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Commercial Real Estate Vacancy Rates Improving Rents Firming

by Arnie Levine on March 2, 2012

in Commercial Real Estate,Finance,Latest News,Real Estate news,San Diego Investment Properties

According to the National Association of Realtors® quarterly commercial real estate forecast, all of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord’s market commanding bigger rent increases. These trends also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey.

Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. “Sustained job creation is benefiting commercial real estate sectors by increasing demand for space,” he said. “Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”

NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.

“Household formation appears to be rising from pent-up demand,” Yun said. “The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term.”

The Society of Industrial and Office Realtors® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.¹

The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.

Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market – an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.

Office and industrial space remains a tenant’s market – 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.

Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers’ market for development acquisitions; prices are below construction costs in 78 percent of markets.

Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.

NAR’s latest Commercial Real Estate Outlook² offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc.,³ a source of commercial real estate performance information.

Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.

The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.

After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.

Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.

Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.

Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.

Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.

Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.

Multifamily Markets
The apartment rental market – multifamily housing – is likely to see vacancy rates drop from 4.7 percent in the first quarter to 4.5 percent in the first quarter of 2013; multifamily vacancy rates below 5 percent generally are considered a landlord’s market with demand justifying higher rents.

Areas with the lowest multifamily vacancy rates currently are New York City, 1.8 percent; Minneapolis and Portland, Ore., each at 2.5 percent; and San Jose, Calif., at 2.7 percent.

After rising 2.2 percent last year, average apartment rent is expected to increase 3.8 percent in 2012 and another 4.0 percent next year. Multifamily net absorption is forecast at 209,900 units this year and 223,600 in 2013.

The Commercial Real Estate Outlook is published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.

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Homeowners should be aware of these tax breaks

by Arnie Levine on March 2, 2012

in Finance,Latest News,Real Estate news

Homeowners should be aware of these tax breaks that they may be eligible to receive.

Mortgage interest: Homeowners are generally entitled to reduce their taxable income by the amount of mortgage interest they pay, as long as they itemize deductions on their tax returns.

Private mortgage insurance: Homeowners who are paying PMI likely will be able to fully deduct the amount, as long as their adjusted gross income is $100,000 or less ($50,000 for married taxpayers filing separately). Borrowers with incomes above $100,000 may qualify for a partial deduction.

Energy-efficient home improvements: If windows, doors, or skylights that meet the requirements of the federal Energy Star program were installed in 2011, homeowners can get a tax credit equal to 10 percent of the product’s costs.

Points: The charges a borrower paid in points to get a mortgage are generally deductible if it was a first mortgage on the property. In the case of a refinance loan, all or some of the point charges might be deductible, but it gets complicated.

Property taxes: The amount paid in property taxes is deductible as long as it is based on the assessed value of the property. If the mortgage company collects money for property taxes, the amount actually paid should be on the 1098 form lenders send out each January.

Please seek legal or tax advise from a professional Tax Consultant or CPA to confirm any of the information provided.

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NAR Video: Pending home sales hit 21-month high

by Arnie Levine on March 2, 2012

in Finance,Latest News,Real Estate news,San Diego Real Estate

ForSaleHouseYellowPhoto NAR Video: Pending home sales hit 21 month high

Pending home sales rose to their highest level in 21 months in January, according to the National Association of Realtors® , as agents signed more contracts for existing homes.

The seasonally adjusted index increased 2% month-over-month to 97 from a downwardly revised 95.1 in December. Signed contracts also jumped 8% over the year-earlier reading of 89.8.

The trade group’s index marked its highest point since a 111.3 reading in April 2010, also the last time it topped 100.

Analysts polled by Econoday predicted 1.5% monthly growth, with a consensus range between a 1.1% drop and a 3% increase.

Lawrence Yun, NAR chief economist, said job growth and rising rental rates “are hopefully pushing the market into what appears to be a sustained housing recovery,” despite wavering in the pending home sales. The index dipped in December from 96.9 in November.

“If and when credit availability conditions return to normal, home sales will likely get a 15% boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater,” Yun said in a release.

Pending sales grew 7.7% and 7.6% in January month-over-month in the South and Northeast, respectively, while West and Midwest sales fell 4.4% and 3.8%. All four regions, however, saw signed contracts increase from a year earlier, from 10.8% in the Midwest to 0.7% in the West.

Lawrence Yun, NAR chief economist

NATIONAL ASSOCIATION OF REALTORS^®

Pending Home Sales Index (PHSI)

Year		United States	Northeast	Midwest	South	West	United States	Northeast	Midwest	South	West
2009		95.0	76.8	88.9	98.5	110.0	*	*	*	*	*
2010		89.3	71.2	80.3	97.1	100.7	*	*	*	*	*
2011		89.9	67.5	80.8	98.0	104.2	*	*	*	*	*
		Seasonally Adjusted Annual Rate					Not Seasonally Adjusted
2011	Jan	89.8	71.2	79.5	98.7	101.2	70.9	47.9	60.2	75.4	93.2
2011	Feb	88.4	65.6	78.8	98.1	101.1	79.0	57.1	79.3	86.5	84.1
2011	Mar	89.9	64.6	79.8	103.2	99.1	104.3	82.4	96.2	122.4	101.5
2011	Apr	83.5	65.8	75.6	93.3	90.3	97.9	86.4	95.6	111.6	87.6
2011	May	89.2	69.2	81.0	95.5	103.7	102.8	94.3	98.0	108.9	104.9
2011	June	90.7	68.3	80.5	97.6	108.2	108.7	89.4	96.6	124.5	111.9
2011	July	90.5	67.9	81.0	96.6	108.5	94.0	69.1	78.9	106.9	108.9
2011	Aug	89.6	65.2	79.2	97.5	107.0	102.8	71.2	82.7	108.7	139.5
2011	Sept	86.9	62.9	75.0	94.8	106.0	83.2	51.4	71.1	84.9	118.2
2011	Oct	92.6	69.9	87.0	99.9	104.8	90.1	67.6	83.0	91.8	112.3
2011	Nov	96.9	72.3	90.1	102.9	113.7	81.1	53.1	69.7	81.6	114.2
2011	Dec r	95.1	72.7	91.6	101.3	106.6	63.8	39.8	58.5	72.7	74.1
2012	Jan p	97.0	78.2	88.1	109.1	101.9	78.2	54.7	69.9	84.6	95.0
	vs. last month:	2.0%	7.6%	-3.8%	7.7%	-4.4%	22.6%	37.4%	19.5%	16.4%	28.2%
	vs. last year:	8.0%	9.8%	10.8%	10.5%	0.7%	10.3%	14.2%	16.1%	12.2%	1.9%


©2011 NATIONAL ASSOCIATION OF REALTORS^®

More questions we can help you, at County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! Want to know what your home is worth?

If you have equity in your home, we will sell your home and get top dollar in this challenging market with our Internet Marketing and Sales Program. If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also, go to www.ShortSaleRealtors4U.com

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Housing Expected to Add to GDP in 2012

by Arnie Levine on March 2, 2012

in Finance,Latest News,Real Estate news

The 2012 outlook is improving modestly from a disappointing 2011. Economic growth picked up in the fourth quarter of 2011 to 2.8 percent and is expected to come in at 2.3 percent for 2012, up from 1.6 percent growth for all of last year, according to Fannie Mae’s Economic & Strategic Research Group. However, the year-end growth rate was due largely to a positive swing in business inventory growth, which is not indicative of underlying consumer demand or the overall health of the economy. Nevertheless, consumer spending improved modestly and manufacturing and services activity expanded at a strong pace.

Importantly, labor market conditions continued to improve with nonfarm payroll job growth increasing nearly 250,000 across many industries, including construction. The unemployment rate dropped to 8.3 percent, down from 8.5 percent the month prior, as the large increase in employment outweighed a growing number of people joining the workforce—indicating a genuine improvement in the labor market. If we continue to see this level of positive data, the Group notes, the labor market may become an upside determinant for an improved outlook.

Housing also showed signs of improvement late last year with existing home sales rising in December for the third consecutive month. Indicators point to some good pickup in construction of apartment buildings and modest pickup in single-family construction in some locations. Overall, housing is expected to add to gross domestic product (GDP) for the first time in seven years, albeit by a very modest amount. Near-term improvement in housing sales is expected to be quite modest due to the very low current level of sales and continued expected declines in home prices, which remain a challenge to the housing market.

“Risks to the forecast are more balanced between the upside and downside since our January forecast,” says Fannie Mae Chief Economist Doug Duncan. “The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis. However, economic growth will remain constrained by various headwinds, such as a potential spike in oil prices due to tension in the Middle East; an expected decline in net exports from the global slowdown; and an expected increase in fiscal drag, including the fading of federal spending from the stimulus and a decline in defense spending for operations in Iraq and Afghanistan.”

County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! We offer free counseling in real estate regarding; home values and information on options of selling vs. Foreclosure.

Click here to get loan informationbefore the rates go up. To get started on viewing homes, condos, investment properties, pre-foreclosures, bank owned foreclosures (REO’s) or thinking of selling your property, please contact me today for free counseling at (619) 540-5811.

New Pro-Property Search. We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net/ and I’ll be happy to follow up and take great care of them.

Jobless claims at lowest level since 2008

by Arnie Levine on February 26, 2012

in Finance,Latest News,Real Estate news

The Labor Department said the seasonally adjusted figure of initial claims for the week ended Feb. 18 was 351,000 unchanged from the previous week, which was revised upward 3,000.

Analysts surveyed by Econoday expected 355,000 new jobless claims last week with a range of estimates between 330,000 and 363,000. Most economists believe initial claims lower than 400,000 indicate a strengthening employment situation. Claims have been lower than this threshold for most of the past four months.

The four-week moving average, which is considered a less volatile indicator than weekly claims, decreased by 7,000 claims to 359,000 from the prior week’s revised slightly 366,000.

The seasonally adjusted insured unemployment rate for the week ended Feb. 11 was unchanged at 2.7%, according to the Labor Department.

The total number of people receiving some sort of federal unemployment benefits for the week ended Feb. 4 fell to 7.5 million from 7.68 million the prior week.

County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! We offer free counseling in real estate regarding; home values and information on options of selling vs. Foreclosure.

Click here to get loan informationbefore the rates go up. To get started on viewing homes, condos, investment properties, pre-foreclosures, bank owned foreclosures (REO’s) or thinking of selling your property, please contact me today for free counseling at (619) 540-5811.

New Pro-Property Search. We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net/ and I’ll be happy to follow up and take great care of them.

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Bernanke says health of community banks improves

by Arnie Levine on February 17, 2012

in Finance,Latest News

BankHealthPhoto Bernanke says health of community banks improves

Federal Reserve Chairman Ben Bernanke said community banks are improving.

The long maligned sector has accounted for a majority of bank failures since the 2008 financial crisis. Of the 392 bank failures between January 2008 and September 2011, 326 were community banks, according to the Federal Deposit Insurance Corp.

These smaller firms became over exposed to concentrated struggles in their areas, particularly Georgia, where community banks funded much of the residential and commercial buildup leading to the crisis. Since then, the firms that survived complain of extraordinary burdens from the Dodd-Frank Act and increased examinations from the FDIC.

“Despite economic uncertainties, the condition of community banks is improving, which is reassuring given their undeniable importance to the health of our nation’s economy,” Bernanke said in his speech at the FDIC Thursday.

There were 92 bank failures in 2011, down from 157 closings the year before. For a break down of the trends in bank failures since the crisis, pick up the February issue of HousingWire.

FDIC Chairman Martin Gruenberg told CNBC following Bernanke’s speech that failures and problem banks are trending downward as the economy slowly recovers.

“I think community banks, most of them, are doing quite well,” Gruenberg said. “They’re more than holding their own with the underlying economy and the longer term challenges.”

Bernanke also said the Fed will work to keep lines of communication open as it works to steady the national and global economic system. Rules from the Dodd-Frank Act meant to blockade the risks created by large banks, he assured, would not “find their way” to smaller firms.

“That…is not our intent, and we will work to ensure that it does not happen,” Bernanke said.

Community bankers raised concern of the Fed’s monetary policy. By keeping the federal funds target rate at roughly 0%, it hurts profitability at smaller firms by constraining net interest margins, some said.

Bernanke did say the difference between the yield on safe assets such as Treasury securities — which banks are forced to hold when loan demand is weak — and the rate paid on deposits is “relatively low.”

However, net interest margins also depend on the difference between the return on the loans the bank writes and the yield on these safe assets. Bernanke defended the lower rate, claiming the discount would mean more demand for taking out loans such as mortgages.

Pending home sales climbed to the highest level in 19 months in November, according to the National Association of Realtors, but many economists believe more needs to be done to fix housing before demand can rise to the levels necessary to forge profits and thus rejuvenate these struggling firms. In December, pending home sales dropped 3.5%.

Cam Fines, CEO of the Independent Community Bankers Association, attended the speech. Fines said holding the federal funds rate so low works in the short term, but smaller institutions that “load-up” on longer-term Treasurys could find themselves upside down when the rates do go up. Essentially, these small banks could be funding long-term loans with expensive short-term deposits, which is what led to the savings and loan crisis in the late 1980s.

Still, Fines sympathized with Bernanke, who must carefully manage the economic levers at his disposal in order to avoid near-term threats.

“He’s in a tough position. He has so many things to consider,” Fines said.

Bernanke admittedly said the lingering problems in state and national economies leave many challenges for community banks.

“Despite some recent signs of improvement, the recovery has been frustratingly slow, constraining opportunities for profitable lending,” Bernanke said.

Unemployment rate falls to 8.3%

by Arnie Levine on February 12, 2012

in Finance,Latest News

The economy added 243,000 jobs in January and the unemployment rate fell to 8.3%, its lowest level since February 2009.

The Labor Department said large gains in professional and business services, leisure and hospitality, and manufacturing jobs drove the gains, which came in well above most analysts’ estimates. The rate in December was 8.5%.

Analysts surveyed by Econoday expected 135,000 new jobs in January with a range of estimates between 110,000 and 189,000.

The unemployment rate is down from 9.1% in August. Private-sector employment rose by 257,000 jobs in January, while government jobs declined by 14,000, the Bureau of Labor Statistics said. For 2011, governments shed 276,000 jobs at the local and state level.

Service industry jobs continued to climb in January with most of the 44,000 new leisure and hospitality jobs in food and drinking places. The Labor Department said food services added 487,000 jobs since a low in February 2010.

Retail sector employment also rose last month as department stores added 19,000 jobs, health stores added 7,000 and car dealers added 7,000, according to the BLS.

Jobs for nonresidential specialty construction increased by 30,000 the past two months, helping the construction industry add another 21,000 jobs last month on top of a December gain of 31,000.

The federal agency revised gains in nonfarm payrolls for November up to 157,000 from a prior reading of 100,000. The Labor Department slightly increased the December figure to 203,000 from 200,000.

The number of unemployed Americans fell to 12.8 million in January from 13.1 million the prior month, with the long-term unemployed, or those without jobs for 27 weeks or more, flat at 5.5 million, or nearly 43% of the unemployed.

The unemployment rate hit 9.8% in November 2010 and hovered around 9% for most of 2011 before decling the last few months.

County Properties, 25 years of brokerage experience, trust and a Member of the local Better Business Bureau! We offer free counseling in real estate regarding; home values and information on options of selling vs. Foreclosure.

Click here to get loan informationbefore the rates go up. To get started on viewing homes, condos, investment properties, pre-foreclosures, bank owned foreclosures (REO’s) or thinking of selling your property, please contact me today for free counseling at (619) 540-5811.

New Pro-Property Search. We will setup a customized search for you by our professional REALTOR® Team. Sit back relax and shop at home! We will make changes to your Pro-Property Search any time you like, just let us know. Have fun!

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net/ and I’ll be happy to follow up and take great care of them.

Unemployment rate falls

by Arnie Levine on February 4, 2012

in Finance