Christine Denny Blog

An concern that’s increasingly receiving attention and gaining some traction is a private real estate switch fee imposed by builders.

Here’s how it would work: When a house sells, the original developer receives as much as one percent from the sale price. This resale or capital recovery charge is paid by the seller every time a house trades and is attached to a house for 99 years.

Some builders, who aren’t constructing so much these days but are seeking new revenue streams while an overabundance of inventory is depleted, are attracted to this fee. Not only would it bring in some money, but builders contend the fee would assist off set construction of roads and other up front infrastructure expenses though usually those expenses are constructed into the cost of a house. One of the leading proponents of the fee is a company called Freehold Capital Partners, a New York firm that runs a Texas home building company.

National Association of Realtors and the American Land Title Association have come out against this surcharge and 17 states have legislation that cope with it. The National Association of Homebuilders last week issued a whitepaper that detailed many of the facets surrounding the issue. NAHB has yet to take a formal position on it.

There are some worries about attaching a re-sale fee to a home for 99 years. For instance, a prospective homeowner would not be in a position to secure an FHA loan if a third-party switch fee was on the deed. Some experts also believe the charge could effect property values and hinder transactions from taking location.

Within the meantime, various federal agencies, including the Department of Housing and Urban Development and Federal Housing Finance Agency, are reviewing the issue.


Read much more: Philadelphia Business Journal

U.S. homebuilding activity disappointed in August, punished through the expiration of a first-time home purchasing tax credit score along with a coinciding slip in client confidence, according to residential building contractors.

Single-family homebuilders said gross sales and closings sagged in August and July compared to a livelier spring season that had been driven by the federal tax credit. They had been of mixed opinion on the actual success from the tax credit score, which likely borrowed sales from later in the 12 months and punctured a hole in summer commerce.

Minimal job creation and ongoing work insecurity are nonetheless sidelining several would-be home buyers wary of making big monetary commitments. But amid sparse new construction, inventory is heading toward balance in many markets. Pricing remains beneath pressure, building contractors mentioned.

The multi-family home building marketplace, meanwhile, is opening up just somewhat as rental demand rises. Capital availability has improved a little, and some new construction is underway this year right after disappearing in 2009.

“We expected a drop-off after the tax credit score, but the softness within the economy hit builders doubly hard,” said Bernard Markstein, senior economist at the National Association of House Building contractors, a Washington-based trade group. “The weak economy is holding consumers back.”

The NAHB’s newest housing marketplace index, for July, fell to its lowest level since March 2009. Markstein mentioned August housing starts might enhance some from July. But year-on-year comparisons because May have reflected the “perversion from the tax credit,” which boosted spring gross sales, he mentioned. It supplied as much as $8,000 for first-time and some returning homebuyers who closed on a purchase by June 30.

Costs had been stable-to-slightly-better through the spring, but Markstein expects new data to reveal a resumption in cost declines.

Homebuilding activity is faring much better in parts of the Northeast, the Mid-Atlantic, Midwestern states like the Dakotas, Iowa, Idaho, Kansas and power states like Texas and Oklahoma, he mentioned.

“One of the reasons that the national numbers look so poor is that the areas nonetheless in trouble are the locations with the most production,” Markstein mentioned. “Seven from the top states would be the smallest markets and represent 4% of national production.”

He’s lowered his forecast for new home gross sales this 12 months, from a 25% year-on-year acquire that he anticipated in February to, at most, a slight improvement over 2009.

On a brighter note, Markstein said inventory overhang has fallen significantly, and also the pace of existing-homes’ foreclosures is unlikely to accelerate. Upward stress on constructing supplies prices previously this year has eased as demand has slackened, he added.

A Houston-based national builder said his year-to-date gross sales are away 10% from 2009, pressured by a belated dip in Texas markets and the finish from the fiscal stimulus.

“Traffic has been off. Gross sales happen to be tough. The consumer is still extremely skittish,” mentioned John Johnson, chief executive of David Weekley Houses, which builds in Texas, Colorado, Florida, Georgia and the Carolinas. “I don’t know when the real recovery’s going to happen.”

Sales had been buoyant into June simply because of the tax credit score, aided by swift development and standing or near-completed inventory, he mentioned. Even second- and third-time house consumers saw the benefit of the tax credit score, simply because it helped them sell their current homes.

“It got some people off the fence, but then it rapidly died,” Johnson mentioned. He does not view the tax credit score as a net-help for the housing business.

Weekley’s August and September-to-date begins and closings have been “disappointing,” and largely in line with a soggy July, Johnson said. His Texas markets are away 20% this year vs. final, battered in component by the oil spill in the Gulf of Mexico. But that drop is shallower than his other markets’ previously steep declines, and probably represents the trough for the Lone Star State. Markets in the Carolinas and Florida show some improvement vs. 2009, but Georgia and Colorado remain slow, he mentioned.

Johnson mentioned Weekley Houses has greatly decreased its inventory and increased its efficiencies and profit margins. Buyer discounts, perks and freebies have moderated. In select instances, the firm has been able to raise costs very modestly.

Johnson is now expecting a 5% to 10% drop in company revenues in 2010. In February, he’d forecast steady inflows year-over-year.

A builder in California said she’s guardedly optimistic about gross sales within the San Francisco area but pessimistic about Southern California company.

“The tax credit expiration is hurting us at our lower-priced communities within the desert of Southern California,” mentioned Cindy Douglas, vice president of gross sales and advertising at Ponderosa Houses, headquartered in Pleasanton. “These buyers are having a extremely tough time qualifying for loans and they’re worried about their work security. There are also a lot of brief gross sales and foreclosures in Riverside County, which is generating it difficult for new house builders to compete.”

Most of Ponderosa’s markets sagged in July and August. But gross sales at one, an active-adult project in Pleasanton, close to San Francisco, beat expectations and could lift the company’s total gross sales into positive territory this year, Douglas said. All- and mostly-cash consumers snapped up 10 of 12 units released in July and August.

Douglas mentioned California stock levels have steadied because builders have slashed their release sizes, but unending foreclosures and brief gross sales within the existing-home marketplace might soon push new-home supply up. They’ve already pressured prices and have eliminated Ponderosa’s hopes of raising costs this 12 months, she mentioned.

A builder in Connecticut said the marketplace still seems to be calling for lower costs.

“Everybody had expected the 2010 rebound to be a little bit stronger than it is,” mentioned Greg Ugalde, president and chief legal officer at T&M Constructing, in Torrington. “There are pockets of decent exercise.”

His August sales and closings had been about in line with July’s and year-ago figures, as interest fell away right after the tax credit score evaporated. Ugalde mentioned other region building contractors have told him of similar business patterns.

T&M may see more a few more houses sell this year than last, but margins will be slimmer, he said. Sweeteners have expanded and some supplies prices have climbed. Buyers are looking for smaller homes with fewer amenities.

Ugalde lamented tight credit score conditions, which are preventing many stable potential buyers from taking advantage of historically low interest rates.

A builder near New Orleans said August company repaired some.

“This 12 months is going to become better than final 12 months for us, but the tax credit score did borrow sales from the finish of the year,” said Larry Kornman, Resident of Slidell, LA-based Sunrise Houses, which builds in Southeast Louisiana. He described the tax giveaway as “disruptive” to company and within the finish, not much of a assist.

“It created a lull in Might, June and July sales, but I think we’re sort of more than that period.”

New Orleans is now in a “new phase of rebuilding,” he said. “There are more lots coming on line from the state entity that bought lots from customers right after the storm,” he said, referring to Hurricane Katrina, which slammed the Gulf Coast in August 2005 and leveled large parts of the Cresent City and beyond.

Regarding closings, Kornman mentioned August will match those of July along with a year ago, but September should bring growth. Region stock appears to have been absorbed, he mentioned.

Sunrise Homes costs stand about 25% below 2008 levels. Kornman mentioned he’s constructing more houses that appeal to first-time consumers than before the housing downturn. He expects a 10% gross sales increase this year more than last.

In the multi-family market, traffic, need, occupancy and rent costs are all climbing, according to Scot Sellers, chief executive of Archstone, a Denver-based rental apartment constructing developer and operator with about 80,000 units in it national portfolio.

“We’ve seen an improvement in apartment markets across the country,” mentioned Sellers, whose principal markets are Boston, New York Washington, DC, Seattle, San Francisco and Southern California. He mentioned recession-era practices like doubling up and moving in the parents are slowly receding.

Archstone has started one new development project this 12 months, in Washington, its strongest market. This compares with no begins for the whole of last year, Sellers said. A few more DC-area buildings should start within the next 12 months, some postponed from last year simply because of a lack of funding. He’s also hoping for ground-breaking in other markets in 2011.

Capital availability has reappeared this year, but on a limited basis, he mentioned.

“There are investors who are interested, but it’s a extremely small list.”

The NAHB is scheduled to release its September housing market index on Monday at 10 a.m. EDT. The Commerce Dept. is scheduled to release August housing starts and constructing permits data on Tuesday at 8:30 a.m. EDT and August new-home gross sales data on Friday, Sep. 24 at 10 a.m. EDT.

Source: i-Market News

House building contractors, who aren’t selling too many houses nowadays, appear to become utilizing their downtime to sharpen high quality and service.

Consumer satisfaction improved for any third consecutive yr, while new-home quality came in much better once more, according to the closely-watched J.D. Power and Associates 2010 U.S. New-Home Builder Customer Satisfaction Research released Wednesday.

Overall, customer satisfaction averaged 826 on a 1,000-point scale —the highest level since the study’s 1997 inception. Customers appear probably the most pleased within the boom-to-bust markets of Phoenix, Las Vegas, Southern Calif. and Orlando. Old Country House Plans

New-home high quality, meanwhile, averaged 844, also a record high. That’s a dramatic change from the housing heyday, when building contractors slapped up homes at a frenzied pace that allowed little time for top-notch quality. The Journal has previously written about problems in boom-era abodes. To become sure, much more work remains: Commonly-reported problems include landscaping and also the high quality and finish of kitchen cabinets.

House builders’ employee count has plunged dramatically from the peak, apparently weeding out the staffers who may have come across like shady used-car salesmen: The proportion of buyers who thought their salesperson acted in an honest manner climbed notably in 2010 from a year earlier.

Shea Houses and Standard Pacific both earn bragging rights for dominating customer service in three markets: Phoenix, San Francisco and Southern Calif. for Shea; Austin, Charlotte and Tampa for StanPac. KB House rocked Orlando and Tucson. To builders, a JD Energy win is big time.

“Receiving this prestigious recognition is like winning the Super Bowl for building contractors,” mentioned Craig LeMessurier, a KB Home spokesperson. “Sure, to be initial in any marketplace allows us bragging rights. But much more importantly, it shows that our commitment to our customers doesn’t finish when they sign a purchase agreement.”

The survey also examined new-home high quality for the fourth yr by measuring the occurrence and impact of problems in 41 categories ranging through the bathroom to interior paint. From the 17 included markets, Centex - now owned by building giant Pulte - KB Home and M/I Houses led in two markets.

“The downturn from the housing market—along with intensified competition for any extremely restricted pool of home buyers—has reinforced the importance of customer focus for new-home builders,” says Dale Haines, J.D. Powers’ senior director from the real estate and construction industries practice, in a release.

The study is based on responses from more than 16,400 consumers who provided feedback right after living in their home an average of four-to-18 months - long sufficient for most issues to crop up. It was fielded between March and July 2010.

Source: The Wall Street Journal Blog

Habitat for Humanity Athens/Limestone County is among 136 recipients selected to participate inside a national inexperienced constructing initiative in between Habitat for Humanity Worldwide and The home Depot Foundation. Launched in 2009, the Partners in Sustainable Constructing Plan is a $30 million, five-year plan aimed at helping Habitat affiliates in the united states incorporate sustainable constructing practices in 5,000 Habitat houses.

Each Habitat organization receiving a Companions in Sustainable Constructing grant will obtain $3,000 for each house built to a standard equivalent to Energy Star and as much as $5,000 for each home constructed to a higher green standard. The chosen Habitat affiliates are expected to build 2,400 homes in 2010-2011.

“We are extremely grateful to Habitat for Humanity International and The home Depot Basis for selecting Habitat for Humanity Athens/Limestone County as a Partner in Sustainable Building grant recipient,” mentioned Executive Director, Garth Lovvorn Jr. “We will use the funding on 6 houses we are building with low-income families in need.”

Since the program was established, almost 1,500 houses have been certified nationwide. By incorporating practices for example making a tight building envelope and using efficient, durable materials within the construction procedure, several of these houses achieved inexperienced constructing certification with small additional cost.

We believe that wholesome homes are the constructing blocks for thriving, affordable and environmentally sound communities,” mentioned Kelly Caffarelli, president of The home Depot Basis. “Through our partnership with Habitat for Humanity, we’re focused on bringing the practical monetary and well being benefits of inexperienced building and maintenance to households of modest incomes. By showing that green building and efficient maintenance of a home can really keep much more money inside a family’s wallet, we also hope this effort has a ripple effect on all homeowners nationwide. ”

Companions in Sustainable Building is the initial partnership between The house Depot Foundation and Habitat for Humanity Worldwide at the nationwide level in the united states. For much more details about the PSB plan, visit www.homedepotfoundation.org.

Because its inception in 1992, Habitat for Humanity Athens/Limestone County has remained committed to the idea that everyone should have the opportunity to personal a home of his or her own. Through partnerships, Habitat for Humanity Athens/Limestone County is dedicated to eradicating poverty housing within the community. Through donations from businesses, individuals, churches and foundations Habitat will continue to build inexpensive housing for those in need.

Source: The News Courier