Immigration reform worth $500B to housing economy

SAN DIEGO – May 22, 2013 – If current immigration legislation in the U.S. Congress passes – bills that would create a path to legalization for 11 million undocumented immigrants – it would pump more than $500 billion into the U.S. economy over five years, according to a study released by the National Association of Hispanic Real Estate Professionals (NAHREP).

NAHREP estimates that immigration reform, as proposed, would create a new pool of 3 million homeowners and add more than $500 billion in sales, income and spending into the U.S. housing economy.

Based on previous estimates, NAHREP officials calculate that up to 6 million undocumented immigrants would likely pursue legalization and possibly citizenship under the bill, and up to 3 million would pursue homeownership based on the patterns of naturalized Latinos.

“Foreign-born householders have a high value and strong desire for homeownership,” says Juan Martinez, NAHREP president.

NAHREP based its projections on updated data and the approach it used for its 2004 study “The Potential for Homeownership Among Undocumented Workers,” to estimate the economic impact on the current housing economy.

• Assuming past purchase trends among foreign-born householders remain consistent, half expected to pursue legalization – up to 3 million of 6 million undocumented immigrants – would also buy a home once they have legal status.

• Many of undocumented foreign-born householders have age and income characteristics associated with potential homeownership, with household incomes of about $40,000.

• Up to 3 million undocumented foreign-born householders could potentially afford a home worth $173,600, the national median sales price. This would generate more than $500 billion in new mortgages, and about $25 billion in mortgage origination and refinance income.

• The purchases would create $28 billion in income within the real estate community.

• Home purchases by 3 million legitimized immigrants would create $180 billion in additional consumer spending within local communities based on the average $60,000 in associated purchases estimated by the National Association of Realtors in 2012.

“With the possibility of a legitimate path to residency and citizenship, we expect this group to be eager to buy homes,” says Gary Acosta, NAHREP co-founder.

© 2013 Florida Realtors®


Almost 112,000 Floridians benefit from lender settlement

TALLAHASSEE, Fla. – May 22, 2013 – Floridians have received about $8.7 billion in relief under the national mortgage settlement, as reported by the five largest mortgage servicing banks that are parties to the settlement.

According to the latest Settlement Monitor’s report released yesterday, more than 111,000 Floridians have received some type of relief. About $1.39 billion went to mortgage modifications; about $3.15 billion went toward forgiving the entire balance of second liens.

Overall, the average recipient receiving a mortgage modification got $133,560. The average recipient with a second-lien cancellation saw $68,333 removed.

Five banks participated in the settlement, with their numbers confirmed by the Monitor in an independent audit. The five banks include Ally/GMAC, Bank of America. Citi. JPMorgan Chase and Wells Fargo.

“Today’s report indicates that 111,000 Floridians have benefited from $9 billion in relief – significantly more than the $8.4 billion that we expected when we entered the settlement,” says Florida Attorney General Pam Bondi.

Nationally, the five lenders have distributed $50.63 billion in direct relief to over 620,000 homeowners, at roughly $81,000 per homeowner.

A chart detailing the Florida money distribution by type of consumer and bank is available online in PDF format.

© 2013 Florida Realtors®

Existing Home Sales Hit A 3 Year High!

Existing Home Sales Hit A 3 Year High!


Monthly Market Statistics for Palm Beach County


2013 Palm_Beach_County_Single_Family_Homes_2013-01_Summary

Monthly Market Statistics for Miami-Dade County

Jan 2013 Miami-Dade_County_Townhouses_and_Condos_2013-01_SummaryMiami-Dade_County_Single_Family_Homes_2013-01_Summary

Monthly Market Statistics for Broward County



What a Picture’s Worth……

Adding a photograph to a listing can translate to a big price bump…

Turns out, a picture is worth thousands of dollars.

Adding at least one photo to a residential-real-estate listing increases the final sale price by up to 3.9%, says Ken H. Johnson, an associate professor of finance at Florida International University’s Hollo School of Real Estate. That can mean an extra $39,000 for a $1 million house.

“If I was selling, I would put every picture I could on the listing, at a ratio of four to five interior vs. one exterior,” says Prof. Johnson. “We’re talking about a few extra weeks in marketing time to get that 3% to 5% increase on a home. That’s a good trade.”

Roughly 85% of the 4,077 houses studied by Prof. Johnson and co-authors Christopher Cain and Justin Benefield included a photo. Interior pictures were more effective than exterior shots, adding a 3.9% price bump vs. 1.9%. Although adding just one photo can result in these gains, Prof. Johnson estimates that each additional photo adds about $150 to $200 to the final sale price.

But be prepared to wait for the payoff: Adding a photo increases the time to sell by 20.6%, meaning the house will stay on the market for an additional 16.5 days, on average, according to the study, “On the Relationship Between Property Price, Time-on-Market, and Photo Depictions in a Multiple Listing Service,” published in the Journal of Real Estate Finance and Economics in 2011.

That’s because photos give consumers more information to consider, slowing the decision-making process, Prof. Johnson says. “You’re getting an information overload. It’s like offering kids a bunch of candy, and they can’t decide which one to take,” he says. But photos also ease uncertainty. Consumers who have a clear idea of what they are buying are willing to pay more and are ultimately more satisfied with the sale.

Prof. Johnson’s research does not differentiate between professional photos and amateur shots, but says he thinks professionally shot photos are much more effective.

Debra Stotts, senior vice president and associate broker at Town Residential in New York City, recently had one of her listings at Trump World Tower at 845 United Nations Plaza reshot to better show off the design, size and views.

To do that, Manhattan-based photographer Michael Weinstein looked for what he calls the single “wow photo” to open the listing. Usually, it’s the living room, but in this case, Mr. Weinstein says he shot the dining room opening into the living room to emphasize spaciousness.

Mr. Weinstein, owner of MW Studio, shares some tips that homeowners and brokers can consider when working on listings. First, he takes into account which direction the windows face and when the natural light will best accentuate the space. Generally, earlier in the day gives a clear, bright light, while later in the day casts a warm glow.

He usually shoots from the corner of a room with a wide-angle zoom lens to depict the room at its largest. He also positions the camera to highlight the unique elements of a home, whether that’s floor-to-ceiling windows, generous hallways or an elegant foyer. Mr. Weinstein charges on a per shot basis at roughly $250 to $1,500 per real-estate shoot, depending on the number of photos used.

Evan Joseph, another Manhattan-based photographer, will sometimes use up to eight lenses in a single shoot. “I look for the camera angle that makes a room open up, maybe being closer to the windows or shooting upward. Sometimes you need to find the spot where the view is the most fantastic, and that spot might be in the middle of a room or on a couch,” he says. Mr. Joseph, owner of Evan Joseph Images, says he charges between $600 and $1,500 for high-end shoots of resale homes.

Both photographers agree natural light is best. But in the case of a cloudy day, Mr. Joseph comes to shoots armed with plenty of studio lighting. Mr. Weinstein skips the lighting but will occasionally turn on interior lamps to add warmth—though that can give the impression that a room is naturally dark.

For the most part, Mr. Weinstein says, touch-ups happen after the shoot with digital photo editing. A cloudy, overcast view can be brightened to show clear blue, sunny skies. Fireplaces are dressed up with fires. He also removes anything unsightly, like wires, scuff marks on walls, vents, even air-conditioners. He adjusts the color as well to accentuate certain features in the homes. “We’ll warm up the floors or warm up the colors of the walls. It’s very subtle, but it can be very effective,” he says.

Especially time-consuming is removing multiple or large elements, like scaffolding seen through a window or a delivery truck obscuring the front, Mr. Joseph says. “People think Photoshop has a magic ‘Remove This’ button, but you have to reimagine, re-create and reassemble the thing that I’m removing,” he says.

One broker notes that retouching shouldn’t misrepresent the space. “Even if a space needs a lot of work, I would show the flaws in the images so people know what they’re getting into,” says Patty LaRocco, senior vice president and associate broker at Town Residential.

Photos have to walk the fine line of showing off a space’s character without making the home seem too personalized, Ms. LaRocco says. “Materials, light and volume are really what I’m after,” she says.


How photos with property listings affect the sale price and time on market:

  • 3.5% Increase in sale price when an online listing contains one or more photos.
  • 3.9% Increase in sale price when a listing with only one photo shows an interior view.
  • 1.9% Increase in sale price when a listing with only one photo shows an exterior view.
  • 20.6% Rise in the time it takes to sell the property when a listing contains at least one photo.
  • $150 to $200 Estimated increase to the sale price per additional photo.

Source: ‘On the Relationship Between Property Price, Time-on-Market, and Photo Depictions in a Multiple Listing Service,’ 2011, co-authored by Ken H. Johnson, an associate professor of finance at Florida International University’s Hollo School of Real Estate



A New Lease on Luxury

They’ve got the money to buy trophy homes—but for now, they’d rather rent. Hoping to keep cash liquid while watching the direction of the market, more people are paying big sums for temporary digs.

When real-estate developer Don Peebles moved his family to Manhattan from Coral Gables, Fla., he decided to combine two adjacent ninth-floor apartments to create a 4,750-square-foot, seven-bedroom, nine-bathroom home with glass walls on the Upper West Side overlooking the Hudson River. His wife, Katrina, spent two months decorating the apartment with abstract paintings from their art collection, whimsical wallpaper in the kitchen and tufted couches in the living room.

Though the Peebleses invested significantly in their home, they don’t own it. Instead, they are paying $35,000 a month to lease it. Renting also gives them the flexibility change their minds about what neighborhood they want to live in if they decide to move. “Our primary residence doesn’t need to be an investment,” he says.

A growing number of people who can afford to buy trophy homes are instead opting for a more temporary solution: the trophy rental. Some renters say they want to avoid tying up their money in steep down payments and instead are investing their money in the financial markets or their own businesses. Still, they’re willing to spend tens of thousands of dollars a month on a rental to get the lifestyle they want.

As a result, the highest end of the rental market has seen significant growth. In New York, apartments and townhouses priced at $15,000 per month and up represented 1.3% of the market in December, up from 0.5% a year prior, according to Jonathan Miller, president of appraisal company Miller Samuel. Prices are rising quickly as well: the median price for the $15,000-and-up sector is up 23.1% from a year ago. The uptick in rentals mirrors an overall trend nationwide in which the rental vacancy rate fell to 4.5% in fourth quarter of 2012, down from 5.2% a year earlier, according to real-estate research firm Reis Inc. REIS +5.95% —and the lowest since 2001’s third quarter.

Astrid Pillay, a broker with Halstead in Manhattan, found two $35,000-a-month rental townhouses for clients in December and says another recently offered a seller $1 million for a two-year lease on a townhouse currently for sale. A number of her rental clients, she says, are recent sellers of trophy homes who have “just cashed out” and want to wait until the market dips again to buy. Other brokers say limited inventory of houses for sale has also helped the rental market. “At this price point, you’re not just going to settle for whatever is available,” says Noble Black, a broker with Corcoran.

New to the rental market in New York are three penthouses ranging in price from $30,000 a month to $50,000 a month in New York by Gehry, a new high-rise building in Lower Manhattan where one-bedrooms on high floors start at $5,500 per month. The largest unit in the building is a 3,800-square-foot, 76th-floor penthouse that includes a nearby studio apartment for nannies, maids or in-laws. Annual cost would top $600,000 a year.

In California, luxury rents are increasing by 5% to 10% each year, says Bill Witte, president of developer Related California. In San Francisco, where Related California has one luxury rental building and several in the works, rents are already 10% higher than their peak before the recession hit, he says. At the Paramount, the developer’s 40-story rental tower downtown, rents are now more than $4.50 a square foot, up from their prerecession peak of $4 a square foot. Related recently rented a 1,190-square-foot two-bedroom apartment there for $6,850 a month.

In San Francisco’s financial district, Millennium Tower, a 60-story high-rise where venture capitalist Tom Perkins owns a penthouse and retired quarterback Joe Montana rents two apartments, there’s a two-bedroom just under 2,300 square feet available for $15,000 a month.

In Los Angeles, billionaire developer Rick Caruso recently opened 8500 Burton Way, an 87-unit apartment building near Beverly Hills and just last week unveiled its crown jewel: a three-bedroom, fully furnished penthouse unit with a monthly rent of $40,000. Mr. Caruso put $2.1 million into building and decorating the unit—which includes custom-made macassar ebony bookshelves and Hèrmes wallpaper in the bathrooms—and says it is the priciest rental in Southern California. (A penthouse unit at 1221 Ocean Ave., a luxury building that overlooks the Pacific in Santa Monica where Britney Spears once lived, doesn’t even come close, at $27,000 a month).

In Miami, rentals that were going for $25,000 a month a year ago are now renting in the $40,000 range, says Greg Mirmelli, a principal and founder of GM Real Estate in Miami. A home on Sunset Island, for example, now rents for roughly $40,000, up from $30,000 two years ago.

Daniel de la Vega, a managing partner of One Sotheby’s Realty in Miami, says he’s got six listings for condos or homes above $30,000 a month or more, which are leasing much faster than usual, mostly to foreigners who will eventually buy something. A private gated home on the beach recently rented for $90,000 a month; it is also available for sale for $14.9 million.

The rise of the trophy rental comes as many Americans continue to abandon ownership in the wake of the country’s housing crisis and credit crunch. The U.S. homeownership rate was 65.3% in the third quarter of 2012, its lowest level since 1996, according to the Census Bureau. In the midst of the housing boom, in 2004, the homeownership rate reached 69.4%.

“We are definitely seeing gravitation toward higher leases,” says Billy Rose, president and co-founder of the Agency, a real-estate firm in Beverly Hills. “A lot of the private-equity guys we see who used to buy are choosing to rent places for $10,000 or $15,000 a month now because they would rather play the market than buy a house,” adds Mauricio Umansky, Mr. Rose’s partner and Agency co-founder.

Jonathan Moore, a 25-year-old entrepreneur, currently leases a two-bedroom at the Ritz-Carlton Residences at LA Live in downtown Los Angeles for $6,200 a month. Mr. Moore, who runs an alternative investment-management company called GCM Capital Management, says that right now he would rather keep his money in his business rather than plunk it down on a large down payment, especially when he doesn’t plan to stay in one place for more than five or 10 years. “I am an illiquid millionaire, so it would be hard for me to unwind my stake in my business,” he says. “But this way, I get all the benefits of being a homeowner, and all the luxury amenities, without the financial downsides.”

Renting, of course, does have its drawbacks. Renters may be subject to landlords raising fees or refusing to renew a lease, for example. With homeownership, “you have some security with respect to the ability to control your own destiny,” says Stuart Gabriel, the director of the UCLA Ziman Center for Real Estate. Still, ownership typically only makes economic sense for those looking for stay put for several years. Property values need to appreciate enough to cover closing costs and other fees. “You’re speculating on housing prices and included in that speculation is the cost of buying and selling, which can be substantial,” he says.

Real-estate brokers say their listings for the largest, most-expensive rental apartments tend to go very quickly—sometimes exceeding their asking prices. Bo Poulsen, a broker with Town Residential in New York, says he recently had four offers for a TriBeCa apartment asking $18,500 a month shortly after it hit the market. It ended up renting for $21,000. “That definitely was not happening a year ago,” he says.

According to real-estate tracker, the median amount of time a New York rental property above $15,000 a month spent on the market was 10 weeks, down from 12 weeks in 2011.

The relatively low inventory and high demand means unsolicited rental offers on for-sale properties have become commonplace. Restaurateur Jeffrey Chodorow recently received an offer of $75,000 a month to rent his 3,700-square-foot Manhattan condominium, which is on the market for $18.8 million, says his broker, Oren Alexander.

Limited availability of homes for sale is also driving buyers to the rental market. “If you want to live in a brand new apartment, there just isn’t anything available right now—every building is full,” says Gregg Lynn, a luxury broker at Sotheby’s International Realty in San Francisco. “You have to wait until 2015 for new construction.”

Some of the newest high-end rental buildings were originally designed as boom-era condominiums and converted when sales were slow. In many cases, owners opted to rent the units because they didn’t want to sell them at distressed prices.

In Hollywood, the Avenue was converted into rental apartments from condos when its backer fell into bankruptcy. The building now features $7,000- to $11,000-a-month penthouses with 25-foot ceilings. It is already 95% leased. “When we took over the project, it was a half-done busted condo deal,” says Rob Goodman, chief executive of Resmark Cos., which opened the Avenue.

Ken Kahan, founder of real-estate company California Landmark, is currently building three luxury rental buildings in Los Angeles. One of those projects, the bw in Brentwood, was originally designed as a condo project that Mr. Kahan converted to a rental development after the recession hit because it became too difficult to secure financing for condominiums.

The new demand for luxury rentals has spurred the expansion of several national companies, including AKA, which has rental buildings in New York, Philadelphia, Washington and London. Later this month, AKA is completing the finishing touches on a luxury rental in Beverly Hills, where furnished apartments under 2,000 square feet rent for $12,000 to $16,000 a month. That development offers amenities such as a 50-seat screening room and a private entrance to Spago, an upscale Beverly Hills restaurant that will also deliver room service to residents.

Related Cos., a major apartment developer, just launched their priciest rentals ever in New York in a Midtown building called One MiMA Tower. After seeing condos renting in another development for over $20,000 a month, “we thought, let’s go here because we can actually cater to this submarket that exists, but no has been addressing,” says Daria Salusbury, a senior vice president with the company who oversees leasing. The smallest units in One MiMA, junior one-bedrooms, start at $4,800 a month. Three-bedroom penthouses with 2,200 square feet are priced as high as $25,000 a month.

The company also broke ground last month on its long-stalled billion-dollar project on Grand Avenue in downtown Los Angeles. But rather than beginning with the planned first phase of the project, which involved building 390 condos in two structures, the company is instead building luxury rental apartments. “We knew we could take a run at a rental building with the rental market strengthening,” says Related California’s Mr. Witte, “whereas condo prices, while they are beginning to creep back up, aren’t high enough to justify new construction.”

Wealthy individuals are also getting into the game, buying condo units expressly to rent out as a steady investment vehicle. Last fall, the El Royale, a 56-unit Art Deco tower near Hollywood, sold for $29.5 million to investors looking for rental properties. At $527,000 per unit, it is one of the highest prices ever paid for an older building in Southern California. Likewise, the Frank in Venice sold last year for $56.7 million, or $810,000 per unit, one of the highest prices ever paid per unit in Los Angeles.

“The huge tenant demand for luxury rentals in coastal gateway markets has made them the most attractive real-estate investments right now,” says Ron Harris, who brokered both of those sales.

Corrections & Amplifications 

An earlier version of this article stated that broker Astrid Pillay found two $35,000-a-month rental apartments for clients in December. The properties were townhouses.


Twitter: Fastest growing social network in the world

NEW YORK – Jan. 31, 2013 – Twenty-one percent of the global Internet population uses Twitter actively on a monthly basis, elevating it to the fastest growing social network in the world, according to a report by GlobalWebIndex (GWI).

Twitter use has grown rapidly. The number of Twitter users grew 40 percent from the second quarter of 2012 to the fourth quarter of 2012, according to the report. Since July 2009, Twitter has grown 714 percent in active users. Twitter boasts 288 million monthly active users.

The most active Twitter users are in Hong Kong, followed by the United States (94 percent increase), Russia, China and Italy.

Why the sudden growth in Twitter?

GWI says that Twitter’s growth has been attributed to the growth in mobile Internet usage and mass media integration. TV, film, radio, sports and advertising provide more reason to use Twitter than other social networks.

Also, GWI attributes Twitter’s growth to its skyrocketing adoption among older adults. Over 55s are the fastest growing demographic on Twitter, growing 116 percent from the second quarter of last year to the fourth quarter of 2012. Active users among the 45- to 54-age-group also grew 81 percent in that period.

Many real estate professionals use Twitter to connect with prospects and peers in the business.

Source: “Twitter Ranked Fastest Growing Social Platform In The World,” Forbes (Jan. 29, 2013)

© Copyright 2013 INFORMATION, INC. Bethesda, MD

FHA to tighten some loan rules

WASHINGTON – Jan. 31, 2013 – The Federal Housing Administration (FHA) announced a series of changes to be issued this week.

Commissioner Carol Galante calls the changes “essential and appropriate” as the administration tries to bolster its cash reserves in its Mutual Mortgage Insurance Fund (MMI Fund).

Changes to mortgage insurance premiums
FHA will increase the annual mortgage insurance premium (MIP) added onto most new mortgages by 10 basis points (0.10 percent). Premiums on FHA jumbo mortgages ($625,500 or larger) will go up by 5 basis points (0.05 percent). There are a few exceptions, such as some streamline refinance transactions.

In addition, most new FHA borrowers will pay the MIP for the life of their loan.

Previously, FHA automatically cancelled MIP on loans when the current principal balance reached 78 percent of the original principal balance. FHA’s Office of Risk Management and Regulatory Affairs says that cancellation has cost the MMI Fund billions of dollars in premium revenue on mortgages endorsed from 2010 through 2012.

Manual underwriting on higher-risk loans
If a buyer has a credit score below 620 and a total debt-to-income (DTI) ratio greater than 43 percent, FHA won’t allow lenders to automatically approve a loan request. Lenders must now manually underwrite these loans, document compensating factors that support their approval based on FHA guidelines.

Higher downpayment on loans above $625,500
FHA says it will raise the mandatory downpayment on jumbo loans from 3.5 to 5 percent. It will officially announce it soon in the Federal Register. FHA says the change will encourage more private lenders to participate in the housing finance market.

Home equity conversion mortgage consolidation
FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013.

FHA loans after a foreclosure
FHA has a minimum waiting period of three years for a borrower who went through a foreclosure. However, the administration says it’s not that simple – a buyer must also reestablish good credit and qualify under other FHA loan guidelines.

“It has come to FHA’s attention that a few lenders are inappropriately advertising and soliciting borrowers with the false pretense that they can somehow ‘automatically’ qualify for an FHA-insured mortgage three years after their foreclosure,” FHA says in a release. “This is simply not true and such misleading advertising will not be tolerated.”

FHA says non-FHA lenders have also started advertising FHA mortgages. “FHA will work with other federal agencies to address such false advertising by non-FHA-approved entities,” according to the release.

© 2013 Florida Realtors®