Halloween Real Estate Humor

pumpkin humor

Well, this isn’t quite real estate humor, but they are pumpkins on a home’s stair case. I’m not sure why this made me laugh, but it did. Perhaps it is the sick humor side of a real estate professional who can see a resemblance between the bottom pumpkin and certain sellers when they receive low ball offers…

I hope that everyone has a safe and happy Halloween…and does not end up like the bottom pumpkin!

Senate Debates Extending First Time Buyer Credit

Bloomberg.com reports that the Obama administration endorsed plans to extend an $8,000 tax credit for first-time homebuyers, saying it is helping stabilize the nation’s housing market. Senate Democrats have announced plans to extend the credit until April 30, 2010, while expanding it to include higher-income Americans and some who already own homes.

Senate Finance Committee Chairman Max Baucus said today the new plan would offer a $6,500 credit for homebuyers who have lived in their prior residence for at least five years. Couples earning up to $225,000 and individuals up to $125,000 would qualify for the break, Baucus said. That’s up from the current $75,000 limit for individuals and $150,000 for couples.

“The success of the American economy is closely tied to the success of the housing market; by helping to stabilize the housing market, the homebuyer tax credit has helped to shore up the economy as it begins to recover,” said Baucus, a Montana Democrat. “This would enable an even greater number of potential homebuyers to take the credit.”

Lawmakers said they want to prevent home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression. More than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the homebuyer tax credits this year, according to the Treasury Department.

The Democrats’ proposal would extend the credit to home purchases under contract by April 30, 2010 so long as they close the sale within 60 days. Those buying homes worth more than $800,000 wouldn’t be eligible for the credit, said Baucus. Lawmakers also said they won’t extend the break beyond the new April 30, 2010 deadline.

The current tax credit is set to expire on November 30, 2009. The Senate could vote on this new bill as early as tomorrow.

Real Estate agents – Worldwide real estate companies directory and property buyers and sellers guide.

“Shadow Inventory” Adds Time to Nashville Recovery

According to a recent article in Barrons, there is a growing segment of 7.1 million homes in the US’s “shadow inventory” – more than 15 months worth at the current absorption rate of sales. These are homes and condos that are most likely headed for foreclosure – mortgages that are at least 60 days overdue, of which nearly 10% haven’t made a payment in two years.

The shadow inventory is in addition to the actual housing inventory of 3.6 million unsold residential property, more than an 8 month supply. Another 300,000 homes are added to the shadow inventory each month. Unfortunately, programs like Obama’s Making Home Affordable, which has generated more than 630,000 loan modifications so far, has not made much of a dent in this new potential inventory.

What It Means for Nashville

A two year inventory of unsold plus ‘shadow inventory probably means housing prices will continue to not improve by much very soon. Median home sale prices were $158,376 in August 2009. This price is just less than it was in January when the first wave of foreclosures was just hitting our market. I would expect a very similar result during the second wave, which should not be as big as the first.

Sellers: If you absolutely must sell your house, you might have to wait awhile before prices start to improve. If you don’t have to sell, then it might make more sense to stay put.

Buyers: You are in a great position. A second, yet smaller wave, means that there should be a decent amount of extremely desirable homes that can be bought at extremely attractive prices. But, don’t sleep on the good ones because with a smaller wave, there will be less cream and more vultures.

You should also understand that Nashville is not Miami, Phoenix or Las Vegas. Homes cannot be bought for 50 percent of value unless they are falling down and inhabitable. Our market never got that huge value increase and won’t get the huge value decline.

Lipman Group to Auction Off 30 Terrazzo Condos in Nashville

Terrazzo Auction

Terrazzo Auction flyer

Do you know that sinking feeling you get sometimes? You get a nagging feeling that you just cannot shake and you’re sure that something is about to go wrong, but you have no idea what it is. Well, I got that feeling tonight when I was awakened by our screaming newborn. Of course, at first I thought that my sinking feeling somehow involved our 4 week old, but then I walked over to my computer and downloaded what may be considered the beginning of the end for the Terrazzo and the Gulch.

A little more than a week ago I reported that Canyon Johnson, the money behind the Terrazzo had let Zeitlin Realtors go as the listing company for the project. A day later I also reported that the Lipman Group, a company that had never listed a high-rise condo project, was taking over and questioned that decision thought process. Now, I have come to fully realize the implications of this move and just how horrible it might be for Nashville as a whole. In fact, Larry Lipman’s company could be in danger of becoming the company known as “The real estate company that killed downtown Nashville living” if their risky scheme backfires.

It appears that in conjunction with the Boston-based auction consulting firm, Accelerated Marketing Partners, and locally operated United Country Auctions, the Lipman Group is going to forge into the great unknown of luxury high-rise auctions. By the way, do you know what United Country’s company slogan is? “America’s Rural Real Estate Company”! I am not kidding you, look at the website yourself. Holy crap Batman!

Well, it might not be that bad, Accelerated Marketing Partners has done several of these auctions in the past, but looking at their website, I then realized that these guys are just liquidators. Most of their auctions are in depleted markets like Atlanta and all over Florida, but I did see a few auctions in their home city of Boston and became hopeful once again. That is until I read the recent Boston.com news article about the results of the sale. The article clearly stated that some buyers purchased condos for up to 41% less than asking price. Whoa.

And why in the world are they holding the auction in a hotel ballroom a half mile from the building? It stands to reason they would want bidders to be in the actual building to build excitement on auction day. There’s a ton of space to hold the event in the more than 8,000 square foot vacant restaurant space on the ground floor. Is the building not good enough for these guys?

Let me recap the story so far. Terrazzo condo sales are not going so well and so the financier lets listing company go in favor of a high-rise unknown. High-rise unknown then partners with New England auction consulting firm and local farm auction company and plans to auction off 30 luxury condos in a unrelated hotel. In order to let the local real estate community know of this incredible opportunity, they fire off a mass email in the middle of the night. Maybe it’s me, but this thing seems doomed before they even start bid calling.

Maybe I am being overly hard on these guys, or maybe I am not. Either way, I really cannot wait to hear the reaction from the Bristol Group and MarketStreet Capital. I would hate to be the agent who sold a Terrazzo condo to their best client right now.

It seems to me that the result of this auction will be one of two things: 1) The auction will go well. The uniqueness and buzz creates a lot of awareness and energy that results in the condo buying public jumping off the fence and back into the market. The prices paid are very respectable and now the Terrazzo has effectively jumpstarted the downtown condo market and deserves a little praise. The rest of the condos in downtown don’t receive a price boost, but they all receive an interest boost and things are good, or 2) the auction is either only semi-successful or a flop and now everyone who was on the fence becomes a vocal naysayer. All of a sudden the downtown Nashville condo market becomes a punch line to real estate jokes and all condo projects are hurt from this failed attempt to sell units in just one ill-located building. Crosland, Bill Barkley, the Lipman Group, United Country and all others involved in this effort become a real estate anecdote to the downtown real estate discussion.

This morning the Tennessean came out with a story about the auction and managed to quote the CEO of Accelerated Marketing Partners as saying, “This will have major repercussions in Nashville in terms of value.” He went on to say, “People will look at these auctions to determine what they want to pay for properties in Nashville. Particularly in a market that has declined like this market, where there is a disconnect between buyers and sellers, this event will break the logjam.”

Clearly, this is a prepared statement that this guy has given in lots of other markets and clearly shows that  has not done very much research in Nashville. I don’t see a 6% year over year price decline as a “logjam”. It’s a shame that these guys take such pride in devaluating real estate markets.

See all condos for sale in The Terrazzo

Mortgage Applications Down as Rates Rise

Mortgage Rates 10-27-09

mortgage applications far mortgage rates rise

Mortgage applications declined for the second consecutive week and to their lowest level in over a month, as interest on 30-year fixed loans rose to 5.07 percent. The Mortgage Bankers Association reports that its index of loan applications fell 13.7 percent last week, as requests to refinance mortgages sank 16.8 percent and demand for purchase loans fell 7.6 percent. Also, demand for home loans is most likely cooling because the deadline to utilize the first-time home buyer credit is approaching in 34 days.

It’s not so much the new purchase mortgage applications that are worrisome, it’s more that real estate buyers are beginning to slip back into the “wait and see” mentality that can reverse the positive effects of what the first time buyer’s credit has begun to accomplish…

Nashville Convention Center Gets Support & Resistance

It’s clear to me that the new Nashville convention center is going to be built and all of the pubic opinions trust upon us by the media is simply entertaining noise. Of course, this is only my educated opinion and not the collective  opinion of the entire city. Well, when I read headlines like, “Nashville Sues to Seize Convention Center Land“, I am kind of tipped off.

Whenever I listen to a structured debate discussing whether or not Nashville needs a new convention center, the opposing argument always seems to come down to four main points. The first point is that we are currently in an economic recession and that it does not make sense to build something that costs $700 million. The second point is that the $700 million could be better spent on items like public education or possibly not even spent at all. The third point is that Gaylord has an adequate convention center already in place that makes the need for a convention center in downtown moot. The fourth point is if a new convention center is built, what in the world will happen to the old convention center. Will it sit vacant?

To point #1, I agree that we are currently in an economic downtown. This means that there are more Nashvillians out of work, the cost of materials have come down significantly and that we probably won’t be in a new recession once the convention center is complete. Actually, is there a better time to build? I make the argument that there is not. The cost of labor and materials are better than it has been in decades, the availability of skilled labor has never been as readily available and all economic indicators point to economic stabilization by late 2010, a full 2 years before the convention center would be complete. So, it stands to reason that Nashville will actually be perfectly positioned to take advantage of  new convention and hotel traffic in the second year of recovery. It is reported that the Music City Center will create 2,500 immediate new construction jobs early next year and more than 30,000 additional jobs once the center is complete. Even if those numbers are 20% too optimistic, doesn’t 24,000 new jobs sound great? If not, let me put that into perspective. 24,000 jobs are more jobs than there are residents of Spring Hill.

To point #2, I think there could be an argument that spending $700 million on public education would be good, but not for short term city growth. Every scholar who has ever studied the effects of investment in public education agrees that the return on investment is not fully realized for approximately a decade. Simply stated, it is a long term investment. Therefore, spending $700 million on education rather than on a convention center would be a very bad short term investment for the city (I do think that Nashville does need to invest long term in education though).

To point #3, I agree that Gaylord has a great hotel and conference center. What in the heck does that matter?!? Is Nashville not supposed to compete with Opryland? Last time I looked, a free market economy that depends upon competition as a key ingredient to success still exists in the United States. If Walgreens builds a pharmacy on one corner is CVS now forbidden to build a store within 5 miles of that new Walgreens location? Is Exxon now restricted from building a new gas station in a certain zip code because BP has “got it adequately covered”? Seriously, Gaylord is doing a great job creating public misinformation and dissent and has even been caught funding groups (Nashville Priorities) to make negative noise, but what in the world does it matter? Here is what I have to say, Gaylord, good luck competing with a newer, better located, non theme-park like, urban masterpiece. I would also like to thank them for decades of awesome Christmas light displays too.

To point #4, what in the world are you worried about? The current convention center is owned free and clear. There is no debt. In a worst case scenario, you could fire sale the darn thing to a greedy developer who could do whatever they want with the darn thing and still come out ahead. But, that’s probably not going to happen. There is already at least one natural tenant who has expressed strong interest, the Dallas-based Medical Trade Center. Problem solved. Medical trade center or fire sale. Either way, the current convention center won’t sit vacant and become a tax liability, I can promise you that.

In my opinion, this new convention center is not only needed, but it’s coming whether you like it or not. Not only that, according to my own fuzzy math, there is less than a 17% chance the taxpayers will ever have to contribute one penny to its construction or maintenance cost. In case you have not heard, you never had to pay a penny for the last one either. In fact before that current convention center was built, do you remember what industry dominated the 400 block of Broadway? Porn.

Convention Center Supporters

Virtually the entire business community supports the construction of a new downtown convention center in Nashville. There are some obvious supports like all of the chambers of commerce in the region, the Visitors Bureaus, hotels associations, Realtor associations, restaurant associations and downtown retailers. In addition to those you would expect, Tennessee State University, the Country Music Association, the Gospel Music Association, the Chamber Music Orchestra, the Songwriters Association International and even the Tennessean publically threw in support. Obviously, the entire music community believes this building is going to be an important part of their future success.

Convention Center Skeptics

The Nashville Priorities group, a privately funded dissent group is the most vocal opponent followed closely by misguided members of the general public. I feel like John Stossel, “give me a break”! I really am not aware of any other groups who oppose the construction of the new Music City Center, although, I hope that you will tell me who they are.

BTW – to Mayor Dean, FDR and Eisenhower would be proud. Very proud.

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