The Obama Administration is taking another crack at addressing a core problem hindering the economic recovery: underwater homeowners (that is, borrowers who owe more on their mortgages than their homes are worth) and the ripple-effects of that financial hardship. The Federal Housing Finance Agency announced plans Monday to revamp the three-year-old Home Affordable Refinance Program [HARP] to allow more underwater borrowers to refinance. Ideally, qualified homeowners who have been consistently paying their mortgages would be able to refinance their loans at lower rates thereby staving off the threat of default and freeing up spending money for other purposes. Both outcomes would ostensibly help the economy, if the program works exactly as designed. But given HARP’s lackluster results in its first three years of existence, the new initiative has its share of skeptics. Anthony Sanders, a finance professor at George Mason University, said a “fundamental disconnect” exists between HARP’s goal of lowering monthly mortgage payments and the larger economic issues facing many Americans. “There’s no evidence that lowering a mortgage payment a few hundred dollars a month prevents defaults,” he said. “Giving $200 a month to people who already have a job doesn’t really make any sense.” Homeowners aren’t defaulting on their mortgages over a few hundred dollars, he said. They’re defaulting because they’ve lost their job and can’t find another one, or have suffered some other financial catastrophe. To open HARP up to more financially strapped homeowners, the FHFA has removed an earlier cap that disqualified borrowers whose mortgages were valued at 125% or more than the value of their homes. The program is open only to those borrowers whose loans are backed by Fannie Mae and Freddie Mac , the troubled quasi-government entities that provide financing for an estimated 80% of all U.S. mortgages. (The government seized control of Fannie Mae and Freddie Mac in 2008 as they teetered on the verge of collapse.) “This is an appropriate balancing of risk that’s being borne by Fannie and Freddie, and hence the American taxpayer,” FHFA’s acting director, Edward DeMarco, said Monday during a conference call with reporters. “This will make HARP more available.” The Obama Administration claimed the original HARP program would help 5 million borrowers. But the actual number has been less than 900,000. The FHFA predicted Monday that by easing the restrictions on the old program and reducing some refinancing fees and streamlining the process as many as one million underwater homeowners could get help by 2013. Critics say it still barely makes a dent. In August, Corelogic, a housing research firm, said 11 million mortgages, or nearly 25% of all residential home loans, are underwater. The FHFA also hopes the revamped HARP gives banks with substantial mortgage portfolios additional incentives to participate. To that end, FHFA altered the program so that lenders won’t be forced to buy back HARP loans if underwriting problems are later discovered. Under the previous, tougher restrictions, banks had little incentive to refinance mortgages, said Leif Thomsen, CEO of Mortgage Master, a large Massachusetts home lender. Default rates haven’t reached critical mass for the big commercial banks, Thomsen explained, consequently they saw no reason to renegotiate a loan made at 6% interest down to 4%. Banks are, after all, in the business of making money by lending money, he noted. Besides, given the federal guidelines that capped underwater loans at 125% of the value of the property, many struggling homeowners couldn’t refinance anyway.  But lifting the cap should create strong competition for refinancing underwater loans, Thomsen predicted, a factor that could spark the big banks to renegotiate and refinance on their own or see all that refinancing business move to independent firms like Thomsen’s. “It’s about time that this program came out,” Thomsen said. “I’ve been calling for something like this for three years.” JPMorganChase (NYSE:JPM) is already on board, issuing a statement Monday in praise of the new HARP and saying it could save consumers as much as $2,500 a year. But Sanders said the program – and its creators – are still missing the point. “I think they’re making the assumption that everyone who saves money on a refinanced mortgage will spend it on consumer durables. But they might put it away in their savings account or put it aside for their kid’s college education, like they should have in the first place,” he said. Sanders said the government is essentially wasting its time on housing programs that he described as chronically “too small in scope” and off the mark in terms of targeting what’s really ailing the  U.S. economy. “The government needs to step out of the way and let the housing market heal itself,” he said. “Lack of jobs is what causing the problem right now.”

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Another Day, Another Housing Program

The Obama Administration is taking another crack at addressing a core problem hindering the economic recovery: underwater homeowners (that is, borrowers who owe more on their mortgages than their homes are worth) and the ripple-effects of that financial hardship. The Federal Housing Finance Agency announced plans Monday to revamp the three-year-old Home Affordable Refinance Program [HARP] to allow more underwater borrowers to refinance. Ideally, qualified homeowners who have been consistently paying their mortgages would be able to refinance their loans at lower rates thereby staving off the threat of default and freeing up spending money for other purposes. Both outcomes would ostensibly help the economy, if the program works exactly as designed. But given HARP’s lackluster results in its first three years of existence, the new initiative has its share of skeptics. Anthony Sanders, a finance professor at George Mason University, said a “fundamental disconnect” exists between HARP’s goal of lowering monthly mortgage payments and the larger economic issues facing many Americans. “There’s no evidence that lowering a mortgage payment a few hundred dollars a month prevents defaults,” he said. “Giving $200 a month to people who already have a job doesn’t really make any sense.” Homeowners aren’t defaulting on their mortgages over a few hundred dollars, he said. They’re defaulting because they’ve lost their job and can’t find another one, or have suffered some other financial catastrophe. To open HARP up to more financially strapped homeowners, the FHFA has removed an earlier cap that disqualified borrowers whose mortgages were valued at 125% or more than the value of their homes. The program is open only to those borrowers whose loans are backed by Fannie Mae and Freddie Mac , the troubled quasi-government entities that provide financing for an estimated 80% of all U.S. mortgages. (The government seized control of Fannie Mae and Freddie Mac in 2008 as they teetered on the verge of collapse.) “This is an appropriate balancing of risk that’s being borne by Fannie and Freddie, and hence the American taxpayer,” FHFA’s acting director, Edward DeMarco, said Monday during a conference call with reporters. “This will make HARP more available.” The Obama Administration claimed the original HARP program would help 5 million borrowers. But the actual number has been less than 900,000. The FHFA predicted Monday that by easing the restrictions on the old program and reducing some refinancing fees and streamlining the process as many as one million underwater homeowners could get help by 2013. Critics say it still barely makes a dent. In August, Corelogic, a housing research firm, said 11 million mortgages, or nearly 25% of all residential home loans, are underwater. The FHFA also hopes the revamped HARP gives banks with substantial mortgage portfolios additional incentives to participate. To that end, FHFA altered the program so that lenders won’t be forced to buy back HARP loans if underwriting problems are later discovered. Under the previous, tougher restrictions, banks had little incentive to refinance mortgages, said Leif Thomsen, CEO of Mortgage Master, a large Massachusetts home lender. Default rates haven’t reached critical mass for the big commercial banks, Thomsen explained, consequently they saw no reason to renegotiate a loan made at 6% interest down to 4%. Banks are, after all, in the business of making money by lending money, he noted. Besides, given the federal guidelines that capped underwater loans at 125% of the value of the property, many struggling homeowners couldn’t refinance anyway.  But lifting the cap should create strong competition for refinancing underwater loans, Thomsen predicted, a factor that could spark the big banks to renegotiate and refinance on their own or see all that refinancing business move to independent firms like Thomsen’s. “It’s about time that this program came out,” Thomsen said. “I’ve been calling for something like this for three years.” JPMorganChase (NYSE:JPM) is already on board, issuing a statement Monday in praise of the new HARP and saying it could save consumers as much as $2,500 a year. But Sanders said the program – and its creators – are still missing the point. “I think they’re making the assumption that everyone who saves money on a refinanced mortgage will spend it on consumer durables. But they might put it away in their savings account or put it aside for their kid’s college education, like they should have in the first place,” he said. Sanders said the government is essentially wasting its time on housing programs that he described as chronically “too small in scope” and off the mark in terms of targeting what’s really ailing the  U.S. economy. “The government needs to step out of the way and let the housing market heal itself,” he said. “Lack of jobs is what causing the problem right now.”

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Another Day, Another Housing Program

Overall housing starts in September beat expectations by a wide margin, the U.S. Commerce Department reported Wednesday, the surge coming primarily from multi-unit structures. Permits for new homes were down, however, which means the gains probably won’t last. With demand for single-family homes still stagnant, many Americans are turning to rental properties, which prompted the increase in multi-unit dwellings. Because of that, as well as the decrease in permit structures, housing experts are skeptical that the September data represent a meaningful shift in direction for the battered sector. “I’d love to see it as something concrete, but I just don’t see that happening,” said Steve Palm, president of Smart Numbers, an Atlanta-based real-estate data firm. The report showed that new housing construction jumped 15% to a seasonally-adjusted annual rate of 658,000 units, the biggest increase in 17 months. Analysts had predicted an increase of 590,000 new units. The lion’s share of the September increase — 51.3% — came from construction of buildings with two or more units.  Meanwhile, construction starts of single-family homes — by far the larger segment of the market — rose just 1.7%, according to the data. Palm described starts on multi-family dwellings as a “moving target” because the data is compiled differently around the country and is often skewed or misleading. Data on single-family homes is more uniform and therefore more telling as an indicator of the health of the housing market. “It’s an anomaly,” he said. Adding to the muted reaction from housing analysts is that permits for new construction, which are viewed as more meaningful than actual groundbreakings, fell 5% to a 594,000 annual rate. It was the lowest reading in five months as an inventory glut of existing homes caused by a rise in foreclosures over the summer appears to have curbed developers’ plans for building new homes. IHS Global Insight economist Patrick Newport explained that permits are more relevant than starts because “they are much better measured, less affected by unusual weather, such as hurricanes, and are forward looking.” “Added up, total permits were down — indicating that housing starts are likely to drop in October or November,” said Newport. “On balance, this was a mixed report.  The increase in starts is good for GDP growth and jobs.  The drop in permits indicates that September’s gains are not sustainable.  The report does not change the current direction of the housing market — a flat single-family market and a slowly improving multi-family market,” Newport concluded. Palm was more blunt. “We’re not going anywhere. We’re just plodding along. The economy definitely has to improve and housing isn’t going to lead us out of this,” he said.

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Housing Starts Jump, But Overall Data a Mixed Bag

Earnings reports, in particular from a handful of big banks, will draw investors’ attention next week. Tech giant Apple’s ( NASDAQ : AAPL) earnings are also due, the report arriving in the immediate aftermath of the untimely death of co-founder and long-time chief executive Steve Jobs . Industry leaders Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS) and Wells Fargo (NYSE: WFC) are all scheduled to report earnings. Each bank has its own story, none more compelling perhaps than Bank of America, which is facing problems on a number of fronts, not least backlash from customers angry about the bank’s plan to apply a $5 monthly fee for using debit cards. The rest, with the ever-dominant Goldman a likely exception, could be hampered by the difficult economy, which has dampened enthusiasm for the kind of big corporate deals for which these banks earn big fees. Apple’s new chief executive, Tim Cook , if he participates in the company’s earnings conference call, could face questions on the direction he intends to take Apple as competition in the consumer gadgets sector gets ever more intense. Earnings from bellwether companies IBM (NYSE: IBM) and Coca-Cola (NYSE: KO) are also due. Inflationary data comes out with the Producer Price Index released Tuesday and the Department of Labor’s September Consumer Price Index out Wednesday. The Federal Reserve has said repeatedly that inflation is a potential concern in the near future, but is not currently a high priority. Gas and food prices have leveled off somewhat since rising sharply earlier this year primarily due to catastrophic events worldwide. Data on September housing starts is due Wednesday. Many economists believe a broad and sustained economic recovery will begin with the housing sector. A glut of inventory and skittish buyers have hurt demand for months. Those dynamics aren’t likely to have changed in September. Existing home sales figures are due Thursday. Also on tap for next week is a report from European fiscal leaders on how to deal with Greek’s overwhelming debt. Any news out of Europe regarding the Greek debt crisis has drawn an immediate response from Wall Street , with good news prompting rallies and bad news prompting sell-offs.

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Week Ahead: Bank Earnings and Inflation Data

Investors next week will review housing data and its close ally, consumer confidence . Plummeting home prices have taken their toll on consumer confidence as homeowners have reined in spending in proportion to the shrinking value of their house. Factory data is also on tap from three regional manufacturing surveys. Sales of new single-family homes in August is out Monday. The number has been stagnant at about 300,000 for several months and a boost is needed if the battered construction sector is to regain its footing. During the housing boom early last decade, a massive inventory glut of new homes was created in areas such as Las Vegas, Florida and areas of Southern California. Many of the homes were built on speculation, but no buyers ever materialized. The market is still trying to work through that glut and construction workers are suffering the consequences. The National Association of Realtors Pending Homes Sales Index for August is due Thursday. The influential S&P/Case-Shiller Home Price Index for July is due Tuesday. The U.S. housing woes are well documented and a revival of that sector is key to the overall economic recovery. But foreclosures are on the rise again, jumping 7% in August over July, according to housing research firm RealtyTrac, and default notices filed against delinquent homeowners rose 33% in August from the prior month. With foreclosures back on the rise and inventories glutted, home prices are expected to fall. The Wall Street Journal this week, citing a recent survey of 100 economists, said home prices, already down nearly 32% from their 2005 highs, are expected to drop another 2.5% this year and rise just 1.1% annually through 2015. All of these factors will weigh heavily on the Conference Board’s Consumer Confidence Index for September, also due Tuesday. Consumer spending makes up 70% of the U.S. economy, but most consumers are holding onto every dollar they can. The ripple effect has been devastating. The final reading of the Reuters/University of Michigan Consumer Sentiment Index for September is due Friday. The index currently stands at 57.8, the same level at the worst of the recent financial crisis. The Dallas Fed’s Texas Manufacturing Outlook is out Monday; the Richmond Fed Manufacturing Survey is due Tuesday; and the Kansas City Survey of Manufacturing on Thursday. A second revision of second quarter U.S. GDP is due Thursday, and a report on August personal income and spending is out Friday.

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Week Ahead: Housing and Consumer Confidence

It’s a relatively light calendar for economic data next week, perhaps offering a breather to harried investors. A deluge of bad economic news this week sent stock markets on a roller coaster, soaring up and down (mostly down) as traders tried to gauge the impact of another possible recession. A lot of attention will be focused on a speech scheduled for Friday by Federal Reserve Chairman Ben Bernanke at an annual conference in Jackson Hole, Wyo., hosted by the Kansas City Fed. It’s anyone’s guess what, if anything, new Bernanke has to say about the direction of the U.S. economy and the Fed ’s ability to impact that direction. On Aug. 9, the Fed said it plans to keep interest rates at extraordinarily low levels at least until mid-2013. It’s also unclear, given the current political climate as well as widespread skepticism over the success of earlier Fed measures, what other options the Fed has at its disposal. Before Bernanke’s speech investors can digest data on new home sales due Tuesday. The numbers are expected to be weak, as the housing market has remained consistently sluggish since the real estate bubble burst in 2008. A report on durable goods is due Wednesday. Analysts believe the July report will show some improvement over dreadful June numbers. The data is viewed as a good gauge of business investment. A second reading on second-quarter GDP, scheduled for release Friday, is expected to put numbers to the strong belief that the economy is slowing. Economists this week lined up to issue reports slashing growth expectations for the rest of the year. The Richmond Federal Reserve manufacturing survey is due Tuesday and the Kansas City Federal Reserve’s survey will be released on Thursday. There’s little reason to believe either will be markedly better than a similar regional manufacturing report issued this week by the Philadelphia Fed, which was awful. The final reading of the Reuters/University of Michigan Consumer Sentiment Index is due on Friday. Consumer confidence has melted in recent months as unemployment has remained high and the value of homes continues to plummet. Data on mass layoff activity for July is due Tuesday, while initial jobless claims for the week ended August 20 are due Thursday.

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Week Ahead: Spotlight on Bernanke in Jackson Hole

It will take years before we can truly assess how far out of whack the real estate market was at the pinnacle of the housing boom last decade. That’s important to remember when assessing the current dismal state of the U.S. housing market. Lax lending standards that in 2005 allowed almost anyone to get a mortgage have been tightened considerably in the past couple of years — so much so that many housing experts believe the tougher standards are what’s blocking a sustained housing recovery.  The often-used analogy is that of a pendulum that swung a long way in one direction and has now inevitably swung a nearly equal distance in the opposite direction. Of course, no one questions why the new standards emerged. They are a direct response to a lending-era dominated by no income/no asset mortgages, otherwise known as “no doc” or liar loans.  The dilemma now is how to find a comfortable middle-ground.  Specifically, what’s needed are lending standards that balance the need for accountability and responsibility while at the same time fulfilling the important function that mortgages have served for decades — making homeownership an affordable option for millions of Americans. Nothing less than the health of the U.S. economy depends on it.  (New Home Sales Slip in June ) The U.S. has a “national priority of homeownership,” said Ron Phipps, president of the National Association of Realtors . “But it has to be sustainable. That should be the preface to the conversation about homeownership in the U.S.” The mortgage industry has taken important strides toward that goal of sustainability, reining in its practices in an effort to ensure that borrowers can actually repay their loans. There’s a movement afoot that would establish a national set of mortgage servicing standards designed to reduce costs to lenders and consumers alike, and also make the process more transparent and less cumbersome and confusing. The Mortgage Bankers Association supports the effort, arguing that consumers and lenders would benefit from a uniform set of standards that would cut down on paperwork and reduce legal expenses for both borrowers and lenders by significantly streamlining the process. “We at MBA believe that a consolidated national servicing standard, if developed in a cooperative manner, could stimulate much needed reform of a residential mortgage loan servicing system that has admittedly failed a great number of consumers during the recent foreclosure crisis,” MBA President David Stevens said during testimony earlier this month before Congress. Meanwhile, the Federal Reserve recently introduced a proposal that would require mortgage lenders to verify borrowers’ incomes and outstanding debt before approving a home loan. The idea is similar to the MBA supported measures: that is, create safeguards so that consumers borrow within their means and lenders make responsible loans. The Fed is currently seeking public comment on the plan. But while one half of the equation is making strides toward a solution as lenders address the folly of giving loans to people who can’t repay them, the other half of the equation is still in flux. That part of the solution will require a flexibility that allows otherwise qualified borrowers to obtain mortgages even it their finances — monthly income, credit history, outstanding debt, etc. — don’t precisely fit the rigid lending restrictions now in place. Phipps praised the new industry policies targeting “the terrible underwriting practices of the past decade that contributed to the real estate meltdown and subsequent financial crisis.”  He warned, however, that “punishing homeowners with overly stringent requirements is unnecessary and harmful.” The NAR believes U.S. home sales could potentially jump 15% — an estimated 750,000 sales in 2010 — if lending standards were relaxed just a bit. Industry experts are virtually unanimous in their belief that uniform standards for underwriters would benefit the mortgage industry (and ultimately the housing market), but uniform standards for borrowers do not. In fact, that’s already proving to be true. Patty Raymo, chief operating officer at Mortgage Master, a large Massachusetts-based residential mortgage lender, said stringent uniform lending standards, for the most part set by secondary market investors rather than the actual lenders, are excluding many qualified home buyers. Raymo cited the tough guidelines used by automated underwriting engines to determine if a borrower is qualified. Lenders plug a potential borrower’s financial data into these engines, and the software removes any human element of the decision making process. “In today’s world you can either get a loan or you can’t. There’s no gray area,” said Raymo. “The pendulum has definitely swung.” Consider, for example, debt ratio standards now required by the automated underwriting engines. Currently, a potential borrower’s debt ratio can’t exceed 45% of their gross monthly income. If the debt ratio falls “outside of that box,” in the parlance of the mortgage industry, the borrower’s application is automatically rejected. In the past, “common sense lending” allowed a lending officer to review a file and formulate their own decision. That process went awry during the housing boom, but now it has become overly restrictive. “It’s probably the most frustrating it’s been since I’ve been in the business. You see a loan that makes sense but it can’t get done because it doesn’t fit into the box. The automated underwriting engine probably  wouldn’t allow it, so you can’t do it. It would be nice if we get back to a point where we were able to make a decision outside that box,” said Raymo. The reason those boxes are so inflexible is that the secondary market for mortgages comprised of the big Wall Street investment banks — Citigroup (NYSE:C), Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) among them — are still healing from the collapse of the subprime mortgage market and remain extremely skittish toward risk. The big banks have made it clear to the lenders on the front lines of the mortgage industry — Mortgage Master, for example — that if a loan doesn’t pass their muster they won’t buy it. Consequently, if the big Wall Street banks won’t buy a loan the lenders won’t approve it. Raymo said she expects the big banks will eventually become less risk averse. “Eventually they will loosen up and there will be a balance but it’s going to take some time because everyone is still digging out from the mess that occurred,” she said.

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The Real Housing Fix: Common-Sense Lending

When they’re not fretting over the nation’s credit rating, investors next week will be dissecting second-quarter earnings reports and keeping tabs on key housing data. Corporate earnings have been strong throughout 2011, fueling stock market growth. But those results  haven’t translated into support for the broader U.S. economy. Companies that stripped down during the worst of the recent financial crisis seem to be doing more with less. Consequently, with the economy still in flux, they’re in no hurry to expand their businesses and hire new employees. Shareholders have benefited and workers’ 401k programs are being replenished, but U.S. unemployment remains stubbornly high. Bellwether companies set to report their quarterly results next week, according to Reuters, include IBM (NYSE:IBM), Halliburton (NYSE:HAL), Charles Schwab ( NASDAQ :SCHW) and Gannett (NYSE:GCI) on Monday; Apple (NASDAQ:AAPL), Bank of America (NYSE:BAC), Bank of New York Mellon (NYSE:BK) Coca-Cola (NYSE:KO), Goldman Sachs (NYSE:GS), Johnson & Johnson (NYSE:JNJ) and Wells Fargo (NYSE:WFC) on Tuesday; American Express (NYSE:AXP), eBay (NASDAQ:EBAY), and Intel (NASDAQ:INTC) on Wednesday; Chubb Corp . (NYSE:CB), Microsoft (NASDAQ:MSFT), and Travelers (NYSE:TRV) on Thursday; and Caterpillar (NYSE:CAT) and General Electric (NYSE:GE) on Friday. On the housing front, the July NAHB/Wells Fargo Housing Market Index is due Monday. The June data on housing starts and permits is due Tuesday. The National Association of Realtors will release data on sales of existing homes on Wednesday. Housing data was dreadful throughout the spring and economists are hoping the numbers start to tick upward, although there’s no pressing reason to believe they will. Housing prices are still tumbling and inventories are still overflowing with foreclosed homes. Potential buyers are sitting on the sidelines wondering how low prices will fall before they should step in. It will be a slow week for economic data, but not barren. The Philadelphia Fed’s Business Outlook for July and the Conference Board’s Leading Economic Indicator for June are both due Thursday. Meanwhile, of course, the debate over raising the debt ceiling and how best to rein in future deficits will go on in Washington, D.C.

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Week Ahead: A Flood Of 2Q Earnings

Most investors next week will undoubtedly be looking forward to the long July Fourth holiday weekend. Everyone could use a breather after weeks of bad economic news and stock market losses. Nevertheless, a good bit of economic data will be released. The ISM Manufacturing Index for June is due Friday and it may be the most significant report all week. The ISM index is the most widely watched factory report and it follows closely in the wake of disappointing regional manufacturing data. Economists expect the index to fall to 51.8 in June from 53.5 in May. For months manufacturing had been a lone bright spot on an otherwise grim economic landscape. But that may be changing; the regional data was impacted by bad weather across many regions of the U.S. — notably tornadoes and flooding in the Midwest — which disrupted supply chains. Three Federal Reserve District Bank surveys of manufacturing are due ahead of the ISM report and they should give a preview of what’s to come on a national scale. The Dallas Fed’s Texas Manufacturing Outlook is due Monday and it may offer the most optimistic view. The Richmond Fed’s Survey of Manufacturing is due Tuesday and the Kansas City Fed Manufacturing Survey is due Thursday. The Chicago Purchasing Managers index, used to gauge demand for goods made in factories, is due on Thursday. Consumer spending and personal income data for May are due on Monday. Meanwhile, more bad news is expected from the housing sector. The S&P/Case-Shiller Home Price Index for April is due Tuesday and the numbers are expected to show a continued decline in home values. Pending home sale data for May is due Wednesday. The U.S. housing sector has been just as stubborn as the labor market in its refusal to participate in a recovery. Consumer confidence has been rocked as homeowners see the value of their homes decline and with it the equity that provided a cushion against financial emergencies. Speaking of consumer confidence, the Conference Board’s Consumer Confidence Index will be released Tuesday and the final take on the Reuters/University of Michigan Consumer Sentiment Index is due Friday. The only hope for an increase in these indexes stems from a slight drop in gas prices as oil prices have dipped in recent weeks to around $90 a barrel from over $110 a barrel in the spring. Car makers on Friday will release figures on June sales of North America-produced motor vehicles.

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Week Ahead: Lots of Data Ahead of July 4th Holiday

DENVER- The Bascom Group of Irvine, CA and the Carlyle Group have acquired a portfolio of two properties totaling 840 units in the Denver Metro region in this week’s roundup of commercial real estate news in the West. The portfolio consists of Fairways at Lowry, a 450-unit complex in Aurora, CO acquired for $16.65 million and the 390-unit Village at Coronado in Thornton, CO acquired for $15 …

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Bascom Partnership Buys 840 Units for $32M

There are some people that find venturing into commercial real estate investments to be challenging and time-consuming — not to mention the hefty amount of cash that is needed in order to get started.

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Find The Perfect Commercial Real Estate For You To Start A Great Business In The Florida Market

Everyone will be watching the Federal Reserve next week, trying to read the tea leaves to determine how Fed policy makers will respond to the recent spate of lousy economic news. The Federal Open Market Committee will meet on Tuesday and Wednesday, to be followed by the release of formal announcements of Fed positions and a press conference by Chairman Ben Bernanke . Bernanke’s press conference on Wednesday afternoon will be his second and part of the Fed ’s new policy of seeking to explain its decisions to an often nonplussed American public. Bernanke’s first press conference in April was well received. No one expects any significant changes in Fed monetary policy. Interest rates will almost certainly remain at a range of 0% to 0.25%, where they’ve been for two and a half years, and there will be no expansion of the quantitative easing program scheduled to end in June. But, as has been the case for months now, investors will be closely parsing Fed language for any indication that fiscal policy could be shifting down the road. Earlier this year the thought was that the Fed would be tightening fiscal policy as the economic recovery took hold. But that sentiment has changed in the past few weeks as one economic report after another has indicated that a real recovery may be some ways off. Housing data due next week is likely to receive most of the attention in an otherwise sparse week for economic reports. A report on May sales of existing homes is due Tuesday, and one for new single-family houses on Thursday. Home sales have been at a virtual standstill for months as potential buyers sit on the sidelines waiting for prices to fall even further. The FHFA House Price Index for April is due Wednesday. Late last month, a widely watched housing index showed home values have fallen in 20 large markets. That trend isn’t expected to end any time soon. The Richmond Fed’s Survey of Manufacturing for June is due Tuesday and follows two disappointing reports from the New York and Philadelphia regions. The New York and Philadelphia reports were especially troubling because manufacturing had been one of the lone bright spots on an otherwise bleak economic landscape. In fact, the lousy manufacturing numbers out of the Northeast paired with higher inflation numbers led some to raise the specter of stagflation, a dreaded economic condition in which prices go higher but economic growth is stagnant.   An advance report on durable goods orders for May is due Friday, as is the release of the third estimate of first-quarter GDP.

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Week Ahead: FOMC and Bernanke’s Second Press Conference

Tap Tonio today releases Commercial Real Estate Analysis Your Way 1.0 for iPhone, iPod touch and iPad users. The application is a comprehensive tool for investment property hunting, allowing investors to quickly assess potential real estate investment property without sacrificing the detailed financial calculations and metrics that help drive decisions. Commercial Real Estate Analysis Your Way …

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Commercial Real Estate Analysis Your Way 1.0 for iPhone

Before anyone starts talking about a housing recovery, the conversation needs to shift from foreclosures to closings. For months, the only “good news” out of the relentlessly stagnant U.S. housing market has been reports that foreclosures are slowing. On Thursday, for instance, RealtyTrac reported that foreclosure filings in May fell for the eighth straight month and are down 33% from a year ago. But that was inevitable given the fact that there is a finite number of homes in America and record numbers of foreclosures were filed in 2009 and 2010 as homeowners struggled to pay their mortgages during the worst of the recent financial crisis. Simply put, it was almost statistically impossible for the number of foreclosures to keep rising. The numbers eventually had to go down so there’s really nothing positive to glean from these figures. Barry Bramlett, president of Equity Depot LLC, which compiles real estate data in Georgia, compared the steady decline in foreclosures to an army that on each successive day of a battle loses fewer soldiers. “You start out with a large number of soldiers and on the first day of battle a large number are lost. The next day there are fewer soldiers to lose so fewer are lost, and so on and so on,” he said. A battle with lots of casualties seems an apt metaphor for the current housing market. And there doesn’t seem to be any end in sight for this war. Last week Ara Hovnanian , CEO of the giant homebuilder Hovnanian Enterprises (NYSE: HOV), sought during a conference call with analysts to ease concerns that the prolonged housing slump was taking a heavy toll on his business. He said at one point, “We remain confident that we have the liquidity to weather the remainder of this downturn, and will continue to position ourselves in preparation for the inevitable housing recovery.” But when is inevitable? No one seems to know. Jay Butler, an associate professor of real estate at Arizona State University, said it all depends on your definition of recovery. According to Butler, for many Americans recovery will mean that their mortgages are no longer ‘underwater,’ an increasingly common predicament in which homeowners have seen the value of their homes fall so much that they owe more than their home is worth. Underwater mortgages have been cited as a primary reason so many homeowners have defaulted on their loans, forcing foreclosure. The thought being, why continue to make monthly payments on a $400,000 mortgage when the house is now worth only $300,000?  Underwater mortgages have also cut into the housing market because homeowners who owe more than their homes are worth can’t sell without incurring significant losses. Butler said that, for others, the key to a recovery will be when “the housing market is driven by owner-occupants, not foreclosed properties.” “Typically, when one thinks of housing the main theme is people wanting to buy a place for their family. Now, foreclosures are the dominant force,” he said. Butler said recovery could be “many years down the line” in hard hit areas of the country such as Phoenix. In less beleaguered regions such as Texas, perhaps not as long, he said. There are many obstacles that need to be overcome, some of them specific to the industry itself as the pendulum has swung sharply from the lax lending standards of a decade ago to a markedly different lending environment today. Now, potential homeowners face increasingly tougher loan-qualification guidelines, lower limits on U.S. Federal Housing Administration-backed mortgages and higher down-payment requirements. While a common-sense approach to lending might have avoided the catastrophic fallout from last decade’s housing bubble, the sharp turn in the other direction is now acting as an impediment to lifting the housing market out of its doldrums.   The rest of the economy isn’t helping either. “It’s been two-and-a-half years and we’re still heading down,” said Steve Palm, president of Smart Numbers, an Atlanta-based real estate data firm. That trajectory isn’t expected to change if unemployment continues to hover above 9%. “Housing will not lead us out of this thing,” said Palm. “We’ve got to get businesses to start hiring.” A significantly reduced unemployment rate is widely seen as the lone economic index that could single-handedly affect the housing market. But in lieu of that unlikely scenario it will take jumps in a range of housing-related data points — sale closings, homes under contract, building permits, etc. — before anyone is convinced the housing market is turning around. Bramlett said none of those numbers is likely to move higher while a huge glut of housing inventory remains. “Nothing is going to change while there’s that glut,” he said. “Until that changes I don’t see anything driving any prices upward.” But jobs are the key. High unemployment bleeds across all sectors of the economy and has impacted housing in particular. Said Bramlett: “There is no mobility right now, people aren’t moving for jobs. It used to be that when you got a better job you got a better house. Now no one is getting that better job so they’re not moving into that better house. It’s unchartered territory at the moment.”

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Housing Recovery Begins When Foreclosures Turn To Closings

At the turn of the century, retail developers were in love with outdoor suburban plazas. Today, malls are going back indoors — but with a twist. They are now family destinations.

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Slideshow: Malls get a makeover

And because of the purchasing power of its population and healthy economy, Florida is indeed a good place to start your business. Fortunately, there are plenty of businesses in the state.

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Acquire Florida Commercial Real Estate the Right Way

Many businesses that operate within the Florida State now seem to go for the option of leasing commercial space that goes for a rate that is somewhat on the rise while some of the others prefer to simply purchase commercial real estate in which they might be able to operate more smoothly.

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Leasing Florida Commercial Real Estate Be Sure To Set The Foundation Properly From The Very Start

Cassidy Turley represented parties in these transactions:

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Commercial real estate notes

Commercial real estate developer Akridge announces that US Premier Office Equities, a fund sponsored by USAA Real Estate Company, has closed on the purchase of 700 Sixth Street, NW, in DC’s East End submarket.

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USAA Real Estate Company Affiliate Purchases 700 Sixth Street from Akridge

LoopNet, Inc. , a leading provider of commercial real estate marketing, technology and information services and operator of the most heavily trafficked commercial real estate marketplace, today announced that LoopNet enterprise client The Shopping Center Group , one of the country’s leading retail real estate advisory companies, has been honored with a 2011 “Digie” award for its private label …

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LoopNet’s iPad/iPhone App for Enterprise Solution Customer – The Shopping Center Group – Wins 2011 "Digie" Award at …

Ten dollars in New York can buy you a martini, an I Heart New York T-shirt, four subway rides and for a lucky few, an East Village apartment.

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Psst. Buddy. Want a NYC apartment for $10?

The outlook among U.S. homebuilders has been grim all year. This month, it became grimmer.

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US builders’ outlook falls amid weakening sales

The house sits on pastoral acreage in the rural Idaho countryside. At a price less than $180,000, it seemed a steal — until its owners discovered it was infested with hundreds of snakes.

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‘Satan’s lair’: Family flees snake-infested home

Bank of America Corp unnecessarily burdened U.S. regulators who were reviewing the mortgage giant’s foreclosure practices, according to a court filing.

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Bank of America delayed foreclosure review

Apartment dwellers, long happy to sidestep the drama homeowners have suffered in the housing market, are now facing their own downside in the form of sharply rising rents.

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Renters are next victims of housing market

For a small but growing number of people, the only way to get a house sold is to resort to financing provided by the seller. It’s risky business.

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Home sellers court risks with last-resort loans

Economic data tied to inflation and consumer sentiment will garner investors’ attention next week. The past few weeks have brought a deluge of bad economic news related to housing, labor and manufacturing, and that isn’t expected to change next week. The May Producer Price Index , due for release on Tuesday, and the Consumer Price Index , set for release Wednesday, are widely watched inflation gauges. Both indexes are expected to show rising inflationary pressure due to soaring commodity prices. The indexes probably won’t show increases as large as in March and April, however, because fuel costs have leveled off somewhat, reducing prices at the gas pump. A month ago a gallon of gasoline was hovering near $4. Now it’s down to about $3.70. The May data on retail and food sales are due Tuesday and the numbers are expected to be weak due to the unexpectedly soft labor market . In May the unemployment rate unexpectedly jumped to 9.1% and the number of jobs created fell precipitously from previous months. Fewer people working will undoubtedly eat into retail and food sales. In addition, the natural disaster in Japan has reduced car inventories in the U.S., which will cut into May car sales. The June preliminary Reuters/University of Michigan Consumer Sentiment Index is due Friday. Forecasters believe consumer sentiment will be tied directly to the lower employment figures. If people feel they are less likely to find a job, or that their job may be in peril, they are less likely to spend money. That’s significant because consumer spending makes up about 70% of the U.S. economy. The National Association of Home Builders / Wells Fargo Housing Market Index for June is due Wednesday. The housing sector has been slumping for months with no end in sight. The index will reflect that slump. More housing reports are due Thursday with data tied to housing starts and building permits issued in May. The numbers have barely moved for nearly a year and that isn’t expected to change. Two manufacturing sector gauges are also due next week: the New York Federal Reserve ’s Empire State Survey on Wednesday, and the Philadelphia Fed’s Business Outlook on Thursday. Once a beacon of light in an otherwise bleak economic landscape, manufacturing has also shown weakness recently. Data related to May industrial production and capacity utilization is due Wednesday.

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Week Ahead: Inflation and Consumer Sentiment Data

Proposed rules sparked by the financial industry meltdown could have the effect of shutting may lower-income buyers out of the mortgage market, critics say.

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Proposal could shut many out of housing market

After peaking at 50 percent in 2006, the African-American homeownership rate has now fallen to 44.8 percent, Census Bureau data show. By comparison, the homeownership rate for whites in the U.S. is 74.1 percent, and the nation’s overall homeownership rate currently stands at 66.4 percent.

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theGrio: Dream of black home ownership fading

The Obama administration is blaming the three largest U.S. mortgage lenders for the failures of its foreclosure-prevention program. It says they’ve done little to help people at risk of losing their homes.

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Gov’t faults 3 lenders over mortgage-aid efforts

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Sponsored By:

Falling U.S. home prices have shrunk equity so much that the proportion of their homes that Americans actually own is near its lowest point since World War II. 

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Americans’ home equity near a record low

But continued debt woes and tight corporate spending could temper the recovery, and office space demand is likely to lag.

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Commercial real estate market makes a comeback

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This week’s People of Note includes the following markets: Charlotte, Chicago, Houston, Los Angeles and Raleigh/Durham. LOS ANGELES Colliers Hires Algermissen as EVP Steve Algermissen joined the downtown Los Angeles office of Colliers International as executive vice president. The 28-year commercial real estate broker specializes in the sale and joint venture of retail, office and ground up development in Southern California. Algermissen…

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CoStar’s People of Note (May 29-June 3)

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Bernard Madoff’s brother has his New York mansion on the market for $6.5 million.

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Madoff’s brother selling swindler’s NY mansion

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With the U.S. hotel sector firmly in recovery mode, the number of large hotel investment sales has continued to rise in the second quarter. More properties are coming onto the market in response to a growing amount of capital seeking hotel investment, with private-equity funds, institutional buyers and other types of buyers joining REITs in the competition for high quality lodging assets. The already-hot pace of deals seems to have accelerated…

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Investors Jump Back Into Rebounding Hotel Market

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Through an aggressive push in Washington, DC, to cut costs and improve operational efficiencies, the federal government’s listings of properties for sale could balloon from less than a hundred or so to include potentially thousands of properties – and also, reduce the government’s reliance on leased space. The effort is already influencing how landlords and brokers make decisions affecting commercial real estate . With pressure building to lower…

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Excess Federal Property a Game Changer for Commercial Real Estate

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Alexandria Real Estate Equities Inc. raised about $452 million from a common stock offering. The company intends initially to use the net proceeds to reduce the outstanding balance of its borrowings. American Campus Communities Inc. closed a combined $650 million credit facility, consisting of a $450 million unsecured revolving credit facility and a $200 million unsecured term loan facility. The initial term of the revolving credit facility is…

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Real Money: Corporate & Property Financings and Note Buys & Sells

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Buoyed by positive same-store sales and solid optimism among restaurant operators for continued growth, the outlook for the restaurant industry remained positive in April. The National Restaurant Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.9 in April, essentially unchanged from a level of 101.0 in March. In addition, April represented…

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Restaurant Industry Outlook Remains Positive

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Government Properties Income Trust acquired 305 E. 46th Street in New York City from Extell Development Company for $114 million, or approximately $742 per square foot. The 16-story, 153,689-square-foot office building was built in 1928 and is located between First and Second Ave. in the United Nations submarket. The building currently houses the United Nations in a lease through 2018. James Gross of Williamson, Picket, Gross, Inc. represented…

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Government Properties Income Trust Acquires 305 E 46th for $114M

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Cassidy Turley announced its intention to acquire the brokerage and property management operations of Atlanta-based commercial real estate services firm Carter, a move that would gain it a significant foothold in the Atlanta and Central Florida markets. Carter, founded in 1958, employs 350 professionals at its headquarters and full-service office in Atlanta along with a full-service office in Tampa and other offices around the country. The firm…

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Updated: Cassidy Turley Bolsters Southeast Presence With Carter Acquisition

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Jones Lang LaSalle and Pacific Medical Buildings have formed a strategic alliance to provider development, planning and financing services to health care organizations. The venture combines San Diego-based PMB’s track record of financing and developing health-care facilities with JLL’s consulting and development expertise, local capabilities and national business relationships. The firms will assist providers with strategic and development planning…

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Jones Lang LaSalle Aligns With MOB Developer

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Morgans Hotel Group sold two hotels in New York City to Felcor Lodging Trust for $140 million, or approximately $801 per square foot. The deal includes the 168-room Royalton Hotel located at 44 W. 44th St. and the 114-room Morgans Hotel at 237-239 Madison Ave. The two hotels total 175,000 square feet and have been recently renovated with more than $32 million in improvements in the last three years. Morgans Hotel Group will continue to manage…

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Morgans Hotel Group Sells Two for $140M

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Five years ago, practically anyone could get a mortgage and no one believed real estate prices would ever stop rising. Now, hardly anyone can get a mortgage and no one knows when home prices will stop falling. It’s gotten so bad that for many young couples a key element of the American dream — buying a home of their own — has been put on hold in favor of renting. It just makes more financial sense right now. “Not too long ago rent used to be a four letter word,” said Mike Larsen, a real estate analyst with Weiss Research.

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Another high-tech giant agreed to take up residence at Moffett Towers, a 1.8 million-square-foot office and research and development campus in Sunnyvale, CA. Microsoft Corp. signed a long-term agreement to lease 237,000 square feet of office space at 1020 Enterprise Way at Moffitt Towers, developed by San Francisco-based Jay Paul Co. The world’s largest software provider will relocate and expand several business units currently based in Palo Alto…

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Lease Up: Microsoft To Move Palo Alto, Mountain View Operations Into Sunnyvale Tower

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The McClatchy Co. (NYSE: MNI) has sold 14 acres of waterfront land for $236 million. The buyer, Bayfront 2011 Property LLC, is a subsidiary of Genting Malaysia Berhad, part of a group of international developers and operators of destination resorts in the U.S., U.K. and Asia. The site is currently home to Miami Herald Media Co.’s headquarters and an adjacent parking lot. The seven-story waterfront office building totals 604,000 square feet of…

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McClatchy Sells Miami Waterfront for $236M

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In a week shortened by the Memorial Day holiday, all eyes will be on the monthly employment report for May due on Friday. Economists expect May nonfarm payrolls to show an increase of about 200,000 and for the unemployment rate to drop slightly to 8.9% Stubbornly high unemployment has been a thorn in the side of the U.S. economic recovery. The high jobless rate bleeds into virtually every other facet of the economy, affecting consumer spending, which makes up 70% of the U.S. economy, and cutting into another long-suffering sector, housing. The modest improvements expected in the May numbers continue to confirm what economists said months ago — the economic recovery is going to be a long, slow slog. Other job-related economic indicators due next week include the ADP National Employment Report for May on Wednesday. Coming ahead of the government’s monthly job report, the ADP numbers frequently offer a preview of what’s likely to come. Also due on Wednesday is the Challenger report on layoff intentions for May. While hiring has been spotty for months as companies question whether the economy is strong enough to expand, the number of companies actually slashing payroll has fallen, according recent Challenger reports. That trend is expected to continue in May. Weather could play a role keeping weekly initial jobless claims at a high level. The report, due Thursday, could be impacted by the flooding of the Mississippi River and the tornadoes that have destroyed towns and wreaked havoc across the Midwest. Those natural disasters could impact jobless claims for several weeks to come. The Conference Board’s Consumer Confidence Index for May is due Tuesday. Confidence is expected to have risen in May as political turmoil in Middle East has eased, lowering concerns for fuel shortages. Gasoline prices, soaring through most of the spring, leveled off ahead of the Memorial Day weekend and the unofficial kickoff of summer. “There is some relief for consumers and retailers, since gasoline prices started falling in the latter part of May after briefly crossing over and then dipping below the $4 per gallon mark. This has boosted consumer confidence and will help increase spending as we enter the summer season,” said IHS Global Insight economist Chris Christopher. Housing data in the form of the S&P/Case-Shiller Home Price Index for March is due Tuesday. Home values continue to decline due to bloated inventories. It’s a bit of a self-fulfilling prophecy as buyers delay purchases, hoping prices will fall even further. And prices continue to fall. The severe weather could also affect economic reports due from the Institute for Supply Management, which will release its data for manufacturing and non-manufacturing on Wednesday and Friday, respectively. Flooding and tornadoes around the country have disrupted supply chains, making it harder for factories to distribute their goods.

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Week Ahead: May Jobs Report Takes Center Stage

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In a move that would gain it a significant foothold in the Atlanta and Central Florida markets, Cassidy Turley announced its intention to acquire the brokerage and property management operations of commercial real estate services firm Carter. Carter, which employs 350 professionals at its headquarters and full-service office in Atlanta along with a a full-service office in Tampa and offices around the country, will continue to operate and grow…

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Cassidy Turley to Acquire Atlanta-based Carter’s Brokerage, Property Mgt Business

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This week’s People of Note includes the following markets: Atlanta, Dallas/Fort Worth, Denver, Los Angeles, New York City, Phoenix, San Francisco and South Florida. DENVER CBRE Taps Barrett as Global Corporate Services SVP Workplace strategy specialist Sharon Barrett joined CB Richard Ellis in Denver as senior vice president of global corporate services. The 25-year industry veteran is a former senior director at Cushman & Wakefield and founding…

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CoStar’s People of Note (May 22-28)

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With occupancies and rents beginning to rise in two of the country’s most prestigious biotechnology clusters, life science space is becoming one of the few niches enjoying bona fide development plays in 2011. Nowhere in the country has the tightening of lab space supply been more evident than in the supply-constrained San Francisco Bay Area — especially in South San Francisco and the San Francisco CBD, where leading life science owners and developers…

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LAND GRAB: Developers Ease Back Into Life Science Market As Supply Tightens

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