Two Projects in Default Dog Big Home Builders [Las Vegas]

Two Projects in Default Dog Big Home Builders [Las Vegas]

Two massive housing developments in Las Vegas, involving several of the nation’s largest home builders, have received default notices on about $765 million in debt, according to one of the partners in the projects.

John Ritter, chief executive of Las Vegas-based Focus Property Group, says that two joint ventures — involving Focus as well as builders Toll Brothers Inc., KB Home and Lennar Corp. among others — have each missed an interest payment in recent weeks and are in negotiations with lenders.

The default notices renew concerns about the risks that joint ventures pose to home builders. Many companies created these arrangements in order to spread the cost of buying land during the housing boom. But builders disclose very little about such ventures, stoking investors’ fears that these deals could hurt builders in unanticipated ways.

Toll Brothers earlier this week said it could suffer “significant” losses if its joint venture partners failed to meet certain obligations, but it would not go into detail about which projects or partners were in trouble.

Make money by buying right in today’s down market

Make money by buying right in today’s down market

Successful real estate investors often say “money is made when you buy.” There is truth to this because real estate values are based on what similar properties are currently selling for. Therefore, buying “under market” gives you potential for an immediate profit.

But wait! Exactly what does “under market” mean? Especially in Southwest Florida, it does NOT mean a certain percent off what a property sold for at the height of our market.

I’m working with several investors. Almost every conversation started with: “I believe our market is close to bottom and I want to buy, but only at 50 percent off the market top.”

I’ll then ask why a 50 percent discount in itself makes a wise purchase. This is usually followed by a lengthy explanation on how they value real estate. If you are guilty of this, please stop. What something sold for two to three years ago is totally irrelevant today.

’08 foreclosure rate is on way to a record

’08 foreclosure rate is on way to a record

Foreclosure action in the first two months of 2008 was nearly three times greater than at the same time last year in Manatee, Sarasota and Charlotte counties.

The 3,683 legal actions so far this year — actual lender takeovers, notices of delinquency and other advance warnings of foreclosure — compares with 1,322 for the first two months of 2007 and about 14,000 for all of 2007, according to data from RealtyTrac, the Irvine, Calif., company that tracks foreclosures nationally.

If this pace continues, banks and other lenders moving to reclaim homes in Southwest Florida could be on their way to making 2008 a record year for foreclosures.

Distressed properties now account for roughly a quarter of all residential transactions, says Mary Howard, president of Lakewood Ranch’s Cornerstone Title.

Tight credit spurs rentals

Tight credit spurs rentals

There is a bright spot growing in the long-beleaguered rental market.

Occupancy rose 3% last year at the 1,600 units in metro Detroit owned by Kaftan Enterprises, said owner Jeffrey Kaftan, who also is president of the Apartment Association of Michigan.

“The apartment market has really been hurt for the past four years because of the proliferation of condos and easy money,” Kaftan said. “We now are starting to see that change.”

Kaftan said he expects the trend to continue this year as the buyers’ market continues and tight credit keeps some potential home buyers on the sidelines.

Bargains in Condos

Bargains in Condos

Over the past several years, condos — both newly built towers and converted apartments — sprang up like mushrooms after a spring rain. Now, the market is glutted and buyers are scarce.

The National Association of Realtors reports that in November (the most recent data available), a 13-month supply of condos clogged the market. That’s the biggest backlog since the NAR began keeping condo statistics in 1999, and it’s reminiscent of the glut in the early 1980s. Although builders have pulled back, there’s still plenty in the works. The National Association of Home Builders expects this “heavy oversupply” to last through 2009.

Meanwhile, bad news — credit-tightening, foreclosures, falling home prices — has scared off buyers. Sales of condos have fallen since the peak in 2005. In November, they were down 21% nationwide from the year before.

Ironically, the median condo price in the U.S. increased 2% in the third quarter of 2007, to $226,900. But that figure reflects a large number of upscale units in the sales mix. In most markets, sellers are cutting prices and offering incentives for midrange condos, which have been largely abandoned by move-up and downsizing buyers who must sell their current homes first. Suburban condo prices are soft because fewer buyers want to commute, and resale units go begging as buyers turn to newly built condos.

South Floridians turn to alternative home insurance

South Floridians turn to alternative home insurance

With major insurers poised to shed more property insurance policies this year, Florida residents will be shopping for alternatives.

Two little-known options expected to become more popular are surplus-lines companies and self-insurance pools.

Surplus lines and condo self-insurance pools aren’t subject to Florida rate regulations, so they may be cheaper. Another perk is that they’re exempt from state fees insurers pass to policy holders. But there are risks. If a major storm hits, surplus-lines policy holders and condominium or homeowners’ groups that self-insure can’t tap the Florida Insurance Guaranty Association fund that helps pay claims when insurers fold.

“They’re extremely complex and not easily understood even among insurance experts,” Jeff Grady, president of the Florida Association of Insurance Agents, said of unregulated insurers. “People [considering the option] really need to do their homework or consult with someone who understands insurance.”