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‘Foong on Finance’ with Keat Foong: NAHB Changes Prediction Regarding New Construction
The National Association of Home Builders (NAHB) has revised up its forecast for multifamily construction this year. “The better-than-expected mid-year improvement in multifamily housing production has been significant enough for NAHB to increase its forecast for 2010,” states NAHB. The trade group projects that 120,000 units (two-plus units) will be started in 2010. At the International Builders’ Show in January, NAHB had predicted fewer than 100,000 units in starts for this year. NAHB attributes the improved outlook to increased employment, pent-up household formation, and financial hurdles for buying homes. Of course, 120,000 units still represents a low level of new…
Gimme Shelter with Daniel Gehma: “Stop! It’s Only A Rental”
When traveling for business, it seems there’s often one little detail that gets overlooked. Today I had to be in Phoenix to visit a property with a client, as sort of a fact-finding mission. (“Shade” at Desert Ridge, a former Gold Nugget “Rental Apartment Community of the Year.”) It’s only a short flight over to Arizona, but the community is about a half hour drive from the airport. (Sprawl—go figure.) A rental car was necessary. Since business has been slow for a while, I haven’t traveled a ton, especially to destinations where a rental car is required, so I guess…
‘Foong on Finance’ with Keat Foong: Is the Tea Party Good for Commercial Real Estate?
Jobs, jobs, jobs. Speaking to executives in the commercial real estate financing industry, I hear that the most important economic indicator for them is, without doubt, job growth. Job growth has to increase before the commercial real estate fundamentals can improve. If Tea Party candidates sweep the upcoming elections in November, will that bring about better job growth prospects for the economy? There are two courses of action one would think a Tea Party politician would want to implement immediately and radically: (1.) cutting taxes and (2.) cutting spending. Will cutting taxes and cutting government spending at a deep level bring about better job…
‘Foong on Finance’ with Keat Foong: Will the New FHA Rules be Changed Soon?
The more stringent rules HUD announced this summer for the FHA multifamily mortgage insurance program were no surprise. By the time the Mortgage Letter 2010-21 came out on July 6, the multifamily development and financing community already pretty much knew what the main points were going to be. Among the biggest, and most contested, changes are the decrease in the required the Loan-to-Cost (LTC) from 90 percent to 83.3 percent, for the FHA 221(d)(4) program for market-rate new construction. The Debt Service Coverage ratio (DSC) has also been increased, to 1.20 percent from 1.11 percent. The new requirements make…
‘Gimme Shelter’ with Daniel Gehman: Busy’s Back
Ok, I’m gonna call it: busy is definitely back. I’m teetering right on the edge of exhaling, and it won’t take much to push me into real belief. If I’m dreaming, please don’t wake me, because I like this. As far as I can figure, the phone started ringing in earnest about sixty days ago. At first, the work was coming in as sort of a steady trickle . . . drip, drip, drip: a combination of both completely new developments and others previously left for dead. The drips have combined and become a relatively steady flow, so much that…
‘Foong on Finance’ with Keat Foong: Free Marketers vs. Fannie and Freddie
The high-power summit organized by the Treasury Department to discuss the future of Fannie and Freddie occurred this week, yesterday. It seems to be the tendency of 21st Century Big Money to have a ideological opposition to “Big Government.” But in this case, homeowners and renters are lucky because industry is coming out in favor of government support, as in government support for the mortgage finance system. Free Marketers are not so pro-Free Market when the government support also helps them. It is a fundamental fact of human society that certain things cannot be handled by the Free Market. And…
‘Foong on Finance’ with Keat Foong: Low Rates! Hurrah!!
There was news this morning of a new wave of economic pessimism: exports have fallen and the possibility grows that the 2.4 percent second quarter GDP growth figure could be revised lower. And the accompanying news was that the yield on the benchmark 10-year Treasury bills had fallen back further, to 2.69 percent. Recently, the yield has been in the 2.90 percent range, and we thought that was low (albeit higher than the low-2 percent levels reached during the depths of the financial crisis in late-2008/early-2009). Just as I was getting ready to submit a blog today on this subject, I…
“Gimme Shelter” with Daniel Gehman: Nobody Walks In LA
Well, to be fair, what I really mean is nobody jaywalks in Los Angeles. Seriously. My conviction surrounding this issue stems from the day my colleague was ticketed to the tune of about a hundred bucks for jaywalking. Mind you, this was not for casually wandering across the street mid-block, this was for walking against the flashing orange hand at an intersection. Not the solid orange hand, the flashing orange hand. I was in Manhattan about two weeks ago, and it pretty much took a full 24 hours for me to understand I wasn’t in the city of angels anymore….
‘Foong on Finance’ with Keat Foong: Economic Recovery Reversing Itself?
The commercial real estate sectors are showing greater optimism, and investment activity is starting to come to life again. The latest National Multi Housing Council (NMHC) Quarterly Survey of Market Conditions released in May showed “widespread improvement” in the apartment sector. The apartment sales volume index even increased to a record, of 72 from 56. In the midst of the newfound optimism, we have news this week that the national economic recovery is slowing. Some experts even say the consumer spending slowdown will last through 2011. Will this economic reversal continue into future months, and take a bite out of…
“Gimme Shelter” with Daniel Gehman: Let Me Feed You
Ok, so I have a new goal. By the time I’m 55, my home will generate enough electricity to not only re-charge my electric vehicle, but also to sell the excess back to my local utility. Please understand that I’m well on my way already—there’s a photovoltaic system on my roof that was designed to provide about 85 percent of my annual demand. Why stop at 85 percent? Well, at the time, the theory went that since any energy generated at my place in excess of what I could use would flow back into the grid—from where my utility company…