Author: ft Editorial Staff

Increased home construction supported by government subsidies

California construction, while on the rise from February to June 2009, fell in July. The pace of single family residence (SFR) construction during July 2009 was at an annual rate of 22,000 starts; 37% below one year ago. U.S. national construction of SFRs continued on a rise that started in March. July numbers rose nearly 2% from the previous month while building permits applied for in the month of July rose 6% from the previous month. This brings national construction up 37% from its winter low. The increase in building has been supported by an $8,000 tax credit for first-time home buyers purchasing a home. The credit applies to homes purchased through November 30, 2009. Builders are lobbying Congress for an extension of the tax credit. The National Association of Home Builders argues that new homes built create an average of three jobs, and generate an average of $90,000 in taxes for the local and federal government. New homes also translate to increased business for Home Depot and other construction-related companies. Home Depot’s annual sales improved in one of its most important markets: California. On the other hand, national apartment construction fell 13% from June to July. first tuesday take: The apartment occupancy numbers will be the dark side of this fleeting spurt of good news. As for California single family homes, they have been prebuilt and are in...

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Riverside Town Hall Discussion of the Foreclosure Prevention Act (ABX2 7)

This article responds to the recent town hall discussion on real estate held by Assemblyman Ted Lieu in Riverside, California on July 30, 2009. Frustrated homeowners and real estate professionals packed Riverside City Hall on July 30, 2009 to discuss California’s foreclosure crisis with state Assemblyman Ted Lieu (D-El Segundo). Lieu is responsible for the 2009 law which imposes a 90-day delay on foreclosure proceedings. The delay only applies to foreclosure by lenders who fail to put forth the effort to start a dialogue about loan modification with homeowners. [See first tuesday September 2009 Legislative Watch] In Lieu’s words, “foreclosure is a lose, lose, lose scenario.” A foreclosure sale costs the lender money to conduct, but fails to make up for the lender’s loss on the loan. Foreclosure causes the homeowner to lose his house. Also, the neighborhood suffers a loss in the form of blight associated with distressed vacant properties. All these things happen in any recession and are corrective in nature. But part of what Lieu said, or at least implied, about loss is dead wrong. Indeed, foreclosure can be an actual money loss for some homeowners and communities, and foreclosure costs must be paid. However, foreclosure for lenders is not a losing scenario at all; rather, foreclosing on a delinquent loan is in the lender’s best interest—unless they can arrange the rare, profitable modification with a...

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Zestimates are great conversation starters with sellers and buyers. Zillow has done more for our bottom line than NAR ever has or will. Don’t fight the current of the river, learn to run with it. Disruption is inevitable in any industry that is fragmented or inefficient. Granted, it does feel like armchair experts and platforms are plentiful in real estate these days, but when the tide rolls out we will see the value proposition of the truest professionals in this industry shine once again.

Justin Bonney, on Zillow’s impact on the real estate industry

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