Higher rates don't mean the death of housing, says Blackstone's real estate chief

Matthew J. Belvedere | @Matt_Belvedere

Concerns about the impact of what's expected to be higher Federal Reserve interest rates on the property market are overblown, Jonathan Gray, global head of real estate at Blackstone, told CNBC on Tuesday.

"We're later in the cycle, but some people are getting a bit too negative," said Gray, who manages $103 billion of investor capital — nearly a third of Blackstone's total assets under management. He controls more than $200 billion worth of real estate.


There's too much of a focus on rates, he said. "There's a [false] sense that owning real estate is the same as owning a bond."


"Real estate, like stocks, can see earnings growth," he argued. "And that's what we're seeing today because of favorable fundamentals."


In recent periods of rising rates — such as the early 1990s, the late 1990s and the mid-2000s — the property market "did OK," Gray said.


"We don't expect to see the growth in value in the next couple years that we've seen in the last four or five years," he admitted. "But we don't expect to see some sort of sharp decline in the near term."
Blackstone, a diversified investment firm with specialties in real estate and private equity funds, also has a major holding in Invitation Homes, a nationwide home rental company.


"The housing market is definitely a bright spot in the U.S. [economy]," Gray asserted, saying home building is not keeping up with demand and population growth. "The result of that is you're seeing rising rents and rising home prices. And we expect that to continue."


"We own about 100,000 either multifamily homes or single-family homes for rent. And across the board, across the country, we're seeing strength in that area," he said.

Your Buyers’ Nemesis:

Student Debt, High Rent

Student loan debt and high rental prices continue to sideline potential home buyers. More than half – 53 percent – of potential home buyers with student loan debt say the debt “somewhat” or “very much” is an obstacle to them in buying a home, up from 49 percent in 2014, according to the fourth annual housing survey from NeighborWorks America.


Read more: Student Loans Fuel Wealth Gap


“With the home ownership rate at the lowest point in decades, and minority home ownership plunging even further, these data signal a weak home buying market going forward, despite near record-low mortgage rates and broad-based national income growth,” says Paul Weech, president and CEO of NeighborWorks America.


Nearly 60 percent of renters say they went their next housing move to be into home ownership, according to the survey, but rising rental and home costs are delaying student loan holders from obtaining home ownership. A survey by the National Association of REALTORS® and SALT conducted earlier this year found similar results: Nearly three-quarters of non-home owners repaying their student loan debt say it is delaying them from a home purchase, and for many, that delay could be by more than five years.


Affordability concerns are growing. Fifty-six percent of those surveyed by NeighborWorks say they believe that rents in their area are too high for a person to save for a future home.


The study says that better awareness of down payment assistance programs and student loan debt counseling may help affordability. NeighborWorks found that 71 percent of Americans were unaware or not sure about down payment assistance programs. Further, 77 percent of those with student debt say they had never heard or were not familiar with loan counseling programs from nonprofits.


“These programs could help a consumer manage their student debt and provide information about down payment assistance programs that could increase the possibility of qualifying and obtaining affordable and sustainable home ownership,” according to NeighborWorks.


Source: NeighborWorks America

Mortgage Rates Move Higher This Week   

Borrowing costs are rising: The 30-year fixed-rate mortgage increased to a 3.47 percent average this week. Despite the uptick, rates still remain near historical lows.


"This week, the 10-year Treasury yield continued its climb as an increasing number of financial market participants foresee a December rate hike after a series of positive economic data releases," says Sean Becketti, Freddie Mac's chief economist. "The 30-year fixed-rate mortgage moved up 5 basis points to 3.47 percent in this week's survey, the first increase in one month. Even though we've seen economic activity pick up, consumer price inflation and implied inflation expectations remain below the Federal Reserve's 2 percent target."


Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 13:

• 30-year fixed-rate mortgages: averaged 3.47 percent, with an average 0.6 point, rising from last week's 3.42 percent average. Last year at this time, 30-year rates averaged 3.82 percent.
• 15-year fixed-rate mortgages: averaged 2.76 percent, with an average 0.6 point, increasing from last week's 2.72 percent average. A year ago, 15-year rates averaged 3.03 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.82 percent, with an average 0.4 point, increasing from last week's 2.80 percent average. A year ago, 5-year ARMs averaged 2.88 percent.

Source: Freddie Mac

You May Think It's Trash But It Could Be Treasure

Written by Connie Adair

Stephen Ranger walked into "one of the worst houses in the city" and found a rolled up blanket under the bed. The find -- a Second Phase Navajo chief's blanket worth more than $100,000, -- was unexpected. A find such as this is rare, says Ranger, vice-president of Waddington's Auctioneers in Toronto, but it does happen. So when you decide to downsize or purge, it's a good idea to call in an expert before you toss everything in the trash.

"There's never a downside to calling in a local auction house to do a quick walk through," Ranger says, adding a Waddington's expert costs $200 per hour. "It gives peace of mind."


"If you think something is worth money, chances are it isn't. If you think something is worthless, there's a possibility it may not be," says organizing company Downsizing Diva co-founder Karen Shinn. "Two sisters asked an antiques auctioneer to visit their house and look at their most valuable possession, a dining room set. It was the biggest thing in their house, they had spent the most money on it and used it for important times -- it had emotional value.


However the auctioneer told them it was worth about $400. Then he asked about the two vases sitting on the buffet. The sisters were going to donate them to a church yard sale. Those vases were Moorcroft," Shinn says.


Old magazines, postcards and even vintage cereal boxes are among the items people think are worthless but can actually have value, she says.


"When you're downsizing and want to make sure you don't get rid of valuable items, the best advice is to do your homework. There are a lot of resources out there -- the Internet, antique and art appraisers, books, senior move managers -- so check to make sure you have an idea what something is worth before you let it go. Items may have ‘heart value' to you and your family, but when you're talking about ‘dollar value' do your research."


If you have something that's been in the family a long time, you may want to have it checked out, Ranger says. "Send a photo to your local auction house." The auction house should give you feedback about whether it's worth auctioning or not.


Larger cities usually have qualified specialists working for established companies. "What you want to avoid is someone who comes in and scoops up that van Gogh in the closet," before you know what's happening, Ranger says.


However be prepared for the negative too. The value of most household goods has depreciated, he says. "The next generation doesn't collect like the last one.


Millennials are not collecting figurines or traditional furniture." That said, there are collectors for just about everything, antique, vintage, new and everything in between.


"Every fall when our crews go into homes during back-to-school season we come across valuable items that parents were ready to toss that are actually worth quite a bit of money to collectors," says Mike Thorne, president of St. Catharines, Ont.-based JustJunk.com.


JustJunk and Shinn have been in the business for 15 years each and put the knowledge they've gained over the years to work to help their clients spot treasures. It doesn't mean they'll catch everything of value, but a seasoned eye is an asset to your downsizing/purge project.


Here are some of the top kids' items with money-making potential that JustJunk tells parents to look out for when decluttering:


Pokemon: Pokemon Go may have taken the world by storm this summer, but there's plenty of money to be made from the original Pokemon for Nintendo Game Boy. Original game cartridges in good condition are selling to collectors for a few hundred dollars.


Polly Pocket: These tiny dolls and play sets that were popular in the early ‘90s can fetch $500 or more if they're in top condition.


Furbies: Launched in 1998, these strange owl-like robotic creatures are still highly sought after. Collectors will pay about $600 for one of these guys in mint condition - sometimes even higher if it's in the original packaging.


Harry Potter: If you happened to get on the Harry Potter train early and bought a 1998 first edition of the first book in the fantastically popular series - Harry Potter and the Philosopher's Stone - you could be in for a payday. Copies in great condition are currently selling for about $6,500 each. Add a signature from author J.K. Rowling and the price more than doubles to about $15,000.


LEGO: Some LEGO sets and mini figures can sell for hundreds of dollars to the right collector. Before getting rid of any LEGOS, it's a good idea to check online to see what's hot on the collectables market.


If you have the time and the inclination, you can search items on the Internet to get an idea of their worth. Consignment shops, selling items online and garage sales are ways to cash in on your unwanted items. But you have to gauge whether the time spent will be worth it.


When they are downsizing, people typically make three piles -- keep, donate and toss. Adding a fourth pile could make good financial sense.

Messing With The HOA Can Be Expensive

Written by Bob Hunt



Most homeowners in a common interest development probably understand that it can be a real hassle to get into a dispute with the Homeowner Association (HOA). Not so many, though, may know that it can become pretty expensive as well. A recent case from California's Fourth Appellate District Court of Appeal makes the latter point abundantly clear. (Rancho Mirage Country Club Homeowners Association v. Thomas B. Hazelbaker et al., August 9, 2016) 

Thomas and Lynn Hazelbaker owned a condominium in the Rancho Mirage Country Club development. The development was subject to regulations and CC&Rs which were enforced by the Rancho Mirage Country Club Homeowners Association (Association). According to the Court record, here's what happened:


"In November 2011, defendants [Hazelbakers] applied for and received approval from the Association's architectural committee to make certain improvements to the patio area of their property. Subsequently, however, the Association contended that defendants had made changes that exceeded the scope of the approval, and which would not have been approved had they been included in defendant's November 2011 application.


"On June 19, 2012, the Association sent defendants a request for alternative dispute resolution pursuant to [Civil Code §5930], identifying the disputed improvements and proposing that the parties mediate the issue. Defendants accepted the proposal and a mediation was held on April 8, 2013. A ‘Memorandum of Agreement in Mediation' dated April 9, 2013, was reached … The agreement called for defendants to make certain modifications to the patio, in accordance with a plan newly approved by the Association… The agreement provided for the modifications to be completed within 60 days from the date of the agreement. It also provided for a special assessment on defendants' property to pay a portion of the Association's attorney fees incurred to that point…


"The modifications described in the mediation agreement were not completed within 60 days. The parties each blame the other for that circumstance."


On September 4, 2013, the Association filed a lawsuit seeking specific performance of the mediation agreement. Subsequently, the parties reached an agreement regarding the modifications, slightly different from those agreed to in mediation. Those modifications were completed in September 2014. However, the parties continued to have disagreements about who should bear the costs of litigation to that point.


On October 15, 2014 the Association filed a motion seeking attorney fees. The motion was based on Civil Code §5975(c) which is part of a large body of law, commonly referred to as the Davis -- Stirling Act, concerning common interest developments. §5975(c) says, "In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney's fees and costs."
On December 2, 2014 the trial court issued an order granting the Association $18,991 in attorney fees, plus $572 in costs. The Hazelbakers appealed.


The central question for the Appellate Court was "…is a lawsuit to enforce an agreement that was reached during mediation (or another form of ADR) an action ‘to enforce the governing documents' in the meaning of section 5975, where the mediation was initiated pursuant to the Davis -- Stirling Act? And the Court's answer was "yes", at least in circumstances similar to this case. (The Court acknowledged that the answer might have been ‘no' had the mediation involved other matters.)


The Hazelbakers also questioned the amount the trial court had awarded. They should have been satisfied with what was assessed. The amount initially requested by the Association was $31,970. In any event, the Appellate Court upheld the trial court's figure of $18,991, noting that "It is well settled, however, that the trial court was not required to issue any explanation of its decision with regard to the fee award."


Finally, the Appellate Court noted that, as prevailing party in the appeal, the Association is entitled to recover its appellate attorney fees. That figure will be set by the trial court.


We don't know what the patio improvement itself cost; but we do know that you can add to that figure the Hazelbakers own attorney fees plus those of the Association.


This all started with a decision to depart from or modify the plans as approved by the Association. Typically, it would really be a bother to go back to the architectural committee and seek approval for the change. But it might have been a whole lot cheaper. Maybe there's a lesson there.


Bob Hunt is a director of the California Association of Realtors^®. He is the author of Real Estate the Ethical Way. His email address is scbhunt@aol.com .

How Color Helps Sell Your Home

Written by Realty Times Staff

Yes! Just like curb appeal matters, the colors of your home can and will influence buyers. With that in mind, we explore which colors tend to appeal to the masses.


The color scheme of your home, from the outside in, sets the tone. It's like going to see a theatre play and seeing an intricately crafted and appropriately painted set for the production. It can immediately intrigue you–before the play has begun and even if you know few details about the play.


When it comes to color, be sure to consider the location. A peach-pink home in a retirement community might be okay, but that same color in an upscale, urban city may be unappealing to younger city dwellers.

The outside of your home is one of the largest areas potential buyers will see. So make your decision carefully and be sure to have a professional paint job done. If you choose white for the exterior, your home is likely to appeal to the masses, according to one study that indicated upwards of 40 percent of people liked white homes.

The great thing about a white home is you have plenty of options to make the home stand out by using an accent color for the trim. The downside is that white gets dirty very fast and shows it more than other colors. So before you list your home, make sure that you have a fresh coat of paint applied or pressure wash the exterior to bring back that newly painted look.


Also take into consideration the color of other homes on the block. Typically, white will not look out of place. However, if you had a purple home on a block where the homes are mostly beige and neutral colors, you'll get noticed but won't likely get the kind of attention you want.


Beige with neutral-colored trim is another popular color scheme. Both beige and white are safe exterior colors. They don't turn buyers off.

There's also been a trend to paint just the front door a deep, rich color like red. This may not be appealing to all. However, buyers would tend to overlook it because it's a simple change as well as one that can easily and cheaply be changed to the new buyer’s choice. As long as the colors look good together, this wouldn't necessarily turn buyers away.


The paint inside your home is equally important. In fact, one good tip for sellers is that if they can do nothing else, they should get some fresh paint up on the walls. The new paint helps showcase the home and gives it a new-home feel.


There are a wide variety of interior colors. Don't feel like you have to go with only beige. You can be a little more daring, using bold accent colors. Just make sure the paint colors you choose don't give a dark, closed-in feeling. Aim to create comfort, a sense of calmness, relaxation, and a place where family can unwind. Earth-tone colors convey this very well.


For a more chic and sophisticated look, interior designers often choose from the grey palette. A dark grey color can create a bold statement and attract the eye to a particular area.


Whatever colors you choose, remember that your aim is to appeal to the masses. Test the colors out first. Get opinions from the experts.


Your real estate agent has likely been in hundreds of homes and can offer you some very good guidance.

Home Buyers Please Note and Seize the Opportunity: Prices likely to stay muted for the next 6 months

from Realty Times

It is generally believed that prices of residential houses may indicate upward surge due to greater demand and good appreciation of the property. However, according to a recent survey conducted b Knight Frank consultant for FICCI, housing sales are predicted to remain stable or improve in next 6 months while price appreciation is expected to be muted. After some slow down in the real estate business lasting about previous 6 quarters, the prospects of better sales in the housing sector is quite bright. This trend is an affirmation and faith of the stakeholders for better future. The report credits the real estate with positive transaction in the preceding six months and the projections are also positive.

The demand for office space is increasing manifold. The residential segment of the real estate which was experiencing turbulent time for the last three years has also made a good turnabout in terms of recovering from the shop. The consultant also observed that there is a significant improvement in the sentiments for the residential sector. This is substantiated by the number of respondents with a positive outlook for this sector moving up substantially in 2016 especially in the sales volume.

 

The report further credits on the basis of the feedback, more than 95% respondents that the sales volume will either be at the same level or improve in the next 6 months. It is also mentioned that despite this good showing so far as sales are concerned the stakeholders are of the view that the residential prices will remain muted. According to the report that more than 60% of the respondents participating in the survey consider that the appreciation in residential price will continue to be the same or even worse by the end of the year.

 

Thus, the report of Knight Frank released by FICCI project a mixed scenario of cheers and some concerns. For more visit irxlive.com