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Vulcan Investment Partners receives 2013 Florida Excellence Award Monday, May 19, 2014
Category: Press Releases

 

FOR IMMEDIATE RELEASE:

Vulcan Investment Partners LLC receives 2013 Florida Excellence Award 

May 19th 2014 -  Vulcan Investment Partners LLC has been selected for the 2013 Florida Excellence Award amongst all its peers and competitors by the US Trade & Commerce Institute (USTCI).

Each year the USTCI conducts business surveys and industry research to identify companies that have achieved demonstrable success in their local business environment and industry category. They are recognized as having enhanced the commitment and contribution of small businesses through service to their customers and community. Small businesses of this caliber enhance the consumer driven stature that Florida is renowned for.

Vulcan Investment Partners LLC has consistently demonstrated a high regard for upholding business ethics and company values. This recognition by USTCI marks a significant achievement as an emerging leader within various competitors and is setting benchmarks that the industry should follow.

As part of the industry research and business surveys, various sources of information were gathered and analyzed to choose the selected companies in each category. This research is part of an exhaustive process that encapsulates a year long immersion in the business climate of Florida.

About USTCI

The USTCI is a leading authority on researching, evaluating and recognizing companies across a wide spectrum of industries that meet its stringent standards of excellence. It has spearheaded the idea of independent enterprise and entrepreneurial growth allowing businesses of all sizes to be recognized locally and encouraged globally.

 

Particular emphasis is given to meeting and exceeding industry benchmarks for customer service, product quality and ethical practices. Industry leading standards and practices have been developed and implementation of the same has been pioneered by the dedicated efforts of the business community and commerce leadership.

 

  

 

Water Front Miami Beach Land trades for 11.3M.Monday, March 10, 2014
Category: Press Releases

Waterfront Miami Beach land trades for $11.3M

Property has approvals for 80 residential units, 18 boat slips
March 10, 2014 01:30PM
Aerial of 6800 Indian Creek Drive

Aerial of 6800 Indian Creek Drive

A residential development property in Miami Beach has traded for $11.3 million.

The waterfront 6800 Indian Creek Drive parcel was acquired by a private real estate investment group, Globe St. reported. It has approvals for a 14-story, 80-unit residential building with 18 boat slips. Miami-based Windsor Capital is the seller.

Windsor was represented by the Boca Raton office of Atlanta-based ARA

Forecluse Inventory down 32% from year agoFriday, August 30, 2013
Category: News

Foreclosures are down from a year ago but still Miami is one of the cities with more foreclosures up to date.

 

 

Hedge Funds are crowd first time buyersTuesday, August 13, 2013
Category: Press Releases

There are still a whole lot of foreclosed houses out there. You would think that means it's a great time for first-time buyers to purchase a house.

But that's not the case: One reason, private equity firms are buying up huge numbers of single-family houses. Wall Street wants to turn them into rentals.

Jonathan Shidler is a realtor in California. Lately he gets at least one call every day from a hedge fund manager who wants to buy single-family houses in bulk.

He says they are buying them like a financial instrument, "which is fine and dandy. but what's different about these instruments is people live in them. You put your key in it and go inside. You get naked inside of it. So it makes it a little more personal."

Wall Street has been investing in residential housing for decades. What is new is the scale of these purchases. Hedge funds are buying thousands of single-family houses around the country, especially in states hardest hit by the housing crash, like California.

The Inland Empire region of California is one of the most sought after markets for single-family homes. Bill O'Rafferty flips houses in the Inland Empire city of Riverside. He took me on a tour of the neighborhoods where he flips most of his houses.

"This is a 1,200 square foot house with detached two-car garage, O'Rafferty said as he put a key into a ranch style home on a corner lot. The house he showed is what he calls "The gold standard of entry-level homes."

This is the type of home that hedge funds are snapping up. O'Rafferty put this house on the market on a Friday. By Monday he had 17 offers.

Those offers came from two types of buyers: Investors looking to turn a profit and families looking to get a piece of the American dream. These days O'Rafferty almost always sells to the investor.

"Now, do I want everyone to live in harmony and have a house and love their family? Yes, but at some point Bill has to make a living."

First-time buyers simply can't compete with the investors offering cash, some of whom are buying properties above retail cost. And investors don't have to have worry about their credit score.

"That's another factor," says Steve Cook, managing editor of Real Estate Economy "Half of the people that apply for a mortgage don't get it."

A first-time buyer needs a FICA score of 750 to qualify for a loan. Cook says those high standards are a result of lending standards that were tightened after the housing crash. "And for good reason. But they haven't loosened at all."

Another reason fewer houses are on the market: Banks are doing more loan modification to avoid litigation and the Obama administration's $75 billion loan modification program has helped more troubled homeowners stay in their houses.

Hedge Funds as Land LordsTuesday, August 13, 2013
Category: Press Releases

Hedge Funds As Landlords? In Search Of Returns, Wall Street Buys Up Foreclosed Homes

 

Here’s some good news. Some hedge funds are expecting the housing market to recover. And guess what? They’re planning to profit off of it.

English: Foreclosure signs, Mortgage crisis,

Flipping Houses 2.0: Sylvan Road Capital is buying up foreclosed homes, renovating them and renting them out for profit.

A former Morgan Stanley housing strategist who left in May to start his own hedge fund is buying up low-cost foreclosed properties, extensively renovating them and renting them out.

Oliver Chang launched his firm just two days ago and expects to invest over $1 billion in the single-family rental market over the next two years–or 10,000 homes. Sylvan Road Capital said it already has initial capital from a private equity firm to acquire over $300 million in homes.

“America is moving toward a Rentership Society, and I believe the opportunity to purchase and professionally manage single-family rental homes represents one of the most compelling investment opportunities across all asset classes,”Chang said in a statement.

His firm has partnered with three principals of Delmar Realty Advisors, a homebuilder and property management specialist firm which already owns a portfolio of home rentals in Atlanta.

Property Value raises trigger ForeclosuresFriday, June 14, 2013
Category: Press Releases

Property value rises trigger foreclosures

By Scott Blake
    Experts say the economy is on the mend, yet home foreclosure filings are still on the rise in Greater Miami.
   Much of the reason, they say, is because property values are rising, making it more appealing for banks and other lenders to initiate proceedings to seize financially distressed properties.
   "Banks are seeing good values, so they're trying to get their money out" of distressed properties through foreclosures, says Dan Mackler, a lead attorney with the Gunster law firm in Miami who has represented banks and investment groups in the process.
   "With the banks, it's just a numbers game," he added.
   Greater Miami's foreclosure statistics go against the national trend:
   In April, the number of properties receiving a foreclosure filing nationwide was down 23% from the same time last year. But the number of properties receiving a foreclosure filing in Greater Miami was 21% higher in April than it was the same time last year, according to RealtyTrac, a California-based firm that compiles foreclosure data around the US.
   Another factor in the local rise in foreclosure filings is the so-called "robo-signing" settlements against banks in the past year or so. While those cases were pending, banks were holding off on many foreclosures. And another factor is the local court system devoting more resources to work through a backlog of foreclosure litigation.
   The robo-signing settlements — stemming from what authorities have called shoddy and sometimes fraudulent processing of mortgage documents to speed up foreclosures — amounts to help for homebuyers that is "too little, too late," says Ken Thomas, a Miami-based independent banking consultant and economist.
   "The people who lost their homes in the depth of the crisis... a lot of their lives have been ruined," Mr. Thomas says, adding that big banks could have done more to write down the value of properties and take other steps to keep homebuyers in their homes.
   Many of those people are now renters, or have moved in with relatives, or have left the area or the state in search of jobs or better living conditions, he says. For those renting, he adds, many of them will remain renters due to a combination of rising property values, stricter lending standards and a still-sluggish job market.
   Interestingly, another current foreclosure trend in Greater Miami is the opposite of what's happening nationwide.
   Currently, more than 1.37 million properties in the US are in some stage of foreclosure (default, auction or bank owned) while most of them — more than 909,000 — are for sale, according to RealtyTrac.
   However, of the 55,896 properties in some stage of foreclosure in Greater Miami, only a small fraction — 2,215 — are for sale, RealtyTrac reports.
   Mr. Mackler says that's because banks have tended to hold foreclosed local properties without putting them back on the market as they have waited for housing prices to rebound.
   Mr. Thomas also notes, in some cases, both buyers and lenders had less incentive to quickly move forward with foreclosures: buyers wanted to stay in their homes as long as possible and lenders didn't want to pay homeowner and condo association fees, as well as costs for maintenance, repairs and property taxes. But, in many cases, the courts have prodded them into taking action on pending cases.
   Meanwhile, Greater Miami and Florida as a whole continue to have some of the highest foreclosure rates in the country — and one of the unfortunate byproducts of that trend has been a glut of vacant properties.
   Nationwide, 10.7% of all housing units — 14.2 million — were vacant in the first quarter of the year due to foreclosures and other reasons. And Florida leads the nation in vacant foreclosures with 90,556, according to a recent study by RealtyTrac.
   Mr. Thomas says banks seem to be becoming more receptive to finding ways to keep buyers in their homes after witnessing the negative effects on those properties and surrounding neighborhoods.
   "The big banks understand a lot of the reputational loss. They're not looking good when they kick grandma out of her home," he says. "It also hurts neighborhood values, and some of these banks own whole tracts of property, so it hurts their portfolio."
   Meanwhile, the homeownership rate in the US dropped to an 18-year low in April. Experts say it signals a shift away from homeownership toward rental housing while investors — including Wall Street firms and hedge funds — have purchased hundreds of thousands of foreclosed homes at deflated prices.
   In some markets, investors have been reselling previously foreclosed properties — a practice known as "flipping" — at hefty profits, driving up housing prices. That includes Miami, where property flippers have been churning out profits at an average of more than 35%, according to RealtyTrac.
   By now, the local stories about all-cash purchases by affluent buyers from Latin America and elsewhere are commonplace, particularly in the downtown and beachside condominium markets.
   Meanwhile, data show the highest foreclosure rates in the area have been in the suburbs around the city, places such as Kendall, Hialeah and North Miami.
   "A lot of them have come from South America," Mr. Mackler says about the cash buyers. "They see [Miami properties] as a safe place to [invest] their money and let it appreciate for three or four years and sell it."
   While many investors rented out their newly-purchased condos and houses, Mr. Mackler says, he is seeing more buyers moving into their properties, particularly downtown.
   He and his wife bought and have lived in a condo in the Brickell Avenue corridor since 2010. He says more of the units in his building now seem to be owner-occupied, and his neighbors come from all over the world.
   "You step into the elevator," he says, "and you hear [people speaking] Spanish, Portuguese, Italian, French, Russian and even some Nordic languages."

To read the entire issue of Miami Today online, subscribe to e-MIAMI TODAY, an exact digital replica of the printed edition.

US Hedge Funds eye south FloridaMonday, June 10, 2013
Category: News

U.S Hedge Funds Eye South Florida

Home Prices Jump 10.9%Wednesday, May 29, 2013
Category: News

Home prices surged during the first quarter at their fastest pace in nearly seven

years, the latest sign of a sustained warm-up in an economic recovery that has

otherwise been marked by starts and stops.

Single-Family Rental REITs Continue Tapping Capital MarketsThursday, May 23, 2013
Category: News

Single Family REITS continue Tapping Capital Markets

Home prices scores hightes annual gainsWednesday, May 1, 2013
Category: Press Releases


 

NICK TIMIRAOS WSJ.COM 1 MAY 2013

WALL STREET JOURNAL

 

Home prices are rising at the fastest rate in seven years, with some communities seeing double-digit gains, as buyers are returning to a market where the number of properties for sale is in short supply.

Prices increased 9.3% in February from a year earlier while mortgage-interest rates hovered near record lows,

according to the Standard & Poor's/Case-Shiller index that tracks home prices in 20 major metropolitan areas. All 20 cities posted year-over year gains for the second consecutive month, which hasn't happened since 2005, before the crash. In some of the hardest-hit markets, the gains have been particularly heady.

Housing prices are up by double digits in Miami and several other markets over the past year.Here, a prospective sale in Miami earlier this year.

Miami ROSE TO 12.1% From last year.

 

Vulcan's Success at the IMN SIngle Family Homes ForumFriday, April 26, 2013
Category: Press Releases

Vulcan Investment Partners had a very successful participation in the IMN's REO-to-Rental Single Family Homes Forum

 

24 April 2013

IMN hosted its annual REO-to-Rental Forum in Miami, the REO-to-Rental asset class has become quite a hot topic and this conference sure  provided invaluable insight into current trends in the market, as well as where market participants see this class of assets going over the near- and far-term.

 

Vulcan Investment Partners as one of the experts in the field and with local participation in the Miami Market had a very strong participation and involvement in this conference.

Vulcan had Panel participation in these interesting topics:

 

What Inning are we in: Examining the Traditional Hot Single

Family Markets & the Impact on a Local Housing Market When

the Aggregators Come to Town

 

Panel Participants:

 

Steve Taplin, CEO Diversified Residential Group, LLC

Rob Bloemker, CEO Five Ten CapitLorenz Schwarz, Chief Operating Officer Green River Capital

Kyle Lundstedt, Managing Director LPS Applied Analytics

Erik Wesoloski, Principal Title Capital Management LLC

Mario Alonso, Managing Partner and Chief Acquisitions Officer

Vulcan Investment Partners, LLC

What is your Acquisition & Overall Strategy?

Panel Participants:

Tom Eggleston, CEO HouseKey Properties

Jeff Pintar, President, PINTAR INVESTMENT COMPANY, LLC

Jonathan Ellenzweig, Vice President Tricon Capital Group

Inaki Negrete, CEO Vulcan Investment Partners, LLC

 

 

By Emilio Braun CMO Vulcan Investment Partners

Foreclosure Capital: Florida leads States, Miami leads citiesMonday, April 15, 2013
Category: News

Foreclosure capital: Florida leads states, Miami leads cities

 
 

The greater Miami area posted the highest foreclosure activity of any large city in the nation in the first quarter, with one in every 79 residences receiving some type of foreclosure filing, RealtyTrac said.
The greater Miami area posted the highest foreclosure activity of any large city in the nation in the first quarter, with one in every 79 residences receiving some type of foreclosure filing, RealtyTrac said.
Joe Raedle / Getty Images

mbrannigan@MiamiHerald.com

Florida is the nation’s foreclosure state, and Miami is the foreclosure capital.

The greater Miami area posted the highest foreclosure activity of any large city in the nation in the first quarter, with one in every 79 residences receiving some type of foreclosure filing, RealtyTrac said.

Miami’s foreclosure activity was more than three times the national average.

Florida continued to rank No. 1 among the 50 states in the first quarter, with more of its homes getting foreclosure filings than in any other state, according to the Irvine, Calif.-based real-estate data firm.

During the first quarter, 85,671 Florida residences got some sort of foreclosure filing. That was one in every 104 residences — a rate nearly three times as high as the national average of one in every 296 residences, RealtyTrac said.

Foreclosure activity in Florida increased 7 percent in the first quarter from the prior period and jumped 17 percent from the year-earlier quarter, the firm said.

The increase reflects a step-up in activity by lenders who had held off on pressing foreclosures during the “robo-signing’’ scandal that spotlighted an array of improprieties in the way lenders handled cases. Since last year’s major legal settlement between 49 state attorneys general and five big banks, lenders have clearer parameters on how to handle foreclosures and have been working through their backlogs.

Six other Florida metro areas also ranked in the top 10 in the nation in foreclosure activity in the first quarter. They are: Orlando (No. 2, with one in 86 housing units receiving a foreclosure filing); Ocala (No. 3, with one in 92); Tampa (No. 5 with one in 100); Jacksonville (No. 7, one in 105); Palm Bay-Melbourne-Titusville (No. 8 with one in 109); and Lakeland (No. 10, one in 128).

Worries that a mountain of foreclosures in Miami would flood the market and derail the housing recovery have proven unfounded so far. Amid a shortage of homes and condominiums for sale and a growing crowd of eager buyers, distressed properties are getting snapped up quickly. Housing prices in the area are posting steady gains.

Doug DeWitt, a broker at Concierge Real Estate Services in Miami Beach, which helps several banks to value and sell homes that the banks have taken in foreclosure actions, said: “It’s flying off the shelves. If there is shadow inventory, it’s not bogging down the system.’’

On Tuesday, Concierge listed a bank-owned house at 19845 NW 53rd Place in northwest Miami-Dade on the Multiple Listings Service and by Wednesday, it had received 16 offers, DeWitt said. The three-bedroom, two-bath home measuring 1,253 square feet in the Lakes of Acadia subdivision was listed at $109,900

Vulcan Investment Partners to speak at the IMN Single Family Aggregation Forum in Miami, FL (April 2Monday, April 8, 2013
Category: Press Releases

Vulcan Inverstment Partners will participate on the Spring Single Family Aggregation: the REO to Rental Forum held in Miami from the 22th and 23th of April as sponsors and also as Panelists.

Will be participating in this Forum

What Inning are we in: Examining the Traditional Hot SingleFamily Markets & the Impact on a Local Housing Market Whenthe Aggregators Come to Town.

Panel Participants:

Mr. Mario Alonso

Managing Partner and Chief Acquisitions Officer

Vulcan Investment Partners, LLC

 

 

Now its a renters MarketWednesday, April 3, 2013
Category: Press Releases

Now it’s a renters’ market

 
  Could rental houses owned and managed by deep-pocketed hedge funds and big investors be the post-bust stepping stones to homeownership for huge numbers of renters?

Could they also provide a form of safe harbor or sanctuary for thousands of families who were displaced by financial difficulties from their previous homes through foreclosures or short sales?

A new national study suggests that the answer to both questions is yes.

Over the past five years, according to Wall Street analysts’ estimates, between $7 billion and $9 billion worth of distressed single-family homes have been purchased and converted to rentals by institutional investors — hedge funds, private partnerships of high net-worth individuals and even pools of capital raised among investors in foreign countries.

Unlike traditional “mom and pop” rental home investors, these funds have been scooping up dozens, sometimes hundreds, of properties at a time through all-cash purchases of foreclosures, short sales and bulk packages. Some of the bulk acquisitions have come from the troubled-asset portfolios of financing giants Fannie Mae and Freddie Mac, others from banks that have taken over homes left by strategic defaulters.

Though single-family rental homes have long been a part of the American housing scene, the involvement of large-scale institutional investors is causing the category to explode. According to a new study conducted by pollster ORC International for Premier Property Management Group, a company that works with investors, roughly 52 percent of all rental units in the country are now single-family homes and house 27 percent of all renters.

Recent Census Bureau data cited in the study indicate that the number of single-family rentals grew by 21 percent between 2005 and 2010 — from the top of the boom through the depths of the bust and foreclosure crisis — compared with a 4 percent increase in total housing units.

What’s the significance of this rapid conversion of ownership units to rental? For one thing, according to Mark Fleming, chief economist for CoreLogic, a mortgage and real estate research firm, mass conversions are contributing to the severe declines in homes-for-sale inventories in markets where foreclosure rates were most pronounced during the bust. Lack of inventory, in turn, is pushing up prices of entry-level homes in those areas.

But the ORC-Premier study suggests that the new waves of single-family rentals may also be providing important pathways to homeownership, not only for first-timers but for those displaced by the housing bust. Fully 60 percent of rental home tenants say they plan to buy a house sometime in the next five years By contrast, only 44 percent of multifamily apartment building renters have similar plans.

According to the study, the high interest in ownership “reflects the new roles single-family rentals are fulfilling as a stepping stone to homeownership, both for first-time buyers and as a sanctuary for large numbers of families displaced by foreclosure but who plan to buy again when they can afford to do so.”

The study found that, compared with apartment tenants, single-family renters made more money ($75,000 to $100,000 vs. $50,000 to $75,000), have more children in their homes and are more concerned about local school quality and community facilities such as parks and recreational areas.

Asked by interviewers what impediments to purchasing a house they anticipate within the coming five years, nearly a third said they may not be able to qualify for a mortgage. The time frame coincides with the number of years that individuals with seriously damaged credit files — a foreclosure, bankruptcy, short sale and multiple defaults on other debt obligations — need to fully rehabilitate their credit and build back their credit scores to a level that will qualify them for a home loan on favorable terms.

Bottom line from the study: Single-family rentals are likely to remain a growing factor in the housing market, as incubators and safe havens for future purchasers. At the same time, though, they may — at least temporarily — depress the national homeownership rate, which stands at around 65 percent, down from 69 percent during the boom.

Kenneth Harney is executive director of the National Real Estate Development Center

60% of Single-Family Renters Plan to Buy Within 5 YearsThursday, March 14, 2013
Category: Press Releases

60% of Single-Family Renters Plan to Buy Within 5 Years

 

Daily Real Estate News | Tuesday, February 26, 2013

Renters of single-family homes are twenty-five percent more likely than apartment tenants to stay in their current homes fives years or longer, according to a new survey by Opinion Research Corporation. The finding suggests that “demand for single-family homes, the fastest growing rental category, will be more stable than multi-family demand,” according to the survey findings.

Renters also say they plan to become home owners one day, particularly among single-family tenants. Sixty percent of single-family renters and 44 percent of apartment renters say they plan to become home owners within the next five years. 

“The near term interest in becoming home owners among single-family tenants reflects the new roles single-family rentals are fulfilling as a stepping stone to home ownership for first-time buyers and as a sanctuary for large numbers of families displaced by foreclosures but who plan to buy again when they can afford to do so,” according to the survey results. 

The survey also found that single-family renters make more money and are twice as likely to have children as apartment renters, according to the survey. The survey found that the median income of a single-family renter is $75,000 to $100,000 compared to $50,000-$75,000 for apartment dwellers. Single-family renters also tend to be older, with the majority aged 35 to 44, compared to 14 to 34 among apartment dwellers.

Property investor gets serious in FloridaTuesday, February 12, 2013
Category: News
 

Giant property investor gets serious in Florida

/ Wednesday, November 7, 2012

The Blackstone Group and its partners have begun deploying their massive war chest to buy up distressed homes in Florida.

In October alone, the giant New York-based investment firm spent more than $80 million to buy 536 properties in 11 counties, including 23 properties in Sarasota and 14 in Manatee.

All the buying has been done through THR Florida LLC, which is owned by Riverstone Residential Group — a Dallas apartment rental and management company.

Riverstone is one of two companies that teamed up with Blackstone to organize the massive real estate buying spree that has the potential to change the dynamics of an already rebounding market.

“They’re taking properties off the market, which is not a bad thing,” said John Schaub, a Sarasota real estate investor and author of ‘Building Wealth One House at a Time.’ “That usually drives up prices a bit.”

But for one Port Charlotte real estate agent who concentrates on helping investors buy distressed properties, the arrival of Blackstone is bad news.

“They’re outbidding everyone at auction,” the agent said. “They’re just mopping the floor down here in North Port. We’ve been left twiddling our thumbs.”

Blackstone’s goal, according to press reports, is to buy as many single family homes as possible, rent them out and then package the properties into a real estate investment trust that can be sold to investors.

“But managing single family home rentals is not the same as managing apartment buildings,” Schaub said. “Another company tried to do it in the late 1980s.”

Schaub’s prediction is that Blackstone and its partners will begin reselling the properties in two or three years.

While Blackstone has already acquired more than 1,500 houses around Phoenix and Southern California, the buying in Florida has just begun and has been heaviest in the Tampa Bay area.

Court records show THR Florida bought 250 properties in Hillsborough County last month. It bought 89 in Polk County and 88 in Pasco.

 

 

JPMorgan Entices Millionaires to Become Landlords: Monday, February 4, 2013
Category: Press Releases

Feb. 4 (Bloomberg) -- JPMorgan Chase & Co. is giving its wealthiest clients the chance to invest in the single-family rental market after other investments linked to the U.S. housing recovery jumped in value.
     The firm’s unit that caters to individuals and families with more than $5 million, put client money in a partnership that bought more than 5,000 single family homes to rent in Florida, Arizona, Nevada and California, said David Lyon, a managing director and investment specialist at J.P. Morgan Private Bank. Investors can expect returns of as much as 8 percent annually from rental income as well as part of the profits when the homes are sold, he said.
     The bank’s wealthy clients are joining a growing number of private-equity firms and individuals buying rental homes in the regions hardest hit by the U.S. housing crash. Blackstone Group LP has spent $2.7 billion, and said last month it accelerated purchases as home prices rise faster than anticipated. Even after home values in November gained by the most in six years, investors are wagering on rental properties as an alternative to housing-related stocks and mortgage debt that’s already soared.
     “The traditional places people might look -- homebuilder stocks and appliance makers -- probably aren’t the best places for new investments,” said John Buckingham, chief investment officer at Al Frank Asset Management in Aliso Viejo, California, which oversees about $4.5 billion. “They’ve had fantastic runs.”

Vulcan Investment Partners Newsletter January 2013Tuesday, January 22, 2013
Category: News

 

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Newsletter

January 2013

 

 

 

 

EDITOR´S  LETTER

 

 

VULCAN HAS AQCUIRED MORE THAN  150 PROPERTIES !

 

It has only been 3 months since our first Newsletter and Vulcan has already taken significant steps towards achieving its goals.

Our efforts have been featured in numerous recognized publications that begin to cement our name  as a recognizable one in the distressed real estate space.

Vulcan has acquired more than 150 properties in South Florida, rehabilitated more than 100, and both rented  and sold its inventory at superior rates relative to the market and other players in this space. As of 3Q12, the Fund has a Net Asset Value (NAV)  of $17,776,475 and a Net Return of 26.93%.

 

After being among the pioneers in single-family home aggregation strategies, Vulcan's business model is now being validated with the entry of renowned institutional investors like Blackstone Group, Starwood, and Goldman Sachs into this space. This sector has recently seen the engagement of large financial institutions, like Citigroup, extending lines of credit to market players in addition to the first single-family home REIT IPO.

In terms of Vulcan's Target Assets, a high number of weekly foreclosures continue to provide the Fund with a pipeline of distressed properties at significantly discounted prices. By way of example, in Dade County last month the Court announced acceleration in the foreclosure process to allow banks to further rid themselves of legacy non-performing assets. Vulcan expects this to importantly expand the number of opportunities in the months ahead.

Market dynamics continue to favor the Fund's strategy due to rising construction costs and scarce labor driving sales of existing versus new home sales. Additionally, occupancy and rental rates have maintained their upward trend, benefiting Vulcan's rental portfolio.

In this issue, you will find useful information regarding the Fund's performance, our latest acquisitions, relevant real estate news, and additional industry and macroeconomic data.

Please do not hesitate to contact us with any questions or comments.

Wishing you the best for 2013.


Emilio Braun Burillo
Managing Partner
Investor Relations


ebraun@vulcanfunds.com

www.vulcanfunds.com

 

 

 

 

3Q12 Net Asset Value ( NAV)

 

 

 

 

3Q12 Net Asset Value ( NAV)

Thru 3Q12, Subscriptions to the Fund totaled $14,000,000 and the Net Asset Value, as provided by Cortland Capital Market Services, rose to $17,776,475. This represents a Net Return (pre-tax) to the Fund of 26.93% since inception*.

Read more ›

 

 

 

Latest News Articles

 

 

VULCAN ACQUISITIONS

Vulcan 150
Purchase Price 90,200 usd.
Sqft. construction 1,583

 

Read more ›

 

RECENT NEWS

Blackstone Rushes $2.5 Billion Purchase as Homes Rise

By John Gittelsohn
Blackstone Group LP, the largest U.S. private real estate owner,...

Read more ›

 

IN THE NEWS

Vulcan Investment Partners (www.vulcanfunds.com), founded by a group of leading Mexican businessmen and financial experts...

 

 

 

Read more ›

 

VULCAN TEAM BIO

Guillermo Moreno
North Zone Supervisor

 

 

 

 

Read more ›

 

 

 

Articles

 

 

3Q12 Net Asset Value ( NAV)

 

Thru 3Q12, Subscriptions to the Fund totaled $14,000,000 and the Net Asset Value, as provided by Cortland Capital Market Services, rose to $17,776,475. This represents a Net Return (pre-tax) to the Fund of 26.93% since inception*.

*Unaudited and exclusive of the Subscription Incentive. Individual partner returns may vary due to the Subscription Date and Subscription Incentive, amongst other factors.

 

 

 

 

 

 

 

 

 

Top ›

     

 

 

 

Vulcan 150

 

North Miami, Fl

Single Family Home
Bedrooms 3, Bathrooms 2,

Sqft. of construction 1,583

Purchase Price $90,200

Mortgage Foreclosed:$185,361

 

 

Vulcan 152

 

Miami Gardens, Fl
Town House
3 Bedrooms, 1 Bathrooms,

Sqft. of construction 1,465

Purchase Price $100,700
Mortgage Foreclosed: $197,468

Top ›

 

 

 

RECENT NEWS

 

Blackstone Rushes $2.5 Billion Purchase as Homes Rise

 

By John Gittelsohn

Jan. 9 (Bloomberg) -- Blackstone Group LP, the largest U.S. private real estate owner, accelerated purchases of single- family homes as prices jumped faster than it anticipated.
Blackstone has spent more than more than $2.5 billion on 16,000 homes to manage as rentals, deploying capital from the $13.3 billion fund it raised last year, said Jonathan Gray, global head of real estate for the world's largest private equity firm. That's up from $1 billion of homes owned in October, when Blackstone Chairman Stephen Schwarzman said the company was spending $100 million a week on houses.
"The market is moving much faster than anybody thought possible," Gray said during an interview in Blackstone's New York headquarters. "Housing is much stronger than people anticipated."
Blackstone is the largest investor in single-family homes to manage as rentals, acquiring properties in nine cities, from Miami to Phoenix, where prices surged 22 percent in the 12 months through October. The firm, along with Thomas Barrack's Colony Capital LLC and Two Harbors Investment Corp., is seeking to transform a market dominated by small investors into a new institutional asset class that JPMorgan Chase & Co. estimates could be worth as much as $1.5 trillion.
The market, which has been "dominated by 'Mom and Pop' owners" could total 12 million homes and be double the size of the institutional multifamily market, JPMorgan analysts led by Anthony Paolone, wrote in a note yesterday. "A corporate structure with institutional capital around the business makes sense."

Racing Recovery

Blackstone, which started buying the properties last year, has been racing against the real-estate recovery as prices across the U.S. rose more than economists forecast, with the areas hardest hit by the crash rebounding the most.
The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent in the 12 months through October, the biggest 12-month advance since May 2010, the group said last month in New York. Prices will gain 3.3 percent in 2013 after an estimated 4.5 percent jump last year, based on the median estimates of 15 economists and housing analysts surveyed by Bloomberg News.
Blackstone is buying in Atlanta, Chicago, Las Vegas, Phoenix, Northern and Southern California; Miami, Orlando and Tampa, Florida -- where prices fell so far that they "overshot," said David Roth, managing director at Blackstone overseeing single-family home rentals.

'Warehousing' Homes

Blackstone has been purchasing through foreclosure auctions and short sales, in which banks agree to accept less than is owed on the mortgage, after more than 5 million homeowners lost their homes since the market's peak in 2006.
It's bought so quickly it's "warehousing" more than half of the homes it's acquired as it completes the purchase and hires staff and contractors to renovate and rent the properties, Gray said. It takes about 30 days to fix each home and then as much as 30 days to lease the property, he said.
"Renovating the 16,000 homes is an enormous job," Gray said.
By comparison, D.R. Horton Inc., the largest U.S. homebuilder by volume, sold 18,890 homes and generated $5.35 billion in revenue in fiscal 2012.
Colony Capital has bought about 5,500 homes since April, spending more than $500 million, and expects to reach $1.5 billion invested by the end of the year. Closely held Waypoint Homes said it has bought about 2,500 homes and expects to have 10,000 homes by the end of 2013.

'Strong Appetite'

"We are seeing increased supply of rental homes as some of these big companies have moved into the space, but we're still seeing a strong appetite as well," said Colin Wiel, co-founder and managing director of Waypoint. "We always anticipated that prices were going to rise pretty quickly. They've risen quicker during the last 12 months than we would've guessed."
Blackstone currently buys all of its homes with cash and then finances pools of houses with up to 60 percent debt. Conventional single-family home mortgages are financed with a 20-percent down payment.
The firm got a $600 million line of credit from Deutsche Bank AG in October. It's in talks with the Frankfurt-based lender to double the financing, according to two people with knowledge of the negotiations. Deutsche Bank will lead a group of banks that will contribute an additional $600 million, according to the people, who asked not to be identified because the talks are private.

'Limited Leverage'

Financial institutions have been slow to back single-family rental homes, because large investors have little history to demonstrate cash flows and cost of operations. "While leverage is currently limited, potential financing options include secured credit lines, lending syndicates, high- yield debt, government sponsored enterprise-provided financing, and securitization," Jade Rahmani, an analyst with Keefe, Bruyette & Woods Inc. in New York, wrote in a note yesterday.
Citigroup Inc. extended a $245 million line of credit to Waypoint in October, enabling the investment firm to multiply its initial $150 million in capital from GI Partners, a Menlo Park, California-based private equity fund. American Residential Properties, which has 1,500 homes in five states, received a line of credit from Wells Fargo & Co. in June 2010. The company announced plans for an initial public offering of shares as early as the first quarter of this year, depending on market conditions.
Blackstone's strategy in real estate generally has been to "buy, fix and sell," said Gray, who in 2007 engineered the largest real estate buyout ever when Blackstone acquired Sam Zell's Equity Office Properties Trust for $39 billion including assumed debt. Gray's real estate business brought in $1 billion in profit for the firm in 2011.
In the case of the single-family business, Blackstone will rent and manage the homes through Invitation Homes, which it founded last year with Riverstone Residential Group, an apartment management company based in Dallas.
While Blackstone ultimately will benefit from the properties' price appreciation, in the meantime, the homes will generate revenue and cash flow, Gray said.
"We're building a real company," he said.

 

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IN THE NEWS…

 

Vulcan Investment Partners (www.vulcanfunds.com), founded by a group of leading Mexican businessmen and financial experts, will be purchasing 1,200 repossessed and foreclosed homes in South Florida in the next years.

Vulcan administers Vulcan Dynamic Realty Fund LP, a fund dedicated to purchasing and renovating distressed properties at lower prices than their original construction cost.

Vulcan acquires foreclosed properties or those that are bank owned and rents them for several years at an attractive cap rate before selling them as the housing recovery takes hold. The firm expects to rent 70 percent of its properties and sell the remainder at high margins.

"The residential home market in South Florida is definitely on the rise, but we still see about 700 single family homes come out of foreclosure every week in Broward and Miami-Dade counties," said Inaki Negrete, CEO of Vulcan Investment Partners.

"When we looked at the low acquisition prices, along with property appreciation and a high rental cap rate, we were able to project a high return on investment over five years," said Emilio Braun, Vulcan's Chief Marketing Officer.

"Many see this strategy as a way of taking advantage of the demand for rentals and the low U.S. home prices," Negrete said. "We're buying properties once valued at $200,000 or more for $75,000 and making them available for a reasonable $1500-a-month rent."

Earlier this year, South Florida had the second-highest increase nationwide in foreclosure activity with a 53 percent increase in foreclosure filings. As investors absorb the distressed properties, the market will balance out, with properties increasing in value and construction activity picking up, Negrete said.

Vulcan's founders see significant community benefits from their multimillion-dollar investment.

"Vulcan in essence is helping revitalize the South Florida real estate market by reducing the number of foreclosed properties and making them affordable to renters and buyers," Negret said.

About Vulcan Investment Partners

Vulcan Investment Partners, LLC incorporated on July 13, 2011 to act as General Partner to private real estate funds engaged in the purchase, sale, and leasing of distressed properties in the East Coast and Sunbelt region. Vulcan controls investment strategies and structural and organizational decisions of private real estate funds. www.VulcanFunds.com

 

 

 

Source: Press Release Little Fish Media

 

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VULCAN TEAM BIO

 

Guillermo Moreno
North Zone Supervisor

Born in Nicaragua and raised in Miami, Guillermo has a Bachelor's Degree from Miami-Dade College and has been in the real estate business for years working in various areas.

His duties at Vulcan include the inspection, supervision, construction progress, and weekly property reports.


He has vast knowledge of the Dade and Broward County areas. Guillermo is a key element to our daily operations of the company.



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You’re receiving this newsletter because you’ve subscribed to our Newsletter. Not interested anymore? Unsubscribe instantly. Copyright © 2012 Vulcan Investment Partners. All Rights Reserved.

 

 

Florida defies housing rebound as foreclosures soarThursday, January 17, 2013
Category: News

Florida Defies Housing Rebound as Foreclosures Soar

Florida’s foreclosure crisis just won’t end. More than six years after subprime lending and overbuilding led to the worst U.S. real estate slump, the state had the biggest increase in home seizures last year, and the highest foreclosure rate, RealtyTrac Inc. said.

One in every 32 Florida households received a notice of default, auction or repossession in 2012, more than double the average U.S. rate of one in 72, the Irvine, California-based data seller said today in a report. Home repossessions increased by 16,276 during the year to 84,456, the biggest gain nationwide. Adding to the state’s woes is a backlog of foreclosures caused by a required court review of each case.

Enlarge image Florida Defies Housing Rebound as Foreclosures Soar: Mortgages

Florida Defies Housing Rebound as Foreclosures Soar: Mortgages

Florida Defies Housing Rebound as Foreclosures Soar: Mortgages

Joe Raedle/Getty Images

One in every 32 Florida households received a notice of default, auction or repossession in 2012, more than double the average U.S. rate of one in 72.

One in every 32 Florida households received a notice of default, auction or repossession in 2012, more than double the average U.S. rate of one in 72. Photographer: Joe Raedle/Getty Images

U.S. Housing Market Has `Momentum,’ Eisenbeis Says
 
4:47

Jan. 16 (Bloomberg) -- Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc., talks about the Federal Reserve’s Beige Book business survey and negotiations over the federal debt limit. Eisenbeis speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Enlarge image Florida Defies Housing Rebound as Foreclosures Soar

Florida Defies Housing Rebound as Foreclosures Soar

Florida Defies Housing Rebound as Foreclosures Soar

Mark Elias/Bloomberg

Florida, one of four so-called sand states that had the biggest booms before crashing, is the last of the group including California, Nevada and Arizona to rebound.

Florida, one of four so-called sand states that had the biggest booms before crashing, is the last of the group including California, Nevada and Arizona to rebound. Photographer: Mark Elias/Bloomberg

“Florida has had the worst problem the whole time, the combination of speculation and a run-up in prices and a judicial timeline that makes foreclosure sales take much longer,”Herb Blecher, senior vice president at mortgage-data provider Lender Processing Services Inc., said in an interview. “Even though they’re progressing somewhat, there’s still a foreclosure bottleneck.”

Florida, one of four so-called sand states that had the biggest booms before crashing, is the last of the group including California, Nevada and Arizona to rebound. While the S&P/Case-Shiller home-price index for 20 U.S. cities surged 4.3 percent in October from a year earlier, the Miami and Tampa metropolitan areas in Florida were laggards among the component members “and have not recovered much so far,” according to index chairman David Blitzer.

Miami, Tampa

Phoenix and San Francisco area values have both advanced more than 22 percent from their lows, San Diego is up 12 percent and Las Vegas rose more than 11 percent, all surpassing gains of 8.2 percent in Tampa and 9.5 percent in Miami, the best- performing Florida market, S&P/Case-Shiller data show. Both of those cities are still down by about half from their market peaks in 2006, according to the measure.

“Arizona dealt with their problems, whereas Florida really hasn’t come down from the elevated level of foreclosures,” Robert Tayon, New York-based vice president of securitized products research for Barclays Plc, said in a phone interview.

Lower-priced areas in northern Florida cities such as Jacksonville and Tallahassee are showing a “sluggish recovery” compared with vacation destinations on the Atlantic and Gulf of Mexico coasts in the south, saidLawrence Yun, chief economist of the National Association of Realtors in Washington. Judicial supervision of repossessions is slowing Florida’s rebound, in contrast to California and Arizona, so-called non-judicial states, where lenders send notices to delinquent borrowers and record defaults at the county level without court intervention, Yun said.

Third-Slowest

It took an average 853 days in Florida to complete a foreclosure in the fourth quarter, the third-longest behind New York and New Jersey, RealtyTrac said in today’s report. The U.S. average rose to 414 days from 348 days a year earlier, the most since the data firm began tracking the metric in 2007. Texas had the shortest period at 113 days.

The judicial process makes Florida “unique” among the four sand states, and has resulted in a buildup of distressed property, Yun said in a phone interview. Almost 20 percent of outstanding Florida loans were more than 30 days delinquent or in foreclosure in November, the largest share of non-current mortgages in the nation, according to data provider Lender Processing Services.

Judicial States

Almost 12 percent of Florida loans were in foreclosure, also the biggest portion among U.S. states, Jacksonville, Florida-based LPS said Jan. 11.

Like Florida, six other judicial states ranked among the top 10 for non-current mortgages, with New Jersey second with almost 17 percent of its loans either delinquent or on properties already taken back by lenders; New York fifth at almost 14 percent; and Illinois, Maryland, Louisiana and Connecticut ranking seventh through 10th. The U.S. average in November was 10.6 percent, according to LPS.

Even with Florida’s top share of non-current mortgages, the number of those loans declined by 13 percent from a year earlier, outperforming other judicial states and pointing to an eventual resolution of the foreclosure crisis, LPS’s Blecher said.

High foreclosure totals have U.S. homebuilders, hedge funds and private-equity firms positioning themselves for the recovery. Florida, along with Texas, California and Las Vegas, presented “extremely high-margin opportunities” for land purchases in the fourth quarter, Lennar Corp. (LEN) President Richard Beckwitt said during the Miami-based builder’s Jan. 15 earnings call.

Homebuilder Sentiment

Homebuilder sentiment is at the highest level since June 2006, fueled by conditions in the western and southern U.S., Barclays analyst Cooper Howes said in a note yesterday. Builders broke ground on more houses than forecast in December, capping the best year for the industry since 2008, the Commerce Department reported today in Washington.

Rising prices and a declining supply of distressed homes are primary reasons for the optimism, Tayon said.

Blackstone Group LP (BX) is buying foreclosures in Atlanta, Chicago, Las Vegas, Phoenix, Northern and Southern California; Miami, Orlando and Tampa, Florida -- where prices fell so far that they “overshot,” said David Roth, managing director at Blackstone overseeing single-family home rentals.

Government-run Fannie Mae, the largest holder of foreclosed houses with an inventory of 107,225 repossessed homes as of Sept. 30, plans to sell most of them one-by-one after a bulk sale of 2,500 properties last year. The U.S. is the biggest owner of Florida foreclosures with 23,405, an increase of 50 percent over its total in 2011, according to RealtyTrac.

Bank Inventory

Florida’s bank-owned inventory at Dec. 31 was 83,697, up 6.8 percent from 2011. It had the highest share of foreclosure supply compared with other states for the U.S., Bank of America Corp. (BAC) and Well Fargo & Co., and the second-highest portion for JPMorgan Chase & Co. (JPM), Citigroup Inc. and Ally Financial Inc., according to RealtyTrac.

Nationwide, the number of unique U.S. properties that received a foreclosure filing last year fell 3 percent to more than 1.83 million from 1.9 million in 2011, and decreased 36 percent from 2.9 million in the 2010 peak year. About 1.39 percent of households got at least one filing, down from 1.45 percent and 2.3 percent, RealtyTrac said.

Florida led with the most properties in some stage of mortgage distress at 305,766, or 20 percent of the U.S. total. California followed at 212,172, or 14 percent; Illinois was third at 135,858, or 9 percent; and Ohio was fourth at 76,015, or 5 percent.

Vacation Destination

In Naples on Florida’s gulf coast, an established vacation destination for decades, median prices last year rose 17 percent to $204,000, said Brenda Fioretti, residential agent at Prudential Florida Realty and former president of the Naples Area Board of Realtors. It was the biggest annual gain since 2006, one of the bright spots for the state in 2012.

“Naples is unique because investors are attracted to our second homes,” Fioretti said in an interview. “We’ve always been a high-priced area and don’t have much of a starter home inventory. Back in 2004 and 2005, people were buying everything they could. They thought they’d just turn right around and sell, and then they couldn’t get rid of them.”

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net

To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net; Rob Urban at robprag@bloomberg.net.

Blackstone Group accelerated Purchases of SIngle Family HomesWednesday, January 9, 2013
Category: News
Jan. 9 (Bloomberg) -- Blackstone Group LP, the largest U.S. private real estate owner, accelerated purchases of single- family homes as prices jumped faster than it anticipated. 
 
 Blackstone has spent more than more than $2.5 billion on 16,000 homes to manage as rentals, deploying capital from the $13.3 billion fund it raised last year, said Jonathan Gray, global head of real estate for the world’s largest private equity firm. That’s up from $1 billion of homes owned in October, when Blackstone Chairman Stephen Schwarzman said the company was spending $100 million a week on houses. 
 
 “The market is moving much faster than anybody thought possible,” Gray said during an interview in Blackstone’s New York headquarters. “Housing is much stronger than people anticipated.” 
 
 Blackstone is the largest investor in single-family homes to manage as rentals, acquiring properties in nine cities, from Miami to Phoenix, where prices surged 22 percent in the 12 months through October. The firm, along with Thomas Barrack’s Colony Capital LLC and Two Harbors Investment Corp., is seeking to transform a market dominated by small investors into a new institutional asset class that JPMorgan Chase & Co. estimates could be worth as much as $1.5 trillion. 
 
 The market, which has been “dominated by ‘Mom and Pop’ owners” could total 12 million homes and be double the size of the institutional multifamily market, JPMorgan analysts led by Anthony Paolone, wrote in a note yesterday. “A corporate structure with institutional capital around the business makes sense.” 
 
 Racing Recovery 
 
 Blackstone, which started buying the properties last year, has been racing against the real-estate recovery as prices across the U.S. rose more than economists forecast, with the areas hardest hit by the crash rebounding the most. 
 
 The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent in the 12 months through October, the biggest 12-month advance since May 2010, the group said last month in New York. Prices will gain 3.3 percent in 2013 after an estimated 4.5 percent jump last year, based on the median estimates of 15 economists and housing analysts surveyed by Bloomberg News. 
 
 Blackstone is buying in Atlanta, Chicago, Las Vegas, Phoenix, Northern and Southern California; Miami, Orlando and Tampa, Florida -- where prices fell so far that they “overshot,” said David Roth, managing director at Blackstone overseeing single-family home rentals. 
 
 ‘Warehousing’ Homes 
 
 Blackstone has been purchasing through foreclosure auctions and short sales, in which banks agree to accept less than is owed on the mortgage, after more than 5 million homeowners lost their homes since the market’s peak in 2006. 
 
 It’s bought so quickly it’s “warehousing” more than half of the homes it’s acquired as it completes the purchase and hires staff and contractors to renovate and rent the properties, Gray said. It takes about 30 days to fix each home and then as much as 30 days to lease the property, he said. 
 
 “Renovating the 16,000 homes is an enormous job,” Gray said. 
 
 By comparison, D.R. Horton Inc., the largest U.S. homebuilder by volume, sold 18,890 homes and generated $5.35 billion in revenue in fiscal 2012. 
 
 Colony Capital has bought about 5,500 homes since April, spending more than $500 million, and expects to reach $1.5 billion invested by the end of the year. Closely held Waypoint Homes said it has bought about 2,500 homes and expects to have 10,000 homes by the end of 2013. 
 
 ‘Strong Appetite’ 
 
 “We are seeing increased supply of rental homes as some of these big companies have moved into the space, but we’re still seeing a strong appetite as well,” said Colin Wiel, co-founder and managing director of Waypoint. “We always anticipated that prices were going to rise pretty quickly. They’ve risen quicker during the last 12 months than we would’ve guessed.” 
 
 Blackstone currently buys all of its homes with cash and then finances pools of houses with up to 60 percent debt. Conventional single-family home mortgages are financed with a 20-percent down payment. 
 
 The firm got a $600 million line of credit from Deutsche Bank AG in October. It’s in talks with the Frankfurt-based lender to double the financing, according to two people with knowledge of the negotiations. Deutsche Bank will lead a group of banks that will contribute an additional $600 million, according to the people, who asked not to be identified because the talks are private. 
 
 ‘Limited Leverage’ 
 
 Financial institutions have been slow to back single-family rental homes, because large investors have little history to demonstrate cash flows and cost of operations. 
 
 “While leverage is currently limited, potential financing options include secured credit lines, lending syndicates, high- yield debt, government sponsored enterprise-provided financing, and securitization,” Jade Rahmani, an analyst with Keefe, Bruyette & Woods Inc. in New York, wrote in a note yesterday. 
 
 Citigroup Inc. extended a $245 million line of credit to Waypoint in October, enabling the investment firm to multiply its initial $150 million in capital from GI Partners, a Menlo Park, California-based private equity fund. American Residential Properties, which has 1,500 homes in five states, received a line of credit from Wells Fargo & Co. in June 2010. The company announced plans for an initial public offering of shares as early as the first quarter of this year, depending on market conditions. 
 
 Blackstone’s strategy in real estate generally has been to “buy, fix and sell,” said Gray, who in 2007 engineered the largest real estate buyout ever when Blackstone acquired Sam Zell’s Equity Office Properties Trust for $39 billion including assumed debt. Gray’s real estate business brought in $1 billion in profit for the firm in 2011. 
 
 In the case of the single-family business, Blackstone will rent and manage the homes through Invitation Homes, which it founded last year with Riverstone Residential Group, an apartment management company based in Dallas. 
 
 While Blackstone ultimately will benefit from the properties’ price appreciation, in the meantime, the homes will generate revenue and cash flow, Gray said. 
 
 “We’re building a real company,” he said. 
 
 To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net 
 
 To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net ; Rob Urban at robprag@bloomberg.net 
 
Apartment Rents continue to riseTuesday, January 8, 2013
Category: News

APARTMENT RENTS CONTINUE TO RISE

Apartment landlords continued to impose hefty rent increases as 2012 drew to a close, although

there are some early indications they could be losing their leverage with tenants.

The average nationwide monthly apartment rent was $1,048 in the fourth quarter, up 0.6% from

the third quarter and up 3.8% from a year earlier, according to a report set to be released Tuesday

by real-estate research firm Reis Inc. The year-over-year increase was the largest since 2007 and a

sign that landlords still have the upper hand they regained in 2010.

The nation's apartment vacancy rate, which has declined

since hitting 8%in the aftermath of the financial crisis,

fell to 4.5% from 4.7% in the third quarter. The rate is the

lowest since 2001's third quarter.

High rates aren't deterring "people from renting," said

Jeff Donnelly, a real-estate analyst with Wells Fargo

Securities LLC.

Vacancy rates fell in some of the markets hit hardest by

the housing bust, including Phoenix, where vacancies

declined to 5.8%, and in Orlando, Fla., where vacancies

dropped to 5.3%.

New York City's performance offered perhaps one of the

report's biggest surprises. The city continues to have the

lowest vacancy rate among the cities tracked by Reis, at

2.1%, and effective rent levels were up 3.9% for the year. But in the fourth quarter, average rent

levels in New York declined 0.2% to an average of $2,985.

Rent levels in New York are already the highest in the nation and observers say some renters may

be resistant to paying anything higher. "Three thousand dollars is a very expensive threshold," said

Ryan Severino, a Reis senior economist. Rents "certainly can't keep going up forever." Rent levels in

Fairfield County, Conn., near New York, dropped 0.1% to $1,819.

Still, rates continue picking up in many other cities. Seattle led the nation with a 5.8% climb from

the prior year, while San Francisco, Houston and San Jose, Calif., saw increases topping 5%.

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Miami firm looking to buy foreclosed homes in FloridaTuesday, December 4, 2012
Category: News

A Miami-based company says it's seeking investors interested in buying into Florida's bloated foreclosure market.

Title Capital Management is overseeing a $150 million fund in which investors buy, renovate and rent homes before reselling them in five to seven years. A separate $50 million fund allows investors to buy, fix up and "flip" the properties.

Two years ago, the firm managed a fund that achieved an average return of 25 percent in about 172 days, said Scott Kranz, principal of Title Capital.

"There is no shortage of opportunity," he said.

Last month, Vulcan Investment Partners, a Miami firm led by a group of Mexican businessmen, said it was spending $150 million to invest in foreclosed properties in South Florida. Other groups, including financier Warren Buffett and private equity firm The Blackstone Group, have announced similar plans in Florida and across the country.

Florida posted the nation's highest foreclosure rate in October for the second consecutive month, according to the RealtyTrac listing firm. One in every 312 homes in the Sunshine State was in some stage of foreclosure last month. Nevada was second at one in 352 homes.

A total of 28,783 Florida homes received a foreclosure notice in October, the most in the past year, RealtyTrac said.

Prospective buyers and real estate agents have complained in recent months about a lack of homes for sale, but there's an ample supply of foreclosures that eventually will hit the market, said Jack McCabe, a housing analyst in Deerfield Beach.

Since 2006, banks have repossessed 450,000 homes across Florida — and 200,000 of those have yet to be marketed for sale because lenders are hoping prices keep rising, McCabe said.

There are 350,000 Florida homes currently in the foreclosure process — and 550,000 more that have yet to enter the courts, McCabe said.

All told, 1.1 million of the state's 11.1 million homes are in or near foreclosure, he said.

"There's a strong appetite by investors for getting in on this and taking advantage of the real estate downturn and future boom," McCabe said.

But the strategy isn't foolproof, said Mike Larson, an analyst for Weiss Research in Jupiter.

"It does raise the antenna a little bit," Larson said. "If everybody's doing it, what's the risk? The risk is that they could overpay for homes again."

Title Capital says it's looking for individual and institutional investors. The firm plans to buy homes valued at $50,000 to $200,000 and rent them for $1,200 to $1,500 a month. Rental rates would be higher in some markets, including South Florida, Kranz said.

He was a principal in Strategica, a merchant banking group that handled financings of more than $30 billion. He also says he has raised $1.5 billion in equity capital for his own transactions.

Blackstone Sees Two-Year Window to Buy Houses: MortgagesThursday, November 15, 2012
Category: News

Investors buying foreclosed U.S. homes might have less than two years to accumulate properties as competition and rising prices shrink the pool of cheap assets, according to Blackstone Group LP (BX), the largest buyer.

“Prices are starting to move faster,” said Jonathan Gray, global head of real estate for Blackstone, which has invested about $1.5 billion this year in foreclosed homes. “That’s one of the risks that emerge as more people like us get into the space and as individual homeowner confidence grows. Frankly, buying a home today is pretty compelling.”

The opportunity for funds to buy homes at discounts could last less than two or three years, Gray said yesterday at the Bloomberg Commercial Real Estate Conference in New York as record-low mortgage rates and home prices down 40 percent from the peak entice individuals back into real estate. Atlanta, Phoenix, Las Vegas and other markets hit hard by the worst housing crisis since the Great Depression are rebounding as the economy improves and the supply of homes for sale shrinks.

Home Depot Inc. (HD), the largest U.S. home-improvement retailer, is the latest company to benefit from a housing recovery, reporting third-quarter earnings this week that beat analysts’ estimates.

“Geographically, the harder hit areas that were really the epicenter of the housing crisis appear to be on the mend,” Frank Blake, the company’s chairman and chief executive officer, said. “It has been consecutive, it has been consistent, so that is why we think it is healing.”

Price Gains

Home prices have risen year over year for seven consecutive months, which hasn’t happened since 2006, said Walter Molony, a spokesman for the National Association of Realtors.

The median price of a previously owned U.S. home rose 11.3 percent in September to $183,900, the biggest year-over-year gain since November, 2005, as inventories dwindled, the Washington-based National Association of Realtors said Oct. 19. That price is up 19 percent from January, when Blackstone started buying.

The number of homes for sale is drying up as demand improves, funds snap up foreclosed properties to rent out and owners remain reluctant to sell until prices rise further. Mortgages rates driven to record lows by Federal Reserve stimulus, along with a falling jobless rate, indicate sales will keep improving. Previously owned homes on the market dropped 3.3 percent in September to 2.32 million, the fewest for any September since 2002.

‘Beaten Down’

“The recovery in house prices could surprise people,” Gray said in a Bloomberg TV interview airing today on “Money Moves” with Deirdre Bolton. “They have just gotten beaten down so much and we’re not building enough to keep up with the population growth. Affordability is there. I think as homeowners get a little bit of confidence, we will steadily have more people lean toward buying homes, faster home price appreciation, which will be good for this investment strategy and good for the economy at large.”

“With rising sales and a sustained downtrend in housing inventory, we’re projecting the median existing-home price to rise 6 percent this year and 5 percent in 2013, with comparable gains in 2014,” Molony said. “However, if housing construction doesn’t return to normal, prices could accelerate.”

Even with the cost of borrowing at record lows, many potential homeowners lack the savings and income to buy, buoying the rental housing market and drawing in institutional investors.

Biggest Buyer

Blackstone, the world’s largest private-equity firm, has spent about $1.5 billion on 10,000 foreclosed properties in the U.S. this year, making it the biggest buyer of single-family homes in the country, Gray said. Blackstone has been buying $100 million of houses a week, Stephen Schwarzman, chairman of the New York-based firm, said during an Oct. 18 earnings call.

“This is the kind of thing that happens once -- every once in a while, where you see something that’s a market-turning trend and we are loading the boat,” Schwarzman said.

Blackstone fell 2.7 percent to $13.98 today in New York. It’s returned 0.5 percent, including dividends, during the past year, compared with 11 percent for the Standard & Poor’s 500 Index.

Thomas Barrack’s Colony Capital LLC, a private-equity firm, has bought about 5,500 homes since April, spending more than $500 million, and expects to reach $1.5 billion invested by the end of next year. Closely held Waypoint Homes has said it has bought about 2,500 homes and expects to have 10,000 homes by the end of next year.

REIT Plans

Blackstone, Colony and other investors buying homes in bulk to rent have said they could create real estate investment trusts out of the properties to take public, paying dividends from the rental income on the homes, similar to the wave of apartment REITs such as Equity Residential (EQR) that went public in the early 1990s.

“There are differing opinions about whether the opportunity will continue beyond 2-3 years to buy houses at yields that make sense to institutional investors,” said Colin Wiel, co-founder and managing director of Waypoint Homes. “I believe this is an evergreen opportunity.”

While investment yields “will come down,” from about 7 percent today, excluding debt, to a level more in line with apartment-property yields, or about 5.5 percent, Wiel said, “I think institutional investors will be comfortable with that because the asset class will be ‘established’ by then.”

Blackstone paid less than $150,000 on average for homes that were valued during the 2006 peak at more than $300,000, Gray said. Blackstone has formed a company called Invitation Homes to focus on about 10 metropolitan areas that were particularly hard hit by the credit crisis. It has partnered with closely held Riverstone Residential Group based in Dallas to manage the properties.

‘Sizable Investment’

“It’s grown to be a sizable investment for us,” Gray said. “One of the key questions is, can you make this work?”

Blackstone plans to attract tenants by renovating the homes and providing better property management, Gray said. Because it’s buying homes after lenders have foreclosed, the properties generally are in poor condition and require investment to make them more livable.

“We’re coming in and deploying significant capital,” Gray said. “We’ve got to make this as efficient as possible,” he said. “I think it’s one of the barriers to entry. You have to make a huge infrastructure investment in order to execute.”

Owning 400 single-family homes spread out by geography, as opposed to one apartment building with 400 units, presents challenges for investors, Gray said. Blackstone is focused on about 10 markets, including Northern and Southern California, Phoenix, Tampa and Orlando in Florida, Atlanta, Chicago, Charlotte in North Carolina, Las Vegas and Seattle, he said.

One exit strategy for the firm is to sell stock to the public in the management company when the time is right, Gray said.

“We can create a business investors will want on an income basis,” he said. “I think we can create a real company that can be taken public.”

To contact the reporters on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net; Jason Kelly in New York at jkelly14@bloomberg.net.

To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net; Rob Urban at robprag@bloomberg.net.

Home Prices Up 7.6% From Year AgoThursday, November 8, 2012
Category: News

Home prices appreciated in a growing number of cities during the third quarter, the latest evidence that the real estate recovery is gaining momentum and breadth. The median price for an existing single-family home was $186,000 in the third quarter, up 7.6%
from a year earlier and the largest year-over-year growth since 2006, according to a report Wednesday from the National Association of Realtors. More cities saw gains. Single-family home prices rose in 120 of 149 metropolitan areas tracked by the NAR, up from 110 in the second quarter and 39 in the year-ago period.

Many of the sharpest home-price rebounds have been in markets hard hit by the real estate bust. In the Phoenix metropolitan area, for instance, median prices were up 34.9% from a year ago, according to the NAR. Three cities pummeled by the bust—Las Vegas, Miami, and Riverside, Calif. —all were in the top 20 for price gains with year-over-year increases between 12.0% and 12.7%. Median prices for existing homes measure the midpoint in sales at a given point in time for homes that
aren't newly built. The level of gains can be skewed if the mix of homes being sold shifts from one month to another. Median prices can rise, for instance, when more expensive homes sell in one month compared with the previous month, even if prices for those homes don't rise. Still, there is little doubt that the housing market has improved in the past year. There are fewer
"distressed" homes for sale—such as foreclosures and bank sales that tend to drag down prices—and that has whittled the inventory of unsold homes. In addition, rising rents and low interest rates have spurred buyers to return to the market.

At the close of the third quarter there were about 2.32 million existing homes for sale, down 20% from the third quarter of 2011. And rates for a 30-year fixed mortgage averaged 3.54% in the third quarter—a rock-bottom level by historical standards—which was down from a still-low 4.31% average a year ago.

All told, low home prices, rising rents and a slowly improving economy have given more Americans the motivation and confidence to become home owners. About 72% of respondents said it was a good time to buy a home, according to a monthly survey Fannie Mae issued Wednesday. While many consumers expect home prices to rise only modestly over the next year, they believe rental rates will continue to climb, further motivating them to buy.

What Today's Jobs Report Says About the Housing MarketMonday, November 5, 2012
Category: News

Any jump in jobs is good for housing, and October's gain of 171,000 is no different.

One of the biggest barriers to entry for potential home buyers, new and move-up, has been uncertainty in employment. So this positive report can only add to rising consumer confidence and wealth.

(Read more: Jobs Report Shows Some Gains.)

When you dig down into the numbers, however, you can see where the numbers are not quite as rosy as some would hope for both home buyers and builders.

 

While overall construction added 17,000 jobs in October, residential-building construction employment fell by 2,000. Residential specialty contractor jobs increased by 6,700, which speaks to the real root of today's housing recovery.

All-cash investors are leading the gains; they buy distressed properties and then repair and remodel them to turn them into rentals. It's no wonder remodelers are seeing greater gains than the home builders.

An industry index of remodeling finally climbed into the positive in October, making a significant jump to its highest level since the end of 2005. Both current conditions and future expectations saw gains on the National Association of Home Builders' remodeling index (RMI). The builders claim it is not just investors, but a result of rising home equity.

(Read More: Homeowners Hit by Sandy May Save Thousands of Dollars)

“The strength of the RMI, especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize,” said NAHB Remodelers Chairman George Moore Jr., a remodeler from Elm Grove, La. “As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off.”

 

Mortgages
 
30 yr fixed 3.46% 3.19%
30 yr fixed jumbo 4.03% 4.02%
15 yr fixed 2.84% 2.79%
15 yr fixed jumbo 3.40% 3.40%
5/1 ARM 2.89% 2.72%
5/1 jumbo ARM 2.93% 2.98%
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While any construction is better than no construction, housing analysts focus more on home building than remodeling, as the nation's home builders contribute more to the overall economy, with more jobs and materials. Home builders have ramped up production dramatically, as they rise from the ashes of the housing bust.

Housing starts and permits are up significantly from the bottom, and the public builders are all reporting at least double-digit gains in new orders.

They still, however, need to see more demand from their historically strong cohort, the first-time home buyer. Those younger Americans are seeing employment gains, but are still proportionally harder-hit than the rest of the work force.

(Read More: Home Prices Rise, but Analysts See Pressure Ahead)

"Among 25-34 year-olds, the prime age group for housing demand, 75.1 percent were employed in October, up from 74.9 percent in September and from 73.6 percent in October 2011,"" notes Jed Kolko of Trulia.com, a real estate sales and information website. "For this age group, the unemployment rate was 8.3 percent in October, down from 9.7 percent one year ago – an even bigger drop than for the economy overall. Labor force participation increased for this key group."

The downside in October's jobs report, however is that job growth in what Kolko calls “clobbered metros” was just 0.5 percent (annualized rate) through September – behind the national average of 1.6 percent for the same period. (These figures are annualized 3-month growth rates to September, the latest data released for metros.) Kolko defines clobbered metros as the areas with the biggest price declines during the bust and the highest vacancy rates now: "Job growth there is especially important for housing demand," he notes.

 

Click on ticker to follow real estate news:

US Home Builders

—Toll Brothers [TOL  32.31    0.11  (+0.34%)   ]

—DR Horton [DHI  21.11    0.07  (+0.33%)   ]

—Hovnanian Enterprises [HOV  4.75    0.03  (+0.64%)   ]

—PulteGroup [PHM  17.359    -0.011  (-0.06%)   ]

—Ryland Group [RYL  34.21    0.22  (+0.65%)   ]

—Lennar Corp [LEN  37.33    0.02  (+0.05%)   ]

—Beazer Homes USA [BZH  16.50    -0.02  (-0.12%)   ]

—Meritage Homes [MTH  36.40    -0.12  (-0.33%)   ]

—KB Home [KBH  16.0775    0.0775  (+0.48%)   ]

 

 

High Costs Bedevil BuildersMonday, October 29, 2012
Category: News

New-home construction has picked up momentum in recent months after years of contraction. But the industry is facing a fresh challenge: building costs are going through the roof.

Builders are seeing the prices of materials, labor and land rise due to shortages and reduced capacity among manufacturers, subcontractors and developers. Some industry veterans say the price increases could be temporary, noting that supply-demand imbalances often occur early in a recovery. That happens in part because the industries that fuel the engines of the construction
trade are wary about ramping up until they are sure the recovery is sustainable.

But rising costs mean many builders will try to pass along price increases to consumers. If too many potential
new-home buyers opt instead for an older home, that could have implications for the economy. Sales of new homes provide a much bigger lift to economic growth than sales of older ones. The National Association of Home Builders estimates that each new home built generates about three new jobs. "If somebody buys a new home, you've got to hire a bunch of construction workers to go build it," said Michael Hanson, senior U.S. economist with Bank of America Merrill Lynch. If fewer new
homes sell, he said, "that would mean less of a boost" to gross domestic product. The Census Bureau reported Wednesday that the median price of a new home was $242,400 in September, up 11.5% from a year ago. The median price of an existing home was $183,900 in September, up 11.3% from a year earlier.

The cost of framing lumber, which makes up nearly one-sixth of the total construction cost of a home, has risen 21% in the past year. Makers of drywall, which is used to build interior walls, haveboosted prices 25% since January and signaled more increases to come early next year. In addition, builders are paying more for land and labor.

But rising costs mean many builders will try to pass along price increases to consumers. If too many potential new-home buyers opt instead for an older home, that could have implications for the economy. Sales of new homes provide a much bigger lift to economic growth than sales of older ones. The National Association of Home Builders estimates that each new home built generates about three new jobs. "If somebody buys a new home, you've got to hire a bunch of construction workers to go build it," said Michael Hanson, senior U.S. economist with Bank of America Merrill Lynch. If fewer new homes sell, he said, "that would mean less of a boost" to gross domestic product. The Census Bureau reported Wednesday that the median price of a new home was $242,400 in September, up 11.5% from a year ago. The median price of an existing home was $183,900 in
September, up 11.3% from a year earlier. The cost of framing lumber, which makes up nearly one-sixth of the total construction cost of a home, has risen 21% in the past year. Makers of drywall, which is used to build interior walls, have boosted prices 25% since January and signaled more increases to come early next year. In addition, builders are paying more for land and labor. around for years and then found something else," said Megan McGrath, a home builder analyst with MKM Partners. "The trick is getting the skilled labor force to come back." That will be easy in some regions, but not everywhere. Jonathan Jaffe, Lennar's chief operating officer, said in a recent conference call that labor shortages are most acute in Phoenix, Texas and
parts of Florida.

In Arizona, the Legal Arizona Workers Act, a 2010 law meant to crack down on illegal immigrant workers, has driven many seasonal workers from the state, said Margot Veranes, a union organizer for painters and drywall-hangers in Phoenix.
Write to Robbie Whelan at Robbie.Whelan@wsj.com

Home Sales Rise for 15th MonthFriday, October 26, 2012
Category: News

The sales pace of previously owned homes eased slightly in September from August but were still well ahead of last year's pace, marking the 15th straight month of year-over-year home-sales gains. Existing homes were selling at a seasonally adjusted annual rate of 4.75 million units in September, the National Association of Realtors reported Friday. The Realtor group said sales eased from August's pace due in part to declines in the supply of homes for sale, which hit a 6½ year low.
September's sales figures were the second highest level of the year, down 1.7% from August and up 11% from a
year earlier. Some economists expected sales in September to decline "simply because they were so strong in August," said Patrick Newport, an economist with IHS Global Insight. The 2.32 million homes listed for sale in September was
20% below last year's level and down by 3.3% from August. Inventory hasn't been lower since 2005. At the current pace of sales, there were 5.9 months of supply in September, the lowest level since March 2006, before housing markets went into free fall.
Housing demand has climbed this year as mortgage rates have fallen to their lowest levels on record. Applications
for home-purchase mortgages last week rose 12% above last year's levels, according to a separate report from the
Mortgage Bankers Association this past week. Meanwhile, rising rents and improving consumer confidence has created urgency. Prices are also rising. Median home prices rose 11.3% from one year ago, to $183,900, the NAR said.
Sharp inventory declines are frustrating buyers and realestate agents but are creating favorable conditions for sellers, who are fielding multiple offers and selling their homes more quickly. Many buyers that need a mortgage are losing out to investors and other buyers willing to pay in cash.


"The markets need inventory right now," said Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm. "The pent-up demand is enormous. Rates are low and people are tired of the rent going higher."
Sales fell from August by 6.3% in the Northeast and by 3.4% in the West, where the inventory of foreclosed homes and other "distressed" cheap homes has plunged. Sales were up from one year ago in all four regions. The Northeast has lagged behind the rest of the country during the current recovery. On Wednesday, the Commerce Department reported that new home
construction in September jumped by 11% from August for the country as a whole, but fell by 5.1% in the Northeast.
Still, there are signs that demand could be picking up. Building permits for new single-family homes rose by 7.5% in September in the Northeast, the largest of any region. And new-home sales in August rose by 20% in the Northeast from one year ago, hitting a two-year high. The Realtors' report also showed that sales nationally are rising for more expensive homes, while
sales of cheap homes have plunged amid rising prices and thin supplies. Home sales dropped by 12.5% from one year ago for homes priced below $100,000, but rose by 15.9% for those priced between $250,000 and $500,000 and by 13.4% for those priced above $1 million.

Buyers Back After ForeclosureTuesday, October 16, 2012
Category: News

Millions of families lost their homes to foreclosure after the housing crash hit six years ago. Now, some of those families are back in the housing market. Call them the "boomerang" buyers.

It is difficult to quantify the exact number of boomerang buyers, but

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Millions of families lost their homes to foreclosure after the housing crash hit six years ago. Now, some of those families are back in the housing market. Call them the "boomerang" buyers, as Dawn Wotapka explains on Lunch Break. Photo: AP.

real-estate agents, mortgage brokers and home builders all say a significant number of new buyers are families and individuals who went through foreclosure as recently as three years ago, the time period that buyers who defaulted on a mortgage must typically wait before becoming eligible for a mortgage backed by the Federal Housing Administration.

On a recent conference call with investors, Stuart Miller, chief executive of Miami-based home builder Lennar Corp., said the company was seeing more people "coming out of the penalty box." At Cornerstone 

Communities, a San Diego home builder, roughly 20 of the 110 closings they have had this year came from buyers who have been through a foreclosure or short sale, estimates Ure Kretowicz, the company's chief executive.

"It's more than incremental business, that's for sure," adds Dan Klinger, president of K. Hovnanian American Mortgage, the mortgage arm of builder Hovnanian Enterprises Inc. With growing interest from these formerly delinquent buyers, K. Hovnanian provides its sales staff with a flier with industry guidelines listing the mortgage-eligibility rules for all types of derogatory events, from foreclosure to bankruptcy filings. "The industry is saying, 'Pay your dues and then get back into the market,' " Mr. Klinger says.

Using the three-year benchmark it takes to get an FHA-guaranteed loan, in this year's second quarter there were 729,000 households that were foreclosed upon during the bust that are now eligible to apply for an FHA mortgage, up from 285,000 in the second quarter of 2011, according to an analysis of foreclosure data by Moody's Analytics. The company projects that number will grow to 1.5 million by the first quarter of 2014.

Typical boomerang buyers are people like April Del Rosario, who purchased her first home in 2006 when she was 24 years old. Newly married and unsure of what terms such as adjustable-rate mortgage meant, Ms. Del Rosario and her husband paid $315,000 for a two-bedroom condominium in San Diego's Mission Valley area, a location they picked because it was central to their jobs. The $2,600 monthly mortgage payment was already a struggle, but when the mortgage rate was adjusted higher and Ms. Del Rosario became pregnant, the couple was overwhelmed. They lost the home to foreclosure in 2009.

"We were really young and stupid," she says. "All of a sudden, our already really expensive mortgage was going to go up. I was pregnant and everything was just bad timing on our part."

Three years later, the couple is back in the market. The Del Rosarios were recently approved for a loan for a $280,000 home in Chula Vista, south of San Diego, which, when it is completed in January, will have three bedrooms and a two-car garage. Instead of proximity to work, they picked the location based on its school district and their desire to live there a long time. And while they now must pay $300 a month in mortgage insurance, the family's income has grown, and their total mortgage payment is still a little lower than before, around $2,400. "We're trying to be really conservative. We just want to have a nice place for our son," she says.

There is a web of rules for when and how people who have lost homes to foreclosure or short sales or have gone through a bankruptcy can become eligible for a new mortgage. It typically takes three years after a foreclosure or short sale for a buyer to qualify for an FHA-backed loan. In many cases, it takes just one year after a Chapter 13 bankruptcy discharge, according to the agency.

Fannie Mae or Freddie Mac require a wait period of as much as seven years after a foreclosure or short sale before a consumer can become eligible for a conventional mortgage, though some short sellers can purchase again after as little as two years.

Becoming eligible for a new mortgage doesn't mean that buyers will necessarily qualify for one. Lenders still require borrowers to have strong credit score and to have been paying their other bills on time.

Until recently, many of the people who had lost their home to foreclosure or short sale have rented homes, leaving many economists and industry watchers to wonder if the nation would become more of a renter society. In the second quarter, the national home-ownership rate came in at 65.5%, 

down from 65.9% a year earlier and 69.2% in the second quarter of 2004. Each percentage-point decline represents about one million households.

But as rental rates continue rising—they climbed 0.8% in the third quarter to a national average of $1,090 per month, according to Reis Inc. —homeownership is increasingly becoming cheaper than renting.

That is part of what enticed Ronda Martinez, 39, back in to the market. In 2007, she and her husband, Mark, let their two-story, $430,000 home in Perris, Calif., go into foreclosure when they were unable to sell it when required to move to Phoenix for a job.

Later, in 2010, she was laid off from her job at a real-estate-data company.

Since then, the family has repaired their finances, and Mrs. Martinez found a new job. This month, the family is closing on a $150,000 home in Phoenix that has five bedrooms and a pool in the back.

"Initially people are upset and think, 'I'll never buy again,' " she said. But "there's no reason to give up on owning."

Write to Conor Dougherty at conor.dougherty@wsj.com and Dawn Wotapka at dawn.wotapka@dowjones.com 

Vulcan Investment Partners Fund Investing $150 Million On Distressed Properties in South FloridaMonday, October 8, 2012
Category: News

MIAMI, Oct. 2, 2012 /PRNewswire/ -- Vulcan Investment Partners (www.vulcanfunds.com), founded by a group of leading Mexican businessmen and financial experts, will invest $150 million on purchasing 1,200 repossessed and foreclosed homes in South Florida.

Vulcan administers Vulcan Dynamic Realty Fund LP, a fund dedicated to purchasing and renovating distressed properties at 50 percent of their original construction cost.

Vulcan acquires foreclosed properties or those that are bank owned and rents them for several years at an attractive cap rate (about 14 percent annually) before selling them as the housing recovery takes hold. The firm expects to rent 70 percent of its properties and sell the remainder at high margins.

"The residential home market in South Florida is definitely on the rise, but we still see about 700 single family homes come out of foreclosure every week in Broward and Miami-Dade counties," said Inaki Negrete, CEO of Vulcan Investment Partners.

When Vulcan liquidates the fund in 2017, it expects to see a 100 percent increase in the values of the properties in its portfolio, plus an annual rental cap rate above 14 percent.

"When we looked at the low acquisition prices, along with property appreciation and a high rental cap rate, we were able to project a high return on investment over five years," said Emilio Braun, Vulcan's chief marketing officer.

At once risky, the distressed South Florida property market has gotten the support of investors. Among Vulcan's board of directors is Guillermo Prieto Trevino, former chairman and CEO of Bolsa Mexicana de Valores SAB de CV.

"Many see this strategy as a way of taking advantage of the demand for rentals and the low U.S. home prices," Negrete said. "We're buying properties once valued at $200,000 or more for $75,000 and making them available for a reasonable $1500-a-month rent."

Earlier this year, South Florida had the second-highest increase nationwide in foreclosure activity with a 53 percent increase in foreclosure filings. As investors absorb the distressed properties, the market will balance out, with properties increasing in value and construction activity picking up, Negrete said.  

Vulcan's founders see significant community benefits from their multimillion-dollar investment.

"Vulcan in essence is helping revitalize the South Florida real estate market by reducing the number of foreclosed properties and making them affordable to renters and buyers," Negret said.

About Vulcan Investment Partners

Vulcan Investment Partners, LLC incorporated on July 13, 2011 to act as General Partner to private real estate funds engaged in the purchase, sale, and leasing of distressed properties in the East Coast and Sunbelt region. Vulcan controls investment strategies and structural and organizational decisions of private real estate funds. www.VulcanFunds.com.

Contact: Patricia Maldonado
305-490-8831
patricia@littlefishmedia.net

Vulcan Investment Partners Fund Investing $150 Million On Distressed Properties in South FloridaMonday, October 8, 2012
Category: News

MIAMI, Oct. 2, 2012 /PRNewswire via COMTEX/ -- Vulcan Investment Partners (

), founded by a group of leading Mexican businessmen and financial experts, will invest $150 million on purchasing 1,200 repossessed and foreclosed homes in South Florida.

Vulcan administers Vulcan Dynamic Realty Fund LP, a fund dedicated to purchasing and renovating distressed properties at 50 percent of their original construction cost.

Vulcan acquires foreclosed properties or those that are bank owned and rents them for several years at an attractive cap rate (about 14 percent annually) before selling them as the housing recovery takes hold. The firm expects to rent 70 percent of its properties and sell the remainder at high margins.

"The residential home market in South Florida is definitely on the rise, but we still see about 700 single family homes come out of foreclosure every week in Broward and Miami-Dade counties," said Inaki Negrete, CEO of Vulcan Investment Partners.

When Vulcan liquidates the fund in 2017, it expects to see a 100 percent increase in the values of the properties in its portfolio, plus an annual rental cap rate above 14 percent.

"When we looked at the low acquisition prices, along with property appreciation and a high rental cap rate, we were able to project a high return on investment over five years," said Emilio Braun, Vulcan's chief marketing officer.

At once risky, the distressed South Florida property market has gotten the support of investors. Among Vulcan's board of directors is Guillermo Prieto Trevino, former chairman and CEO of Bolsa Mexicana de Valores SAB de CV.

"Many see this strategy as a way of taking advantage of the demand for rentals and the low U.S. home prices," Negrete said. "We're buying properties once valued at $200,000 or more for $75,000 and making them available for a reasonable $1500-a-month rent." Earlier this year, South Florida had the second-highest increase nationwide in foreclosure activity with a 53 percent increase in foreclosure filings. As investors absorb the distressed properties, the market will balance out, with properties increasing in value and construction activity picking up, Negrete said.

Vulcan's founders see significant community benefits from their multimillion-dollar investment.

"Vulcan in essence is helping revitalize the South Florida real estate market by reducing the number of foreclosed properties and making them affordable to renters and buyers," Negret said.

About Vulcan Investment Partners Vulcan Investment Partners, LLC incorporated on July 13, 2011 to act as General Partner to private real estate funds engaged in the purchase, sale, and leasing of distressed properties in the East Coast and Sunbelt region. Vulcan controls investment strategies and structural and organizational decisions of private real estate funds.

.

Contact: Patricia Maldonado 305-490-8831 patricia@littlefishmedia.net SOURCE Vulcan Investment Partners

Copyright (C) 2012 PR Newswire. All rights reserved -0- KEYWORD: Florida INDUSTRY KEYWORD: FIN

Vulcan fund plans to invest $150M in distressed South Florida propertyMonday, October 8, 2012
Category: News

Vulcan Investment Partners LLC, which says it was founded by a group of leading Mexican businessmen, plans to invest $150 million on purchasing 1,200 repossessed and foreclosed single-family homes in South Florida.

Vulcan, which is registered in Delaware, administers Vulcan Dynamic Realty Fund LP, a real estate fund dedicated to purchasing and renovating distressed properties at 50 percent of their original construction cost, a press release said.

Vulcan plans to acquire the properties in foreclosure or those that are bank owned (also known as real-estate owned or REOs) and rent them for several years at an attractive cap rate before selling them as the housing recovery takes hold, the press release said.

The strategy appears to capitalize on at least one phenomenon in the South Florida distressed home market: Cash buyers can be a lot more nimble than traditional buyers who have to go through the process of getting a mortgage.

“The residential home market in South Florida is definitely on the rise, but at the same time we still see about 700 single-family homes come out of foreclosure every week in Broward and Miami-Dade counties,” said Iñaki Negrete, CEO of Vulcan Investment Partners.

Vulcan expects to liquidate the fund in 2017.

Among Vulcan’s board of directors is Guillermo Prieto Treviño, former chairman and CEO of Bolsa Mexicana de Valores SAB de CV.

Negrete said, “We’re buying properties once valued at $200,000 or more for $75,000 and making them available within six weeks for a reasonable $1,500-a-month rent.”

Negrete said the effort should help revitalize the South Florida real estate market by reducing the number of foreclosed properties and making them affordable to renters and new homebuyers.

There have been numerous media accounts about distressed property not being properly maintained after owners have abandoned them. In some cases, cities end up cutting the lawn and put liens against the property.

Vulcan also expects its efforts will help balance the market and lead to more construction in new homes.

Shares of major homebuilders, including Miami-based Lennar Corp. (NYSE: LEN), have risen in recent weeks on expectations the new home market is making a comeback, partly fueled by low interest rates for mortgages.

The company listed the following people as part of its management team:

* Guillermo Prieto Treviño, president of the board of directors

Iñaki Negrete, CEO

Juan Ramon Zaragosa, COO

Mario Alonso, chief administrative officer

Carlos Mosquera, VP of acquisitions

Emilio Braun Burillo, chief marketing officer

Jose Ortega, partner

Jorge Kalb, partner

Detailed biographies of the managers can be found on the company's website.

Vulcan Investment Partners Fund to Invest $150 Million On Distressed Properties in South FloridaMonday, October 1, 2012
Category: Press Releases

 

Vulcan Investment Partners Fund to Invest $150 Million
On Distressed Properties in South Florida

 

MIAMI [Oct. 1, 2012]Vulcan Investment Partners (www.vulcanfunds.com), founded by a group of leading Mexican businessmen and financial experts, will invest $150 million on purchasing 1,200 repossessed and foreclosed single-family homes in South Florida.

Vulcan administers Vulcan Dynamic Realty Fund LP, a real estate fund dedicated to purchasing and renovating distressed properties at 50 percent of their original construction cost.

Vulcan acquires the properties in foreclosure or those that are bank owned (also known as real-estate owned or REOs) and rents them for several years at an attractive cap rate (about 14 percent annually) before selling them as the housing recovery takes hold. The firm expects to rent 70 percent of its properties and sell the remaining 30 percent at high margins.

“The residential home market in South Florida is definitely on the rise, but at the same time we still see about 700 single family homes come out of foreclosure every week in Broward and Miami-Dade counties,” said Iñaki Negrete, CEO of Vulcan Investment Partners.

When Vulcan liquidates the fund in 2017, it expects to see almost a 100 percent increase in the values of the properties in its portfolio, plus an annual rental cap rate above 14 percent.

“When we looked at the combined effect of low acquisition prices, along with property appreciation and a high rental cap rate, we were able to project a high return on investment over five years,” said Emilio Braun, Vulcan’s chief marketing officer.

At once thought risky, the distressed South Florida property market has gotten the support of many investors. Among Vulcan’s board of directors is Guillermo Prieto Treviño, former chairman and CEO of Bolsa Mexicana de Valores SAB de CV.

“Many see the buy-to-rent strategy as a way of taking advantage of the demand for rentals and low U.S. home prices,” Negrete said. “We’re buying properties once valued at $200,000 or more for $75,000 and making them available within six weeks for a reasonable $1500-a-month rent.”

Negrete and his partners also see significant community benefits from their multimillion-dollar investment. Vulcan is helping revitalize the South Florida real estate market by reducing the number of foreclosed properties and making them affordable to renters and new homebuyers.

 

Earlier this year, South Florida laid claim to the second-highest increase nationwide in foreclosure activity for a metropolitan area with a 53 percent increase in foreclosure filings. As Vulcan and other investors absorb the distressed properties, the real estate market will balance out, with properties increasing in value and construction activity picking up, Negrete said.


# # #

 

Vulcan Investment Partners Management Team
The Vulcan Investment Partners management team has more than 150 years of combined experience in international real estate, finance and marketing. Learn more about our management team at www.VulcanFunds.com

 

Guillermo Prieto Treviño, President of the Board of Directors
Iñaki Negrete, Chief Executive Officer
Juan Ramon Zaragosa, Chief Operating Officer

Mario Alonso, Chief Administrative Officer
Carlos Mosquera, Vice President of Acquisitions
Emilio Braun Burillo, Chief Marketing Officer
Jose Ortega, Partner
Jorge Kalb, Partner

 

About Vulcan Investment Partners

Vulcan Investment Partners, LLC incorporated on July 13th, 2011 to act as General Partner to private real estate funds engaged in the purchase, sale, and leasing of distressed properties in the East Coast and Sunbelt region. As a General Partner, the Delaware limited liability company controls investment strategies and structural and organizational decisions of private real estate funds. With more than 150 years of collective experience in real estate, finance, and marketing, the management team of the company based in Miami has an extensive network of relationships as well as strategic alliances with high profile industry and local players that provide essential regional insights and effective sourcing of opportunities. Visit www.VulcanFunds.com.

Demand growing for new type of ABSTuesday, September 25, 2012
Category: Press Releases

Demand growing for new type of ABS: residential rental income securitization

 
While the total home ownership in the US has stalled, the rental market continues to expand (a trend that started prior to the financial crisis), providing support to the overall housing market.

Source: BNP Paribas

As home prices declined up until this year and rents increased (see discussion), rental properties have become a more attractive investment - particularly in comparison to other fixed income products available.

Source: BNP Paribas

Cash buyers, many of whom convert distressed homes into rental properties, have been coming into the market in increasing numbers.
BNP Paribas: - As investors seek returns, housing looks increasingly attractive. A lot of increased activity has come from cash buyers; the National Association of Realtors reports that the share of existing single-family home sales purchased by cash buyers has risen to just below 30% from 20% a few years ago. Private equity investors have also been reportedly buying blocks of homes for rental conversion...
But unlike a traditional mortgage, 90% of which are provided or guaranteed by the US government, financing rental properties is more difficult. And most large landlords are looking to finance these properties to boost returns. A recent development however could give the rental market in the US a boost by making such financing available. This potential new approach is the securitization of rental income.
WSJ: - Waypoint Real Estate Group LLC, a major investor in U.S. foreclosed homes, has secured a $65 million loan from Citigroup Inc. C -1.17% to help add to its portfolio of properties, according to people familiar with the matter. 

Bankers and investors said the debt-financing deal is a milestone for the burgeoning business of renting out houses that were previously in foreclosure. 

Waypoint, an Oakland, Calif., investment firm, is working with Citigroup on a bigger, longer-term financing deal that is expected to close in the coming weeks, the people said. 
...
The Waypoint deal underlines banks' confidence in the investment strategy and may serve as a precursor to another development in the market: Bankers said they have been hammering out details on how to create the first security backed by home-rental payments
And as with other types of securitization, banks need these loans rated in order to lower capital usage and potentially improve liquidity.
WSJ: - Citigroup and other major banks have held talks with the major credit-rating firms about potential securitizations, people familiar with the conversations said. 

In recent weeks, rating firms such as Fitch Ratings and Moody's Investors Service have published research reports outlining their views on potential structured deals.
The problem with rating this type of product however is the lack of historical performance (delinquency and vacancy) data in the rental market.
WSJ: - Fitch said initial deals were unlikely to be rated above the single-A category. One major hurdle to high ratings: the lack of long-term data detailing the likelihood tenants living in previously foreclosed homes will pay rent on time. 

While mom-and-pop businesses have been buying, renovating and renting out homes for years, major investors backed by private-equity and hedge funds only began amassing single-family homes within the past couple of years.The market has developed rapidly, but data on the tenants' behavior are limited.
Demand for rental homes is on the rise and the need for leverage by the landlords (in order to boost rental yields) is also increasing. At the same time, fixed income investors are searching for new slightly higher yielding product. Conditions could be right for the rental securitization market to take off - particularly as more data becomes available. Over time this will help clear the remaining distressed home inventories in the US.
Boost for Foreclosure MarketTuesday, September 18, 2012
Category: News

Waypoint Real Estate Group LLC, a major investor in U.S. foreclosed homes, has secured a $65 million loan from Citigroup Inc. to help add to its portfolio of properties, according to people familiar with the matter. Bankers and investors said the debt-financing deal is a milestone for the burgeoning business of renting out houses that were previously in foreclosure.
Waypoint, an Oakland, Calif., investment firm, is working with Citigroup on a bigger, longer-term financing deal that is expected to close in the coming weeks, the people said.

Investors have spent billions of dollars in recent months snapping up foreclosed homes, betting they will profit from the rental income the properties produce.The strategy gained momentum earlier this year, after the Federal Reserve expressed support for the strategy asa way to clear the backlog of foreclosures that has slowed the U.S. housing market's recovery.Until Waypoint's deal with Citigroup, the industry hadn't yet tapped the debt markets, bankers and investorssaid. Debt should lower the cost of financing additional purchases, allowing investors to buy more homes at afaster pace, they said.

The Waypoint deal underlines banks' confidence in the investment strategy and may serve as a precursor to another development in the market: Bankers said they have been hammering out details on how to create the first security backed by home-rental payments. As they do in bonds backed by mortgages and other assets, banks would pool the rents of thousands of tenants living in the formerly foreclosed properties and sell to investors a promised return based on the income the homes produce. The sale of such a bond would help foreclosed-home investors like Waypoint pay back their lenders while raising funds they can use to buy more houses. A spokesman for Citigroup declined to comment.

Citigroup and other major banks have held talks with the major credit-rating firms about potential securitizations, people familiar with the conversations said. In recent weeks, rating firms such as Fitch Ratings and Moody's Investors Service have published research reports outlining their views on potential structured deals. Fitch said initial deals were unlikely to be rated above the single-A category. One major hurdle to high ratings: the lack of long-term data detailing the likelihood tenants living in previously foreclosed homes will pay rent on time.

While mom-and-pop businesses have been buying, renovating and renting out homes for years, major investors backed by private-equity and hedge funds only began amassing single-family homes within the past couple of years. The market has developed rapidly, but data on the tenants' behavior are limited. Colony American Homes, a unit of private-equity firm Colony Capital LLC that launched in January, is another major player in the so-called real-estate-ownedto- rental market that has expressed interest in securitization. The firm owns about 3,600 homes and hopes to reach 10,000 by next spring.
Waypoint and Colony are viewed as top candidates for an initial securitization given the number of homes they own and their institutional backing, bankers and investors said.

Waypoint, which started in 2009, owns more than 2,200 homes in California as well as the Phoenix, Chicago and Atlanta areas, and aims to amass as many as 11,000 by the end of 2013. GI Partners, a Menlo Park, Calif.-based private-equity firm, invested $250 million in Waypoint in January. Waypoint's strategy differs from competitors because the firm focuses on buying homes one by one, executives said. "We're sharpshooters," Managing Director Gary Beasley said. "We'll also look at bulk transactions, but what we've found is that oftentimes the assets that are pooled together have something that we find attractive and then others less so." The firm purchases about one-third of its homes from foreclosure auctions and the remainder through brokers who represent banks or homeowners, Mr. Beasley said.

Ninety-five percent of Waypoint's home leases are for two years, a bid to minimize vacancies to ensure a steadier stream of returns for investors. "Turnover in theresidential world is one of the key things to manage," Mr. Beasley said. Waypoint also offers financial counseling to tenants, Mr. Beasley said.

Firms Flock to Foreclosure AuctionsWednesday, September 12, 2012
Category: News

LITHONIA, Ga.—On a muggy morning earlier this month, Paul Fuhrman pried the screen off a window to get into a two-story house in this Atlanta suburb. It was just another day's work for the 43- year-old executive at private-equity firm Colony Capital LLC, based in Santa Monica, Calif. After buying the house for $120,000 in a foreclosure auction, Mr. Furhman and his colleagues wanted to check out Colony's new investment—and broke in because they hadn't gotten the keys yet. Mr. Fuhrman's sweat and dirty hands show how the business of buying foreclosed homes, renovating and renting them out is morphing from a largely mom-and-pop business into the next big thing on Wall Street. Investors who once chased only big -ticket deals now are buying houses one at a time.

"We went from hunting elephants to whacking ants with a mallet," says Mr. Fuhrman, who found stained carpets, piles of discarded clothing, a broken door and signs of a recent living-room camp out by squatters. Colony owns about 3,600 foreclosed homes, including 133 bought in the Atlanta area in one day, and officials hope to increase the firm's inventory to 10,000 by next spring. According to investment bank Jefferies & Co., major financial firms led by Colony, Blackstone Group LP, BX +1.22% Och-Ziff Capital Management and Oaktree Capital Group LLC have raised more than $8

billion to buy houses, largely in markets pummeled by the housing crisis. At first, many investors hoped lenders would sell foreclosed houses in bulk. But most banks prefer to sell one house at a time, figuring that approach will fetch higher prices. As a result, the foreclosure circuit hasn't yet produced a giant windfall for buyers like Colony, though executives say early returns are promising. Yields on rents from houses owned by the firm are 7% to 8%, higher than many other types of real estate. Purchase prices have averaged 12% less than Colony expected, which should make it easier to sell the homes or borrow against them and exit with double-digit percentage gains.

Anthony Myers, a senior managing director with Blackstone's real-estate group, said that while the cost of operating in the foreclosed-home business is "incredibly high," the buyout firm is well positioned. "We, like others, believe in the
housing recovery and we believe there's a great role for folks like us to come in, buy these homes," he said.

"We are in the sixth inning of the opportunity to buy distressed homes and rent them out," says John Burns, a realestate
consultant in Irvine, Calif. Blackstone and Colony have been especially aggressive in foreclosure-racked Georgia.
On a Tuesday morning, about 200 people gathered in front of the courthouse in Gwinnett County as an auctioneer opened the bidding on about 900 homes. "Game on," said Albo Antonucci, a buyer working for Colony, rushing to join the crowd. One early sale was a three-bedroom, two-bathroom house in Duluth, Ga. Bidding started t $43,515. Colony had been studying a published list of thousands of properties to be auctioned this month in the Atlanta area, driving by the houses and doing price
comparisons to determine the maximum price the firm could pay for each house and still hit their target yields. Jay Byce, a portfolio manager for Colony, glanced at his binder. It showed Colony's maximum bid price for the property was $71,000. After about 20 offers, he entered the bidding—and won the house for $53,400. In Georgia, buyers of foreclosed houses usually pay on the spot. Mr. Byce turned to a colleague who held a locked plastic case full of cashier's checks. In all, Colony had brought $3 million in checks to the courthouse. On the same day, 52 Colony employees were bidding on homes at seven different county courthouses in Georgia, and spent a otal of about $9 million. Under a red canopy tent, Evan Jaleh, a thirdyear associate at Colony, sat at a laptop set up at a card table, entering Colony's winning bids into a spreadsheet.

Nearby, Dallas Tanner, a principal with propertymanagement company Treehouse Group, Tempe, Ariz., gave orders and distributedcashier's checks to his team, which usually buysusing funds from Blackstone.The surge in interest from financial firms hasboosted foreclosure sales. About one-third of homes in recent foreclosure auctions in Gwinnett County were sold, up from 15% six months to a year ago, estimates auctioneer Doug Hardegree. Unsold homes go back to the lender. The arrival of private-equity firms and hedge funds rankles smaller investors, many of whom try to quickly "flip" their purchases for a profit.

bidding, you can't get anything out there," says Niana Hill, who sat in a courthouse cafe during a break in the auction. "I like 20% yields or more. I don't like 10%." Colony executives say the numbers look fine to them. Once the private-equity firm spends about $11,000 to renovate the house in Lithonia, Colony expects to rent it for about $1,550 a month. After taxes, fees and other expenses, Colony investors should get a net yield on this house of 8.2% a year. Colony has indicated it may take its rental business public or sell its homes after values appreciate. "When I look at other opportunities out there in the commercial-real-estate space, to get the same current yield, adjusting for risk, it's very difficult," Mr. Fuhrman says. "Of all the real-estate asset classes, this is probably the most liquid." Write to Robbie Whelan at Robbie.whelan@wsj.com

Happy at LastMonday, September 10, 2012
Category: News

Nothing's wreaked quite the havoc on the U.S. economy, and indeed the national psyche, as the six-year slide in home prices. It wiped out some $7 trillion in household wealth, savaged bank balance sheets, and induced the Great Recession and the tepid recovery.

Yet there are unimpeachable signs that this national nightmare is now over. Home prices are starting to rise, if somewhat haltingly, in most areas of the country. And a number of forecasters predict home-price increases around 10% or so nationally over the next three years, with some metropolitan statistical areas, such as Midland, Texas, and Bismarck, N.D., likely riding the energy-exploration boom to better than 20% jumps in residential-real-estate prices. The turnaround, in fact, appears to be arriving exactly on the schedule that Barron's laid out this year in a March 19 cover story entitled "Ready to Rebound."

Of greatest moment, perhaps, was the release two weeks ago of the S&P/Case Shiller Composite 20-City Index that showed a jump in home prices of 2.3% in June over May. Likewise the Case-Shiller National Index in the second quarter rose 6.9% over the first-quarter level, before any seasonal adjustment. And for the first time since the summer of 2010, the National Index actually nosed ahead of the year-earlier quarter's reading, if only by 1.2%.

"This increase in home prices, unlike the one that occurred in 2009-2010 as a result of the temporary tax credit for first-time home buyers, looks to be for real," says David Blitzer, chairman of the index committee at S&P Dow Jones Indices. "We probably won't see a V- shaped recovery in housing, with prices overall going up 20% in the next year. But this rally

has legs, and prices will definitely be higher next year."

The recent strength seems to have continued in July and August, according to home-price indexes compiled by CoreLogic. Like Case-Shiller, the consumer, mortgage and property research firm tabulates prices based on repeat sales of the same properties, but it releases the data more quickly. CoreLogic said last week that, year over year, home prices nationally had jumped 3.8% in July and an even stronger 4.6% in August. The latter number was based on its pending, rather than completed, home-sale price index.

"It has been six years since the housing market last experienced the gains we saw in the July numbers, with indications that the summer will finish up on a strong note," says CoreLogic CEO Anand Nallathambi. "Although we expect some slowing in price gains over the balance of 2012, we are clearly seeing the light at the end of a very long tunnel."

TO BE SURE, any sustained recovery in prices faces some formidable obstacles. The "shadow inventory" of residences that are in some stage of foreclosure or whose owners are at least 90 days delinquent on their mortgages stands at 3.1 million–6% of the 50 million home loans in the U.S. In a normally functioning market, the total of distressed properties would be more like 2%.

Likewise, some 13 million homeowners are under water -- meaning that their mortgages are larger than the value of their houses or condos. Although the vast majority of these people are current on their mortgage payments, many may be tempted to resort to a "strategic default." This is particularly true in the event of a job loss or some other economic vicissitude.

And finally, the collapse in housing prices was so severe -- nationally, residential real estate fell by over one third in value, peak-to-trough -- that it would take at least a 50% jump just to restore prices to the nutty levels they achieved in 2006. Unfortunately, those were the prices at which many homes were purchased. So, for many, hope will be difficult to maintain in the years ahead.

Just look at Phoenix (see table below). Through June, it had enjoyed a 14.4% price recovery, but that rise only reduced the 55.9% decline from its peak to a 49.6% loss. Some areas like the Central Valley of California may take decades to return to the heady levels of peak valuation, when even folks who couldn't walk and chew gum at the same time could get home loans.

Yet some keen observers of the real-estate market, such as Moody's Analytics' Mark Zandi, are optimistic that home prices will rise as much as 10% from current levels by the end of 2014, once the shadow inventory is worked down over the next year or so. He points to such factors as the continued rise in effective

rent rates (the main competition to home ownership), low mortgage rates, steady though slow improvement in job growth and improving availability of bank credit.

 

"We've clearly reached a key psychological shift in home buyers' psychology, where folks are now starting to worry about missing the boat, rather than fearing whatever house they buy, no matter how attractive the price, can only go down in value," Zandi explains.

Even more upbeat is Lawrence Yun, chief economist at the National Association of Realtors, who, unlike some of his predecessors, is more a sober analyst than a cheerleader for the real- estate brokerage industry. Yun is heartened by several factors that have been showing up in NAR monthly sales figures and median home-price trends.

For one thing, existing home sales in July ran at an annual pace of 4.47 million, up 10.4% from the 4.05 million pace in July 2011. Median sales prices, too, have been ticking up for five straight months. They hit $187,300 in July, 9.4% above the year-earlier level. Part of that rise reflects a changing mix of sales, with higher-priced homes accounting for a bigger share of volume. But, Yun points out, this factor alone should help boost overall economic growth.

AS A CONSEQUENCE, he thinks that home prices could rise as much as 5% in both 2012 and next year. One reason is that the inventory of unsold dwellings has remained surprisingly tight with just 2.4 million, or 6.4 months' worth of inventory, on the market in July, based on the current sales pace. Back in the darkest days of the home-price collapse in late 2008 and early 2009, inventories regularly clocked in at around a 10-month supply and even briefly surged to more than 12 months in the summer of 2010.

This current market tightness has confounded many residential real-estate bears in light of the fact that so many American homes remain in the foreclosure pipeline and so many homeowners are under water on their mortgages.

Even so, Yun expects the supply tightness to lingerfor some time to come. Many of the troubled properties in places like Phoenix and Miami are being absorbed by local investors attracted by the bargains available and the ability to earn a handsome yield on the properties by renting them out. Many of these opportunistic buyers are putting up all cash.

As a result, the shadow inventory has been dropping precipitously, declining from more than 4.5 million homes at the peak of the bust to just over 3 million homes currently.

Two years ago, distressed sales accounted for about a third of all sales of previously occupied homes. This year, the figure will be 25% and next year just 15%, predicts the economist.

This is important because foreclosure and "short" sales (sales by homeowners with the approval of lenders at less than the amount of the mortgage debt) are typically done at significant discounts to the price of comparable properties, destroying neighborhood home values in the process. But now, Yun notes, not only are distressed sales declining as a percentage of total existing-home sales, but so are the price discounts at which they occur.

Also potentially bolstering existing housing prices has been the precipitous drop in new-home construction, Yun contends. Given population growth and new household formations, the U.S. is producing only about half the 1.2 million new dwellings needed each year. In fact, he fears

 

that a housing shortage could even develop. (For a look at what this means for home builders, see feature "A Window on Home Builders." )

FEW OBSERVERS HAVE FOLLOWED home-price trends with the assiduity of Ingo Winzer, president of Local Market Monitor. He started tracking them two decades ago, when he worked in the finance department of a now-defunct mortgage insurer.

But he does more than merely pontificate on market behavior. Indeed, he has the audacity to make three-year price forecasts for all 317 U.S. metropolitan statistical areas, from the populous New York area (11.7 million residents) to tiny Cheyenne, Wyo. (population 88,852). His clientele consists of local and regional banks, mortgage companies, home builders, and private real-state investors all over the country.

Winzer readily concedes that his is a somewhat inexact science, but he claims to be able to get most trends right. "Home prices tend to move in distinct long-term waves, particularly in major metro markets," he says. And, he maintains, the magnitude of the price moves is generally within the range of his three-year forecasts, even if each yearly prediction doesn't precisely come to pass.

His methodology involves establishing an equilibrium home price for each market, or a price for housing that each metro area's per-capita income comfortably can support. Other factors entering into his calculations include unemployment rates, job growth, and single- and multi- family building-permit activity. He also takes into account the past relationship in each area between income and home prices. Homes in desirable areas like San Francisco, for example, historically trade at prices above those that per capita income levels would dictate in most other parts of the country.

Winzer admits that forecasting prices these days is tougher because there is less history to use to judge price behavior in the current market. Nonetheless, he sees prices nationally rising a cumulative 7% over the next three years (beginning July 1, 2012).

He expects some of the biggest jumps in oil- and-gas boom towns like Midland, Texas, where he sees prices jumping 49%; Houston, 26%; and Bismarck, N.D., 20%. At the same time, he expects prices in overbuilt Florida climes that rely on the second-home market to continue suffering, with Port St. Lucie falling 14%, Panama City dropping 7%, and Pensacola sliding 6%.

What's next for your home? The table above shows Winzer's forecasts for the top 50 U.S. markets.

Shadow Inventory: It's Not as Scary as It LooksMonday, September 10, 2012
Category: News

The housing market is improving because there are more buyers chasing fewer homes. Skeptics of a housing bottom, however, often point to a scary set of numbers: the “shadow inventory” of potential foreclosures—the millions of mortgages that are either in foreclosure or in default.

It’s true that home prices are unlikely to see brisk gains once they do hit bottom because it will take years to absorb this glut. But will this phantom inventory derail the incipient housing bottom? Maybe not, say a number of housing analysts.

There are several reasons why the shadow inventory isn’t as scary as it sounds: It’s concentrated in a handful of markets—it isn’t inherently a national phenomenon. It is being offset by improved demand, particularly from investors. And the housing vacancy rate is low, a product of very little new home construction over the past few years that could counterbalance continued high inventories of foreclosed homes.

We’ll address each of those in subsequent posts. But first, let’s examine the actual size of the shadow inventory. While the shadow is very large, one often-overlooked fact is that the shadow isn’t nearly as large as it was two years ago.

There are a wide range of estimates of shadow inventory. A common measure are loans that are either in the foreclosure process or that are three months or more delinquent. These are mortgages that are among the most likely to ultimately become bank-owned properties.

Barclays Capital estimates that at the end of May there were around 1.8 million mortgages in the foreclosure process and another 1.45 million where borrowers have missed at least three payments. That puts the total number of properties that could be repossessed and resold by banks at around 3.25 million mortgages.

Associated Press

‘The concept of a huge shadow inventory is preposterous,’ says one economist.

If those homes hit the market all at once, housing would be in deep trouble. Last year, for example, there were 4.4 million sales of previously owned homes. The figure is still higher than any time before June 2009.

But it is down from a peak of 4.25 million in February 2010. And unless mortgage delinquencies begin to accelerate sharply, the shadow inventory won’t be growing. Barclays estimates that at the current rate, this figure could fall to around 2.4 million loans.

“The concept of a huge shadow inventory is preposterous,” says Christopher Thornberg, a housing economist with Beacon Economics in Los Angeles. “The number of mortgages in

distress is way down from one year ago. It’s clear there are fewer distressed properties out there.”

Housing analyst Ivy Zelman has a slightly larger estimate of shadow inventory—around 6.3 million homes at the end of last year—that includes more newly delinquent mortgages and potential re-defaults. She says that in a normal market, there’s a comparable shadow inventory of 2.9 million homes. So the key figure—the excess level above the historical trend—is around 3.4 million homes.

Ms. Zelman published an in-depth research note earlier with the title: “Shining a bright light on the shadow: Why what’s lurking doesn’t concern us.” In it, she explains how it’s more important to focus on the pace at which foreclosures are being liquidated, and not the absolute number.

“Just like the Wizard of Oz, shadow inventory is not very intimidating once you pull back the curtain,” the report said. That isn’t to dismiss the magnitude of the problem and headwind it will continue to pose for any housing recovery, she wrote. “The bathtub is almost full, but the water has stopped rising, and we are most concerned with how fast it drains.”

Certainly, there are many other risks to housing. There are at least 11 million homeowners that are underwater, owing more than their homes are worth. There are even more than that who don’t have enough equity to make a 10% down payment on their next home, plus pay a real-estate broker’s sales commission, in order to trade up to a bigger home or downsize to a smaller one. And it’s still very difficult to get a mortgage.

But the shadow inventory is often the big trump card used to quiet any housing-happy talk. Tomorrow, we’ll offer a deeper look at how demand factors into this equation, and how the shadow is being disposed.

This is the first of three posts examining the shadow inventory.

Ex-Morgan Stanley housing chief launches foreclosed home fundMonday, August 13, 2012
Category: News

Aug 1 (Reuters) - Oliver Chang, the former head of U.S. housing strategy at Morgan Stanley, on Wednesday announced the opening of an investment firm that intends to spend up to $1 billion to acquire distressed, single-family homes over the next two years.

Sylvan Road Capital is launching with a $300 million investment from an undisclosed private equity firm, the new firm said.

The new asset management firm will seek to acquire foreclosed homes across the United States with an eye toward operating them as rental properties.

Chang's move comes at a time when many hedge funds and private equity firms are raising money to acquire foreclosed homes with the intention of renting them out for several years before selling them as the housing recovery takes hold.

Hedge funds and other institutional investors have embraced the buy-to-rent model as an asset class for their solid income streams at a time when bond yields have plunged.

But some wonder whether institutional investors are overstating the potential for making money with foreclosed homes, given that historically it has been an industy populated by local entrepreneurs.

"America is moving toward a rentership society, and I believe the opportunity to purchase and professionally manage single-family, rental homes represents one of the most compelling investment opportunities across all asset classes," Chang said.

In May, Reuters reported that Chang was leaving Morgan Stanley to launch a so-called buy-to-rent fund. And other Wall Street executives who had been involved with the housing market are doing something similar.

Former Goldman Sachs Group Inc. mortgage executive Donald Mullen is trying to raise $500 million for a foreclosed home fund. Goldman Sachs is helping its former executive market the fund to investors.

A Goldman Sachs wealth management customer, who has seen marketing documents for Mullen's fund, said Goldman employees may invest as much as $100 million into the fund called Fundamental REO Access fund. The new fund requires investors to keep their money locked up for a minimum of eight years, the Goldman Sachs customer said.

One criticism about the rush of institutional money into the market for foreclosed homes is that hedge funds and private equity shops lack the operational wherewithal to become landlords. There is concern that big money investors will not have the ability to manage a large portfolio of single-family homes.

Chang, in beginning his firm, is trying to deal with that issue by partnering with three members of the Atlanta-based Delmar Realty Advisors, a firm that has focused on buying and extensively renovating highly distressed single-family properties.

"My partners have been in the single-family real estate business for nearly two decades and have built a best-in-class acquisition, renovation and management platform specifically designed for these properties," Chang said in a statement annoucing the new firm.

Empresarios sacan provecho a crisis en EUTuesday, June 26, 2012
Category: News

Ciudad de México.- Un grupo de empresarios mexicanos aprovechó los efectos de la crisis inmobiliaria en Estados Unidos y creó en Miami el Fondo Vulcan Investment Partners para comprar casas en remate y revenderlas.Emilio Braun, socio del fondo, dijo que las compras se hacen en línea durante las subastas de casas adjudicadas a los bancos."Estamos comprando casas que valían 250 mil dólares en 2006, a 70 o 75 mil dólares."Con la crisis, los dueños de las viviendas comenzaron a caer en 'foreclosure', que es cuando el banco toma posesión del inmueble por falta de pago, entonces los bancos se quedan con el inventario y hay bancos grandes que tienen hasta 7 mil casas en la zona, por eso las quieren rematar", dijo Braun.El fondo tiene retornos de 15 por ciento al año sobre la inversión inicial, que debe ser de por lo menos 100 mil dólares, informó.Sólo en los condados de Dade y Broward, en Florida, cada semana se ponen a la venta entre 500 y 700 propiedades, de acuerdo con información de la empresa.Cada semana, el área de adquisiciones del fondo elige 30 viviendas de acuerdo con sus parámetros y compra entre 5 y 10, explicó Braun.Después de que se obtiene el título de propiedad, las casas se remodelan y se venden o rentan.El precio de venta es entre 20 y 30 por ciento superior a la inversión, que incluso se encuentra por abajo del precio de construcción de otras casas que se venden en el mercado, por lo que estas propiedades se vuelven una mejor opción, aseguró Braun."Hemos comprado 120 casas, la mayoría en renta, queremos llegar a mil o mil 500 y queremos levantar 149 millones de dólares y es un proyecto a 5 años", señaló el empresario.El presidente del Consejo de Administración del Fondo es Guillermo Prieto, ex director de la Bolsa Mexicana de Valores, y entre los socios están Iñaki Negrete, ex banquero; Mario Alonso, accionista de Prendamex; Jorge Kalb, accionista de Atlas One Financial, así como José Ortega y los hermanos Juan Ramón y Juan Fernando Zaragoza, empresarios de bienes raíces. Síguenos en Twitter: @TerraEconomiaMX Encuentra más información que TE SIRVE, AQUÍ Sigue a Terra Economía en móviles: m.terra.com.mx Sigue a Terra Economía también en tu tableta: tablet.terra.com.mx

Cities with the most homes in foreclosure Tuesday, May 29, 2012
Category: News

According to data released last week, the worst effects of the housing crisis are beginning to wind down. RealtyTrac's latest report shows the number of foreclosures in the U.S. in April is down 13 percent to 188,780 from 219,258 a year ago. However, some of the largest cities in the U.S. continue to lag behind the rest of the country, and still have long to go before the housing crash has fully run its course.

RealtyTrac published the number of new home foreclosures in April in the 50 largest metropolitan statistical areas in the U.S. Of those 50 areas, 10 had more than double the national foreclosure rate, which is one out of every 698 new homes.

n California’s Inland Empire metropolitan area, the rate was more than triple that. Using RealtyTrac’s foreclosure rates and and home price data from Fiserv Case-Shiller, 24/7 Wall St. reviewed the metropolitan areas with the highest foreclosure rates.

The continuing high rates of foreclosures in some areas is a disturbing trend, says RealtyTrac’s vice president, Daren Blomquist. Although the national foreclosure rate appears to have peaked, he explains, the massive number of remaining properties yet to be foreclosed may continue to hurt the U.S. market in the long term. The large number of new foreclosures “means that distressed property sales will continue to represent a large portion of overall sales for at least the remainder of this year, which in turn will keep a lid on any robust home price recovery,” Blomquist says.

After reviewing the markets with the highest foreclosure rates, it is clear that regions with the most foreclosures to date are the ones worst affected by the housing crisis. Seven of the 10 metro areas on this list had among the top 10 largest declines in home value from their pre-recession peaks. In six of the 10 regions, houses lost more than half their value in less than six years. In Las Vegas, home prices plummeted 61.8 percent between the beginning of 2006 and the end of last year.

24/7 Wall St. examined RealtyTrac’s latest foreclosure figures of new homes for April 2012, as well as the changes in the number of new foreclosures from a month prior and a year prior. In addition, we reviewed historical, current, and projected home price changes, provided by Fiserv-Case Shiller.

These are the five cities with the most homes in foreclosure:

5. Atlanta-Sandy Springs-Marietta, Ga.
Foreclosure rate:
1 in 298 homes
Number of homes: 2,165,495 (9th most)
Foreclosures (April 2012): 7,271 (4th most)
Home price decline from peak: -35% (14th largest decline)

By the fourth quarter of 2011, home values in Atlanta fell 35 percent from their peak. The Atlanta area has the ninth most housing units of any region on the list, and the median price of these homes was just $110,000 in the fourth quarter of 2011. Things may be on the upswing, though — the number of homes in foreclosure fell 11 percent from the prior month.

4. Sacramento-Arden-Arcade-Roseville, Calif.
Foreclosure rate: 1 in 277 homes
Number of homes: 871,793 (23rd fewest)
Foreclosures (April 2012): 3,147 (12th most)
Home price decline from peak: 54.7% (5th largest)

With home prices down 54.7 percent from their high at the end of 2005, the Sacramento area registered the fifth-largest decline in home prices. However, foreclosures are down by 39.01 percent from last year, when April 2011 had 5,160 homes in foreclosure. Additionally, the number of foreclosures also decreased by 26.7% from the previous month, from 4,294 to 3,147. Fiserv expects home prices in the area to rise 6.3% annually through the fourth quarter of 2016.

3. Miami-Ft. Lauderdale-Pompano Beach, Fla.
Foreclosure rate: 1 in 273 homes
Number of homes: 2,464,417 (5th most)
Foreclosures (April 2012): 9,031 (3rd most)
Home price decline from peak: 54.2% (7th largest decline)

The Miami metro region topped all Florida regions in the number of new foreclosures. It also ranks third in new foreclosure rates among the 50 largest metros with 9,031 foreclosures in April 2012. While foreclosures in the area decreased between March 2012 and April 2012, to the tune of 9.2 percent, the future appears gloomy. Prices in this region are forecast to fall another 3.8 percent between the fourth quarters of 2012 and 2013.

2. Las Vegas-Paradise, Nev.
Foreclosure rate: 1 in 249 homes
Number of homes: 840,343 (22nd fewest)
Foreclosures (April 2012): 3,378 (10th most)
Home price decline from peak: 61.8% (the largest decline)

Home prices in Las Vegas, the poster child of the housing crisis, plunged by 61.8 percent from their peak in early 2006 through 2011 — the greatest decline of any of the nation’s 50 largest metros. Although new foreclosures in the Las Vegas-Paradise region declined by 66.1 percent to 3,378 over the past year, the number of foreclosures in April represents a slight increase over March, when 3,301 new homes were in foreclosure. Making matters worse, prices are expected to fall by another 3.3 percent between the fourth quarter of 2012 and the fourth quarter 2013, according to Fiserv.

1. Riverside-San Bernardino-Ontario, Calif.
Foreclosure rate: 1 in 213 homes
Number of homes: 1,500,344 (14th most)
Foreclosures (April 2012): 7,049 (5th most)
Home price decline from peak: -56.6% (2nd largest decline)

As of the fourth quarter of 2011, prices in the Riverside metro area fell by 56.6 percent from their peak, the second largest drop among top 50 metros. In addition, this region is first in terms of new foreclosure rate, at one in 213. While the number of homes (1.5 million) ranks 14th of the 50 largest regions, the area’s new foreclosure count for April 2012 reached 7,049 — fifth highest overall. It appears, however, that, the situation is improving; between March 2012 and April 2012, foreclosures dropped 10.8 percent.

Ready to ReboundFriday, May 25, 2012
Category: News

It hit with the ferocity of an Old Testament plague, wiping out large populations of homeowners in the U.S. Five million of the country's 76 million mortgage holders have lost their homes to foreclosure or lender-ordered short sales since 2006, and an estimated 14 million more owe more on their homes than their properties are currently worth. In all, some $7.4 trillion in homeowners' equity has been destroyed, according to Mark Zandi, chief economist at Moody's Analytics, and more than two million jobs in the home-building industry disappeared. At year end 2011, the S&P/Case-Shiller National U.S. Home Price Index fell to a record low, 33.8% below the boom peak level, recorded in 2006's second quarter. The descent has been all the more hideous in such once-manic markets as Las Vegas, Phoenix and Miami, which, according to the Case-Shiller 20-City Composite Index, have fallen 61%, 55% and 51%, respectively, from their high-water marks.

Everyone has shared the pain. The negative wealth effect from the price decline both contributed to the virulence of the Great Recession and crimped the subsequent recovery. Yet as grim as these year-end readings appear to be, there are signs that the long nightmare for American homeowners is in its terminal stage, and that, maybe, just maybe, home prices will bottom and begin to turn by the spring of 2013—if not before. Certainly, the economy is doing better these days— the sine qua non for improved demand for housing. Jobs numbers have
been up sharply three months in a row, leading to a jump in consumer confidence of late.

The near-record low in mortgage rates and concomitant slide in home prices has made houses and condos stunningly affordable (although stiff underwriting standards have made getting home loans more difficult). This is captured in the National Association of Realtors Housing Affordability Index, which measures how much purchasing power a median-income family needs in order to buy a median-priced home, using conventional mortgage financing.

This measure stood at 206 in January, which meant that the typical family has more than double the income needed to purchase an average home. That reading is more than twice the 102.7 at the peak of the bubble in July 2006. MUCH OF THE HOME-PRICE DECLINE in the past six years has been fueled by the distress sales of foreclosed properties, which typically sell at discounts of 30% or more to dwellings in the conventional sales market. Distressed sales, along with vacant houses and condos awaiting a sale, trash property values for all the other homes in the immediate area. These forced sales have weighed heavily on overall market prices that are typically reported on a metropolitan-area basis Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order

This phenomenon is showing up in the statistical service CoreLogic's Home Price Index, which nicely separates distressed from nondistressed sales. Indeed, for all of 2011, prices fell 4.7% nationally from the previous year's level. Excluding distressed sales, however, home prices dropped just 0.9%.

Of greater moment, perhaps, CoreLogic data show that nondistressed-sales prices rose 0.2% month over month in December 2011 and 0.7% in January 2012. Could this be an augur of better times to come? Absolutely, in the opinion of Karl Case, professor emeritus at Wellesley College and one of the progenitors of the Case-Shiller indexes, launched in 2002. "If you drill down in the numbers by zip code in the Boston area, as I have done, you find that more desirable, affluent neighborhoods like Back Bay and Beacon Hill are doing just fine now—while, say, Fall River is still in the dumps and dragging down the entire Boston Metro area," he asserts. This bifurcated market is seen all across the country. While the Nob Hill neighborhood in San Francisco never saw values drop drastically and is now recovering nicely, Stockton, Calif., remains in the dumps. It's a tale of two cities elsewhere, too. The Santa Monica real-estate market is doing fine, while the desert towns to the east are still suffering. And, in the Miami environs, South Beach is strengthening; Hialeah, Fla., isn't. Then there are areas that have been so depressed that the only direction now seems to be up. In fact, woebegone Detroit was the only place in the latest Case-Shiller National Index to show an annual increase for December. True, the price increase was a skimpy 0.5%, but that was lots better than the 12.8% slide notched by the Atlanta area for 2011. And the only two metro areas that showed month-over-month gains in December were Miami, up 0.2%, and Phoenix, up 0.8%.

TO BE SURE, PLENTY OF headwinds remain for home sales. Unlike the stock market, home prices display much longterm momentum and inertia. Prices, all other factors being equal, tend to move in their past direction, and lenders, chastened by recent experience, remain tight with mortgage credit. Going through the home-loan application process these days is like undergoing a financial colonoscopy. In contrast, during the salad years of the housing boom, banks were shoving money at borrowers, with few questions asked.

The biggest impediment to a turn in the home market remains the so-called shadow inventory of some 3.671 million homes, according to estimates by Mark Zandi of Moody's Analytics: those that remain somewhere in the foreclosure pipeline. Payments on some are 90-plus days delinquent; others are already lender-owned properties, known as REOs (real estate owned), that haven't yet been listed for sale. This inventory sits atop a market for existing-home sales that this January reached an annual pace of 4.5 million units. Moody's Zandi, for one, finds particularly worrisome the recent $26 billion settlement of charges, alleging malpractice in home foreclosures, reached by 49 state attorneys general and the five largest lenders and mortgage servicers in the U.S. If nothing else, as a result of this, the shadow inventory will hit the home market far faster than it would have otherwise. "While I feel better about U.S. home prices than I have in six years, I do think that a pickup in foreclosure and short sales could push U.S. home prices down another 5% this year, before the market bottoms next spring," says Zandi. (In a short sale, the lender and homeowner agree to sell the home at a loss with the proceeds going to the lender in lieu of an actual foreclosure.)

Eleven forecasters surveyed this year by the Federal Reserve Bank of Philadelphia predicted, on average, that the Case-Shiller National Index would fall by just 0.2% this year—and that it would rise 1.2% in 2013. Even if the decline were to reach Zandi's 5% level in 2012, it would be off such a low price base as to be almost imperceptible.

If the market bottoms out early next year, as Barron's expects, any recovery is liable to be somewhat tepid for a while. Buyer psychology has been shredded by the housing bust: The notion of housing as investment, rather than shelter and a wasting capital good, has been destroyed. Meanwhile, lots of sellers, anxious to downsize or liquidate, remain in the wings, ready
to pile into the market at the first sign of a rebound. A pricing model recently developed by Goldman Sachs predicts a rise in nominal prices of a cumulative 30% over the next 10 years, for a real return of 1% annually, after adjusting for inflation. But if tax changes like the elimination of deductibility of mortgage interest materialize, long-term appreciation in home prices could hew more closely to inflation, with little in the way of real returns.

NONETHELESS, THE POSITIVES these days outweigh the negatives. Take the daunting 3.7 million homes that Moody's estimates is in the shadow inventory. Zandi points out that this
foreclosure pipeline has been steadily shrinking since its peak of 4.53 million homes in the first quarter of 2010. The decline is primarily a result of a precipitous drop in loans entering the foreclosure channel. The 30- and 60-day early-stage delinquency rate has been dropping like a stone for several years because of tightened mortgage-underwriting standards.

Likewise, Zandi expects that the shadow inventory could be reduced by at least 700,000, thanks to recent changes in Uncle Sam's Home Affordable Modification Program to encourage lenders to reduce the principal on loans in early-stage default. He also expects investment demand from all-cash buyers for homes in hard-hit areas like Nevada, Arizona, California and
Florida to take lots of properties out of the shadow inventory. Rising rent rates make the strategy appealing to buyers seeking attractive cash returns while they await a turn in the market.

The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, is also encouraging them to make bulk sales to investors of their large portfolios of foreclosed properties. CoreLogic's chief economist, Mark Fleming, thinks that the size of the true shadow inventory—the number of homes that will reach the market as distressed sales—totals only about 1.6 million. Such transactions, which accounted for 28% of all existing home sales in December, won't return to the record 33% they hit in February 2011, he adds.
The demand for housing could pick up markedly in the years ahead, just from population growth, or, in census lingo, household formation.

The Great Recession of 2008-09 sparked a collapse in household formation, as adult children postponed striking out on their own or moved back to their parents' homes after losing, or failing to find, jobs. The household-formation rate plummeted to 300,000 during 2008, from more than 1.7 million in 2005. But the Canadian economic research outfit BCA sees the U.S. rate surging to its historic annual average of around 1.3 million in the years ahead, boosting the demand for rental apartments first and then spilling into the housing market. BCA reckons that five million new households will have to be formed simply to return the ratio of households to population to normal levels.

Perhaps no one knows more about residential real-estate price trends then Yale economist Robert Shiller, the co-creator of the Case-Shiller indexes. He has studied prices going back many years, including those in one neighborhood in Amsterdam that has been around for literally centuries. While he's reluctant to predict definitively when the U.S. housing bust will
end, he points to one leading confidence indicator that appears to be signaling a market turn—the National Association of Home Builders/Wells Fargo Housing Market Index.

This monthly survey seeks to capture shifts in builders' perceptions of current and future market conditions and buyer traffic. The index has been on a tear of late, rising five months in a row and to its highest level since 2007. Home-builder stocks likewise have blasted off since the October 2011 stock-market low, with Beazer Homes (ticker: BZH) up some 167%, Toll
Brothers (TOL), 81%, and the SPDR S&P Homebuilders exchangetraded fund (XHB) up 74%.

This confidence index, Shiller notes, topped out almost seven years ago, in the very month that he boldly predicted in a Barron's article that the U.S. home market was on the verge of a monumental collapse that would see prices fall an inflation-adjusted 50% ("The Bubble's New Home," June 20, 2005). "It's amazing how on target that prediction was, since nationally the market is already down 40% in real terms," Shiller said in a recent telephone interview.

The Yale economist isn't sure why the builder-confidence reading has been such a good leading indicator. After all, the market for new homes even in strong years never accounts for more than 20% or so of all sales; existing houses and condos account for much more. And lately, the figure has sunk to around 6%. Perhaps home builders have a deeper insight into
potential buyers' psychology—although if their grasp of market conditions were that good, many of them wouldn't have gone belly-up during the bust.

The Obama administration certainly hopes that housing is on the verge of a turn. So do the host of homeowners anxious to unload their properties. One very positive sign: The inventory of new and used homes is around a six-month supply, a decline from the peak in 2008 of more than 10 months. That bodes well for continued economic recovery and could win President Barack Obama another four years in the White House. But for baby boomers who once hoped to retire on the proceeds of selling a home, the best advice may be: Don't quit your day job.

Vulcan Investment Partners, LLC Friday, May 25, 2012
Category: Press Releases

Vulcan Investment Partners, LLC is a Delaware limited liability company incorporated on July 13th, 2011 to act as General Partner to private real estate funds engaged in the purchase, sale, and leasing of distressed properties in the East Coast and Sunbelt region. As a General Partner, the company controls  investment strategies and structural and organizational decisions of private real estate funds.

With over 150 years of collective experience in real estate, finance, and marketing, the Management Team of the company has an extensive network of relationships as well as strategic alliances with high profile industry and local players that provide essential regional insights and effective sourcing of opportunities.

Vulcan Partners ParticipateWednesday, May 23, 2012
Category: Press Releases

Vulcan Investment Partners to participate in the IMN Real Estate Opportunity Private Fund Investing Forum in New York from May 31st to June 2nd, 2012.

VIP will be a guest speaker at: Single Family Home Aggregation Strategies: Can it be Done Effectively?

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