Monthly Archives: October 2012

Economy Watch: Sandy’s Costs Already Being Guessed

By Dees Stribling, Contributing Editor- MultiHousingNews.com

Sandy is still vexing parts of the Northeast with wind and rain, but it’s already time for preliminary damage estimates. Very preliminary, since the total costs of a natural disaster aren’t usually known for months or longer—and often economists disagree (as economists are wont to do) about the costs vs. the gains from re-construction. Hurricane Katrina, after all, did monumental damage, but also caused a mighty influx of spending.

In a widely cited early estimate, IHS Global Insight put the bill at as much as $50 billion. Some $20 billion of that would be in property damage, while as much as $30 billion in lost business income. To compare, Katrina caused an estimate $105.8 billion in property damage, while last year’s Irene, which also struck the Northeast, caused an estimated $15.8 billion in property damage, according to the National Hurricane Center.

Prognosticators are also bandying around estimates of the hurricane’s impact on U.S. GDP in the fourth quarter. Not everyone believes there will be much overall impact. “While natural disasters take a large initial toll on the economy, they usually generate some extra activity afterward,” Moody’s Analytics Ryan Sweet noted on economy.com, which is the company’s website. “We expect any lost output this week from Hurricane Sandy will be made up in subsequent weeks, minimizing the effect on fourth quarter GDP.”

Wall Street Re-emerges Today

Wall Street remained closed for a second day on Tuesday, but reopened today. It’s an important day for the exchanges, and not just psychologically, since on the last trading day of each month traders typically balance mutual fund portfolios and settle billions in futures and options contracts.

A number of IPOs slated for this week may or may not be delayed. Restoration Hardware, probably the best known of a half-dozen IPOs for the week, is still scheduled to price on Thursday night, according to Reuters.

S&P/Case-Shiller Indexes Showed Continued Upward Movement in U.S. Home Prices

The S&P/Case-Shiller indexes, which were released on Tuesday, showed continued upward movement in U.S. home prices. The 20-city composite index posted a 0.9 percent increase in August, following a 1.6 percent gain in July, while the 10-city composite likewise saw a 0.9 percent monthly increase. Annually, the 10- and 20-city indexes were up 1.3 percent and 2 percent, respectively.

Among the 20 metro markets tracked by Case-Shiller, all saw month-over-month increases except for Seattle, which was down 0.1 percent for the month, but the amount of growth in the other markets showed wide variety. Detroit saw the largest monthly price increase in August, with a gain of 2.3 percent, and Atlanta and Phoenix both experienced rises of 1.8 percent. Among the weakest markets that still showed, Dallas gained only 0.1 percent and Tampa was up 0.4 percent.

“Home prices continued climbing across the country in August,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, noted in a press statement. “The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market.”

Indoor Air Quality: Low VOCs, High Reward

By Barbra Murray, Contributing Writer – MultiHousingNews.com

Strictly defined, as per the U.S. Environmental Protection Agency, volatile organic compounds (VOCs) are pollutants that permeate the air as gases from certain solids or liquids. Substantial VOC content in products is, of course, a bad thing from both an environmental and health standpoint; but when it comes to indoor air quality, it is the VOC emission level that is most important in terms of monitoring impact. High levels can have short- and length-term health consequences ranging from the triggering of asthma and allergies to neurological disease.

“It’s incredibly important to make sure you’re limiting the chemical emissions in your apartments because they are such a small space and you spend a lot of time in them, so you are very susceptible to problems with indoor air quality,” says Mark Rossolo, director of public affairs for GreenGuard Environmental Institute, the certification body of UL Environment. According to the EPA, levels of several volatile organics average two to five times higher indoors than outdoors. And the list of potential sources of VOC emissions in multifamily buildings is a long one. This classification of toxins can rear its ugly head in products ranging from the paint on the ceiling to the carpet on the floor and any number of points in between.

For most, paint and lacquer are the offending products that come to mind as the most obvious potential source of unwelcome emissions indoors. As Rossolo points out, “Everybody understands that paint emits; you can smell it typically.” Yet today, in a growing number of cases, the “smell” can be deceiving. Paint manufacturer Benjamin Moore & Co. recently emerged from the lab with a new coloring method that, when integrated with coatings, adds nothing to the mix in terms of emissions. It’s a zero-VOC tinting method. “The gist of it is, we didn’t just make a low-VOC paint, we made a low-VOC system,” says Carl Minchew, director of Environmental Health & Safety at Benjamin Moore. “We had to take the time and make the investment in that technology, but now we have this platform of no-VOC colorants that are made for water-based coatings, and they actually enhance the performance of the coatings that they go into.”

Jim Carrillo, vice president of residential properties with commercial real estate company The Towbes Group Inc., eyes the potential long-term advantages of such a product for his company, whose 14 apartment properties became 100 percent smoke-free zones as of June 1—lobbies, fitness facilities, 2,000 residential units and all. “The turn cost—the cost that we incur to turn an apartment when a resident moves out—is a huge expense, and I believe that using low-VOC paint over a long period of time, combined with the fact that residents will not be smoking in the apartments, will help us reduce those costs,” Carrillo explains. “Also, we have a fair percentage of both seniors and children in our communities and just like going smoke free, it looks like all of the research is pointing to the fact that using low-VOC paint is also beneficial to the most vulnerable of the populations. I think we have to consider it.”

The walls are not the only culprits indoors; floors can also emit VOCs. Carpets can emanate 4-phenylcyclohexene and some vinyl floorings give off styrene. As is the case with paints, there are low-emitting alternatives, including modular carpet.  It’s not just the carpet itself that can be a problem—the glue utilized to attach the carpet is a potential source of high VOCs as well—but some modular products essentially kill those two birds with one stone. Environmentally friendly modular carpet and flooring manufacturer Interface Inc.’s carpet tiles all meet the U.S. Green Building Council’s LEED low-emitting carpet criteria, and its TacTiles connectors allow for glue-free installation. “Its use in multifamily properties is a growing area for us,” says Mikhail Davis, manager of strategic sustainability with Interface. “There have been projects where we’ve done the common areas because of the heavy wear issues; we’ve gotten more traction there.” Still, the modular carpet concept in general has yet to really catch fire in the multifamily industry. “I think it’s mostly just the first-cost versus use-cost challenge,” he suggests. “Developers are looking at their capital budgets, which include buying the carpet. They are not necessarily looking at the lifetime cost of maintaining the carpet and having it look good longer.” The long-term savings come from the fact that modular flooring allows for spot treatment, so to speak, of stains as well as wear and tear. An individual tile can simply be disconnected from the group, removed, replaced and recycled. It’s the realization of the future costs savings in replacement that is slowly leading to an increase in the use of modular, low-VOC carpeting. “The green part of it hasn’t come that much into play,” Davis notes. “It’s not the primary buying criteria, but people are really excited when they find out about the low-VOC emissions after they’ve decided based on cost and performance and the other traditional carpet attributes.”

You can’t have it all; rather, you can’t get rid of it all. A property completely void of VOCs is akin to a picnic sans ants; they’re going to show up, so the real issue is keeping their presence to a minimum. The variety of low-VOC offerings provides numerous means of diminishing emissions. Even signage, like the “Management Office” plaque in the lobby, can be a contributor, as can cabinetry. GreenGuard has certified products in both categories. Low-VOC kitchen and bath countertop materials are readily available. The lovely couch in the lobby can also emit toxic chemicals. As reported in a 2010 issue of Japan’s Bulletin of National Institute of Health Sciences, a study of 10 residential furniture items and electrical appliances—including sofas, desks, refrigerators and desktop computers—concluded that sofas produced the highest emission rate of total VOCs.

“Energy efficiency is great but it really has dominated the green discussion and things like indoor air quality have kind of fallen by the wayside a little bit,” Rossolo says. But a low-VOC crusade, just like the green movement, could ride on the coattails of a much grander trend. “For owners of multi-housing units, if they can position their buildings as healthy or healthier, as opposed to green, we think they’re going to see a lot more traction because everybody can relate to a health message; not everybody buys the green message.”

The Changing Landscape of Affordable Housing?

By Sathya Moorthy, RA, LEED-AP – Senior Project Architect, MTFA Architecture – MultiHousingNews.com

According to US Census Bureau, America is trending towards population growth in cities, and that means a trend in multifamily housing. As a result, the construction of multifamily units is growing faster than single-family homes. The past decade has seen a flurry of high-rise apartments in Washington, D.C., and this trend is rapidly spreading across the suburbs such as Arlington and Tysons Corner, Va. While the supply of condominiums and high-end apartments are in line with the demand, it is not so the case with affordable housing. In fact, the supply of affordable housing in this region has dwindled by more than 50 percent in the past decade, and the existing stock of affordable housing is in such bad shape that many are undergoing major renovation efforts. Even after major renovation efforts, affordable housing clearly distinguishes itself from its wealthy cousins by location, architecture, amenities and access to public transit.

vPoint

Affordable housing programs mixed with market rate units in the same building and nestled in the midst of an affluent transit oriented development has been a dream for county officials in the region. That dream came true with the completion of “The Views at Clarendon” (currently called as the “vPoint”), in spring 2012.

The goal of the project was to preserve and rehabilitate the church’s sanctuary, steeple and education building for increasingly flexible use respecting the architectural heritage of the campus and buildings, while converting and expanding the remainder of the existing structure into a 10-story multifamily affordable housing development with underground parking.

vPoint is a multiuse project that has transformed the current site of the First Baptist Church of Clarendon into a true civic space. The new building supports 21,000 square feet of church space on the first two levels including a new sanctuary, narthex, administration and educational spaces. The 116 multifamily housing units, ranging from efficiencies to three bedroom units, are located on the upper floors. More than 60 percent of the units are dedicated for affordable housing to support the need in the area. The existing three-story education building continues to house a childcare center for 185 children along with a seminary for liturgical studies. The new and existing buildings are connected with an enclosed light filled walkway providing accessibility from the street to all levels.

The Architecture

Located on a triangular site wedged between the existing church steeple and the education building, the building form that rises from three-stories below grade is carefully chiseled to fit within its urban context. The architecture of the new building is contextually contemporary with finely detailed brick façade punched with glazed openings, cast stone and steel, and comfortably fits in with the existing church steeple, the education building and other nearby development. The building steps back on the upper floors to create a gradual transition between the single-family residential neighborhood on the north and the commercial development abutting other sides of the property. The interior of the building is filled with natural light, which is achieved by strategically sized and placed windows. The attractive elements of the building’s design and the streetscape improvements complement and enhance nearby revitalization and redevelopment initiatives.

Sustainable Design

It is extremely rare that sustainability and affordability go together. At vPoint, sustainability was an integral part of the project design process. Located at the heart of Arlington—a transit oriented development (TOD), yards away from the metro station, bus lines and various other amenities, the project is imbued with green amenities like hi-performance mechanical systems, high-performance windows, energy efficient/water saving appliances, energy efficient lighting, reflective roof, electric car charging stations and green power. These are just a few examples of how this development pushes the green envelope. The most sustainable quality is the diversity of use on site from church to day care, office to education, along with affordable and market rate units.

undefinedAmenities

In addition to the green features mentioned above, vPoint is abound with amenities like designer kitchens, stainless steel appliances, in-unit washing machines, high-end fixtures, wood flooring, a resident’s lounge and business center, an outdoor space that includes grill and lounge seating, and a conference room that can transform into a mini-event space. The existing onsite amenities like the church and day care center adds to the appeal.

Accolades

The project recently earned the LEED Gold Certification. It also won the Urban Land Institute Smart Growth Award, and the 2012 Washington Building Congress Craftsmanship award.

Conclusion

With minimal amenities and less than inspiring design of their buildings, affordable housing has never been fully integrated with their neighbors, and this has been the status quo for decades. vPoint is clearly a game changer for affordable housing that co-exists with market rate units and other civic uses, offering features, location and amenities that used to be the exclusive domain of high-end condos. vPoint certainly defies the existing status quo of affordable housing and sets a strong precedence for other communities to follow suit. Whether the luxuries that vPoint brings to the affordable housing is an anomaly or a changing trend, is yet to be seen.

Sathya Moorthy is a senior project architect at MTFA Architecture in Arlington, Virginia. He has more than 12 years of experience, with a strong inclination for mixed-use high-rise buildings and sustainable design. 

Photo credit: © Todd A. Smith, www.tasphoto.com

ULI Special Report: Emerging Trends Respondents Optimistic About Recovery

By Suzann D. Silverman, Editorial Director – Commercial Property Executive Magazine

Optimism permeated the Emerging Trends in Real Estate results this year, with respondents finding a marked improvement over last year. Recovery, though, remains slow, noted Jonathan Miller, partner & co-owner of Miller Ryan L.L.C. and the longtime author of the report, a venture between PricewaterhouseCoopers and the Urban Land Institute. Miller and fellow researchers presented the results during a media briefing yesterday during the ULI Fall Meeting.

Jonathan Miller

“Recovery is definitely happening, and we’re profiting from it,” he declared, reflecting the sentiments of the more than 900 real estate investors, fund managers, developers, owners, lenders, brokers, advisors and consultants that participated in this year’s survey. And it is now occurring across the board: While multi-family has been the favored sector for investment for the past three years, he noted, the other sectors are now all attracting attention, as well. That said, in-depth interviews with 300 of the respondents revealed lingering uncertainty beneath the surface.

Among markets, the historical top cities remain in favor, although there was some surprising movement in how they ranked , based on investment, development and homebuilding prospects, according to Chuck DiRocco, director & head of real estate research at PwC, who is a co-author & production manager of the report. The biggest surprise was Washington, D.C.’s drop in favor, with the nation’s capital falling from the top spot down to No. 8 after three years leading the ranking. That shift in favor was revealed in a mid-year evaluation and has lingered into the more formal annual survey.

Last year’s second-place city, Austin, also dropped down, though it retained a respectable fourth-place listing, while formerly third-ranked San Francisco, continuing its return to strength, moved up to lead the ranking. Other top 10 cities included New York City, up to second place from fourth last year; San Jose, making waves with its move from seventh to third place; Houston, up from eighth to fifth; Boston, down only slightly, from fifth place to sixth; Seattle, now seventh (down from sixth last year); with Dallas-Fort Worth and Orange County, Calif., rounding out the list. Last year’s ninth and tenth place cities, Los Angeles and San Diego, dropped down to 16th and 15th place, respectively.

Chuck DiRocco

San Francisco made a particularly triumphant return because it won the “triple crown” of first place in investment, development and homebuilding, DiRocco noted. But performance among major cities across the country was promising, with the average market score at its highest since the early 2000s and an increase in the number of cities getting a green light for “generally good” performance while five fewer markets got a red light for “generally poor” performance than last year. Even the long-suffering Midwest is not as “red” as it once was, he said.

Another surprise was the rise in interest in secondary markets. “The major gateways have gotten too pricey for a lot of people,” Miller observed, as cap rates have continued to plunge. Investors in secondary markets, however, need to link up with a local operator to succeed, he warned, as they are in the best position to make money. “It’s a get-rich-slow (scenario), but you can make money,” he added.

Financiers also remain on the optimistic side, although they are not providing capital to everyone, according to Stephen Blank, senior fellow for finance at ULI and principal researcher & advisor for Emerging Trends. Equity providers across the board will capitalize the “usual suspects,” the well-heeled investors with solid reputations, but with others, “it’s a search for yield,” he said. The most confident investors include opportunity funds, REITs and foreign investors, while pension funds are taking a more cautious stance.

Stephen Blank

On the debt side, too, the most solid investors and properties will be able to obtain what they need, but for less-advantaged properties, financiers have no problem continuing to extend and pretend. They expressed confidence the CMBS market is returning sufficiently to cover the looming debt maturities.

Researchers’ top tips:

  • Concentrate acquisitions in budding infill locations.
  • Construct green office in 24-hour markets.
  • Major hub distribution centers near ports and airports offer opportunity.
  • Apartment development is leveling off.
  • Single-family housing funds are worth pursuing, but with caution and only if they involve local operators.
  • Pursue the big three “re’s”: Repurpose obsolete properties, refinance and renovate. Recapitalize well-leased assets and lock in low interest rates while you can.
  • Hold core properties in 24-hour cities.
  • Buy or hold public REITs and non-performing loans.

Economy Watch: Unemployment Claims Bounce Back Upward; CEOs, JP Morgan Fiscal-Cliff Wary

By Dees Stribling, Contributing Editor – Commercial Property Executive Magazine

Proving itself to be the volatile indicator that it’s frequently asserted to be, the number of initial unemployment claims spiked upward for the week ending October 13 to 388,000, according to the U.S. Department of Labor on Thursday. The previous week’s claims were also revised upward a bit to 342,000. The four-week moving average, which isn’t so volatile, was up only 750 to 365,500.

Also on Thursday, the Conference Board reported that its Leading Economic Index for the U.S. increased 0.6 percent in September to 95.9 (2004 = 100). That followed a 0.4 percent decline in August, and a 0.4 percent increase in July, so “bouncing around” might be a fair characterization of the index in mid-2012.

“The U.S. LEI increased in September, more than offsetting the decline in August,” Ataman Ozyildirim, economist at the Conference Board, said in a statement. “The LEI has been signaling an economy that is fluctuating around a slow-growth trend. The six-month growth rate has slowed substantially, but still remains in growth territory due to positive contributions from the housing and financial components.”

CEOs Worry About Fiscal Cliff

No U.S. politician is paying much attention to the fiscal cliff at the moment, considering that the election is dead ahead, so the nation’s moneymen decided to nag the politicos about the situation on Thursday. The Financial Services Forum, which represents the C-suites of the largest banks and other financial service firms in the country, sent an open letter to President Obama and Congress.

The gist of the letter was a warning that the U.S. would see another downgrade to its credit rating if no deal was reached to avert the cliff. Also, it warned of another recession. “The consequences for inaction — for stability in global financial markets — for economic growth, for millions of Americans still without work, and for the financial circumstances of American businesses and households — would be very grave,” the letter stated.

The money panjandrums also asserted that merely avoiding the cliff isn’t enough. They call called for longer-term fixes to the nation’s fiscal problems. Their letter did not, however, articulate any specific positions on exactly what kind of action the government should take, either in the short- or longer term.

JP Morgan Says Watch for That Cliff

JP Morgan, for its part, said in a research note that it’s now estimating that the cliff–if unresolved–will pare 1 percent off GDP growth in 2013. That’s up from a previous estimate of a 0.5 percent haircut for the nation’s GDP. The banking giant is also predicting GDP growth in the first quarter of 2013 at 1 percent, and 1.5 percent during the second quarter.

Wall Street had a down day on Thursday, with the Nasdaq taking more of a beating perhaps because of irregularities in reporting Google’s underwhelming results. The Dow Jones Industrial Average lost 8.06 points, or only 0.06 percent, while the S&P 500 lost 0.24 percent. The Nasdaq, however, was down a full 1.01 percent.

REM Special Report: Leaders Focus on Technology, Training and Trends

By Paul Rosta, Senior Editor – Commercial Property Executive Magazine 

Technology, training, and trends in real estate property categories topped the agenda during the opening session of the Institute of Real Estate Management’s opening general session in New Orleans on Thursday.

Senior executives commented on the trends that will be shaping the major property categories in a panel discussion moderated by Jim Evans, IREM’s 2012 president and president of Bruce G. Pollack & Associates Inc. of Grand Blanc, Mich.

“Industrial is going to be very positive in the next few years,” said Karen Whitt, Colliers International’s president & COO of U.S. real estate management services.

Some 40 percent of the nation’s distribution space is becoming obsolete as retailers require 30-foot and 36-foot clear-space heights. She also cited e-commerce and the Panama Canal expansion as among the forces that are changing client needs.

Whitt also noted that real estate management is affected from a declining footprint of office space, from 300 square feet per user to 200 square feet on average. And as the popularity of Apple stores shows, retail “has become about the experience of shopping, not just buying.”

On the multi-family front, Fred Tuomi, president of property management for Equity Residential, cited the much-discussed demographic and economic factors that are propelling the apartment business: the entry of the Millennial generation into the work force, the postponement of home-buying and marriage. One striking statistic from Equity Residential’s portfolio: 43 percent of the REITs units are rented by a single occupant, and of those residents, 51 percent are women.

Both executives weighed in on the strategic issues that concern owners and managers of all property categories. “Clients want knowledge; what they get is data,” Whitt said. A 50-page report is usually far less valuable to clients than insight into the global, local and national trends that will specifically affect their investment and development decisions, she asserted.

On a related note, Tuomi challenged the effectiveness of the use of technology today. Real estate managers and others have plenty of sophisticated tools at their disposal. “What I’m not seeing our industry doing right now is leveraging that technology to reduce your cost of operations,” he said.

Addressing the anticipated nationwide shortage of property managers, the executives brought up some similar qualities that they look for in recruitment. New professionals can be trained in finance and operations, Whitt observed; however, she added, “You cannot train people to have that energy level, that passion, that enthusiasm.”  For his part, Tuomi said, “I look for the sparkle in their eyes” and the ability to connect with people. “You can hire for attitude, then train for skills. It’s very important to have that welcoming personality.”

Asked about his approach to hiring seasoned managers, as opposed to less experienced recruits, Tuomi explained, “We don’t have that many seasoned professionals—we grow our own.” A pitfall of hiring veterans is that they can be what he called “overly seasoned, meaning that they’re baked and they think they know it all,” he said.

The most valuable quality a veteran manager can bring to the job is a never-ending thirst for knowledge, Tuomi commented. “What I look for is not, ‘I can bring to you my world of expertise,’ but “I can bring to you my curiosity.”

Economy Watch: Existing Home Sales Edge Down

By Dees Stribling, Contributing Editor – MultiHousingNews.com

Existing home sales dropped 1.7 percent in September to an annualized rate of 4.75 million units, including both single-family and multifamily, according to the National Association on Friday, with August’s rate revised upward to 4.83 million. The September 2012 rate was 11 percent higher than during September 2011, however.

The Realtors also noted that total housing inventory at the end September fell 3.3 percent to 2.32 million existing homes available for sale, which represents a 5.9-month supply at the current sales pace. That’s down from a six-month supply in August. Listed inventory is 20 percent below a year ago.

The national median existing-home price for all housing types was $183,900 in September, up 11.3 percent from a year ago, the NAR said. Distressed homes accounted for 24 percent of September sales (with 13 percent foreclosures and 11 percent short sales), up from 22 percent in August. Distressed inventory accounted for 30 percent of housing sales in September 2011.

Most states see unemployment drop

Unemployment dropped in September compared with August in 41 states and the District of Columbia, while six states posted rate increases, and three had no change, the U.S. Bureau of Labor Statistics reported on Friday. Compared with September 2011, 44 states and D.C. saw unemployment rate decreases from a year earlier, while six experienced increases.

Nevada retains its unwanted and long-standing title as the state with the highest unemployment rate, at 11.8 percent in September 2012. Double-digit unemployment rates are still vexing only three states, namely Nevada, Rhode Island, and California (10.5 percent and 10.2 percent, respectively, for the latter two). As recently as early 2010, 18 states and D.C. suffered from double-digit unemployment rates.

North Dakota still enjoys the nation’s lowest jobless rate, 3 percent. All together, the BLS reports that 21 states have jobless rates significantly lower than the U.S. figure of 7.8 percent, while 14 states had measurably higher rates, and 15 states and DC had rates not much different from that of the nation.

Driving on U.S. roads modestly up

The U.S. Department of Transportation reported on Sunday that travel on all U.S. roads and streets was up by 1.2 percent (3 billion vehicle miles) for August 2012 compared with the same month in 2011. Total travel for the month is estimated to be 262.4 billion vehicle miles. That’s an indicator of a moderate expansion in economic activity, and came despite the fact that gas averaged about $3.78 per gallon during the month, compared with about $3.70 in August 2011.

Wall Street took a dive on Friday, with the Dow Jones Industrial Average dropping 205.43 points, or 1.52 percent. The S&P 500 lost 1.66 percent and the Nasdaq was down 2.19 percent. Friday happened to be the 25th anniversary of Black Monday in 1987 (the Dow Jones was down 22.6 percent that day), but it was probably coincidence that on the same day in 2012, a string of poor reports, especially in the tech sector, helped drive markets down in the worst single-day performance in about four months.

Neighbors wait, worry as banks take longer to sell foreclosed homes

By Mary Shanklin, Orlando Sentinel – Florida Trend Magazine

A neighborhood’s chances of recovering quickly from the hung-over U.S. housing market depend not only on how many foreclosed homes it has but also, it seems, on which banks own the properties.

Bank of America, for instance, takes almost two months longer on average to sell a foreclosed property than EverBank Financial does, according to new, nationwide data from the research company RealtyTrac Inc. And BofA, the lending giant that inherited many of its troubled mortgages when it bought Countrywide Financial in 2008, has been taking longer this year to sell its foreclosure properties than it took last year.

A lot of things can happen when long-abandoned houses sit on the market for additional months. By slowly releasing their foreclosed properties, for instance, some lenders have benefited from rising home prices this year; in the core Orlando market, prices are up 16 percent since the start of 2012.

But those long-held properties also rack up more unpaid association fees, overdue property taxes, repair costs, neighborhood complaints and even code-enforcement fines as the months wear on.

At Cranes Roost Villas in Altamonte Springs, the first thing residents and visitors see as they enter the gated community is a leaky corner unit draped in blue tarp so long that the plastic sheeting has started to disintegrate.


Today’s Business: Check out the latest pictures from the financial world


“Bank of America put a bright-blue tarp on top of roof rather than repair it,” said longtime resident Richard Campanaro. “Half of it has blown off. It would make a wonderful haunted house if you wanted to do something for Halloween. It’s terrible — I wouldn’t even want to enter the property.”

Last year, it took Bank of America an average of 5.3 months to sell a foreclosure, according to RealtyTrac. So far this year, it has averaged 6.7 months. Deutsche Bank, Wells Fargo & Co., Ocwen Financial andCitigroup have also fallen further behind in selling their foreclosed properties. Through September, all of them were taking at least 20 percent longer than they took in 2011, based on RealtyTrac’s nationwide data.

Smaller banks appear to be more nimble when dealing with foreclosures, perhaps because they aren’t faced with nearly the same volume of properties, said Daren Blomquist, RealtyTrac vice president. And mortgage servicers with portfolios of higher-end properties are better able to sell those homes than are companies saddled with less-desirable houses.

But the longer a bank-owned house sits idle during the foreclosure process, the deeper it falls into disrepair.

“Banks are not typically too willing to repair these homes, particularly if there are property flippers ready, willing and able to buy the more scratch-and-dent variety of homes and fix them up,” Blomquist said. According to RealtyTrac, the number of flippers is up 25 percent nationally and 34 percent in the Orlando area compared with a year ago.

Two nonprofit housing organizations recently filed complaints with the U.S. Department of Housing and Urban Development, accusing Bank of America of failing to maintain foreclosed houses in 10 cities’ minority communities, including Orlando’s. The groups included photos of houses with unlocked doors, mold, interior walls spray-painted with graffiti, and piles of trash heaped outside.

The Charlotte, N.C.-based lending giant denied any wrongdoing and said it stands behind its property-maintenance-and-marketing practices. “Bank of America is committed to stabilizing and revitalizing communities that have been impacted by the economic downturn, foreclosures and property abandonment,” spokeswoman Jumana Bauwens said.

Orlando Code Enforcement Officer Mike Rhodes said he sees repeated problems in low-income areas and elsewhere with houses owned by various lenders. A review of code violations within the city found that Wells Fargo had the greatest number of code infractions among the nation’s top five lenders.

A year ago, for instance, Orlando cited Wells Fargo for failing to secure a swimming pool at a foreclosed house in downtown Orlando. At the same house last month, Orlando cited Wells Fargo for overgrown landscaping and debris in the backyard. And just two weeks ago, Wells Fargo got a notice for broken front windows and black water in the pool.

Repeated safety violations at the same bank-owned houses have become such a recurrent theme for local governments that some of them, such as the city of Tampa, have considered establishing foreclosure registries, which require lenders pay $125 to register a property within 10 days of filing a foreclosure notice.

In registering a property, banks have to provide contact information for a property manager in case the house falls into disrepair and the local government — or the neighborhood’s community association — wants some action taken.

Rhodes said there has been some discussion about creating a registry in Orlando, but getting the properties “signed up” does not ensure the houses will be maintained. He said his staff already knows whom to call at most of the mortgage companies with foreclosures in the city, so he questions whether such a registration is necessary.

“You call a company in Texas that manages the assets of Wells Fargo, and they contact someone here,” Rhodes said. Calls, though, don’t always resolve the problems.

“We’ve got a situation in Parramore, the property is owned by Wells Fargo,” Rhodes said. “There are squatters, drugs being dealt and you name it.”

A spokeswoman for Wells Fargo said the company inspects foreclosures monthly, registers foreclosures as required, maintains abandoned houses and secures them.

“We occasionally receive code violations or concerns regarding the condition and maintenance of homes in our servicing portfolio that are not foreclosed,” the bank said in a written statement. “If the property in our servicing portfolio is delinquent and vacant, but has not yet gone to foreclosure sale, we will maintain and secure it.”

The time JP Morgan Chase takes to sell its foreclosed properties has held steady from last year to this year. Lisa Shepherd, vice president of Chase’s REO and Preservation unit, said the company has not changed its sales strategies in the past year but has been able to move more properties as it winnows its inventory.

“When there is less distress inventory in the market, we find there are more interested buyers,” Shepherd said. She added that Chase works with local real-estate agents and makes necessary repairs, taking into consideration the neighborhood overall.

Prospects for banks generally to work through their foreclosure inventory in Florida do not look promising. RealtyTrac projects that foreclosure filings in the state will continue to increase for the next six to 12 months, and that will likely increase the average time to sell for many of these lenders during the next year.

“However, because buyers and investors finally appear to be flocking to the market, pulled by low prices and interest rates, I don’t expect the influx in bank-owned inventory to cause a major dip in average prices,” said Blomquist, the RealtyTrac vice president.

Back in Altamonte Springs, Campanaro said it’s sad that he has grown accustomed to the shredded blue tarp that creates an eyesore at the entrance to his neighborhood.

What’s even sadder, he said, is what that does to the property values for residents trying to rebuild some equity in their homes.

mshanklin@tribune.com for 407-420-5538

Copyright © 2012, Orlando Sentinel

Crescent Resources to Develop $68 Million Community in Tampa, Fla.

By Jessica Fiur, News Editor – MultiHousingNews.com

Tampa, Fla.—Crescent Resources LLC, a Charlotte, N.C.-based real estate development company, announced that it is starting work on a $68 million community in Tampa, Fla.

The community, called Circle Bayshore, will have eight stories and 367 units, including studio, and one-, two- and three-bedroom apartments. Each unit will include high ceilings, walk-in closets and separate linen closets. Kitchens will be built with granite countertops, a prep island and stainless steel appliances. The bathrooms will also have granite countertops, as well as custom wood cabinetry.

Building amenities will include a two-story health club and fitness center, swimming pool, outdoor area with grilling stations and fire pit, business center and a club room. Additionally, a parking garage will be available for residents and their guests.

Circle Bayshore will also feature many green and sustainable elements. The community is being designed to meet LEED certification requirements.

The community was designed by MSA Architects of Miami. It is being financed by an equity investment from Crescent Resources, construction financing from Capital One and mezzanine financing from Nationwide Real Estate Investments.

“This extraordinary location is ideal for multifamily residential with its close proximity to the water, entertainment and dining venues,” Brian Natwick, president of crescent Resources’ multifamily division, said in a press statement. “Circle Bayshore will offer its residents a unique lifestyle in an uncommon location with amazing amenities, first-class programming and high-quality interiors.”

Circle Bayshore’s first apartments are expected to be completed in the first quarter of 2014.

Boynton Beach Multifamily Development Ready to Open $1M Green-Friendly Clubhouse

By Keith Loria, Contributing Writer – MultiHousingNews.com

Boynton Beach, Fla.—Seabourn Cove, a gated community of 456 townhomes and garden apartments in Boynton Beach, Fla., is opening a $1 million, 6,204 square-foot, green-designed clubhouse.

The development is on track to become the nation’s largest sustainable community of multifamily homes

“Seabourn Cove incorporates cutting-edge green designs, materials and processes,” Rick Lococo, Seabourn Cove’s managing partner, tells MHN. “In today’s economy, people want to know how much can they save in the community. I tell them an estimated 40 percent on electricity and 25 percent on their water bill.”

Seabourn Cove units range in size from 888 to 1,718 square feet and are comprised of one-, two- and three-bedroom residences with one to 2.5 baths. Units include single-story flats as well as two- and three-story townhomes.undefined

“In planning of the project, we looked to the National Green Building Standard gold rated design,” Lococo says. “We’ve used Energy Star appliances, reclaimed and recycled materials throughout, all low-flow water faucets (for a 20 percent reduction in water bills) and high quality windows with enhanced insulation.”

Seabourn Cove encompasses nearly 23 acres near the Intracoastal Waterway, and the clubhouse is situated inside the main entrance on Federal Highway, between U.S. 1 and Old Dixie Highway.

The clubhouse will act as a centerpiece of the community’s casual, active lifestyle, offering resort-style amenities including a racquetball/sports court, fully equipped gym, men’s and women’s saunas and a computer room. A clubroom includes a large flat-screen television, lounge seating and adjoining café with a bar for socializing and private gatherings.

“In the clubhouse we have hot spots so there’s free wi-fi for all the residents, a conference room, and a 1,100-square-foot professional grade business center with state of the art equipment,” Lococo says. “We have a resort-style pool with a 15,000 square foot shell deck with a gazebo in the back. You feel like you are in the islands back there.”

The clubhouse’s Mediterranean design is crowned by a barrel-tile roof, and accented with ironwork, tile floors and 14-foot-high ceilings.

A second clubhouse is being planned for the community and will boast similar sustainability features, which are the same aesthetic, techniques and materials found in its rental homes

Accented by hundreds of indigenous trees and plants, this community was created by developers Charles Funk, Jeff Meehan and Lococo in cooperation with the City of Boynton Beach as part of its drive to be the epicenter of sustainable living in Florida.

“On the outside, we touched on every energy-savings component that we actually could, as well as adding solar power roof heads,” Lococo says. “We have a dog walk, a kid’s playground and also the first eco-walk in the city of Boynton Beach.”