Good news for mid-Atlantic area home sales?

Will Housing Sales Sustain Growth Without Tax Credit?

This article from Austin Kilgore shows the pending housing sales increases in the US.  According to the National Association of Realtors, pending home sales rose for the third straight month, which are up 21% from March 2009.

Pending home sales rose for the third straight month in March, as buyers rushed to sign contracts leading up to the April 30 expiration of the homebuyer tax credit, according to the National Association of Realtors (NAR).

NAR’s pending home sales index increased 5.3% from February to March. This year’s pending sales were up 21.1% from March 2009. In February, pending sales were up 8.3% year-over-year. The index is a measure of home sales contracts that typically close one or two months after signing. It’s based on a national sample that typically represents about 20% of existing-home sales transactions and is a leading indicator of future home sales.

NAR chief economist Lawrence Yun said the homebuyer tax credit is responsible for boosting sales. “Clearly the home buyer tax credit has helped stabilize the market. In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” he said. “Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing.”

“Another encouraging sign is the improvement in the availability for jumbo and second-home mortgages,” Yun added. “As bank balance sheets strengthen, it is just a matter of time before lending of non-government-backed mortgages steadily opens up.”

Regionally, pending sales increased the most in the South, where the 12.7% month-over-month increase put pending sales 28.3% above the March 2009 level. In the West, the index increased 1.9% month-over-month, bringing pending sales up 8.8% from one year ago. The index increased 1.2% in the Midwest and is now 18.5% above a year ago. The Northeast was the only region to experience a decline, down 3.3% from February. However, pending sales in the Northeast are 27.2% above March 2009’s level.

Know your landlord and gain some real estate advantages

This article from Mike Norris explains 3 common commercial landlord types.  Understanding your landlord, when it comes to commercial real estate, can be critical when it comes to renewal, renegotiation, relocation, etc.

One of the reasons that commercial real estate is a process — not a commodity — for end-users is that one of the key steps to the process is understanding the landlord.

Who is the landlord? It could be a single individual who’s owned the property outright for a long time. More likely, it’s an entity, as small as an LLC consisting of local partners or as large as a public real estate investment trust.

Moreover, the landlord is also its listing agent, asset manager, property manager and lender(s). Each of these individuals has a particular role in protecting the landlord’s interests — and not only is each landlord different, but also each type of landlord has unique pressure upon them that you need to understand.

Here are some basic things to keep in mind regarding a few of the most common landlord types:

Pension Funds

Many people don’t know that school teachers and other state government employees own much of the commercial real estate in America.

Their ownership comes in the form of tax-exempt pension funds administered by each state to pay benefits for retirees. Commercial real estate had long been considered a long-term stable asset for these portfolios to grow and make payments to retirees. You may have heard that many states have had their funds significantly eroded (by about 20 percent in the cases of Maryland, Virginia and the District of Columbia).

In some cases, funds are “oversubscribed” to real estate; in other words, the value of other investments have collapsed, so while their real estate has actually held up relatively OK, they’re forced to sell off portions of their real estate portfolio to reduce the percentage of investments tied to real estate to comply with their own rules.

What does this mean for you as an existing or prospective tenant? Stable cash flow is critical for both fund stability and disposition values of the assets, so you have unprecedented leverage to reduce costs, improve your facility and mitigate risk in your lease.

Real Estate Investment Trusts (REITs)

These public entities have probably received the most attention due to their declines both during the early part of the decade as well as now toward the end of it. REITs have their own requirements, most especially debt-to-equity thresholds and generally accepted accounting principles (GAAP) rules.
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