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October 29, 2005
Real estate: Home closings could be delayed
MIAMI -- A-Realtor.Com -- Thanks to Hurricane Wilma, real estate closings could be delayed weeks or even months, as most lenders will require reinspections to ensure that the homes didn't sustain significant damage that would impact their value.
This is standard practice after a hurricane or national disaster, but it's a process made infinitely more complicated by the large geographical area impacted by Wilma. And the end of the month is typically a busy time for closings, particularly in South Florida where the housing market is booming.
"They just want to make sure the property hasn't been destroyed or there hasn't been a downturn in the market," said John Thomson, a Coral Gables real estate attorney and the owner of First Property Title Services.
Adding to the logistical problems are issues such as the ability to reach title companies and lawyers, many of whom have not gotten back to work because of a lack of power. Plus, with the gas shortage it's hard to get an appraiser out on the road to do an inspection.
"Even if we wanted to close the loans, it's very difficult," said Robert Green, executive vice president of residential lending for BankUnited, which estimates it had several hundred loans in South Florida scheduled to close during the week after Wilma.
Green estimates that about 30 percent of those loans will not be able to close because of extensive damage to the homes or people reconsidering moving to Florida. "The rest will close, it's just a question of when," he said.
Some banks will try to speed up the process by having their own officers conduct visual inspections of the property, instead of a waiting to hire an appraiser.
But if the closing is delayed, what happens to the mortgage rate that the borrower had locked-in? That's a key concern because 30-year rates have risen from about 5.2 percent to 6 percent in the past month. The answer depends largely on the lender.
** Washington Mutual will extend the lock as "long as necessary," said John Moore, first vice president and regional manager for Florida.
** Wachovia Bank will offer a 15-day rate extension for all ZIP Codes designated as disaster areas by the Federal Emergency Management Agency, said Jennifer Darwin, a Wachovia spokeswoman. "This will give us time to evaluate what has occurred and make adjustments to the application or the loan as needed."
** Bank of America customers shouldn't see a rate change, but individual situations will be evaluated, said Julie Davis, a Bank of America spokeswoman. "That's absolutely something where we're going to work with our customers."
** BankUnited will try to work with customers on rates, but Green said: "Lenders are going to have a real tough time honoring the rate locks. It could be an indefinite delay depending on the condition of the property."
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Posted by South Florida Realtor at 03:40 PM | TrackBack
Hurricanes, housing boom blow construction materials prices through the roof. South Florida Realtor
JACKSONVILLE, Fla. -- South-Florida-Realtor.Com -- Hurricane-force winds may not have hit the First Coast this season, but hurricanes Katrina, Rita -- and now, Wilma -- have blasted the costs of construction materials skyhigh.
Local contractors and material suppliers say Wilma might deal the latest blow to construction materials prices, causing a spike in costs of the basic building blocks of homes, including cement, lumber and shingles.
Expected rebuilding efforts for Katrina and Rita have already driven prices up, spurring home prices up with them. According to the National Association of Home Builders, new home prices have grown 15 percent through August since August 2003.
Cement prices were already rising at a rate of about 20 percent every six months, said Frank Taylor, a sales and marketing agent with Heidelberg Cement Group.
"Demand has been very high in the Southeast region," he said.
"Katrina, Wilma, the housing boom -- all of that is driving prices up and putting us in a shortage."
Taylor said that Florida consumes about 10 million tons of cement per year, half of which must come from outside the state due to insufficient in-state production capacity. Thus, rocketing fuel prices have also driven cement prices skyward.
Bryan Lendry, president of the Northeast Florida Builders Association, said that higher cement prices might be coming from another unlikely source -- China. Construction projects there have sucked building materials away from the United States, leaving local contractors scraping for cement. The hurricanes worsened that costly trend.
Lendry said that his own company, custom home builder Brylen Homes, has seen a 50 percent increase in the cost of plywood since the end of September. The waiting period for asphalt shingles has also grown to between two and three weeks.
"Whenever a hurricane hits, we see lumber flying off the shelves," Lendry said. "We're getting hit with repair demands in an already tight market. Now, we might wait four or five days just for concrete. That used to be unheard of."
Since Sept. 1, the price of plywood has rocketed 30 percent and the price of OSB roof sheeting, which is used in the roofs of most local homes, has soared 40 percent, said Robert Mangum, who heads purchasing for the Carolina Lumber Company in Jacksonville.
"Since Katrina, these prices went way up, and with Wilma coming, manufacturers are probably going to keep prices up," he said.
Because South Florida mainly uses plywood in roofs instead of OSB roof sheeting, Mangum expects that plywood prices will see the largest increase once rebuilding begins.
Roofing materials, which are largely petroleum-based products, have also come in high-demand.
Asphalt shingles, which are used in the construction of most roofs, cost about 5 percent more every month than they did the month before, and shingles manufacturers are having to ration some suppliers as they struggle to keep up with demand, said Kevin Snyder, sales and projects manager for BBG Contracting Group Inc. in Jacksonville.
Glen McRae, assistant manager of the Jacksonville branch of the Bradco Supply Corporation, said that he has seen the price of asphalt shingles go up about 25 percent in the last six months and that his branch is on an allocation from his manufacturers.
"People are trying to come up with alternatives but almost everything used in roofing is petroleum based," McRae said. "As you see gas prices go up, you can be sure that shingles are going up too."
McRae said that his supply line and prices had already been heavily affected by Katrina and Rita and that Wilma could cause another spike in demand and prices.
All of that might bring another headache for Katrina Hosea, owner of BeeTree Homes, a Jacksonville-based custom home builder. In the past four months, she has seen the prices that it pays for sheetrock rise 20 percent. Hosea said that she also has trouble getting dry wall and concrete for her houses.
"In my opinion, I find materials costs are extremely inflated, but a lot of the manufacturers know they can get these prices," she said.
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Posted by South Florida Realtor at 03:36 PM | TrackBack
Displaced business owners may be in for a long search for vacant office space. Miami Real Estate
WEST PALM BEACH, Fla. -- www.GotPalmBeach.Com
Displaced businesses hoping to find temporary office space following Hurricane Wilma could be in for a long look.
"Oh boy. That's going to be real hard," Neil Merin, a West Palm Beach real estate broker, said Wednesday.
The problem, Merin said, is that the office market tightened considerably before Wilma struck. A year ago, office vacancies in South Florida were 16 percent to 17 percent; today vacancies hover near 10 percent, the lowest level in years.
In addition, Wilma inflicted more damage on the region than last year's hurricanes, so there is even less office space available for businesses considering a move.
"I don't see any landlord doing something on a temporary basis," said Bill Kohlhepp, a broker for Marcus & Millichap in Fort Lauderdale. "If he's going to spend the money on tenant improvements, he's going to want it to be a permanent move."
Last year, after hurricanes Frances and Jeanne, West Palm Beach broker Peter Applefield said he fielded four or five calls a day from businesses in need of temporary space. He was able to help some, while others were simply out of luck.
"Landlords aren't that excited about doing a two- or three-month deal," Applefield said. "Usually, it's going to have to be a year or two."
But smaller businesses needing new permanent space should find it easier than larger companies because landlords had been converting larger offices to smaller spaces even before Wilma.
In Cypress Creek, for example, the 86,000-square-foot Gateway Office Building is only about half full, and small companies needing 2,000 or 3,000 square feet could find the necessary space there, Kohlhepp said.
The T-Rex Corporate Center in Boca Raton has about 23,000 square feet for a mid-size company, said Steve O'Hara, a broker for CB Richard Ellis who helps lease T-Rex.
The office park also might be able to accommodate a user needing 10,000 to 15,000 square feet, he said.
"We like to do long-term deals," he said.
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Posted by South Florida Realtor at 03:29 PM | TrackBack
NAR’s Home Sales Forecast Looking Stronger
The forecast for home sales has trended up as the year progressed, fueled lately by added demand resulting from the impact of recent hurricanes, according to the National Association of Realtors®.
David Lereah, NAR’s chief economist, said that at the beginning of the year it was thought that 2005 would be the second best total for both existing- and new-home sales, but by June it was apparent that another record was in the works. “Post-Katrina, our sales projections for this year have moved even higher,” Lereah said. “Short-term momentum is very strong, and our Pending Home Sales Index just set a record. In addition to the housing needs of hurricane victims, we may be seeing some ‘fence jumping’ from home buyers who are getting into the market before interests rates move higher.”
Existing-home sales are forecast to rise 4.2 percent to 7.07 million in 2005, while new-home sales are expected to increase 7.1 percent to 1.29 million. Total housing starts – single-family and multifamily – should be up 4.5 percent to 2.04 million units this year, the best showing since 1973, and single-family starts are seen at a record of 1.70 million.
“Inflationary pressures – driven by higher energy costs – have become a concern, so we anticipate two more hikes in the fed funds rate by the end of the year. In addition, long-term interest rates also are rising at a faster clip,” Lereah said. The 30-year fixed-rate mortgage is projected to reach 6.2 percent in the fourth quarter, and trend up to 6.7 percent by the end of next year.
The national median existing-home price for all housing types is forecast to increase 12.5 percent in 2005 to $208,400, while the median new-home price should rise 3.9 percent to $229,700.
NAR President Al Mansell of Salt Lake City said some easing in home sales is expected in 2006. “The rise in mortgage interest rates is likely to have a slight braking action on the housing market, and the upside of that is it would help to bring the market closer to balance between home buyers and sellers,” he said. “As a result, there should be a cooling in the rate of price growth – on balance, the overall market should continue to favor sellers with price appreciation remaining above the high end of historic norms. The investment fundamentals for housing remain solid.”
In 2006, NAR expects the median existing-home price to grow by 5.2 percent and the median new-home price to rise 7.1 percent. Historic home-price gains are 1.5 percentage points above the rate of inflation, which is seen at 2.6 percent next year.
“Although energy prices are the chief culprit in current inflation concerns, we project oil prices to settle early next year – that would cause inflation to quickly dissipate,” Lereah said. The Consumer Price Index is forecast to rise 3.5 percent for all of 2005 before easing early next year.
Inflation-adjusted disposable personal income is expected to grow by 1.4 percent for 2005. The U.S. gross domestic product (GDP) is seen at 3.5 percent for all of 2005, with GDP picking up early next year as hurricane rebuilding accelerates. The unemployment rate is projected to average 5.2 percent for the next three quarters, then decline to 5.0 percent in the second half of next year.
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