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August 2006 |
A Publication of ELLIOTT®
& Company Appraisers |
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LUXURY
CONDOMINIUM MARKET HITS BUMPY ROAD |
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 Throughout the United States, developers are postponing or canceling
condominium projects, as the housing market continues to cool.
"We’ve gone through the biggest real estate boom in the last eight
or nine years and some of these (condo) projects haven’t started
yet," said Allan Domb, a real estate executive who is a major player in the
Philadelphia condominium market. "Do you think they’re going to
start building now?"
Cancelled projects in Las Vegas include Las Ramblas, a $3 billion,
4,400-unit resort backed by actor George Clooney, Ivana Las Vegas, a
$700 million, 945-unit tower, named after Ivana Trump and Aqua Blue,
a $600 million, 825-unit luxury condominium-hotel resort backed by
singer Michael Jackson and other investors.
Jack McCabe, CEO of McCabe Research and Consulting, reported that
South Florida developers with finished condos are offering such
radical incentives as one year’s free mortgage, the use of a yacht
or upgraded kitchen packages.
If sales continue to weaken, McCabe believes some developers would be
willing to sell their condos for cost. He pointed out that 25,000
condos are being constructed in Miami-Dade County, with two-thirds
of them costing $700,000 or more. The median household income in
Dade County only qualifies a buyer for a $225,000 home. Furthermore,
building permits have been issued for 25,000 more condos in the area
and 50,000 more have been announced for future construction.
"The sweet spot of the market is probably $250,000 to $700,000,"
Domb said. "That’s what the majority of the population can afford.
Many condos are priced higher. That’s part of the problem."
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COMMERCIAL REAL ESTATE
INFATUATES INVESTORS |
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 According to a study conducted by
PricewaterhouseCoopers, commercial real estate is enjoying a boom,
despite the sharp increase in oil prices and interest rates.
"With the overall economy showing continued strong gains in employment
as well as high levels of consumer confidence, investors seem poised to
continue their long-standing infatuation with the U.S. commercial
property markets," said William Croteau, PricewaterhouseCoopers’ U.S.
real estate sector leader.
The report of the study indicated that steady gains in employment, as
well as limited supplies in new office buildings, have led to lower
vacancy rates and increased rental rates. The overall weighted average
rental rate for the national suburban office market was at $22.71 per
square foot in the first quarter of 2006. That was a 4.5% increase over
that in the first quarter of 2005.
Investors who were contacted during the study claim to be finding fewer
top-quality properties for sale.
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E-MORTGAGES GAINING
IN POPULARITY |
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Just like appraisals have tended to
become paperless in recent years, the "e-trend" is starting to
occur in mortgages. Soon borrowers in large quantities are
expected to go through the entire mortgage process from
application to registration with the county courthouse online.
Harry Gardner, a vice president with eMortgages with Mortgage
Industry Standards Maintenance Organization (MISMO), predicts
that e-mortgages will catch up with those on paper within five
years.
Advantages for buyers to use e-mortgages include faster
turnaround time, lower cost and more accuracy. |
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QUOTES OF WIT &
WISDOM |
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"To succeed as a team is to hold
all members accountable for their expertise." -- Mitchell Caplan
"No man is justified in doing evil on the ground of
expediency."
-- Theodore Roosevelt
"We can have facts without thinking, but we cannot have
thinking without facts." -- John Dewey
"Dreaming permits each and every one of us to be quietly and
safely insane every night of our lives." -- William Dement
"The advantage of a classical education is that it enables
you to despise the wealth that it prevents you from
achieving." -- Russell Green
"The glory of great men should always be measured by the
means they have used to acquire it."
-- Francois de la Rochefoucauld
"Knowledge and timber shouldn’t be much used till they are
seasoned." -- Oliver Wendell Holmes
"One of the greatest pains to human nature is the pain of a
new idea." -- Walter Bagehot
"Life is a fairly good play with a badly written third act."
-- Truman Capote
"Think like a wise man, but communicate in the language of
the people." -- William Butler Yeats
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