To improve the condition of New York City’s stalled construction sites, Manhattan Borough President Scott Stringer released a reported this week titled “Arrested Development”. The hope is that new legislation will allow the City to partner with developers to make stalled construction sites temporarily accessible to the public, and ensure that they once again contribute to the City’s economic and physical health. There is even the possibility of revenue generation for the developer. The report’s three main recommendations are:

 1. Expand public access to sites through public and private uses.

2. Where interim uses are not possible, the City should launch art programs to beautify sidewalk sheds.

3. Where possible, the City should work with property owners to expand narrowed sidewalks created by construction fences and scaffolding.

There are real NYC examples detailed in the report. Near the Holland Tunnel is a half-acre construction site that is now “LentSpace”, a temporary public art park. At a stalled site on theLower East Side, “Timeshare Backyard” rents out space (starting at $50/hour) as a “backyard” with grills, sprinklers, wading pools and live bands. The Related Companies has loaned a site adjacent to the Highline that is temporarily used for organized activities, events and food venues. And in Brooklyn, a stalled mixed-use development is now the Dekalb Market, made up of six urban farms in addition to independent retailers, eateries and work-sell spaces housed in repurposed salvaged shipping containers.

The report states that the legislation being sought is similar to that proposed in San Francisco and implemented in Seattle. For all of the details from “Arrested Development: Breathing New Life Into Stalled Construction Sites” click here. 

This got me thinking about Metro Atlanta. Not only do we have numerous stalled developments outside the Perimeter, but there are also Intown sites such as the vacant lot on 10^th Street near Piedmont that have potential for beautification and even revenue generation. How can we use New York’s idea to improve Atlanta?

Continuing on with the repurposing theme, next week I will look into the “Redfields to Greenfields” initiative as commercial sites “in the red” are repurposed into parks.

Seven in 10 Americans also agreed that buying a home is a good financial decision while almost two-thirds said now is a good time to purchase a home. The annual survey, which measures how affordable housing issues affect consumers, also found that more than three quarters of renters (77 percent) said they would be less likely to buy a home if they were required to put down a 20 percent down payment on the home, and a strong majority (71 percent) believe a 20 percent down payment requirement could have a negative impact on the housing market.

Over half – 51 percent – of self-described “working class” home owners as well as younger non-college graduates (51 percent), African Americans (57 percent) and Hispanics (50 percent) who currently own their homes reported that a 20 percent down payment would have prevented them from becoming home owners.

Pulse surveys for the past eight years have consistently reported that having enough money for a down payment and closing costs are top obstacles that make housing unaffordable for Americans. Eighty-two percent of respondents cited these as the top obstacle, followed by having confidence in one’s job security.

The survey also found respondents were adamantly against eliminating the mortgage interest deduction. Two-thirds of Americans oppose eliminating the tax benefit, while 73 percent believe eliminating the MID will have a negative impact on the housing market as well as the overall economy.

When asked why home ownership matters to them, respondents cited stability and safety as the top reason. Long-term economic reasons such as building equity followed closely behind. On a local level, respondents said neighbors falling behind on their mortgages and the drop in home values were top concerns. Foreclosures also continue to remain a large concern, with almost half of those surveyed citing the issue as a problem in their area.

Courtesy of National Association of Realtors. For complete article, click here.

Nationwide, the percentage of households that are occupied by just one person has reached an all-time high of more than 31 million, which is 27 percent of all households. One of the only few locations to not experience a rise in single-person living is New York City due to record high rents.  However, the number is still high as 46% of NYC residents live alone.

Forbes has continually ranked Atlanta as one of its best cities for living single. U.S. Census numbers show that within a 5 mile radius of Midtown Atlanta, 42% of households are occupied by one person. Inside all of I-285, this number is 35% and outside 285, 21% of households are single occupant. Overall, the statistic for people living alone in Atlanta is up 35% over the past decade.

Planners and developers are figuring out how to accommodate this changing demand for housing. Effects will be seen in square footage, number of bedrooms and features sought by those living solo. Another consideration is that the proportion of single women buyers has nearly doubled to almost 20 percent of all homebuyers in the past two decades. Single women are now the second largest group of homebuyers. This buyer group seeks security, convenience and ease of maintenance when purchasing a home.  

Source: Census, ESRI

I’ve always been a student of history, which serves me well when researching and analyzing data. With the long weekend upon us and time for Friday’s Block Talk, I decided to take a departure from real estate and research the origins of the Labor Day holiday.

The first Labor Day was celebrated September 5, 1882 in New York City with a demonstration parade organized by the Central Labor Union. Some records show that Peter McGuire, the co-founder of the American Labor Union founded the holiday. Other accounts credit the idea to Matthew Maguire, who was secretary of the Central Labor Union in New York City. By 1894, 23 states recognized Labor Day; in June of 1894, Congress passed an act making the first Monday in September a legal holiday. Labor Day is seen as a yearly national tribute to contributions that workers have made to the country.

Originally, parades were held to celebrate the American worker, and the holiday had more political charge to it. But over time, the day has evolved to include other forms of celebration such as picnics, barbeques and fireworks. Labor Day weekend also signals the “unofficial” end of summer (but not for those of us in the South!) and the start of start of the football season.

As you enjoy your break from a day of labor, we hope that you have a happy and safe weekend!

Source: US Department of Labor

For this week’s column, I pulled numbers from our Universal Database to see how the Atlanta market is performing in distressed sales (as a percentage of overall sales numbers) year-over-year for 2011 vs. 2010.

The table above summarizes year-over-year changes (to date) in the amount of sales in FMLS that were foreclosure, lender-owned, corporate or short sale. The only category to see improvement is single-family new construction homes. While the supply of distressed inventory remaining in this category is at 8 months, as discussed in my April 22^nd column, the amount of inventory is continuing to decline which is resulting in the year-over-year improvement in this distressed number.

As to the other categories, a continued increase in distressed sales can result in additional downward price pressure to a market bouncing along the bottom. However, the low months of remaining supply of resale distressed inventory is positive and provides some hope that we are working through some of the distress. What remains to be seen is how much shadow foreclosure inventory Atlanta has coming as the banks continue to work out the process.

A quick reminder on my methodology. For the single-family home data, I pull numbers from a 6-county area of Cherokee, Cobb, Fulton, Forsyth, DeKalb and Gwinnett. For Condos/Townhouses, I use a 4-county area of DeKalb, Cobb, Fulton and Gwinnett. Respectively, over 80% of sales occur in these counties.

Google experienced a 5% drop in market share since last year, so it has recently made changes to how websites are ranked on its site. Through the latest Google Panda update, more weight is now given to sites that have relevant, quality content. Some of the relevant content that Google is looking for comes from blogs, social media and video.

What is Google Panda? It is a filter that is designed to identify what Google believes to be ‘low quality pages’. If there are too many low quality pages, the Panda filter effectively flags the site. Panda gives a site-wide penalty, not a page penalty. So if a certain percentage of your pages fall below Panda’s quality algorithm, then the whole site suffers. The biggest mistakes are:

1. Lack of original content page to page
2. Pages with empty content
3. Overlapping and redundant articles
4. Too many ads

So what can you do to increase your internet exposure? Fresh material for your website, (property) videos, (resident) testimonials, usage and linkage to social media sites will all aid to increase your organic search positioning with Google. Fresh content should be added on a regular basis.

 Here are a few examples of how NRTDA is using relevant, quality content for our developments:

 Tribute Lofts Blog

Gallery Residences Resident Video

1010 Midtown Links to Facebook 

Want to know more? Read here and here.

For July, the sale of single-family homes experienced a 17% year-over-year increase and a 19% increase for condos and townhouses. Here at NRTDA, we experienced our own successful July with strong sales of distressed single-family homes in the suburbs, townhouses in Buckhead and condos in Midtown Atlanta.

With July’s success behind us, the real estate market has wondered what would happen next because of the credit downgrade. This week, mortgage rates have dropped to or near all-time lows as investors moved money into safer bonds and mortgage backed securities that fund most home loans.

Yes, there are buyers who have now called off their search completely since they would need to sell stocks for a down payment. However, we are also hearing stories of buyers who have decided to stay the course because rates are so low. Real estate as a long-term investment remains attractive to many, even right now.

So how will you capture these buyers? Because supply still outpaces demand, make sure you pay attention to the fundamentals of the 4 P’s: Product, Price, Place and Promotion.  

Questions to consider:

• How does my product look to potential buyers?
• How competitively am I priced?
• How is my location? Do I need to make an adjustment for the location?
• How am I getting the most reach for my marketing dollars?

Based on your goals to sell, you may need to make adjustments to your sales and marketing strategy to reach those buyers that are still in the market. But don’t delay or you will lose out to your competition.

This week I completed an Atlanta condominium market study that was much more detailed than the one I blogged about on July 15^th. My previous research on premiums for inner core condominiums was limited to 2-bedroom product.

Today’s study covers 253 sold units (during 2011) and 203 active units; 1, 2 and 3 bedrooms. Included is data for some of the latest new construction closings that were mined from property and tax records.

Overall, new construction condominiums that are centrally located are achieving a premium of 36% over those located out of the urban core. Inner core resales are similarly achieving a premium of 36%.

Often we’re asked to comment on the inventory of shadow housing – those properties that are seriously delinquent, in foreclosure and real estate owned (REO) by lenders, but aren’t currently listed in FMLS/MLS. Our clients want to understand future supply that would be competition for their own properties. In my previous blog,  I used data from RealValuator to talk about local trends in pre-foreclosures which gives insight into shadow inventory.

Today, I’m looking on a national level. LPS Applied Analytics performs extensive research on national mortgage delinquencies and foreclosures which comprise shadow inventory. Points below are current as of May 31, 2011 (from July report). The next report will be published during the first week of August.

• Nationally, there is (an estimated) 4 years worth of 90+ day delinquent/foreclosure inventory currently in the system, some of which will be working its way towards foreclosure. 

• Problem loans peaked in 2009 at 2.7% of all loans. May 2011 stood at 1.27%; lowest point was spring 2006 at .5% of all loans.
• Delinquencies are down from peak in 2009 by 20% due to modification efforts or moving to foreclosure; however, foreclosures remain at an all time high.
• 1 in 10 borrowers are in some state of delinquency or foreclosure.
• Lack of equity, especially at a combined loan-to-value ration of >150% is a primary driver of new problem loans; 32% of all borrowers are in a negative equity position.
• 70% of loans in foreclosure are underwater (of these 70%, 35% have CLTV >150%) – the longer these stay in foreclosure, the greater the chance of a continued effect on housing recovery.
• Delinquencies are almost 2x, and foreclosures are 8x, historical “norms”.
• Average time a loan is in foreclosure:  580 days.

LPS reports that Georgia has seen a 50% drop in foreclosure sales since the peak in Sept 2010. There still exists a bottleneck on foreclosure sales, resulting in a high amount of inventory just sitting in the pipeline that exists as shadow inventory. It could take many more years for this shadow inventory to be absorbed, especially with moratoriums, and the length of time is takes to process and sell foreclosures.

Inner Core vs. Outer Core (2 Bedroom) Sales since January 1, 2011

Inner Core

• 51 total solds. New at $242 per sq. ft. and Resale at $188 PSF.
• Data shows a positive sign that distressed inventory is being absorbed.

Outer Core

• 23 total solds. New at $171 per sq. ft. and Resale at $115 PSF.
• Distressed inventory still playing a prominent role in the fringe neighborhoods.

(Zips: 30308, 30309, 30312, 30318)

Inner core new construction condos are achieving a 29% premium over the outer core and inner core resale condos are achieving an even higher premium, at 39%. Inner Core resales are also selling at a higher price per square foot than new condos in the outer core.

Now, more than ever, it is important to understand each market and how to position inventory to stay competitive. With the large amount of inventory available, I will continue to monitor these markets as more downward pressure may be placed on price.