Inman News recently released a report highlighting metro areas that are expected to “outshine many other markets in real estate performance this year.”

Inman searched metro areas with populations over 150,000 to find where real estate sales volume is rising, job markets are growing, foreclosure activity is low, sales prices are appreciating, and home affordability is at high levels.

The following are the metro areas topping the list, including the third quarter 2011 median sales price and the percentage change in sales price year-over-year.

1. Raleigh-Cary, N.C.

Median sales price: $224,300

Median sales price change year-over-year: 7.3 percent

2. Wichita, Kan.

Median sales price: $120,900

Median sales price change year-over-year: 5.5 percent

3. Rochester, N.Y.

Median sales price: $123,400

Median sales price change year-over-year: 1.4 percent

4. Des Moines-West Des Moines, Iowa

Median sales price: $157,900

Median sales price change year-over-year: 0.8 percent

5. Chattanooga, Tenn.-Ga.

Median sales price: $128,700

Median sales price change year-over-year: 7.3 percent

To see the full article and the other cities that made the top ten list click HERE

MSAs with the Fastest Rising Median List Prices

In related news, Inman published a table from Realtor.com data showing the Metropolitan Statistical Areas (MSAs) with the fastest rising median list prices in 2011. The data comes directly from actual listings posted on the site by 933+ multiple listing services throughout the country.

Note that the Fort Myers-Cape Coral MSA ranks number three on the list with a compound growth rate of 1.73%.

MSA January 2011 December 2011 Compound Growth rate

1. Miami, FL ($200,000 $265,000) –  2.59%
2. Boise City, ID ($128,000 $154,900) –  1.75%
3. Fort Myers-Cape Coral, FL ($190,000 $229,375) –  1.73%
4. Punta Gorda, FL ($150,000 $179,000) –  1.62%
5. Daytona Beach, FL ($154,900 $179,900) –  1.37%
6. West Palm Beach-Boca Raton, FL ($188,894 $219,000) - 1.35%
7. Naples, FL ($315,000 $365,000) - 1.35%
8. Washington, DC-MD-VA-WV(DC) ($320,000 $369,000) - 1.30%
9. Sarasota-Bradenton, FL ($209,000 $241,000) - 1.30%
10. Grand Rapids-Muskegon-Holland, MI ($119,900 $137,000) - 1.22%

CoreLogic Releases 2011 Home Price Statistics

CoreLogic recently released its December Home Price Index (HPI) report. Including distressed sales, home prices in the U.S. decreased 4.7 percent in 2011 compared with December 2010. Florida, however, fared a bit better than the national average with a price decline of only 3.3 percent. According to CoreLogic, 2011 was the fifth consecutive year for a decrease in the HPI.

The HPI also calculated price changes if distressed sales are excluded. Nationally, prices declined just 0.9 percent after backing out non-homeowner sales in 2011. Florida matched the national average with a 0.9 percent drop for the year. Distressed sales include short sales and real estate owned (REO) transactions.

The report also shows that national home prices decreased 1.4 percent in December compared to the month before if they include distressed sales – its fifth consecutive monthly decline. However, national home prices actually rose 0.2 percent month-to-month if distressed sales are backed out of the equation. It’s the first time the price non-distressed sales rose for the month since July 2011.

Highlights as of December 2011

• Including distressed sales, the five states with the highest appreciation were: Montana (+4.4 percent), Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent) and New York (+1.7 percent).

• Including distressed sales, the five states with the greatest depreciation were: Illinois (-11.3 percent), Nevada (-10.6 percent), Georgia (-8.3 percent), Ohio (-7.7 percent), and Minnesota (-7.5 percent).

• Excluding distressed sales, the five states with the highest appreciation were: Montana (+7.7 percent), South Dakota (+3.5 percent), Indiana (+3.3 percent), Alaska (+3.1 percent), and Massachusetts (+2.9 percent).

• Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.7 percent), Minnesota (-5.2 percent), Arizona (-4.9 percent), Delaware (-4.2 percent) and Michigan (-3.5 percent).

• Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2011) was -33.7 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.0 percent.

• The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).

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Posted by Scott R. Lodde

1. SKIPPING RAPPORT: Would we BBQ chicken without 1st greasing the grill? No way! Too sticky a situation. Same applies to all other aspects of selling without 1st establishing rapport. For most selling situations, whether we like it or not, whether it’s fair or unfair, a good rapport is the single most important part of the sales process. We naively think of closing as wearing that label, but study after study shows that human connection reigns supreme in selling. Did you know that of all customers who left for a competitor, 80% of those said they were satisfied with their previous purchase (source: Harvard Business Review)? So, satisfaction does not translate into loyalty. But bonding emotionally is at the heart of rapport and loyalty. That same Harvard source reports that 97% of loyal customers are loyal for life! Although there certainly are other reasons people buy from us especially in a difficult economy (e.g., discounts we offer, their addiction to our brand or location, they literally must have our product/service due to a command from above or a demand from their client base, etc.), people typically “buy” us before they buy what we’re selling. Buyers like to buy from people they like, feel comfortable with, and/or trust. This is the essence of rapport.

Let’s recognize that although rapport building is generally taught as the 1st step in a sales call, it must be an ongoing process throughout the entirety of any sales interaction. Yes it’s often difficult to do with some prospects who are just different from us or who won’t allow us to bond for any number of reasons. Sometimes, lack of time inhibits our ability as well. Researching your prospects (via Linked In, social media, organizations’ websites, addictomatic.com, and even listening to vocal clues about prospects from their voice mail messages) can often offer opportunities that may give you an edge to connecting with them. As other studies tell us, words (i.e. verbal communication) are the weakest way to connect with others. This tells us we have to master the other 2 “V’s” of communication: Visual (body language) and vocal (voice related) clues that comprise 93% of our effectiveness as salespeople (check out FAQ’s on nlp.com).

2. SUBSTANDARD “ASKING” SKILLS: As doctors (and great salespeople) all know, “prescription” (solutions) without proper diagnosis (qualifying) is malpractice (poor selling).

To get what we want from someone (like a prospect with roomnights), keep these principles in mind: We have to ask specifically by stating exactly what we want, do it quickly, and ask at the right time (in the selling cycle and when the prospect is ready, willing, and able). We must also learn to ask for the same thing in different ways on occasion, and always ask someone who can actually help us (decision makers/influencers)! Quick tip: Never ask, “Are you the decision maker?” If they are, they may think you’re challenging their authority, and if they’re not, they may feel humiliated. Much better is to ask, “Who else, besides you, is involved in the decision-making process?”

3. SALES PRESENTATION “ERRORS OF OMISSION“: We’re all sometimes guilty of “errors of commission,” things we did wrong such as mentioning too many features, addressing the wrong needs, and taking too long to address the correct needs. However, far more frequent are “errors of omission,” things we neglected to say or do. Here are some of the most common (and dangerous) errors of omission: not addressing the prospect’s most important needs first (or worse yet, ever!), not directly comparing ourselves to other prospect options during our presentation, missing prospect “signals,” passing on the chance to validate our worth, and not asking for confirmation from our prospect before closing.

Diffuse stress associated with a prospect’s most important needs by tackling them before other, less critical needs. Don’t shy away from direct comparisons. Instead, “Dare to compare!” We owe it to our employers and fellow workers who depend on our revenue-generating skills. Remember to point out your product (amenities/services) and your personal points of differentiation (what makes you different/better as handlers of their account). Be sure to include your “USA’s”: Unique Selling Advantages© especially if the competition offers similar things. Notice prospect signals by closely observing them through active listening to their tone as well as watching their body language. Validate during your presentation by offering 3rd party testimonials (what others said about you/your hotel: provide visual proof later via e-mailing attached testimonials) as well as by mentioning any awards you/your property/brand has recently won. Verify prospect receptiveness on occasion during the presentation (How’s that sound so far?) and do so at the end of this “meeting needs” step before quoting rates and attempting to close.

4. SELF-DESTRUCTIVE LAST IMPRESSION: We’ve all heard about the critical 7 seconds of an initial prospect interaction, but equally important is the way we exit (a phone call, an outside appointment, a site tour, a group presentation, etc.), as it’s pretty easy to undo an otherwise good call with a weak parting handshake, a lack of eye contact, or a far-too-casual “See you ‘guys’ later.”

Practice a sincere “Thank you for your time” and a reasonably firm handshake, or if you dare to emulate me, “mirror” their handshake to establish “physical commonality.” Sound too “New Age” for you? Call me for a 1 minute explanation or purchase/download “Reading People” by Jo-Ellan Dimitrius and delve into the area salespeople MUST master to be at the top of their profession: Neuro-Linguistics (NLP).

5. SLIGHTING (OR TOTALLY) IGNORING MENTORS: There are 2 basic ways to learn anything (including how to be the best salesperson we can be): 1) experiential which is learning from our mistakes or 2) through being mentored. The 1st (AKA trial and error) can teach us things we’ll never forget, but all too often that’s due to the high price we pay in excessive time, money, and hardship required. We are taking the test 1st, and learning the lesson second. Being mentored saves us time and usually reduces the pain of making unnecessary mistakes. Here, we learn the lesson 1st (from others who have excelled at the task and are willing to help us succeed), and then take the test second. Sadly, so many of us still choose to do things the hard way, only to find that there are plenty of painful experiences for us compliments of prospects, clients, co-workers, and bosses. Ouch! Why be a grouch? Be a “mentee!”

If you’re lucky enough to have access to live mentors, don’t think twice. Just say yes! These can be supervisors at your hotel, elsewhere in your management company, or at the brand level (if applicable) who can make themselves accessible to you on a consistent basis. Ask 100 questions, take lots of notes, try their suggestions on for size ASAP, and report back for a critique to discuss what worked and what didn’t. Ask your mentor if you can do anything for them in return. But what if no actual (or willing) mentors are available? All is not lost especially with recent enhancements in technology and communication. Simply look for virtual or surrogate mentors to fill the niche. Available surrogate mentoring sources include CD’s from subject matter experts (surf the American Hotel and Lodging’s Educational Institute), live seminars or classes, webinars, and downloads (audible.com is great!). If you’re part of a chain, tap into your brand’s many e-resources. Remember that many programs are archived in case you were unable to “attend.” And speaking for other live mentors, we can’t compete with the 24/7 availability factor offered you by CD’s, archived sessions, and downloads. Find your mentors and start your learning engines right now. Learning isn’t a spectator sport!

6. SHOWING LITTLE OR NO RESPECT: Even if we have a great product or service to sell, or if we have excellent sales skills, we may finish last in getting a prospect’s commitment if we’re initially perceived as selfish or uncaring before or during a sales call. We may not even get to do a call if we seem disrespectful.

Begin with the end in mind. When calling someone to qualify, to present, or to simply introduce yourself, try this question (or a close variant) immediately after you identify yourself: “Is this a good time or a bad time to speak with you about your …(upcoming conference/business travel, hotel needs, etc.)?” Some prospects will say it’s OK, but due to suspicions about salespeople (compliments of our selling ancestors back in the last century), most will tell you it’s not a great time and even give you a reason or 2. This is potentially a good thing for you as you reply with, “No problem. I respect your time and that’s why I asked. When would be a better time for us to speak?” Though not always, prospects frequently will then offer an alternate time frame (and despite not verbalizing it, they will be pleasantly surprised at the respect level you demonstrated and that’s about as good a 1st impression as you can expect!). And, by the way, you went from a cold call to an appointment call (ending with your “OK great. I’ll try you Thursday after 1:00 and thanks for your time, sir.”), and your prospect set the appointment! Remember that you “never get a second chance to make a first impression.”

About the author:
Ed is President of Stonehenge Consulting Group and an affiliate of the Alliance Group.  Stonehenge provides hotel sales performance and top line revenue consulting.  Ed is a frequent speaker/trainer at national brand and management company conferences, HSMAI chapters, and U.S. Navy-operated hotels. People from over 30 countries have attended his U.S.-based selling workshops, and he has delivered hotel sales training in 8 countries.

According to the Tax Foundation’s State Business Tax Climate Index, Wyoming, Florida and Texas rank among the 10 best states for taxes on business, while companies in states like New York, New Jersey and California have a far less pleasant tax climate.

The Tax Foundation says it looks at dozens of state tax provisions to create the ranking –a single easy-to-use score that measures each state’s tax climate against every other state. While some similar studies focus on residents’ tax burden they pay each year, the Index focuses on how a tax system enhances or harms a state’s businesses.

The 10 best states in this year’s Index

1. Wyoming

2. South Dakota

3. Nevada

4. Alaska

5. Florida

6. New Hampshire

7. Washington

8. Montana

9. Texas

10. Utah

The 10 lowest ranked states in this year’s Index

41. Iowa

42. Maryland

43. Wisconsin

44. North Carolina

45. Minnesota

46. Rhode Island

47. Vermont

48. California

49. New York

50. New Jersey

A copy of the latest report is available HERE.

Population Projections and the Effect on Real Estate

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) recently wrote a blog posting entitled Population Projections: United State and the World in which he tried to explain another reason why real estate prices have dropped in the recent past.

In the U.S., he ignores the claim that the large number of people retiring and an eventual dying off of the baby boomers will mean less housing demand in the future since the broader population are not just the baby boomers.

Every year about 3 million additional people live in the U.S. The projection by the Census further calls for more people for the foreseeable future with the total tally rising to 436 million by 2050 from the current total of 311 million people. Such growth assures steady housing demand.

While he admits it is hard for even a smart economist to understand what all this means, demand for real estate is automatically created.

Below is an interested chart from the posting on global population growth projections.

Click to Enlarge

Homeowners by Age

In another interesting blog posting, the NAR noted that in 2000 (a very normal housing year without a bubble), 67 percent of Americans lived as a homeowning household. The easy credit conditions that followed fueled home buying beyond normal and the ownership rate rose to 69 percent. The subsequent housing bust brought the ownership rate down to today’s 66 percent.

Click to Enlarge

Not all age groups had similar experiences throughout this cycle. The very young were mildly impacted. The very old did not on average feel any pain. The big impact was felt among people in their 30’s, who have much the same homeownership rate today as back in 2000, well before the bubble. It is also this group where there is potential for re-entering into the homeownership market in the near future.

International Buyers Help Miami Break All-time Sales Record in 2011

Accord to a recent article WORLD PROPERTY CHANNEL, Miami was the fastest rebounding residential property market in US in 2011.

According to the Miami Association of Realtors and the Southeast Florida Multiple Listing Service (SEFMLS), total 2011 sales, including both condominiums and single-family homes, in Miami-Dade County were 24,929, up four percent from the 24,025 in 2005 and 46 percent from 17,068 in 2010. Year-end closed sales of condominiums surged 54 percent, from 9,760 in 2010 to 15,009 in 2011. Total single-family home sales increased 36 percent from 7,308 in 2010 to 9,920 in 2011.

Unlike other markets throughout the U.S., Miami has recovered faster and stronger than expected and is poised for further growth and double-digit price appreciation in 2012.

International buyers and investors continue to play a major role in boosting market performance in Miami, according to the Miami Association of Realtors. Miami is the top area in the U.S. for international real estate buyers. These buyers from worldwide markets will continue to strengthen the Miami market long into the future.

The inventory of residential listings in Miami-Dade County dropped 39 percent from 24,278 in to 14,087 over the last year. Currently, there is a 4.9-month supply of condominium inventory and a 5.8-month supply of single-family homes in Miami-Dade County, reflecting a very healthy marketplace. Total housing inventory nationally fell 9.2 percent at the end of December.

Heightened demand for bank-owned (REO) properties and improved processing of short sales has resulted in rapid absorption of distressed listings and price appreciation. In December, 54 percent of all closed residential sales in Miami-Dade County were distressed, including REOs (bank-owned properties) and short sales, compared to 59 percent in December 2010 and 56 percent the previous month. Contrary to a year ago, there are now more short sales being transacted than REOs.

In Miami-Dade County, 63 percent of total closed sales in December were all-cash sales. Cash sales accounted for 42 percent of single-family and 77 percent of condominium closings. Nearly 90 percent of international buyers in Florida purchase properties all cash.

Nationally, all-cash sales accounted for 29 percent of transactions, reflecting the stronger presence of international buyers in the Miami real estate market.

Posted by Scott R. Lodde

According to a bullish report in the 2011 edition of the HVS U.S. Hotel Valuation Index, the U.S. lodging market experienced strong demand recovery throughout 2011. Strong occupancy growth continued in 2011, as well as some initial recovery in average rates.

The transaction side of the business has increased considerably from the downturn witnessed in 2009 as numerous high-profile assets have come to market, and fierce bidding is commonplace among active institutional buyers and investors.

Highlights of the report include:

• Value for a typical U.S. hotel is forecast to increase by 28% and 25% in 2011 and 2012, respectively

• U.S. hotel values are projected to exceed 2006 peak levels by 2012

• Relative to the hospitality industry, investors aggressively re-entered the hotel market in 2011, and continue to do so now

• Hotel transactions in 2011 have involved larger and more expensive properties.

• Hotel capitalization rates and other rates of return have fallen to one of the lowest points in history — this is due to low mortgage interest rates, the large amount of equity capital chasing very few acquisition opportunities and the fact that there is huge upside potential in future NOI

• Las Vegas and Tampa are expected to register the most growth from 2009 (low point) to 2015

• San Francisco, New York City, and Oahu are expected to be the most valuable markets for hotel owners on a per-room basis by 2015

• On an annual compounded basis from 1987 to 2015, Austin, Texas; New York City; and Miami; have/are expected to exhibit the strongest yearly increases

• Markets with low risk but high return on investments are San Diego, New Orleans, San Antonio, and Seattle, based on market volatility analysis

• San Francisco leads the race to hotel value recovery

Full Report

Florida soon could be the third most-populous state.

Florida had the nation’s third-largest population growth in the past year. The U.S. Census recently reported that Florida grew by 256,000 residents from April 2010 to July 2011.

Texas and California were the only states with larger growth.

The 10 States with the Largest Numeric Increase from April 1, 2010, to July 1, 2011

1. Texas 529,000

2. California 438,000

3. Florida 256,000

4. Georgia 128,000

5. North Carolina 121,000

6. Washington 105,000

7. Virginia 96,000

8. Arizona 90,000

9. Colorado 88,000

10. New York 87,000

Florida now has 19.1 million residents, making it the nation’s fourth most-populous state. The Sunshine State is within striking distance of surpassing New York in population. All it takes is an additional 400,000 residents.

If current growth trends continue, Florida could pass New York in population size in two years. New York added 87,000 people between April 2010 and July 2011.

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Fed issues housing market white paper

The Federal Reserve Board studied the U.S. housing market to analyze existing problems and has suggested possible solutions.

The white paper, “The U.S. Housing Market: Current Conditions and Policy Considerations,” calls for increased lending to creditworthy homebuyers, and more loan modifications, mortgage refinancings and short sales to reduce the rising inventory of foreclosed homes and help stabilize the housing industry.

The Fed white paper says the current problem with mortgage credit “reflects not only a correction of the unsound underwriting practices that emerged over the past decade, but also a more substantial shift in lenders’ … willingness to bear risk.” However, the Fed says that fixing the current real estate market must not simultaneously repeat the mistakes of the past.

The Fed paper also addresses converting foreclosed properties into affordable rentals. Many real estate groups, including the National Association of Realtors (NAR) support any change that makes it easier for owner-occupants and small investors to get financing, such as opening the Federal Housing Administration 203(k) program to investors.

The NAR is concerned about proposed bulk sales of distressed properties, which could lead to greater losses for taxpayers and a negative impact on housing values.

Full Report

Posted by Scott R. Lodde

Sanibel Island is the number one travel destination in the world, according to travel guru Arthur Frommer, the mastermind behind Frommer’s guidebooks and budget travel magazine.

Frommer recently ranked his ten favorite places to visit and listed Sanibel first above destinations like Bali and Paris.

Sanibel Island residents are celebrating the top honors from such a respected travel writer.

The island has won many travel awards and high rankings, but this carries special weight because it is Frommer’s personal favorite.

On the web site Frommer noted, “Off the west coast of the Sunshine State, a few miles from Fort Myers, is this idyllic haven of white-sand beaches, condos whose seafront apartments are available for weekly rentals, excellent restaurants, good shopping and most important, the Ding Darling Nature Preserve, visited by thousands of birds of every species, who bask in the sun after diving for fish, and are one of the great natural sights of wildlife in America.”

The other destinations in the top 10 list include:

1.  The Island of Bali, in Indonesia
2.  Paris, France
3.  St. John in the U. S. Virgin Islands
4.  Cairo, Egypt
5.  Bonaire, one of the “ABC” islands of the southern Caribbean
6.  Yachats, the Oregon Coast
7.  Chiang Rai, Thailand
8.  New York City’s Greenwich Village (and its Off-Broadway theaters)
9.  Kenya

Click HERE to see link to NBC2 news video.

Click HERE to see the full article and list.

Foreclosures Take Twice As Long To Process Now As They Did In 2007

A recent article in the The Huffington Post it is taking twice as long for foreclosures to work their way through the process of selling or auctioning than it did in 2007.

In 2007, the average foreclosure process in America, from beginning to end, took 253 days, or about eight months. Today, according to LPS Applied Analytics, the average foreclosure takes 674 days. That’s a year and ten months, almost triple what it was four years ago.

The foreclosure epidemic is one of the main factors inflicting damage on the housing market, which has still not made up for the losses it suffered a few years ago when the real estate bubble burst. In neighborhoods across the country, foreclosed or vacant properties are distorting their local markets, dragging down the values of the surrounding houses and wiping out vast sums in homeowner wealth.

The ubiquity of foreclosures, and their depressing effect on housing prices, has been cited as both a symptom and a cause of the country’s persistent unemployment problem. Many homeowners enter default after losing their jobs — and on the flip side, as the Wall Street Journal recently noted, plummeting home values tend to trap people where they are, making it harder for them to move to other towns where employment opportunities might be more plentiful.

The conundrum is expected to get worse in 2012. New foreclosures climbed by about 21 percent in the third quarter of 2011, with a total of almost 1.33 million foreclosures underway by the end of September.

Analysts believe the volume of foreclosures will grow much greater this year as banks begin re-submitting documents that had to be discounted in the wake of the robo-signing scandal, when some of the country’s biggest lenders were found to have approved reams of mortgage paperwork without reading it first.

Experts have offered a range of predictions for when the market might touch bottom and housing prices will begin to rise again. Even the most optimistic forecasts don’t see a recovery happening until late 2012 or early 2013.

Full Article

Ten U.S. Metros with Largest Drops in Real Estate Values

According to data from online real estate site Zillow, the top 10 U.S. metro areas with the greatest year-over-year median home-value declines, by percentage, from October 2010 to October 2011, were clustered in two regions.

The 10 metro areas, clumped in the Southeast and the far West, declined an average of 13.4 percent, from No. 1 Gainesville, Fla.’s 17.2 percent drop to an 11.8 percent decline for No. 10 Reno, Nev.

The chart-topping Gainesville, Fla., metro area’s 17.2 percent decline settled the area’s median home value to $111,300 in that time span.

Just 40 miles away, the Ocala, Fla., metro area, No. 7 on the top 10 list, showed a 12.7 percent decline in median home value, to $85,200. Nearby, Atlanta and Mobile, Ala., rounded out the Southeast metros on the list at No. 2 and No. 5, respectively.

The far West portion of the top 10 features six metros in a Pacific-leaning band that curves from No. 3 Medford, Ore., in the Northwest to No. 6 Tucson, Ariz., in the Southeast.

The Mobile, Ala., metro area, at No. 5, has the lowest median home value on the list at $78,200, and is counterbalanced by No. 9 Santa Barbara, Calif.’s highest median home value of $371,200. After Santa Barbara, Calif., the next highest median home value on the list takes a steep drop to No. 4 Chico, Calif., metro area’s $169,300.

U.S. metro areas clustered in the Southeast and in the far West experienced the greatest 2011 year-over-year declines in median home value, by percentage, according to Zillow data.

Full Article

Ten States in the U.S. with the Highest Foreclosure Rates

A related article from Realtor Magazine ranks the ten states in the U.S. with the highest foreclosure rates in 2011. Most of the results weren’t a surprise, as the states that began showing signs of heavy foreclosures years ago continue to lead the pack.

As whole, U.S. foreclosure filings actually dropped from 2.23 percent in 2010 to 1.4 percent in 2011.

Nevada came in first again with 6 percent of its homes in some state of foreclosure during 2011. One out of every 16 homes in Nevada received a foreclosure filing. While down somewhat, this puts Nevada at the top of the list for the fifth consecutive year.

Arizona came in second, with 4.14 percent of its homes receiving a foreclosure notice, or one out of every 15 homes. In third was California, at 3.19 percent.

Michigan, Florida, and a number of other states still have significant foreclosure percentages, but AZ, CA, and NV are ahead by a large gap. These states fell victim to “building out in the sand”. The warm climates attracted many second-home and vacation-home buyers with new construction, high value appreciation, and seemingly close proximity to large urban areas.

The full list of the top 10 state with the highest foreclosure rates:

1. Nevada: 6 percent (1 in 16 housing units received at least one foreclosure filing in 2011)

2. Arizona: 4.14 percent (or 1 in 24)

3. California: 3.19 percent (or 1 in 31)

4. Georgia: 2.71 percent (or 1 in 37)

5. Utah: 2.32 percent (or 1 in 43)

6. Michigan: 2.21 percent

7. Florida: 2.06 percent

8. Illinois: 1.95 percent

9. Colorado: 1.78 percent

10. Idaho: 1.77 percent”

Full Article

Posted by Scott R. Lodde

According to the recently released edition of Hotel Horizons®, PKF Hospitality Research (PKF-HR) forecasts that rooms revenue (RevPAR) for U.S. hotels will rise 8.1 percent in 2011, and increase another 6.1 percent in 2012.

PKF-HR is forecasting the continued recovery of the U.S. lodging industry. How well a hotel does in 2012, however, will vary depending upon the price of the room and where it is located.

Looking forward, PKF-HR sees familiar signs along the road to recovery. Owners and operators are now focused on more aggressive pricing policies, which in turn will translate into strong growth in hotel profits.

Recovery Disparities

PKF-HR is cautioning its clients that the national statistics may, or may not, apply to the type and location of hotels they own or operate. Looking deeper into the data, PKF-HR finds a continued bias favoring the future performance of hotels in the upper-tier segments of the industry.

Hotels operating in the upper-tier (luxury, upper-upscale, upscale) segments are all forecast to achieve occupancies above 70 percent in both 2012 and 2013, which will exceed their long-term average occupancy levels. Conversely, hotels in the lower-priced chain-scales will continue to achieve occupancy levels below their long-term average through 2013.

The unevenness of the recovery is also apparent when analyzing the performance of the 50 markets for which PKF-HR prepares Hotel Horizons® forecast reports. In 41 of the 50 markets, hotels are renting more guest rooms today than they ever have in their history. However, the distribution of demand recovery varies by segment. In 49 of the 50 markets, upper-tier hotels have passed their previous peak levels of accommodated demand, but lower-tier hotels have reached the same milestone in only 16 cities.

The Pricing Challenge

With national occupancy levels approaching their long-term average, and no meaningful new hotel supply additions in the foreseeable future, the pace of ADR growth is forecast to accelerate.  PKF-HR is projecting the ADR for all U.S. hotels to increase 4.7 percent in 2012 and another 5.3 percent in 2013. The long-term annual average for ADR growth is 2.8 percent.

PKF-HR is forecasting U.S. lodging demand to grow 2.0 percent in 2012. This is less than the annual growth rates observed in 2010 (+7.4 percent as reported by Smith Travel Research) and projected for 2011 (+4.8 percent).

Best Places to Invest in Real Estate

Money Magazine released the top cities to be a landlord, based on home prices, projected rent increase, and job growth. The top four cities to make its list are:

1. Houston
Projected rent increase in the next 3 years: 18%
Median home price: $174,000
Average monthly rent: $818

2. Grand Rapids
Projected rent increase in the next 3 years: 15%
Median home price: $128,000
Average monthly rent: $636

3. Rochester, N.Y.
Projected rent increase in the next 3 years: 25%
Median home price: $148,000
Average monthly rent: $785

4. Dallas
Projected rent increase in the next 3 years: 16%
Median home price: $166,000
Average monthly rent: $877

Full Article

Cities That Boast the ‘Best Value’

Kiplinger’s Personal Finance magazine recently ranked metro areas by best “value,” factoring in low cost of living, strong economies, and personal amenities.

The following are the six metro areas that topped its list, including each city’s unemployment rate, median household income, and cost-of-living index (the index is based on the national average of 100; cities with a score below 100 have a lower cost-of-living).

1. Omaha, Neb.
Unemployment rate: 4.6%
Cost-of-living index: 90.3
Median household income: $53,457

2. Charlotte, N.C.
Unemployment rate: 10.4%
Cost of living index: 93
Median household income: $53,168

3. Nashville, Tenn.
Unemployment rate: 8.5%
Cost of living index: 90.7
Median household income: $51,352

4. Colorado Springs, Colo.
Unemployment rate: 9.3%
Cost-of-living index: 92.0
Median household income: $56,576

5. Knoxville, Tenn.
Unemployment rate: 7.7%
Cost-of-living index: 89.7
Median household income: $45,727

6. Lexington, Ky.
Unemployment rate: 7.8%
Cost-of-living index: 89.1
Median household income: $48,158

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Posted by Scott R. Lodde

According to three leading U.S. economists, despite national and global headwinds, the state’s real estate market is entering 2012 on an upward trend, according to three leading U.S. economists on Wednesday.

The economists predicting a recovery were part of a panel at the state association’s 2012 Real Estate & Economic Forecast Conference in Orlando. The panel included Florida Realtors chief economist John Tuccillo, Wells Fargo senior economist Mark Vitner and Lawrence Yun, chief economist for the National Association of Realtors.

The panelists believe the State is in a mini-recovery with sales trending up, listing inventories falling, the supply of lender-related properties stabilizing, and the start of a trend which includes multiple offers on homes in some local markets.

Many Florida markets are showing sharp drops in inventories of homes for sale – a sign that demand is picking up and prices are stabilizing.

Because of Florida’s appeal to international buyers, Yun was optimistic about the outlook for South Florida, in particular. He expects to see a gain in home prices in the Miami and Naples markets in the next 18 months. From there, the recovery is likely to roll northward to Central Florida and then North Florida.”

In October, there was a 6 percent increase in home sales in northeast Florida, when compared to 2010.

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The Great $2 Trillion Global Real Estate Liquidation

According to U.S. hedge fund Fortress Investment Group, more than $2 trillion of global real estate assets is up for sale, either as a result of distress or deleveraging. The firm believes global markets are coming to grips with an historic, generational rebalancing.

This unprecedented volatility has prompted a real estate sell-off which eclipses several times over that seen after the U.S. Savings and Loans crisis from the late 1980s to mid-1990s, and the Asian currency crisis, which began in Thailand and South Korea in 1997.

The S&L crisis generated real estate sales in excess of $260 billion, while the Asian crisis by its end in 2000, prompted a circa $345 billion sell-off, according to Fortress research.

Fortress estimates that real estate asset sales, from all around the world will be several times more than the current $2 trillion it has identified, which far exceeds the total of all asset sales over the entire 20th Century.

Fortress believe calls the current situation … the Great Liquidation and coupled with what they call the Great Litigation will drive a supply-demand imbalance of distressed, illiquid assets that exceeds anything experienced before.

Stressed borrowers, whether countries, banks or real estate investors are trying to survive as long as possible before resorting to selling their assets. The inevitable, Fortress argues, can only be forestalled for so long and eventually, they state, “gravity brings everyone back to earth.”

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Where the Work is Heading: 6 Top Job States

According to an article at Forbes.com, Texas is expected to add the most jobs over the next five years on a percentage basis.

Employment in Texas is expected to increase by 2.9 percent annually through 2015, or add 1.6 million new net jobs in that period, according to research from Moody’s Analytics.

Here are the states expected to grow the most with jobs in the next five years, according to Forbes:

1. Texas – Projected 5-year annual job growth: 2.9%

2. Nevada – Projected 5-year annual job growth: 2.9%

3. Arizona – Projected 5-year annual job growth: 2.8%

4. New Mexico – Projected 5-year annual job growth: 2.6%

5. North Dakota – Projected 5-year annual job growth: 2.6%

6. Utah – Projected 5-year annual job growth: 2.4%

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Forbes Slide Show

Posted by Scott Lodde

According to industry publication Mortgage Daily, Florida retained its top ranking in the nation for mortgage fraud litigation through September as millions of dollars in bad boom-time loans continue to be discovered by law enforcement and lenders.

The report showed that Florida’s activity during the third quarter included more than $144 million in suspect loans that were questioned in court.

California ranked second on the activity index, but with more than $204 million in allegedly fraudulent loans, it came in first based on dollar amount.

Many investors continue to pressure banks to buy back mortgages that didn’t meet underwriting standards or were bogus for other reasons, such as falsification of the borrower’s income.

As an example, Bank of America bought back $2.87 billion in bad mortgages from federal mortgage backers Fannie Mae and Freddie Mac.

Nationwide, the mortgage fraud index climbed 16 percent in the third quarter, compared with the same time in 2010, with cases totaling more than $1.3 billion in questionable loans.

The five states with the worst index ranking were, in order: Florida, California, Minnesota, New York and Texas.

In Florida, the mortgage fraud index was up 45 percent compared with the previous quarter. It was 18 percent higher than in the third quarter of 2010.

A report issued by the federal Financial Crimes Enforcement Network in September that found Palm Beach County ranked sixth in the nation per capita for suspicious loan activity.

“There is a lot of fraud in South Florida, and we will see heavy enforcement in the future,” Thomas said “It’s taking a lot of time to catch up, but there are paper trails for all of this and they will eventually get to most of it.”

Investors Blamed for Bubble in Housing

According to a new federal report from Federal Reserve Bank of New York speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures and sent economies plummeting in Nevada, California, Arizona, Florida and other states.

Researchers with the found that investors who used low-downpayment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. The researchers said their findings focused on an “undocumented” dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.

More than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house, according to the report. In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.

Investors defaulted in large numbers after home values began to drop in 2006. They accounted for more than 25 percent of seriously delinquent mortgage balances nationwide and more than a third in Arizona, California, Florida and Nevada from 2007 to 2009.

As a result, millions of homeowners saw their home values decline so that they were worth less than the original purchase price. Foreclosures skyrocketed. Residential construction also languished, putting hundreds of construction workers in the hardest-hit states out of work.

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Florida is Aging Much more Slowly

According to data released in a report by the U.S. Census Bureau, about 17.3 percent of the state’s population was 65 and older in 2010 down from 17.6 percent a decade earlier, according to a U.S. Census analysis released Wednesday. By comparison, 13 percent of the total U.S. population is now over 65, up from 12.4 percent in 2000.

As a result, some are saying it’s time for Florida to shed the “God’s waiting room” image and revive its slogan as the Fountain of Youth.

The country’s overall population has been skewing older the past 10 years in tandem with aging baby boomers. Florida can’t escape that trend, but it is aging much more slowly than practically anywhere else.

Only half-dozen states posted a drop in their percentage of older residents, with Florida showing the steepest drop.

Economists and demographers point to several reasons for the disconnect. The biggest reasons? Florida has been drawing younger workers over the past 20 years, particularly in fields like construction. Meanwhile, its inflow of retirees has slowed amid not just the housing bust but fierce competition from states like North Carolina and Georgia.

Nationally, the 65-and-up club grew by 15.1 percent between 2000 and 2010 while the total U.S. population grew 9.7 percent.

Florida still has the greatest share of population 65 and older among all states. But the gap is shrinking. No. 2 West Virginia (with 16 percent over 65) and No. 3 Maine (15.9 percent) both were among states that have been getting older the past 10 years, relatively speaking.

Numbers from the report:

17.3: Percent of Florida’s population 65 and older, the highest rate in the country.

19.8: Percentage of Clearwater residents who are 65 and older, the second-highest rate in the country among cities of 100,000 or more, trailing only Scottsdale, Ariz.

3.5: Percentage of Clearwater residents 85 and up, tied with urban Honolulu for highest in the country.

5: Number of Florida cities in the Top 10 list of those with the highest percentage of elderly residents.

1: Number of states that had fewer residents 65 and up in 2010 (Rhode Island).

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Posted by Scott R. Lodde

Case-Shiller, recently reported that their closely watched Case-Shiller index registered a 3.9 percent decline during the third quarter of this year when compared to the same period in 2010. That represents an improvement over the 5.8 percent decline posted in the second quarter, but S&P described home prices as weakening as the third quarter came to an end. The national index rose by only 0.1 percent between the second and third quarters. Three cities posted new index lows as of the end of September – Atlanta, Las Vegas, and Phoenix.

Two other reports also show falling prices after seeing some gains in the Spring and Summer. Lender Processing Services says prices are down 3.7 percent annually in September, erasing the gains of the Spring, and they say all of the 13,500 zip codes it tracks are in the negative.

CoreLogic confirmed that prices fell 3.9 percent in October, but when you take out foreclosures and short sales (the latter when the home is sold for less than the value of the mortgage), home prices are down just 0.5 percent annually.

6 Cities Where Foreclosures are Increasing

Last week we reported on a recent study from the financial analysis firm 24/7 Wall St. which identified the housing markets expected to offer some of the biggest discounts for home buyers.

This week they report on housing markets that are still battling high numbers of foreclosures.

Using data from RealtyTrac, 27/7 Wall St found that the following cities saw the biggest increases in foreclosures – 30 percent or more – between the second and third quarters of 2011:

1. Albuquerque, NM

Quarterly increase in foreclosures: +151%

Number of foreclosures in third quarter of 2011: 1,358

Percentage that home values have dropped from peak: -14.9%

2. Boston-Cambridge-Quincy, MA

Quarterly increase in foreclosures: +67%

Number of foreclosures in third quarter of 2011: 2,003

Percentage that home values have dropped from peak: -15.8%

3. Sarasota-Bradenton-Venice, FL

Quarterly increase in foreclosures: +57%

Number of foreclosures in third quarter of 2011: 1,673

Percentage that home values have dropped from peak: -51.4%

4. Cincinnati-Middleton, Ohio-Ky.-IN

Quarterly increase in foreclosures: +55%

Number of foreclosures in third quarter of 2011: 1,956

Percentage that home values have dropped from peak: -15.9%

5. Jacksonville, FL

Quarterly increase in foreclosures: +49%

Number of foreclosures in third quarter of 2011: 2,559

Percentage that home values have dropped from peak: -39.3%

6. Palm Bay-Melbourne-Titusville, FL

Quarterly increase in foreclosures: +44%

Number of foreclosures in third quarter of 2011: 1,039

Percentage that home values have dropped from peak: -53.4%

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Retiree Havens Offering Good Buys

According to a recent article in Money magazine, if you’ve got cash, pick up a future resort retreat now at a bargain price.

For example, prices for condos in Napa, Calif., and Naples, Fla., have dropped about 44 percent since the housing boom, according to Fiserv data. That mixed with historically low mortgage rates are prompting some to start picking their retirement haven.

Financial experts recommend that retirees who are considering buying a second home prior to retirement may want to consider renting it out until they’re ready to move in to offset the cost of ownership. However, if they don’t want to step into the landlord role themselves, they should expect to spend 10 percent to 15 percent of the monthly rental fee on a property manager. Also, if they’re looking at purchasing a condo, they should make sure the development allows rentals since some developments do not or have restrictions on rentals.

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CMBS Delinquency Rate Retreats; Future Improvements under Pressure

According to Trepp LLC, after two consecutive months of weak delinquency reports-featuring increases that left the rate at its second highest point ever-the CMBS delinquency rate dropped sharply in November.

However, while the decrease in the CMBS delinquency rate will likely be received positively by investors, the underlying data indicates that further improvements will be hard to come by.

Overall in November, the delinquency rate for U.S. commercial real estate loans in CMBS fell 26 basis points to 9.51%. This was the second biggest drop in 2011, surpassed only by August’s 36 point drop. The rate has now fallen in four of the 11 months of 2011.

The percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO, or non-performing balloons) is now 8.88%, down 33 basis points for the month.

Unfortunately, two specific trends will put severe upward pressure on the rate over the next few months, indicating that further improvements could be elusive.

The day of reckoning is here for the class of 2007 originated loans as the five-year balloon loans that were made at the height of the commercial real estate bubble have begun to mature.

The 2007 vintage was the weakest in terms of underwriting standards and it is widely expected that many of these loans will have trouble paying off at their balloon date. In total, about $15.5 billion of these loans will come due in 2012, with the majority reaching their balloon dates over the next six months.

Trepp said it expects that the majority of these loans will make their way to special servicing.

A gradually healing CMBS market was also expected to provide some source of funding for the CMBS loans hitting their balloon dates at one point last year. That safety valve can no longer be counted upon in the short term. Therefore, this too will provide upward pressure on the CMBS delinquency rate.

In their report Trepp notes some mitigants that could relieve some of this upward pressure, but none of them are particularly positive.

First, there could be another big wave of loan resolutions. This would reduce the pool of distressed loans (the numerator in our calculation) but it would come at the expense of additional bondholder losses.

Second, more loans could be granted extensions, but experience has shown that these are often done with hope note creation, rate relief, and/or balance forgiveness. None of those options are positive results for most investors.

By property type, industrial property loans continue to weaken while all other major property types improve.

• Hotel delinquency rate dropped 184 basis points-now 12.28%;
• Industrial delinquency rate jumped 61 basis points to 12.20%-threatening to pass hotels as the second worst performing property type;
• Office delinquency rate dropped 19 basis points to 8.76%;
• Multifamily delinquency rate dipped 55 basis points and remained the worst major property type with a rate of 16.18%; and
• Retail delinquency rate tightened 9 basis points to 7.52%-still the best performing major property type.

Posted by Scott R. Lodde

Despite inconsistent economic news, increases in lodging demand and property-level net operating income (NOI) have most industry participants feeling optimistic that hotel property values are heading upward.  The 2011 edition of the Hospitality Investment Survey conducted by PKF Consulting sheds some light on the market and transaction factors that are influencing this line of thinking.

Here are some the findings from the survey:

1. Overall capitalization rates for all hotels decreased 110 basis points when compared to 2010. This reflects survey respondents’ reaction to the more attractive debt environment, as well as the anticipation that property level NOI will continue to increase. Investors continue to place a premium on the full service segment due to its greater upside, high barriers to entry and the current difficulty to obtain construction financing. Terminal capital­ization rates also declined compared to our previous survey, however to a lesser degree.
2. Concurrent with the decline in capitalization rates, discount rates, or un-leveraged IRR’s, for hotels decreased to 11.75 percent. The 253 basis point spread between the overall capitalization rate and discount rate suggests in­vestor yield requirements have lowered when compared to last year, likely due to the decreased level of risk and overall landscape of the current lodging market.
3. Equity yields followed a similar downward trend, though hotel investors continue to expect handsome returns when compared to other forms of investment real estate. Cash-on-cash returns experienced little change compared to what we learned in 2010, and the average holding period indicated by the survey respondents de­creased slightly.
4. Overall deal volume, particularly among real estate investment trusts (REITs), has surged since the beginning of 2011. With a lower overall cost of capital and financing flexibility that includes equity along with debt, REITs are aggressively targeting hotel properties in all segments, particularly high quality assets in major markets. Leading the way is Ashford Hospitality, who spent $1.28 billion on the 28-property Highland Hospitality port­folio. Pebblebrook Hotel Trust (spending over $780 million on 10 hotels) and Apple REIT (spending roughly $475.8 million acquiring over 20-hotels) have also been active players.
5. Debt service coverage ratios also decreased and are now in line with 2008 levels, suggesting that lenders are starting to “loosen up” with regards to their underwriting. This year’s survey indicated that interest rates reached their lowest point in recent history at 6.69 percent, a decrease of 84 basis points when compared to 2010. Loan-to-value ratios increased compared to last year, but remain well below 2007 levels.

2012 Outlook Remains Positive for U.S. Lodging Industry

PKF Hospitality Research also released their preliminary Hotel Horizons® updated forecast for the U.S. lodging industry. Based on performance data through September of 2011 (provided by Smith Travel Research), and Moody’s Analytics’ October 2011 domestic economic forecast, PKF-HR believes that RevPAR in the U.S. will increase by 8.1 percent in 2011, and rise another 6.2 percent in 2012.

The 8.1 percent revised RevPAR forecast for the current year represents a 90 basis point increase over their previous forecast released earlier this year.

Because of the accelerated performance in 2011, the PKF forecast change in RevPAR for 2012 has been lowered 110 basis points from 90 days ago to still-attractive 6.2 percent.

PKF is optimistic for lodging’s performance in 2012 and is based on the economic forecasts of Moody’s Analytics. Real personal income is projected to rise, and is the most important element of Gross Domestic Product (consumer spending and business investment).

Best Housing Markets for Big Bargains

A recent report from the financial analysis firm 24/7 Wall St. has identified the housing markets expected to offer some of the biggest discounts for home buyers. Many of these markets have been plagued with large gluts of foreclosures that have dragged down prices. Six of the ten markets on the list have had median home prices fall to less than half what they were five years ago.

All of the top 10 most popular metros have experienced double-digit price declines from peak to trough, with seven out of 10 experiencing declines approaching 50 percent or more, according to figures from the Federal Housing Finance Agency.

Half of the top10 metros are in Florida, two are in Southern California, and one is in Nevada — specifically the Las Vegas metro area.

Eight out of 10 metros had median list prices of less than $150,000 as of Nov. 15, with the exceptions of both California markets.

The following are the top five housing markets which offer home buyers some of the biggest discounts:

1. North Port-Bradenton-Sarasota, Fla.

Median home price: $170,000

Home value decline from peak: -51.4%

Predicted change in home value through 2Q 2012: -6.5%

2. Riverside-San Bernardino-Ontario, Calif.

Median home price: $180,000

Home value decline from peak: -55.4% (14th biggest decline)

Predicted change in home value through 2Q 2012: -14.8%

3. Charleston-North Charleston, S.C.

Median home price: $200,000

Home value decline from peak: -23.3%

Predicted change in home value through 2Q 2012: -1.6%

4. Fort Lauderdale-Pompano Beach, Fla.

Median home price: $199,000

Home value decline from peak: -48.4%

Predicted change in home value through 2Q 2012: -9.2%

5. Cape Coral-Fort Myers, Fla.

Median home price: $106,000

Home value decline from peak: -59.3%

Predicted change in home value through 2Q 2012: -12.2%

Posted by Scott R. Lodde