Real Estate Investing

My friend Mary is still in her house, but they’ve received a couple of preforeclosure notices.  She’s not alone.  According to the latest news from RealtryTrac and CNN.com,

Foreclosures hit another record high in August: 304,000 homes were in default and 91,000 families lost their houses.  More than 770,000 homes have been repossessed by lenders since August 2007, when the credit crunch took hold.

Her mother-in-law hasn’t told them they can move in with her at this point.  I’ve assured her she could come and stay with me for a couple of weeks anyway.  Maybe they’ll buy one of those little sheds for a backyard stay there.  In any case, I’m worried for them.

Meanwhile in California, whole communities are nearly falling apart. 

FLIPPERS and speculators who had nothing invested in Merced beyond money were the first to abandon the community.

Many real estate agents and loan brokers, their customers gone, soon followed. So did commuters who thought they could spend four hours a day making round trips to the San Francisco Bay Area. And the spinners, young men and women hired by the developers to stand at intersections and literally point the way to the new developments, disappeared.

Now developers are pulling out.

Sustainability becomes the next major question, especially for little boom towns like Merced.  The key, in my opinion, is to find something unique or special about the town and then market it.  In Wilkinsburg - outside of Pittsburgh - an urban farmer named Lenore Schwartz has big plans for her community, thanks largely to the tomato.  From growing tomatoes, her business is expanding according to the Pittsburgh Post-Gazette,

The project includes the green renovation of a three-story brick house that will incorporate a commercial kitchen for cooking classes, guest room for visiting speakers, greenhouse additions and a central, exposed stone fireplace that will radiate heat and act as a support post when interior walls are removed.

Ms. Schwartz and Mr. Boulos also want the center to include a farmstand, an edible-fish pond, blacksmith forge and other features. They’re working to line up support in the funding community.

In my own community in middle Tennessee, I’ve begged our town to consider a farmer’s market.  Having been told “That’s not our job as a town,” my next suggestion is to rezone residential areas to allow for stores like a 10 cent grocery, an art studio, photography or dance studio, garden center.  But without someone like Lenore or an investor to lead this charge, it’s unlikely we’ll see that happen.

I’d talk about gasoline now - and the spike in prices due to Hurricane Ike fears - but it’ll ruin your weekend.  Instead, I’ll just send happy thoughts your way for an enjoyable two-day break.

Photo from here.

California is getting closer to having one state-wide MLS system, according to the San Francisco Chronicle.  Expected to be available in 2009, 66 local REALTOR® associations and three regional MLS groups — representing 60 percent of the market in California — have signed nonbinding letters of intent to participate in CALMLS so far.  Read more from Realtor.org.  In my own MLS area, we’ve faced challenges simply to get the various associations to embrace on preferred lock box … this will be very interesting to see how one MLS works itself out.

Donald Trump is lending a helping hand to Ed McMahon who has been facing foreclosure of his personal home following health issues.  He is buying the home so he can lease back to McMahon.  Says Trump, “When I was at the Wharton School of Business I’d watch him every night,” the mega-developer said. “How could this happen?”

Austin, Texas is set to recover from the real estate slump faster than the rest of the U.S., according to the Austin Business Journal. 

In the coming year Austin will outperform the rest of the country in job growth and in the health of its housing market, according to Mark Dotzour, chief economist at Texas A&M University’s Real Estate Center.

Finally, ghost towns are popping up all over the country due to halts in new construction developments.  According to MSNBC,

The Colonial-style brick home had four bedrooms, three-and-a-half bathrooms, and designer touches and offered everything they expected in a town known for great public schools and homes fit for Ford execs. 

Everything, that is, except neighbors.

When the MacDonalds arrived, there were fewer than 15 homes in Kirkway Estates, where 179 were planned. Their home was the only one built thus far on a cul-de-sac with six lots.

I’ve seen many developments that look like this.  There’s a monster-sized subdivision near where I live and I’ve seen that construction has come to a skidding stop.  I have to wonder what all those workers are now doing to earn a living.

Many positive stories hit the news this morning saying the housing market is showing sure signs of recovery. The online Redding.com (California) site reports good news,

Has the north state’s housing market hit bottom? Data from Zillow.com, among the many Web sites that track values, suggest that prices have not only bottomed out but are coming back up.

The Associated Press provides a detailed analysis about the housing market, economic growth and unemployment. A recovery is definitely in sight for housing, but companies will continue to be cautious about spending and hiring.

Forecasters are hopeful that the housing slump _ in terms of home sales _ will hit bottom this year. However, economists were divided over whether the low point would be reached in the second, third or fourth quarters of this year. House prices, though, are still expected to drop this year and next.

The good news is the story waits until the third paragraph to use the “R” word: Recession.

In other retail news, Lowe’s - the big daddy of building supply - is definitely feeling the pain of the slow housing market. Sales were down according to Bloomburg Business News,

Sales in stores open at least 13 months fell 8.4 percent in the quarter. They dropped 12 percent in February and March and 1 percent in April, helped by better weather and demand for flowers, plants and bushes…

I’m glad to have helped out Lowe’s and Home Depot. We bought new flower pots for outside, some pansies, and yellow lantana flowers that I’d never heard of but are pretty.

Special Note for you would be gardeners: I just searched for a photo of the lantana flower to share with you and learned that it’s an invasive weed-type flower and poisonous to boot.