U r b a n T r e k k e r

Big Builders Stocks Up

The big builders profits were up and their stock prices were historically high. How do you make sense of direction of the market then if their stocks' prices tell something about their record profits? From Big Builders News Link:

• Beazer Homes Q1 Net Income Climbs 29%
• Centex Q3 Net Income Up 30%
• Ryland Group Announce Highest 4th Qtr Earning Ever

The rationale behind this maybe because the biggies are in the business of developing and selling homes. That means they are in it for the long haul! Meanwhile, investors like us.. our thinking goes like this.. well, the market is no longer hot. Maybe we should refrain from investing and wait till the market.. goes up to jump in again?

Starker Exchange

This advice from Benny Kass, the Housing Counsel from Washington Post, is for real estate investors when using Starker Exchange or like-kind-exchange or 1031 exchange. In a nutshell, what investors are doing is deferring the capital gains by exchanging like kind properties.

Before you do an exchange, determine the tax consequences. If you do a like-kind exchange, your profit will be deferred until you sell the replacement property. However, the cost basis of the new property in most cases will be the basis of the old property. Discuss this with your accountant to determine whether the savings by using the like-kind exchange would make up for the lower cost basis on your new property.

Why? Because, the rule to do like-kind-exchange looks simple and easy on paper, but it is complex and complicated to implement it. If you are not careful, Uncle Sam can come and calling your name.

Bottom line...

The rules are extremely complex. You must seek both legal and tax accounting advice before you enter into any like-kind exchange transaction, whether forward or reverse.

* Like Kind Exchanges Can Be Thorny [Washington Post]

Real Estate Links

We have Spring like weather today in DC. I feel Spring is in the air already. By the way, here are selected stories from around the Internet on real estate (some of them carry over from over the weekend):

The Last Handshake Deal [Washington Post]
Corian Counters Instead of Granite [The Walk-Through]
Undermount Sink Can Drain Budget [Remodeling Online]
The Disappearing Las Vegas Condos [NYT]
The Power of Words [NYT]
Condos and Housing in the Region [Rebuilding Place in the Urban Space]
New Urbanism Embraces Latino [USA Today]
These Days Expect the Unexpected Rather than Existing [Matrix]
Look and Load Your Condo [Washington Post]

Good Faith Estimate As Good As it Gets

Good news for buyers, according to Washington Post, a number of lenders will guarantee expenses on your Good Faith Estimate.

For example, this month SunTrust Mortgage Inc., which is among the 20 highest-volume home lenders in the country, began rolling out what it calls "good-faith guarantees." When retail loan applicants receive their good-faith estimate disclosures, SunTrust now adds language that commits the company to deliver those prices at settlement. SunTrust Mortgage is a subsidiary of Atlanta-based SunTrust Banks Inc. and operates in all 50 states and the District.

Another large mortgage-industry player, LendingTree LLC, has begun offering lenders on its network what it calls settlement service "bundles." The prepackaged bundles include everything needed to close the mortgage, from title search and insurance to credit reports and appraisals. They often carry lower total costs to lenders than the lenders would pay to assemble the same services on their own.

Participating lenders are better positioned to offer more accurate estimates of total closing charges and even pass on the lower, wholesale market costs to borrowers. LendingTree is a Charlotte-based national mortgage and realty services aggregator that connects loan applicants with 260 independent lenders that participate in its network. It typically promises mortgage applicants competitive quotes from up to four lenders. Roughly 50 of its lenders are now buying settlement service bundles through LendingTree Settlement Services LLC, its wholly owned, in-house "vendor management" company.

Common expenses on GFE form -- title insurance, survey, origination fees, credit report and appraisals. If you buy a new condo or condo conversion, another expenses that will be added here -- working capital (usually equal to 2 month condo fees) and first month condo fee.

* A Good Faith Effort to Clean Estimate [Washington Post]

Housing Market Ain't Stock Market

Why aren't housing prices falling faster than stock prices? That's because housing market is not like stock market!

Hats off to Big Picture, who analyzes it from his perspective as a Chief Market Strategies for one of the big investment houses in NY.

Nice pair of charts from Northern Trust that show even as sales slow down:

Prices still remain relatively robust:

 

The correlation betweenthe two charts show that even as sales down, prices are still robust. If you have stocks and the company is in deep trouble, the stock prices will fall faster than the news. But, it's not the case with a property. It takes time to unload your property. There's no pressure for the sellers to sell it a big loss.. unless, sellers are relocating, or under pressure to sell. In short, unlike stock market - real estate will slow down in a sloooooow mo...

* Top Ticking Real Estate is Different Than Stock [Big Picture]

Friday Fun: Dumbest Thing in Real Estate Biz

Here is something from the list of "101 Dumbest Moments in Business: Real Estate," from Business 2.0 for your Friday reading.

1. Bubble Trouble, Grand Prize Winner, Dumbest Moment of 2005

"If you grew up in Danvers, and you remember it as the spooky place on the hill, it might not be the right place to live." -- William McLaughlin, an executive with AvalonBay Communities, which is converting boarded-up Massachusetts mental institution Danvers State Hospital into a 497-unit complex of high-end apartments and condos. That sound you hear? Not the ghosts of mental patients, but loud hissing from the wildly inflated housing bubble, which tops our list this year with seven priceless moments of real estate insanity. First up: the nuthouse-to-yuppie-house trend currently sweeping North America, with such conversions also planned in Detroit, New York, Vancouver, and Columbia, S.C., where the centerpiece of the development is an original brick building with the word "asylum" chiseled into the facade.

10. Three weeks later, Vail's Board of Realtors announces that it's moving back in with its mom.

Unable to buy office space in a community where the average home price recently headed north of $4 million, the Aspen Board of Realtors heads north too -- to Basalt, Colo., a town of 3,000 residents 20 miles away.

* 101 Dumbest Moment in Business: Real Estate [Business 2.0]

Real Estate Links

Here are selected stories from around the Internet on real estate:

Adding Cultural Heritage Dimensions... to DC Street Car Planning [Rebuilding Place in the Urban Space]
Can a Feng Shui Expert Give Your Home Good Chi? [Real Estate Journal]
The History of A Hot Spot: The Adams Morgan Heritage Trail [DCist]
Ways to Find Child Friendly Places to Live [Wash. Home Guide]
Cooling can be Cool for First Time Buyers [Wash. Home Guide]
Investor can't Bank on Lender [Wash. Home Guide]
Thriving Local Economy Boost Building [Wash. Home Guide]
Plenty of Programs for First Timers, Cash Poor [Realty Times]

N.VA Growth Going Going Up

Who says that Northern Virginia is stop growing? The market may be slowing down a bit..but, it doesn't mean that on the long run it stops growing. According to an annual estimate by University of Virginia's Weldon Copper Center Public Service, N.VA has grown by nearly 14%, or about 293,000 people the last five years.

[....] Virginia as a whole gained more people than all but six other states, and 60 percent of the state's growth occurred in Northern Virginia, the center found.

Here are where the growth concentrated.

Leading the way was Loudoun County, which the center estimates grew by a "phenomenal" 82,700, or 49 percent, in the past five years. Prince William County was close behind, with an increase of 74,500 over that period. Fairfax County, though not growing at the same rate, still added 52,400 residents since 2000.

"The trend since 2000 has been the same: The growth has been quite steady, and the major growth is in Northern Virginia," said Qian Cai, the center's director for demographics and workforce. "It will be more congested in Northern Virginia." Chart: Courtesy of Washington Post. (Click to enlarge)

To check the potentials for Loudoun County, click here. In addition to the real estate mantra of location, location, location. I would add -- population, population, population.. the key to economic and housing market growth! Why bother with short-term fluctuations, just focus on the long-term outlook.

* No Signs of Pause in N.VA [Washington Post]
* Western Ballston Metro Moves Forward [Arlington Connection]
* Signs of the Times [Springfield Connection]
* A Midtown Makeover [Springfield Connection]
* Loudoun County Real Estate [Urban Trekker]

WholeFoods Old Towne is Open

Just read this in Alexandria Gazzette Packet. WholeFoods in Old Town has opened its door for biz.

Amid a flurry of employees making last minute adjustments to store shelves, rearranging rows of fresh produce, putting ice over an array of seafood, and firing up the pizza oven, Whole Foods Market opened Tuesday morning at their newest location at 1700 Duke St.
"I'm very glad this store has finally opened so we can get traffic on Duke Street moving again. Now citizens have no reason to call my office about the backups on Duke Street due to the construction," said Mayor William D. Euille in welcoming the environmentally-oriented grocery chain to the city.

WholeFoods to go...:)

* Whole Foods Opens Its Door [Alexandria Gazette Packet]

Real Estate Links

Here are selected stories from around the Internet on real estate:

Existing Home Sales Slide [Washington Post]
Historic Neighborhood Tax Relief Act [Rebuilding Place in the Urban Space]
Homeowners and Purist Go Head to Head Over Vinyl Siding [Real Estate Journal]
Luring Business Developers Into Low-Income Areas [NYT]
New Coalition to Fight Plan to Add Toll Lanes to Beltway [Washington Post]
Western Ballston-Metro Moves Forward [The Connection Newspaper]
Just Around the Corner [The Connection Newspaper]
Marriott Plan Additional Hotel for Route 1 [The Connection Newspaper]
History Preserved in McLean [The Connection Newspaper]