Atlanta Home Prices Hit New Low in January

Atlanta Business Chronicle

Home prices in most major U.S. cities, including Atlanta, were “dismal” to start in 2011 and a double-dip recession could be beginning, according to the monthly Standard & Poor/Case-Shiller Home Price Indices.

After a one week delay from the originally scheduled date of mailing Gwinnett's assessment notices were sent to the wrong owners on Friday. They are now saying that all commercial notices will be resent next week.

Government Cuts Clip Office Market

By Anton Troianovski

Smaller government means less demand for office space, and that is acting as a drag on the recovery of the commercial-real-estate market.

By Tony Downs, NREI Contributing Columnist

Several factors are coming together to limit new construction.

New construction of housing peaked at over 2 million units in 2005, and then collapsed 74% to 529,000 in 2010, as reported by Economic Indicators, a U.S. government publication. The combination of continuing foreclosures and a shortage of construction financing will block much new housing construction.

According to Gwinnett County most of the commercial tax assessment notices were mailed on Friday, March 25th. As such, the deadline to appeal your property tax assessment is May 9. Please contact us for further details/assistance.

Average Metro Home Prices Fall in February

By Michelle E. Shaw
The Atlanta Journal-Constitution

The average sale price of existing single-family homes in metro Atlanta tumbled 13.6 percent in February from a year earlier, dashing hopes for the first upward pricing trend since last summer.

Repost: Gwinnett commercial notices won't go out until late next week, approximately 3/24/11.

Gwinnett County Tax Assessor's website shows commercial notices will be mailed this Friday, March 18th. I called their front office and they verified that this is correct. If your notice is dated March 18 you have until May 2nd to file your appeal.

They are also saying residential assessment notices will be mailed on April 15th. If your notice is dated April 15th you will have until May 30th to appeal.

US housing construction plunges

WASHINGTON (AFP) – Construction of new homes in the United States plunged in February to near record lows and building permits hit bottom, official data showed Wednesday in a dismal report on the ailing housing market.

http://news.yahoo.com/s/afp/20110316/ts_alt_afp/useconomyconstructionhousing

There is little doubt in my mind that unless the unemployment rate plunges to “normal” levels soon prices will drift lower from here. How deep are investor’s pockets? If they stop buying how many months of inventory will there ultimately be?

Underwater mortgages rise as home prices fall

By DEREK KRAVITZ, AP Real Estate Writer Derek Kravitz, Ap Real Estate Writer – Tue Mar 8, 1:40 pm ET

I am reposting this to supplement the double dip talk.

As Whitney Tilson and Glenn Tongue of T2 Partners LLC showed in their excellent analysis and 2009 book "More Mortgage Meltdown" the foreclosure crisis is far from over. The problem loans yet to peak are the Alt-A loans, also referred to as "liar loans" because of the lack of documentation of income and assets (73 percent of securitized Alt-A loans). The Alt-A market is estimated to be 50 to 100% larger than the subprime market. The problems with subprime loans occurred first because their interest rates typically reset after only two years. Alt-A loans typically had five year resets. Alt-A resets began to surge in 2010 and they will continue to rise into 2012.
http://www.moremortgagemeltdown.com/

Suburban office owners! Rents are not rising and vacancy rates are not falling. Sales are less than replacement cost in most cases. Capitalization rates have dropped slightly but this is no time to sit on your hands. Appeal your tax assessment.

In a recent survey just as many national investors called office building property a "buy" as those calling office a "hold" (44% each). This probably has a lot to do with the dichotomy of suburban office product versus central business district (CBD) office product. The difference between the two locations is a departure from previous recoveries, however. In the past, due to the desire for lower rents and shorter commutes the suburban office properties typically lead the office market coming out of recession.

Due to the large amount of vacant suburban office space at this time (70%) of total, suburban property is lagging CBD property this time around. With job creation continuing on a sluggish pace suburban office vacancies are stable to increasing, even as CBD properties are experiencing lower vacancy rates. Rents that were cut during the great recession don't stand much of a chance of rising in the suburbs until the job picture turns around and all that vacant space is absorbed.

National CBD office market overall capitalization rates declined during the most recent quarter over quarter comparisons (per PWC/Korpacz) to 7.53%. National suburban cap rates also declined to 8.17%. Atlanta office market cap rates declined slightly to 8.84% from 8.95% the previous quarter and 9.03% a year ago. Office leasing activity was up 27.5% over the first three quarters of 2010 versus the same period in 2009. Free rent is prevalent however, with up to 20 months free on a ten year lease. The outlook for rent levels remains negative for the near term.

The Atlanta office market vacancy rate was averaging approximately 10% in the fourth quarter. Tenant retention is averaging approximately 63% just slightly below the year ago 65%. Rents are flat to declining -0.25% while operating expenses are rising approximately 2.32%. The Wall Street Journal recently reported that the delinquency rate on commercial mortgage backed securities reached a record 9.39% in February and one of the largest jumps was office CMBS delinquencies which rose to 7.1% from 6.88%.

Leading, downtown, trophy office buildings are the only office properties selling for premium prices and suburban office is lagging. Continued pressure on rents coupled with high vacancy rates will continue to adversely affect pricing. Overall Atlanta office properties are selling for 50% to 100% of replacement cost with an average price of 80% of replacement cost. 2011 is a good time to appeal your property tax assessment.

By ELIOT BROWN

The delinquency rate for commercial mortgage-backed securities reached record levels in February, as commercial real-estate deals made in the market's peak continue to struggle despite rising values in some parts of the country.

Commercial Vacancy Rates to Decline
A stabilization trend is taking place in commercial real estate sectors, but in most markets rent will remain soft except for multifamily rentals, according to the National Association of REALTORS.

Lawrence Yun, NAR chief economist, said a pullback in construction is helping stabilize the market. “Very limited construction of new commercial real estate over the past few years has essentially fixed the supply of available space,” he said. “This means vacancy rates could fall quickly from any increase in demand for commercial space.”

From the first quarter of this year to the first quarter of 2012, NAR expects vacancy rates to decline 0.5 percentage point in the office sector, 1.3 points in industrial real estate, 0.1 point in the retail sector and 0.9 percentage point in the multifamily rental market.

“Even with declining vacancy rates, rents are not likely to turn positive in most markets until next year, outside of multifamily rental properties,” Yun said. For example, office rents are forecast to fall 1.8 percent this year before turning higher by 4.0 percent in 2012...
http://www.realtor.org/rmodaily.nsf/pages/News2011022803

Commercial Property Deals May Double in U.S. as Blackstone Bets on Rebound

U.S. commercial property purchases may double this year as confidence builds among investors with access to credit and equity that values will rebound.