Latest CRE Price Analysis Reverses Positive Direction in October

Discounted Foreclosures Account for 25% of Home Sales in Third Quarter

by Jann Swanson on December 2, 2010

Commercial Mortgage Default's Rise in Third Quarter

U.S. Home Prices Fell 3.2% in Third Quarter, FHFA Says

U.S. home prices fell 3.2 percent in the third quarter from a year earlier as demand weakened without federal tax credits, the Federal Housing Finance Agency said.

The Atlanta area led declines among the 25 largest metropolitan regions, with a 10 percent slump, the FHFA said in a statement. Prices rose 4.6 percent in the San Diego area for the biggest gain, according to the agency, which measures sales of homes with mortgages backed by Fannie Mae or Freddie Mac.

Home sales fell to record-low levels after the April 30 expiration of a tax credit of as much as $8,000 for buyers. An overhang of distressed properties and an unemployment rate hovering near 10 percent will likely cause more price declines, according to Celia Chen, an analyst with Moody’s Analytics Inc. in West Chester, Pennsylvania.

"Our overall expectations for home prices is that they’ll drop by another 8 percent by the third quarter of next year," she said in a telephone interview before the FHFA report.

Measured from June 30, prices fell 1.6 percent, the Washington-based FHFA said. Economists had projected prices would decrease 1.1 percent, according to the average of 15 estimates in a Bloomberg survey.

The State of Georgia is losing approximately 30 licensed and registered appraisers every month because:

1. Houses aren't selling.
2. No one can refinance because they have no equity, or have negative equity. (generally speaking)

U.S. Office Rebound to Be Delayed by "Shadow" Space, Rosen Says

The U.S. office sector will be the slowest to recover as companies absorb empty space and advances in technology reduce the need for square footage, said Kenneth Rosen, a professor at the University of California, Berkeley.

Unoccupied "shadow inventory" accounts for 3 percent to 5 percent of total business leases, and that space will be filled before firms sign new rental agreements, Rosen, chairman of Berkeley's Fisher Center for Real Estate and Urban Economics, said at a conference in San Francisco. Cloud computing and other tech advances let employees work away from offices, further reducing space needs, he said.

"Every company has shadow space," Rosen, who also runs Berkeley-based hedge fund Rosen Real Estate Securities LLC, said in an interview yesterday. Most U.S. cities face prolonged vacancies because of the surplus, excepting Washington, New York, San Francisco, Boston and parts of the Silicon Valley, where technology and venture capital spur leasing, he said.

"If you're in the knowledge-based industries such as VC, everything 'green' and social media, there is a large, growing demand for space," Rosen said.

The average vacancy rate in U.S. central business districts fell to 14.7 percent in the third quarter from 14.8 percent in the second quarter, Cushman & Wakefield Inc. said last month. The overall rate including suburban areas rose to 17.5 percent, the highest since 1993, from 17.4 percent, according to the New York-based broker.

Prices for U.S. commercial property rose in September after falling to an eight-year low the previous month, Moody's Investors Service said yesterday. Demand for the best office buildings in major markets pushed up the Moody's/REAL Commercial Property Price Index 0.3 percent from a year earlier as investors sought returns higher than fixed income. Prices gained 4.3 percent from August...

All,

It has taken much time and effort to get our new property tax appeal firm established and ready to rumble! I want to thank everyone for their time and support! We are now in position to challenge the "national" firms that give short shrift to all but the most highly valued properties. Again, thank you.

Dan