Unexpected Rebound In New Home Construction For February

Originally Posted at Triangle Business Journal

New home building unexpectedly rebounded across the country last month as builders increased their housing starts to a 583,000 annual pace from a record low of 477,000 set in January.

The Commerce Department reported Tuesday that new home construction rose 22 percent from January to February but remained 48.5 percent below year-ago levels. The surge was led by an 83 percent jump in multi-family construction. Single-family homebuilding rose by a modest 1.1 percent.

In the South, which includes the Carolinas, new construction jumped 30 percent last month compared to the month before but was still 44 percent below the levels of last year.

Only one region reported a drop in housing starts: the West, where starts declined by 24.6 percent. The largest increase was in the Northeast, where starts increased 88 percent.

Permits for future new home construction in the South rose by 5.9 percent from January to February but were still 46 percent lower than the year before.

Nationwide, permits rose 3 percent from January to February but remained 48.8 percent lower than a year ago.

The South region includes Virginia, Maryland, D.C., Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and West Virginia.

N.C. Corporate Tax Revenue Down 37%

Originally Posted at Triangle Business Journal

Collections from the state’s tax on corporate profits were down 37 percent for the first eight months of fiscal 2009, July through February, as North Carolina companies battled the recession.

The number is seen as a barometer of business conditions.

Collections during the eight-month period were $275.8 million, down from the $441.5 million recorded during the same period in fiscal 2008, according to the North Carolina controller’s office.

The state taxes corporate profits at a rate of 6.9 percent.

In a new report on the state’s fiscal outlook, North Carolina General Assembly researchers pegged recessionary job losses in the state at 197,000 through February and commented that “recessionary conditions will persist for much, if not all, of 2009.”

Mortgage Rates Hit 1971 Levels

As Originally Posted to Seeking Alpha

The gap between the 10-year Treasury note and the 15-year / 30-year fixed-rate mortgages has narrowed, not surprisingly, since the Federal Reserve began actively buying mortgage securities in January (see Bloomberg article).

The average rate on a 30-year fixed mortgage fell to 4.96 percent in January, the lowest it has been when considering data that goes back to 1971. Rates were recently at 4.98 percent. With a promise to increase mortgage-backed security purchases by an additional $750 billion, along with as much as $300 billion in Treasury purchases over the next 6 months, rates obtained with the help of a Raleigh real estate agency should continue to be under pressure in the near term.

As the Fed continues to support low rates in hopes that consumers will either refinance or make a new home purchase, others are also encouraging consumers to purchase now, but for different reasons. Given the flood of money entering the market, consumers will eventually begin seeing inflationary pressures. Now may be the time to act while both rates and prices are low.

Housing Experts Say Buyers Have Several Options

From News 14 Carolina



CHAPEL HILL, N.C. – Real estate experts say the federal government is providing several opportunities to help certain parts of the housing market.

For qualified buyers, there are a number of government programs to help finance their purchases.

Whitney Long, a loan originator with Carolina Home Mortgage in Chapel Hill, N.C., says although private bank loans have been harder to secure, loans from the Federal Housing Administration or through the VA or USDA can provide help for those looking to finance most or all of their costs. She said that especially applies to those who use the first-time homebuyer's credit.

"We're starting to see a lot more people get pre-qualified, think about buying now that the credit has come out with the $8,000 for new home buyers," Longs said. "So, it's certainly a big incentive for people to think about it."

She said she's doing about 50 percent more government loans than before.

Even though experts are not sure when the slump will end, they know the numbers will eventually start heading the other way.

"If you look at all the things that have historically gone well for our market, in terms of the universities, the demographics, the educational level, the income and earning level of the people that live here, those are the types of markets that come out of recessions quicker," Stacey Anfindsen, a real estate market analyst, said.

The housing market in the region is doing better than the rest of the nation and although they're slower than before, statistics show there is activity in the real estate market.

But Nick Tennyson, executive director of the Durham, Orange and Chatham Home Builder's Association, knows people are being cautious.

"I don't think any of us should kid ourselves about the fact that there are people who have lost their jobs in our market and people who are afraid about that," Tennyson said. "I think that's really just stopped a lot of people from considering any sort of purchase."

Commercial Real Estate Properties Going Green in Raleigh

Increasingly, there is more demand for environmentally-friendly working and living spaces in the U.S.. Fittingly, the cutting-edge technology firms of the Research Triangle Park area of North Carolina are leading the way through innovative design and eco-engineering. The following article, taken from the Triangle Business Journal, highlights the efforts of America's largest center for technology development.

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As the epicenter of innovation and cutting-edge technologies, Research Triangle Park is pushing for a more “green” environment, both inside its buildings and across its 7,000-acre expanse.

Liz Rooks, executive vice president of the Research Triangle Foundation, which oversees the park, says zoning and environmental best practices have changed dramatically in the last 50 years.

With the opening of the Wake County portion of the park, the RTF worked with North Carolina State University to design a master plan with a heavy emphasis on protecting the ecology, she says.

Environmentally sensitive land was identified and declared off-limits for development. Steep slopes were clearly marked out, and existing vegetation was retained to prevent erosion.

Despite the nation's housing slump, Raleigh real estate remains in steady demand due to the unique combination of high-tech businesses, world-class colleges and universities, and advanced medical facilities. Efforts on behalf of the Park to "go green" only add to the appeal.

Read Entire Article from the Raleigh Business Journal

For Home Buyers Update

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NC Triangle Real Estate Update December 2008

Happy Holidays! In this holiday season FOR HomeBUYERS, Inc. would like to wish you much joy and happiness as you spend this time with family and friends. And let us continue to be thankful for what we have and for blessings to come.

Triangle Market Conditions: Who would have expected all the turn of events since our last email in September. The economic instability is now beginning to have a greater impact on the housing market in the Triangle as buyers seem to be taking a wait and see attitude. Also, the winter season is always somewhat slower so the market is softening more than usual. All that being said, the interest rates are dropping and we may see record lows very soon. This could be a great time to buy a home in the Triangle. The major banks are loaning money for homes. You will need to have a good credit score of about 680 and the minimal amount for a down payment of 3% with FHA until January 1 and then it goes to 3.5%. If you are eligible for a VA loan you can still get 100% financing. You can negotiate Closing Costs to be paid by the seller. If you are renting, now is a great time to buy a home. Sellers are very negotiable on their prices. In fact, there may not be any better time to buy than the next 3 or 4 months. When summer arrives people will begin moving again and prices will either stay more firm or even go up. The diversity of the job market in the Triangle keeps the housing market on a firmer foundation than most areas.

Don’t forget about the tax credit: In addition to the lower interest rates, you can take advantage of the $7500 tax credit through June 30, 2009. We provided detailed information in our September newsletter on the tax credit. If you would like more information please call us at 800-333-2893.

Visit www.ForHomeBuyers.cmo or call 919-878-1110 or 800-333-2893 to schedule a no obligation Consultation at your convenience to learn how Exclusive Buyer Representation can help you Avoid Costly Home Buying Mistakes. If you are not in the area, we can provide the Consultation by phone. We work evenings and weekends by appointment. This initial Consultation does not obligate you to us in any way. You may also REPLY to this email for an appointment to speak with one of our Exclusive Buyer’s Agent Realtors.

U.S. Steps Up Help For Homeowners

WASHINGTON -- The chief executives of Detroit's Big Three auto makers appealed in dire language for U.S. taxpayers to help their industry, but couldn't dispel doubts in Congress that have clouded prospects for a government-led rescue.

In appearances Tuesday before the Senate Banking Committee, the leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC, together with the head of the United Auto Workers union, argued the shaky U.S. economy couldn't withstand a collapse of any of the companies.

The chief executives of GM and Chrysler said they could run out of funds without the government's support. GM CEO Rick Wagoner said the package is needed to "save the U.S. economy from a catastrophic collapse." Many markets however are doing well, these markets include; Raleigh Real Estate, Durham Homes, High Point Homes, Greensboro Homes, Home Inspection, Wilson Homes, Wilson NC Real Estate, Home Warranty, Raleigh Estate Homes, Triangle Homes, Chapel Hill Farms and Farms Chapel Hill.

That the companies were convening -- "hat in hand," as Sen. Christopher Dodd (D., Conn.) said -- before a congressional panel reinforced the depth of their difficulties and the possible diminishment of their political clout. Extending a helping hand to Detroit auto makers, long a central part of the nation's manufacturing base, doesn't appear to be a given.

One question is whether the auto makers can muddle through to January when a new Congress convenes with strengthened Democratic majorities and a Democrat in the White House. The complexity of a possible intervention -- and the political divisiveness it has wrought -- could be too great to overcome this week.

On Monday, Senate Democrats introduced legislation that would set aside $25 billion to help the industry, drawing from the $700 billion fund created to stabilize financial markets. The legislation would allow the auto companies and parts suppliers to receive "bridge home loans" of at least ten years with favorable interest rates. But there is resistance among many senior Republicans and the White House. If no decision is made this week, the issue will be kicked over to the new 111th Congress.

In the late afternoon session, Republicans largely condemned the industry's request. Even some Democrats committed to helping the auto makers showed little enthusiasm for the task at hand.

While noting he backs aid, Senate Banking Chairman Mr. Dodd denounced the companies for failing to move more aggressively to reverse their sharp declines in market share. "They're seeking treatment for wounds that, I believe, are largely self-inflicted," Mr. Dodd said, adding the industry has failed to adapt and "we're all paying the price for it."

As the hearing stretched past its third hour, the top executives disclosed how much they might each apply for if Congress approved the $25 billion loan package: $10 billion to $12 billion for GM; $7 billion to $8 billion for Ford; and $7 billion for Chrysler.

The companies said they would use the money to pay employees, cover current operating costs and develop new products.

Both GM and Ford are on a pace to use up $2 billion each a month, based on their third-quarter earnings. Not getting funding immediately threatens GM most directly because the firm is operating close to its minimal funding requirements. The supply chain is shared among the Big Three, so a bankruptcy filing of one could spell problems for the other two.

Some analysts suggest GM, Ford and Chrysler can cut costs enough to survive until January. But if the U.S. auto market continues to sink, the companies' cash drain could outpace their ability to cut costs.

GM has said that without government aid, the company would run out of operating funds as early as early 2009.

Chrysler joined GM for the first time in linking its survival to a federal bailout. "Without immediate bridge financing support, Chrysler's liquidity could fall below the level necessary to sustain operations in the ordinary course," Robert Nardelli, the company's chairman and CEO, said. He added that the company was currently spending about a $1 billion a month more than they were taking in, leaving the auto maker with slightly more than $6 billion cash on hand.

Only Ford says that while the loan package is necessary for the betterment of the U.S.-based auto companies, it could withstand the downturn without government assistance.

The auto makers and the union sketched their companies' far-reaching impact. They also argued that Chrysler, Ford and GM are on the right track to compete with foreign-based auto makers, but that turmoil in the broader economy foiled their good planning. The companies together employ 239,000 people in the U.S.

Under pressure from senators over the issue of executive compensation, Chrysler's Mr. Nardelli said he would be willing to accept a salary of $1 a year as part of a federal bailout. Lee Iacocca made the same commitment when he ran Chrysler and secured federal loan guarantees in 1979. The chief executives of GM and Ford declined to make the same commitment.

The Banking Committee testimony is part of a broader lobbying campaign that includes parts suppliers and dealers. The executives will appear before the House Financial Services Committee Wednesday. All told, the companies are seeking $25 billion to weather the weakening economy, which has dampened demand for autos and restricted consumer access to home loans.

In another indication of the industry's problems, the world's three dominant credit insurers now consider the U.S. auto industry among the riskiest sectors for default.

Few lawmakers in either party doubt the economic challenges facing the Big Three. At issue is how -- and whether -- Congress should get involved.

Sen. Jim Bunning (R., Ky.) said a rescue proposal by Senate Democrats would give the industry "virtually a blank check," and doesn't require the companies to improve productivity and lower labor costs. "Major changes are needed, if federal dollars are to be made available," he said.

Sen. Richard Shelby (R., Ala.) said he has doubts about whether the money will be enough to meet the industry's needs: "Is this the end, or just the beginning?"

Industry supporters, such as Sen. Carl Levin (D., Mich.) want action this week. "The stakes are great and time is short," said Sen. Levin, who is scrambling to find the 60 votes needed to overcome objections in the Senate. Sen. Levin drafted the legislation that would set aside $25 billion to help the industry using bridge home loans.

To qualify, companies would have to accept limits on executive compensation, allow the government to take stock in the firms, and submit a detailed plan showing how they intend to return to sound financial footing and improve their capacity to produce fuel-efficient vehicles.

It wasn't clear whether Congress would demand management changes as a condition to any bailout, although the topic was on the minds of some lawmakers. Sen. Bob Bennett (R., Utah) predicted the jobs of hourly workers and executives are on the line as the industry restructures itself. "Everybody's going to get hurt in the process," he said, adding that the idea "that we in the Congress can prevent that from happening is wishful thinking."

The proposed assistance would be on top of $25 billion in already-approved home loans intended to help the industry retool to meet higher fuel-efficiency standards. The White House is pushing a rival plan to speed release of the previously approved home loans, by removing certain restrictions.

In testimony before the House Financial Services Committee, Treasury Secretary Henry Paulson said Tuesday the collapse of one of the auto companies "would be something to be avoided." But he said giving the industry access to the $700 billion fund isn't the answer. "I don't see this as the purpose" of the bailout program, he said.

Some Democrats aren't showing enthusiasm. Sen. Dianne Feinstein (D., Calif.) said she has problems with helping the industry without first receiving "a new business plan" that shows how the companies will return to competitiveness.

Sen. Jon Tester (D., Mont.) said the idea of additional government intervention isn't popular with voters: "People in Montana are experiencing bailout fatigue."