Wednesday October 31, 6:34 pm ET
By Tali Arbel, AP Business Writer
Dollar Slumps Against Euro, Pound, Canadian Dollar As Fed Announces Quarter-Point Rate Cut
NEW YORK (AP) -- The dollar skidded to a new low against the euro Wednesday while the British pound broke through $2.08 after the Federal Reserve lowered a key interest rate by a quarter percentage point to 4.5 percent.
The Canadian dollar bought more than $1.06 for the first time since 1957.
The 13-nation euro soared to $1.4503, its fourth new high in as many trading days, while the British pound bought $2.0813, after having hit a high of $2.0822 Wednesday.
The euro bought $1.4434 in New York late Tuesday, while the pound was worth $2.0679.
The Canadian currency was trading at $1.0571, or 94.60 Canadian cents, shortly after the announcement, above the 47-year high of $1.0510, or 95.15 Canadian cents, it hit Tuesday. The dollar bought 95.35 Canadian cents late Tuesday.
The dollar continued to plunge against the Canadian dollar in later trading, buying 94.16 Canadian cents. The Canadian dollar was worth $1.0620, the first time it broke through $1.06 in 50 years.
"The stock market is going to think very highly of this (rate cut), but it will continue to undermine the dollar," said Michael Woolfolk, senior currency strategist at the Bank of New York.
The Fed's statement was intended to signal a continued openness to cutting rates, while indicating that inflationary pressures made doing so risky, he said.
Although lower interest rates can jump-start an economy, they can also weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.
"Currency traders are not buying into the relative hawkishness cropping up in this month's statement," said Ashraf Laidi, chief currency analyst at CMC Markets U.S. "While the outlook for the Fed is between further rate cuts and no rate cuts ... rates will remain unchanged if not go up for foreign banks," he said, causing currency traders to drop the dollar.
The rate-cut announcement, while expected, drove the dollar down, even as new U.S. data showed the economy grew at a 3.9 percent pace in the third quarter, the fastest pace in 1 1/2 years.
A second report showed that construction spending rose 0.3 percent in September, the best showing in four months.
The euro, the Canadian dollar and the pound have been climbing steadily against the dollar, regularly touching new highs since August amid fears for the health of the U.S. economy, stoked by the subprime credit crisis.
The euro has been helped by sentiment that the European Central Bank has yet to finish a gradual campaign of rate increases, while the pound has benefited from expectations that the Bank of England will leave rates untouched rather than follow the Fed in cutting the cost of borrowing.
The Canadian dollar, a commodity-backed currency, has benefited as oil prices soared and demand for Canada's exports increases.
In other trading, the dollar rose against the Japanese currency, climbing to 115.31 yen from 114.77 yen Tuesday. However, the dollar slid against the Swiss franc to 1.1565 from 1.1600.
Wednesday, October 31, 2007
Fast Facts from California Association of Realtors
From C.A.R. Newsline, October 31, 2007
Calif. median home price - September 07:
$530,830
(Source: C.A.R.)
Calif. highest median home price by C.A.R. region September 07:
Santa Barbara So. Coast $1,667,500
(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region September 07:
High Desert $271,940
(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 07: 24 %
(Source: C.A.R.)
Mortgage rates - week ending 10/25:
30-yr. fixed: 6.33%; Fees/points: 0.5%
15-yr. fixed: 5.99%; Fees/points: 0.6%
1-yr. adjustable: 5.66%; Fees/points: 0.6%
(Source: Freddie Mac)
Calif. median home price - September 07:
$530,830
(Source: C.A.R.)
Calif. highest median home price by C.A.R. region September 07:
Santa Barbara So. Coast $1,667,500
(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region September 07:
High Desert $271,940
(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 07: 24 %
(Source: C.A.R.)
Mortgage rates - week ending 10/25:
30-yr. fixed: 6.33%; Fees/points: 0.5%
15-yr. fixed: 5.99%; Fees/points: 0.6%
1-yr. adjustable: 5.66%; Fees/points: 0.6%
(Source: Freddie Mac)
Press Release: Fed's Board of Governors
Release Date: October 31, 2007
The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/2 percent.
Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance. However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction. Today’s action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time.
Readings on core inflation have improved modestly this year, but recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric S. Rosengren; and Kevin M. Warsh. Voting against was Thomas M. Hoenig, who preferred no change in the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Richmond, Atlanta, Chicago, St. Louis, and San Francisco.
The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/2 percent.
Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance. However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction. Today’s action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time.
Readings on core inflation have improved modestly this year, but recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric S. Rosengren; and Kevin M. Warsh. Voting against was Thomas M. Hoenig, who preferred no change in the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Richmond, Atlanta, Chicago, St. Louis, and San Francisco.
Euro Touches 1.45 After FOMC
Wednesday, 31 October 2007 22:23:39 GMT
- Euro Touches 1.45 After FOMC
- USD/CAD at 50 Year Lows, Australian Dollar Headed for Parity
- ECB: Could they Raise Interest Rates?
- British pound hits 26 Year High
- Carry Trades Take Off After Fed Decision
The Federal Reserve cut interest rates by 25bp and the US dollar dropped to a new record low against the Euro and multi-decade lows against the British pound, Australian and Canadian dollars. The amount of easing was exactly what we expected, but the FOMC statement is being interpreted by different people as neutral or slightly hawkish. The Fed acknowledged that growth has picked up in the third quarter and warned that the recent increases in energy and commodity prices could put renewed upward pressure on inflation. However at the same time, they said that the upside risks to inflation roughly balance the downside risks to growth. The price action in the markets today suggests that traders do not believe today’s rate cut will be the Fed’s last. In fact, PIMCO’s Bill Gross told CNBC shortly after the rate decision that further cuts are needed for growth. According to the tone of the FOMC statement, the Fed is in no rush to cut rates, but they do leave the door open for further easing should it be needed.
Interestingly enough, the most profound US dollar weakness has been against the commodity currencies. Gold broke $800 and oil futures hit $95 a barrel in after hours trading. Against the Euro, British pound and Japanese Yen, the dollar ended the US trading session only slightly lower than its pre-FOMC levels. With non-farm payrolls due in less than 48 hours, further dollar weakness could be limited. Private sector payrolls increased 106,000 last month according to ADP. This was much stronger than expected and suggests that non-farm payrolls could be as high as 125k in the month of October. GDP growth in the third quarter was also the strongest since March 2006, which are all reasons why the US dollar could see some short term strength. Also the statement indicates that financial market conditions are just as important as economic conditions – so keep on top of what the Fed watches with our new weekly report. Not all news today was good. Chicago PMI dropped back into contractionary territory, foreshadowing a possible decline in ISM tomorrow. We are also expecting the Challenger layoffs report and jobless claims, both of which will shed more light on Friday’s payrolls. Don’t forget about personal income, personal spending and PCE; all potential market movers.
USD/CAD at 50 Year Lows, Australian Dollar Headed for Parity
The biggest beneficiaries of US dollar weakness today are the commodity currencies. The Australian dollar rose to a 23 year high and the Canadian dollar hit a 50 year high! Oil and gold prices are both higher while Canadian GDP was stronger than expected. We once again reiterate that no trend in the currency is as strong now as the downtrend in USD/CAD. With 95 cents behind us, the next logical target is 90 cents and $100 oil is exactly what will take us there. In after hours trading, crude oil futures surged above $95 a barrel. There is no reason to fade this move. Meanwhile, the Australian dollar will be in play tonight with PMI, retail sales and the trade balance due for release. We are looking for stronger spending and a narrower trade balance thanks to low unemployment and a strong currency. This coincides with our view that the Australian dollar will be the next currency to reach parity with the US dollar.
ECB: Could they Raise Interest Rates?
The Euro touched 1.45 but we have yet to hear a word of caution from the European Central Bank. Why? The answer is simple, inflation. Consumer prices in the month October jumped to a 2 year high of 2.6 percent, well above the central bank’s 2 percent target. Maintaining price stability has long been one of the ECB top priorities. Today’s CPI data illustrates the degree of price pressure that the Eurozone economy currently faces. The ECB needs a strong Euro to bring down inflation which is why they have not shown any major concern about the level of the currency. In fact, they could even be seriously considering raising interest rates. Yesterday, the central bank of Sweden raised rates by 25bp. Like the ECB, they were worried about growth and the impact of the global market turmoil, but at the same time inflationary pressures were such a concern that they opted to raise rates to the highest level in nearly 5 years. The ECB faces the same predicament and given the decision by Sweden, we would not be surprised to see a hike from the ECB as well. At bare minimum however, monetary policy will remain hawkish for the remainder of the year.
British Pound Hits 26 Year High
The British pound rose to a 26 year high on the back of broad dollar weakness and speculation that the housing market may not be in as much as trouble as everyone may have initially thought. According to Nationwide, tight supply drove house prices up 1.1 percent in October, the biggest rise in four months. Consumer confidence however has fallen to the lowest level since March, which signals potential troubles ahead for retail sales, but for British pound traders this has mattered little since demand for high yielding currencies and dollar strength or weakness seems to be the primary driver of the currency’s movements at the moment. Manufacturing PMI is due for release tomorrow. The recent strength of the British pound is expected to dampen manufacturing activity.
Carry Trades Take Off After Fed Decision
The Japanese Yen crosses were the best performing currency pairs in the market today. Stocks took a wild ride today, translating into equally volatile price action in the carry trades. The Bank of Japan left interest rates unchanged last night, which was right in line with expectations. They also lowered their growth forecasts from 2.1 percent down to 1.8 percent for 2007. Labor cash earnings were also weaker than expected, making the fundamental bias for the Japanese Yen very clear.
Source: DailyFX.com, Written by Kathy Lien, Chief Strategist
- Euro Touches 1.45 After FOMC
- USD/CAD at 50 Year Lows, Australian Dollar Headed for Parity
- ECB: Could they Raise Interest Rates?
- British pound hits 26 Year High
- Carry Trades Take Off After Fed Decision
The Federal Reserve cut interest rates by 25bp and the US dollar dropped to a new record low against the Euro and multi-decade lows against the British pound, Australian and Canadian dollars. The amount of easing was exactly what we expected, but the FOMC statement is being interpreted by different people as neutral or slightly hawkish. The Fed acknowledged that growth has picked up in the third quarter and warned that the recent increases in energy and commodity prices could put renewed upward pressure on inflation. However at the same time, they said that the upside risks to inflation roughly balance the downside risks to growth. The price action in the markets today suggests that traders do not believe today’s rate cut will be the Fed’s last. In fact, PIMCO’s Bill Gross told CNBC shortly after the rate decision that further cuts are needed for growth. According to the tone of the FOMC statement, the Fed is in no rush to cut rates, but they do leave the door open for further easing should it be needed.
Interestingly enough, the most profound US dollar weakness has been against the commodity currencies. Gold broke $800 and oil futures hit $95 a barrel in after hours trading. Against the Euro, British pound and Japanese Yen, the dollar ended the US trading session only slightly lower than its pre-FOMC levels. With non-farm payrolls due in less than 48 hours, further dollar weakness could be limited. Private sector payrolls increased 106,000 last month according to ADP. This was much stronger than expected and suggests that non-farm payrolls could be as high as 125k in the month of October. GDP growth in the third quarter was also the strongest since March 2006, which are all reasons why the US dollar could see some short term strength. Also the statement indicates that financial market conditions are just as important as economic conditions – so keep on top of what the Fed watches with our new weekly report. Not all news today was good. Chicago PMI dropped back into contractionary territory, foreshadowing a possible decline in ISM tomorrow. We are also expecting the Challenger layoffs report and jobless claims, both of which will shed more light on Friday’s payrolls. Don’t forget about personal income, personal spending and PCE; all potential market movers.
USD/CAD at 50 Year Lows, Australian Dollar Headed for Parity
The biggest beneficiaries of US dollar weakness today are the commodity currencies. The Australian dollar rose to a 23 year high and the Canadian dollar hit a 50 year high! Oil and gold prices are both higher while Canadian GDP was stronger than expected. We once again reiterate that no trend in the currency is as strong now as the downtrend in USD/CAD. With 95 cents behind us, the next logical target is 90 cents and $100 oil is exactly what will take us there. In after hours trading, crude oil futures surged above $95 a barrel. There is no reason to fade this move. Meanwhile, the Australian dollar will be in play tonight with PMI, retail sales and the trade balance due for release. We are looking for stronger spending and a narrower trade balance thanks to low unemployment and a strong currency. This coincides with our view that the Australian dollar will be the next currency to reach parity with the US dollar.
ECB: Could they Raise Interest Rates?
The Euro touched 1.45 but we have yet to hear a word of caution from the European Central Bank. Why? The answer is simple, inflation. Consumer prices in the month October jumped to a 2 year high of 2.6 percent, well above the central bank’s 2 percent target. Maintaining price stability has long been one of the ECB top priorities. Today’s CPI data illustrates the degree of price pressure that the Eurozone economy currently faces. The ECB needs a strong Euro to bring down inflation which is why they have not shown any major concern about the level of the currency. In fact, they could even be seriously considering raising interest rates. Yesterday, the central bank of Sweden raised rates by 25bp. Like the ECB, they were worried about growth and the impact of the global market turmoil, but at the same time inflationary pressures were such a concern that they opted to raise rates to the highest level in nearly 5 years. The ECB faces the same predicament and given the decision by Sweden, we would not be surprised to see a hike from the ECB as well. At bare minimum however, monetary policy will remain hawkish for the remainder of the year.
British Pound Hits 26 Year High
The British pound rose to a 26 year high on the back of broad dollar weakness and speculation that the housing market may not be in as much as trouble as everyone may have initially thought. According to Nationwide, tight supply drove house prices up 1.1 percent in October, the biggest rise in four months. Consumer confidence however has fallen to the lowest level since March, which signals potential troubles ahead for retail sales, but for British pound traders this has mattered little since demand for high yielding currencies and dollar strength or weakness seems to be the primary driver of the currency’s movements at the moment. Manufacturing PMI is due for release tomorrow. The recent strength of the British pound is expected to dampen manufacturing activity.
Carry Trades Take Off After Fed Decision
The Japanese Yen crosses were the best performing currency pairs in the market today. Stocks took a wild ride today, translating into equally volatile price action in the carry trades. The Bank of Japan left interest rates unchanged last night, which was right in line with expectations. They also lowered their growth forecasts from 2.1 percent down to 1.8 percent for 2007. Labor cash earnings were also weaker than expected, making the fundamental bias for the Japanese Yen very clear.
Source: DailyFX.com, Written by Kathy Lien, Chief Strategist
Oil Just Whiskers Below $100, but Can it Drive Canadian Dollar Beyond 90 Cents?
Wednesday, 31 October 2007 21:52:48 GMT
The Canadian dollar has recently rallied to fresh multi-decade heights against the US dollar, with record crude oil costs stoking strong demand for the Canadian currency. With the world’s second-largest proven oil reserves, Canada has undoubtedly benefitted from the commodity’s meteoric uptrend. Given the fact that it is the single-largest exporter of oil to the United States, it is little surprise that the US Dollar-Canadian dollar exchange rate has held a historically high correlation to the price of crude oil. However this correlation is waning, indicating that US dollar weakness is becoming a bigger driver of USD/CAD than just oil prices. Therefore it remains to be seen whether $100 oil will drive USD/CAD below 90 cents.
Source: DailyFX.com, Written by David Rodriguez, Currency Analyst
The Canadian dollar has recently rallied to fresh multi-decade heights against the US dollar, with record crude oil costs stoking strong demand for the Canadian currency. With the world’s second-largest proven oil reserves, Canada has undoubtedly benefitted from the commodity’s meteoric uptrend. Given the fact that it is the single-largest exporter of oil to the United States, it is little surprise that the US Dollar-Canadian dollar exchange rate has held a historically high correlation to the price of crude oil. However this correlation is waning, indicating that US dollar weakness is becoming a bigger driver of USD/CAD than just oil prices. Therefore it remains to be seen whether $100 oil will drive USD/CAD below 90 cents.
Source: DailyFX.com, Written by David Rodriguez, Currency Analyst
Lower Rates Drive Jump in Mortgage Applications
Daily Real Estate News October 31, 2007
Mortgage applications were up in response to the lowest 30-year mortgage rates since early May, according the Mortgage Bankers Association’s weekly mortgage applications survey, released Wednesday. The mortgage applications index rose by a seasonally adjusted 3.8 percent to 681.7 for the week ending Oct. 26. On an unadjusted basis, the index increased 3.6 percent compared with the previous week and was up 19.5 percent compared with the same week one year earlier. The refinance index jumped 9.2 percent to a seasonally adjusted 2,249 last week, rising to 49.6 percent of total mortgage activity. Mortgage rates were down in all categories:
Mortgage applications were up in response to the lowest 30-year mortgage rates since early May, according the Mortgage Bankers Association’s weekly mortgage applications survey, released Wednesday. The mortgage applications index rose by a seasonally adjusted 3.8 percent to 681.7 for the week ending Oct. 26. On an unadjusted basis, the index increased 3.6 percent compared with the previous week and was up 19.5 percent compared with the same week one year earlier. The refinance index jumped 9.2 percent to a seasonally adjusted 2,249 last week, rising to 49.6 percent of total mortgage activity. Mortgage rates were down in all categories:
- 30-year fixed-rate mortgages decreased to 6.15 percent from 6.21 percent.
- 15-year fixed-rate mortgages dropped to 5.79 from 5.86 percent.
- 1-year ARMs decreased to 5.93 from 6.1 percent.
Source: Reuters News and the Mortgage Bankers Association (10/31/07)
8 Tips for Investors Looking for Next Housing Gem
Daily Real Estate News October 31, 2007
The Minneapolis-based Real Estate Investors Association, a club for people interested in real estate investments, isn’t discouraged by the state of the housing market.Its members, who meet to ask questions and share advice, has grown from five to 100 over the last two years, despite the housing slowdown in some corners of the business."This is what buying low is all about," says Jason Cramer, a member who has turned his hobby into a career. He recently opened a business that buys and sells distressed properties.Here’s some advice from club members for potential investors:
The Minneapolis-based Real Estate Investors Association, a club for people interested in real estate investments, isn’t discouraged by the state of the housing market.Its members, who meet to ask questions and share advice, has grown from five to 100 over the last two years, despite the housing slowdown in some corners of the business."This is what buying low is all about," says Jason Cramer, a member who has turned his hobby into a career. He recently opened a business that buys and sells distressed properties.Here’s some advice from club members for potential investors:
- Buy in a familiar neighborhood, near where you live, work or go to college.
- Research the area thoroughly, identifying potential properties and other business opportunities.
- Observe trends, costs, vacancies, and potential appreciation.
- Assess your own skills. If you have to hire out maintenance, costs will hit the bottom line.
- Start small. A single-family home or a duplex is a good beginning.
- Plan to hold it for at least three years.
- Avoid foreclosed properties. They are complicated to buy and they aren’t a guaranteed deal.
- Be pre-approved for financing. Most investment property loans require at least 10 percent down.
- Remember, dealing with people is key, so hold onto your sense of humor.
Source: Star-Tribune, Lynn Underwood (10/20/07)
Tuesday, October 30, 2007
Top Commercial Markets for 2008
Daily Real Estate News October 30, 2007
Keep an eye on commercial real estate markets in metros that position themselves as 24-hour cities with a global pathway to international markets, says the Urban Land Institute (ULI) in a rating of the top commercial real estate markets for 2008. The hottest commercial real estate market in the country? New York City, where vacancies are in the mid-single digits and rents have skyrocketed. ULI dubs the Big Apple, “America’s 24-hour city.”
Prices for industrial and office space might be at an all time high, but according to the report “the weak dollar means the city’s ‘monster’ prices look cheap to foreign investors who are “pouring and parking money into Manhattan real estate.”
All the markets to watch have similar attributes to New York. All have a major international airport and/or shipping port and walkable residential neighborhoods.
Each has also “made a concerted effort revitalize downtown areas or close in urban hubs that make them magnets” for corporate headquarters, business elites, and a highly educated workforce and also capotes the largest share of investor dollars, says ULI in their annual report, Emerging Trends in Real Estate.
Seattle, where a concentration of mixed use development draws residents to new downtown neighborhoods, is another standout. A strong and highly diversified economy resulting from a large number of corporate headquarters and the city’s position as an important hub on Asian commerce routes contribute to its top ranking on the commercial markets to watch.
Other top commercial markets to watch, according to ULI, are:
Washington, D. C. “The government never stops and the ever churning Washington real estate market cushions against abrupt downturns,” concludes the report.
Los Angeles. Office markets in Orange Country might be softening but ULI says those in West LA have never been stronger. LA/Long Beach remains the nation’s top port
San Francisco. A resurgence of technology business is propelling the market in this city. View space commands over $1,000 a square foot.
Boston. Investors are keeping a close eye on this market, says ULI, even though new industries recycle office spaces left vacant by recent corporate headquarters departures
San Diego. “A leading indicator for a market correction,” says ULI.
Denver. A retooled downtown has created what ULI calls an “urban burb,” a hip and exciting urban core in the midst of a sprawling suburban area connected to downtown via light rail.
Smaller markets to watch include: San Jose, Calif.; Honolulu, Hawaii; Austin, Texas; Raleigh-Durham and Charlotte, N.C.; Portland, Ore.; Sacramento, Calif.; Las Vegas, N.V.; Orlando and Tampa, Fla; Salt Lake City, Utah, Jacksonville, Fla.; Nashville, Tenn.; and Minneapolis, Minn.
— By Camilla McLaughlin for REALTOR® Magazine Online
Keep an eye on commercial real estate markets in metros that position themselves as 24-hour cities with a global pathway to international markets, says the Urban Land Institute (ULI) in a rating of the top commercial real estate markets for 2008. The hottest commercial real estate market in the country? New York City, where vacancies are in the mid-single digits and rents have skyrocketed. ULI dubs the Big Apple, “America’s 24-hour city.”
Prices for industrial and office space might be at an all time high, but according to the report “the weak dollar means the city’s ‘monster’ prices look cheap to foreign investors who are “pouring and parking money into Manhattan real estate.”
All the markets to watch have similar attributes to New York. All have a major international airport and/or shipping port and walkable residential neighborhoods.
Each has also “made a concerted effort revitalize downtown areas or close in urban hubs that make them magnets” for corporate headquarters, business elites, and a highly educated workforce and also capotes the largest share of investor dollars, says ULI in their annual report, Emerging Trends in Real Estate.
Seattle, where a concentration of mixed use development draws residents to new downtown neighborhoods, is another standout. A strong and highly diversified economy resulting from a large number of corporate headquarters and the city’s position as an important hub on Asian commerce routes contribute to its top ranking on the commercial markets to watch.
Other top commercial markets to watch, according to ULI, are:
Washington, D. C. “The government never stops and the ever churning Washington real estate market cushions against abrupt downturns,” concludes the report.
Los Angeles. Office markets in Orange Country might be softening but ULI says those in West LA have never been stronger. LA/Long Beach remains the nation’s top port
San Francisco. A resurgence of technology business is propelling the market in this city. View space commands over $1,000 a square foot.
Boston. Investors are keeping a close eye on this market, says ULI, even though new industries recycle office spaces left vacant by recent corporate headquarters departures
San Diego. “A leading indicator for a market correction,” says ULI.
Denver. A retooled downtown has created what ULI calls an “urban burb,” a hip and exciting urban core in the midst of a sprawling suburban area connected to downtown via light rail.
Smaller markets to watch include: San Jose, Calif.; Honolulu, Hawaii; Austin, Texas; Raleigh-Durham and Charlotte, N.C.; Portland, Ore.; Sacramento, Calif.; Las Vegas, N.V.; Orlando and Tampa, Fla; Salt Lake City, Utah, Jacksonville, Fla.; Nashville, Tenn.; and Minneapolis, Minn.
— By Camilla McLaughlin for REALTOR® Magazine Online
Housing Downturn Turns Up
By Lauren Baier Kim
Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)
Sellers turn to home staging in sluggish market
As the housing market continues to slow, more home sellers are turning to home staging -- the art of preparing and decorating a home for sale -- to speed sales, according to recent news articles.
In Seattle, where the number of homes on the market was 50% higher in September than it was a year ago, staging used to be a tactic sellers would use to get a better price for a home, says the Seattle Post-Intelligencer. But today, as the housing market slows, if a home is not well presented and photographed, it may not sell at all, the newspaper says.
"The houses that are selling are the ones that are impeccable and priced right," the Post-Intelligencer quotes a local real-estate agent as saying.
In Baltimore, more real-estate agents facing slow sales are "pinching pennies and staging the homes themselves," says an agent in a Baltimore Sun story. When staging a home, she rents the items she needs, or uses furnishings and decor that she has purchased for that purpose, that agent says. Depending on the cost of the staging, she may or may not pass the costs along to the seller, she says.
When staging a home for sale, be sure to clean it thoroughly, remove clutter and get a second opinion about the appeal of your home's furnishings, paint and wallpaper. Also consider renting new furniture if yours is too out of date or worn, and make sure the home is well-lit, the Baltimore Sun recommends.
Investors move in on foreclosed properties
Some real-estate investors are looking to profit from the housing market's downturn.
In the Washington Post, columnist Kenneth R. Harney writes that investment groups are "searching for fire-sale prices on properties with good long-term prospects," and will rent or resell the units when the market appears to be recovering. "Call them grave dancers, vulture funds, turnaround specialists or the more euphemistic 'opportunity investors.' However you identify them, the deal is the same: When hyperactive real-estate markets lose their sizzle, or property owners no longer can afford to hang on to their houses, well-capitalized investors smell blood and move in," he writes.
Membership is up at one Minneapolis real-estate investment club, profiled in this story in the Minneapolis Star-Tribune. "Some members say that with 10.47 homes on the market for each active buyer, according to the Minneapolis Area Association of Realtors, and the median sale price in the Twin Cities metro area falling, now is a good time to be an investor," the paper writes. The club offers classes on investing and networking meetings, and for many members it's a place to go and learn from other investors' mistakes, the Star-Tribune says.
Retirement hot spots at a discount
The housing downturn isn't all negative. Thanks to the housing market slowdown, big discounts can be found in formerly pricey enclaves, says BusinessWeek.com. The Web site has picked four retirement locales whose prices have cooled enough to create real-estate deals for savvy buyers. (But the Web site's picks should be tempered with the caveat that the smartest purchases in these markets would be ones for the long-term, since prices may fall some more in these locales before there's a recovery.)
Among the Web site's picks are Bend, Ore., which sports mountain views and a mild year-round climate. The town gained popularity in the 1990s and prices soared, but now, with a 15-month inventory of homes on the market, buyers have room to negotiate. For instance, one local home, first listed for $579,000 in February, has sunk to $439,000, BusinessWeek.com says.
In San Diego, foreclosures and excess inventory from home builders are forcing prices downward. Median home prices in the area hit $622,000 in May 2006 and are now down to $595,000, the Web site says.
A similar situation has developed in Miami. Speculation was the name of the game there during the housing boom, causing builders to build excess inventory, and investors to invest in local real estate. But with housing prices falling, many investors are walking away from their deposits, BusinessWeek.com says. As a result, area listings remain on the market for months -- such as a beach-view condominium whose price has dropped from $899,000 to $765,000, furnished, the Web site says.
Also making BusinessWeek.com's list is Sun City Carolina Lakes, a Del Webb Corp. retirement community that's 18 miles south of Charlotte, S.C. To attract buyers, the developer has been offering incentives like free golf carts and upgraded landscaping.
Another plus for relocating retirees? People 65 or older do not have to pay taxes on the first $50,000 of their home's assessed value, BusinessWeek.com says.
Rents on the rise
The housing market's troubles has been a boon for landlords as an unstable housing market and tougher lending standards lead people to choose renting a home over buying one, according to several recent articles.
In the third quarter, larger apartment complexes in California have seen their average rental rate increase 5.6% from a year earlier to $1,413 a month, says the Los Angeles Times. The highest rent increases were seen in the San Francisco Bay Area, where rental rates rose 12.2% in Santa Clara County from a year earlier, the Times says. The most expensive rental areas in the state remain Los Angeles and Orange counties, where the average rent increased 5.2% from the year before to $1,630, according to the newspaper.
Meanwhile, the Seattle Times reports that monthly rents in Seattle jumped 10.7% in September from the year before to $1,057, and in Salt Lake City, rents rose 9.7% in September from the year before to $769, the Seattle Times says. The newspaper notes that Tucson, Ariz., which saw a rent increase of 3.1% for the same time period, had average rents of only $662 a month in September.
And Cincinnati's Enquirer.com says that while there have been some rental rate increases in Greater Cincinnati and Northern Kentucky, they have been relatively small -- with effective rents (the price actually paid by tenants) increasing 2.4% over the last year, reaching $645 a month in the third quarter.
-- Lydia Serota contributed to the article.
The RealEstateJournal, October 24, 2007
Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)
Sellers turn to home staging in sluggish market
As the housing market continues to slow, more home sellers are turning to home staging -- the art of preparing and decorating a home for sale -- to speed sales, according to recent news articles.
In Seattle, where the number of homes on the market was 50% higher in September than it was a year ago, staging used to be a tactic sellers would use to get a better price for a home, says the Seattle Post-Intelligencer. But today, as the housing market slows, if a home is not well presented and photographed, it may not sell at all, the newspaper says.
"The houses that are selling are the ones that are impeccable and priced right," the Post-Intelligencer quotes a local real-estate agent as saying.
In Baltimore, more real-estate agents facing slow sales are "pinching pennies and staging the homes themselves," says an agent in a Baltimore Sun story. When staging a home, she rents the items she needs, or uses furnishings and decor that she has purchased for that purpose, that agent says. Depending on the cost of the staging, she may or may not pass the costs along to the seller, she says.
When staging a home for sale, be sure to clean it thoroughly, remove clutter and get a second opinion about the appeal of your home's furnishings, paint and wallpaper. Also consider renting new furniture if yours is too out of date or worn, and make sure the home is well-lit, the Baltimore Sun recommends.
Investors move in on foreclosed properties
Some real-estate investors are looking to profit from the housing market's downturn.
In the Washington Post, columnist Kenneth R. Harney writes that investment groups are "searching for fire-sale prices on properties with good long-term prospects," and will rent or resell the units when the market appears to be recovering. "Call them grave dancers, vulture funds, turnaround specialists or the more euphemistic 'opportunity investors.' However you identify them, the deal is the same: When hyperactive real-estate markets lose their sizzle, or property owners no longer can afford to hang on to their houses, well-capitalized investors smell blood and move in," he writes.
Membership is up at one Minneapolis real-estate investment club, profiled in this story in the Minneapolis Star-Tribune. "Some members say that with 10.47 homes on the market for each active buyer, according to the Minneapolis Area Association of Realtors, and the median sale price in the Twin Cities metro area falling, now is a good time to be an investor," the paper writes. The club offers classes on investing and networking meetings, and for many members it's a place to go and learn from other investors' mistakes, the Star-Tribune says.
Retirement hot spots at a discount
The housing downturn isn't all negative. Thanks to the housing market slowdown, big discounts can be found in formerly pricey enclaves, says BusinessWeek.com. The Web site has picked four retirement locales whose prices have cooled enough to create real-estate deals for savvy buyers. (But the Web site's picks should be tempered with the caveat that the smartest purchases in these markets would be ones for the long-term, since prices may fall some more in these locales before there's a recovery.)
Among the Web site's picks are Bend, Ore., which sports mountain views and a mild year-round climate. The town gained popularity in the 1990s and prices soared, but now, with a 15-month inventory of homes on the market, buyers have room to negotiate. For instance, one local home, first listed for $579,000 in February, has sunk to $439,000, BusinessWeek.com says.
In San Diego, foreclosures and excess inventory from home builders are forcing prices downward. Median home prices in the area hit $622,000 in May 2006 and are now down to $595,000, the Web site says.
A similar situation has developed in Miami. Speculation was the name of the game there during the housing boom, causing builders to build excess inventory, and investors to invest in local real estate. But with housing prices falling, many investors are walking away from their deposits, BusinessWeek.com says. As a result, area listings remain on the market for months -- such as a beach-view condominium whose price has dropped from $899,000 to $765,000, furnished, the Web site says.
Also making BusinessWeek.com's list is Sun City Carolina Lakes, a Del Webb Corp. retirement community that's 18 miles south of Charlotte, S.C. To attract buyers, the developer has been offering incentives like free golf carts and upgraded landscaping.
Another plus for relocating retirees? People 65 or older do not have to pay taxes on the first $50,000 of their home's assessed value, BusinessWeek.com says.
Rents on the rise
The housing market's troubles has been a boon for landlords as an unstable housing market and tougher lending standards lead people to choose renting a home over buying one, according to several recent articles.
In the third quarter, larger apartment complexes in California have seen their average rental rate increase 5.6% from a year earlier to $1,413 a month, says the Los Angeles Times. The highest rent increases were seen in the San Francisco Bay Area, where rental rates rose 12.2% in Santa Clara County from a year earlier, the Times says. The most expensive rental areas in the state remain Los Angeles and Orange counties, where the average rent increased 5.2% from the year before to $1,630, according to the newspaper.
Meanwhile, the Seattle Times reports that monthly rents in Seattle jumped 10.7% in September from the year before to $1,057, and in Salt Lake City, rents rose 9.7% in September from the year before to $769, the Seattle Times says. The newspaper notes that Tucson, Ariz., which saw a rent increase of 3.1% for the same time period, had average rents of only $662 a month in September.
And Cincinnati's Enquirer.com says that while there have been some rental rate increases in Greater Cincinnati and Northern Kentucky, they have been relatively small -- with effective rents (the price actually paid by tenants) increasing 2.4% over the last year, reaching $645 a month in the third quarter.
-- Lydia Serota contributed to the article.
The RealEstateJournal, October 24, 2007
Monday, October 29, 2007
Euro hits new high against dollar
By MATT MOORE
FRANKFURT, Germany
The euro crept steadily higher against the dollar, reaching a new record and then continuing its climb in morning European trading on Monday, as markets looked for signals from the U.S. Federal Reserve about a likely rate cut this week.
The 13-nation euro opened at $1.4428, besting its previous high of $1.4393 on Friday in New York and then proceeded to climb to $1.4438 in midmorning trading, before falling back to $1.4430 -- well above the $1.4385 it bought in late New York trading on Friday.
The euro has been climbing steadily against the euro all year, soaring to new highs almost weekly since August on the back of market fears over the U.S. economy's health because of the subprime credit crisis and increasingly disappointing economic reports.
But the euro's rise, which makes goods from the U.S. much cheaper to buy and shopping for U.S.-bound tourists ideal, can hurt exports from countries that use the euro, particularly Germany and France.
Earlier this month, a survey looking at German investor confidence showed strong concern about exports. The strength of the euro risks making European exports less competitive.
The dollar was also hampered over the weekend as prices for oil surged breached $93 and gold futures hit their highest price since January 1980, $780 per ounce.
That, coupled with the Fed's meeting on Wednesday and market expectations that it may cut interest rates from 4.75 percent, has driven the dollar lower against most major currencies, including the British pound and the Japanese yen.
In trading Monday, one British pound bought $2.0566 compared with $2.0521 on Friday while the dollar was down against the yen, dipping to 114.19 yen from 114.22 yen on Friday.
"Following a series of hawkish speeches by Fed officials during the last week and disappointing housing numbers, we are convinced that the Fed is inclined to cut rates again," HVB/UniCredit economists Harm Bandholz and Davide Stroppa wrote in an investment note on Monday, adding that they expect a rate cut of a quarter of a percent.
Although lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.
The Associated Press October 29, 2007, 6:20AM ET, BusinessWeek
FRANKFURT, Germany
The euro crept steadily higher against the dollar, reaching a new record and then continuing its climb in morning European trading on Monday, as markets looked for signals from the U.S. Federal Reserve about a likely rate cut this week.
The 13-nation euro opened at $1.4428, besting its previous high of $1.4393 on Friday in New York and then proceeded to climb to $1.4438 in midmorning trading, before falling back to $1.4430 -- well above the $1.4385 it bought in late New York trading on Friday.
The euro has been climbing steadily against the euro all year, soaring to new highs almost weekly since August on the back of market fears over the U.S. economy's health because of the subprime credit crisis and increasingly disappointing economic reports.
But the euro's rise, which makes goods from the U.S. much cheaper to buy and shopping for U.S.-bound tourists ideal, can hurt exports from countries that use the euro, particularly Germany and France.
Earlier this month, a survey looking at German investor confidence showed strong concern about exports. The strength of the euro risks making European exports less competitive.
The dollar was also hampered over the weekend as prices for oil surged breached $93 and gold futures hit their highest price since January 1980, $780 per ounce.
That, coupled with the Fed's meeting on Wednesday and market expectations that it may cut interest rates from 4.75 percent, has driven the dollar lower against most major currencies, including the British pound and the Japanese yen.
In trading Monday, one British pound bought $2.0566 compared with $2.0521 on Friday while the dollar was down against the yen, dipping to 114.19 yen from 114.22 yen on Friday.
"Following a series of hawkish speeches by Fed officials during the last week and disappointing housing numbers, we are convinced that the Fed is inclined to cut rates again," HVB/UniCredit economists Harm Bandholz and Davide Stroppa wrote in an investment note on Monday, adding that they expect a rate cut of a quarter of a percent.
Although lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.
The Associated Press October 29, 2007, 6:20AM ET, BusinessWeek
Buyers Remorse Strikes Florida Condo Speculators
Daily Real Estate News: October 25, 2007
Buyers Remorse Strikes Florida Condo SpeculatorsAs many as 60 percent of buyers who signed a contract in 2005 to buy a new condo in Florida would now like to wiggle out of the deal, estimates Gary Poliakoff, an attorney who represents a dozen South Florida developers in a variety of suits filed by reluctant buyers.John Mike, chairman of the REALTORS® Association of the Palm Beaches, said people who had no intention of living in their properties are filing the suits."A lot of those condos were bought by speculators with the same business plans--to flip their properties--and unfortunately that has created a glut of units. Now we're seeing a large number or people trying to get their money back by hiring lawyers," Mike says. Most of the lawsuits filed in Florida since the real estate market downturn still are making their way through the courts. They typically seek redress for what the court papers describe as fraud: inducement, negligent misrepresentation and breach of contract. Other cases hinge on technicalities. A suit in Broward County Circuit Court seeks an injunction to prevent a condo from closing because developers failed to comply with a federal law that requires them to register their developments with the U.S. Department of Housing and Urban Development. "The claims and the suits are, namely, a means for an end for investor-buyers to get out of deals where they weren't able to realize the profits they expected, but it doesn't mean the reasons are legitimate," Poliakoff says.
Source: South Florida Sun-Sentinel, Jennifer Gollan (10/24/2007)
Buyers Remorse Strikes Florida Condo SpeculatorsAs many as 60 percent of buyers who signed a contract in 2005 to buy a new condo in Florida would now like to wiggle out of the deal, estimates Gary Poliakoff, an attorney who represents a dozen South Florida developers in a variety of suits filed by reluctant buyers.John Mike, chairman of the REALTORS® Association of the Palm Beaches, said people who had no intention of living in their properties are filing the suits."A lot of those condos were bought by speculators with the same business plans--to flip their properties--and unfortunately that has created a glut of units. Now we're seeing a large number or people trying to get their money back by hiring lawyers," Mike says. Most of the lawsuits filed in Florida since the real estate market downturn still are making their way through the courts. They typically seek redress for what the court papers describe as fraud: inducement, negligent misrepresentation and breach of contract. Other cases hinge on technicalities. A suit in Broward County Circuit Court seeks an injunction to prevent a condo from closing because developers failed to comply with a federal law that requires them to register their developments with the U.S. Department of Housing and Urban Development. "The claims and the suits are, namely, a means for an end for investor-buyers to get out of deals where they weren't able to realize the profits they expected, but it doesn't mean the reasons are legitimate," Poliakoff says.
Source: South Florida Sun-Sentinel, Jennifer Gollan (10/24/2007)
Forecasters Predict Drop in Commercial Market
National Association of Realtors
Realtor Magazine Online
Daily Real Estate News October 26, 2007
Business has been good in the multifamily and commercial segments, even though single-family home construction has been in the pits. Now McGraw-Hill 2008 Construction Outlook forecasts a drop in commercial construction, fueled by tighter lending and weaker job growth."The credit crunch that emerged at mid-2007 continues to be a major concern for construction and the overall economy," says Robert A. Murray, Vice President, Economic Affairs, McGraw-Hill Construction. "As a result, we're now predicting downturns in the previously resilient multifamily and commercial segments, as well as continued weakness in single-family home construction."The forecast wasn’t all bleak. Transportation projects are expected to grow moderately, including infrastructure maintenance and upgrades, particularly in the aftermath of the bridge collapse in Minneapolis. Iinstitutional building, including school construction, is expected to strengthen again after its 2007 pause, and transportation terminals are also expected to grow.
Source: McGraw-Hill Construction (10/25/2007)
Realtor Magazine Online
Daily Real Estate News October 26, 2007
Business has been good in the multifamily and commercial segments, even though single-family home construction has been in the pits. Now McGraw-Hill 2008 Construction Outlook forecasts a drop in commercial construction, fueled by tighter lending and weaker job growth."The credit crunch that emerged at mid-2007 continues to be a major concern for construction and the overall economy," says Robert A. Murray, Vice President, Economic Affairs, McGraw-Hill Construction. "As a result, we're now predicting downturns in the previously resilient multifamily and commercial segments, as well as continued weakness in single-family home construction."The forecast wasn’t all bleak. Transportation projects are expected to grow moderately, including infrastructure maintenance and upgrades, particularly in the aftermath of the bridge collapse in Minneapolis. Iinstitutional building, including school construction, is expected to strengthen again after its 2007 pause, and transportation terminals are also expected to grow.
Source: McGraw-Hill Construction (10/25/2007)
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