More than just real estate.
Sprawl to meet its limit in Atlanta
By Christopher B. Leinberger
From News Services
Wednesday, November 05, 2008
I have been coming to Atlanta for 35 years, consulting for the likes of Trammel Crow Residential, Cousins Properties and Carter and Associates, and I have witnessed one of the most remarkable metropolitan transformations in the country. Those changes led me to remark in a speech in the 1990s that metropolitan Atlanta was the fastest-growing human settlement in history regarding land consumption.
This phenomenal growth has been in all four cardinal directions but particularly to the north, up I-75, Ga. 400 and I-85. This northern thrust is in the heart of the “favored quarter,” that 90-degree arc coming out from downtown that has been the focus of the vast majority of growth in Atlanta, just as it is in every metropolitan area in the country.
However, this development pattern is changing.
The underlying population and employment growth will continue —- well above national rates. However, where that growth will locate is evolving.
We are witnessing the beginning of the end of sprawl. Like much of the rest of the country, the overproduction of automobile-driven suburban development at the fringe of the Atlanta metropolitan area has reached its limits. The combination of outrageous commutes, environmental degradation and the increasing number of consumers preferring a “walkable urban” way of life have combined to start the end of the geometric increase in land consumption of the past half century.
The subprime crisis and the energy price spike of the past 18 months have just accelerated an underlying market trend.
Evidence of this structural change comes from many sources:
> The city of Atlanta had been losing population since 1960 in spite of rapid metropolitan growth. That changed in the 1990s and has phenomenally accelerated this decade. The city is now among the top 10 fastest-growing cities in the country.
> The city of Atlanta’s share of office market demand had been falling for at least a half century; it stabilized a couple of years ago. If you follow trends from other metro areas that are ahead of Atlanta, the office market share and the employment that comes with it should start gaining on the suburbs during the next upturn.
> While the national housing depression has not affected metro Atlanta quite as badly as many other regions, it has followed national trends in one important respect: Homes in the center of the region and close to job centers have not suffered much, if any, price declines. Prices on the fringe are down twice the regional average, losing on average at least 14 percent of value. The highest-price housing on a per-square-foot basis is now in the city and close-in suburban job centers, a fundamental change from 20 years ago.
Metro Atlanta is following a national trend in creating and growing high-density, walkable urban places. The two-week party that was the Olympics in 1996 first showed you how exciting a temporary walkable urban place could be, and you set out to make it permanent over the subsequent decade.
But it definitely is not confined to downtown.
Midtown, Atlantic Station, Virginia-Highland, Buckhead, Vinings and Decatur have also emerged as walkable urban places. There will be many more.
The metro area that has the most walkable urban places, per capita, is the region surrounding Washington. It has 20 such urban communities today and 10 more are emerging; 20 years ago there were just two. Given that metro Atlanta has exactly the same population as metro Washington, if you follow the Washington model, you will be growing 15 to 25 more walkable urban places in the next decade. This represents tens of billions of dollars in investment over the next decade and will be home to thousands of jobs and housing.
But where will they be? Follow the MARTA rail and other planned rail lines, such as the Beltline. Ninety percent of Washington’s 30 current and emerging walkable urban places are served by rail transit.
However, these walkable urban places will not all locate in Atlanta. The experience in Washington and other metropolitan areas indicates that the majority of these places will be in the inner suburbs and job centers. Think of places such as Alpharetta, Doraville, Norcross and Smyrna.
There will be losers. Certain fringe, drivable-only suburbs will find themselves too far out and unaffordable to drive there and back for every trip from the house. The emerging demographic trends show that the vast majority of households created over the next 20 years will be singles and couples. Most of these households will eschew the Ozzie and Harriett houses on the fringe, preferring the many options offered that are walkable or a close transit ride away from home. The end of the “drive until you qualify” housing will mean Atlanta needs a conscious strategy to provide work force and affordable housing.
Yet on balance, more walkable, urban centers in metro Atlanta will have many environmental, financial and social benefits. It may hurt certain households on the fringe, but its societal and family benefits far outweigh the costs. In any case, it is what the market is demanding.
> Christopher B. Leinberger is a visiting fellow at the Brookings Institution, a professor at the University of Michigan and a real estate developer. He is author of “The Option of Urbanism: Investing in a New American Dream.” Sarah Kirsch of the Atlanta office of RCLCO, a real estate advisory firm, helped compile local data.
Sunday, December 14, 2008
Wednesday, November 26, 2008
Atlanta Real Estate Investor
More than just real estate.
Now that we are happy that interest rates are on the way down from an already reasonably low level, we can all ponder why am I not investing in Real Estate? after all we are hearing every day that this is the best time to be a buyer or an investor in Atlanta Real Estate.
Let take some advice from someone who is an Atlanta Investor, John Adams, the guru of Atlanta Real Estate.
Real Estate Investments Yield Income on a Monthly Basis
One of the questions I am most frequently asked is this: In a world of financial opportunities as diverse as it has ever been, why would anyone want to invest directly in rental real estate? It’s a good question, and one that deserves a response.
And because I have owned and managed residential real estate for more than thirty years, it’s hard for me to relate to the question. I admit that I eat, sleep, and breathe rental houses, and it’s been that way for a long time. But I do keep up with alternative opportunities, so I think I can be objective.
As a preface, I question the use of the word "investment" as it applies to residential real estate. The act of investing has been defined as "the laying out of capital in an enterprise with the expectation of profit," and that sounds fairly passive. Most people who think of investing in something don’t expect to have to work at their investment.
For example, when you buy 100 shares of stock in a company, you have made a decision to leave the management and direction of that company to the board of directors. Not only that, the board of directors is not likely interested in your opinions on which way the company should move.
Instead, you pay cash for the stock and hope for dividends. In addition, it is hoped that the stock will, over time, go up in value. Typically, there is nothing you can do to personally affect the company performance. That is a passive investment.
Residential real estate is different. It requires some level of personal attention to make it successful.
Some people have described ownership of rental real estate as a second job, and there is definitely a "hands-on" component. But management of a rental house can be delegated to a property manager or a real estate professional, so you can minimize the owner’s day to day involvement.
Even so, I consider rental houses to be an active investment.
Once you have gotten past the basic management difference between real estate and other investments, the true major benefit of real estate becomes clear.
It is income. Rental real estate generates income. That income arrives in the form of monthly rental payments, and can begin on the first day of ownership and continue indefinitely.
Some critics would say that, in a low interest rate environment, many of those who have rented in the past have moved out of rental property and purchased homes of their own. And while that is true, the fact remains that more than one-quarter of all households in this country pay rent every month.
In recent years, our government set of goal of increasing home ownership, and we have seen a strong increase in first time home buyers. But that rate now stands at 77 percent, and further advances are increasingly difficult. Those who rent today either choose to do so for the sake of convenience, or find loan approval much more difficult as a result of income or credit issues.
And with home prices advancing faster than wages, along with recent interest rate increases, it is likely to become harder for first time buyers in the future, not easier.
The remarkable thing about the income that can be generated by residential real estate is that the income can pay for the investment.
To my knowledge, there is no other mainstream investment that the average person can buy which requires little cash up front and pays for itself over time. And that’s because lenders have found that lending a large percentage of a home’s purchase price is usually a safe bet.
The ability to easily borrow a large portion of a home’s purchase price is called leverage, and is another key advantage of real estate.
Many homeowners become landlords when they need to move to their next house and are unable (or unwilling) to sell their current residence. Rather than sell for a reduced price, they may decide to rent, simply to cover the payments. This is a viable alternative for many owners.
If you decided to move around in metro Atlanta every two or three years, and keep your old house every time you move, you could build up quite a portfolio. And there is effectively no limit to the number of times you could repeat this procedure over a period of years.
Government subsidies of the home lending industry make it possible to borrow almost the entire purchase price at relatively good rates, which are locked in for as long as thirty years. And this type of financing is simply not available to any other investment.
The combination of income and leverage creates a powerful opportunity which requires little cash in the beginning, then produces income to cover payments over the life of the investment.
This type of self-sustaining model is simply not available for mainstream investments like the stock market, precious metals, or bonds. Instead, real estate has unique advantages which make it extremely attractive to the investor who understands the risks involved.
John Adams Money99.com
Now that we are happy that interest rates are on the way down from an already reasonably low level, we can all ponder why am I not investing in Real Estate? after all we are hearing every day that this is the best time to be a buyer or an investor in Atlanta Real Estate.
Let take some advice from someone who is an Atlanta Investor, John Adams, the guru of Atlanta Real Estate.
Real Estate Investments Yield Income on a Monthly Basis
One of the questions I am most frequently asked is this: In a world of financial opportunities as diverse as it has ever been, why would anyone want to invest directly in rental real estate? It’s a good question, and one that deserves a response.
And because I have owned and managed residential real estate for more than thirty years, it’s hard for me to relate to the question. I admit that I eat, sleep, and breathe rental houses, and it’s been that way for a long time. But I do keep up with alternative opportunities, so I think I can be objective.
As a preface, I question the use of the word "investment" as it applies to residential real estate. The act of investing has been defined as "the laying out of capital in an enterprise with the expectation of profit," and that sounds fairly passive. Most people who think of investing in something don’t expect to have to work at their investment.
For example, when you buy 100 shares of stock in a company, you have made a decision to leave the management and direction of that company to the board of directors. Not only that, the board of directors is not likely interested in your opinions on which way the company should move.
Instead, you pay cash for the stock and hope for dividends. In addition, it is hoped that the stock will, over time, go up in value. Typically, there is nothing you can do to personally affect the company performance. That is a passive investment.
Residential real estate is different. It requires some level of personal attention to make it successful.
Some people have described ownership of rental real estate as a second job, and there is definitely a "hands-on" component. But management of a rental house can be delegated to a property manager or a real estate professional, so you can minimize the owner’s day to day involvement.
Even so, I consider rental houses to be an active investment.
Once you have gotten past the basic management difference between real estate and other investments, the true major benefit of real estate becomes clear.
It is income. Rental real estate generates income. That income arrives in the form of monthly rental payments, and can begin on the first day of ownership and continue indefinitely.
Some critics would say that, in a low interest rate environment, many of those who have rented in the past have moved out of rental property and purchased homes of their own. And while that is true, the fact remains that more than one-quarter of all households in this country pay rent every month.
In recent years, our government set of goal of increasing home ownership, and we have seen a strong increase in first time home buyers. But that rate now stands at 77 percent, and further advances are increasingly difficult. Those who rent today either choose to do so for the sake of convenience, or find loan approval much more difficult as a result of income or credit issues.
And with home prices advancing faster than wages, along with recent interest rate increases, it is likely to become harder for first time buyers in the future, not easier.
The remarkable thing about the income that can be generated by residential real estate is that the income can pay for the investment.
To my knowledge, there is no other mainstream investment that the average person can buy which requires little cash up front and pays for itself over time. And that’s because lenders have found that lending a large percentage of a home’s purchase price is usually a safe bet.
The ability to easily borrow a large portion of a home’s purchase price is called leverage, and is another key advantage of real estate.
Many homeowners become landlords when they need to move to their next house and are unable (or unwilling) to sell their current residence. Rather than sell for a reduced price, they may decide to rent, simply to cover the payments. This is a viable alternative for many owners.
If you decided to move around in metro Atlanta every two or three years, and keep your old house every time you move, you could build up quite a portfolio. And there is effectively no limit to the number of times you could repeat this procedure over a period of years.
Government subsidies of the home lending industry make it possible to borrow almost the entire purchase price at relatively good rates, which are locked in for as long as thirty years. And this type of financing is simply not available to any other investment.
The combination of income and leverage creates a powerful opportunity which requires little cash in the beginning, then produces income to cover payments over the life of the investment.
This type of self-sustaining model is simply not available for mainstream investments like the stock market, precious metals, or bonds. Instead, real estate has unique advantages which make it extremely attractive to the investor who understands the risks involved.
John Adams Money99.com
Hurrah, Interest rates going down
More than just real estate.
Well we now have a new President elect, who is currently choosing his cabinet in double quick time.
But what else is happening out there to help with the financial stress in the Real Estate market?
The newly announced Federal Government Plan is an Important Move for Real Estate
Following the Fed’s announcement of its plans to buy up to $600 billion in mortgage-backed assets, the housing industry welcomed this solution, citing Main Street and mortgage rates as the direct beneficiaries.”This is one of the key actions we’ve been advocating ever since the Treasury altered its course on how it would use the $700 billion recovery package passed in September. This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Housing recovery is the key to economic recovery in this country and it always has been.”
To support the mortgage markets and bring down mortgage rates, the nation’s home builders also called on federal officials to clearly affirm that the government will provide long-term guarantees for the debt and securities purchased by Fannie Mae and Freddie Mac.
Investors are confused over the extent of federal support for long-term obligations held by the housing government sponsored enterprise (GSEs) and that uncertainty has pushed spreads on GSE debt in relation to Treasury yields to record highs, Jerry Howard, president and CEO of the National Association of Home Builders (NAHB), said in a letter to Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart.
“As a result, mortgage rates are at unacceptably high levels, which is forestalling recovery of the housing market and creating a major drag on the economy,” Howard added.
In yesterday’s announcement, the Fed said it would purchase mortgage-backed securities from Fannie Mae, Freddie Mac, and Ginnie Mae for up to $500 billion. “This will be critical to a housing recovery,” McMillan said.
Lawrence Yun, NAR chief economist, said purchasing debt obligations of Fannie and Freddie is an important move. “We commend the Fed decision because it will directly bring down long-term interest rates,” he said. “The level of investment should be aggressive enough to bring interest rates down in a meaningful manner. As we’ve seen in past recessions, home sales rise when mortgage interest rates fall.”
Yun said that given the present state of the mortgage market, interest rates on 30-year fixed-rate mortgages are too high. “If Fed action brings down mortgage interest rates by even 1 percentage point, it would increase homes sales by 500,000 units. That should help to draw inventory down and stabilize prices.”
Yun said higher home sales are critical now to absorb inventory and stabilize prices. “Only with stabilization in home prices can we have a healthy housing and economic recovery,” he said.
In its announcement, the Fed said it will purchase up to $100 billion of GSE debt from primary dealers through a series of competitive auctions to begin next week. Purchases of up to $500 billion in MBS will be conducted by selected asset managers before year-end. Both the direct obligations and MBS purchases are expected to take place over several quarters.
It also will purchase another $500 billion in mortgage-backed securities, which consist of mortgage loans that are packaged together and sold to investors. These securities, viewed as toxic now because so many mortgages are going unpaid, are at the heart of what’s weighing down troubled banks. Purchasing them is intended to free up bank lending, which would spur the economy.
© 2008, McClatchy-Tribune Information Services. RISMEDIA, Nov. 26, 2008-(MCT/RISMedia)-
Well we now have a new President elect, who is currently choosing his cabinet in double quick time.
But what else is happening out there to help with the financial stress in the Real Estate market?
The newly announced Federal Government Plan is an Important Move for Real Estate
Following the Fed’s announcement of its plans to buy up to $600 billion in mortgage-backed assets, the housing industry welcomed this solution, citing Main Street and mortgage rates as the direct beneficiaries.”This is one of the key actions we’ve been advocating ever since the Treasury altered its course on how it would use the $700 billion recovery package passed in September. This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Housing recovery is the key to economic recovery in this country and it always has been.”
To support the mortgage markets and bring down mortgage rates, the nation’s home builders also called on federal officials to clearly affirm that the government will provide long-term guarantees for the debt and securities purchased by Fannie Mae and Freddie Mac.
Investors are confused over the extent of federal support for long-term obligations held by the housing government sponsored enterprise (GSEs) and that uncertainty has pushed spreads on GSE debt in relation to Treasury yields to record highs, Jerry Howard, president and CEO of the National Association of Home Builders (NAHB), said in a letter to Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart.
“As a result, mortgage rates are at unacceptably high levels, which is forestalling recovery of the housing market and creating a major drag on the economy,” Howard added.
In yesterday’s announcement, the Fed said it would purchase mortgage-backed securities from Fannie Mae, Freddie Mac, and Ginnie Mae for up to $500 billion. “This will be critical to a housing recovery,” McMillan said.
Lawrence Yun, NAR chief economist, said purchasing debt obligations of Fannie and Freddie is an important move. “We commend the Fed decision because it will directly bring down long-term interest rates,” he said. “The level of investment should be aggressive enough to bring interest rates down in a meaningful manner. As we’ve seen in past recessions, home sales rise when mortgage interest rates fall.”
Yun said that given the present state of the mortgage market, interest rates on 30-year fixed-rate mortgages are too high. “If Fed action brings down mortgage interest rates by even 1 percentage point, it would increase homes sales by 500,000 units. That should help to draw inventory down and stabilize prices.”
Yun said higher home sales are critical now to absorb inventory and stabilize prices. “Only with stabilization in home prices can we have a healthy housing and economic recovery,” he said.
In its announcement, the Fed said it will purchase up to $100 billion of GSE debt from primary dealers through a series of competitive auctions to begin next week. Purchases of up to $500 billion in MBS will be conducted by selected asset managers before year-end. Both the direct obligations and MBS purchases are expected to take place over several quarters.
It also will purchase another $500 billion in mortgage-backed securities, which consist of mortgage loans that are packaged together and sold to investors. These securities, viewed as toxic now because so many mortgages are going unpaid, are at the heart of what’s weighing down troubled banks. Purchasing them is intended to free up bank lending, which would spur the economy.
© 2008, McClatchy-Tribune Information Services. RISMEDIA, Nov. 26, 2008-(MCT/RISMedia)-
Sunday, November 9, 2008
Butterfly effect
More than just real estate.
Despite his lame-duck status, George W. Bush, president of the United States of America, is still arguably the most powerful man in the world-at least for another two months. Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke have more influence over U.S. and international financial market performance and monetary policy than almost anyone else.
Yet, for all the influence and all the resources at their disposal, these three powerful men have been largely ineffectual in their efforts to stave off an economic meltdown far worse than anything seen in several generations.
Bernanke has slashed Fed funds rates, flung the discount window wide open and orchestrated buyouts of once-dominant financial institutions. Paulson fired his infamous “bazooka” and took Freddie Mac and Fannie Mae into conservatorship. Over $1 trillion has been earmarked to prop up the imploding housing and financial markets. Have all these efforts been for naught? And if these powerful men have been unable to turn the tide, who can?
The Butterfly Effect
An offshoot of Chaos Theory, the Butterfly Effect suggests that small variations of the initial condition of a system may produce large variations in the long-term behavior of the system. A butterfly’s wings might create tiny changes in the atmosphere that, ultimately, alter the path, delay, accelerate or even prevent the occurrence of a tornado in a certain location. The flapping wing represents a small change in the initial condition of the system, which causes a chain of events leading to large-scale alterations of events. Had the butterfly not flapped its wings, the trajectory of the system might have been vastly different.
All Real estate sales are an opportunity to break the cocoons and become butterflies, altering the course, slowing down or perhaps even preventing severe financial storms from devastating their neighborhoods, cities and states. One flap, one home, one family at a time. And the place to start this chain effect is in the foreclosure market.
Agents of Change
Think about what happens when an agent conducts a successful short sale: the homeowner is spared the emotional and economic trauma that comes with foreclosure and eviction; the lender saves tens of thousands of dollars in legal and processing fees; a home buyer gets a property below market value; Who loses in that transaction?
There will be over 1 million REOs on the market by the end of this year. Until this inventory is exhausted, home prices and new home sales will continue to languish. Bank-owned homes can quickly ruin a neighborhood-nothing drives property values down more rapidly than vacant homes, and nothing is more of a safety hazard than an empty, boarded-up property. The faster a first-time home buyer can take possession of an REO, the faster the neighborhood has a chance to stabilize and recover. Foreclosure sales, in today’s troubled market, present a rare opportunity to do good for others.
The current problem isn’t a battle between Main Street and Wall Street; it’s a systemic problem that threatens both. Like it or not, the Realtors role in this drama has shifted from “real estate agent” to “agent of change.” And we are uniquely positioned to help affect the recovery for which the powers-that-be have provided massive financing. Start flapping, and let’s see what happens. Contact BJ webb today for further information on how to start flapping.
Adapted from an item by Rick Sharga, who is senior vice president at RealtyTrac.
Despite his lame-duck status, George W. Bush, president of the United States of America, is still arguably the most powerful man in the world-at least for another two months. Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke have more influence over U.S. and international financial market performance and monetary policy than almost anyone else.
Yet, for all the influence and all the resources at their disposal, these three powerful men have been largely ineffectual in their efforts to stave off an economic meltdown far worse than anything seen in several generations.
Bernanke has slashed Fed funds rates, flung the discount window wide open and orchestrated buyouts of once-dominant financial institutions. Paulson fired his infamous “bazooka” and took Freddie Mac and Fannie Mae into conservatorship. Over $1 trillion has been earmarked to prop up the imploding housing and financial markets. Have all these efforts been for naught? And if these powerful men have been unable to turn the tide, who can?
The Butterfly Effect
An offshoot of Chaos Theory, the Butterfly Effect suggests that small variations of the initial condition of a system may produce large variations in the long-term behavior of the system. A butterfly’s wings might create tiny changes in the atmosphere that, ultimately, alter the path, delay, accelerate or even prevent the occurrence of a tornado in a certain location. The flapping wing represents a small change in the initial condition of the system, which causes a chain of events leading to large-scale alterations of events. Had the butterfly not flapped its wings, the trajectory of the system might have been vastly different.
All Real estate sales are an opportunity to break the cocoons and become butterflies, altering the course, slowing down or perhaps even preventing severe financial storms from devastating their neighborhoods, cities and states. One flap, one home, one family at a time. And the place to start this chain effect is in the foreclosure market.
Agents of Change
Think about what happens when an agent conducts a successful short sale: the homeowner is spared the emotional and economic trauma that comes with foreclosure and eviction; the lender saves tens of thousands of dollars in legal and processing fees; a home buyer gets a property below market value; Who loses in that transaction?
There will be over 1 million REOs on the market by the end of this year. Until this inventory is exhausted, home prices and new home sales will continue to languish. Bank-owned homes can quickly ruin a neighborhood-nothing drives property values down more rapidly than vacant homes, and nothing is more of a safety hazard than an empty, boarded-up property. The faster a first-time home buyer can take possession of an REO, the faster the neighborhood has a chance to stabilize and recover. Foreclosure sales, in today’s troubled market, present a rare opportunity to do good for others.
The current problem isn’t a battle between Main Street and Wall Street; it’s a systemic problem that threatens both. Like it or not, the Realtors role in this drama has shifted from “real estate agent” to “agent of change.” And we are uniquely positioned to help affect the recovery for which the powers-that-be have provided massive financing. Start flapping, and let’s see what happens. Contact BJ webb today for further information on how to start flapping.
Adapted from an item by Rick Sharga, who is senior vice president at RealtyTrac.
Sunday, November 2, 2008
Think outside the box
More than just real estate.
Worried about home values?
If you own Atlanta real estate and you are not in trouble with your mortgage, don’t, worry about the appreciation of your property, when it comes to reduction in home values the places of greatest risk are, California, Nevada, Arizona.
If you have access to cash or financing, it still a great time for housing bargain's.
The Georgia Multi Listing System recently confirmed that of its71,000 active home listings, 7,400 were classified as bank owned homes. Banks are finally getting the message and they are selling some of these homes at reasonable prices, unfortunately the processing times are lengthy as the banks shuffle the papers from one department to another in some cases this can take up to six weeks, so buyers and agents need to work hard to keep these deals moving forward.
For buyers, you need to work with an agent who has experience of dealing with bank owned properties and short sales.
Think Outside the Box
With so many homes out there sellers have to creative to stand out from the crowd.
The people at The Mansion at Peachtree in Atlanta, Georgia have gone far outside of the box. The customers they are courting are those who expect their needs to be met. That is why they have partnered with MD on Call to provide on site medical care to their residents. The first 2 years of the service are included in the purchase price of the units.
Now that is thinking outside of the box.
Along with butler and concierge service, spa and sauna, buyers who purchase homes at the new luxury high-rise the Mansion on Peachtree receive two years of service from MD on Call, a mobile medical practice that treats patients in their homes.
The Mansion, which opened in Buckhead in May but is yet to be occupied, is believed to be the first residential property in Atlanta and among the first in the country to offer medical services to its homeowners.
“Our resident profile was people who anticipate every service being available to them,” said Clark Butler, president of City Centre Properties, owner and developer of the upscale, 2,500- to 10,000-square-foot residences ranging in price from $2.5 million to $1
Along with butler and concierge service, spa and sauna, buyers who purchase homes at the new luxury high-rise The Mansion on Peachtree receive two years of service from MD on Call, a mobile medical practice that treats patients in their homes.
The Mansion, which opened in Buckhead in May but is yet to be occupied, is believed to be the first residential property in Atlanta and among the first in the country to offer medical services to its homeowners.
“Our resident profile was people who anticipate every service being available to them,” said Clark Butler, president of City Centre Properties, owners and developers of the upscale, 2,500- to 10,000-square-foot residences ranging in price from $2.5 million to $12 million. “It seemed to be a natural fit.”
Neither City Centre, which sought out the partnership with MD on Call, nor other developers or concierge medicine experts contacted knew of any other such arrangements.
It’s a sign of the economic times, said Georgia State University real estate professor Julian Diaz.
“People have got to be very creative in selling real estate now,” said Diaz, noting the economy’s negative impact on even the luxury housing market. To sell to this smaller clientele, developers must differentiate themselves by offering such services. But he doesn’t expect such perks to become a permanent part of the real estate landscape.
“It’s a very specialized market with not a whole lot of players,” he said. “A lot of people would like to sell to that handful, so you’re trying to distinguish yourself among a very select group.”
New homeowners at The Mansion can take advantage of the services, valued at several thousand dollars, once they close on their units. Appointments are not necessary because the physicians group sees patients in their homes, offering everything from a throat culture to an EKG.
Holly and Rick Wolfert received details about the amenity last week when they closed on their new residence at The Mansion. The couple, who moved from Connecticut to Lake Oconee in 2007, plan to maintain their primary residence in Greensboro, so they do not anticipate utilizing the medical services often. Still, they said the service should attract other homeowners, especially retirees and the less mobile.
“It’s a great convenience for people who don’t like to make appointments and go to the doctor,” said Holly Wolfert.
Concierge medicine practices — also called “boutique” or “executive” medicine — are rapidly growing among patients and doctors who seek a higher level of medical service. Doctors charge patients an annual fee ranging from about $1,500 to $20,000 for 24/7 availability by cell phone and e-mail, total body exams and same-day visits. After paying their annual fee, patients can use their insurance plan, in some instances.
An estimated 1,100 concierge practices exist nationwide, most formed by small groups of doctors who limit their practice loads to several hundred patients or fewer, compared to a typical practice’s 2,500.
Atlanta emergency room specialist Ellen Frauenthal founded MD on Call 11 years ago. Her partnership with The Mansion is a new wrinkle for her practice, she said.
MD on Call focuses on preventive medicine, wellness and healthy lifestyles to ensure that patients are not ignoring the things that keep them well, said Frauenthal, who refers to her practice as “health care without the hassle.”
MD on Call services are not covered by insurance, and each annual retainer covers a specified number of hours, depending on size and needs of the family. Her practice’s three physicians limit their patient load to fewer than 100 and conduct lifestyle assessments of their patients to help personalize their medical treatment.
“We become patient advocates,” said Frauenthal, who said her practice has grown mainly by word-of-mouth. “Just like people have financial advisers, we are the equivalent in terms of health care.”
2 million. “It seemed to be a natural fit.” via the ajc.com.
Worried about home values?
If you own Atlanta real estate and you are not in trouble with your mortgage, don’t, worry about the appreciation of your property, when it comes to reduction in home values the places of greatest risk are, California, Nevada, Arizona.
If you have access to cash or financing, it still a great time for housing bargain's.
The Georgia Multi Listing System recently confirmed that of its71,000 active home listings, 7,400 were classified as bank owned homes. Banks are finally getting the message and they are selling some of these homes at reasonable prices, unfortunately the processing times are lengthy as the banks shuffle the papers from one department to another in some cases this can take up to six weeks, so buyers and agents need to work hard to keep these deals moving forward.
For buyers, you need to work with an agent who has experience of dealing with bank owned properties and short sales.
Think Outside the Box
With so many homes out there sellers have to creative to stand out from the crowd.
The people at The Mansion at Peachtree in Atlanta, Georgia have gone far outside of the box. The customers they are courting are those who expect their needs to be met. That is why they have partnered with MD on Call to provide on site medical care to their residents. The first 2 years of the service are included in the purchase price of the units.
Now that is thinking outside of the box.
Along with butler and concierge service, spa and sauna, buyers who purchase homes at the new luxury high-rise the Mansion on Peachtree receive two years of service from MD on Call, a mobile medical practice that treats patients in their homes.
The Mansion, which opened in Buckhead in May but is yet to be occupied, is believed to be the first residential property in Atlanta and among the first in the country to offer medical services to its homeowners.
“Our resident profile was people who anticipate every service being available to them,” said Clark Butler, president of City Centre Properties, owner and developer of the upscale, 2,500- to 10,000-square-foot residences ranging in price from $2.5 million to $1
Along with butler and concierge service, spa and sauna, buyers who purchase homes at the new luxury high-rise The Mansion on Peachtree receive two years of service from MD on Call, a mobile medical practice that treats patients in their homes.
The Mansion, which opened in Buckhead in May but is yet to be occupied, is believed to be the first residential property in Atlanta and among the first in the country to offer medical services to its homeowners.
“Our resident profile was people who anticipate every service being available to them,” said Clark Butler, president of City Centre Properties, owners and developers of the upscale, 2,500- to 10,000-square-foot residences ranging in price from $2.5 million to $12 million. “It seemed to be a natural fit.”
Neither City Centre, which sought out the partnership with MD on Call, nor other developers or concierge medicine experts contacted knew of any other such arrangements.
It’s a sign of the economic times, said Georgia State University real estate professor Julian Diaz.
“People have got to be very creative in selling real estate now,” said Diaz, noting the economy’s negative impact on even the luxury housing market. To sell to this smaller clientele, developers must differentiate themselves by offering such services. But he doesn’t expect such perks to become a permanent part of the real estate landscape.
“It’s a very specialized market with not a whole lot of players,” he said. “A lot of people would like to sell to that handful, so you’re trying to distinguish yourself among a very select group.”
New homeowners at The Mansion can take advantage of the services, valued at several thousand dollars, once they close on their units. Appointments are not necessary because the physicians group sees patients in their homes, offering everything from a throat culture to an EKG.
Holly and Rick Wolfert received details about the amenity last week when they closed on their new residence at The Mansion. The couple, who moved from Connecticut to Lake Oconee in 2007, plan to maintain their primary residence in Greensboro, so they do not anticipate utilizing the medical services often. Still, they said the service should attract other homeowners, especially retirees and the less mobile.
“It’s a great convenience for people who don’t like to make appointments and go to the doctor,” said Holly Wolfert.
Concierge medicine practices — also called “boutique” or “executive” medicine — are rapidly growing among patients and doctors who seek a higher level of medical service. Doctors charge patients an annual fee ranging from about $1,500 to $20,000 for 24/7 availability by cell phone and e-mail, total body exams and same-day visits. After paying their annual fee, patients can use their insurance plan, in some instances.
An estimated 1,100 concierge practices exist nationwide, most formed by small groups of doctors who limit their practice loads to several hundred patients or fewer, compared to a typical practice’s 2,500.
Atlanta emergency room specialist Ellen Frauenthal founded MD on Call 11 years ago. Her partnership with The Mansion is a new wrinkle for her practice, she said.
MD on Call focuses on preventive medicine, wellness and healthy lifestyles to ensure that patients are not ignoring the things that keep them well, said Frauenthal, who refers to her practice as “health care without the hassle.”
MD on Call services are not covered by insurance, and each annual retainer covers a specified number of hours, depending on size and needs of the family. Her practice’s three physicians limit their patient load to fewer than 100 and conduct lifestyle assessments of their patients to help personalize their medical treatment.
“We become patient advocates,” said Frauenthal, who said her practice has grown mainly by word-of-mouth. “Just like people have financial advisers, we are the equivalent in terms of health care.”
2 million. “It seemed to be a natural fit.” via the ajc.com.
Sunday, October 12, 2008
What a Week!!
More than just Atlanta Real Estate
Today I was going to talk about the buy out and if it is an example of socialism, but the historic and calamitous events of the past week have been so dire I decided to postpone the investigation of socialism and look more closely at the recent worsening of events of the financial markets and the way they directly affect the Real Estate Market.
Over the last 8 trading days the Dow has plunged 2400 points or 24%, who could have predicted that. Two weeks ago we all hoped that by now things would have least stopped getting worse. Sow how did we get here?
Firstly the government takeover of Fannie Mae and Freddie Mac had the temporary effect of lowering interest rates, which is a good thing. But the bankruptcy of Lehman Brothers, the failure of Washington Mutual and the sale of Wachovia, as well as the stock market sell-off, has affected investor confidence in the financial markets, and that has pushed home-loan rates right back up. Also despite the fact that the goverment reduced the interest rate that banks are allowed to charde each other to borrow money, they arent lending money!! this "credit crunch" not only affect the banks but also the businesses that rely on credit to purchase raw materials, make pay roll, and even buyers who want to borrow for a home are now having more difficulty.
So the government bailout could help home prices if the banks that get relief turn around and make new loans, but so far it's not clear that they will. More importantly, housing prices are not just a factor of mortgage rates. Foreclosures and slow sales have left 4-million-plus homes on the market, nearly half a million more than two years ago. That could get worse before it gets better if rising unemployment translates to fewer buyers to work off that fat inventory.
Until homes for sale are again scarce, it will continue to be better to be a buyer than a seller.
According to CNN, most economists expect another 10% drop in housing prices nationally.
"I don't see the slump in housing prices ending anytime soon," says Dean Baker, co-director of the Center for Economic Policy and Research.
“Well how soon is soon?” I hear you ask
"In the long run none of what we're doing now is going to matter that much to real estate," says Wellesley economics professor Karl Case. "Home prices have to do with the scarcity of land and perception of that scarcity."
I agree that in the long term real estate has always shown that it is a great investment, after all God isn’t making anymore land is he !!.
So sellers hang in there and buyers and investors now is the time to buy selectively and pick up some great deals. Georgia Real estate had over 10,000 new foreclosure filings in July (courtesy www.Realtytrac.com) which is a sad number for every one of those owners, but it also opportunity for investors and buyers. I recently met with some new investors who are looking to buy unfinished subdivisions, owned by distressed builders or banks, and buy them out, sit on the land, and then build and sell the homes when the market recovers. I say bravo, this is how millionaires are made.
Today on CNN I heard George Soros comment that stabilization of home prices is fundamental to any recovery attempt. He advocates that re-negotiation of foreclosures of up to 85% of the value of the mortgage should be a tactic of the lenders, the banks would still have losses, but they would be less than the losses they will suffer otherwise, and of course it would keep people in their homes, and limit the effects that foreclosures have on the local real estate and general real estate market. What do you think?
Some more good news, the national Association of Realtors says pending home sales increased 7.4% from July to August, the highest increase since 2007.
Today I was going to talk about the buy out and if it is an example of socialism, but the historic and calamitous events of the past week have been so dire I decided to postpone the investigation of socialism and look more closely at the recent worsening of events of the financial markets and the way they directly affect the Real Estate Market.
Over the last 8 trading days the Dow has plunged 2400 points or 24%, who could have predicted that. Two weeks ago we all hoped that by now things would have least stopped getting worse. Sow how did we get here?
Firstly the government takeover of Fannie Mae and Freddie Mac had the temporary effect of lowering interest rates, which is a good thing. But the bankruptcy of Lehman Brothers, the failure of Washington Mutual and the sale of Wachovia, as well as the stock market sell-off, has affected investor confidence in the financial markets, and that has pushed home-loan rates right back up. Also despite the fact that the goverment reduced the interest rate that banks are allowed to charde each other to borrow money, they arent lending money!! this "credit crunch" not only affect the banks but also the businesses that rely on credit to purchase raw materials, make pay roll, and even buyers who want to borrow for a home are now having more difficulty.
So the government bailout could help home prices if the banks that get relief turn around and make new loans, but so far it's not clear that they will. More importantly, housing prices are not just a factor of mortgage rates. Foreclosures and slow sales have left 4-million-plus homes on the market, nearly half a million more than two years ago. That could get worse before it gets better if rising unemployment translates to fewer buyers to work off that fat inventory.
Until homes for sale are again scarce, it will continue to be better to be a buyer than a seller.
According to CNN, most economists expect another 10% drop in housing prices nationally.
"I don't see the slump in housing prices ending anytime soon," says Dean Baker, co-director of the Center for Economic Policy and Research.
“Well how soon is soon?” I hear you ask
"In the long run none of what we're doing now is going to matter that much to real estate," says Wellesley economics professor Karl Case. "Home prices have to do with the scarcity of land and perception of that scarcity."
I agree that in the long term real estate has always shown that it is a great investment, after all God isn’t making anymore land is he !!.
So sellers hang in there and buyers and investors now is the time to buy selectively and pick up some great deals. Georgia Real estate had over 10,000 new foreclosure filings in July (courtesy www.Realtytrac.com) which is a sad number for every one of those owners, but it also opportunity for investors and buyers. I recently met with some new investors who are looking to buy unfinished subdivisions, owned by distressed builders or banks, and buy them out, sit on the land, and then build and sell the homes when the market recovers. I say bravo, this is how millionaires are made.
Today on CNN I heard George Soros comment that stabilization of home prices is fundamental to any recovery attempt. He advocates that re-negotiation of foreclosures of up to 85% of the value of the mortgage should be a tactic of the lenders, the banks would still have losses, but they would be less than the losses they will suffer otherwise, and of course it would keep people in their homes, and limit the effects that foreclosures have on the local real estate and general real estate market. What do you think?
Some more good news, the national Association of Realtors says pending home sales increased 7.4% from July to August, the highest increase since 2007.
Sunday, September 28, 2008
Word of the Week - Bailout
More Than Just Atlanta Real Estate
What a week! This must be one of most eventful in terms of the financial markets and the US economy.
Whether you live in Atlanta or Alaska, the word of the week was ‘bailout’ but is has also been called ‘financial stimulus package’, or by some ‘wall street giveaway!!’ what ever you want to call it, there is definitely a split in opinions as to whether it is even needed.
Some of the pundits were even suggesting that we should ‘let the chips fall as they may’ in other words, all of these financial institutions that are in trouble should be left alone to fail and then let the markets settle and reset.
At the other end of the spectrum there is President Bush, who on Tuesday is claimed to have said during the talks ‘If money isn’t loosened up, this sucker could go down’, he apparently made those comments as he saw the package he offered fall apart.
In between these two opinions there are some people who although they believe that the markets are king, they see the flaw in the do nothing plan. Although on the outset it would not cost the taxpayer billions of dollars, once these institutions fail, due to the complex nature of the modern financial markets their effect is always wider that just their employees and shareholders, the markets have a tendency to panic and become unstable, and as I said in the last blog, they all effect each other in some way, so this approach although well meaning in its nature has major problems. That said, this plan does highlight one observation, no one knows what the full depth or potential cost of this situation is.
It seems most people believe that the problem is big enough that we need to do something. Amongst this crowd are people who claim that Hank Paulson’s main interest is saving the value of his Goldman Sachs stock, true he is an ex-chairman and CEO of the financial giant, but actually what gave Goldman Sachs a great boost was the announcement on Tuesday by Warren Buffet that he would invest $5 Billion in Goldman Sachs. I should disclose that Warren Buffet owns the company that I work with, but without favoritism I can honestly say that there are many, many people and financial institutions that follow the words and deeds of Warren Buffet, after all he didn’t get to be the richest person in the world (Forbes.com 03/05/08) without understanding the financial markets, value, economics etc.
But coming back to the bailout, I have heard people saying that we should use this $700B in other ways, such as handing thousands out to each household. Now while this is a great thought (I really need a big screen HDTV) what they misunderstand is that we don’t actually have this money. We are going to have to go with our begging bowl to other countries such as China, to lend it to us, and with our credit rating being as low as it is, you know the interest rate will be high, so this will just be added to the approximately 9.7 trillion that the USA owes other countries.
The plan it its original form was only three pages long, this seems short for a high school essay, never mind a financial plan to save the world! Well the senators (and public) have seen through that ploy and have asked for more detail to be added to crucial elements, such as executive pay to those involved in bailed out institutions, are there limits to the size of loans or bad paper that is covered. How long will the government hold them for? And will they sell them on at a profit? By Monday the document was 42 pages long, by Friday the working version was up to 102 pages.
Whatever we do to fix this the bigger picture also involves fixing the mechanism that allowed this to happen in the first place…………….lack of regulation and oversight of the banking and financial institutions. We have already heard from countries like China, and Germany saying ‘I told you so’ as we sailed towards the iceberg. The markets will never have the same confidence in American investments if we don’t fix it. The days of property prices rising annually by double digits are gone, what it proved is what all grandmothers know ‘Things that come to quickly always end in tears’.
But ironically the objective of all these bailout plans is to achieve one very basic aim…….. Help property prices to stabilize, bottom out, and then start to increase. Once that happens we are all back on the good ship ‘happiness’ as this is an indication that the economy is headed in the right direction.
Is this the way to do it…………..what do you think?
Good news….Our company’s market share of sales of Atlanta homes rose by 30% in August 2008 over August 2007.
The next Blog - Is this socialism?
What a week! This must be one of most eventful in terms of the financial markets and the US economy.
Whether you live in Atlanta or Alaska, the word of the week was ‘bailout’ but is has also been called ‘financial stimulus package’, or by some ‘wall street giveaway!!’ what ever you want to call it, there is definitely a split in opinions as to whether it is even needed.
Some of the pundits were even suggesting that we should ‘let the chips fall as they may’ in other words, all of these financial institutions that are in trouble should be left alone to fail and then let the markets settle and reset.
At the other end of the spectrum there is President Bush, who on Tuesday is claimed to have said during the talks ‘If money isn’t loosened up, this sucker could go down’, he apparently made those comments as he saw the package he offered fall apart.
In between these two opinions there are some people who although they believe that the markets are king, they see the flaw in the do nothing plan. Although on the outset it would not cost the taxpayer billions of dollars, once these institutions fail, due to the complex nature of the modern financial markets their effect is always wider that just their employees and shareholders, the markets have a tendency to panic and become unstable, and as I said in the last blog, they all effect each other in some way, so this approach although well meaning in its nature has major problems. That said, this plan does highlight one observation, no one knows what the full depth or potential cost of this situation is.
It seems most people believe that the problem is big enough that we need to do something. Amongst this crowd are people who claim that Hank Paulson’s main interest is saving the value of his Goldman Sachs stock, true he is an ex-chairman and CEO of the financial giant, but actually what gave Goldman Sachs a great boost was the announcement on Tuesday by Warren Buffet that he would invest $5 Billion in Goldman Sachs. I should disclose that Warren Buffet owns the company that I work with, but without favoritism I can honestly say that there are many, many people and financial institutions that follow the words and deeds of Warren Buffet, after all he didn’t get to be the richest person in the world (Forbes.com 03/05/08) without understanding the financial markets, value, economics etc.
But coming back to the bailout, I have heard people saying that we should use this $700B in other ways, such as handing thousands out to each household. Now while this is a great thought (I really need a big screen HDTV) what they misunderstand is that we don’t actually have this money. We are going to have to go with our begging bowl to other countries such as China, to lend it to us, and with our credit rating being as low as it is, you know the interest rate will be high, so this will just be added to the approximately 9.7 trillion that the USA owes other countries.
The plan it its original form was only three pages long, this seems short for a high school essay, never mind a financial plan to save the world! Well the senators (and public) have seen through that ploy and have asked for more detail to be added to crucial elements, such as executive pay to those involved in bailed out institutions, are there limits to the size of loans or bad paper that is covered. How long will the government hold them for? And will they sell them on at a profit? By Monday the document was 42 pages long, by Friday the working version was up to 102 pages.
Whatever we do to fix this the bigger picture also involves fixing the mechanism that allowed this to happen in the first place…………….lack of regulation and oversight of the banking and financial institutions. We have already heard from countries like China, and Germany saying ‘I told you so’ as we sailed towards the iceberg. The markets will never have the same confidence in American investments if we don’t fix it. The days of property prices rising annually by double digits are gone, what it proved is what all grandmothers know ‘Things that come to quickly always end in tears’.
But ironically the objective of all these bailout plans is to achieve one very basic aim…….. Help property prices to stabilize, bottom out, and then start to increase. Once that happens we are all back on the good ship ‘happiness’ as this is an indication that the economy is headed in the right direction.
Is this the way to do it…………..what do you think?
Good news….Our company’s market share of sales of Atlanta homes rose by 30% in August 2008 over August 2007.
The next Blog - Is this socialism?
Tuesday, September 23, 2008
More than just real estate.
I believe that this blog should be about more that just Atlanta Real Estate, after all as we now see nearly all financial markets are tied to each other, and calamity in one market can have global effects. Therefore where the opportunity arises or circumstances dictate I will blog about matters that are widely related to the Atlanta Real Estate market such as Finance, Economics, Politics, world affairs etc etc.
How did we get in this mess?
I have a large number of friends and investors who reside outside of the USA. Some of them have been asking me “How did we get in this financial mess?”. The effects have truly been felt all over the world. Huge investment banks that had weathered, world wars and depressions have thrown in the towel. (eg. Lehman Brothers, founded 1830). Yes this latest problem did originate here in the good old USA. I will devote a little time to help us all to understand how, and why it happened. I will stick to the facts, as far as possible and of course any views offered are my own personal views.
The current financial crisis definitely has its beginnings in the housing market. Greed and dishonesty …………those two bed fellows often found in the rubble of many a financial crisis, sure did play their part here, but let’s leave that for another time. Two of the biggest players on the block of housing finance were Freddie Mac and Fannie Mae.
Fannie Mae was created in 1938 at a time when millions of families could not become home owners or were at great risk of losing their homes. Fannie Mae’s role was to expand the flow of funds in all communities and enable more people to become homeowners. But it also had a duty to its private investors (read more about their history at http://www.fanniemae.com/index.jhtml ) Basically Fannie Mae is a privately owned company with a congressional charter (hence it became a Government Sponsored Enterprise - GSE) to operate in the secondary mortgage market, to guarantee loans and make sure that Mortgage Banks and other lenders have enough funds to lend prospective home buyers.
Freddie Mac is another GSE with the same role (http://www.freddiemac.com/.) It was created in 1970 to end the monopoly of Fannie Mae.
Unfortunately with the incestuous relationship these GSEs had to the government and Congress they were not as heavily regulated as they should have been. It became clear to a few trained observers that some of the subprime mortgages that were being bundled by the lenders (who incidentally only had to keep some of them for only 30 days!) were carrying huge risk. The issue was ignored by congress. Now we know that all financial markets thrive on risk, but as investors all over the world, purchased these bundles of loans, that carried the promise of collecting mortgage payments in the future, it slowly became clear that these bundles were not going to pay off. The other ingredient that turned a misfortune into a disaster was the falling house prices. Under normal circumstances when a home owner defaults on the mortgage, the lender takes over the property (foreclosure) and sells it off and gets their investment back. But unfortunately US house prices were falling, thus the banks could not sell them and break even, and when the market became flooded prices fell even further, creating a very difficult situation for everyone, from home owner, lender, Freddie Mac, Fannie Mae and even the investment banks, pension funds etc etc that held these bundled investments.
That’s it for today, next time I will talk about what being done to steer a path out of this situation.
On a positive note now is a great time to be buying a home, whether you're looking to move to Atlanta or anywhere else in the USA or become an investor, there is plenty of choice, property prices are amazingly low, interest rates are historically low, and with foreclosures at an all time high, there a plenty of prospective tenants. If you have any questions hit me back.
I believe that this blog should be about more that just Atlanta Real Estate, after all as we now see nearly all financial markets are tied to each other, and calamity in one market can have global effects. Therefore where the opportunity arises or circumstances dictate I will blog about matters that are widely related to the Atlanta Real Estate market such as Finance, Economics, Politics, world affairs etc etc.
How did we get in this mess?
I have a large number of friends and investors who reside outside of the USA. Some of them have been asking me “How did we get in this financial mess?”. The effects have truly been felt all over the world. Huge investment banks that had weathered, world wars and depressions have thrown in the towel. (eg. Lehman Brothers, founded 1830). Yes this latest problem did originate here in the good old USA. I will devote a little time to help us all to understand how, and why it happened. I will stick to the facts, as far as possible and of course any views offered are my own personal views.
The current financial crisis definitely has its beginnings in the housing market. Greed and dishonesty …………those two bed fellows often found in the rubble of many a financial crisis, sure did play their part here, but let’s leave that for another time. Two of the biggest players on the block of housing finance were Freddie Mac and Fannie Mae.
Fannie Mae was created in 1938 at a time when millions of families could not become home owners or were at great risk of losing their homes. Fannie Mae’s role was to expand the flow of funds in all communities and enable more people to become homeowners. But it also had a duty to its private investors (read more about their history at http://www.fanniemae.com/index.jhtml ) Basically Fannie Mae is a privately owned company with a congressional charter (hence it became a Government Sponsored Enterprise - GSE) to operate in the secondary mortgage market, to guarantee loans and make sure that Mortgage Banks and other lenders have enough funds to lend prospective home buyers.
Freddie Mac is another GSE with the same role (http://www.freddiemac.com/.) It was created in 1970 to end the monopoly of Fannie Mae.
Unfortunately with the incestuous relationship these GSEs had to the government and Congress they were not as heavily regulated as they should have been. It became clear to a few trained observers that some of the subprime mortgages that were being bundled by the lenders (who incidentally only had to keep some of them for only 30 days!) were carrying huge risk. The issue was ignored by congress. Now we know that all financial markets thrive on risk, but as investors all over the world, purchased these bundles of loans, that carried the promise of collecting mortgage payments in the future, it slowly became clear that these bundles were not going to pay off. The other ingredient that turned a misfortune into a disaster was the falling house prices. Under normal circumstances when a home owner defaults on the mortgage, the lender takes over the property (foreclosure) and sells it off and gets their investment back. But unfortunately US house prices were falling, thus the banks could not sell them and break even, and when the market became flooded prices fell even further, creating a very difficult situation for everyone, from home owner, lender, Freddie Mac, Fannie Mae and even the investment banks, pension funds etc etc that held these bundled investments.
That’s it for today, next time I will talk about what being done to steer a path out of this situation.
On a positive note now is a great time to be buying a home, whether you're looking to move to Atlanta or anywhere else in the USA or become an investor, there is plenty of choice, property prices are amazingly low, interest rates are historically low, and with foreclosures at an all time high, there a plenty of prospective tenants. If you have any questions hit me back.
Friday, September 19, 2008
New Website Launch
Hello everyone! It's official, the new website was launched on September 5, 2008 at a launch party. The newly designed website has something for everyone looking to buy, sell, or invest in real estate.Some features of the new site are:
- Why you should move to Atlanta
- Historical and informative data on the Atlanta area
- For the investor, view thousands of investment homes, including some with tenants to pay your mortgage
- View and comment on beautiful kitchens in Atlanta homes
- The easiest way to find your dream home
- Get information on how to get free flight and hotel accommodations (see terms & conditions)
For this and much more, visit www.TheAtlantaDream.com.
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