I wonder if the high level of residential real estate vacancies is also adding to the problem? With so many residential properties sitting empty homeowners are willing to take a loss to have some revenue coming in. Add a weak economy and you have the recipe for falling rental rates.

“Vacancies continued to rise despite what has traditionally been a strong leasing period for apartment properties,” said Victor Calanog, director of research at Reis.

Job losses and falling wages are shrinking the pool of potential renters, defying forecasts that prospective homebuyers would rent rather that purchase as house prices decline. The U.S. unemployment rate rose to a 26-year high in June and U.S. payrolls dropped more than forecast in June, the government said last week.

Equity Residential, founded by billionaire Sam Zell and now the biggest U.S. apartment landlord by market capitalization, said in April that job losses made the company “cautious” and it was offering rent reductions to lure tenants. via  Bloomberg.com.

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Apartment Vacancy at 7.5% Across United States

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Vornado Realty Trust, the 3^rd largest real estate investment trust firm in the United States, is putting together a billion dollar fund to buy up distressed properties. The fund and others like it will set the base of the commercial real estate market by buying up the properties of investors that are overextended.

Interesting how the commercial market free from government intrusion has dropped quickly but will also stabilize quickly as the rules of free market are allowed to work. Meanwhile, the residential market is mired in government programs that keep the pain alive.

“People are readying themselves for the buying opportunities that are going to open up,” said Steve Coyle, a fund manager at Cohen & Steers Inc., a New York-based investor in real estate securities. “Private guys are going the public route and then you’ve got public guys raising private funds.”

Vornado, which owns mainly office and retail properties, is one of about 50 REITs that raised a total of $15.7 billion from equity sales through June 26, according to the National Association of Real Estate Investment Trusts, the trade group based in Washington. Vornado completed a $741.8 million stock sale in April with proceeds earmarked for cutting debt and making acquisitions. via  Bloomberg.com.

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Vornado Building $1 Billion Dollar Vulture Fund For Commercial Real Estate

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Here are some stats I found from the Texas Transportation Institute.

Other highlights from the research illustrate the effects of the nation’s traffic problems.

• The overall cost (based on wasted fuel and lost productivity) reached $87.2 billion in 2007 – more than $750 for every U.S. traveler.
• The total amount of wasted fuel topped 2.8 billion gallons – three weeks’ worth of gas for every traveler.
• The amount of wasted time totaled 4.2 billion hours – nearly one full work week (or vacation week) for every traveler.

and here they are”

Top 10 Worst Traffic Cities in the United States For 2009:

via TTI

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Top 10 Worst Traffic Cities in the United States For 2009

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Experts say the problem is being felt nationwide as the loan-servicing industry struggles to become a housing counseling agency, too.

Lenders have neither the staffing nor the expertise — and possibly not the motivation — to keep up with the demand from home-owners who want their mortgages reworked so they can stay in their homes.

One housing expert compares the new workload for the loan servicers with that in the education system that no longer teaches just math and reading, but also must provide health care, teen counseling and after-school activities.

“It’s a whole retooling of an industry,” said Julia Gordon, a senior policy counsel at the Center for Responsible Lending. “You will not get a servicer who will say, ‘I don’t want to do it.’ ” But in truth, she said, “they don’t want to do it.” via Las Vegas Sun.

With the average cost of a foreclosure at $60,000 dollars lenders Boards of Directors are not eager for homes to fall into that black hole. But the worker bees are buried under a deluge of calls and problems, and lets face it, to them it is a job. So the imperative to find a way to work out a loan is less than the need to write new loans or just get through the day.

And with the losses that banks are seeing you know HR is not racing to hire people to work out these issues, even if they could find people who were experts in working out the bad loans according to the ever changing regulations.

It is a classic catch 22 for the banks and the borrowers. A shame, but one fully to be expected.

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Lenders Buried Under Load of Mortgage Re-Works

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Noted Saudi investor Prince Faisal has created a 1.1 billion dollar fund to invest in commercial properties in the United States and the United Kingdom. This is good news. Instead of a slow drop, commercial real estate plummeted from it’s highs and is already starting to form a base. Investors know they have a short window where there are bargains and are moving quickly.

This is opposed to residential which has had so much meddling and tweaking from the government no one is sure what the true market is, creating a much longer slowdown and more uncertainty for investors.

An investment manager part-owned by the Saudi royal family is planning to invest a chunk of its assets in UK and US commercial property, according to Prince Faisal bin Salman bin Abdulaziz, its chairman.
For Jadwa Investment, commercial real estate was, with natural resources, the most appealing investment opportunity, Prince Faisal told the Financial Times in an interview…
Fadi Tabbara, the fund’s chief investment officer, said that it wanted to expand abroad to continue diversifying revenue streams so as to make them “less sporadic and more predictable”.
Brad Bourland, Jadwa’s chief economist, said: “We are focusing on areas where there is currently a favourable exchange rate, attractive asset prices and a historical connection. The US and UK markets meet these criteria the most at the moment.” FT.com

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Saudi Fund Investing 1.1 Billion in United States and United Kingdom

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Check out the video to see so for yourself.

You know that those who will be managing Jackson’s estate will be doing everything they can to emulate Elvis Presley’s Graceland as it is a money making venture. The story of Neverland being haunted is by Michael Jackson is too good to be true for those who will be redeveloping the property.

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Haunted House? Michael Jackson Already Haunting Neverland

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I hope Evander can find his way out of the mess he is in now, but my guess is this story will occur again and again. He is like millions of other Americans, he has more house than he can afford. The only difference is the scale of the problem.

Holyfield’s 109-room Fairburn area mansion, which is spread across 104 acres, went into foreclosure for the second time within the past year. Collectors are seeking payment of the original $10 million loan for the home at 794 Evander Holyfield Highway.

A second Holyfield property at 592-596 Westridge Road, valued at $216,000, was also to be sold, according to a notice in the Fayette County News.

The famed athlete has grossed more than $248 million in the ring, but two divorces, several failed business ventures and child- support payments believed to total $500,000 annually have taken a toll on his financial well-being.

Attorney Philip Hasty declined to say why the Holyfield and Cox auctions were canceled.

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Evander Holyfield House Is Pulled From Foreclosure Auction

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People were wondering where it occurred so I did a quick Google Map.

This is a real shame, he was one of the good guys in the NFL.

View Larger Map

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Steve McNair Murder Location in Nashville, TN

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Have a Wonderful 4^th of July and remember that the liberty and freedom you enjoy were paid for in blood, and continue to be so.

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Happy 4th of July - The Declaration of Independence

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Over the next few days I will be outlining what is in the bill and scaring the crap out of you. Can you imagine how expensive it will be to retrofit your home to hit these mandates?

I did a quick excel spreadsheet and according to the numbers the Secretary of Energy will expect by 2029 that homes will use 62 percent less energy, or else they will be subject to Federal intervention. We will get into Federal intervention and inspectors on a later post.

(A) effective on the date of enactment of the American Clean Energy and Security Act of 2009, 30 percent reduction in energy use relative to a comparable building constructed in compliance with the baseline code;

(B) effective January 1, 2014, for residential buildings, and January 1, 2015, for commercial buildings, 50 percent reduction in energy use relative to the baseline code; and

(C) effective January 1, 2017, for residential buildings, and January 1, 2018, for commercial buildings, and every 3 years there after, respectively, through January 1, 2029, and January 1, 2030, 5 percent additional reduction in energy use relative to the baseline code. US Congress Bill 2454 page 200

And if this is not scary enough, look at the power it gives the Secretary of Energy:

(4) ADDITIONAL REDUCTIONS IN ENERGY USE.—Effective on January 1, 2033, and once every 3 years thereafter, the Secretary shall determine, after notice and opportunity for comment, whether further energy efficiency building code improvements for residential or commercial buildings, respectively, are life cycle cost-justified and technically feasible, and shall establish updated national building code energy efficiency targets that meet such criteria. US Congress Bill 2454 page 202

You will have given the Secretary of Energy the power to decide unilaterally what the energy use codes for the country will be. One person will have the power to decide what homes have to do to comply with his or her whims.

And you think we have problems now with real estate, just think of the fun times we will have if this bill gets enacted into the law of the land.

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Waxman-Markey Cap And Trade Will Make Homes Cut Energy Consumption 62 Percent

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