The Residential/CRE Investor app allows for numerous approaches to track investing.

Residential/CRE Investor, a newly-released app for the iPhone, iPad and iPod touch, is a sophisticated yet user-friendly financial model for evaluating single-family, multifamily and commercial real estate investments

George Mathew, the app’s creator, said he wanted to create a program that effectively compared financial returns from a number of different products.

“I needed a model that compares the potential returns of different investment properties with a logic that is consistent with how analysts evaluate other investment options, including equities and corporate bonds,” Mathew explained.

In addition to its aforementioned features, the app also structures mortgage financing and determines pricing based on valuation metrics. For all potential investments, the app utilizes a Financing Likelihood Indicator that allows users to adjust an offer price based on a target internal rate of return (IRR) or projected capitalization rate.

Rather than building customized spreadsheets or working with costly desktop software packages, users are able to input property data and understand potential returns on a mobile device with an intuitive user interface, and users can also generate cash flow projections with as few as two inputs or with hundreds, making this financial model as simple or complex as a user prefers. The cash flow projections can then help determine the viability of potential financing structures and investment returns.

The app allows for unlimited properties, tenant units, expense items and revenue items, and each revenue and expense item’s growth can be generalized or customized by year. Other features include:

• Common building expenses can be shared with specific tenants.
• Capital expenditures can be projected by year and by tenant.
• Projected sale value can be based on price appreciation, capitalization rate, or even a discount rate with perpetual growth formula.
• Income taxes, including the tax benefits associated with building depreciation, can also be projected.
• Users can also e-mail property investment reports directly from their own e-mail outbox.

A full App Guide and further information is available at http://CRE-Owner.com.

Housing starts rose in April by double-digit sums from the year before.

Housing starts for privately-owned homes rose by nearly 30 percent year-over-year in April, perhaps the strongest sign yet of a recovery in residential construction.

According to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development, starts were up 2.6 percent from March to April and 29.9 percent from April 2011 to a seasonally adjusted annual rate of 717,000.

Single-family housing starts were also positive, rising 2.3 percent from March to a rate of 492,000.

John Carroll, the Chicago division president of Ryland Homes, said the big increase in starts was no surprise to Ryland, given the rise in demand the company had already seen for its developments.

“We were not surprised by the increase in starts in the month of April,” Carroll said. “Ryland’s sales nationwide were up significantly in the first quarter, including our Chicago Division’s March sales, which were the highest they’ve been for a single month since 2008.”

A big part of that local demand, Carroll continued, is Chicago’s unique relationship with rentals and homes.

“Chicago is actually one of the few markets today where it is actually cheaper to own a home than to rent,” he said. “With our new homes being offered at values similar to resale housing stock, without all the warts, it’s not surprising that we are seeing increased interest in our sales offices.”

The rental/ownership divide has also played a role in the business of PulteGroup, said Maria Wilhelm, the VP of sales for the company’s Illinois Division.

“Rising expensive rental rates and falling vacancies are beginning to tip the scale toward homeownership for renters across the country,” Wilhelm said.

Another factor, Wilhelm said, has been the newest development from Pulte, which aim to offer the right home in the right area for the right price, as she framed it. And now, with economic conditions improving for many consumers, demand has picked up considerably.

“Pulte Homes had a fantastic grand opening in Glenview, and are currently over 30 percent sold out of the Regency at The Glen – Villas,” she said.

The Census Bureau also reported on housing completions and building permits in its data.

For privately-owned housing completions, April’s seasonally adjusted annual rate of 651,000 was a 10.0 percent increase from March and a 20.1 percent increase from April 2011; in the single-family market, the 489,000 rate of completions was an even more impressive 11.4 percent rise from March.

Building permits were the one area that did not show uniform increases, but yearly, they still posted significant increases. From March to April, the rate of 715,000 was a 7.0 percent drop, but compared to April 2011, the rate is 23.7 percent higher. For single-family authorizations, the rate of 475,000 was a 1.9 percent increase from March.

In a blog entry on the data, Calculated Risk’s Bill McBride framed the increases in a historical light.

“[T]otal housing starts have been increasing lately after moving sideways for about two years and a half years,” he wrote. “Total starts are up 50 percent from the bottom, and single family starts are up 39 percent from the low. This was above expectations of 690,000 starts in April, and was especially strong given the upward revisions to prior months. The housing recovery continues. “

The future of housing finance was a big topic at a recent symposium for real estate.

Housing finance was the main feature of a multi-panel discussion at the Realtors Midyear Legislative Meetings & Trade Expo in Washington yesterday.

Officially titled “Housing Policy in 2013: Challenges, Opportunities and Solutions,” the symposium featured a who’s who in the world of housing finance, including Ed DeMarco, the acting director of the FHFA, Carol Galante, the acting commissioner of the FHA, Mark Zandi of Moody’s Analytics and Susan Watcher, a professor at the Wharton School of Business.

Jon Broadbooks, the director of communications at the Illinois Association of Realtors, is in Washington this week attending the expo’s events, and he said the panel presented their views before a sympathetic crowd of agents.

“There was some applause,” Broadbooks said, especially for policies floated by bank representatives for greater action confronting foreclosures.

“Were there a lot of details? No,” he said. “But the banks did seem to be taking steps toward working with agents.”

In comments during the symposium, DeMarco stressed a long-run viewpoint in assessing the progress of housing.

“We all are cautiously optimistic that the signs of stabilization, and in some places, strength, that have begun to emerge in various housing markets are true signals that a long-awaited recovery is taking place,” DeMarco said. “While FHFA will keep its focus on foreclosure alternatives, refinancing, and ongoing liquidity in the marketplace, it is time for policymakers to begin work in earnest on the future housing finance system.”

As evidence of those efforts, DeMarco made mention of the FHFA’s efforts in building a new infrastructure for the secondary mortgage market; establishing standards that promote a safer and more efficient housing finance system; and increasing private capital while retracting government participation in the secondary mortgage market, goals that were, coincidentally, identical to what NAHB Chairman Barry Rutenberg advocated in a recent op-ed on financial reforms.

What DeMarco did not mention, though, was principal reductions, an omission that only reinforces how contentious the topic has become in recent weeks. After resisting calls from agents and lawmakers to pursue the policy, DeMarco stated in an address to the Brooking’s Institution that, contrary to what he had claimed, principal write downs would save Fannie Mae and Freddie Mac to the tune of $1.7 billion. Still, he said the FHFA would take its time in making a final decision on the matter, and a couple weeks ago, it announced it was delaying its decision.

DeMarco’s comments alone demonstrated the schismatic lending environment that 2012′s presidential victor can anticipate, come the 2013 inauguration. Since 2008, Fannie and Freddie have either purchased or guaranteed 75 percent of new mortgages, and when FHA financing is included, the government has accounted for roughly nine out of 10 new loans. Though many sources, President Obama included, feel that private lending must take a greater role in housing finance, the recent principal reduction throw down with the FHFA has shown that transition will not happen overnight.

In her comments, Galante stressed the mission and professional commitments of the FHA, making particular note of the recent changes the agency has made to shore up its troubling finances. Just this morning, we reported on the FHA’s finances, and how despite the changes that Galante referenced and data suggesting their impact, analysts still fear the worst when assessing the FHA’s portfolio.

Following Galante’s speech, a panel of industry experts debated the future of the GSEs and the government’s role in promoting the American dream of homeownership, and in comments following the symposium, NAR President Moe Veissi reaffirmed the association’s support for a secondary market.

“As leading advocates for homeownership, Realtors want to make sure that everyone who wants to own a home and is able to afford one can do so,” Veissi said. “Without a secondary market, mortgage interest rates would be unnecessarily higher and unaffordable for many Americans, and products like the 30-year fixed-rate mortgage would likely be inaccessible for most borrowers.”

Members and non-members are invited to network and learn about how they can integrate the latest tablet technology into their busy work lives.

Registration and networking start 11:30 a.m., while the meeting will be held from noon to 1:30 p.m. The event cost, which includes lunch, is $25 for members and $30 for non-members.

RSVP at westsuburbanwcr@gmail.com.

WCR gave away restaurant certificates, service discounts and free WCR event registrations for those who joined or renewed their memberships each hour. The organization also solicited donations for a scholarship fund that will be available to agents to be used for education and designation opportunities throughout the year.

“I am always astonished to see the ’30 Under 30′ professionals every year and all that they have achieved in such a short amount of time,” said National Association of Realtors President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “What amazes me the most about this year’s class is how they recognize there is no one formula for winning in real estate. They have discovered success their own way and display the dedication and hardworking spirit all Realtors possess. Realtors are constantly evolving with the market, and it’s important to recognize these young people and learn from them, as they are the future of the real estate profession.”

This year marks the 12th anniversary of Realtor Magazine’s “30 Under 30″ program. Over the years, 390 rising young stars have been recognized for their commitment and dedication to the real estate industry.

The 2012 “30 Under 30″ honorees, who are featured in the May/June issue of Realtor Magazine, are a mix of broker-owners/managers and salespeople, representing all sectors of the market from commercial real estate to residential and rental properties. On this year’s list, Grigory Pikarsky, broker/owner of Vesta Preferred LLC in Chicago, is among the “30 Under 30.”

“We are proud that CAR is in a position to nurture the development of young leaders and provide them with opportunities to assume responsibilities within the local and national real estate industry,” said Bob Floss, CAR president and managing broker/owner of Bob Floss and Son Realty. “Not only is Greg one of Chicago’s most aspiring young Realtors, he demonstrates a willingness to support other Realtors and industry goals that we are glad to help cultivate.”

In addition to establishing his own company at a relatively early age, Pekarsky, 27, emerged as a leader in the Chicago area real estate industry when he was appointed the second individual to hold a year-long chair position of CAR’s newly forming Young Professionals Network, in 2010. The CAR YPN gained momentum and grew exponentially during Pekarsky’s tenure, and was named Large Network of the Year by the National Association of Realtors.

Pekarsky also worked in partnership with CAR to launch a YPN Mentor series that bridges Chicago real estate industry newcomers with established professionals.

See the full list of the “30 Under 30″ honorees and their complete profiles on Realtor Magazine’s website here.

Some analysts the FHA is re-inflating the housing bubble, but data on the agency's loans may not support that viewpoint.

The Federal Housing Administration has taken a big role in the tight-lending environment of the post-boom housing market, but has it been costly?

That’s the argument of the Fiscal Times, which, in a piece analyzing the financing methods of the FHA, even went so far as to utter the word “bubble” in relation to the lending practices of the government agency.

The situation, as the Times frames it, is one of compensation. In the face of the restrictive lending policies that major banking institutions have followed after the economic downturn, a period where only the most credit-worthy of consumers could apply for loans with significant down payments, the FHA has stepped in to fill the void, offering its low-cost, low-down payment offerings to more modest consumers who lack the stupendous requirements of private lenders.

Those lower standards, the Times argues, has involved extending credit to unqualified buyers, and as a result, the home-owning market has become littered with people of questionable finances that are more susceptible to economic shocks – and thus, delinquencies, defaults and foreclosures.

Roger Staiger, an adjunct faculty member at the Johns Hopkins Carey Business School, said in the article that because of the low down payments, this new breed of homeowners are more like rents.

“You’re creating a country of renters who are now renting from the bank,” he said. “Because of this lack of fiscal prudency (sic), we’re never going to become a nation of non-debtors.”

Edward Pinto, a resident fellow at the American Enterprise Institute, summoned the dreaded “bubble” rhetoric, arguing that the extension of credit to questionable buyers will create uncertainty and risk in the system.

“[The FHA] continues to make loans that are very high risk and they’re not pricing them right,” Pinto said. “There’s no incentive to put down a larger down payment. It makes it difficult for the private sector to compete as they price rationally, as private banks cannot compete with irrational pricing.”

Recent data from the FHA would appear to support the two analysts’ perspectives. As of March, 26 percent of the FHA’s loans from 2007 were seriously delinquent, as were 24 percent from 2008. And, 49 percent of the agency’s modified loans were delinquent again after 12 months, with 638,000 loans total (as of September 2011) in their second default. But as is often the case with government lenders, those numbers are only half the story.

First of all, the delinquency data improves dramatically as time progress. Twenty-four percent of the FHA’s 2008 loans may be seriously delinquent, but that number drops to 11 percent for loans originated in 2009, to 4.1 percent for loans from 2010 and all the way down to 1 percent for loans from last year.

New foreclosure and delinquency data is casting shadows on the FHA's finances.

Another round of foreclosures and delinquencies has once again put the FHA’s finances under scrutiny, as the agency’s boom-era loans continue to haunt its books.

According to the latest data from Lender Processing Services, lenders began foreclosure proceedings on 36,400 FHA-backed mortgages in April, which is twice the number from a year ago, according to a Bloomberg report on the agency’s loans.

Delinquencies have not fare much better, but the year of origination plays a huge role in the performance of the loans. As of March, 26 percent of the FHA’s loans from 2007 are seriously delinquent, but for 2008, the total is 24 percent; for 2009, it’s 11 percent; for 2010, it’s 4.1 percent; and for 2011, it’s just 1 percent.

Recent policy tweaks by the FHA have played a big part in that diminishment. In 2010, the agency raised it minimum credit score to 580, along with rising its minimum down payment from 3 to 3.5 percent and limiting seller assistance for down payments from 6 to 3 percent. Then, most notably, it raised its insurance premiums by 75 percent and considered a credit requirement restriction that proved so controversial it all but abandoned the proposal.

Even with those changes, some are still critical of the agency’s relatively low-cost loan offerings. David Lykken, a managing partner at Mortgage Banking Solutions, an Austin, Texas-based consulting firm, was quoted by Bloomberg expressing such a perspective.

“The credit standards are way too loose – you can get into a house with very little skin in the game, and if home prices drop by a small amount, you’re underwater,” he said. “We’ve got to start getting reasonable about standards. What they’ve done so far, some very slight attempts at tightening, don’t really count.”

Modifications have proved semi-successful at stopping the tide of defaults. A study by the Treasury Department found that 49 percent of the FHA’s modified loans were delinquent again after 12 months, and an FHA report from September 2011 stated that 638,000 of its mortgages were in their second default.

As Bloomberg notes, the downward trend in home prices, along with the FHA’s growing influence in the mortgage industry, have contributed to the large numbers. In 2010, the FHA guaranteed 1.1 million single-family loans, its highest total ever and four times the total of its 2007 loans, which was 261,165. Since then, though, home values have depreciated dramatically in some spots of the country, and overall, FHA borrowers now owe nearly 7 percent more than their home is worth if they paid the minimum down payment.

All of the data, inevitably, leads to the FHA’s finances, and whether the agency will be able to weather the delinquency storm that has affected so many other lending institutions. By law, the FHA must maintain a 2 percent capital ratio, but its reserve fund had dropped to 0.24 percent in the FHA’s November report to Congress, a number that opened to the door to numerous doomsday scenarios from analysts.

The FHA has maintained its solvency, and other analysts have viewed the agency’s finances with a bit more restraint. And, the agency received a mammoth, $1 billion cash infusion from the nation’s largest banks as part of the mortgage settlement, and just yesterday, Deutsche Bank agreed to a $202.3 million settlement with the agency.

Builder confidence increased again in May, hitting its highest mark in five years.

Builder confidence hit its highest level in five years in the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) from the NAHB.

A measure of confidence in the newly built, single-family home market, the HMI gained five points from April to May to increase to 29, which is its strongest reading since May 2007.

David Crowe, the NAHB’s chief economist, said that though building is not quite out of the woods, it has markedly improved in recent months.

“While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing consumers back,” Crowe said.

Derived from a monthly survey the NAHB has conducted for 25 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Each of the index’s components rebounded from declines in the previous month. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, respectively, with the traffic component hitting its highest level since April of 2007. The component gauging sales expectations in the next six months rose three points to 34.

Regionally, both the Midwest and South were distinguished by five-point gains to 27 and 28, respectively.

The HMI is hardly the first sign of recovery in the homebuilding sector. Just last week, we reported on big year-over-year gains in the 55+ plus single-family market, and the week before that, the Census Bureau found that construction spending rebounded in March to a 6 percent increase from the year before.

Barry Rutenberg, chairman of the NAHB, said a number of positive economic factors have contributed to the higher builder confidence in 2012.

“Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” Rutenberg said. “It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.”

Business and incomes were up in 2011 for NAR members, after some tough post-boom years.

After a few difficult years, the income and business of Realtors grew in 2011, according to the 2012 National Association of Realtors Member Profile.

A survey of 58,823 NAR members that yielded 6,245 usable responses, the profile found the median income for Realtors rose 2.3 percent in 2011 to $34,900. Also, licensed brokers typically earned $48,400 in 2011, and the median sales for agents was $27,200.

Paul Bishop, NAR’s vice president of research, said the increases in member income are the first since 2002.

“Many Realtors have persevered through very difficult market conditions and understand the cyclical nature of the business, but have never had to endure a cycle like the one that is presently waning,” Bishop said. “The good news is home sales are rising, overall activity is expected to be notably better this year and individual prospects are much brighter given there are fewer Realtors than several years ago.”

Those year-over-year gains are also evident in Chicago’s markets. Bob Floss, the president of the Chicago Association of Realtors and managing broker/owner of Bob Floss and Son Realty, said he has observed increases in business from a professional and educational standpoint.

“Chicago Realtors are busy today and closing more deals so far in 2012 than in the same period in 2011,” Floss said. “Students I teach and others in the field reinforce that there’s a real return to business basics that’s paying off with identifying clients and successfully closing sales.”

Floss added that now that Illinois has transitioned to new licensing requirements for its real estate agents, new opportunities are available to build upon those gains, a development we recently reported on.

“In addition, the recent Illinois license law transition has readied Realtors working today to offer smarter, stronger service to their clients,” Floss said.

Tom Krettler, the co-president of MORe and a broker associate with RE/MAX Northern Illinois, said he has also observed a definite increase in business in 2012.

“I do hear from many Realtors that sales are going quicker,” he said, adding that inventory in his markets of Palatine, Schaumburg and Hoffman Estates has also been “clocking downward,” a cycle that will only create more demand among buyers, as properties become less plentiful and pent-up demand is forced onto the market.

Krettler is currently attending the NAR Midyear Meetings & Trade Expo, and he said that the inventory situation in some of the major cities on the East and West Coasts has been even more pronounced, with some agents at the expo audibly complaining about the lack of inventory.

“They always say that things start at the coasts and move inward,” Krettler said, hoping for a similar situation in due time for the Midwest.

Other income-related stats from NAR’s report included: NAR members who have been in real estate for 16 years or longer earned $50,200 last year, which was higher than in 2011; Realtors who worked 60+ hours a week earned $80,900 (an interesting detail that ties in with our latest Top Producers issue); and 17 percent of members earned a six-figure income.

The report also contained numerous details of the demographics and professional characteristics of NAR members, such as:

• The typical NAR member has 11 years of experience and works 40 hours per week.
• Sixty percent are women, who account for 55 percent of brokers and 66 percent of sales agents.
• More than nine out of 10 Realtors are certain they will remain in the business for at least two more years.
• Thirty-two percent of Realtors hold at least one out of six certifications in specialized training, with the most popular area being the short sales and foreclosures resource certification.
• Repeat business accounted for a median 19 percent of activity in 2011 and is higher for those with more experience – for members with 16 years or more in the business, that number rises to 38 percent.

NAR President Moe Veissi said Realtor training and experience is giving them the edge in today’s market.

“Our members are tapping into resources that give them an edge up on challenging conditions, whether it’s helping a buyer negotiate a distressed sale or find a loan, or in helping a seller with effective marketing,” Veissi said. “Beyond that, we’re fighting for both home owners and buyers in Washington and beyond because homeownership matters to the well-being of this nation.”