Jobless claims hit new record
Real Estate News & Commentary by Chris McLaughlin, May 14, 2009
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Jobless claims hit new record
The US Labor Department released figures showing that 637,000 people filed new claims for jobless benefits in the week ended May 9, up 32,000 from an upwardly revised 605,000 in the previous week. The number of people filing claims on an ongoing basis rose to a record high for the 15th straight week. The 4-week moving average of initial claims, which smoothes out volatility in the measure, rose 6,000 to 630,500. The most recent data available shows 6,560,000 claims filed on a continuing basis — the highest number since the Labor Department started tracking the data in 1967 and an increase of 202,000 from the previous week. Most of the increase was due to auto layoffs — Chrysler LLC has laid off 27,000 workers in the wake of its April 30 bankruptcy filing and General Motors has said it will temporarily shut 13 factories beginning later this month, potentially affecting 25,000 workers.
Banks were forced to take TARP
Documents obtained by the conservative legal watchdog group Judicial Watch, through the Freedom of Information Act (FOIA), show that the CEOs of nine major banks were given no choice but to take TARP funds. According to a document marked “CEO Talking Points” prepared for then-Treasury Secretary Henry Paulson, “if a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance …” and warned, “We don’t believe it’s tenable to opt out because doing so would leave you vulnerable and exposed…We plan to announce the program tomorrow and that your nine firms will be the initial participants. We will state clearly that you are healthy institutions, participating in order to support the U.S. economy.” The Treasury Department had no comment.
Mortgage loan originations down
The Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations shows that commercial and multifamily mortgage loan originations continued to drop in the first quarter of 2009 to the point that they’re 70 percent lower than during the same period last year and 26 percent lower than during the fourth quarter of 2008. According to Jamie Woodwell, Vice President of Commercial Real Estate Research at the Mortgage Bankers Association, “In the first quarter of 2009 we saw the effects of the continued recession coupled with little demand from borrowers and a constrained supply from lenders as a result of the credit crunch. The net result was low levels of new originations.”
The 70 percent overall decrease in commercial/multifamily lending activity during the first quarter was driven by decreases in originations for all property types. When compared to the first quarter of 2008, the decrease included an 88 percent decrease in loans for hotel properties, an 80 percent decrease in loans for health care properties, a 76 percent decrease in loans for retail properties, a 66 percent decrease in loans for office properties, a 61 percent decrease in multifamily property loans, and a 50 decrease in industrial property loans.
Producer Price Index up
According to a report by the US Labor department, the Producer Price Index climbed 0.3 percent after declining 1.2 percent in March, driven by the biggest increase in food prices since January 2008. Excluding food, the headline PPI would have increased 0.1 percent. However, compared to the same period last year, prices received by producers tumbled 3.7 percent, the biggest decline since January 1950, keeping the risk of deflation alive. Core producer prices, excluding food and energy costs, rose 0.1 percent in April. The core PPI was unchanged in March.
Now on to our real estate investor education tips section …
SWOT for Short Sales
A SWOT analysis is typically considered an academic way to analyze the pros and cons of any given strategy but short sale investors should not overlook this powerful yet simple tool. It’s easy, elegant and ever-so powerful when combined with real estate investments.
SWOT Stands For…
SWOT stands for strength, weakness, opportunities and threats.
You should quickly notice that there are helpful and harmful aspects as well as external and internal factors that impact each category. Let’s use a short sale property to demonstrate; property X is ten years old, located in a good school district and is priced right. It’s located on a somewhat busy street with high visibility. The county is considering expanding the road in the future which could impact the potential sale of the property. Cosmetic upgrades are needed including an overgrown lawn, paint and general deferred maintenance. The owner is highly motivated but has little to no savings to help relocate.
Using the above information it is possible to quickly analyze the property using SWOT…
Strengths:
· Priced Right.
· Minimal Repairs – easily managed
· Good schools/desirable area
· Motivated owner
· Easy advertising due to visible location
Weakness:
· Busy street – may not go commercial and could detract from desirability in short term
· Owner has few/no resources and may need help
· Not ready to rent or sell-will require input
· Ten years old – higher insurance and holding costs/mature
Opportunities:
· Potential to turn commercial at some point in the future?
· Consideration to rent/hold strategy?
· Re-sale right away to right buyer
Threats:
· Bank or other investors may spot future potential as early acceptable risk.
· Road expansion could result in destruction of property value depending upon residual space remaining.
· Imminent domain?
Consider adding a SWOT analysis to your investment tool box; not only is it a great way to get a handle on the major issues surrounding any given property but it helps clarify and identify both risk and reward scenarios.
See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com/welcome.html
P.S.
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Copyright Loss Mitigation Institute 2009.
All Rights Reserved.
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid flipping of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner and Supervising Broker of one of Florida’s
largest Real Estate firms, running 4 different
offices, supporting nearly 450 agents, uniquely
positioning him to help thousands of investors
make money in the biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
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