Commercial construction activity to drop in 2009 and 2010

Real Estate News & Commentary by Chris McLaughlin, July 13, 2009

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris

How Loan Modification Can Make You Rich:

Join Us Tuesday Night for a Special Webinar

Join Nathan Jurewicz as he interviews the

nation’s leading expert on Loan Modifications

and how you can take this information and make

an extra $10,000 or $30,000 a month working PART TIME!

This incredible webinar will give you exact details

of how you can do 3 simple things that you can even

farm out and it will Fix this Economy, Make You Money,

and Help Home Owners all in one very easy 3 step

process that is repeatable and is guaranteed!

And it doesn’t cost you a cent to find out about it:

https://www2.gotomeeting.com/register/675252714

Commercial construction activity to drop in 2009 and 2010

commercialconstruction Economic downturn will lead to a drop in construction activity this year and next, according to the American Institute of Architects (AIA). In its report, AIA says spending on construction of offices, retail centers, and hotels will fall 16% in 2009 and 12% in 2010. “We’ve had a really rocky six months in the economy and in the construction sector,” said Kermit Baker, AIA’s chief economist. “People are seeing a real tough environment out there and not a lot of incentive to invest in projects.” Economists do not see any of the indicators being conducive to growth in commercial construction. Jobless rate is nearing 10% while consumer sentiment is showing no signs of improvement. Economic recovery is critical to commercial construction since non-residential construction lags behind the economy. “Why do you build new office buildings? You need to see job numbers pick up,” Baker said. “Why do you build new retail centers? You need to see consumer spending pick up.” According to AIA, hotel construction is likely to drop 26% in 2009 and 17% in 2010, while industrial spending will drop 0.8% in 2009 and 28% in 2010.

“The credit pendulum is stuck at stupid”

stupid While analysts say buyers are getting great deals in the housing market, home buyers are not finding it easy to get a loan. Blame it on tightening of credit norms; even people with good credit score are denied loan. In addition, new norms such as borrowers having to produce at least 2 years of sufficient tax returns are posing problems for first-time buyers who have just begun their career. Bankers and brokers believe many borrowers who are being refused home loans now would have most definitely been accommodated in the past when lending norms were lot more lenient. “The credit pendulum is stuck at ‘stupid,’” said Lou Barnes, an owner of Boulder West Financial Services, a mortgage bank. “I am turning down loans every day that my grandfather in his Ponca City, Okla., savings and loan in 1935 would have been happy to make. And he was tough.” Fannie Mae recently changed its policies to count only 70% of the value of stocks and bonds towards valuing borrowers’ assets while considering their loan application. Earlier, 100% of the value was considered. Stuart Fraass of Guaranteed Rate, says, “If you’re self-employed, you have virtually no chance of getting a mortgage now.” While no one wants to return to lax lending standards of 2006 which led to the housing bubble, analysts believe excessive tightening of credit norms could hurt a housing market recovery. Banks, having been bitten, are shy now; at least for the time being.

No takers for luxury homes

Remember Veblen goods, those that defy law of demand? Veblen goods are high-status goods, the demand for which rises when price increases. Buyers’ perception of exclusivity may go up when the price rises, thereby making the good even more preferable. Luxury homes, which seemed to defy the law of demand in the past, have been impacted in the current economy. “In the high end we always kind of thought we were immune to this stuff,” says Christy Smith, president of Casas del Oso Luxury Homes. According to Smith, his company sold luxury homes even before they were completed, in this past. Things are changing now. “After 9/11 we didn’t miss a beat,” says Smith. “But this time with all the stuff on Wall Street there’s a lot of hesitancy.”

A study of decline in the housing market reveals that high-end homes have fallen more in value than lower-priced homes. Ken Shuman, spokesman for Trulia, says sellers reduced prices of $2 million and above homes by 14.3% in June as against a 9.75% drop for homes that are less than $2 million. In addition, large mortgage loans are more difficult and expensive to get than smaller loans. “There is no second market for jumbo mortgages right now,” says Peter Grabel, a mortgage banker with Luxury Mortgage. Analysts don’t see the high-end housing market recovering in the near-future. “I think it’s going to be a long time,” says Jim Randel, a Connecticut real estate attorney and author of “The Skinny on the Housing Crisis.” Randel said: “I don’t know if that means five years, ten years or what.”

States introduce program to help homeowners

According to a report prepared by the State Foreclosure Prevention Working Group of the Conference of State Bank Supervisors last spring, about 80% of the struggling homeowners had not taken advantage of the mortgage-modification program. State governments, realizing the need to do their bit, have introduced programs to help homeowners. New Jersey and Connecticut have programs which require lenders to meet with borrowers and court-appointed mediators during the process of foreclosure. The idea is to see if the number of foreclosures can be brought down. Roberta Palmer, who oversees Connecticut’s Foreclosure Mediation Program, says, “When people are in crisis, the more you ask them to do, the less likely it is they’ll participate.”

According to Palmer the program has so far attracted 2,500 borrowers to mediation and nearly 60% have reached settlements that permit them to remain in their homes. In New Jersey, 614 borrowers qualified for mediation by end May, and of those, 223 have reached settlements allowing them to keep their homes, according to Eric Max, the director of the Office of Dispute Settlement at New Jersey’s Department of the Public Advocate. New York has introduced a pilot project with $20 million of city funds, to convert empty or stalled condominium developments into affordable housing. “It’s not going to solve all of these problems by any means but it allows us to throw out a net and see what we pull in,” said Marc Jahr, president of New York City’s Housing Development Corporation. “We see an opportunity here to really capture affordability at a relatively inexpensive price to the public and to do it in a timely manner.”

President Obama says stimulus plan is working

President Barack Obama in a statement last week said the stimulus plan is working as intended. “It has already extended unemployment insurance and health insurance to those who have lost their jobs in this recession,” said Obama. Critics of the stimulus plan say the $787 billion initiative has not done enough to stimulate the economy. House Minority Whip Eric Cantor of Virginia said the economic recovery plan was “full of pork- barrel spending, government waste and massive borrowing cleverly called ‘stimulus.’” Cantor said: “The plain truth is that President Obama’s economic decisions have not produced jobs, have not produced prosperity, and have not worked.” The rising jobless rate is having an impact on Obama’s rating. A survey by Quinnipiac University conducted in June shows 49% of Ohio voters approved of Obama’s job performance, down from 62% in the May survey. The disapproval figure for Obama was 44%, up from 31% in May. Obama said the measure “was not designed to work in four months — it was designed to work over two years.”

Now on to our real estate investor education section…

Five Habits of Highly Effective Short Sale Entrepreneurs

What differentiates those that achieve success in short sales from the rest? Often less than you might imagine. With a bit of practice, patience and planning anyone can go from novice investor to self-made success with these five habits of highly effective short sale entrepreneurs.

Courage. Sounds easy enough but like the cowardly lion in the Wizard of Oz, acting upon that which we already own isn’t always easy. Courage is expressed in many different ways but unlike other activities, investing in real estate can’t be invented – there are no guarantees and very few ways to “spin” losses. In some ways investing in real estate is a lot like a sales job that is paid on compensation – it’s a direct measure of your own personal productivity and effectiveness. Now, here is a little known fact discovered by researcher Thomas Stanley in his ground-breaking work regarding the affluent…the number one reason top sales professionals are more successful than others is their ability to ask one simple question; “Will you do business with me?”. It’s the key to self-made success and requires little more than the courage to ask.
Knowledge. The second most important habit of effective short sale entrepreneurs is a constant thirst for knowledge. They routinely stay up to date on the world around them as well as invest in their own success by working with mentors, reading and taking the time to know more than others. Plain and simple, learn everything there is to know about your market, your type of investment property, your financial options and other relevant information. Hire experts for those areas outside of your expertise.
Think Big. Effective short sale entrepreneurs might start small but they think big. They are not satisfied with the status quo nor do they falter when confronted with resistance or obstacles; instead, they merely recognize these as the natural growing pains associated with expansion. Likewise, the most successful entrepreneurs surround themselves with people more successful than themselves rather than vice versa. Forget the ego trip that comes from being the wealthiest, smartest or most savvy investor in the room…instead, opt for the opportunity, knowledge and networking potential that comes from being the least successful in the room.
Credible. Without a doubt, the most successful short sale entrepreneurs take great pains to differentiate themselves through a stellar reputation, high level of integrity and credibility. Rather than empty promises, effective entrepreneurs rely upon testimonials, proven results and a track record of success.
Consistent. “When the going gets tough the tough get going” is a sentiment that accurately reflects those that earn success versus those that eventually falter or fade away. Short sales are not easy profits – contrary to what some might think. While it is true you can earn a sizable income and provide ample time for other interests in life, mastering short sales from the ground up without the benefit of training, resources or mentors can literally take years. Success comes to those that are prepared for the long haul and differentiates the men from the boys (so to speak). While it might be possible to “get lucky” now and then, most short sale investors fail to achieve meaningful results – the life changing results that make a true impact for years to come- because they didn’t invest in their own training, networking or knowledge. Instead, they took the ‘Easy come –easy go” route.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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 reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner 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
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris

commercial construction