City Indexes Up

On Tuesday, the Standard & Poor’s/Case-Shiller Home Price Indices officially stated that for the fourth straight month, July 2011 indicated an increase in the 10- and 20-city indexes. Moreover, both records submitted a 0.9 percent increase for the month compared to June. Seventeen of the 20 total cities covered by the reports showed positive improvement over the month, with the exceptions of Denver, which didn’t change at all, Phoenix and Las Vegas. It’s highly probable that the warm weather and summer delight was part of the explanation in the prevention of waning prices.

Annual Rates of Home Prices Changing

“With July’s data we are seeing not only anticipated monthly increases, but some fairly broad improvement in the annual rates of change in home prices,” said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s Indices. “This is still a seasonal period of stronger demand for houses, so monthly price increases were expected and were seen in 17 of the 20 cities.”

Of course, the seasonal “heat wave” of demand was expected this summer, but bear in mind that prices in most of these markets are inferior compared to what was recorded for July 2010. According to the separate S&P/Case-Shiller home-price indexes, most metro areas, including Dallas, Boston, and Atlanta, showed increases for July over June, June over May, and even annually. However, while annual rates indeed exhibited some life, both composites recorded respective annual returns of -3.7 percent and -4.1 percent and are still lagging. This must be why Blitzer only defined annual differences as a “fairly broad” improvement.

Sustained Housing Recovery Still Elusive

“While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery,” he added. “Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery.”

“It should be no surprise that housing remains weak and today’s data does nothing to dispel that idea,” said Dan Greenhaus, Chief Global Strategist at BTIG LLC.

“While the worst of housing’s collapse is most certainly behind us, upward movement has proved fleeting. Prices are still down 31% from their summer 2006 high and with current fundamentals in place, there is no reason to expect significant price increases in coming quarters.”

Consumer Confidence Remains Poor

Call Greenhaus’ analysis pessimism or realism, but it’s synonymous to how the consumers feel. Despite the summer home-price increases, the consumer confidence today remains poor. Private research firm, The Conference Board, observed that September’s consumer confidence index hit 45.4. It did, however, change from 45.2 in August’s results, but the index is measured on a scale of 100.

Even with annual rates in the market on the rise, the deficit to peak years has bogged down the optimism of professionals and buyers alike. As consumers’ concerns focus more toward their own jobs and personal salaries, facing the prospect of decline or even loss of such, they are ignoring buying homes and collectively staring down a long road to recovery.

432 Park Avenue – Best In The City

The building’s tentative name is the same as the address, 432 Park Avenue, a title that is likely to soon be revered nationally.    The CIM Group, along with their partner on the project, Harry Macklowe, a New York developer, expect that upon completion, the project will be a grand success due to the tower’s preferable location to buyers, among other reasons.    In a development space purchased by the CIM Group last year in Midtown Manhattan, many have considered the area one of the most attractive spots to settle not only in New York, but in the world.

$1 Billion Development Produces Tallest Residential Building in NYC

Macklowe and the CIM Group are in high hopes that the project will be a hit also in regards of the funding put into it.    How could they expect any less when the Park Avenue development site alone cost them $305 million, and the final bill is projected in excess of $1 billion?    It ought to be worth it when considering that when completed, the tower would put the current tallest New York residential building, the Eight Spruce Street building, to absolute shame.    The plans unveiled illustrate that the building would exceed 1,300 feet in thin prismatic form, tending to 128 condos.    The tower would, if all goes accordingly, surpass the Empire State Building office tower in height.    The catch to all the excitement is that the building’s future inhabitants don’t know how long they’ll have to wait, as there is no official completion date scheduled yet.    WSJ reported that CIM needs a construction loan of at least $700 million, and with banks both domestically and overseas in the midst of a whirlwind of problems, this is a big order to fill.

High Hopes for New Residential Landmark

Regardless, unless something goes drastically wrong, the tower will be built at some point and people will fill the 5,000 square-foot spaces.    When more is revealed on the construction plans, process, and completion dates, it will no doubt be interesting to watch coverage and national exposure unfold; surrounding what may be a new landmark of prestige in the urban community.

The CIM Group is a full service real estate investor based in Los Angeles, and was founded by Ami Shemesh and Shaul Kuba upon immigration from Israel into the U.S. Their services and information can be found at CIMGroup.com.

Sure, we knew about how many bathrooms we needed (there were never enough) and how many bedrooms would fit all of us.  We could even agree quite often about the size of the garage (again, never big enough).   But that’s about where it ended.  You see, for me, I dreamed of finding a house that I could move into, unpack, toss my feet up on the coffee table and stay awhile without having to replumb, rewire or repaint.  My wife, on the other hand, would still be carrying in boxes from the moving truck as she plotted exactly which shade of beige (during my marriage, I’ve learned that there are roughly 38,000) she would paint the kitchen.

The fact is, men and women are different.  And a recent Coldwell Banker survey learned a lot more about how.   Women would rather live closer to their extended family than their job, and they tend to know faster whether a house is right for them.  Men were more likely to need to see a house two times or more before making a decision, and were far more likely to want to turn an extra room into the proverbial “man cave”; i.e, an entertainment center.

What I thought was particularly interesting, however, was how many (70%) of those surveyed said that they make financial decisions together—something I found very heartening.   After all, things like buying a house are huge commitments for any couple, and both of them should have a say in the process.   And not just choosing the house itself, but also realistically discussing the kind of payment they can afford each month, what kind of financing they’re going to look for, the real estate agent they’re going to choose and the lender they’re going to work with.

And, most importantly, how soon the kitchen has to be painted.

As I see it, this is not only great news for the real estate market, but also for you if you’ve been thinking about buying a home.

You see, just like retailers reduce the price of their merchandise at the end of each season to move it off the shelf, it seems that builders have been reducing the prices of their spec homes in order to reduce debt and get to a more liquid position.    That means that you can get a beautiful, brand-new home with all the upgrades you’ve been wanting for thousands of dollars less than you would have paid even a year ago.

Combine a brand new home with a rate as low as 4.875%, and you’ve got a deal that is in my mind altogether too good to pass up.   Especially if you’re buying the home you will plan on being in for years to come, because you’ll have a virtually unsurpassed opportunity to earn valuable equity when the market recovers.

Now keep in mind that new homes aren’t the only way to go.  Recent reports from the National Association of Realtors reflected that sales of existing homes rose in June for the third consecutive month as well.   That means that people with a long-range perspective—folks just like you—are beginning to take advantage of lower-priced real estate in all of its forms.   And it also means that, if trends continue, we’ll start to see a reduction in the amount of available properties on the market.  And home prices—and values—are sure to follow.

The best way to get started on owning one of these properties?   Work with a loan officer to get pre-qualified.  Make sure he/she is committed to mortgage transparency.  That way when you do go to talk to a real estate agent, you know exactly how much home you can afford—and have the power to make a much stronger offer.

Questions?  Comments?  I’m always glad to hear them.