Melissa Savenko's Richmond Real Estate Review

Investors Will Be the Main Buyers in Next Several Years - Silver Lining in Dark Clouds?

According to Inman News, real estate investors are likely to be THREE TIMES AS ACTIVE as other types of home buyers over the next two (2) years.  I'm hoping that's a silver lining in a whole heck of a lot of dark clouds in the real estate world.  Makes sense to me.  If you are a lucky soul with extra cash and some savvy, it's a great time to buy undervalued investment real estate.  Foreclosures are a great place to start. But I don't recommend foreclosure auctions until you know what you are doing.  Find some already bank-owned properties, also known as "REO," for "real estate owned" properties. But recognize that most REO properties are going to require more than cosmetic updates.  People that can't pay their mortgage have not been able to keep up with scheduled capital maintenance.  Many REO properties are going to have some significant deficiencies.

My best advice:  If you are new to the game, start slow and start small.  Don't get in over your head on your first deal.  And for goodness sakes, find a good real estate agent experienced in real estate investing.

And the Hits Just Keep Comin' - MORE Bad News in Residential Real Estate

The N.Y. Times published this article on the growing backlog of foreclosed homes currently in the hands of the major banks and mortgage lenders.  Short version:  There is a huge backlog of foreclosed property currently bank-owned that has not yet hit the market, and banks keep taking more back.  Scary statistic: In the Atlanta market, the estimate is the banks are foreclosing on EIGHT properties for every one they sell.  Ouch.

Is the news all bad?  What's it mean for little ole Richmond, Virginia?  I need to think on this one a while.  Meanwhile, like everyone in this business - developers, contractors, home sellers, agents - I am putting my head down and trying to push on through.  May the force be with us.

Changes to the HUD-1 - AGAIN

Looks like the federal government is considering changes to the settlement statement, also known as the HUD-1.  Check out today's Richmond Times-Dispatch article on the topic.  The HUD-1 is the official form document that buyers and sellers receive at a real estate closing that shows who pays what to whom and all the costs and fees that add up to the ultimate cash FROM the buyer and TO the seller.  What is lacking in the current required regime is what every buyer wants to know -  how much cash to I have to bring to the closing table to buy this house?

So, the Consumer Financial Protection Bureau is rolling out the "Know Before You Owe" progam, and asking for public feedback on two proposed forms that would replace the curremt HUD-1.  Check out www.consumerfinance.gov/knowbeforeyouowe to weigh in in the process.

And here is hoping for a kinder, gentler, easier to understand, settlement statement.  And that we don't have to change the financial disclosure process again any time soon. 

BAD News in Residential Real Estate + GOOD News in Commercial Real Estate - What Gives?

So, first thing I read this morning is the Bizsense article "All of a Sudden, Boomtown USA," which describes the over 200% increase in commercial deal value for the first four months of 2011($160.6M), compared with the same time period in 2010 ($47.9M).

The next thing I read is the Richmond Times-Dispatch article, "Homebuilders Say Outlook Remains Soft."  [NOTE:  The online version's article is titled "U.S. Homebuilders Remain Pessimistic," which seems to me a more negative title. I wonder why the discrepancy?]  According to the article, the National Homebuilders Association's projections for the future were its most pessimistic since September 2010.  Which is saying something, since all of 2010 was pretty daggone awful.

So what gives?  How can commercial real estate be looking up, and residential real estate still be on life-support, if not flat-lining?   I don't have any hard evidence or data to back up my findings [I know, I know, for some of my metric-driven colleagues and clients, this makes you crazy].  However, I do have some theories, which I intend to share, just in my next post.  Right now, I have two hours to get my office desk clear enough that a new desktop computer can be installed.  Anyone who has seen my office knows that will be a tall order.  More later....