Florida Commercial News - Land, Development, Building, Business

A new bill is making its way through the House of Representatives right now that may meet with success up in Congress since it's a bipartisan effort: introduced yesterday, HR 1255 just may become law this year. (An identical version of this proposal failed to become law as HR1755 last year.)

Home Construction Lending Regulatory Improvement Act of 2013 

Which is good news for home builders around the country, because the proposed "The Home Construction Lending Regulatory Improvement Act of 2013" aims to help home builders get credit for their residential developments.  

What will HR 1255 do?

Right now, federal regulations are seen as thwarting home builders in their efforts to get financing to go forward with new projects.  As a result, in March 2013 we have a small number of new homes to offer buyers while builders are not able to get new construction loans to build more new houses because banks cannot loan them money.  

If passed, this new law means American home builders would be able to get credit in order to build their projects much easier than they can right now.  How?  Among other things:

1. The new law would free qualified lenders with real estate loans making up 100% of their capital to make new real estate loans to home builders.
2. It would end the ability of the federal government to block a home builder from getting a loan on a project from a qualified lender. 
3. It would block federal agencies from forcing a lender to call in a home builder's real estate loan if it's in good standing. 
4. If the collateral on a builder's loan has lost value, a builder in good standing on its loan would be able to work with the lender to maximize the situation through workouts, etc. 

The National Association of Home Builders issued a release yesterday applauding this proposed law.  From the NAHB:

“We commend Reps. Miller and McCarthy for acting to remove a major impediment to the housing recovery by promoting legislation that will enable home builders to obtain construction loans in order to put construction crews back to work and to meet rising demand across much of the nation for new homes,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. 

 You can read the full text of HR 1255 online soon (it was not available today), as well as track its progress through the House and Senate.  

RealtyTrac has issued its analysis of distressed residential sales across the United States, and state by state, in 2012 and the news shows that almost half these sales involved some kind of distressed property.

Officially titled the RealtyTrac® Year-End and Q4 2012 U.S. Foreclosure & Short Sales Report™, the report can be read online here.

Overall, the RealtyTrac analysis found almost a million homes either in the foreclosure process or were already REO (owned by the bank) were sold in 2012 (sales of 947,995 properties), and these amounted to 21% of all foreclosure-related residential real estate sales nationally. 

This sounds bad, and it's definitely not good; however, consider that this percentage was much higher, at 28%, two years ago. 

Non-foreclosure short sales made up 22% of 2012's residential home sales.  Take this number and add it with the earlier tally, and the year's percentage of sales that involved distressed properties works out to 43%.

“Although foreclosure-related sales represent a shrinking share of total sales, primarily because of fewer bank-owned purchases, distressed sales are still a disproportionately high portion of the overall housing market,” said Daren Blomquist, vice president of RealtyTrac. “And while distressed properties — whether bank-owned, pre-foreclosure or short sales not in foreclosure — are still selling at a significant discount compared to non-distressed properties, average distressed property prices are increasing in many markets thanks to strong demand and limited inventory.”

Also from the report are the following findings:

• In Florida (and 11 other states), there were less REO sales than there were pre-foreclosure sales.
• Florida saw an increase in pre-foreclosure sales in 2012.
• Florida was one of the states with the largest number of non-foreclosure short sales in 2012, tying with Michigan and Nevada for the number one spot (each at 33%).
• Foreclosure-related sales were 25% of Florida's total residential sales in 2012.

Last week, a bipartisan commission of former Cabinet secretaries, ex-Senators, economists, and experts in various aspects of the American housing industry or market issued their report on how things are and how things should be in the future.  

Read their report, entitled "Housing America’s Future: New Directions for National Policy" here.

The press release issued by the Bipartisan Policy Center, and the reaction by the Mortgage Bankers' Association to this report, are shown below in our news releases of the week:

Bipartisan Policy Center Commission Recommends New Systems for Housing Finance and Federal Rental Assistance 

Demographic shifts transform nation’s housing needs 

Feb. 25, 2013

Washington, D.C. – A bipartisan commission of former Cabinet secretaries, former Senators and other leading housing and economic experts unveiled a new vision for housing policy today, which aims to further our nation’s economic recovery and improve the lives of millions of Americans. The recommendations propose scaling back the government role in the nation’s housing finance system and reforming housing assistance programs to better meet the needs of America’s most vulnerable households. 

The commission is co-chaired by former Senate Majority Leader George J. Mitchell, former Senator Christopher S. “Kit” Bond, former Senator and HUD Secretary Mel Martinez, and former HUD Secretary Henry Cisneros, and includes 17 other individuals from diverse professional and political backgrounds. 

The report from the Bipartisan Policy Center’s Housing Commission, entitled Housing America’s Future: New Directions for National Policy, proposes a new housing finance system that calls for a far greater role for the private sector, a continued but limited role for the federal government, the elimination of Fannie Mae and Freddie Mac, and reform of the Federal Housing Administration to improve efficiency and avoid crowd-out of private capital. 

Through these reforms, the plan would address the broken mortgage finance system while creating a stable and strong housing market that provides greater taxpayer protection and supports a more vibrant economy. 

“At this critical time in our nation’s history, we can no longer afford to defer bipartisan action on housing,” said the co-chairs in an op-ed in POLITICO today. “We believe our report can serve as a framework for Congress and the administration to act in the best interests of all Americans.” 

“Profound demographic changes are transforming the country and our housing needs. The aging of the Baby Boomers, the formation of new households by millions of young Echo Boomers striking out on their own, and the increasing diversity of the American population will present new challenges and opportunities for housing providers and policy makers.” 

The plan calls for reforms that would establish a new performance-based system for delivering federal rental assistance with greater devolution of responsibilities to state and local providers. The commission also proposes to shift existing resources to assist more effectively the most vulnerable households, and to preserve and expand the Low Income Housing Tax Credit program to increase the supply of affordable rental housing. 

For first-time home buyers, the report emphasizes the importance of housing counseling as a means of preparing for homeownership. The commission recommends proposals to enable seniors to “age in place” safely and affordably while integrating housing with health care and other programs. For the one-third of Americans who live in rural areas, the commission recommends continued support for homeownership and rental assistance in those communities. 

“Six years after the collapse of the housing market, the problems in housing remain as severe as ever and solutions continue to be elusive,” says the op-ed. “We hope [our report] will serve as a catalyst for action.” 

To read the full report of the Bipartisan Policy Center’s Housing Commission, please visit http://bipartisanpolicy.org/library/report/housing-future. 

###

Statement of MBA’s David Stevens on Bipartisan Policy Center’s Housing Commission Report

WASHINGTON, D.C. (February 25, 2013) – David H. Stevens, President & CEO of the Mortgage Bankers Association (MBA), issued the following statement in response to the Bipartisan Policy Center’s Housing Commission (the Commission) report America’s Housing Future: New Directions for National Policy.

“The release of today’s report represents another important step forward in the debate over the future of the government’s role in housing. As the recovery in the housing market and the broader economy continues to gain momentum, it is critical that all stakeholders work together with policymakers to identify positive solutions that will support both owner-occupied and rental housing finance. 

“There is widespread agreement that the government’s footprint in housing finance is currently too large. The Commission’s report rightfully highlights the need for a greater role for private capital in bearing credit risk, while also acknowledging the continued desire for a limited government function to ensure sufficient mortgage liquidity for qualified borrowers, particularly in times of market stress. 

“We are pleased to see that the Commission’s framework closely follows that of MBA and others who have called for a new secondary mortgage market structure where private capital is placed in the first-loss position, with a federal backstop of mortgage backed securities (MBS) paid for by the entities that issue or insure the MBS. It is important that any secondary market proposal both meet policy objectives, in terms of ensuring secondary market liquidity, and support vibrant, dynamic, and competitive primary and secondary markets for the ultimate benefit of homeowners. 

“The Commission also rightfully identifies a number of other issues facing lenders that are causing an overly tight credit environment that limits financing for qualified borrowers, including ‘put-back’ risk and uncertainty in regulatory mortgage rule-making. 

“Likewise, the Commission’s report recognizes the important role of a robust rental housing market for the approximately 35 percent of Americans who do not own their own home. MBA shares the Commission’s concerns about the importance of a sufficient supply of multifamily rental housing, particularly for low-income families. 

“As we have the opportunity to further digest the Commission’s report, MBA looks forward to working with the Commission to identify and discuss issues where our views may be divergent.” 

###

Foreign investment in South Florida real estate has been a tremendous boost to the local economy in the past several years, and now it appears that banks are becoming more accommodating to these international buyers of local real estate, particularly housing -- and especially luxury single family homes.

For several years, foreign buyers of Miami real estate either had to deal with their lenders in their home countries or bring cash to the closing table.  For many foreign buyers, particularly those from Latin America, cash buys of condos and other Miami real estate was not that strange: in their local economies, cash buys are much more commonplace than they have been in the United States.  

For more details, check out our earlier posts on growing number of foreign cash buys of homes in South Florida including:

• Florida International Real Estate Investment Soars in 2012 Media Coverage: Foreign Investors' Cash Buys in Miami Real Estate Generating a Growing Excitement; and
• Venezuelan Capital Flight to South Florida as Venezuelan Nationals Consider Relocating to Miami Area After Hugo Chavez Re-Elected

U.S. Banks Opening Lending to International Buyers of Residential Real Estate 

In 2013, it appears that American lenders are discovering a profit niche in offering mortgages to foreigners who are interested in buying U.S. real estate.  Among them, First Choice Bank, Citi, and Deutsche Bank.  

True, these lenders are dipping their toes into this market: they are limiting the properties they'll consider to luxury homes (high dollar buys) and they're tending to go with borrowers with whom they've had a past banking relationship.

Addressing the risk involved in loaning significant sums to foreign borrowers, these mortgages also face additional requirements, things like requiring up to half the purchase price as a down payment on the deal and requiring the borrower to open an account at the lending bank where a minimum balance equal to one or two years' mortgages payments must be maintained.  

South Florida Residential Real Estate Target of Foreign Real Estate Buyers

According to the National Association of Realtors in their Research Division's report "Profile of International Home Buyers in Florida 2012," the most popular places for international real estate investment in Florida are:

1. Miami / Miami Beach
2. Fort Lauderdale
3. Orlando - Kissimmee
4. Brandenton - Sarasota - Venice
5. Palm Beach
6. Cape Coral - Fort Myers
7. Tampa - St. Petersburg - Clearwater.

Their report also revealed that 82% of these foreign buys of Florida real estate were cash transactions.  European and Latin American buyers tend to buy higher priced homes and condos; Canadians buy a lot of Florida property, but they tend to buy more reasonably priced properties (between $150-200,000).

This month, the Miami Association of Realtors released numbers regarding foreign buyers of Miami real estate, and in the Miami area, 90% of international buyers of Miami residential property was in cash last year.

What will happen as these foreign buyers with the ability to buy properties in cash have the opportunity to purchase Florida real estate with an American mortgage?  One can assume that the number of foreign sales of residential real estate will jump - and this is good news for Florida's economic future.  

From Houses.com:  Average prices in 6 Miami-Dade areas specifically, saw very high increases when compared to the end of last year....While international buyers come from all over the globe, Canada, China, Mexico, India and the United Kingdom account for 55% of all transactions in the U.S.... Florida is one of four states that comprise 51% of all international transactions in the U.S.

Goldman Sachs is an international investment banking legend, having been around since 1869 and when Goldman Sachs issues its opinion on the economic future of an industry or economic segment, many respect and value what the Research Division at Goldman Sachs is predicting.

This week, Goldman Sachs' analysts Hui Shan and Jari Stein are forecasting home sales in the United States will continue to rise over the next several years.  They are giving numbers here:  

• 5.2 million in 2013;
• 5.7 million in 2016.

Goldman Sachs is also predicting unemployment to drop (prediction: 6.2% by 2016) and home prices to rise (17% by 2017).  

The National Association of Realtors Shows Rising Home Sales

Meanwhile, the National Association of Realtors reports that in January 2013, home sales rose and the NAR's chief economist, Lawrence Yun, is explaining this as being the result of a growing number of sellers and a steady rise in home prices:

"Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said. "In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We've transitioned into a seller's market in much of the country."

According to the NAR, the total existing home sales (seasonally adjusted annual rates) are:

• January 2013 4.92 million 
• December 2012 4.90 million 
• January 2012 4.51 million 

Skeptics Don't Agree with Goldman Sachs

Of course, not everyone agrees with these nice, juicy housing forecasts.  Yale economist Robert Shiller is one voice of skeptism here, telling CNBC interviewers that things are not that clear on the housing horizon.  Maybe housing will rise, but Shiller is of the opinion that it's not that certain (yet).

And as we all balance these opinions and evaluate things, there is that about-face that Goldman Sachs did last March, when Hui Shan announced that the December 2011 predictions were not panning out and that the predicted housing recovery wasn't happening then, after all.  

How to value Goldman Sachs' latest report?  Well, maybe the investment banking research hasn't always been accurate - but Goldman Sachs has been around for many, many years - withstanding many economic valleys.  There's merit in considering what their research team is reporting this week.

Image:  Marcus Goldman (1821 - 1904) one of the founders of Goldman Sachs.

Earlier this month, we shared the perspective of national Mortgage Bankers on the commercial real estate market in 2013. Now, in this news release of the week, is a similar perspective from another group of industry experts:   the National Association of Realtors together with the Real Estate Research Corporation, and Deloitte, giving more good news about the future of commercial real estate in Florida and elsewhere:

Commercial Real Estate Investors Eager to "Turn the Page," According to New Outlook Report

CHICAGO - Frustrated by continued uncertainty, a sluggish recovery, and a challenging investment environment, investors generally appear eager to put the past behind them and adjust to the new normal, as outlined in Expectations & Market Realities in Real Estate 2013—Turn the Page, a new annual report published jointly by Real Estate Research Corporation (RERC), Deloitte, and the National Association of REALTORS® (NAR). According to the report, investors appear to realize that this environment will likely be with us for the foreseeable future, and that adjustments may need to be made to maximize commercial real estate investment performance and yield in our continuing slow-growth economy. 

The three organizations have drawn on their respective capabilities to examine the economy, capital markets, and commercial real estate property markets; to thoroughly assess and analyze existing research; and to offer an outlook for commercial real estate for 2013 and beyond. Findings indicate that the economy is expected to improve only modestly in 2013, with the budget deficit, tax increases, and cuts in government spending expected to continue the economic uncertainty. In general, capital remains available for commercial property investments, but the discipline for capital has been inching upward and is becoming more selective. The report also carefully analyzes and offers an assessment of the office, industrial, apartment, retail, and hotel property sectors, as well as for commercial real estate as an asset class, for 2013. 

“It is time to stop waiting for the economy and the investment environment to get better. This is it—this is the new normal—and we need to turn the page on the past and make the adjustments needed to be successful for the balance of this decade,” stated Kenneth Riggs, Jr., chairman and president of RERC. “Investors are facing the challenges ahead, and commercial real estate continues to be an attractive investment for a variety of reasons in this economic climate.” 

“Moderate positive and stabilizing trends in commercial real estate markets are expected to add value to institutional portfolios as we turn the page to the next chapter of the real estate cycle,” noted Matthew Kimmel, principal and U.S. real estate sector leader for Deloitte Financial Advisory Services LLP. “Overall the office, industrial, retail, apartment and hotel property sectors are expected to experience various elements of slow fundamental increase and growth.”

The group expects the commercial real estate recovery to continue throughout 2013. “A pent-up demand for commercial property space has been developing with the nearly 5 million net new job creations in the past three years,” noted Lawrence Yun, Ph.D., NAR chief economist. “That demand steadily reaching the market, combined with little new construction, will likely help lower vacancy rates and push up rents.”

This week, the Mortgage Bankers Association (MBA) released its Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, and it's nice to read good news in forecasts by experts into the future of commercial real estate development in this country.  It's been awhile as the nation, especially the Sunshine State of Florida, had to deal with the past few years' housing crises, banking scandals, and unprecedented industry financial valleys.

Mortgage Bankers Forecasting Good Things for Commercial Real Estate in 2013 

According to the Mortgage Bankers Association, there will be a jump in the originations of commercial and multifamily mortgages of $254 billion this year.  That's going to be higher than 2012 by 11%.  It gets better: the MBA is forecasting this to be $289 billion two years from now, in 2015. 

"2012 was a strong year for the commercial and multifamily mortgage markets, and 2013 is shaping up to continue the growth,” said Jamie Woodwell, MBA’s VP of Commercial Real Estate Research. “Despite a 21 percent decline in the volume of commercial and multifamily mortgages maturing this year, we expect origination volumes and the amount of mortgage debt outstanding will both increase. Our forecast anticipates Fannie Mae, Freddie Mac and FHA, as well as life insurance companies, will all continue to have strong appetites for making loans, and—coupled with growth in originations for CMBS—the total market will continue to expand.”

Meanwhile, MBA predicts that outstanding commercial/multifamily mortgage debt will exceed $2.4 trillion by the end of this year (2% higher than 2012) and over $2.5 trillion at year-end 2015. 

Read and download the MBA Report here.

National Association of Realtors Commercial Real Estate Forecast for 2013

Meanwhile, the National Association of Realtors released its predictions for commercial real estate sectors in the United States a couple of months back in their Commercial Real Estate Outlook (CREO).    

Among their forecasts, 2013 will see declines in vacancy rates as follows:

• 1.0 percentage point in the office market;
• 0.6 point in industrial;
• 0.2 point for retail;
• 0.1 point in multifamily.

The Realtors' Report also predicts the following in 2013:   

Office Ma​rkets

Vacancy rates in the office sector are projected to fall from an estimated 16.7 percent in the fourth quarter to 15.7 percent in the fourth quarter of 2013.... 

Office rent is expected to increase 2.0 percent this year and 2.5 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 21.7 million square feet in 2012 and 49.0 million next year. 

Industrial Markets

Industrial vacancy rates should decline from 10.1 percent in the fourth quarter of this year to 9.5 percent in the fourth quarter of 2013. 

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.3 percent; Los Angeles, 4.4 percent; and Miami at 6.5 percent. 

Annual industrial rent is forecast to rise 1.7 percent in 2012 and 2.2 percent next year. Net absorption of industrial space nationally will probably total 93.4 million square feet this year and 89.6 million in 2013. 

Retail Markets

Retail vacancy rates are expected to ease from 10.8 percent in the fourth quarter to 10.6 percent in the fourth quarter of 2013. ...

Average retail rent should increase 0.8 percent this year and 1.4 percent in 2013. Net absorption of retail space is estimated to be 9.1 million square feet this year and 19.8 million in 2013.

Multifamily Markets

The apartment rental market - multifamily housing - is projected to see vacancy rates decline from 4.0 percent in the fourth quarter to 3.9 percent in the fourth quarter of 2013; vacancy rates below 5 percent are considered a landlord's market with demand justifying higher rents.... 

Average apartment rent should increase 4.1 percent in 2012 and another 4.6 percent next year. Multifamily net absorption is likely to be 219,700 units this year and 234,600 in 2013.

Read the National Association of Realtors' report online here.

Image: Wells Fargo Center in Miami, Florida (Wikimedia Commons)

If the internet is any indication of interest in real estate purchasing and investment - and most real estate brokers argue that online searches are a valid indicator of buyer interest (not just where, but in what kinds of properties) then Florida real estate developers and those selling real estate here in Florida should take note of Trulia's latest study, detailed here in our News Release of the Week.

February, it seems, is the hottest month for Florida real estate buyers to be interested and investigating property here:

TRULIA IDENTIFIES STATE-BY-STATE SEASONAL REAL ESTATE SEARCH PEAKS AND VALLEYS

Bucking Typical Springtime Real Estate Season, Online Home Searches Highest in February in Florida and in August in Montana and Oregon

SAN FRANCISCO, January 30, 2012 – Trulia (NYSE: TRLA) today published the findings from the Trulia Real Estate Search Report, which tracks and analyzes the online search behavior of U.S. house hunters. Based on all home searches on Trulia from 2007 to 2012, this study provides the inside scoop on the seasonal peaks and valleys in real estate search activity across all 50 states. To see the seasonal pattern, we used a seasonal adjustment model to strip out the upward trend in our search traffic, to reveal whether a state’s search activity in each month is above or below the annual average for that state.

Online House Hunting Hot in March and April, Cold in December

After the holidays, prospective homebuyers and renters typically begin or renew their home search at the start of a new year. At the national level, online real estate search activity picks up in January and reaches its peak in March and April, after stripping out the upward trend from Trulia’s traffic growth over time. Following a slight dip in May, a second peak occurs during the summer months of June and July. As the year ends, home searches slow down, hitting their lowest level in December.

Home Searches in Hawaii, Florida, Montana and Oregon Peak Off-Season

While most online home searches happening at the state level correspond with typical seasonal patterns, local markets follow their own rhythms. For example, in January, search activity in Hawaii and Florida is more than 10 percent above each state's annual average, but almost 10 percent below the annual average in Maine. Meanwhile, summer is when searches peak in the South, and a few states in the Northwest and Northeast. The last two states to peak are Montana and Oregon in August. By October, every state is below its annual average of search activity, and in December, every state is 10 percent or more below its annual average.

When Online Real Estate Searches Peak

Month / U.S. State

January

Hawaii

February

Florida

March

Arizona, California, Delaware, Georgia, Idaho, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Pennsylvania, Virginia, Washington

April

Colorado, Connecticut, District of Columbia, Illinois, Indiana, Kansas, Minnesota, New York, North Dakota, South Dakota, Utah, West Virginia, Wisconsin

May

*

June

Mississippi

July

Alabama, Alaska, Arkansas, Louisiana, Maine, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Wyoming

August

Montana, Oregon

September

*

October

*

November

*

December

*

* Indicates that real estate search activity does not peak in any state during this month.

PRE-APPROVED QUOTES

“Home-search activity swings with the seasons in every state. Buyers and sellers can use these ups and downs to their advantage,” says Jed Kolko, Trulia’s Chief Economist. “Sellers looking for the most buyers should list when real estate search traffic peaks. Buyers, however, should think about searching off-season, when there is less competition from other searchers.

“Local weather patterns have a big impact on when people search for homes online. If it’s too cold or wet to check out open houses, people search less online,” says Jed Kolko, Trulia’s Chief Economist. “Search activity in warm-winter states, like Florida and Hawaii, peaks in January and February. But for most of the country, search traffic is highest in March or April, especially in regions where summer brings rain. In general, people search more online when it’s warm and dry outside.”

MULTIMEDIA

To view the full Real Estate Search Study, click here.

To view an interactive U.S. map illustrating the peaks and valleys of online real estate searches across the country, click here.

ABOUT TRULIA, INC.

Trulia (NYSE: TRLA) gives home buyers, sellers, owners and renters the inside scoop on properties, places and real estate professionals. Trulia has unique info on the areas people want to live that can't be found anywhere else: users can learn about agents, neighborhoods, schools, crime, commute times and even ask the local community questions. Real estate professionals use Trulia to connect with millions of transaction-ready buyers and sellers each month via our hyper local advertising services, social recommendations, and top-rated mobile real estate apps. Trulia is headquartered in downtown San Francisco. Trulia is a registered trademark of Trulia, Inc.

For further information: Daisy Kong, pr@trulia.com, 415.400.7391

The federal government, through the Federal Housing Finance Agency which oversees Freddie Mac and Fannie Mae, continues to find ways to resolve the Housing Crisis and  news this week is that two new, big programs that are designed to help get distressed homeowners and potential strategic defaults moving forward are taking off:

1.  Deed in Lieu of Foreclosures for Qualifying Underwater Mortgages

Recently, Fannie Mae and Freddie Mac announced new rules that will become effective March 1st which will provide Florida home owners current in their mortgages but in positions where they might be contemplating a "strategic default" with an alternative.

Under the new federal program, qualifying borrowers can offer Deeds in Lieu of Foreclosure on their Freddie Mac or Fannie Mae home loans and walk away from the properties without the worry of future responsibility for the deficiency.

For details, check out the Freddie Mac documentation regarding this new Rule.  While this may hit the credit scores of those taking advantage of the new program beginning in March 2013, it should also help Florida home owners who have been considering their financial situation as a limbo-like existence, as they pay a monthly mortgage payment on a note that no longer reflects the reality of the Florida residential real estate values. 

2. Speedy Short Sales Plan for Freddie Mac

Starting in November 2012, qualifying mortgage holders could also take advantage of the Freddie Mac Standard Short Sale program.  As discussed recently by Tracy Mooney, Senior Vice President of Single-Family Servicing and REO in the Freddie Mac blog Executive Prespectives in her post, ”The Shorter Short Sale: Long on Borrower Benefits,” Freddie Mac wants to help people get shorts sales done.  

Freddie Mac has changed things like creating deadlines for banks to decide on a short sale (approve/disapprove) at 60 days from the time of application in order to reach a goal of speedy short sales.

Improving the speed with which short sales are approved by mortgage lenders means that the historic time frames for Florida short sales should change.  Buyers fearful of waiting months before closing on a property, for example, can now expect to have things accomplished in a matter of weeks.

As Ms. Mooney explains in her post:

This is part of Freddie Mac’s overall commitment to helping more struggling homeowners avoid foreclosure by increasing consistency, transparency, and eligibility across our foreclosure prevention programs and requirements. Early results indicate that this program is beginning to take hold with homeowners and realtors.

For those involved in the Florida commercial real estate market, what's happening in Florida business and what's predicted to happen in Florida business is important.  It's more than monitoring development deals or land use: the future success of Florida's commercial real estate development is intertwined with the health of Florida's business development.  

Florida Venture Capital Investment in 2012: the Money Tree Report is Out

Which brings to what has been happening with investors around the country and their decisions regarding investing - specifically, investing venture capital here in Florida.  What's venture capital really?  Venture capital, according to Investopedia, involves:

Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.

And according to year-end money analysts' take on things, Florida didn't fare too well on enticing venture capital to the Sunshine State last year.  The National Venture Capital Association reports, in an analysis published as the "MoneyTree Report," together with Pricewaterhouse Coopers and using information and numbers from Thomson Reuters, that Florida had 34 venture deals last year.

Those 34 venture capital deals in Florida during 2012 brought $202.9 million to Florida business. The MoneyTree Report compares this to the previous year's total of $346.3 million from 55 venture capital deals.

Florida Venture Capital Funding Fell in 2012 (As Did the Nation as a Whole)

Florida took a hit in venture capital investment last year.  In fact, Florida ranked at one of its lowest points on the national venture capital investment scale, in comparison to other states, in 2012, according to the MoneyTree Report.  Florida was ranked no. 20 in 2012, down from a rank of no. 18 in 2011 - and having been in the top 10 venture capital states in past years - after venture investment dollars tumbled 35% for Florida in the past year.  

That's the news from this report.  (Click on the image of a Blue Florida to read the report online.)  Of course, the entire country faced a similar situation.  The United States as a whole saw a drop of 10% in venture capital investment dollars in 2012.  

Where does Florida go from here?  And what part of Florida fared best in 2012 Venture Capital? 

The bigger news here:  this is the first time that venture capital investment has dropped in the United States in three years.  What is happening to Florida is happening to the country as a whole.  Already, many pundits are warning for no one to listen to any voices crying out that the "sky in falling," as various reasons for the dip in venture capital investment is explained.  Some are pointing to Facebook's limp debut in the stock market last year; others are pointing to things like the ongoing budget fights in Congress.  

Meanwhile, within the State of Florida, it is interesting to note that Central Florida appears to have been the focus of much of the venture capital interest last year, a region that includes the Orlando / Lake Nona metroplex. 

Which states are most popular with venture capitalists, based upon 2012 numbers?  California is a strong number one ($15 billion in 2012); followed by Massachusetts; New York; Washington State; and Texas.  

This week, AOL Real Estate reported on foreign investors becoming so infatuated with U.S. real estate, particularly Florida residential real estate, that they are buying property here without even bothering to visit the home before closing on the deal.  In an article entitled, "Foreign Investors Buy Florida Homes Sight Unseen," the power of the World Wide Web really makes itself known as buyers from Canada, China, and other countries, are shopping real estate sites to find homes to buy.  

Florida, according to the article, is the current hot spot for these foreign buyers:  Canadians, Chinese, and other foreign investors are surfing Florida realty web sites to find condos and homes and town-homes to purchase.  And they are buying these homes sight unseen (except for photos, maybe a video tour). 

Looking to other media sources, it appears that foreign media coverage is concurring with AOL on this new trend in foreign investment.  A cursory review of international media coverage of foreign investment in Florida real estate found the following: 

• The Toronto Star reporting on Canadians facing off with Chinese investors in purchasing Florida real estate.  Both foreign real estate investment group, those in Canada and those in China, are finding Florida (particularly South Florida) a market where they can find great deals on properties in a place they consider to be safe as a long term investment location.   
• The Winnepeg Free Press writes on Canadians buying property in Florida, giving details on how Canadians who are foreign investors in Florida real estate need to be aware of things like property taxes here, how a power of attorney works, as Canadians are finding the "depressed" Florida real estate market a tempting place to buy a home far away from the cold Canadian winters.
• Great Britain's The Independent puts Florida right alongside Spain, various Caribbean islands, Italy, and France as popular places for Brits to put their real estate investment funds these days. Miami is cited as being a particularly "strong" market for foreign real estate investors.  The British article discusses "dirt cheap" properties being available now in Florida due to recent economic conditions.
• Finally, here in Miami, the Miami Herald reported earlier this month on foreign real estate investors coming to Florida and particularly South Florida to buy up local residential real estate. Using individual stories, including an English couple who own a London hotel who have discovered the opportunities here for real estate investment, local coverage is dovetailing with coverage around the globe.

In 2013, we should expect and welcome foreign investors of all shapes and sizes and nationalities here in South Florida where our current real estate market beacons them to buy here and invest their money into our economy - both now and in the future.

Image:  Bayfront Park in Miami, Florida, with condo towers lining the horizon.  Public domain image courtesy of Wikimedia Commons.

This week, the Association of Foreign Investors in Real Estate (AFIRE) released its yearly review of international investment trends: for several years now, AFIRE has compiled a year-end survey of foreign investors to learn what spots around the world they are considering as top investment opportunities.

1. International Investor Survey by Official Voice of Foreign Real Estate Industry in U.S. 

Why should we bother with AFIRE's survey?  Well, for one thing AFIRE, to quote from its web site, is:

the official voice of the foreign real estate industry in the United States and the pre-eminent global real estate organization, the Association of Foreign Investors in Real Estate (AFIRE) represents the interests of nearly 200 investing organizations from 21 different countries. AFIRE is a not-for-profit association of international real estate investors with headquarters in Washington, DC. The organization was founded in 1988 with strong support from Dutch pension funds and German investment firms now constitute the largest nationality of investors. While inbound investment into the US remains our members’ common bond, their portfolios have become increasingly global in scope. 

Representing the “who’s who” in the global real estate investment industry, AFIRE membership is exclusive to principals and senior executives. AFIRE provides a platform for top investors to communicate through global meetings in the US, Europe, and key cities around the world. From legislation and tax regulations to informative publications and resources, AFIRE covers the hottest topics to ensure that the foreign investor is as informed as the domestic investor.

2.  AFIRE Survey Finds Most International Investors Believe U.S. is Hot Spot for Internatonal Investment

Here in January 2013, the good news for U.S. real estate markets is that this year, for the first time (and AFIRE has been doing this for 11 years now), the AFIRE survey finds 4 out of 5 of the top investment cities, according to international investors, were located in the United States.  For foreign investors, apparently, the United States looks to offer lots of real estate bargains in the coming year.  

In fact, 81% of those surveyed reported that they are looking to buy or expand their American real estate holdings in 2013.  That's huge, but the bigger question for those here in the United States, is where are these foreign investors planning on spending their money?  

According to the AFIRE survey, the top five cities garnering international interest are New York City, London, San Francisco, Washington D.C., and Houston.  

That's right: four of the top five cities on their Target List are in the United States.  (One does wonder why Miami isn't here, right?) 

The United States was also found to be number one in "Countries Providing the Most Stable and Secure Real Estate Investments," and "Countries Providing the Best Opportunity for Capital Appreciation."  

What Kinds of Real Estate Investment are International Investors Most Interested in Finding?

As for what kinds of investment these foreign investors are considering in 2013, the AFIRE survey found the following as the five most popular foreign real estate investments:

1. Multi-family
2. Industrial
3. Retail
4. Office
5. Hotel. 

Today, the impact of the legislation passed by the House and Senate and autopenned into law by President Obama is still being digested and the entirety of its impact is still being analyzed for its impact on businesses, development, and individuals across the country.  

Here in Florida, from a real estate perspective, there are two key things that we are able to confirm that have been resolved.

1.  The Mortgage Insurance Deduction From Income Taxes Continues

The deduction of mortgage insurance from federal income taxes has been extended for one year: to December 31, 2013.  This allows home buyers who have less than a 20% down payment for their home purchase to buy the required mortgage insurance to deduct that insurance expense from their taxes.  

The mortgage insurance requirement varies from lender to lender:  VA mortgage insurance requirements are much different than private, conventional lenders mandate for new home loans.  In its various forms, mortgage insurance policies are necessary for people who are getting a home loan without putting 20% of the purchase price on the closing table.

Accordingly, this extension impacts millions of Americans who want a home loan in 2013.  It also impacts the housing industry as well as the national real estate markets -- particularly the real estate markets here in Florida, which are working so diligently to recover from the past few years of hardship.

2.  The FIT Exemption of Deficiencies in Short Sales and Foreclosures Also Survives

For those who sell their homes in a short sale, as well as those borrowers whose mortgages go into default and result in foreclosure, there will be an amount left on the bank's balance sheet after the home is sold.  That amount is the substracted sum of the sales price (and expenses) from the mortgage amount, usually refered to as the "deficiency."  

Several years ago, a federal law was passed to exempt that deficiency amount from being considered as income for federal income tax purposes.  This law was set to expire on December 31, 2013, and many in the real estate industry and financial circles were very concerned that its expiration would dampen and harm the fledging recovery in housing.  

The new fiscal cliff legislation extends this exemption of deficiency amounts from short sales and foreclosures.  However, there is a caveat: it does so only for properties that are homesteads.  Sell a second home or investment property, and there remains FIT implications as of 2013.

It's a short term resolution, however:  this exemption also expires on December 31, 2013.  

Floridians recognized the name "St. Joe" and with good reason: this Jacksonville company is the second largest land owner in the State of Florida, owning approximately 567,000 acres as of a tally last month. 

We've posted about St. Joe Company periodically (check out past posts here). As we enter into the new year, can we glean something about how Florida real estate industry will fare by pondering what is going on with St. Joe?  Maybe.  

First, it's important to note that St. Joe isn't just a land owner here in Florida, St. Joe is a land developer.  From their web site:

The St. Joe Company is one of Florida's largest real estate development companies and Northwest Florida's largest private landowner with approximately 567,000 acres of land, concentrated primarily between Tallahassee and Destin. St. Joe is helping bring high-quality, strategic growth to the last, best part of Florida.Our vast land holdings include over 300,000 acres within 40 miles of the new Northwest Florida Beaches International Airport.

 Our land and natural assets combined with our strategic vision for Northwest Florida are helping us create long-term value for our shareholders. We develop resort and residential communities for those who want to live, work and play near the region's beautiful white sand beaches. Our commercial and industrial developments are helping bring jobs and economic growth to the region. In addition, the company manages timber operations on thousands of acres and offers certain rural acreage for sale. We believe that the future of Florida is bright and The St. Joe Company will have a key role in Northwest Florida's growth for many years to come.

What Investors Are Thinking About St. Joe Company These Days

1.  Zacks recently announced that St. Joe was its "bull of the day," for things like:

• The St. Joe Company reported strong third quarter 2012 results
• St. Joe had a "healthy year-over-year increase in revenue"
• St. Joe had a healthy EPS that exceeded the Zacks Consensus Estimate by $0.18. 
• St. Joe is working on development of the area next to the Panama-City Bay County Airport

Their bottom line take on things: "Our long-term Outperform recommendation on the stock indicates that it would perform well above the broader market. Our target price of $27.00, 158.8X 2012 EPS, factors in this view."

2.  Interactive Buyside Reports on St. Joe

Interactive Buyside ("IB") is a group of independent economic analysts that provide research reports to individual investors.  For details out IB's work, check out its website.  

In a recent online report, this independent analyst also sees an optimistic future for Florida's St. Joe:

"The St. Joe Company ("JOE") is a real estate development company in Northwest Florida whose operations had been hit hard in the 2008 downturn. JOE's stock price has recovered from its mid-teen lows it saw in early and mid 2012, as housing has experienced a broad recovery over the past 6 months throughout the U.S. and specifically Florida. Despite the stock's run-up to $22/share, JOE's overhyped asset base consists of secluded rural land in Northwest FL, undeveloped residential lots in vacant communities, and primarily empty commercial acreage that is dependent on the success of a relocated Panama City airport. As detailed in this report, we believe the market is currently baking in best case scenario, as the current stock price is not being justified even after assuming a relatively aggressive asset valuation of JOE's real estate holdings."

So, What Does St. Joe's Company Say For Itself?

 The company recently issued a press release that provided its Results for the Third Quarter of 2012.  From that release, the following information was provided to the public:

1. The number of residential units sold increased from 40 units in the third quarter of last year to 58 units in the third quarter of this year. Pricing also improved, particularly in our resort communities where we have experienced an increase in demand. The combination of higher pricing and a greater number of units sold contributed to a revenue increase of 146% in residential real estate sales.
2. Real estate sales in the Company's rural land businesses was positively and significantly impacted by the sale of two non-strategic pieces of property totaling 3,240 acres at an average price of $5,655 per acre, or $18.3 million in total.
3. Tons of timber sold increased approximately 13% quarter over quarter as a result of opening more of our acreage to timber harvesting and the positive impact of our investments in technology and infrastructure.
4. Revenue in the Company's resorts and clubs business grew approximately 9% in the third quarter of 2012 compared to the third quarter of 2011 due to a strong summer vacation season.
5. Two new commercial tenants, one in the Port of Port St Joe and one in Venture Crossings, commenced their leases.
6. The Company prepaid $19.3 million of debt at its RiverTown project related to infrastructure and community improvement projects. By prepaying the debt, the Company will save approximately $6.0 million in interest expense over the next four and a half years.

Park Brady, St. Joe's Chief Executive Officer, said:

"We had a good third quarter fueled by improvements in all of our business lines. The rural land sales were opportunistic sales of property that were not strategic to our business focus. Despite a slow economy, our residential development, resorts and timber businesses all showed improvement compared to last year. We prepaid over $19 million of debt at one of our residential projects, and we still have $172 million of cash and cash equivalents, which is slightly more than last quarter. We will continue to seek market opportunities in our resort and primary home communities while also exploring longer term opportunities that take advantage of changing demographics, such as retirement communities."

For those looking to find footholds in the current economy that mark Florida's economy and particularly Florida's commercial real estate marketplace as bouncing back from the Great Recession, it appears that St. Joe Company is providing that traction.  More incentive to be optimistic about Florida's future in 2013 and beyond.  

Recently, the Department of Commerce announced that homebuilding permits in the United States hit the highest number in 4.5 years last month (November 2012). Specifically, there were 899,000 units which is the highest amount since July 2008. 

Reactions from economists in the news seem to have those in the know confident that the home building industry will continue to improve throughout 2013.

Recovery of the U.S. Home Building Industry - How This Helps Florida

Here in South Florida, where we've seen home builders so strapped by the bad economic climate, this is very good news.  However, these numbers currently are simply good news for the future for many, since interest rates for home mortgages haven't changed much yet.  

Right now, home buyers are looking at a 30-year, fixed-rate mortgage of 3.37% (week ending 12/20) which is lower than last year's 3.91% during the same time period.  Financing remains an issue.

Nationally, the confidence of home builders is getting more and more sunny as the National Association of Home Builders/Wells Fargo Housing Market Index reports today that builder confidence continues to rise for the 8th month in a row in the future of the U.S. market in newly built, single-family homes.  It's at 47, which is the highest it's been since April 2006.  

Costs of Home Building Skyrocketing: Lumber Up 35% in One Year's Time

Here in Florida, builders are dealing with practicalities.  Not that they aren't optimistic about Florida's future, but there are the realities they see in their work: things like rising prices in new home construction costs. 

Florida home builders are seeing lumber, drywall, cement, and other necessary costs in building a home here in Florida rising sharply.  For example, the cost of lumber has more than doubled since January 2009 and right now, lumber prices are at a six year high according to Standard and Poor's GSCI Spot Index.  

Drywall prices are higher, too, and right now there's a lawsuit alleging that 8 of the biggest suppliers of drywall for use in both home building (residential) and commercial construction have been working together to fix gypsum board prices since September 2011.  

Bottom line: there may be more home building happening in Florida and the rest of the country now and in 2013, but the costs of building those new homes are rising too which makes many in the housing industry wary since building material prices impact the number of new homes built and sold.  

There's good news in all of this data, released in the past few days, even if building materials are rising in price.  We have good reason to be optimistic about 2013 here in Florida.  

In the past few posts, we've delved into international investment in the Florida economy, particularly the Florida real estate markets as China looks primed to become a major investment source for Florida (especially Miami) and as people like Governor Scott are actively promoting the benefits of investing here to investors in places like Columbia.

Brazil is Florida's No. 1 Trade Partner

However, truth is that today, Brazil remains Florida's number one trade partner according to the Florida Chamber of Commerce - and that's not expected to lessen in the near future.  In fact, the Florida Chamber has just debuted a web site dedicated specifically to the growing trade partnership between the State of Florida and the country of Brazil: you can visit it here.

Brazil's Florida trade market was valued at around $14 million in 2010 according to the Chamber, and the Chamber is working hard to increase those numbers in the upcoming years.  So, how steady and strong is the Brazilian economy?  According to experts, things are very (VERY) good for Brazil.

Brazil's Economy - Some Highly Respected Experts View Brazil's Future is Bright

In an analysis done for CNN by Paulo Sotero this week, the noted scholar and expert on all things Brazilian opined that Brazil's president Dilma Rouseff will see 2013 to be the year when Rouseff proves her worth.  

Brazilian President Rousseff has made a public commitment to boost Brazil's GDP to 4% in 2013. According to the CNN editorial, experts believe that Brazil's investment ratio to GDP (now at 19%) will have to get to somewhere between 23% and 25% for the president to meet that goal, and it's doable: Mexico, Columbia, and other Latin American countries are seeing ratios somewhere between 23 - 25 percent these days.  There are concerns that President Rouseff must work to build trust between her government and the private business sector and there are concerns that she will not be able to solidify a bond between her office and Brazilian investors.

However, the CNN piece points out that Rouseff has a reputation of being "no nonsense" and able to act quickly in making decisions and implementing them: her record on dealing with corruption has garnered her much respect.  It's predicted that she will see a growing investment relationship between Brazil and the United States as important for her country (and for which, Florida of course would reap a benefit). 

Meanwhile, even though Brazil didn't grow as fast as predicted, S&P (Standard & Poors) remains "cautiously positive" on Brazil's sovereign credit rating as reported by S&P yesterday.  The agency's managing director is reporting that S&P isn't concerned about Brazil's slower than expected growth and they expect good things in 2013. 

This morning, the president of Brazil's central bank, economist Alexandre Tombini, spoke to a Brazilian congressional hearing and as reported by Reuters, Tombini forecasts that Brazil's economy will grow faster in 2013 with domestic demand as its major force in Brazil's bright economic future.

Bloomberg is reporting that Brazil's Finance Minister predicted last week that interest rate cuts by the country's central bank will stimulate Brazil’s economy, and the weaker Brazilian currency (the real) will boost competition. 

Last month, Reuters took a poll of noted economists and discovered a consensus that Brazil's economy in the 3d quarter of 2012 was expected to have grown at its fastest rate in over 2 years, due in part to lowered taxes.  

Even though the actual numbers didn't show such a growth spurt, in an article for NASDAQ, Goldman Sachs is still predicting that Brazil should boom with growth of 4% or higher in the year 2013 (quoting Jim O'Neill, chair of Goldman Sachs Asset Management).  Economist O'Neill views Brazil as one of the world's big emerging markets, in fact, along with Russia, India, and China ("BRIC"). 

Others Aren't So Sure About Brazil

Still, despite all this optimism, there are those that do not view 2013-2014 as being golden years for Brazil. Forbes, for example, has an article written by contributor Kenneth Rapoza that doesn't see Brazil's economy as more than perhaps "dismal."

Right now, people in Florida (like the Chamber of Commerce) are believing in Brazil as are investment advisors like Goldman Sachs: there are always negatives in every scenario, but for Florida - particularly its commercial real estate market - pushing for the positives brings a needed energy to our beaten economic climate.

Let's hope that the positive forecasts for Brazil prove to be true: because what is good for Brazil may well bring Florida a brighter economic future, as well.  

The EB-5 Visa is important to Florida real estate development (as well as the Florida economy overall) because it is a great incentive for foreign investors to choose Florida - particularly places like Miami, South Florida, and Orlando's Lake Nona - as a place to invest their international funds, be they British Pounds, Brazilian Reals, or Chinese Yuans.  

We've been monitoring the EB-5 Visa's growing popularity here in the United States, particularly its impact here in Florida for a while now.  For details on how the EB-5 works, check out our earlier posts.

Miami's EB-5 Application Adds Tallest Building in Miami Project 

As for the latest, it seems that Miami is working very hard to become a United States Regional Center for the EB-5 Immigrant Investor Program Visa, and recently the City of Miami announced that the proposed Panorama Tower will be a signature project on Miami's application.  

The Panorama Tower will be built at 1101 Brickell Avenue in Miami, as an 83-story project and once completed, it will be the talling building in the Miami skyline.  

China Investors Received 70% EB-5 Visas in 2011

As for what country is expected to be the most interested in these EB-5 Visas, if the past is any prediction of the future it will be China who is most represented at the new Miami EB-5 Regional Center.  

According to CNN, seventy percent (70%) of the EB-5 Visas issued last year went to Chinese investors.  

Benefits of an EB-5 Visa to a Chinese Investor

What's the big deal about an EB-5 Visa?  From the South Florida Investment Regional Center's website, the advantages offered by this Immigrant Investor visa include: 

• There are no requirements regarding age, business experience or language skills
• The program does not require investors to manage their investment on a daily basis. As a limited partner, an investor is free to pursue other professional or personal ventures.
• An investor does not have to be continuously present in the U.S., and can maintain business and professional relations in their own country.
• An investor does not have to live in the city or state where their EB-5 investment is located.
• You can obtain permanent residency through the EB-5 Investor Visa Program.

How much is Florida expecting Chinese investors to take advantage of the EB-5 Visa invitation to invest here?  Check out the South Florida site, which offers printable brochures giving more details about the EB-5 and other investment opportunities, in only three different languages, one  notably Chinese:

1. English 
2. Espanol
3. Chinese (中文)

For over 20 years, The Beacon Council has been working for the economic prosperity of the Miami area and it's just released its annual report for how the Miami-Dade County economy looks now, and into the future.  It looks good.  

The Beacon Council is partly private, partly public, where Miami business leaders sit at the table with Miami officials (like the mayor and county commissioners) to work towards getting new investments into this area, helping existing businesses, and growing new jobs.  It's called an "economic development partnership," and the Beacon Council is one of only 31 economic development organizations in North America (that's Canada and the U.S.) that is accredited by the International Economic Development Council. 

Columbia Beer Brewers Relocation to Miami: Example of International Interest in Miami

You can read the 2011-2012 Beacon Council Annual Report online.  It provides not only incentives that Beacon Council promotes to players both in the United States and around the world, reasons that Miami is the place to be in 2013 and beyond, but concrete examples of its successes, such as the March 2012 decision by SABMiller Latin America to relocate from Bogota, Colombia to Miami-Dade County. SABMiller Latin America is one of the world’s largest brewers of beer, and it sells over 200 beer brands around the world.  

SABMiller has over 70,000 employees in more than 75 countries, and its move to Miami is a big boost to the local economy.  Why did SABMiller Latin America decide on Miami-Dade?  According to the Beacon Council report, it was the easy access offered to South American markets by the Miami International Airport combined with South Florida's skilled and bilingual work force. 

Beacon Council's Top 10 Reasons to do Business in Miami, Florida:

1. Excellent business climate with no state or local income tax.
2. Convenient direct air service from Miami International Airport to all major destinations in Latin America and the Carribbean, and more flights to the region than any other U.S. airport.
3. Ability to ship goods efficiently anywhere in the world through PortMiami, Florida's largest container port.
4. Centrally located in the Western Hemisphere and in the Eastern Time Zone, facilitating communication with Europe and the western United States.
5. More than 100 international consultates, trade offices, and bi-national chambers of commerce that support the worldwide flow of goods and services.
6. Skilled multilingual, multicultural work force drawn from more than 100 nations.
7. Strong, growing domestic economy serving more than 5.6 million South Floridans.
8. Ready access to sophisticated banking, insurance and legal services and other professional services.
9. High quality of life with a wide range of housing options, year-round outdoor recreational activities, renowned cultural institutions and four major professional sports franchises.
10. Financial and workforce training incentives available to qualified companies.  

Just how much international trade connections does Miami have, really?  

Just scroll through the list at the County Website, where the Office of Economic Development and Tourism keeps a roster of Interational Consulates with offices here in Miami.  Here are those consultates and trade offices (and their contact information) as of October 2012 located here in Miami ... and from the looks of this list, the real question seems to be "what country ISN"T interested in doing business here in Miami??"

List appears on extended post page:

Continue Reading

Here in South Florida, we've been cautiously optimistic about seeing the light at the end of the tunnel of this unprecedented nation-wide housing crisis and it's studies like the one released this month by the Miami Association of REALTORS that provides incentive to stay positive, details here in our news release of the week:

Rising Miami Home Prices, Inventory Shortage Create Opportunity for Sellers

Miami, FL – Miami home prices rose again in September, marking 10 consecutive months of appreciation, according to the 26,000-member MIAMI Association of REALTORS and the local Multiple Listing Service (MLS) system. The median sales price of Miami-Dade condominiums, which has increased each of the last 15 months, rose 36.2 percent to $150,000 compared to a year earlier. The median sales price of single-family homes rose 8.6 percent to $190,000.

“The Miami real estate market continues to strengthen despite the shortage of housing inventory,” said 2012 Chairman of the Board of the MIAMI Association of REALTORS Martha Pomares. “We’ve seen nearly an entire year of significant monthly price increases, which makes now a great time to sell a home. Miami properties sell very quickly and draw multiple offers when priced right.”

In September the average sales price for condominiums in Miami-Dade County increased 30.2 percent to $277,774. The average sales price for single-family homes decreased 6.1 percent to $315,521.

Florida Statewide Home Prices

Statewide median sales prices in September increased 7.4 percent to $145,000 for single-family homes and 18.8 percent to $105,376 for condominiums, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The national median existing-home price for all housing types was $183,900 in September, an 11.3 percent increase from September 2011, according to the National Association of Realtors (NAR).

Miami Home Sales Rise Again in September

Total residential sales in Miami-Dade County decreased a negligible 3.4 percent compared to a year earlier when the local market experienced record sales levels. The sales of existing condominiums in Miami-Dade decreased 6.7 percent, from 1,395 to 1,302. Sales of single-family homes increased 1.6 percent, from 903 to 917, year-over-year.

Statewide sales of existing single-family homes totaled 15,643 in September, up two percent compared to a year ago. Statewide condominium sales totaled 7,329, down 2.9 percent from September 2011. Nationally, sales of existing single-family homes, townhomes, condominiums, and co-ops fell 1.7 percent from August but were 11 percent higher than they were in September 2011, according NAR.

“International buyers continue to play a pivotal role in strengthening the Miami real estate market and the local economy,” said 2012 MIAMI Association of REALTORS Residential President Patricia Delinois. “Miami’s market share of international purchases in Florida continues to increase, reflecting its strong position as the top market for foreign buyers and investors and benefiting our businesses and our residents. Miami now accounts for 31 percent of all international sales in the entire State of Florida, up more than 10 percent compared to NAR’s 2011 Florida study.”

Inventory Supply Continues to Dwindle

Over the last year, the inventory of residential listings in Miami-Dade County has dropped 24 percent from 15,264 to 11,595. Compared to the previous month, the total inventory of homes decreased 1.4 percent. Currently, there are 4.3 months of supply in Miami-Dade. Total housing inventory nationally decreased 3.3 percent at the end of September and was 20 percent below year-ago levels, representing a 5.9-month supply at the current sales pace.

Median Day on the Market

Properties are selling much more rapidly in the current market than they did a year ago. The current median days on the market is only 43 for both single-family homes and condominiums, compared with historic averages of 90 to 120 days on the market. These are respectively 14 and 24.6 percent decreases year-over-year. Nationally, the median time on the market was 70 days.

Distressed Sales Decrease

Strong demand for bank-owned (REO) properties and improved processing of short sales continues to yield absorption of distressed listings and to contribute to price appreciation. In September, 47.4 percent of all closed residential sales in Miami-Dade County were distressed, including REOs (bank-owned properties) and short sales, compared to 59 percent in September 2011 and 45.8 percent the previous month. Nationally, distressed sales accounted for 24 percent of September sales, up from 22 percent in August and down from 30 percent in September 2011.

Cash Sales Reflect Strong International Presence

In Miami-Dade County, 62.4 percent of total closed sales in September were all-cash sales, compared to 62 percent in September 2011 and 64 percent the previous month. Cash sales accounted for 43 percent of single-family and 76 percent of condominium closings. Nearly 90 percent of foreign buyers in Florida purchase properties all cash. This reflects the much stronger presence of international buyers in the Miami real estate market – by comparison all-cash sales nationally accounted for 28 percent of transactions in September, up from 27 percent the previous month and down from 30 percent in September 2011.

Note: Statistics in this news release may vary depending on reporting dates. Statistics reported by MIAMI are not impacted by NAR’s rebenchmarking efforts. MIAMI reports exact statistics directly from its MLS system.

About the MIAMI Association of REALTORS

The MIAMI Association of REALTORS was chartered by the National Association of Realtors in 1920 and is celebrating more than 90 years of service to Realtors, the buying and selling public, and the communities in South Florida. Comprised of four organizations, the Residential Association, the Realtors Commercial Alliance, the Broward County Board of Governors, and the International Council, it represents more than 26,000 real estate professionals in all aspects of real estate sales, marketing, and brokerage. It is the largest local association in the National Association of Realtors, and has partnerships with more than 100 international organizations worldwide.

MIAMI’s official website is www.miamire.com.

xxx

We've delved into the background of the Koontz litigation here in past posts; suffice to say that it's a legal controversy between landowner Coy Koontz and his local water management district that has gone on for years (18 years so far), in cases that have come to be known as Koontz I, Koontz II, ... Koontz IV. 

Last June, we noted that Koontz was taking the decision of the Florida Supreme Court in Koontz v. St. John Water Management District to the United States Supreme Court for its review of his claims that constitutional rights had been violated.

• The Florida Supreme Court opinion (Koontz IV) can be read online here.

It was then up to the U.S. Supreme Court to decide whether or not they would accept his invitation to review the matter.  They have.  On October 5, 2012, Coy Koontz's Petition for a Writ of Certiorari was granted.

You can follow the case online via its online docket at the United States Supreme Court's web site.

• The Petition can be read online here.
• The Response to the Petition can be reviewed here.
• The Reply to the Resonse is also available for review.

Koontz brings before the High Court two questions in this inverse condemnation case: 

(1) whether the government can be held liable for a taking when it refuses to issue a land-use permit on the sole basis that the permit applicant did not accede to a permit condition that, if applied, would violate the essential nexus and rough proportionality tests set out in Nollan v. California Coastal Commission (1987) and Dolan v. City of Tigard (1994); and

(2) whether the nexus and proportionality tests set out in Nollan and Dolan apply to a land-use exaction that takes the form of a government demand that a permit applicant dedicate money, services, labor, or any other type of personal property to a public use.

This week, Hugo Chavez was re-elected as President of Venezuela, taking 54% of the Venezuelan vote to the 45% of challenger Henrique Capriles, grandson of Holocaust survivors.

This means that Hugo Chavez will be the President of Venezuela until 2019 (when this new presidential term ends).   For many Venezuleans (and others), this is not good news and reports are that many of these people are looking to leave the country, relocating families and moving investments.  ASAP.

Venezuelans Looking to Invest or Relocate to Miami and South Florida

Word on the street here, and as reported by the El Nuevo Herald in Spanish and the Miami Herald in English, is that Venezuelans are investigating moving themselves as well as moving their investment money to South Florida, and particularly, Miami. 

Immigration attorneys are getting calls and emails.  Real estate brokers, ditto.

Why the growing interest?  Because Hugo Chavez will remain in power for many years in Venezuela, and that is worrisome to many who live in that country because of Chavez's attitudes and policies.  They are afraid.  Here in South Florida, Venezuelans here, watching the election results on television, were upset and even in tears according to CBS-Miami coverage of a Doral restaurant gathering.

EB5 Visas Help Venezuelans Interested in Investing in Florida and Moving to Miami

One big benefit to these people in Venezuela pondering moving their money, their family, and themselves, to Florida is the United State's Immigrant Investor Visa, the EB5.  (For details about this program, read our earlier discussion on the EB5 visa - and how to get one.)

Over half of the Venezuelans who have moved to the United States have expatriated to South Florida (57%).  That's according to official federal agency statistics; however, the actual number of Venezuelans living in this area of the Sunshine State may be much higher. 

According to the U.S. 2010 Census, the number of Venezuelans living in South Florida increased by 150 percent in the first decade of the new century, most in the past 24 months, according to research by the Sun Sentinel.  

Who are these people? 

As explained by Guillermo I. Martinez of the Sun Sentinel, these are Venezuelans who have much to offer Florida and Miami and it's a wonderful benefit to our community as well as our economic future that they are choosing South Florida as a haven against the growing violence and Iran-favoring policies of Venezuelan President Chavez. 

The Venezuelans who are coming here with their families and their money and their skills are professionals; middle class and upper class families; industry leaders, and entrepreneurs who can only help Florida's residential and commercial real estate industries to flourish as well as other facets of the Florida economy. 

Florida knows all too well of the Cuban elite who left Cuba after Castro and how they have contributed to our state since then.  Venezuela's story may well be much like Cuba: our Cuba of the 21st Century.

Last week, internationally-known real estate investor Maxwell Drever was quoted in an interview published in the Tampa Bay Business Journal that he was excited about the Florida real estate market and planned on investing around $100 million in Florida real estate development -- soon. 

That's right.  Maxwell Drever likes Florida -- he calls Florida a “terrific market,” and the question for many may be, who is Maxwell Drever and why is this important to Florida real estate?

Maxwell Drever has been investing and developing real estate across the United States for over 40 years, with much of his background tied to multi-family residential real estate properties. Currently, he is Chairman of the Board at Concierge Asset Management.   His investment skills can be tracked back to the 1970s, when Drever forecast profits to be had in a troubled Seattle market and where he invested successfully in a series of apartment complexes there, to project after project since then, where Drever has made significant profits for himself and his companies by discovering distressed markets and investing in real estate development with profitable results. 

Today, Drever is at the helm of Concierge Asset Management, which does three kinds of investment:

• invests in undervalued REIT stock
• invests in loans on investment real estate - performing and non-performing
• invests in multi-family apartment real estate that is underdeveloped.

Go visit the Concierge web site and you'll learn much more about their proud history of "counter-cyclical parallel" investing, where Drever and his team have achieved success after success by determining the appropriate real estate market in which to invest ... and it's good news to learn that this California-born company with its headquarters in Houston is planning on putting money -- lots of money -- into Florida.

Concierge has already started moving into the Florida market.  Two years ago, Drever and his company bought almost every unit (143 out of 153 units) in Clearwater's Water’s Edge condominium tower project.  (They bought all but ten units for around $30 million.)  At the time, the condo tower was somewhat of a ghost town, dark and mostly vacant.

Drever's people moved in and bought the tower at a good price, and began redevelopment and marketing.  Today, they've sold all but seven (7) of the units.  

According to the Drever interview, Maxwell Drever is very excited about the investment possibilities in Florida right now.  And he's not giving details but he's putting his money where his mouth is ... which means that others will be following his lead.

For Drever, based upon past history, this means condos, townhouses, apartments -- he is an expert in multi-family residential investment and development.  However, as real estate experts recognize, what Drever forecasts here for his niche dovetails into other areas of commercial real estate as well:  shopping centers, rental development, office towers, etc. 

Maxwell Drever's got something good to say for all of Florida.  Better development days are ahead.

For those interested in exploring various areas of Florida for possible real estate development or investment, there are more and more ways to find interesting and valuable information online.  Consider the following information, available online at no charge, for two of the biggest development targets in the State of Florida right now:  Orlando and Miami-Dade.

Orlando Economic Development Information

In Orlando, located in Central Florida, there is the Metro Orlando Economic Development Commission where economic indicators for that area are studied and reported on each month.  You can download its overview of September 2012 Economic Indicators for Metro Orlando online for free. 

For those interested in commercial real estate, the web site also provides things like this:

• Orlando Office and Industry Market Statistics
• National Industrial Comparison - Metro Orlando
• National Office Comparison - Metro Orlando
• National Retail Comparison - Metro Orlando

Miami - Dade Economic Development Information

The City of Miami has its office of Economic Incentives which provides lots and lots of information about the Greater Miami area as well as information regarding incentives that the City of Miami offers to those interesting in doing business there, such as its New Markets Tax Credit (NMTC) program, where "... low interest, private capital [are steered]  into distressed census tracts to capitalize hard to fund commercial and residential projects."

Miami-Dade County also has its Department of Regulatory and Economic Resources which hosts the Economic Development and International Trade website.  Economic trends are reported on a quarterly basis (not a monthly report like Orlando provides) and these are also offered for free as a downloadable pdf document (get the Second Quarter 2012 Report for Miami-Dade here). 

Miami-Dade also offers an overall economic forecast for 2012, published March 2012 by Chief Economist Robert Cruz.  Here, information including the following is provided:

"Except for office market, commercial real estate in Miami-Dade starting to show signs of improvement: vacancy rates down, lease rates up, and positive net absorption in 2011."

"In 2011 the value of total trade was up 19.5% vs. 2010. 2011 saw continuing diversification in value of trade among trading partners (+Europe, +Asia)."

Regional and State-Wide Sources of Economic Information for Florida Commercial Real Estate

There are other sources of economic information and analysis of Florida's economic future as well as details about its economy, not only at a local level as these three sites demonstrate, but also at the regional and state-wide levels. 

What are they describing?  Florida has suffered economically for the past few years, but things are not as bad now as they were a couple of years ago for most Florida industries and economic sectors - and there are optimistic opinions that we're going to see a stronger and more stable Florida economy in 2013 and beyond. 

However, some regions of Florida do look to be bouncing back and offering more opportunity than others, as for example the Orlando area especially its Lake Nona region.  Within the state, some areas are indeed doing much better and offering more to the commercial real estate investor than others do.  If the rest of Florida follows the lead of Lake Nona, then the future will be very bright, indeed.

Lake Nona is a master planned community located in Orlando that seems to be getting more successful by the day.  For those that aren't aware of Lake Nona, here's the description of this unique Florida community from the LearnLakeNona web site:

Lake Nona is a 7,000-acre master planned community within the city limits of Orlando that will be home to world-class education, medical and recreational facilities, a medical city, diverse workspaces, retail centers, entertainment choices and residential options for all types of people seeking the best the city has to offer with all the conveniences of living within a dynamic, vibrant community. Lake Nona is being developed by Lake Nona Property Holdings, owned by Tavistock Group, a private investment company with a broad portfolio of assets around the world.

Lake Nona Development Booming

This week, the Orlando Business Journal reported on how popular Lake Nona really is these days: in this bad economy, 300 new home sales were made in 2012 in the Lake Nona neighborhoods of Laureate Park, Lake Nona Golf & Country Club, Village Walk and Water’s Edge: the best sales record for Lake Nona since 2005.  For more details, check out the info at the Lake Nona blog.

Commercial development is looking good for Lake Nona, too. 

It's not just residential development that is booming -- some would argue that the residential boost in 2012 is following on the coattails of commercial development that is already in place (Medical City) or is in the process of being completed.  Consider:

1. In August 2012, Valencia College ’s Lake Nona campus at Medical City opened for students
2. In March 2012, construction began on a 79,000-square-foot Publix-anchored shopping center.
3. Additionally, there are the new and expanding medical facilities in Lake Nona's Medical City:

•Nemours Children's Hospital at Lake Nona Medical City will open at a cost of $380 million next month.
•VA Medical Center at Lake Nona, 1.2 million-square-foot medical center costing more than $650 million expected to be open for patients in mid to late 2013.
• Orlando Regional Medical Center adding a 10-story patient tower at a cost of $300 million; scheduled to be complete in late 2015.

For more information regarding Lake Nona, leave a comment or visit the Lake Nona website.

As the dust continues to settle on the real estate crisis in Florida and the rest of the country, we are becoming increasingly aware of potential opportunities in the market place.  At least, there are hints of this in the news this week as we see real estate developers and investors taking advantage of historically low prices while economic analysts are putting the pieces together and tying up the crisis into an understandable perspective:

Commercial Real Estate Developers Taking Advantage of Cheap Land and Foreign Investment

Here in Florida, savvy real estate developers are building condos - condos are very popular here in South Florida, especially, given our scenic attractions including all those miles of beautiful oceanfront beaches. Lots of condos, in all shapes and sizes.

How are they doing this? With lots of foreign investment funding.

As we have discussed in prior posts, one of the big advantages of having foreign investment dollars for condominium projects in particular is that the international investor often comes with experience in financing real estate that is much, much different that the American model. They pay up front: condo developers see foreign investors willing to pay as much as 80% of the total before the build is done.

Meanwhile, all across the country there are smart land developers who are looking around for great deals on land that is pristine - undeveloped land can be bought at bargain basement prices these days in much of the country. For the first time in a long time, land is attractive again, to developers and builders.

US Housing Crisis Losses of $13 Trillion Almost Match GDP for 2011 Dollar for Dollar Per Expert Analyst

This week, during a speech at the Mortgage Bankers Association meeting in Dallas, a representative of the fraud analysis firm Interthinx told the crowd of bankers that Interthinx studies revealed that the country's housing industry crisis has piled up $13 trillion in costs to the nation's economy, if various areas are combined: the litigation expense, the bailouts, the mortgage-backed securities claims.

Here's the thing: in her speech, Interthinx's Ann Fulmer pointed out that this $13 trillion almost jives, dollar for dollar, with the Gross Domestic Product (GDP) for the United States in 2011 (which was $15 trillion).

Where did she come up with $13 trillion? Interthinx has the following:

• $8,000,000,000,000.00 (yes, that's the right amount of zeroes: we're talking TRILLIONS here, not millions or billions) in lost homeowner equity
• $2,000,000,000,000.00 in mortgage industry losses (ForeclosureGate)
• $3,000,000,000,000.00 in losses to the federal government (and presumably state governments, too) along with U.S. taxpayers

So, is the worst part of the housing crisis behind us?

Are things getting better, or are we in the eye of the hurricane, where the winds lessen and things seem brighter to those who aren't aware that the hurricane still has lots of fury to bring?

We'll know soon enough -- but one thing that gives hope: smart real estate developers aren't just setting back and fretting: they are taking advantage of cheap land, cheap construction costs, and foreign money to build projects like condominium towers in South Florida. It's this kind of determination, to find a way to success and move forward, that is the real and solid sign that we're putting the crisis behind us.

Broward County just got some big news: the Seminole Tribe (the only Indian Tribe to never surrender, for more of their history visit their web site) is planning to build a major new highrise hotel and casino over in Coconut Creek. 

Genting's Loss May Be Seminole Indian Tribe's Gain?

That's right: remember all the controversy over the casino being proposed by Genting in their new Resorts World Miami project?  So many critics challenged having a new, big gambling mecca in the Miami area.  It was a big deal last year.  Tallahassee law makers did not pass the necessary legislation to allow Genting (and other casino owners) to offer gambling in their establishments, so Resorts World Miami has been radically reduced from its original scope. 

Well, now the Seminole Indian Tribe has announced that it has sought approval from the Bureau of Indian Affairs to build a 20 story hotel and entertainment complex which would include a swanky casino with a goal toward this new project becoming a national draw for gamblers across the country.

The tribe plans on using land it already owns:  45 acres setting next to its existing Coconut Creek casino.  By declaring this tract as its sovereign land, the Seminoles can build the new project while taking the casino off the government tax rolls since it would set on tribal land. 

Reports are that the Seminole Hotel and Casino would invest the local area with lots of new jobs: around 1090 people would find permanent employment here.  They would work in the 1000 room hotel as well as the casino, the 2500 seat theater, or any number of shops and restaurants that are included in the overall plan. 

Big incentive for the Powers that Be to allow the Seminole Tribe to build this thing:  this hotel is expected to put  $76.8 million into the local economy each year.  That's sweet talk to many people out there.

Once built, the new Broward County hotel complex would be over twice as big as the Seminole Tribe's Hard Rock Hotel in Hollywood, Florida.  (Yes, the Seminoles are not new to this ball game.)  This new hotel complex would all be one of the biggest in all of South Florida: and South Florida already has a lot of nice and very big entertainment - hotel complexes for American tourists and foreign visitors to enjoy. 

Will it happen?  Too soon to tell. 

The Seminole Tribe is serious about the project, but there are lots of things to consider and hurdles to jump before any groundbreaking ceremony.  Traffic infrastructure needs are one problem to solve.  On the other hand, construction costs right now are low and that's a benefit in a big hotel build which might not exist in a few years. 

First, there was the issue of whether or not the State of Florida was going to proceed in court against the various mortgage lenders involved in the unprecedented foreclosure crisis that hit not only the State of Florida but the entire country.  Over time, settlement negotiations were entered into between the five biggest banks and all the state attorneys general across the country, with Pam Bondi acting on behalf of the citizens of Florida.

Now, the settlement is a done deal and the money has been forwarded by the banks to the states in accordance with the agreement.  So, what happens now?  Pam Bondi has issued a notice of the status report that has just been compiled and released by Joseph Smith, the man in charge of overseeing the settlement deal gets done, which is our news release of the week. 

Read the actual report online here or read Joseph Smith's news release here. 

Monitor Issues Interim Report on Relief Provided to Homeowners Under the National Mortgage Settlement

TALLAHASSEE, Fla. –Today, Joseph Smith, Jr., the national mortgage settlement monitor, released an interim report on homeowner relief that the nation’s five largest mortgage servicers have provided as of June 30.

Based upon figures voluntarily provided by the servicers, but not yet verified by the monitor, more than 23,000 Floridians have received an excess of $1.7 billion in relief under the settlement. The relief provided thus far includes first and second lien principal forgiveness, forgiveness of past forbearance, refinancing, and deficiency waivers.

The report also details the servicers' progress on reforming their servicing practices as required by the settlement agreement. The interim report includes a timetable for future reports with the monitor’s first audited report expected in April 2013.

“I am pleased to see that progress is being made under the settlement as the mortgage servicers begin to implement procedures designed to fulfill their obligations to Florida's homeowners,” stated Attorney General Pam Bondi. “I will continue to work with the monitor to ensure that the mortgage servicers fulfill their obligations under the settlement agreement.”

In February, Attorney General Bondi entered a landmark $25 billion joint federal-state agreement with the nation’s five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices. In addition to the terms of the national settlement agreement, Attorney General Bondi separately negotiated an agreement with the nation’s three largest mortgage servicers to ensure that a guaranteed portion of the overall settlement funds goes to Florida borrowers.

Attorney General Pam Bondi News Release

August 29, 2012

Media Contact: Jenn Meale Phone: (850) 245-0150

As more and more investment chatter centers around the possibility of investing in the huge volume of single family homes that have, or will be, foreclosed upon in the United States, many are seeing an opportunity in Single Family REITs.  (Read our earlier posts about this blossoming investment vehicle here.)

However, there are those that are very concerned about what Rental REITs (both apartments and SFDs) will mean in the long run to the American economy - and the U.S. Citizen.  Here are some of their concerns and criticisms (with a hat tip to Yves Smith at Naked Capitalism for collecting most of these in his column and its commentary):

1.  The expected popularity of this investment vehicle, together with the decline in homeownership in this country, may mean that many Americans will be tenants to private equity landlords: it will change the very essence of our society.  These private equity landlords won't be like beloved Stanley Roper in the old Three's Company TV Series - nearby, quick to respond to complaints, always involved in maintainance.  Nope.  The worry is that Private Equity Landlords will be anonymous, unapproachable and possibly mysterious owners of properties without any regard for their tenants' concerns or the property's needs.

2.  This is a new concept, and even if Rental REITs have some interest in being good landlords, they've got no pattern to follow, no example in the past to use in figuring out how to be the Corporate Stanley Roper.  

3.  Gretchen Morgenson of the New York Times points to skullduggery happening in New York City with apartment REITs:  including suspicions of sending fake notices and fraudulent notices of non-payment (when payments have been made) to replace low paying tenants.

4.  Some are predicting that these new Private Equity Landlords are going to transfer the responsibility of maintaining the property to the tenant as part of the lease terms.  

5.  If the Rental REITs fails to meet its own obligations, like Tishman Speyer did a couple of years ago on a NY apartment REIT, a large number of tenants are suddenly in limbo - and may not even be aware that their Private Equity Landlord has defaulted on its own agreements.  

As more discussion occurs on this new investment vehicle, especially its latest version - the Single Family REIT, these and other worries will be a part of the conversation.  And they should be.  However, here's the big elephant in the room: there are unprecedented numbers of homes sitting on bank balance sheets right now because of all the foreclosures that have happened in this country.  We know the impact of this very well here in Florida.

Something needs to be done to move forward, and we have no pattern here for how to fix this mess.  It's something new.  

So, new answers are being developed like Single Family REITs, not in a sinister way to thwart the American Dream, but in an optimistic way to get the economy moving again.  Those homes have to get off the bank's shoulders so banks can get back to the industry of finance and not housing.  

In two editorials this week, major Florida newspapers are spotlighting the issue of collecting money to pay for all the Foreclosure Fraud and robo-signing expenses that have been felt by so many different players in the Florida real estate market: housing, banking, construction, insurance, and other industries have all been hurt by what some have labelled "Foreclosure Gate."  Seems that lots of people are looking at all that damage and wondering where the money is going to come from to pay for the harm that has resulted...and what to do with it once Florida gets it.

1.  The Big Bank Foreclosure Fraud Settlement With Florida Attorney General Pam Bondi

First, there has been that big national settlement between the country's Five Big Banks and the state attorneys general, including our own Florida Attorney General, Pam Bondi.  As part of a big national settlement agreement, the banks agreed to pay millions of dollars in exchange for being released from future lawsuits filed by the individual states.

The total amount put into that settlement pot was $25 billion, and Florida received $334 million as its share of the settlement pie.  Five billion dollars was set aside of that $25 billion sum for specific usage by the states, in a separate fund. 

Here's what Florida got in this deal, in detail, as explained on Florida AG Bondi's web site:

Attorney General Bondi formally entered a landmark $25 billion joint federal-state agreement with the nation's five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices. The proposed agreement provides an estimated $8.4 billion in relief to Florida homeowners and addresses future mortgage loan servicing practices. The settlement generally releases civil claims related to robo-signing, other foreclosure-related abuses, and loan origination misconduct, but it provides no release of criminal claims or of claims related to mortgage securitization.

"This settlement will provide substantial relief to struggling Florida homeowners, and ensures that our state gets its fair share of the relief being provided nationally," stated Attorney General Pam Bondi. "This agreement holds banks accountable and puts in place new protections for homeowners in the form of strict mortgage servicing standards."

Florida’s share of the total monetary benefits under the settlement is approximately $8.4 billion.

Florida borrowers will receive an estimated $7.6 billion in benefits from loan modifications, including principal reduction, and other direct relief.

Approximately $170 million will be available for cash payments to Florida borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse.

The value of refinanced loans to Florida’s underwater borrowers would be an estimated $309 million.

The state will receive a direct payment of $334 million.

It's here -- that last item, dealing with the direct payment to the State of Florida, that the Miami Herald has an opinion, which it has made clear on its editorial page yesterday.

According to the Miami Herald, there seems to be a move within the Florida Legislature to look at that $334,000,000 that Florida received in the Big Bank - AG Settlement and consider using it in other places in the budget.   They've got examples to follow:  apparently, Arizona's statehouse already grabbed their share of this pie and diverted it from Arizona foreclosed home owners.  The Herald is against this.

From the Herald:

Attorney General Bondi disagrees. Given that she played a crucial role in the settlement, she knows what she’s talking about.

She and the other attorneys general who hammered out the settlement apparently foresaw the potential for misuse of the funds and inserted language that left no doubt about the funds’ proper use.

The settlement states that permissible purposes include, but are not limited to, “supplementing the amounts paid to state homeowners under the Borrower Payment Fund, funding for housing counselors, state and local foreclosure assistance hotlines, state and local foreclosure mediation programs, legal assistance, housing remediation and anti-blight projects, funding for training and staffing of financial fraud or consumer protection enforcement efforts, and civil penalties. ...

Attorney General Bondi should hold fast to her position that the money from the mortgage settlement can be used without legislative permission. The language of the settlement is clear and the intended uses of the money are equally clear."

2.  Sanctions Against Foreclosure Mill Law Firms Like the Law Offices of David J. Stern

Meanwhile, the Palm Beach Post is concerned about another possible pocket in all this Foreclosure Fraud mess: those who were commonly labelled "foreclosure mills" in the press, the most notorious being that of Broward County's own Law Offices of David J. Stern.   After Florida AG Pam Bondi lost her argument that the Florida DTPA (Deceptive Trade Practices Act) should apply to law firms and therefore allow her offices to sue and collect damages under that statute, it now seems that collect any cash from the Foreclosure Mill lawyers will be left to the Florida Bar and its sanctioning procedures.

The Palm Beach Post is arguing for the Florida Legislature to consider this situation and take action, finding a way to make Florida law firms financially responsible for the foreclosure fraud damages.  From the Post:

To hold firms accountable, the state should give investigators more tools to work with. The Deceptive and Unfair Trade Practices Act has been deemed inapplicable to law firms, but the Legislature could amend the law or create a similar one. The state Supreme Court could expand the Florida Bar’s authority to sanction law firms as well as individuals. Such steps would not be difficult, and they would help to ensure that white-collar criminals can’t get around the law just because they’re lawyers.

So, what is happening here?  As the Herald points out, there has already been a big settlement with the major mortgage lenders to pay billions of dollars in settlement.  The Post is pushing for a similar success in gathering money from the lawyers who represented these lenders during the Foreclosure Gate events.  But what is going to happen to this money once its collected?  That's the big question right now isn't it?

In this week's Economist, the efforts of Arizona based American Residential Properties, Inc. ("ARP") are spotlighted as a mover and shaker in the American housing industry.  What is ARP doing?  The investment company has been steadily buying up residential properties, usually as short sales, and then renting them out - ARP is not reselling the homes, they are investing in them and acting as landlords.

Who is American Residential Properties?

Around three weeks ago (on July 12, 2012), American Residential Properties, Inc. issued a news release that it had completed a private offering of its common stock at $20.00 per share, for a total offering of approximately $224 million.

In that press release, ARP described itself as a "... recently organized, fully integrated and internally managed corporation formed primarily to acquire and manage single-family homes as investment properties for rental and to capitalize on other investment opportunities related to the single-family housing sector. ARP is organized and conducts its operations so as to qualify as a real estate investment trust for federal income tax purposes."

Its CEO, Stephen G. Schmitz, provided the following quote:

"We are pleased to be the first in our sector to raise significant institutional capital on a direct basis from a diverse shareholder base. The fact that the deal was oversubscribed is indicative of the value our shareholders place on our experienced management team. Over the past three- and- a- half years, we have built the systems, the processes, and procedures necessary to acquire and manage single-family homes on a high volume basis in multiple markets. Coupled with our low cost debt facility, we have close to $500MM of buying power. As rental demand continues to increase across the country, our mission is to provide affordable housing for our residents while, at the same time, earn a high risk-adjusted return for our shareholders."

What is ARP Doing that Is So Great for the American Housing Market?

In the past few years, this company has taken its cash and gone shopping in hard hit markets like Arizona (Phoenix), Nevada (Las Vegas) and California (anywhere) for residential properties that looked to be bargains.  ARP buys homes that may need a bit of clean up or updating, but not much, and then rents out the properties to families who meet their tenant qualifications. 

In doing so, ARP has contributed to the change that is being seen around the country: there are less homes in the sales market now than in past years and as a result, things like new construction of single family homes are being to happen again: things that haven't been seen in awhile.

On its website, ARP describes itself as a pioneer in "REO to Rental" investment that began its strategy in the Phoenix area and now focuses upon markets throughout the Southern United States.  ARP buys, renovates, rents, and manages its properties - and from its current publications, it's expected that ARP will happily continue with its vertical integration in what it considers to be a growing cottage industry. 

Is This The Next Big Thing in the Real Estate Investment Marketplace?  Maybe.

Right now, most REITs deal with industrial concerns or mortgages or things like apartment complexes or office buildings.  It is a new twist on things for a group of investors to buy up single family dwellings for the purpose of renting them out. 

However, ARP isn't alone in thinking this is a great idea:  SmartMoney quotes Warren Buffett as thinking this is a good thing to do, given the bargain prices on these distressed homes in many national markets. 

So, is this what happens to that infamous shadow inventory created by the Foreclosure Mess?  Perhaps so, at least for a part of it.  For both big REITS like ARP as well as smaller investors, the plan to grab some single family dwellings at bargain prices and thereafter wear the landlord hat may be a very good and profitable idea indeed. 

Office buildings in South Florida are not tenant-driven any longer, according to the latest reports for the second quarter of 2012: building owners and those interested in investing in office space as a real estate investment got some good news this month. 

In the past, tenants could ask - and get - things like free rent and other cushy concessions, but now the worm may have turned and tenants may now be faced with landlords asking for higher rents and not as ready to make concession deals.  Consider the following:

1.  The Sun Sentinel is reporting that highrise office buildings like CityPlace Tower in West Palm Beach have over 90% occupancy.  

2.  A 2012 Report by Cushman & Wakefield for the second quarter of this year shows Broward County's overall vacancy in the second quarter at 16.7% and Palm Beach County's vacancy at 20%.

3.  The latest market report from Jones Lang LaSalle finds major renewals of office leaseholds in Miami, with GlobeSt.com using the report's Norwegian Cruise Line’s 199,000-square-foot renewal as as an exmaple of corporate tenant retention gaining in strength here in South Florida.  Moreover, office tenants are touring the Miami real estate market for space, GlobeSt giving examples of accounting firm Marcum LLP; Morrison, Brown, Argiz & Farra; and HomeServe USA.

4.  Finally, the CoStar Group is reporting that South Florida's office building vacancy rate was down over the previous quarter in 2012, with net absorption totaling positive 689,344 square feet. They report tenants in 2012 that include:

• Citrix Systems for 54,902 square feet at Park Center;
• University Of Miami Bascom-Palmer for 52,205 square feet at Crossroads 3; and
• State Farm Mutual Automobile Insurance for 50,000 square feet at Convergys at Westpoint Centre.  

CityPlaceTower in West Palm Beach is 90% Occupied.

In an 100% cash transaction, Brazil's EuroBank sold commercial real estate notes backed up with real estate in the Florida counties of Broward, Dade, and Palm Beach to an American investment firm based out of Virginia.  The amount of cash: $33,413, 513.  There are lots of news reports regarding the buying and selling of residential real estate mortgages these days, but this news release regarding a big chuck of cash being used to buy up Florida commercial real estate notes isn't as common and accordingly, is our news release of the week:

RER Equities, Inc. Closes on the Purchase of $33 Million Portfolio of CRE Loans from EuroBank

HERNDON, Virginia, July 20, 2012.

RER Equities, Inc., a private investment firm specializing in buying distressed real estate debt and underperforming properties, recently announced their latest acquisition of fifty one performing, sub­performing and non­performing notes secured by various commercial real estate and related assets. The aggregate unpaid balance of the notes totals $33,413,513. The seller was Coral Gables, Florida based EuroBank, a subsidiary of Banco do Brasil S.A. The notes are secured by real estate assets in Dade, Broward and Palm Beach counties.

The negotiated all cash transaction was completed in thirty days, from confidentiality agreement execution to closing. This transaction is the firm’s second Florida loan acquisition this quarter.

Christopher Kallivokas, Chairman of RER Equities, said, “With the South Florida real estate market starting to turn, we felt this was the appropriate time to pursue assets from banks that are prepared to resolve their distressed portfolios.” RER is actively pursuing other bank portfolios in Florida. Kallivokas commented, “Our experience in providing due diligence and valuation services on over $70 billion of loan portfolios for government insuring agencies, major Wall Street firms and financial institution acquirer’s has allowed us to develop a very unobtrusive procedure for quickly valuing a bank’s classified portfolio. We have found that a buyer that exercises extreme confidentiality, creates minimal disruption and reaches a reasonable price quickly is very attractive to portfolio sellers. Ten days into the process, we arrived at a strike price that met the bank’s expectations and was in line with our investment parameters. ”

Headquartered in Herndon, Virginia, a DC suburb, with offices in Coral Gables, Florida, RER Equities, Inc., has been acquiring distressed real estate related loans throughout the eastern United States since its inception in 1989. It is a member of the RER Financial Group LLC, a nationwide financial services firm specializing in the acquisition, valuation, management and servicing of commercial real estate ("CRE") loans and mortgages. For more information, visit RER Financial Group’s website: www.rerfin.com.

Contact:

Christopher Kallivokas

RER Equities, Inc.

Florida Realtors monitors the Florida real estate industry closely and many Florida real estate experts take heed to the studies and research information that Florida Realtors releases periodically, so many were encouraged by the optimistic news found in their June 2012 tallies.  Here, their summary is our news release of the week:

 Fla.'s Housing Market Continues Positive Trends in June 2012

ORLANDO, Fla., July 19, 2012 /PRNewswire/ -- Florida's housing market had increased pending sales, more closed sales, higher median prices and a reduced inventory of homes for sale in June, according to the latest housing data released by Florida Realtors®.

"Florida's housing recovery continues its positive momentum," said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. "All of the signs point to solid gains, which is good news for the state's economy. In June, pending sales were up 31 percent for existing single-family homes and nearly 23 percent for townhouse-condo units compared to a year ago. The trend shows that many buyers are ready to purchase their Florida dream home, but a lack of financing options and overly restrictive credit standards remain obstacles."

Pending sales refer to contracts that are signed but not yet completed or closed; closed sales typically occur 30 to 90 days after sales contracts are written.

Statewide closed sales of existing single-family homes totaled 18,800 in June, up 5.3 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The statewide median sales price for single-family existing homes last month was $151,000, up 8.2 percent from June 2011.

According to the National Association of Realtors® (NAR), thenational median sales price for existing single-family homes in May 2012 was $182,900, up 7.7 percent from the previous year.In California, the statewide median sales price for single-family existing homes in May was $312,110; in Maryland, it was $259,207; and in New York, it was $208,000.

The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Looking at Florida's year-to-year comparison for sales of townhomes/condos, a total of 9,202 units sold statewide last month, up 1.5 percent from those sold in June 2011. The statewide median for townhome-condo properties was $110,000, up 15.8 percent over the previous year. NAR reported the national median existing condo price in May 2012 was $180,000.

Last month, the inventory for single-family homes stood at a six-months' supply; inventory for townhome-condo properties was at a 5.9-months' supply, according to Florida Realtors.

"The trend we've seen established over the past year is continuing," said Florida Realtors Chief Economist Dr. John Tuccillo. "In June, every housing market indicator moved in the right direction. Closed sales are up, but so are pending sales, median prices, average prices and the ratio of sales price to list price. Conversely, listings are down, days on market are down and – most important – inventories are down. We have now reached a six months' supply of inventory for existing single-family homes and 5.9-months' supply for townhouse-condos."

Tuccillo added, "With an improving employment environment in Florida, we expect that the housing market recovery will continue in the future."

The interest rate for a 30-year fixed-rate mortgage averaged 3.68 percent in June 2012, significantly lower than the 4.51 percent average during the same month a year earlier, according to Freddie Mac.

To see the full statewide housing activity report, go to Florida Realtors Media Center at http://media.floridarealtors.org/ and look under Latest Releases, or download the June 2012 data report PDF under Market Data at: http://media.floridarealtors.org/market-data

Editor's Note: Florida Realtors 2012 housing market data releases mark a new statewide data reporting partnership between Florida Realtors Industry Data and Analysis department and new vendor partner 10K Research and Marketing. Housing sales data from the state's local Realtor organizations is collected and organized with the goal of providing unique, localized market reports to the local Realtor boards and associations within Florida Realtors, enabling the groups and their Realtor members to serve as the definitive voice of real estate in their respective local markets. At the same time, Florida Realtors is providing comprehensive statewide housing market statistics – but this new data series only refers to statewide data and does not include metropolitan statistical areas (MSAs).

Florida Realtors®, formerly known as the Florida Association of Realtors®, serves as the voice for real estate in Florida. It provides programs, services, continuing education, research and legislative representation to its 115,000 members in 63 boards/associations. Florida Realtors® Media Center website is available at http://media.floridarealtors.org.

Florida's real estate industry - residential and commercial - is tied to Brazil in a big way:  according to the Miami Realtors Association, as of last November, Brazilians were second only to Venezuela in foreign purchases of Florida real estate, with Brazil buying fifteen percent (15%) of the total real estate sales in 2011. 

The Brazilian-American Chamber of Commerce (Miami) reports that there are 15 Brazilian multinational companies headquartered in South Florida, including Banco do Brasil, Odebrecht Contractors of South Florida, Embraer Aircraft Holding, and TAM Airlines.  

In fact, Brazil's ties with Florida are becoming so strong that Brazil, currently ranked as the 6th largest economy on the planet, is impacting everyday life here in Florida -- for example, right now there is a push to have Portuguese taught in the Broward County Public Schools, since Brazilians speak Portuguese - not Spanish - and Brazilians businesses and investors (as well as Brazil's many tourists visiting here) need more Portuguese-speaking Floridians.

Which is why Florida real estate investors and Florida land developers are carefully watching what's happening right now with Brazil's economy.

This month, there are news reports and studies being released that do not bode well for the economy of Brazil. Consider these items:

• In June 2012, the confidence of Brazil's consumers fell. According to Reuters, this was for the second month in a row with reports that Brazilians are not optimistic for how their country will fare for the remainder of the year.
• Brazil's Central Bank released its survey where economic forecasts for the rest of 2012 were cut for the 7th week in a row.  The economist are forecasting the weakest year for Brazil's economy since 2009.
• Brazil is facing less demand from international trade at the same time that Brazil's labor costs are rising. 
• The Central Bank of Brazil is predicted to continue its pattern of cutting interest rates through the rest of the year, with talks that the rate may go as low as 7.5% - all in a strategy to fight against inflation. 

What This May Mean to South Florida - Brazil's Economy Influences Florida's Economy

Florida and Brazil have built - and continue to build - an economic relationship and when Brazil falters, then Florida feels the effects.

The Brookings Institute ranks South Florida as one of the country's most hurting economic areas (rank: 81 out of 100)  and one of the factors here may well be Brazil's influence according to local economic experts (read their opinions here). 

It's a great thing that Brazil and Florida - particularly South Florida, and especially Miami - have built a relationship that benefits both regions and it's hopeful that this camaraderie will continue to florish.  However, as with any relationship, there are ebbs and flows, and now Florida must consider not only what happens here but what happens elsewhere: for example, when Brazil's sales in the global marketplace fall - as has happened recently - then Florida will feel this, too. 

For those interested in developing land in Florida or otherwise investing in Florida real estate, it's important to know that the State of Florida is in the process of changing and reforming how land planning, land conservation, environmental protection, and real estate development is handled by both state and local governments.  Statewide reforms have gutted much of the state control over land regulation (for more, check out the ebook in the left sidebar). 

Today, the State of Florida owns and oversees management of approximately 3.8 million acres of uplands. This acreage includes 500,000 acres of conservation easements. Almost all of this state land is used for either recreation or conservation purposes, uses that are constitutionally protected by the Florida Constitution in perpetuity. 

When the State of Florida decides that a parcel of land is no longer needed by the State, the land is first offered as a lease to state agencies, state universities, etc., and if they decline, then the first offer to sell the land is made to local governments.  If those local governments don't buy the tract, then the State will offer the property up for public sale or bid.

Here are 10 things that remain true today for those interested in Florida land and real estate:

1. Florida has over 3.8 million acres of conservation land, leased by the Division of State Lands (Division) to state agencies or local governments to oversee and manage as things like parks, preserves, forests, or recreation areas.
2. The Florida Division of State Lands also leases non-conservation lands to state agencies and local governments for things like college campuses, state prisons, and government office buildings.
3. Land use or land management plans are legally required for uplands under lease from the State of Florida and for both conservation and non-conservation lands.
4. Land use requirements will not require the same thing under Florida law for conservation and non-conservation land. 
5. There is a one year time period for conservation property to have a land management plan submitted (from time of lease) and approval may be needed by the Department of Environmental Protection, a Florida water management district, the Florida Natural Areas Inventory and/or the Division of Historical Resources, and the Division of State Lands. 
6. Land management plans for conservation lands in Florida must meet Florida Statute Sections 253.034(5) and 259.032(10), and agency rule requirements.  For non-conservation land,   land use plans must be submitted on a Division form (if you're smart, it's not an absolute requirement).
7. Many changes in land use or management activities, especially those that are included in ARC’s list of approved Interim Management Activities or additions to the Optimum Planning Boundary, may be allowed without any review by ARC or by posting on the ARC website as a minor plan amendment. More substantive changes must be presented to ARC at a regularly scheduled meeting. 
8. Land Management Plans for parcels over 160 acres must be presented to the Acquisition and Restoration Council (ARC) for their recommendations.
9. Land Management Plans for parcels less than 160 acres may use a form that was developed by the Division.
10. Most of the state’s conservation lands are managed by the following state agencies:

• Florida Forest Service
• Florida Fish and Wildlife Conservation Commission (FWC)
• DEP's Division of Recreation and Parks (DRP)
• DEP's Office of Greenways and Trails (OGT)
• DEP's Office of Coastal and Aquatic Managed Areas (CAMA)
• In addition, Florida’s five water management districts collectively own more than 1.5 million acres, which are managed to protect drinking water supplies as well as provide outdoor recreation opportunities:

• Northwest Florida Water Management District (NWFWMD)
• South Florida Water Management District (SFWMD)
• Southwest Florida Water Management District (SWFWMD)
• St. Johns River Water Management District (SJRWMD)
• Suwannee River Water Management District (SRWMD)

It is St. John's River Water Management District that is currently considering selling off surplus land to private buyers, as discussed in our earlier post on Tuesday.  Whether or not the other WMDs will follow St Johns' lead is being debated, but given their cash-strapped situation these days, it seems likely that surplus land sales to the public will be considered in the near future. 

Source:  Florida Department of Environmental Protection

Lender Processing Services, Inc. has been one of the nation's biggest loan servicers for the country's biggest banks and financial institutions for the past 50 years.  As part of its work, LPS monitors the financial industry and issues periodic reports on the state of mortgage lending and foreclosures, among other things. 

Here, as our news release of the week, is LPS's May Mortgage Monitor Report with some not so good numbers (you can read the full Mortgage Monitor Report for May 2012 online here):

LPS' May Mortgage Monitor: National Foreclosure Inventory Remains Near All-Time High; Delinquency Rate Stabilizes After Seasonal Drop

JACKSONVILLE, Fla., July 9, 2012 /PRNewswire/ -- The May Mortgage Monitor report released by Lender Processing Services (NYSE: LPS) shows that the nation's foreclosure inventory remains near all-time highs, with 4.12 percent of all active mortgages in the foreclosure pipeline in addition to the 3.2 percent that are 90 days or more delinquent but have not yet begun the foreclosure process. According to LPS Applied Analytics Senior Vice President Herb Blecher, the situation is more nuanced when looking at the breakdown between states that apply judicial versus non-judicial foreclosure processes.

"There's a stark contrast in foreclosure inventories between judicial and non-judicial states," Blecher explained. "In the former, 6.5 percent of all loans are in some stage of foreclosure – that's more than 2.5 times the rate in non-judicial states where only 2.5 percent of loans are currently in the foreclosure pipeline. Both these figures are significantly higher than the pre-crisis average of 0.5 percent, but it is worth noting that the average year-over-year decline in non-current loans for judicial states is less than one percent, whereas in non-judicial states, it's down 7.1 percent."

The difference between judicial and non-judicial states impacts the length of time loans remain in the foreclosure pipeline as well; the percent of aged foreclosure inventory has increased notably in judicial states. Approximately 53 percent of loans in foreclosure in states that follow a judicial foreclosure process have been delinquent for more than two years, as compared to just over 30 percent of loans in non-judicial states.

Nationwide, foreclosure sales – which mark the end of the foreclosure process – were up 10 percent in May with the increase more pronounced in non-judicial states. In those states, 6.46 percent of the existing foreclosure inventory progressed to foreclosure sale in May, as compared to just 2.14 percent of the inventory in judicial states.

The May data also shows that after a sharp seasonal decline, delinquencies stabilized, up just 1.1 percent for the month to 7.2 percent, but still down almost 12 percent year to date. In addition, new problem loan rates continue to improve, with rates dropping for the eighth consecutive month – reaching a point (1.06 percent) not seen since July 2007, and well off their January 2009 peak of 2.92 percent. Finally, foreclosure starts were up for the month, rising 11.6 percent from April, though still low by historical standards and more than 40 percent off their September 2010 peak.

As reported in LPS' First Look release, other key results from LPS' latest Mortgage Monitor report include:

Total U.S. loan delinquency rate:

7.2 %

Month-over-month change in delinquency rate:

1.1 %

Total U.S. foreclosure pre-sale inventory rate:

4.12 %

Month-over-month change in foreclosure pre-sale inventory rate:

-0.5 %

States with highest percentage of non-current* loans:

FL, MS, NJ, NV, IL

States with the lowest percentage of non-current* loans:

MT, AK, SD, WY, ND

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

Notes:

(1) Totals are extrapolated based on LPS Applied Analytics' loan-level database of mortgage assets.

(2) All whole numbers are rounded to the nearest thousand.

About the Mortgage Monitor

LPS manages the nation's leading repository of loan-level residential mortgage data and performance information on nearly 40 million loans across the spectrum of credit products. The company's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for LPS' monthly Mortgage Monitor Report. To review the full report, visit http://www.lpsvcs.com/LPSCorporateInformation/CommunicationCenter/DataReports/Pages/Mortgage-Monitor.aspx

About Lender Processing Services

Lender Processing Services (NYSE: LPS) delivers comprehensive technology solutions and services, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers and investors. As a proven and trusted partner with deep client relationships, LPS offers the only end-to-end suite of solutions that provides major U.S. banks and many federal government agencies the technology and data needed to support mortgage lending and servicing operations, meet unique regulatory and compliance requirements and mitigate risk.

These integrated solutions support origination, servicing, portfolio retention and default servicing. LPS' servicing solutions include MSP, the industry's leading loan-servicing platform, which is used to service approximately 50 percent of all U.S. mortgages by dollar volume. The company also provides proprietary data and analytics for the mortgage, real estate and capital markets industries.

LPS is headquartered in Jacksonville, Fla., and employs approximately 8,000 professionals. The company is ranked on the Fortune 1000 as the 877th largest American company in 2012. For more information, please visit www.lpsvcs.com.

SOURCE Lender Processing Services

If you are in Florida and you are involved in land planning or real estate development, you probably know all about Seven50 already; if not, you're about to get acquainted with Seven50 since it's making history.

What is Seven50?  From its website, Seven50 describes itself as:

The Southeast Florida Regional Partnership (SFRP) is a voluntary, broad-based and growing collaboration of more than 200 public, private, and civic stakeholders from the Southeast Florida region of Monroe, Miami-Dade, Broward, Palm Beach, Martin, St. Lucie and Indian River counties. The Partnership has united to leverage resources and coordinate strategic long-term planning to drive competitiveness and prosperity for the region. SFRP seeks greater opportunities for sustained job creation, access to affordable housing, a better menu of transportation options, and more people-friendly, environment-friendly places to live.

The Partnership and Seven50 are explained on the site as:

The Partnership is developing Seven50, a seven county, 50-year Southeast Florida Prosperity Plan that will reflect regional agreement around priority investments in key areas of importance toSoutheast Florida’s future. When considered together, these issues will coalesce into a coherent strategy and investment plan in support of the future sustainability and economic prosperity of our communities and region. Seven initial work groups have been identified along issue areas:

• Education, Workforce & Economic Development
• Development Patterns (Housing, Transportation, Healthy Communities)
• Environment, Natural Resources, and Agriculture
• Climate Resiliency
• Community Assets and Culture
• Inclusive Regional Leadership and Equity
  

Outcomes  

The HUD Sustainable Communities Initiative is the region’s best opportunity to develop consensus around a strategic vision and investment plan that will chart the course to a brighter and more prosperous future for Southeast Florida’s residents and in turn, Florida. It is expected that this strategic vision and the Seven 50 will:

• Serve as the framework for future federal, state and local investment;
• Support and advance the efforts of individual counties, municipalities and other regional partners whose plans and projects further the implementation of the Seven50 Plan; and
• Enhance the ability of the Southeast Florida Region to secure resources needed for critical infrastructure projects that further regional sustainability and economic prosperity.
  

“Preferred Sustainability Status” for certain federal grant programs has already resulted in millions of dollars in additional investment inSoutheast Floridathrough its Partnership member organizations.

 Last week, Delray Beach hosted a historic event involving Seven50: around 500 leaders in real estate - from environmental activists to government honchos to land planners and the like, met together and began the process of gathering public input into the creation of a fifty year (50) plan for the future of seven Florida counties, planning how these areas would grow from now until around 2060.

Things like transportation needs, protecting the environment, suburb growth, and much more will be considered as the Seven50 group plots out how best to balance lifestyle and wildlife concerns with economic needs. 

From project director Marcela Camblor:

“Seven50 is an investment plan that will help guide the allocation of federal and other dollars into the region in order to help ensure economic prosperity and the best-possible quality of life for Southeast Florida’s residents. While Seven50 will be designed to ensure the brightest-possible future for the region in the next 50 years, its impacts will be felt in the near future as early as five years from today.”

 

The counties involved are: Monroe, Miami-Dade, Broward, Palm Beach, Martin, St. Lucie and Indian River.  If you are interested in being involved in this historic project, then go to here for details on how to join a forum or otherwise contribute. 

The news that Donald Trump has serious plans for building a big TV and film studio in Florida is making lots of waves in various industries across the country.  The development would be hugh, of course, but the true impact of this Trump endeavor would be the many offshoots to the Trump project itself.  Given the potential of Trump's game plan upon South Florida and the state as a whole, it's our News Release of the Week:

Miami goes Hollywood! Film industry forecasted to bring thousands of jobs to Miami-Dade County

For Immediate Release: June 05, 2012

Media Contact:  Arleen Gomez

(Miami-Dade County, FL) -- In an effort to stimulate economic development and job growth in Miami-Dade County, Chairman Joe A. Martinez presented a business opportunity to his colleagues at today’s County Commission meeting. Chairman Martinez joined forces with Mr. Donald J. Trump and the Trump Organization to present his vision to bring a new job industry to Miami-Dade – filmmaking. The Chairman’s presentation asked his fellow commissioners to explore the possibility of building a film studio “city” on County-owned land next to the Homestead Air Reserve Base. This media city, Chairman Martinez explained, will not only help stimulate our current struggling economy by creating jobs, but it will also help revitalize the area of Homestead and Florida City which took a major hit during the economic downturn and has been struggling ever since to rebuild itself.

“Many movies and TV shows have been filmed in Miami, but we’ve never been truly able to capitalize on the film industry as many studios opt to complete their work in Los Angeles,” said Chairman Martinez. “If the resources of a studio and a wealth of land to build massive sets – at a cheaper cost – were at filmmakers’ fingertips, I don’t doubt that they would be eager to take advantage of the opportunity.”

According to preliminary plans, “Trump Studio City”, designed after the most modern facilities in Europe, would be built on land spanning 3.16 miles in Homestead, and would consist of film studios and stages, back lots, a media hub, state of the art digital production, hotel, and offices making this bigger and greater than Hollywood. Michael D. Cohen, Executive Vice President and Special Council to Donald J. Trump informed the Board that this industry could inject as much as $262,000 a day in local revenue.

In a unanimous vote, the Board directed the County Attorney’s office to provide a report within 90 days outlining the status of the land and to place a 180-day moratorium on any recommendation for the utilization of the land in question.

“This will make Miami-Dade County the jewel of our great state,” said Chairman Martinez.

First things first, here's the bottom line: Florida developers and builders are very, very interested in what the local county will be charging in impact fees because it can be a big, big number. So what is happening in Osceola County Florida and the possible end to impact fees there is big news.

What are impact fees exactly? 

Impact fees are fees set by the county on new building - whether it's an expansion of something that already exists or whether it's a new development of custom homes, a new residential neighborhood, a shopping mall, an office building, a condo, or some other type of business structure. 

The impact fee is an amount that the county levies against whatever is being developed or built so the county can take that money and use it against the county's costs to meet the added use on county utilities, etc.  -- in other words, it's a fee to cover the added impact of the build upon the county's services.

What is happening to impact fees in Osceola County, Florida?

Osceola County has been hit hard in this Great Recession. It had one of the highest foreclosure rates in the nation.  Its tax base was slipping:  from 2011 to 2012, it fell 5.45%. 

So, Osceola's powers that be decided that one way to spur new growth in the area was to waive impact fees -- and it worked.  Osceola County saw an increase in commercial construction as a result of allowing developers to build without this cost to their bottom line.

Here is the Osceola County Impact Fee Office explanation of its commercial construction impact fee waiver (there's also one for residential construction):

OSCEOLA COUNTY IMPACT FEE WAIVER FOR COMMERCIAL CONSTRUCTION

Transportation and Fire/Rescue Impact Fees are currently waived for new commercial construction. To qualify for the commercial impact fee waiver:

Building permits need to be issued between December 13, 2010 and September 30, 2012

Initial inspection needs to be called in within 60 days of permit issuance

Certificate of Occupancy must be issued within 18 months from the date the building permit is issued

The County Manager may approve an extension of the completion date:

6 additional months for projects of 20,000 to 100,000 square feet

12 additional months for projects of more than 100,000 square feet

(Example: For a building permit issued on January 31, 2012, the C.O. would not be due until July 31, 2013, with the possibility of an extension ranging from December 31, 2013 thru July 31, 2014)

The current Building Permit Fee Waiver program will continue to be in effect on both residential and non-residential construction for permits issued by September 30, 2012.

Water and Sewer Impact Fees are assessed and collected by Toho Water Authority (TWA) and can be contacted at 407-944-5000.

Permanent Moratorium Up for a Vote

Now, Osceola is considering making that temporary waiver of impact fees into a permanent moratorium.  It's hopefully up for a vote next month. 

Expect it to pass: with a moratorium, it does not mean that the county will never have the power to assess impact fees in the future, but it does mean that builders and developers can count on the fact that for the near future, Osceola County may be a cheaper option for a project than other parts of the state that are still assessing impact fees on new growth.

Coy Koontz is taking his case to the United States Supreme Court.  For those in Florida real estate development, Koontz's fight with the St. Johns River Water Management District is well known.  They've been fighting in the courts for years. 

To read the prior case history, check the various appellate cases (there are Koontz II, Koontz IV, etc.) and this latest high court decision made in November 2011:  the Florida Supreme Court's opinion in St. Johns River Water Management District v. Koontz.

What's the fight about?

From the Florida Supreme Court's recent decision, citing with approval the synopsis provided by the lower Florida district court:

This case involves a landowner, Mr. Koontz, who, in 1994, requested permits from [St. Johns] so that he could develop a greater portion of his commercial property than was authorized by existing regulation. . . . Based on the permit denial, Mr. Koontz brought an inverse condemnation claim asserting an improper "exaction" by [St. Johns].

In the most general sense, an "exaction" is a condition sought by a governmental entity in exchange for its authorization to allow some use of land that the government has otherwise restricted. Even though the government may have the authority to deny a proposed use outright, under the exactions theory of takings jurisprudence, it may not attach arbitrary conditions to issuance of a permit.

In relating the circumstances giving rise to this case, the trial court explained:

The subject property is located south of State Road. 50, immediately east of the eastern extension of the East-West Expressway in Orange County. The original. plaintiff, Coy Koontz, has owned the subject property since 1972. In 1987, a portion of the original acreage[2] adjacent to Highway 50 was condemned, leaving Mr. Koontz with 14.2 acres. There is a 100-foot wide transmission line easement of Florida Power Corporation running parallel to and about 300 feet south of Highway 50, that is kept cleared and mowed by Florida Power. . . .

. . . .

All but approximately 1.4 acres of the tract lies within a Riparian Habitat Protection Zone (RHPZ) of the Econlockhatchee River Hydrological Basin and is subject to jurisdiction of the St. Johns River Water Management District.

In 1994, Koontz sought approval from [St. Johns]. for a 3.7 acre development area adjacent to Highway 50, of which 3.4 acres were wetlands and .3 acres were uplands.

In his concurring opinion in Koontz II, Judge Pleus explained the positions [advanced] by the parties during the permit approval process:

Koontz proposed to develop 3.7 acres closest to Highway 50, back to and including the power line easement. In order to develop his property, he sought a management and storage of surface waters permit to dredge three and one quarter acres of wetlands. A staffer from St. Johns agreed to recommend approval if Koontz would deed the remaining portion of his property into a conservation area and perform offsite mitigation by either replacing culverts four and one-half miles southeast of his property or plug certain drainage canals on other property some seven miles away. Alternatively, St. Johns demanded that Koontz reduce his development to one acre and turn the remaining 14 acres into a deed-restricted conservation area. Koontz agreed to deed his excess property into conservation status but refused St. Johns' demands for offsite mitigation or reduction of his development from three and seven-tenths acres to one acre. Consequently, St. Johns denied his permit applications.

Id. at 1269 (Pleus, J., concurring specially). In its orders denying the permits, [St. Johns] said that Mr. Koontz's proposed development would adversely impact Riparian Habitat Protection Zone ["RHPZ"] fish and wildlife, and that the purpose of the mitigation was to offset that impact.

After hearing conflicting evidence, the trial court concluded that [St. Johns] had effected a taking of Mr. Koontz's property . . . . In reaching this conclusion, the trial court applied the constitutional standards enunciated by the Supreme Court in Nollan and Dolan. In Nollan, with respect to discretionary decisions to issue permits, the Supreme Court held that the government could impose a condition on the issuance of the permit without effecting a taking requiring just compensation if the condition "serves the same governmental purpose as the developmental ban." 483 U.S. at 837. This test is referred to as the "essential nexus" test. In Dolan, the Court added the requirement that, for such a condition to be constitutional, there must also be a "rough proportionality" between the condition and the impact of the proposed development....

The Importance of Koontz v. St. Johns River Water Management District to Florida Land Development.

This controversy is hinged upon an application by a Florida land developer for a development permit.  Mr. Koontz planned to develop around 4 acres of land along Orange County State Road 50; Florida law required that he apply with the local water management district for a permit to do so, since his plan would include filling wetlands for the development project (his acreage is wetlands as defined under Florida law).

This was back in 1994.  The St. Johns River Water Management District denied his application. 

Koontz fought the denial, arguing that the Water Management District had illegally taken the property.  At first he won: the initial fight before a state circuit court judge had Koontz in the victory circle and the district being ordered to pay around $375,000 to the landowner for the temporary taking. 

Needless to say, SJRWMD chose to appeal the decision rather than pay for the taking.  And so it goes, with the fight moving to Washington D.C. here in 2012, some 18 years later. (The elder Koontz has passed away; Koontz Jr., his son, continues the fight.)

The Pacific Legal Foundation has gotten involved now, too.  They've asked for the U.S. Supreme Court review, arguing that this case is worthy of the Court's time and consideration because it represents essentially an "unconstitutional shakedown" by government.

Right now, Florida's water management districts are having to make due on much less since Florida Governor Rick Scott instituted drastic budget reductions.  Taxation was cut.  The water management districts have been criticised for a lack of consistency in permitting across the state, too.  Was the Koontz permit denial a "shakedown" - if so, imagine the developers around the state that believe they've faced similar "shakedowns" over the years. 

Lots of eyes are on this case.  To follow the case before the United States Supreme Court, go here, and to learn if the Supremes will agree with the Florida Circuit Court view or the Florida Supreme Court perspective, stay tuned.   

Last year's major deregulation of Florida state oversight of land development continued this year with a number of additional laws being passed in the Spring and Summer of 2012 (see our earlier post for details) as well as HB 503, which is now law in the State of Florida.

HB503 changes the way that builders and developers get permits from the State.  With HB 503, it will take less time for business endeavors to get through the process of getting regulatory okays -- and no, the environment isn't tossed aside as this new legislation changes the permitting procedures.

Both business representatives and environmental activists worked with members of the Florida Legislature to form the final version of HB503 which was sent to Governor Rick Scott's desk for signature earlier this year.   With the revamped permit process, costs in time and money are lessened for builders, developers, and the like -- which helps them do business, and that helps Florida's economy to rebuild itself.

HB503

For a complete review of HB503, please see our earlier post which provides a complete bill summary. 

This new law does the following:

• creates, amends, & revises numerous provisions relating to: development, construction, operating, & building permits;
• permit application requirements & procedures, including waivers, variances, & revocation;
• local government comprehensive plans & plan amendments;
• programmatic general permits & regional general permits;
• permits for projects relating to stormwater management systems, coastal construction, dredge & fill activities,
• intermodal logistics centers & commercial & industrial development;
• sanitary program surveys of certain water systems;
• innocent victim petroleum storage system restoration, ambient air quality & water quality standards, & solid waste disposal;
• sale of unblended gasoline for certain uses;
• exemption from payment to authorizing agencies for use of certain extensions;
• provides a 2-year permit extension.

Here are the Florida Statutes that are impacted by HB503:

• 125.022 - Development permits.
• 161.041 - Permits required.
• 166.033 - Development permits.
• 218.075 - Reduction or waiver of permit processing fees.
• 373.026 - General powers and duties of the department.
• 373.326 - Exemptions.
• 373.4141 - Permits; processing.
• 373.4144 - Federal environmental permitting.
• 376.3071 - Inland Protection Trust Fund; creation; purposes; funding.
• 376.30715 - Innocent victim petroleum storage system restoration.
• 380.0657 - Expedited permitting process for economic development projects.
• 403.061 - Department; powers and duties.
• 403.087 - Permits; general issuance; denial; revocation; prohibition; penalty.
• 403.1838 - Small Community Sewer Construction Assistance Act.
• 403.7045 - Application of act and integration with other acts.
• 403.706 - Local government solid waste responsibilities.
• 403.707 - Permits.
• 403.7125 - Financial assurance.
• 403.814 - General permits; delegation.
• 403.853 - Drinking water standards.
• 403.973 - Expedited permitting; amendments to comprehensive plans.
• 526.203 - Renewable fuel standard.

This article explores the potential investment opportunities available to UK-based investors within the Florida real estate market. It is written by a representative of Harworth Estates as a guest post by a Florida real estate expert.

Why Florida?

For many years, Florida has been a key part of the UK tourism industry, in terms of getting many Britons onto the aeroplane and visiting that part of the United States. Alongside this, the state has been one of the primary destinations for UK residents looking to emigrate to the US, as many get a taste for the lifestyle on offer in that part of the world.

A number of years ago, there were large swathes of investment into Florida, particularly the Orlando area, from UK based investors. Currently, real estate prices in Florida are at a low, meaning that there is now an excellent opportunity for further investment in the area. Given the close association Florida has with the UK, there are definitely profitable investments to be made by those looking to either begin or expand their property portfolio.

What To Buy

What is unique about the current situation in Florida is that the real estate prices have dropped in many areas. From an investment perspective, a real focus on residential properties and developments is much likely to deliver equitable returns over a longer-term period. In this part of the world, the beauty is that a residential property can be bought simply to sell on, or to be used as a holiday villa for use by tourists. For the UK investor, this provides a simple vehicle for developing a consistent revenue stream from their investment into Florida’s residential property market. In an environment where more and more individuals are seeking alternatives to traditional package holidays offered by tourism companies, being able to offer a trustworthy, domestic business proposition with regards to a holiday across the Atlantic will be extremely attractive to many holidaymakers.

While the residential market is the biggest opportunity currently in Florida, there is also potential in commercial property across the state, so wherever your business and investment interests lie, there is likely to be a gap in the market on which you can capitalise.

Marketing Your Property

Let’s face it, this is Florida we’re talking about, so anyone in the UK looking to holiday there knows what it is about. What you need to consider is how you intend to market your property, whether for sale or for rent as a tourist option. The biggest factor influencing this will be the location, so it is imperative you know where you want to buy. Do your research and ask yourself honestly if it works. The property in Cape Coral may look great, but if your target market want to visit Orlando, is the three hour journey likely to encourage them to do business with you?

I think we both know the answer to that!!

This article is a guest post from Harworth Estates. Harworth Estates are one of the largest landowners in the UK with access to over 30,000 acres of land. They provide residential and commercial properties for sale, industrial units, offices and development land.

Florida's construction industry gives lots of people jobs as well as providing all of us with new roads, homes, stores, schools, and such.  If the construction industry is hurting, then we're all hurting in the short run and the long term. 

Bad News for Florida's Construction Industry

So, the latest information from the Associated General Contractors of America is something that those in the know will consider, and the AGCA is reporting that construction employment in the State of Florida hit a record low -- the lowest it's been since 1990.

AGCA reports that Florida construction jobs dropped 7.3% from 2011 to 2012 and merited the number one spot in the country for the state with most lost construction jobs during the time period. 

Read the AGCA press release here. 

However, things may not be as dismal as pondering these construction numbers might lead you to believe. 

Good News for Florida Real Estate Market

Other studies are being released this month, and from the University of Florida there comes the UF Commercial Real Estate Sentiment Index, which brings good news for the Florida real estate industry.  According to the University of Florida research, the state's real estate market is doing better than it's been doing in the past 5 years.

Here, the Kelley A. Bergstrom Center for Real Estate Studies at UF’s Warrington College points to things like more lending opportunities, as well as an upswing in land development of both condo projects and single family home communities.  Employment numbers looked better, too, as did the occupancy rates for Florida office buildings.

To read the University of Florida executive summary of its findings, go here. 

To download a pdf of the UF 2012 Study itself, go here.

So, what to expect?

From the UF Report, the prediction for Florida is given as follows:

"Overall the future is looking brighter for Florida real estate, however uncertainty remains. Expect a continued slow and sometimes sluggish recovery until after the presidential elections in November."

Things do appear better than they have been in the past: we're seeing positive movement and industry insiders in Florida commercial real estate development are cautiously optimistic.  Do the construction numbers give pause?  Perhaps. 

However, construction is happening here in Florida -- we've got really low construction costs right now.  That's a good thing.

Florida will return to a healthy and vibrant economy.  We know this.  We'll get there. 

This week, Zillow released its latest Zillow Negative Equity Report and it's creating lots of chatter around the country.  You can read the Zillow Negative Equity Report here.

The Wall Street Journal points out that negative equity has fallen from last year’s 32.4% according to Zillow's statistics and Zillow has changed its data going back five quarters as part of a new way of doing things.   Given these considerations as well as CoreLogic's negative equity studies (which aren't as high as this one by Zillow), maybe we should review Zillow's new work with a careful eye. 

Why the concern over these negative equity numbers?  Zillow explains:

While the percent of homes in negative equity is dauntingly high, this percentage only represents a potential danger. The majority of underwater homeowners continue to make regular payments on their mortgage, with only 10.1 percent of the 31.4 percent nationwide being delinquent. Therefore, 3.1 percent of homeowners in the nation are at high risk for foreclosure near-term although there has been an increased utilization by lenders of foreclosure alternatives such as short-sales. In the Las Vegas metro, only 5 percent of homeowners are at high risk of foreclosure in the near term, despite 71 percent of homeowners being underwater....

Florida Has Lots of Negative Equity Concerns According to Zillow

From an interactive visual at the Zillow site, you can input city names or zip codes and finding negative equity information.  For example, in the Miami area:

• zip code 33168 in Miami has 58% of its homes underwater and is in the top 5% in the United States for areas with negative equity;
• zip code 33177 in Miami has 57% of its homes underwater and is also in the top 5% in the nation for amount of homes underwater; and
• zip code 33190 in Miami has 71% of its homes underwater and is in the top 1% in the country for amount of homes underwater. 

As for how this report is compiled, according to Zillow, they take their mortgage data from TransUnion and then analyze the numbers to find information on negative equity and delinquencies across the country as well as trends in loan-to-value ratios. 

Zillow determines "negative equity" for the purposes of its report as taking the estimated fair market value of the home and then deducting debt against it, e.g. mortgage debt on the property and any equity loans or lines of credit.

The Dangers of Florida's Negative Equity Have To Be Solved. Soon.

These negative equity numbers shouldn't make anyone stop in their tracks like a deer in the headlights.  That's the worst thing any investor or builder should do.  However, it is important to recognize the legitimate concerns this report raises, such as:

• Negative equity is a hint of possible default on mortgages that many home owners are paying now, and are current in those payments. 
• Negative equity keeps people in homes that are underwater - they cannot sell them, they cannot move to better jobs, they cannot refinance the note, etc.  They are stuck.
• Negative equity discourages potential buyers from buying a home in a community with negative equity properties - buyers will be skittish to buy a home that may be losing value in the future.
• Negative equity poisons the real estate market's balance of supply and demand.  Existing homes and future home developments are impacted detrimentally by negative equity in a community.

Bottom line, negative equity is a huge economic problem and the Zillow report should be turning lots of heads.  It reflects a problem in the national real estate market as a whole, as well as within the banking industry, which keeps things from working as they should. 

Until massive residential home negative equity is resolved, our Florida economy cannot fully recover.  It's that big of a deal. 

Last week, we highlighted news from Florida Realtors that its research projections were optimistic for the future of both the housing industry and the banking industry.  This week, we find even more good news reported by the NAIOP Research Foundation in its latest study, released this month, that finds commercial real estate development bounced back in 2011 and commercial real estate development in the United States should continue on the upswing, details here in our "news release of the week." 

We have emphasized the information provided about Florida, where the commercial market remains among the front-runners but dropped in rank from 4th to 7th overall. 

[You cannot read the report referenced in the news release online; however, details on how to obtain a copy are given.]

Here from the NAIOP, the Commercial Real Estate Development Association, on May 1, 2012:

Commercial Real Estate Development and Construction Rebounds in 2011

PR Newswire \ WASHINGTON, May 1, 2012

NAIOP Research Foundation Study:

-- Construction Spending Grows More Than 12 Percent From 2010 to 2011

-- 238.3 Million Square Feet Built in 2011, 2.5 Percent More Than in 2010

-- New Projects Provide Capacity for 610,000 Jobs

-- Commercial Real Estate Development and Construction Contributed $262 Billion to GDP, Increase of 13 Percent from 2010

WASHINGTON, May 1, 2012 /PRNewswire-USNewswire/ --

Development and construction of commercial real estate – office, industrial and retail buildings – rebounded in 2011, the first year to post gains since the recession began in 2007, according to a report, How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011, released today by the NAIOP Research Foundation.

The total economic impact of the development (pre-construction, construction and post-construction) of commercial real estate during 2011 added $261.6 billion to the GDP, compared to $231.7 billion in 2010, a 13 percent increase, according to the report.

Construction spending on commercial real estate totaled $92.3 billion, a more than 12 percent increase over 2010. This spending supported nearly 2 million jobs nationally.

The increases in construction spending and activity resulted in the building of 238.3 million square feet of new space, an increase of 2.5 percent from 2010. This new space has the capacity to house 610,000 jobs with an annual payroll of $26.8 billion.

"2011 was a transition year for the U.S. economy and the construction sector," said the report's author, economist Stephen S. Fuller, PhD, Dwight Schar Faculty Chair, University Professor and the Director of the Center for Regional Analysis at the George Mason University. "The U.S. economy shifted from a federal stimulus to private-sector driven growth pattern and construction spending grew accordingly."

In addition to the advances made in 2011, forecasts for 2012 call for project construction spending to increase and to accelerate further in 2013 and 2014, according to the report.

"For the first time we are seeing across the board increases in this sector," said Thomas J. Bisacquino, NAIOP president and CEO. "We believe this is the most solid evidence yet of a strengthening recovery."

Impacts Felt Regionally

The impact of the new spending was felt throughout the nation. The following states posted the highest amounts of direct spending in all three phases of development across all categories of commercial real estate (number in parenthesis refers to that state's rank in 2010):

1. Texas (Previous rank: 2), $7.9 billion in spending, 150,102 jobs supported
2. New York (1), $6.5 billion in spending, 83,762 jobs supported
3. West Virginia (48), $5.9 billion in spending, 100,889 jobs supported
4. California (3), $4.5 billion in spending, 70,817 jobs supported
5. Arizona (14), $4.2 billion in spending, 74,117 jobs supported
6. Utah (26), $3.6 billion in spending, 77,550 jobs supported
7. Florida (4), $3.4 billion in spending, 64,970 jobs supported
8. Illinois (10), $3.0 billion in spending, 50,136 jobs supported
9. Massachusetts (21), $3.05 billion in spending, 41,382 jobs supported
10. (tie) North Carolina (7), $3.05 billion in spending, 55,920 jobs supported

About the Report

This report enables the commercial real estate industry to quantify the numbers that demonstrate its considerable and sustained contribution to the U.S. economy. With this data, public, state and local governments can learn the ways that commercial development makes a positive and lasting contribution to their communities, including:

• Supporting the creation of jobs;
• Generating personal earnings, and;
• Promoting new spending activity across the breadth of the economy.

The report was produced using data provided by the Bureau of Economic Analysis, U.S. Department of Commerce, U.S. Census Bureau, McGraw Hill Construction and a NAIOP member survey. The NAIOP Research Foundation published four previous editions of this report in 2006, 2008, 2009 and 2010.

To access a copy of the report, please contact David Harrison at 410-804-1728, or david@harrisoncommunications.net.

* Note to Editors: Please note that the official/legal name of the association is NAIOP.  If additional information is needed, the association can be called NAIOP, the Commercial Real Estate Development Association. The former name (National Association of Industrial and Office Properties) is no longer accurate and was changed in January 2009. For further details, please see the NAIOP press room: http://www.naiop.org/naiop

About the NAIOP Research Foundation: The NAIOP Research Foundation was established in 2000 as a 501(c)(3) organization to support the work of individuals and organizations engaged in real estate development, investment and operations. The Foundation's core purpose is to provide these individuals and organizations with the highest level of research information on how real properties, especially office, industrial, retail and mixed-use properties, impact and benefit communities throughout North America. For more information on how to contribute or for complimentary research reports, visit www.naioprf.org.

About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 15,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit www.naiop.org.

SOURCE NAIOP Research Foundation

Florida's housing industry has been one of the hardest hit in the country, and what happens to Florida housing markets impacts both residential and commercial real estate developments as well as many other sectors of the Florida economy, not the least of which are the banking and construction industries.

Which means that when experts start giving their research results on where housing is heading, there are a lot of people in Florida that are paying attention.  One of those big research studies hit the presses this week, prepared by The Demand Institute, entitled "The Shifting Nature of U.S. Housing Demand." 

Read this new report online here.

Who is The Demand Institute, Author of this Viral Economic Forecast?

The Demand Institute is a newly created organization run by the Conference Board and Nielsen Holdings N.V.  From its website:

The Demand Institute is a non advocacy, non-profit organization and a division of The Conference Board, which holds 501(c)(3) tax-exempt status in the United States. The Demand Institute is jointly operated by The Conference Board and Nielsen. Our headquarters is in New York City, with a presence in Beijing, Brussels, Chicago, Hong Kong, Mumbai, Singapore and Washington, D.C.

Our Mission: The Demand Institute illuminates how consumer demand is evolving around the world. We are on a mission to strengthen the growth and vitality of the global economy by helping public- and private-sector leaders align strategies and investments to where consumer demand is headed across countries, industries and markets....

Which means that The Demand Institute's international membership will be considering the information provided in this new report as they consider investing in the Florida real estate market. It's a rather powerful bunch, this membership.

Given the importance of Florida's foreign investors to our economic recovery, it's important to know what powerful international investment concerns are learning about our present and future real estate climate.  In fact, acknowledging what investors in places like Brazil, Israel, Canada, and other parts of the world are considering doing in the State of Florida may be just as important, if not more important, than what domestic and local investors are pondering as places to put their money. 

Exposure, however, exceeds much more than the Demand Institute's membership.  This thing is going viral.

The report is making the national news in coverage by Bloomberg News and other globally prominent media including TIME Magazine and the Wall Street Journal, which gave great attention to the forecast in this week's article, "Housing’s Future: Renting and Downsizing."  TIME, meanwhile, is crediting the Demand Institute as confirming that the Housing Industry has begun its turnaround in an article entitled, "Report: Housing Market Recovery Has Officially Begun."

What Does the Demand Institute Report Provide?

At least for the next three years or so, we should expect the following in the housing markets:

1. home buyers are looking for smaller houses;
2. the real estate market is beginning to bounce back;
3. the real estate market will not return to its prior glory days in the foreseeable future; and
4. the demand for rental properties will be high.

Here, key to real estate developers and land planners, it is projected that:

• many new apartment complexes and other kinds of multi-residence projects will be built, many in urban areas convenient to shops, workplaces, and schools;
• shadow inventories and distressed properties will be purchased in bulk by the 21st Century's version of a landlord (see our earlier post on national builders moving into this market opportunity); and
• home ownership will be tied to smaller, downsized lifestyles: home ownership remains an American Dream, but it's more of a dream these days than a reality. 

In this week's Wall Street Journal, Beazer Homes USA Inc., a nationally-known home builder based out of Atlanta, Georgia, was the subject of a trending article based upon Beazer Homes' decision to create a Real Estate Investment Trust (REIT) that will, in turn, purchase and then rent out homes (SFDs, not condos and such). International investment firm Kohlberg Kravis Roberts & Co. is working with Beazer Homes here, and from the get-go, the idea is for the Rental REIT, named "Beazer Pre-Owned Rental Homes Inc.," to go public down the road. 

From Barron's: Beazer Homes is starting its new Rental REIT concept in Arizona and Nevada, where it has already got close to 200 SFDs ready to go, accumulated in the distressed home markets there (foreclosure sales, short sales, etc.).   Beazer has big plans for this new business model: they hope to have thousands of homes in the REIT within the next 24 months - and to expand into one additional, hard-hit real estate market. 

Which boils down to this:  builders are seeking new ways to make money in this bad housing market, and now builders are building new revenue streams. 

Rental REITS - What are They?

Investing in a rental REIT will be tempting for many investors because it will enable them to participate in making money via rents without the hassle of owning the home, much less dealing with all the landlord hassles like maintaining the property, vetting tenants, etc. REITS also offer some nice tax advantages.  Expect investors to find these Rental REITS to be good investments.

Additionally, the renter of an individual property owned by the Rental REIT might be interested in buying into the REIT -- in a kind of indirect version of home ownership -- and thereby having "home-ownership" via shares in the REIT. 

Rental REITs Predicted By Some to Be Growing Housing Industry Trend

Some industry watchers are watching Rental REITS as a potentially popular innovation in American home ownership.  One considers these REITS to be a possible "cottage industry" among national builders (like Beazer Homes), with benefits to the renters in the mobility offered by renting along with the lower costs involved in renting versus owning the home, and the benefits to the builders in setting up entities like these Rental REITS where they build for their own interests, perhaps in volume, and not one custom home at a time. 

Beazer Home's Press Release Has All the Details

Beazer has issued a press release giving details of its new Rental REIT plan.  Shown below, the full text of Beazer's release:

Continue Reading

Sure, it's ironic, but the reality is that Florida, despite being surrounded by water on almost every side, is a peninsula that must carefully protect and control water provided for human consumption as well as farming, etc.  That takes hard work and lots of money; however, how much money is budgeted to these efforts changes over time.

Major Money Cuts for Florida Water Management Districts in 2012

Last year, we began monitoring the State of Florida budget cuts approved by Governor Rick Scott over the Florida Water Management system as current economic conditions forced lots of items to be slashed off the state budget.  Once the state coffers were offering less money, the Florida Water Management Districts were forced to take a hard look at their internal budgets, cutting back - in some cases, making drastic cuts. 

For more, read our June 2011 post entitled "Big Florida Water Management Districts Changes Signed into Law by Governor Scott Yesterday."

2012 and Florida Experiencing Record-Making Drought

Add to this hit to the Water Management Districts the drought that has slammed Florida statewide this year and things are very stressful for those involved in water management in our area.  In fact, experts are reporting that 2012 was the 11th driest winter for the 16 counties covered by the Southwest Florida Water Management District, nicknamed "Swiftmud" since they started keeping track of Florida weather patterns (in 1915).

Swiftmud Serves a Huge Area in South Florida

The Southwest Florida Water Management District (Swiftmud) was created in 1961 as a 6000 square mile flood control project in response to the massive damage created by Hurricane Donna.   Over time, Swiftmud grew as the Water Resources Act was passed in 1972, and a statewide water management system evolved, designed to manage and to protect Florida's natural water resources. 

Swiftmud: Is It a Water Management District in Trouble?

Today's harsh realities of less water to meet growing need coupled with a lot less money to do the job means that lots of concern is being raised about Swiftmud.  In this week's Herald Tribune, a long article discusses the situation, which involves Swiftmud's shoestring budget resulting in permanent harm to restoration and increasing the likelihood of expensive environmental cleanups. 

Included as examples of concern in the reporting by Kate Skinner, entitled, "Water district cuts may undo decade of work" are:

• expansion of Peace River regional water supply facility
• spending regarding construction of a desalination plant on Tampa Bay to provide more drinking water
• and budget plans for several projects, e.g.,  expansion of the nearly 500-acre Robinson Preserve (Manatee County); the Dona Bay restoration (Sarasota County); and both stormwater runoff improvements and conservation land restoration throughout the District.  

Meanwhile, an interesting article also appeared this week over in the Tampa Bay Times:  seems that an piece by Lee Logan appearing in both the Times and the Miami Herald asks, "Ron Oakley: Can he take credit for Swiftmud budget cuts?" and points to Oakley's own political mailer, where it states:

"Ron Oakley voted to reduce the Water Management District's budget by 58 percent in the four years he served on the board. His conservative leadership protected local taxpayers over government bureaucrats."

According to Mr. Logan, while Oakley's did vote on the 2011 budget cuts, most of the cutbacks happened when he was leaving office, so Logan doesn't give as much credit to Oakley as he does to the Tallahassee politicians overall. 

One wonders who will be taking credit for the Swiftmud budget cuts in upcoming years....

Florida water management districts are having to do with a lot less money and we're going to be hearing more and more about bad things happening because Swiftmud and the other Districts aren't meeting current and future needs .... It's just starting.

Here at Florida Commercial News, we post major news announcements and press releases that impact Florida real estate investment and Florida land development as the "release of the week."

This week's big news item is the steady increase in residential real estate sales here in Miami, Florida, as reported by the Miami Realtors: Miami real estate has seen a steady increase in Miami home sales prices for the past 120 days, supporting the optimism of many Florida industry insiders that the Florida real estate market has hit bottom and is bouncing back -- good news for all Floridians.

Note: notice the impact of international real estate investors on these numbers....

Here, from the Miami Association of REALTORS:

Miami Home Prices Rise Significantly for Fourth Consecutive Month

For the fourth consecutive month, Miami home prices posted strong gains in March. The median sales price of condominiums in the Miami-Dade County surged 46 percent to $141,700 in March compared to a year earlier, according to the 26,000-member MIAMI Association of REALTORS and the local Multiple Listing Service (MLS) system. The median sales price of single-family homes rose 13 percent to $180,000.

Miami, FL (PRWEB) April 19, 2012

For the fourth consecutive month, Miami home prices posted strong gains in March. The median sales price of condominiums in Miami-Dade County surged 46 percent to $141,700 in March compared to a year earlier, according to the 26,000-member MIAMI Association of REALTORS and the local Multiple Listing Service (MLS) system. The median sales price of single-family homes rose 13 percent to $180,000.

“The fact that Miami home prices have significantly increased for four consecutive months indicates prices have bottomed and have caught up with sales levels,” said Martha Pomares, 2012 Chairman of the Board of the MIAMI Association of REALTORS. “We expect this trend to continue, as Miami increasingly attracts international buyers and investors, second and vacation home buyers, and migrating U.S. residents.”

Statewide median sales prices in March increased 20.8 percent to $105,000 for condominiums and 10.3 percent to $139,000 for single-family homes, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The national median existing-home price for all housing types was $163,800 in March, a 2.5 percent increase from March 2011.

In March, the average sales price for single-family homes in Miami-Dade County increased 21.8 percent, from $279,608 in 2011 to $340,634 in 2012. The average sales prices for condominiums jumped 23 percent, from $212,616 to $261,523.

Sales of existing homes decreased but remain at historically high levels. The sales of existing single-family homes in Miami-Dade decreased 12 percent in March, from 1,039 to 919, compared to record sales levels March 2011. Sales of condominiums were down 10.1 percent, from 1,542 to 1,387, compared to March 2011.

Statewide sales of existing single-family homes totaled 18,370 in March 2012, down 5.7 percent compared to a year ago. Statewide condominium sales totaled 10,012, down 12 percent from those sold in March 2011. Nationally, sales of existing single-family homes, townhomes, condominiums, and co-ops decreased 2.6 percent from February but were 5.2 percent higher than they were in March 2011, according to the National Association of Realtors (NAR).

“The Miami residential real estate market saw record demand that resulted in an all-time record for home sales,” said 2012 MIAMI Association of REALTORS Residential President Patricia Delinois. “This consistent demand coupled with fewer distressed properties being transacted has logically resulted in notable price appreciation unlike anywhere else in the U.S.”

Inventory Declines 34 Percent Year-over-Year

From March 2011, the inventory of residential listings in Miami-Dade County has decreased 34 percent from 18,883 to 12,379 in March 2012. Compared to the previous month, the total inventory of homes dropped 5.1 percent. Total housing inventory nationally decline 1.3 percent at the end of March but is 21.8 percent below a year ago.

Distressed Properties

Strong demand for bank-owned (REO) properties and improved processing of short sales has resulted in rapid absorption of distressed listings and contributed to price appreciation. In March, 49 percent of all closed residential sales in Miami-Dade County were distressed, including REOs (bank-owned properties) and short sales, compared to 52 percent in March 2011 and 54 percent the previous month. Contrary to a year ago, there are now more short sales being transacted than REOs.

International Buyers Fuel Cash Sales

In Miami-Dade County, 65 percent of total closed sales in March were all-cash sales, compared to 65 percent in February and 66 percent a year earlier. Cash sales accounted for 47 percent of single-family and 79 percent of condominium closings. Nearly 90 percent of international buyers in Florida purchase properties all cash. Nationally, all-cash sales were 32 percent of transactions in March, reflecting the stronger presence of international buyers in the Miami real estate market.

Note: Statistics in this news release may vary depending on reporting dates. Statistics reported by MIAMI are not impacted by NAR’s rebenchmarking efforts. MIAMI reports exact statistics directly from its MLS system.

About the MIAMI Association of REALTORS

The MIAMI Association of REALTORS was chartered by the National Association of Realtors in 1920 and is celebrating more than 90 years of service to Realtors, the buying and selling public, and the communities in South Florida. Comprised of four organizations, the Residential Association, the Realtors Commercial Alliance, the Broward County Board of Governors, and the International Council, it represents more than 26,000 real estate professionals in all aspects of real estate sales, marketing, and brokerage. It is the largest local association in the National Association of Realtors, and has partnerships with more than 100 international organizations worldwide. MIAMI’s official website is http://www.miamire.com.

Here's the latest on what is happening with solving the problem of the backlog of foreclosure lawsuits filed in Florida courthouses across the state and clearing out a historic bottleneck in Florida district court dockets so the Florida economy can move forward. 

The Florida Legislature over the past few years has allotted millions of dollars to try and get these court dockets cleared out, and just this month Palm Beach County got another $346,320 so the County can bring more case managers and judges to tackle the job.  (They'll employ experienced senior judges to come in and help.)

Palm Beach County needs the assist.  It's third in line as having the biggest bottleneck of foreclosure filings, right behind Miami-Dade County and Broward County.  (The case volumes are being tracked by the Florida Office of the State Courts Administrator.)

Right now, RealtyTrac is reporting that it takes 2.4 years for a Florida foreclosure lawsuit to complete.  Combine that with the number of foreclosures already in the pipeline, and it's obvious that there remains a tremendous challenge to get these foreclosures done and finalized.

It's a big job, solving the Florida Foreclosure Bottleneck. 

So far, Governor Scott has tried to fix it by moving the foreclosure process out of the courthouse and he has not succeeded.  The Florida Supreme Court, likewise, tried to fix this mess with the idea of promoting mediations: result, not much movement (and the High Court has since admitted failure here).  

In the meantime, the Florida Legislature continues to budget money to solving the problem by essentially expanding the number of judges available to hear the matters and get things resolved.

Which sounds good, except for another problem: there's a big cutback in the Florida state court system budget that threatens the number of court clerks that will be around to deal with the everyday tasks needed to move the Foreclosure dockets through the system. Last week, Governor Scott okayed a $31 million dollar budget cut in statewide county clerk operations. 

Which means that even though Florida counties may be getting more money to hire judges, on the one hand, they are losing money to pay clerks that work the desks, man the phones, and do the filing.

Result?  Florida continues to spin its wheels in the sand, trying to dig out of the Foreclosure Bottleneck Crisis. 

An interesting article was published recently at HousingZone.com, written by Andrew Ryan and Mark Hickman of Virginia's Commonwealth Partnerships, entitled, " Geo marketing the next wave in social networking."

In the article, Ryan and Hickman discuss home builders and listing brokers using geomarketing as a new tool to market and sell their properties.  This isn't a new idea - connecting real estate and geomarketing - but it is in its infancy stage, particularly here in Florida.

A few weeks ago, at MultiHousing News, executive editor Keat Foong offered "Check Out Geomarketing," suggesting that geomarketing will be helpful to those seeking to rent out their properties.  Foong argues that apartment buildings are naturals for using GPS technology to connect properties with tenants.

What is geomarketing?

Essentially, geomarketing is taking advantage of the Global Positioning System (GPS) devices on smartphones and cars to connect traveling customers with nearby goods and services. In sum, technology exists that allows potential buyers to connect with sellers based upon location - a billboard for the 21st Century of sorts. 

This may not be news to you.  For instance, there are web sites designed to take advantage of GPS technology to connect people based upon where they are at the time, like Foursquare, which either you or your teenager may be a member.  (Or not, Foursquare's got some growing pains and may or may not be around in a few years.)

Google is also moving into the geomarketing arena, with its GoogleMaps / Google Latitude offering.  And, of course, there's Facebook.

Let's use Facebook as an example of how geomarketing works.  In May 2010, Facebook and MacDonald's announced their partnership in a new geomarketing venture. 

To introduce everyone to its location features, Facebook expanded its offerings to Facebook users by allowing them to "check in" - which would log their geographic location via GPS: and then, voila, in steps MacDonald's which spotlights one of its products, available at golden arches conveniently close to them, into their feed.  

Will Geomarketing be the Next Big Thing in Florida Real Estate?  Maybe.

The ability to connect those looking to buy or rent Florida real estate by connecting them via social media technology may be more than a trend, it may be a solid way to find buyers and renters for properties in Florida, both residential and commercial. 

It's easy to use, after all.  And it's helpful to both sides of the transaction.  Consider this:  Geomarketing Group USA, Inc. set up its corporate offices here in Miami last year.  Look at their site and consider the future of marketing all sorts of Florida real estate. 

Here at Florida Commercial News, we post major news announcements and press releases that impact Florida real estate investment and Florida land development as the "release of the week."

This week's big news item is the announcement of more development in Lake Nona as Florida Hospital announces a new, important expansion:

______________________

Florida Hospital College of Health Sciences breaks ground on new five-story building to accommodate new programs

ORLANDO, Fla., April 10, 2012 - With an eye toward the future, Florida Hospital College of Health Sciences announced plans to expand its campus to accommodate more students and offer new programs in the health care field.

"With this new building, we are going to be able to educate and train more students in a variety of medical professions," said Dr. David Greenlaw, president of Florida Hospital College of Health Sciences. "Florida is a destination spot for many retirees around the country, so it is imperative that we respond accordingly to offer the best medical care training."

The new 90,000-square-foot, five-story building will feature a large multi-purpose room to host educational hospital and community events, as well as a medical simulation lab with infant, child and adult simulators. The new academic center will also house four clinical labs, five chemistry and biology labs, and a variety of other classrooms with the capability to broadcast courses to diverse geographic locations using the latest web streaming technology.

"Our students truly benefit from a hands-on learning experience," said Kathleen Wren, Ph.D., CRNA, Chair of the Nurse Anesthesia Program at the Florida Hospital College. "This new building will enhance what we are already doing with our students. Our proximity to Florida Hospital Orlando already provides our students with a valuable clinical learning experience and by creating more programs that are in demand, we will be able to train more future medical professionals."

In addition to the new building, the college is expanding its curriculum to offer doctorates in nurse anesthesia, physical therapy and pharmacy. The college currently has a master's program in occupational therapy and health care administration in additional to a variety of associate and bachelor's degrees ranging from nursing to diagnostic medical sonography.

Based on information compiled by the U.S. Census Bureau, it is estimated that by 2030 there will be 72.1 million people over the age of 65 living in the United States. In other words, the elderly will comprise 19 percent of the U.S. population, almost twice their percentage in 2000. With the aging population, as well as an increasingly health conscious society, Florida Hospital College has taken the initiative to prepare for the inevitable growing need for medical professionals.

Florida Hospital College of Health Sciences, located near downtown Orlando, specializes in allied health and nursing education. Founded in 1992, the college currently enrolls 2,700 students in its associate, bachelor's and master's degree programs. The college works closely with Florida Hospital to give students the clinical experience that only a major medical center can provide.

For media inquiries only, contact Florida Hospital Media Relations at 407-303-8217.

Here in Florida, one of the big things that those in the real estate industry are watching - and excited about - is the announcement by Florida East Coast Industries (FECI) of their new project, “All Aboard Florida,” which will be a private passenger rail line connecting people between Jacksonville, Miami, Orlando, and Tampa.   It's an especially interesting piece of Florida land development since FECI will be doing this without any financial subsidy from the government.  

Private Rail "All About Florida" Is Big for Florida Land Development 

FECI is already on the move.  It's already bought in excess of 200 miles of necessary track and between now and 2014, FECI will be boosting those tracks to tip top shape while also getting track in place to complete its plan to include Orlando in its route. 

FECI is going to be putting an estimated $ 1 billion toward getting the All Aboard Florida rail system up and running by 2014, at least for the Miami-Orlando section.  They're estimating it will take as long on their rails to go between Miami and Orlando as it currently takes Amtrak passengers to travel between New York City and Washington, D.C.

Excitement Over Florida's Future Spreads Around the Country as Things Are Looking Up in Florida Real Estate Development and Investment

This is big, big news for Florida.  However, it's not the only excitement percolating in Florida real estate circles.  Consider the following news stories today that discuss the reality that Florida land developers and real estate leaders are seeing real, positive change in the Florida real estate market. 

We're seeing a better future, and we're seeing it now in Florida real estate development.  For more, read:

1. Donald Trump's take on things in an NBC News interview.
2. The Palm Beach Post's coverage of several real estate developments portending a brighter future.
3. The promotion of next month's Real Estate Florida Conference. 

Things are looking better here in Florida, and while we're not out of the woods yet - we're getting there.  Those in the know are seeing light at the end of the tunnel, which is a good thing for all of us who live and work in this beautiful state.

The Sacketts won.  The EPA lost. This is big news for Florida real estate developers, investors (foreign and domestic) in Florida land, as well as landowners everywhere. 

For details on what happened over in Idaho, read our earlier January 10, 2012, post, "Environmental Protection Agency Criticized by U.S. Supreme Court Justices Over Treatment of Land Owners In Wetlands Controversy."

To read the entirety of the March 2012 opinion of the United States Supreme Court in Sackett v. EPA, case no. 10-1062, go here. 

Here's What Happened in Sackett v EPA and Why It's a Good Thing

With every single Justice siding with Mr. and Mrs. Sackett,  the United States Supreme Court has ruled 9-0 that property owners have a right to a hearing to challenge the federal agency's attempts to control their building on their own property.  In other words, the EPA's threats of Big Big Fines against this couple who wanted to build their family home near a river (and by big we mean $75,000/day), which the EPA claimed to be protected wetlands, cannot stand without the rights of the property owners to challenge the agency.

Good stuff.

This gives support to property owners everywhere in the United States, not just Idaho, and not just Michael and Chantell Sackett.  And given that the EPA enforces wetlands protections on almost a daily basis here in Florida, this is a case that is especially important here in the Sunshine State.

It's not news to those who deal in land development to hear horror stories of the EPA coming in and threatening huge, monster fines if a landowner chooses to proceed in building something against the EPA's idea of what should and should not be built on the land.  And, it's not news that before now, the EPA was pretty secure in the position that there would be no hearing where the landowner could challenge the EPA's position.

Until the Sacketts, who risked a whole lot to take this fight to the Highest Court in the Land.  We should all be appreciative of their efforts.  

With all the media focus on investors both foreign and domestic targeting Miami real estate development, not enough hats may be tipping toward what is happening over in Orlando, Florida and particularly in the Orlando area's Lake Nona community.

It's a big deal and not enough people are appreciating what is happening in this part of Central Florida.  That's too bad because it's not only good for the Central Florida economy, it's a noble effort that helps people all over the world both now and into the future.  Literally.

What is happening in Orlando's Lake Nona?

Lake Nona, for those involved in Florida real estate development, is home to Lake Nona's Medical City, which is becoming an internationally recognized biotech mecca for medical resources, both research and treatment, including:  

VA Medical Center - at a projected cost of $665 million, a new 1.2 million square foot medical center is being constructed at Lake Nona by the Department of Veterans' Affairs, and will include a multispecialty outpatient clinic along with 134-inpatient beds, 120-community living center beds, a 60-bed domiciliary as well as the necessary administrative/ support services.  In January 2012, the construction milestone of completing the VA Med Ctr warehouse was met.  (Go here for future milestone updates.)

Nemours Children's Hospital - one of the few free-standing children's (pediatrics) hospitals being built in this country, scheduled to open this year. 

University of Central Florida Health Sciences Campus - Up and running in 2010, the medical school provides world-class facilities, including the Harriet F. Ginsburg Health Sciences Library; a 5,300-square-foot Microscopy Lab; a premier Anatomy Lab; an 198,000 square-foot facility for biomedical researchers (the Burnett Biomedical Sciences building); and three Biosafety Level 3 laboratories.

MD Anderson Orlando Cancer Research Institute - a regional location for the world-wide respected cancer treatment hospital, The University of Texas MD Anderson Cancer Center in Houston, this facility has been operating in the Orlando area since 2003.

Sanford-Burnham Medical Research Institute - Home to two technology centers Conrad Prebys Center for Chemical Genomics and the Translational Research Institute as well as its Diabetes and Obesity Research Center, the internationally recognized Sanford-Burnham (formerly Burnham Institute), chose Orlando's Lake Nona area for the site of its east coast facilities and has been operating in Florida since 2009.

University of Florida Academic & Research Center -  Breaking ground in October 2010, the University of Florida expansion into the Lake Nona medical community provides an 100,000 square-foot facility that beginning this year, will allow UF students the chance to work alongside some of the best scientists in the world in the neighboring facilities of the Sanford-Burnham Medical Research Institute.

These are the biggies of this growing biotech medical hub, but there are more that are being built and more that are being planned.  Consider this:

Recently, the Orlando Sentinel did provide coverage for last month's grand opening of the 54,000 square foot Florida Hospital – Sanford Burnham Translational Research Institute for Metabolism and Diabetes (TRI),  designed by Flad Architects, which will be dedicated to the study of diabetes, obesity, and the metabolic origins of cardiovascular disease both from a laboratory environment as well as a coordinated hands-on patient treatment facility. 

With all the negative chatter about banks and foreclosure, casinos and gambling, state government lessening protections on environmental issues and more ... it's great to think about the good that is being done right now in Central Florida and how real estate investment and development is involved in these noble enterprises.

We should all be appreciating what is happening in Lake Nona right now.  It's a good, good thing. 

This week, the Florida Legislature finalized the $70 billion state budget and ended debate in the House and Senate on how Florida state tax dollars should be spent.  Included within the Florida budget are the following projects that some (including the Orlando Sentinel) are labelling as special deals done to keep powerful Tallahassee senators and representatives happy.

That may be, Florida politics being what they are, but the following projects will be good for Florida real estate development, Florida land investment, and the overall economy of these areas nevertheless.  Consider the following:

1.  Lakeland, Florida, will the hometown for a new state polytechnic university, an institution that will be independent from the University of South Florida.  Not to be confused with the current Polytechnic University in Orlando, either: that institution is affiliated with the Polytechnic University of Puerto Rico, serving as its Orlando Campus.  This project should be a boost for the entire Lakeland area - from Tampa to Orlando. 

2.  The Orlando Executive Airport will get $1.1 million to improve its facility before the October 2012 National Business Aviation Association Convention. 

3. A commercial research grant in the amount of $10 million was alloted for a new "economic development commission" to serve the Space Coast and help communities that have suffered a big economic blow from the loss of the space shuttle.  This includes a lot of benefit, direct and indirect, to  Central Florida.   

4.  There will be $5 million in funding for two business incubators at the Central Florida Life Sciences Incubator Consortium.  Since the CFLSIC has the Orlando area real estate developer Tavistock Group as one of its participants, the Orlando area and all of Central Florida should find this to be good news.

 5.  Major League Soccer (the kind that foreign investors like to watch, remember) got a boost with $1 million targeted to boost soccer in Florida by funding training camps for major league soccer teams to hold their training camps in Central Florida.  Connected with this:  Walt Disney World, which has professional-standard soccer facilities and the Central Florida Sports Commission.

Learn more about the details in the latest budget out of the Florida Legislature here. 

Meanwhile, consider this:  while the budget in this economy means once again tightening our belts (and yes, lots of squealing happens), lots of people are working very hard to find, fuel, and fund things that will help the State of Florida recover from its economic crisis so we can all look forward to a prosperous future.

For real estate development and land investment both foreign and domestic, this means more than looking at land prices and considering locations: it means thinking outside the box to things like promoting professional soccer, improving airports, and advancing technological education ... because all this works together for a better Florida.

Among the things that we monitor on this blog are two things: (1) the actual growth in foreign investment throughout Florida, particularly the Miami area and (2) the media coverage of the international investor interest in Miami and the surrounding South Florida properties, both commercial and residential.

A few weeks ago, Forbes reported to its readers about Miami being the target for a lot of foreign investors.  (For details, read our February 16, 2012 post.)

Maybe Forbes stumbled upon a hot topic - or maybe there is just a lot of chatter and actual events worthy of news coverage in the past few weeks, because more and more publications are providing coverage on foreign buyers coming to Florida and especially Miami to buy real estate.

Consider the article in yesterday's International Business Times entitled, "Cash paying Latin American property investors invade Florida real estate market." There, the influx of real estate buyers of Miami real estate from Brazil and Venezuela is discussed as a big reason that Florida can look forward to a better real estate year in 2012. 

The article explains that buyers from a variety of Latin American countries, accustomed to buying land with cash and not a mortgage, are flocking to Miami to buy property they consider to be at bargain prices.   The article quotes a source at the Miami Association of Realtors that the top country for bringing real estate buyers to the Miami area is Venezuela with Brazil and Argentina coming in second and third.

Note:  If you visit the Miami Association of Realtors' website you can read and download a report entitled "Profile of International Home Buying Activity 2011" prepared by the National Association of Realtors. 

The NAR national study found over 70 countries have been represented in foreign buyers purchasing real estate here in 2011 and that the top five were Canada, Mexico, China, Great Britian (the United Kingdom), and India.  Their researched found that buyers from these five countries bought 53 percent of the real estate transactions involving international buyers - and that many of these foreign buys were in Florida. 

Another recent news article takes a different perspective on things and asks "What makes Miami a hot spot for international real estate," Local experts like Greg Freedman, developer of Trump Hollywood and also a BH3 partner; Paola Garcia-Carrillo, Vizcaya Residential Sales Director; and Shawn Vardi, President of Think Properties were all interviewed for their take on why Miami real estate is so popular with foreign real estate buyers. 

Each gives his own opinion on why the Miami area is such a beacon for international investors - but each agrees that this is just the beginning of the foreign buying of South Florida real estate.

In conjunction with this news coverage, real estate industry professionals are issuing their own press releases that are confirming the long-term, extended interest of foreign buyers in Miami real estate.  For example, in news release this morning, Emilio Cardenal, Executive President of Interinvestments Realty® states:

“We expect in the years to come, that the foreign buyers shall to continue to drive the real estate market in South Florida. Consequently, our future plans are geared to serve the International buyer sector. We are currently in the process of selecting our new Broker-affiliates in Europe and Asia which we will be added to our exclusive Brokers’ Network....”

Tip of the Iceberg of Foreign International Interest

Obviously, more and more people both in the state of Florida as well as across the country and around the world are becoming aware of the skyrocketing foreign buyer interest in Florida real estate, particular Miami real estate properties.  In tandem with that influx of needed and welcome investment, local real estate professionals are gearing their operations to make things easy and efficient for their foreign clientele.

It will be more and more important for Miami area service providers - like our firm, as well as brokers, etc. - to accommodate the international client.  This is all very good for our community. 

Florida developers and Florida real estate investors are monitoring not only what happens on appeal in the case of Lakeview Reserve HOA vs. Maronda Homes but also what the Florida Legislature is doing with HB 1013 and its Senate version, SB 1196.  Florida community interest groups are also watching closely, sitting on the other side of the fight from Florida developers. 

All this activity in both the Florida courts and the Florida statehouse has to do with one big issue -- who will bear financial responsibility for defects in certain community improvements -- sidewalks, driveways, drainage ditches, utilities, roadways, and other parts of a neighborhood that are important to its livability but are not tied to one specific tract or home.  

In Lakeview Reserve HOA, Florida's Fifth Circuit Court of Appeals reviewed and disagreed with the trial court's decision that a homeowners' association was not responsible for certain defects in community improvements.

The court found an implied warranty under Florida common law existed.  In doing so, the appellate court built new Florida common law regarding implied warranties.  

In sum, the appellate court concurred that a homeowners' association can pursue a legal claim for breach of  common law implied warranties of fitness and merchantability (i.e., habitability) against a real estate developer for certain defects in community improvements (in the case, it was a residential subdivision with defective roads, drainage, retention ponds and underground pipes).

From the opinion:  

...we also reject the Developer's argument that extending the implied warranties is a matter for the legislature. In the absence of a legislative pronouncement, we are free to apply common law, and this is a case of application of common law warranties. In fact, Gable I applied common law warranties in a condominium case before the legislature first enacted warranties for condominiums in section 718.203, Florida Statutes (1976). For similar reasons, we reject the Association's application of cases extending implied warranties to the common areas in condominiums as we find those cases inapplicable precisely because those cases are decided on statutory grounds, not available here.

 

Now, while the Florida Supreme Court is being asked to review the Fifth Circuit's decision regarding implied warranties, the legislative branch is taking the matter into its own hands with the pending legislation.  HB 1013 and SB 1196, if passed, will specify that real estate developers are not legally responsible (warranting) these kinds of construction defects.

From the perspective of Florida land developers, the Florida legislature is taking needed action in this extremely bad economy to protect real estate investment and development in the State of Florida.  Freedom from expansion of current law regarding defects in sidewalks, etc., can be more than a minor issue - it can sometimes become so serious as to risk the bankrupting of a developer in this economic environment. 

Which is why the Florida Legislature is taking action to protect future real estate development in this state. Florida developers need to know that warranty law is firm, not fluctuating, in this economy. 

These proposed new laws by definition do not remove longstanding implied warranties; despite some critics, the Florida legislation isn't giving developers a free ride from any responsibility for community improvements.  

What these proposed new laws do is simply stop the judiciary from expanding that implied warranty under the common law.  From the bill text of HB 1013:

WHEREAS, the Florida Legislature finds, as a matter of public policy, that the Maronda case goes beyond the fundamental protections that are necessary for a purchaser of a new home and that form the basis for imposing an implied warranty of fitness and merchantability or habitability for a new home, and creates uncertainty in the state's fragile real estate and construction industry, and

WHEREAS, it is the intent of the Legislature to reject the decision by the Fifth District Court of Appeal in the Maronda case insofar as it expands the doctrine of implied warranty and fitness and merchantability or habitability for a new home to include essential services as defined by the court, NOW THEREFORE,....

 

Last month, we posted about the white paper that US Federal Reserve Chairman Ben S. Bernanke submitted to Congress (read it here, along with the full text of that Federal Reserve white paper) and all the reactions to his submission. Some think the Fed Reserve Chairman is going too far, with Bernanke exceeding the limits of his authority with what he's suggesting to Congress and essentially promoting in his speech last week.

Because Bernanke's speech to the International Builders Group of the National Association of Homebuilders on February 10, 2012, was taken point by point from Bernanke's arguments to Congress. 

At least everyone can agree that Bernanke is a man with a mission.

In essence, Ben Bernanke is arguing that the Federal Reserve system is being hampered in its efforts to jump start the American economy because the U.S. Housing Industry is not cooperating. Specifically, the Federal Reserve Chairman is pointing fingers at the weak mortgage lending present in Florida as well as the rest of the country.

Weak mortgage lending means a weak housing market, which is a big problem for the Federal Reserve these days.  A problem to be solved. 

Bernanke Didn't Talk Money to the Builders, He Talked Housing

After acknowledging a fact that everyone in the real estate industry, if not the country at large, understands - that record low interest rates on home mortgages are not igniting home sales - Bernanke moved to suggestions for getting things moving. 

Things like having government entities (land banks) take on home ownership thru donations of homes; buying of homes; and selling of homes, as well as having the power to clear up title questions.

Result?  Many who are currently facing foreclosure in Florida may never move from their home; however, they may change from being "owner" to "tenant" with the government taking on the responsibility of home ownership.  In the future, will the government sell that home back to the tenant who was facing foreclosure as a home owner?  Probably - but that's one of the big issues here: once the government owns the real estate, some are concerned that the government won't let go.

Here is the full text of Federal Reserve Chairman Ben Bernanke's speech in Orlando last Friday (click to view the entire speech), entitled "Housing Markets in Transition," as it was presented at the National Association of Homebuilders' International Builders Show:

The economic recovery began more than two years ago, but it doesn't feel like much of a recovery for many Americans--certainly for those of you who depend on the housing sector for your living, as well as for the millions of others who have seen their home values plummet or lost their homes through foreclosure. Though some progress has been made in reversing the losses in jobs and income sustained during the recession, the pace of expansion has been frustratingly slow and the unemployment rate remains very high by historical standards. The state of the housing sector has been a key impediment to a faster recovery. In the typical economic recovery, a resurgent housing sector

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This week, Iowa Attorney General Tom Miller issued a statement that almost every state in the union will be signing the settlement deal hammered out between the various state attorneys general and the Top Five mortgage lenders/servicers in the country over ForeclosureGate.  Miller hasn't released a list of the names of those states yet, however.  There are some states that aren't taking the deal.

We do know the lenders involved: 

• Ally Financial
• Bank of America
• Citigroup
• JPMorgan Chase
• Wells Fargo.

We also know that the door has closed on the states, since the sign-on deadline has passed (it was extended to give states more time to agree to the deal, and that extension period is over).  States are either in or out on the joint state-federal mortgage servicing settlement.

Finally, we know that Florida is a part of the deal.  Not because Florida has announced this, per se, but because Florida Attorney General Pam Bondi has been active in pushing for this deal.

Florida AG Bondi not only helped broker the deal, she has been vocal about states like California and Delaware that haven't joined the team and instead, have rejected the ForeclosureGate deal. 

What's her position?  Bondi's take is that Florida has been hit hard by ForeclosureGate and the housing crisis and the State of Florida needs this deal done and some solid foreclosure relief.  She's pushing for this deal to get done because her stance is that this will help our Florida real estate market and accordingly, the entire Florida economy.

Expect the Deal to get Done. 

Will it be the Magic Bullet for our Florida economy?  Time will tell; however, there are many factors at play here - including things like international influence on our state's real estate economy, interest rates both here and abroad, the bottlenecked Florida foreclosure docket, etc. - so it may be overly optimistic to think that this settlement agreement will be magic.  Helpful, yes.  Magic, no.

For more on the Attorney General Settlement with the Big Mortgage Servicers, read our earlier posts on the issues involved. 

Market reports are confirming the great amount of international interest in Florida real estate investment and development.  In the last quarter of 2011, one report reveals that Florida took the lion's share in foreign investor interest from the rest of the United States, as over one-third of all international investment queries targeted this one state.  Florida.

What is bringing so many foreign investors to Florida?  Of course our state is beautiful, with miles and miles of sandy beaches.  Of course Florida is culturally inviting: many different nationalities make their home here - especially Spanish-speaking ones.

However, one major factor may well be the proactive way that the State of Florida is working to court foreign investors and international development.  A prime example of this is the massive deregulation efforts that became effective this past summer.

I have written a short e-article that summarizes what this summer's reforms are  - and what they can mean to savvy land developers and real estate investors in an e-book available on Amazon.com.   Entitled Florida Community Planning Act and Florida Real Estate Investment: 2011 and Beyond, it is priced for easy access to everyone at $2.99 and right now, it's available to read for free to those with an Amazon Prime membership.

The book is intended to help foreign and domestic real estate investors learn more about how legal burdens have been lifted from them by the Florida Legislature and how they can benefit from this reform.  Information is provided in English and Spanish.

I invite you to read Florida Community Planning Act and Florida Real Estate Investment: 2011 and Beyond.

An op-ed piece in this week's New York Times entitled "A Way to Make People Buy Homes Again," proposes a way to boost the housing industry by helping potential buyers get into houses.  And it's smart - something that would help all of the country, to be sure, but it would be especially helpful to our struggling Florida housing market.

The brainchild of economist James A. Wilcox, a professor of business at the University of California, Berkeley, here is what Professor Wilcox proposes in a nutshell:

• the federal government would offer down-payment protection for home purchases
• the program would be available to all buyers
• buyers would buy a protection plan for a set fee (which he suggests to be 1% of the purchase price)
• risk of real estate market values falling (which keep some people from buying in a community) could be addressed by adjusting the fee according to the risk of market decline
• if after 3 years, there was a market decline then the federal government would pay the program buyer to cover their loss due to the decline; the payment is made only if there is a decline.  Alternatively, the government payment is applied to the mortgage principal so there is less due on the house.
• Declines would be determined using federal housing price indices.

Bottom line, the home buyer is protected because at the end of three years, either their home value did not decline or if it did, then the federal program covers their loss in equity up to the full amount of their initial down payment.

Helps Buyers and Lenders, Too

Lenders would be helped by this proposed down-payment protection program because, the Berkeley Economist argues, it helps lenders free up their current tight mortgage credit standards since the program buyer could assign their protection plan to the mortgage lender in exchange for a better mortgage rate or a lower down payment.  This should help mortgage lenders feel comfortable making mortgage loans to more people.

Consider the Cost

Sure, this program would cost millions.  Actually, Professor Wilcox suggests that it might cost a "few billion" in federal funding.  That's a lot of money, true.  However, it's less than the home-buyer tax credit: remember, the feds spent a lot more than a "few billion" for the $8,000 tax credits for first-time buyers. 

Meanwhile, mortgage borrowing is falling since people aren't getting home loans like they used to do. The financial industry is hurting and getting the mortgage market healthy again is very important for South Florida - as well as the rest of the country.

This week, a new industry report confirms that international trade is favorably impacting the South Florida commercial real estate market and will do so even more in 2012.  (Assuming that FATCA doesn't change things.)

Presented by the Commercial Industrial Association of South Florida, and written by Thomas Dixon of Dixon Commercial Real Estate, the numbers reveal that South Florida is an established global trade center and that predictions are that international investment should continue in this region throughout 2012.

Some tidbits from the report:

• Miami as the spot for corporate headquarters continues to be popular with companies worldwide, with our airport west region the trendy area for company HQs. Interestingly, according to the report, this area continues to have the highest rental rates in the country.
• In the Hialeah area, there is a big demand for its smaller manufacturing spots but the bigger buildings continue to have big vacancies (and lower rental rates).
• Not everything is good news for Miami, though.  The report points out that not a single building sold in one section of the metroplex: the part of town they label the "south region," on the map from southwest 152nd street to the Miami-Dade / Monroe County line.

The complete report can be read and reviewed online here. It's worth your time.

[This post is the fifth in a series discussing the Foreign Account Tax Compliance Act (FATCA) and its impact upon foreign investment and development in South Florida and the United States as well as efforts both locally and in other countries to stop FATCA.]

It would appear that the outcry of American expatriates may have opened the eyes of the national media to the detrimental impact of the Foreign Account Tax Compliance Act ("FATCA") upon the U.S. economy.  (For details on FATCA and what it means to South Florida, please review the earlier posts in our series.)

Expat Outcry May Have Spurred Media Coverage of FATCA

Consider the Atlantic's growing coverage of the FATCA mess by correspondent James Fallows.  Fallows has a grip on FATCA's power to harm the American economy - and Americans - but he's spent much of his time considering how the Act impacts expatriates.  Taxpayers.  For more on this, read two of his latest articles:

• The FATCA Chronicles: Tales From China, Canada, and Estonia
• The FATCA Menace!

It's important to understand how this new federal legislation is impacting expatriates and other American taxpayers; however, another extremely important concern here is what FATCA is already doing to the American (and South Florida) economy by discouraging foreign investment so critical to our recovery. 

The Wall Street Journal, Forbes, the Washington Times, and the New York Times Begin to Cover FATCA's Impact on Foreign Financing in the U.S.A.

It's imperative that the American public - especially the South Florida business community - understand FATCA's potential impact on international investment interests who might be considering South Florida as investment targets. 

Here in Miami, for example, foreign investment has been critical to our economy and will continue to be for the next few years.  We are in a tight economy and foreign dollars are clearly bolstering our initial economic growth.

Forbes has contributor Daniel J. Mitchell reporting that "Obama Has United the World In Opposition to Bad U.S. Tax Policy."  Mitchell calls FATCA a "self-inflicted economic wound." 

The Wall Street Journal reports that foreign banks are already closing accounts held by Americans while American banks are joining forces to fight FATCA stateside.  (As if they aren't already busy enough with all that ForeclosureFraud.)

The New York Times is covering FATCA now, too.  In a recent article, NYT posited that FATCA impact is to have foreign monies pay the expense of tracking down assumed tax evaders.

Richard Rahn (also of the CATO Institute, as is Forbes' Mitchell), currently the Chairman of the Institute for Global Economic Growth writes in the Washington Times that FATCA is predicted to take away "hundreds of billions of dollars" in foreign investment, much less the economic impact in new jobs, etc., that the investment would create.

And foreign investment does create big jobs.  Think Genting.

Rahn also does a good job of explaining how foreign banks are just going to nix investing in the United States because of the "massive" fines for noncompliance with FATCA.  He's opining that for an expected round up of $8 billion in tax revenue, FATCA is killing off over $1 TRILLION in foreign investment in this country. 

Get $ 8 billion to lose $ 1 trillion.  That's the math. 

Foreigners aware of FATCA are moving their money out of U.S. Banks here in the States and they are reevaluating whether or not to invest in this country.  That is the bottom line.   This is true even though the Act technically isn't effective until 2013. 

[This post is the fourth in a series discussing the Foreign Account Tax Compliance Act (FATCA) and its impact upon foreign investment and development in South Florida and the United States as well as efforts both locally and in other countries to stop FATCA.]

As 2011 comes to an end, and time ticks closer to the June 2013 effective date of the Foreign Account Tax Compliance Act (FATCA), more and more reaction across the globe is taking place.  As discussed earlier, to implement the requirements of FATCA will cost banks an enormous amount of money -- and there are many foreign lenders that are not too happy at the prospect.

Eight Billion Reasons Feds Like FATCA

In a November 2011 Reuters piece covering FATCA as a forecasted financial tsumani, one U.S. legal expert opined during an Italian tax conference that FATCA may cost the big multinational banks $100,000,000 EACH.  

Compare this against the predicted $8+ billion in tax revenue that FATCA is expected to bring into the coffers of the U.S. Department of Treasury, and we begin to see where the battleground really lies.  The old adage of "show me the money" is often wise advice.  

It's going to be very hard to get FATCA repealed when it's promising so much revenue to a federal government dealing with a severe economic crisis.  Additionally, Congress passed this law as a means of catching alleged tax evaders (whether or not it will actually hurt or halt tax evasion is another issue), so FATCA brings with it a righteous rationale that also weakens the likelihood of repeal.

Other Countries Are Fighting FATCA

As discussed earlier in this series, other countries are shocked and stymied by FATCA because not only does the new law clash with their privacy laws in some instances, but many see FATCA as the United States trying to turn independent jurisdictions into deputized IRS collection agents, and many nations find this insulting. They see this as the worst kind of US economic imperialism at work.

These nations are not sitting still.  They are taking action now, and not betting on a repeal.  China is reported to be planning on ignoring or avoiding FATCA, flat out.  European banks are turning away Americans as customers rather than deal with FATCA.  Canada, meanwhile, has been negotiating with federal representatives on FATCA's impact.  

Earlier this month, Jim Flaherty (Canada's Finance Minister) spoke to reporters to say that the Treasury Department was working with his office on ways to make FATCA easier on Canada's banks.  Flaherty's explanation?  Canada is not a place where U.S. tax evaders are known to find safe harbor.   Since FATCA is aimed at collected hidden tax dollars overseas, Canada is arguing that its banks shouldn't be forced into spending a lot of money to institute compliance (aka collection) procedures that don't jive with FATCA in the first place.  

IRS Commissioner Discusses FATCA Impact Before International Tax Institute

On December 15, 2011, the Commissioner of the IRS gave a speech at the IRS/George Washington University 24th Annual Institute on Current Issues in International Taxation,  (You can read the full text of his speech online here.) It doesn't sound like the IRS thinks that FATCA's days are numbered - Commissioner Shulman definitely sounds like he's with those that think FATCA is a done deal.  

Here are some highlights from Commissioner Shulman's speech (all are quotes from his 12/15/11 speech):

• Our approach to offshore tax evasion follows a natural course…cleaning up the abuses of the past and then mining and leveraging the data we receive to mount a greater attack on the abuse.
• Indeed, I framed the new disclosure initiative as the best chance for people to get back into the system… back into compliance… so they properly report and pay their taxes for years to come. 
• Today, banks are much less willing to facilitate offshore evasion than they were in the past and advisors are asking more questions of their clients regarding offshore accounts. Indeed, individuals now find it more difficult to find an advisor who would suggest such a risky approach and a bank that would accept the money under secrecy conditions. 
• I think it’s fair to say that we are well on our way to deterring the next generation of taxpayers from using hidden bank accounts to cheat on their taxes. Through our ongoing efforts, we are demonstrating that the world has become a smaller place… that we will eventually find you if you are hiding assets overseas.
• Combating international tax evasion is also a coordinated global effort on multiple fronts, including new international tax information agreements and increased collaboration with other governments and tax authorities.
• Congress wrote and passed FATCA to give us tools to combat offshore tax evasion. Since the law was passed, we have put out three pieces of guidance laying out a practical framework and timeline for implementation, such as phasing in the statute’s requirements.
• I have also directly engaged executives from banks and financial institutions around the globe, as have my colleagues at the Treasury Department and IRS. We have listened to their major concerns that generally fall into two categories. First, is the conflict between FATCA and other countries’ laws. Second, is the difficulty in implementing and administering the withholding requirements for passthru payments and the potential burden they place on foreign financial institutions.
• We have taken these conversations very seriously and you can expect new proposed regulations from us soon after the new year that take into account the implementation concerns we have heard. One goal of these regulations is to address these concerns and provide a way forward to allow responsible corporate citizens to work through these tricky issues in a practical fashion.
• To this end, we are shifting our approach to be more strategic, and to view taxpayers through the prism of their business objectives and tax planning strategies. This is a real change.
• We traditionally viewed and pursued international issues through the lens of individual code sections. But this occluded our view of the larger, more meaningful picture. We were only getting a slice of it… and that needs to change.
• For example, when a U.S. corporation shifts income to a low-tax jurisdiction, we need to look at the entire structure that was created to accomplish this. We need to understand the overall planning paradigm… What’s motivating the company...What are the benefits...What are the most aggressive positions…How are they managing tax exposure…In other words, we have to understand what they are trying to accomplish.
•  So, we are shifting our approach to be more strategic and to view taxpayers through their business objectives and tax planning strategies. The end game is to try to develop a way of organizing our international compliance programs to:
  • Indentify the highest compliance risks among our taxpayer base;
  • Work cases as effectively and efficiently as possible;
  • Not waste our and taxpayers’ time on issues that do not pose compliance risk; and
  • Find appropriate ways to resolve cases as soon as possible.
  • Allocation of resources will also follow more closely the way in which taxpayers plan and adopt tax positions. In other words, the strategy mirrors the tax planning paradigm.

• The world of international tax is very dynamic: from our efforts to combat offshore tax evasion by individuals, to deeper coordination of action by sovereign governments, to our evolving strategy to work with the largest corporate taxpayers. Each strategy will depend on us continuing to innovate … continuing to have dialogue outside of our agency…and continuing to always strive to work smarter. We are very focused on continuing to up our game in administering the tax laws in a global environment, and you can expect to see the same intensity of efforts in the years to come that you have seen in the past several years.

What does this mean for Florida land development and Florida real estate investment?  

Well, particularly here in Miami, we are a cosmopolitan culture with longstanding ties - both busness and personal - to countries all over the world.  Florida's economy is in serious trouble, and lots of people are working hard to build upon our global ties to bring foreign investment into the Sunshine State. 

We need to be building that cross-polination between Florida and Brazil, Mexico, Israel, Canada, and beyond.  Asking that these folk come here to invest and build while at the same time, asking their banks to spend millions in an effort for the United States to collect tax dollars -- well, in its simplest terms, it's not very hospitable, is it?  

Financially, it's much more complex than that, of course.  But that is for another post on another day.  

South Florida is geographically blessed with a tropical climate and a continuous ocean breeze that lets us enjoy the outdoors even during the warmest days of summer. Those who live here, however, have learned that part of living in a tropical coastal climate means being vigilant of major weather events, particularly during hurricane season.

In 1926, many South Floridians were caught by surprise and tragedy.  Those of us that are blessed to live here in Miami have all heard the stories of the Great Hurricane.  

Since then, technology and government services have developed to mobilize our community and prepare us all for weather events with admirable efficiency.  Miami and South Florida are grateful for their efforts, including those of the NOAA (source of this image).

I was in Miami in 1992 during Hurricane Andrew, a fierce storm in its own right.  It was a terrifying experience that I will never forget.

For those folk who have lived in Miami for a long time, we all understand and respect the forces of nature. And hopefully, we all appreciate the importance of land investment and real estate development, which work together to build and grow our beautiful hometown - just like they did back in the 1920s and 1930s after the Great Hurricane had done its worst. 

Source: NOAA Public Domain

Florida should become even more alluring to foreign investors and international real estate buyers if the United States Congress passes the proposed “Visa Improvements to Stimulate International Tourism to the United States of America Act” (VISIT USA Act).  

You can follow the legislation's progress online here.  

What is the VISIT USA Act?

In October 2011, Senator Charles Schumer (D-NY) and Mike Lee (R-Utah) worked together to put together a bill that if it becomes law will grant foreigners to the United States visas if they spend at least $500,000 on residential housing in this country.

That's right:  buy $500,000 or more in residential real estate in the United States, and you will automatically get a U.S. Visa - if the VISIT USA Act becomes law.  

The proposed Act, if passed, will obviously be of interest to real estate investors worldwide who are considering purchasing homes or condos here in Florida, particularly here in beautiful Miami. Visas can be cumbersome to deal with, and this helps foreigners who are interested in buying property in our area as rental investments or vacation homes.  

The U.S. Chamber of Commerce is already on-board.  From their news release:

Travel and tourism—a sector dominated by small businesses—accounts for more than $700 billion in revenues and 7.4 million American jobs. When business visitors travel to the United States to buy products or attend conferences, training, and trade shows, they strengthen America’s role as the center of innovation and global commerce. These important reforms could help the United States restore its share of the travel market to its 2000 level of 17 percent and create an additional 1.3 million jobs by 2020. 

For too long, we have created barriers, and too many hoops and hurdles, which act to deter visitors from other countries coming to the United States to spend their money and create jobs. This is a loss we can ill afford in today’s economy. We can address these barriers and still protect the security of the United States. The Schumer-Lee bill meets these twin goals and we look forward to working with the Congress to achieve enactment of this important legislation.

The New Act's Visa Will Have Limitations

As currently drafted, the legislation will offer a new kind of visa, one that can be renewed every 3 years.  It would be specific to foreign owners of American residential real estate (buy an apartment building and you're not a part of the Act).  Finally, this new kind of visa would not be a step toward citizenship.  

Additionally, the buyer would have to be buying real estate without debt attached to it: the Act would only apply to cash purchases.  If the foreign buyer lives in the home for 6 months or more, then they would be subject to U.S. taxes, unless the draft is changed during the legislative process.  

There's been a lot of interest and debate over this proposal.  So much so, that Senator Lee wrote an online article and placed it on his website to give more details into the proposal, entitled, "Clarifying Elements of the VISITUSA Act."  He's calling it a "travel visa," not a work visa or an immigrant visa.  

Call it what you will, there appears to be lots of international interest in this legislation.  For example, ChinaDaily reports that it's interesting to Chinese investors who are interested in American schools for their kids, among other things.  

Florida State Representative Kathleen Passidomo (R-Naples) has not given up on trying to get legislation passed up in Tallahassee that will help resolve that part of the ForeclosureGate mess which has created a backlog of foreclosure filings in Florida courts and an approximate 700 day turnaround time for banks seeking to foreclose on homes where no one is paying on the home loan.  

Translate that:  banks in Florida right now are sitting on loans that are going with NO payment for approximately 23 MONTHS before they can legally hold the collateral that was put up for the event that payments stopped coming into the bank.  

Two years without getting paid and sitting in limbo, it's no wonder that banks are in trouble these days.  Which is one of the reasons for Rep. Passidomo's bill.

What Representative Passidomo's Fair Foreclosure Act Proposes

Introduced in October 2011, the legislation will be considered as part of the 2012 legislative process and is currently proceeding through the committee gates to a full vote.  You can read the full text of Rep. Passidomo's proposed Fair Foreclosure Act online in its entirety here.

In sum, if passed, the new law would not gut the judicial foreclosure process; however, when a foreclosure lawsuit is filed and the homeowner fails to answer the lawsuit or assert any sort of defense to the foreclosure action - something that happens quite often when the Florida homeowner abandons the property - then the current procedure would be changed.

In these situations, under Representative Passidomo's Fair Foreclosure Act, the process is changed and the requirements in what the lender must file with the court in order to foreclose upon the property is lessened. This makes it easier both for the lenders and for the judges to get these foreclosures finalized and the homes into the hands of the banks and back out on the market.  

If one of these foreclosures did manage to hit a bump, the new law would allow interested third parties, like homeowners' associations who are concerned about the abandoned property in their community, to come before the court and ask for a court-ordered case management conference to try and get the case moving forward. 

From HB 213's general description:

Designates act "Florida Fair Foreclosure Act"; revises requirements for acknowledgement of satisfaction of mortgage, lien, or judgment; provides requirements for mortgage foreclosure complaints; requires party foreclosing on specified owner-occupied dwellings to provide specified notice; provides for finality of foreclosure; requires certain actions to set aside foreclosure to be treated as actions for money damages; provides requirements for preparation and recording of instrument acknowledging satisfaction; prohibits certain claims following foreclosure based on enforcement of lost, destroyed, or stolen note; provides requirements for deficiency decrees in foreclosures of certain occupied units; revises procedural provisions relating to foreclosure proceedings; provides for determination of reasonable attorney fees for foreclosing certain owner-occupied properties; provides for election by foreclosing lender to proceed without public sale in certain circumstances; provides for liability of persons wrongly claiming under lost, stolen, or destroyed notes; provides for sanctions for raising unsupported claims or defenses & delay of litigation.

 

Answering Critics of The Fair Foreclosure Act Proposal

Of course, there are those that do not agree with Representative Passidomo's proposed legislation, arguing that all that the bill does is help evildoing banks and their foreclosure-happy attorneys to do bad things to Florida homeowners.

It's true that in these situations, the banks would be allowed to meet a much less stringent standard in their burden of proof before legally foreclosing on a home.  It's also true that much of the "robo-signing" morass has been due to lenders not being able to meet the legal burdens of proof under current real estate law.   

Nevertheless, the new law is not written to help bad actors slide away from doing the right thing.  Instead, it is trying to solve a very real problem here in Florida:  people have been walking away from their mortgages and leaving their homes empty.  Sometimes squatters move in.  Sometimes it's only insects and vermin.  These homes sit there, abandoned, bringing down property values and increasing community dangers for months and months - in some cases now, years and years.

That's not right and it's not good for Florida.  Add to that the reality that Florida needs a solid and strong banking industry and we just don't have that right now.  In what reality is it acceptable to have a company wait for almost two years without being able to take collateral on a promise to pay that has been breached?  

We are in a crisis now due to the huge foreclosure backlog in our judicial system and Representative Passidomo is trying to solve that problem.  It's not the complete answer, but it is a step in the right direction.  

In 2011, shortly after the landmark legislation was signed into law by Governor Rick Scott, a lawsuit was filed by the Town of Yankeetown, Florida, challenging the Florida Community Planning Act as being unconstitutional for among other reasons, allegedly being unconstitutionally vague. The State of Florida moved to dismiss the complaint. From the Leon County Clerk's docket:

Plaintiff seeks declaratory relief, alleging that HB 7207/Chapter Law 2011-139 is unconstitutional because it contains more than one subject and has a misleading title as an act relating to trust funds when the act includes a preemption prohibition on certain referendum and initiatives; and because it contains an unconstitutional delegation of authority to the Florida Department of Community Affairs to determine vague and undefined terms.

On November 9, 2011, a proposed settlement between the State of Florida and the municipality was presented to the court, which would result in an exception to the Act’s application when localities had charter provisions authorizing certain referenda in place on the date that the Act became effective. While the settlement must be approved by both the Governor of Florida and the Florida Legislature, an amendment to the Act itself that would make the settlement provisions part of the Act itself has already been proposed.  

Introduced by Senator Mike Bennett as SB 842, it will amend Florida Statutes Section 163.3167 to read, among other things:

“[A]ny local government charter provision that was in effect as of June 1, 2011, for an initiate or referendum process in regard to development orders or in regard to local comprehensive plan amendments or map amendments, may be retained and implemented.”

Senator Bennett’s proposed amendment to the Community Planning Act does other things, as well as disposing of the Town of Yankeetown’s concerns. From the Florida Senate’s overview, this amendment includes:

Repealing provisions relating to the powers and duties of the Secretary of Community Affairs and functions of the Department of Community Affairs with respect to federal grant-in-aid programs; replacing references to the Department of Community Affairs with state land planning agency; repealing provisions relating to the Urban Infill and Redevelopment Assistance Grant Program; deleting provisions relating to the Coastal Resources Interagency Management Committee; deleting provisions excluding a municipality that is not a signatory to a certain interlocal agreement from participating in a school concurrency system; replacing references to the Department of Community Affairs with the Department of Economic Opportunity; deleting requirements for interlocal agreements relating to public education facilities, etc.

 

This proposed legislation may be tracked online.

[This post is the second in a series discussing the Foreign Account Tax Compliance Act (FATCA) and its impact upon foreign investment and development in South Florida and the United States as well as efforts both locally and in other countries to stop FATCA.]

FATCA (the Foreign Account Tax Compliance Act) will become effective in 2013 unless action is taken, and as discussed earlier in this series, there are a tremendous number of critics of FATCA that believe it is harmful to a wide range of interests, not the least of which is economic stability and recovery in South Florida and elsewhere.

Why Was FATCA Passed in the First Place? Money.

The purported reason for Congress to pass FATCA was to enhance the ability of the federal government to gather taxes due on assets that are sitting in foreign accounts.  Congress passed the legislation as part of the HIRE Act (Hiring Incentives to Restore Employment Act), all for the reason of collecting revenue for the federal coffers.  It's an international tax collection effort aimed at perceived tax evasion through overseas accounts.

What Does FATCA Do?

One basic thing that FATCA does is require that financial institutions, American or foreign, anywhere in the world, provide the Internal Revenue Service with account information for any U.S. clientele with $50,000+ in their account.  Which means that the U.S Government is trying to make its tax collections more effective by having banks file information with the IRS and not just the taxpayer.

However, FATCA isn't a simple tax collection procedure.  FATCA will require major alterations to the way business is done by both foreign and domestic enterprises - and that's the problem. 

FATCA, for example, will force every foreign bank to report all of its U.S. account holders to the Internal Revenue Service (regardless of account balance); afterwards, FATCA mandates that these foreign banks  impose a 30% tax on all payments or transfers to these U.S. account holders who refuse to identify themselves. Any foreign bank that doesn't want to do this will be penalized by the federal government through  withholding of interest and dividends for U.S. sources as well as withholding of gross proceeds from the disposition of U.S. securities, etc.

If FATCA does become effective in 2013 (that's one year, one month, and a few days from now), then a huge number of corporations are going to have to make lots of internal changes in order to comply with this new law. Huge numbers of changes. 

Change is expensive. While this type of imposed change is never welcomed with open arms by companies, FATCA requirements are hitting businesses at an especially bad time: internal changes in frameworks, procedures, operations, etc. are expensive in time and money.  

That's not all.  Accounting firms like Delotte and Ernst and Young are already offering their services to provide "compliance risk assessment" and evaluations of systems and how these internal systems will need to be changed in order to meet FATCA's requirements for withholding and reporting.  Which means not only the expense of the changes themselves, but the additional expense of hiring a firm to evaluate and recommend what those changes need to be. 

Given today's economic climate, forcing additional expenditures in already tight corporate budgets in order for the federal government to collect more tax dollars is not setting well with lots and lots of businesspeople.  Companies in all kinds of industries and in all parts of the world are against FATCA and what it means to their bottom line.

Growing Concern for FATCA's Impact on Investment and Trade

Several months ago, Forbes published an interesting take on FATCA in its June 21, 2011 online edition, written by Forbes contributor Daniel J. Mitchell and entitled "Why Obama's FATCA Law Is A Threat To Business Growth."

There, it's first pointed out that FATCA was passed alongside draconian legislation requiring 1099s to be filed by every U.S. business (from solo proprietorships to the largest corporations) for any vendor with whom they did $600 of business (or more).  That was egregious, and this law was nixed.  No one is going to have to jump through that 1099 for $600+ hoop after all. 

However, FATCA - which Forbes describes as a mere "international version of Obamacare’s 1099 scheme" - remains alive and well and since it's impacting foreign business operations much more than those here at home, Congress hasn't heard the outcry against its unfairness as easily as it heard the 1099 - $600 protests. 

Foreign Companies May Respond By Cutting Off American Investment Rather Than Comply With FATCA

Forbes warns that FATCA is so much trouble that it may mean that foreign financial institutions could decide that the easiest change for them will be to ignore all those offers for help from Ernst and Deloitte and instead, just stop doing business in America.  No U.S. investment, no FATCA worries.

Seems like an option that any sensible foreign business would be pondering, doesn't it? 

Add to this, an article (referenced by Forbes) from Great Britain's Financial Times published in June 2011 entitled "US demains tax tolerance of foreign financial groups," where country after country after country is identified as being at the minimum upset and all the more often outraged at this American legislation.

The outrage against FATCA continues to grow.  For some, it's cost.  For others, it's putting them between a rock and a hard place, since FATCA requirements fly in the face of their own jurisdictions' privacy laws.  There are other bases for foreign criticism, too.  Things like a feeling of being disrespected, as they ask why should other countries be required to act as indirect tax collection agents for America?

Meanwhile, we're starting to see what FATCA will mean if it's not repealed.  This week, Ascentric announced its decision: it's not going to be doing business with Americans because FATCA is not worth the effort.

Next in the series, more details on FATCA and what it means to Americans including businesses in South Florida.

The Florida Supreme Court made national news as well as in Florida land development and real estate investment circles this week as it released its opinion in Koontz IV (read the full text here), ruling that it is not a "taking" by the government, for which payment must be made, when a government agency denies a development permit for private property. 

What the Koontz Fight Was All About: Developing a Small Patch of Land Near a Florida Roadway

Specifically, Florida property owner Coy Koontz asked his local Florida water management district for commercial development permits for 3.7 of acres of his 15 acre patch of land on State Road 50, near the East-West Expressway. The majority of Koontz's land tract has been classified as wetlands.

Negotiations began, and the water management district responded with a request that the property owner reduce his development plan to 1 acre, cutting back 2.7 acres off the development project, as well as turning the rest of his 15 acre tract into a conservation area, restricted by language in the deed, in return for the requested development permit. 

Not surprisingly, the property owner didn't agree with this proposal by the water management district, and litigation began.  This, with many developers wondering how the water management district could have thought any other response to their proposal would be a reasonable reaction. 

Mr.Loontz won at the Florida appeals court (read the Florida Fifth Court of Appeals decision here).  Now, the tide has changed, and the state water management district is the victor after the Fifth Court of Appeals certified the issue to the Supreme Court as a question of great public importance. 

From the Florida Supreme Court opinion (emphasis added):

Based on the above analysis, we conclude that the Fifth District in Koontz IV erroneously applied the Nollan/Dolan exactions test to the offsite mitigation proposed by St. Johns. Since St. Johns did not condition approval of the permits on Mr. Koontz dedicating any portion of his interest in real property in any way to public use, this analysis does not apply. Further, even if we were to conclude that the Nollan/Dolan test applied to non-real property exactions—which we do not— Mr. Koontz would nonetheless fail in his exactions challenge because St. Johns did not issue permits, Mr. Koontz never expended any funds towards the performance of offsite mitigation, and nothing was ever taken from Mr. Koontz. As noted by the United States Supreme Court, Nollan and Dolan were not designed to address the situation where a landowner‟s challenge is based not on excessive exactions but on a denial of development. See Del Monte Dunes, 526 U.S. at 703. Here, all that occurred was that St. Johns did not issue permits for Mr. Koontz to develop his property based on existing regulations and, therefore, an exactions analysis does not apply. See id. (“[T]he rough-proportionality test of Dolan is inapposite to a case such as this one.”).

 

What Does Koontz v. St. John's River Water Management District mean to Florida?

First, it's reversing two existing decisions, already in place as rendered by lower Florida courts, finding that this type of negotiation failure would constitute a taking worthy of compensation. 

The St. Johns River Water Management District had been ordered to compensate a land owner in Orange County for the temporary taking of his land because of permit negotiations to the tune of $376,155.00.  Now, with the Florida Supreme Court ruling, that land owner may be waiting a very long time to see a dime of that money.

According to the Florida Supreme Court, to rule otherwise would be cost-prohibitive to Florida land development:  

"Governmental entities must have the authority and flexibility to independently evaluate permit applications and negotiate a permit award that will benefit a landowner without causing undue harm to the community or the environment." 

However, the argument remains that by demanding that a property owner cut back his proposed development along with turning the rest of his track into conservation lands - or alternatively, get no development permit at all - the water management district has essentially taken that land from the land owner.  

This is how land developers and real estate investors both in Florida and in other parts of the country as well as the world will interpret this case. 

Will the case be taken to the United States Supreme Court for review?  Maybe.  Koontz has been fighting this since 1994, cost-wise it seems like a worthwhile investment at this point.  Assuming that he does so, there's still the big question:  will the United States Supreme Court agree to hear his case?  Who knows -- but it's an open issue before the High Court, so there's the chance that they might do so. 

FYI -- interestingly, Justice Polston agreed with the result, but not the reasoning: Polston believes that failure to exhaust administrative remedies before filing suit was sufficient to reverse the lower court's decision. Chief Justice Charles Canady concurred with this position.  Easy way out for the majority would have been to follow Polston's analysis and kick the case out because Koontz hadn't gone through agency channels before entering the courtroom. 

For more news on how Florida's real estate industry is doing, it's important to go to those in the know.  Melrose Sovereign is a Florida real estate property management services organization based in Orlando that knows first hand what is happening with condo foreclosures here.  Today, Melrose Sovereign provides their take on how community associations are getting hard hit by the foreclosure crisis in a guest post:

Foreclosures are increasing across the nation, and are at an all time high in many places. With increasing numbers of people just walking away from their homes, community associations are suffering. With more and more delinquent properties, associations are struggling to pay their bills and protect home values. Communities associations are also struggling to keep up appearances in their associations with foreclosed homes often becoming neglected.

Some associations have over 25% of their properties in foreclosure. This means that they could be losing 25% of their expected income, and many community associations are not prepared for this. Foreclosures can also have a significant impact on property values in a community, and whose responsibility is it to maintain these properties during the foreclosure is constantly in question. There is also the confusion over who is responsible for the assessment payments during the foreclosure, the bank or the former owner. State laws regulate how much money an association can try to recover from a bank after it takes possession, but it is rarely the full amount the association is owed.

With little help from banks, associations are having to handle foreclosures by themselves. To read more and find out how they are doing so, read “Impact of Foreclosures on Community Associations” at Melrose-Sovereign.

Another important industry study concerning the U.S. real estate market has been released, this one by John Burns Real Estate Consulting, a California market research firm.

John Burns is recognized across the country for its independent housing research, which it provides to various industry leaders, including not only real estate investors and land developers but also lenders and banks around the U.S. Its latest research study, therefore, will be reviewed by key real estate players around the country. 

Included among its findings:

• There are over 3,000,000 homes sitting empty in the United States today.
• The study estimates that it will take 3-4 years for these properties to be absorbed back into the marketplace.
• Right now, around 13% of U.S. mortgages are behind in their monthly payments.
• Only 60% of those mortgages that could be subject to foreclosure right now actually have had foreclosure proceedings started against the home.
• Looking at the nation overall, the researchers believe that the crisis had bottomed out and that the country is recovering from the real estate mess - but it's going to a very slow recovery. 
• How will Florida fare in this predicted slow recovery?  The study has Florida with a 7% growth in new home sales next year. 

We'll see.  Right now, John Burns Consulting is giving the country's housing market an overall grade of D+ (as of October 7, 2011).  Looks like there's really not much room to move, except up....

To read the entire report, you can access it online for free at the JBREC site.

Earlier this week, there was a lot of hoopla over a report from Iowa Attorney General Tom Miller, the head honcho over the Attorneys General settlement talks with the top mortgage banks and servicers over ForeclosureGate issues, that the banks, the states, and the feds were close to finalizing a settlement agreement.  Other news was popping up that the big banks were hinting that the deal was done, with the banks putting a total of $20 billion on the table. 

For over a year now, we have been monitoring these talks among the 50 state attorneys general (including our own Attorney General Pam Bondi), the federal government (through representatives of the Departments of Justice and Treasury along with the newly-created CFPB (Consumer Financial Protection Bureau)), and the big financial powerhouses in the national home mortgage industry, including Ally, Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo.

Meanwhile, over at the New York Times, Pultizer-Prize winning journalist Gretchen Morgenson has been reporting on various attorneys general balking at the settlement, because they feel it's got more holes than swiss cheese, and Florida's Attorney General Pam Bondi went on the record yesterday that Florida's position is the settlement isn't about to happen, especially after some of the attorneys general walked away from the talks, and efforts include getting these folk back to the table. 

What This ForeclosureFraud Big Bank - Government Settlement Means to Florida Developers

This deal, if done, would not solve every ForeclosureGate problem out there.  However, this deal would be a big, big step toward getting ForeclosureGate behind us, and business moving forward again.  The AG-Bank-Gov settlement would resolve a lot of claims in exchange for the estimated $20 billion, and the nation's biggest financial institutions could start moving forward in the business of banking.

Bottom line: practically speaking, Florida development is at a stand-still domestically because Florida developers need Florida interim financing (as well as other banking needs) in order to complete their projects.  

Florida needs Florida banks.  Florida developers need resolution of ForeclosureGate.

For investors in Mexico, Israel, Brazil, Canada, or elsewhere, considering real estate investment in South Florida, there is a local resource that should prove very helpful to them: the Miami Downtown Development Agency.

The MDDA is a governmental entity; however, it is an independent agency of the City of Miami that is overseen by a Board of Directors made up of three public appointees and twelve downtown Miami property owners, residents and/or workers.  The directors set policy, and the MDDA's work is then spearheaded by its Executive Director.  The MDDA gets its money from a special property tax.

The Mission of the Miami Downtown Development Agency

According to its website, the MDDA seeks to "... grow, strengthen and promote the economic health and vitality of Downtown Miami. As an autonomous agency of the City, the Miami DDA advocates, facilitates plans and executes business development, planning and capital improvements, and marketing and communication strategies. We commit to fulfill our mission collaboratively, ethically and professionally, consistent with the Authority’s public purpose."

It fulfils this mission by undertaking certain tasks, including the following which are very helpful to those investigating Miami as a possible investment or development site: the MDDA provides an Information Clearinghouse for Downtown Miami as well as undertaking market research & data collection for the downtown Miami area. 

Go here, and find trend analysis for economic trends, visitor trends,and trade trends, for example.  But there's much more. 

The Downtown Miami Master Plan -- The Epicenter of the Americas

Included among its efforts is the 2025 Downtown Miami Master Plan, described on the agency's site as "... a 15-year roadmap for enhancing the livability and quality of life in Downtown Miami. The plan is to serve as a benchmark for encouraging investment by both the public and private sectors, with the goal of transforming Miami’s urban core into the “Epicenter of the Americas.”

"The approved Master Plan combines new land use and planning guidelines, as well as outlines a number of proposed projects, some of which are already underway. The final plan is the culmination of existing studies, as well as a series of Miami DDA Board workshops, public forums, and stakeholder meetings designed to gain a better understanding of existing conditions and gather the best and most sustainable ideas for revitalizing Downtown Miami.

"The Master Plan outlines five core goals for Downtown Miami (bounded at the South end by SE 15th Rd. and on the North by NE 22nd St.; on the West by I-95 and on the East by Biscayne Bay):

• Enhance Downtown Miami’s standing as the business and cultural epicenter of the Americas
• Leverage the City’s beautiful and iconic tropical waterfront
• Elevate Downtown’s grand boulevards to prominence
• Create great streets and community spaces throughout the district
• Promote transit and regional connectivity

You can download an Executive Summary of the Master Plan here. 

Other Information Available Through the MDDA

The Miami Downtown Development Agency is also a resource for other important information, needed by developers and investors considering the Miami area.  For example, the MDDA provides:

1.  A Study of Residential Market Trends – Q2 2011 (download pdf here)

Commissioned by the Downtown Development Authority and prepared by Goodkin Consulting - Focus Real Estate Advisors, LLC Strategic Alliance, this report presents a statistical update of key residential market trends in the downtown area including monthly residential sales activity (closings), price trends, residential leasing velocity and foreclosure activity.

2. Analysis of Miami Demographics (download pdf here)

Within the MDDA Area of 1.7 Square Miles, there was a population in 2010 of 71,000 with a daytime population over twice that, of 194,000, and the area includes 18.6 Million Sq. Ft. of Office Space and 6,096 Hotel Rooms.

For more information, please surf through the MDDA website or email me for more details. 

Genting Malaysia has closed many of its land deals and debuted its plan for Resorts World Miami, a new $3 billion mega-resort located in downtown Miami (part of it in the old Miami Herald building, part in the Omni) with news that it's moving fast:  Genting developers see doors opening as soon as next year for the hotels, condos, restaurants and other amenities. 

We're already posted about Resorts World Miami and what it means to Miami.  It offers a unique opportunity for South Florida's renewal, and signals economic recovery - even a new prosperity for our community. 

After all, Genting won't be a development in a vacuum: other symbiotic and even parasitic developments will be popping up around Resorts World Miami.  That's a given.  (To check out the details surrounding Resorts World Miami, check out Genting's new website on the planned development.)

So, it's no surprise that some would be concerned at all this fierce activity.  Lots of things will be happening now, and fast.

Miami Powers that Be are justifiably concerned about how Genting's new economic bombshell - as well as the expected additional developments  - will work with what is already here: particularly, the cultural arts facilities that exist in the area.  So much so that the non-profit entity The Town Square Neighborhood Development Corporation is now focusing its efforts on working out the infrastructure kinks (traffic, parking, etc.) that Genting's bringing to the party.  Adrienne Arsht Center's Michael Eidson and Parker Thomson are involved here, along with developer Armando Codina and architect Cesar Pelli.  

Cautiously, and rightfully so, they're turning a watchful eye on Resorts World Miami. Their hope: another Lincoln Center, but this one in Miami not NYC. 

It's too bad that some in Miami haven't been so gracious to Genting.

Others are not so welcoming.  Luther Campbell in the Miami New Times comes right out and challenges the new development in an opinion piece entitled, "Genting casino will kill Miami and Miami Beach." Campbell argues that Genting will keep its visitors on Genting property - that tourists who come will be lured to stay (and spend) only on Genting property, and that Miami Beach and other nearby restaurants and attractions will not only not benefit, but also suffer by having their tourist base drawn to the Genting project. He also argues that the jobs Genting brings are all low paying service jobs, because the casinos will be operated by experienced employees Genting imports from other states, with experience running gambling tables.

 It just does not make sense. A project like Genting's will bring all kinds of jobs - from construction jobs, to development jobs, to service jobs, to jobs for those who will run the hotels, restaurants, and retail establishments.  There is, by the way, no downside to bringing lots of service jobs to Florida - we need the jobs.  Plus, it is hard to believe that tourists who come to Genting won't also be drawn to our beaches, to the Everglades, and to the many nearby attractions that make Miami a world class city. We are all likely to benefit.

The Miami Herald published a piece on Tuesday by Michael Putney, "Genting deals winning hand for Miami," where, after researching the specifics of the deal and Genting's background, including that of its CEO, Mr.. K.T. Lim,  Putney ultimately supports the project (even though there are some comparisons in the article to con men and Ponzi scammers like Scott Rothstein and David Paul).

What brought trust to Putney?  First, that Genting has already invested so many hundreds of millions of dollars here already, just to buy land.  (The Miami Herald spot for $236 million, for example.) Second, that Genting's been hiring locally, getting Floridians to do their work here - Putney points out that  Arquitectonica is doing sculptural design.

Third, Genting's got a track record of success with this sort of thing.  Resorts World Miami isn't Genting's first rodeo.  They've got successful examples of similar types of developments all over the world. 

Is It Wise to Already Be Biting the Investor's Hand That Is Feeding Our Economic Recovery?

Genting is well aware that it may be single-handedly instituting a local recovery here and still, its plans and behavior have been gracious and considerate of local interests.

Billions of dollars are coming into Miami.  Now.  Infrastructure concerns?  Of course.  Water, electricity, traffic, roads, parking.  Wow - lots of work.  And work means jobs.  Jobs.  Right now, as well as later.

Genting has revealed its big plan for Miami, and it's turning lots of heads. As well it should, because we may have just heard the magic words that will release our local community from being under its current dark economic spell. 

Foreign Developer Announces Details of New, Huge Tourist Mecca In Resorts World Miami

Yesterday, Genting pulled back the curtain on its plans for a mixed-use development named Resorts World Miami, and it includes taking the Omni Center and neighboring land to construct not only restaurants, bars, and such but a real, live casino to open as soon as a year from now.  If Genting can get the okay to operate a casino in downtown Miami, of course.

Many believe that the Genting Group (officially, Genting Malaysia Bhd., operating casinos worldwide from its Southeast Asia headquarters) will succeed in obtaining a gambling license for its shiny new project from the Florida Powers That Be.  That will only increase the pull of this new tourist destination for visitors across the country as well as across the globe. 

This is a very, very big deal.  Genting will be spending $3 billion here in Miami to develop and build its Resort World Miami project.  The waterfront resort, according to the latest Genting release, will have four (4) hotels (5200 rooms) with two (2) condo towers (1000 units) and (wait for it)... a lagoon on the roof that is estimated to span 3.6 acres.  There will be a convention center, and Resorts World Miami will have the largest ballroom in the United States.

All this is happening very fast.  We've just learned that the Genting Group bought one mortgage note on the Omni last week, pulling the property out of foreclosure.  Soon thereafter, Genting purchased the remaining mortgage note, giving it control of the Omni Center.   

Genting had made news earlier this year when it bought the property that housed the Miami Herald for so many years (see our earlier post, "Foreign Investors Announce Big New Miami Land Development: Genting Malaysia Spend $236 Million for 14 Acres in Downtown Miami.") 

It's Redevelopment Like This Which Will Bring South Florida Back to Sunny Economic Days

Genting's projection include the creation of 15,000 construction-related jobs as well as 30,000 permanent jobs from its development.  These, of course, are projections tied only directly to Genting.  There will be many other jobs that are created as the ripples of this economic tidal wave crest in downtown Miami.

Consider this:  the U.S. Department of Commerce tracks and measures local economies and it has recently released its tallies for Florida (see the GDP Tables here).  According to Tuesday's information, in South Florida (including the Miami metroplex), real estate is tops, government is next, and trade/finance comes in third as contributing to our economy. 

However, you have to consider that within those numbers are foreign and domestic visitors -- and when you do, as calculated by the Miami Herald, you've got around 15% of the local economy which brings tourism into second place right behind real estate. 

Genting's project is right in the big middle of those numbers.  Genting will be coattailed by others seeking to profit from overflow from Resorts World Miami or to compliment the resorts' offerings. 

Yes, this is a very big deal.  And through tourism investment and real estate development, South Florida may be back on the road to prosperity. 

This afternoon at 5:15 pm, the first public hearing of the South Florida Water Management District on its 2012 Budget will begin.  If you want to go, then plan to be there at SFWMD offices located at 3301 Gun Club Road (map) later today.

Stripped Budgets for Florida Water Management Districts

As previously discussed, money is tight and getting tighter for Florida's state government, and the state's water management has been the target of a lot of belt-tightening.  (See earlier post, "Florida Water Management District Swiftly Cuts Budget With 120+ Employee Bailouts, Does This Really Hurt the Everglades?")

On August 24, 2011, the Secretary of the Florida Department of Environmental Protection (DEP) issued a news release (read it here) that Florida's five water management districts would have budget reductions of $700+ million year-over-year.  Money is to be limited to only their "core mission responsibilities" of water supply, flood protection, water quality and natural system protection.

South Florida Water Management District Budget Cut By Approximately 50%

For the Miami area, the South Florida Water Management District will be operating on a 2012 budget that is almost half that of the prior year.  And, it is true that some of those cuts were easy enough to do: getting rid of cushy perks -- like employees being paid for unused vacation days or board members getting plane rides on the district's plane to SFWMD board meetings -- really shouldn't get anyone's criticism, and new District head Melissa Meeker should be credited for her efforts in scaling back the payroll (including taking her own $40K cut in salary).

Is There Enough Money Left for the Core Mission? Some Are Wondering.

Meeker built the budget for SFWMD and its goal is to cover the district's needs in meeting its "core mission responsibilities."  However, there are those that are concerned that the South Florida Water Management District has cut too much and now, there isn't enough money left to meet those "core mission responsiblities." 

And these aren't just the usual suspects, like the Executive Director of the Audobon Society.  Consider the recent opinion piece published in the Sun Sentinel by Amy Evans, a senior at Weston's Cypress Bay High School, where she worries about the long run impact of the budget cuts ("Cutting costs, and water safety, too?").

Let's Not Second Guess SFWMD's Melissa Meeker Just Yet

It's true that water is very, very important to our community and our state.  Land developers and real estate investors recognize the importance of water issues here just as conservationists and environmentalists do.

However, Melissa Meeker's work in cutting the fat out of the South Florida Water Management District is to be respected - cutting those perks was a good thing, and Ms. Meeker's own willingness to leave her position as the state's water czar and take the local position, only to cut her own pay signficantly right off the bat, demonstrates that Ms. Meeker is one of the good guys.

Perhaps we need to trust her efforts and not start second-guessing her with "What If" questions.  Florida is in dire economic straits and both the private and public sectors are going to have to operate lean and mean to get out of this mess. 

Once again, the national news media is spotlighting what is happening here in the South Florida real estate market; however, it's not more coverage about robosigning or mortgage fraud.  Instead, another world-renown, national news source is discussing foreign investment in Florida real property - just as the New York Times did earlier this year. 

Things are being sold here in Florida daily - it's just to a new type of real estate buyer.

Fortune magazine took notice of the international investor interest in South Florida real estate this month in an article entitled, "For foreigners, the American Dream is very much alive," written by reporter Nin-Hai Tseng.  (Ms. Tseng should know:  prior to being a writer/reporter for Fortune, she covered the development and land-use policy beat at the Orlando Sentinel.)

Written for Fortune and published online at CNNMoney.com, the story spreads the word about something that those of us here in the Miami-Dade metroplex already know all too well:  there is continued global interest in Florida real estate, both residential and commercial, because foreign investors have money to spend and know a good deal when they see one.

Bottom line, we need these foreign investors and their savvy is helping our economy survive as we find our way back to a full recovery.

According to the Fortune article, citing Trulia research, approximately 20% of all residential real estate sales in Florida last year were to foreign buyers.  They are paying in cash for the most part, and they are buying these Florida properties not only as vacation homes but as income-producing rental properties. 

Foreign Real Estate Investment in South Florida is Important to Our Economy Now

Taking these properties off the sales market as well as infusing our local economy with cash -- these are both good things.  Foreign investors are not the cavalry, coming in to save the Florida economy; however, they are helping us much more than many realize.  Much more. 

To the extent that more news coverage advances this story, bringing more and more attention to foreign investors of the opportunities that exist for them in South Florida today, the better.  Perhaps more media outlets will follow the lead of the New York Times and Fortune Magazine - getting this word out is a good thing. 

There's a new study just released on Florida's commercial real estate future and surprisingly, the report has good news for Florida and even better news for the Miami-Dade area.  According to CB Richard Ellis ’s Florida Market Perspective Mid-Year 2011 (read the full report below), Florida's commercial real estate appears to have turned the economic corner - although projections are for a slow recovery.  Five years to heal, but the numbers seem to show that we've bottomed out. 

So Who Is Reporting Things Are Getting Better in Miami's Commercial Real Estate Market?

CB Richard Ellis is an international real estate corporation headquartered in Los Angeles, with the reputation of being the largest real estate services firm in the world.  Producing reports is part of what CB Richard Ellis does with great regularity, on a variety of issues, and its latest report on Florida's future will be considered by many in the industry as reliable. 

CB Richard Ellis's mid-year report for Florida commercial real estate is getting both local media coverage as well as increasing industry interest. 

Of course, within the report itself CB Richard Ellis gives the caveat that while the company does not doubt the accuracy of its statistics, it is making no warranties or guarantees about the information provided or the analysis undertaken.  Nothing more than one would expect in a report such as this, and reading CB Richard Ellis's take on our state's real estate future is worth your time.

Accordingly, we are providing the CB Richard Ellis report, in its entirety, for your consideration:

CBRE Florida Market Perspective Mid Year 2011

Last November, we posted about the inevitability of lawsuits being filed against MERS (Mortgage Electronic Registration Systems) although last fall discussions surrounded things like what causes of action could be pursued, and what parties would have standing to do so.  (See, The MERS Mess: A Pandora's Box of Legal Issues.)

One big factor here: who really owns MERS, because those are the deep pockets that any lawsuit will have to depend upon to pay any resulting judgment, should there be victory for the plaintiff.  And MERS isn't its own independent entity: MERS is privately owned by a number of leading national banks and mortgage processing companies (identified here) that include Fannie Mae, Freddie Mac, Bank of America, CitiMortgage, Merrell Lynch, and WellsFargo.

Now, consider this.

Private Citizens Seek Claims Against MERS for Due Process Violations in Faulty Foreclosure Actions

This week, a California man named Jose Gomes has filed a petition for writ of certiorrari with the United States Supreme Court, Case No. 11-195 styled Gomes v. Countrywide (check docket here), asking that the highest court in the land review lower court decisions in California who have not found that Mr. Gomes was denied his constitutionally protected due process when MERS foreclosed upon his home without the proper paperwork to legally support MERS' authority to do so. 

States and Counties Consider Claims Against MERS for Unpaid Filing Fees

Add to that a wave of news stories where budget-strapped jurisdictions are considering all the filing fees that they did not receive when MERS did not file paperwork with the local real property records, and it seems that there will soon be countless other lawsuits filed by places like Dallas County, Texas, as well as the states of Delaware, Massachusetts, and New York.

The Attorneys General of Delaware, Massachusetts, and New York are each investigating MERS, looking into MERS' business practices and whether or not governmental fees due these states were circumvented (and therefore made the basis of claims to be asserted). 

The District Attorney of Dallas County, Craig Watkins, is telling the media that he believes millions and millions of dollars in damages have been sustained by Dallas County (and its taxpayers) because of MERS' failure to follow traditional Texas filing procedures, including paying established filing fees.

So, the question becomes: how will those who own MERS (Bank of America, Fannie Mae, Freddie Mac, Wells Fargo, CitiMortgage, and their fellow owners) be affected if MERS is required by the courts to pay for lost filing fees in jurisdictions across the country as well as for private due process violation claims?  And if the courts rule that MERS must do this, then what does that do to our precarious financial climate? 

The news this week is filled with various articles discussing the new foreclosure statistics that have been released for the second quarter of 2011 by RealtyTrac, covering the rate of national foreclosure filings where Florida has always been vying for one of the top spots. 

Just where do we stand, here in South Florida, in recovering from the Foreclosure crisis? 

1.  Mortgage Rates are at Record-Breaking Lows (If You Can Qualify)

This morning, USA Today reports that mortgage rates are extremely low - even at record lows - which means mortgage money is cheap for those who can meet the current standards for getting a home loan.  That's not many people right now. 

Just how low are those mortgage rates?  According to USA Today, we're seeing 5.82% for a fixed mortgage rate.  This is great news for those with solid income streams and high credit ratings. 

2. RealtyTrac Quarterly Reports Show Florida Still Hurting - But Gives Some Encouraging News for the Country

RealtyTrac's latest reports (covered by several media stories) keeps Florida in the lead as the state with the highest rate of mortgage loan delinquencies.  Florida is number one with 13.91%; Nevada is a close second at 13.04%; and California comes in at third with 7.83%.  Notice that Florida is close to double the delinquency rate of California. 

According to Consumer Affairs, reviewing the totality of RealtyTrac's reports as they were released this week actually hints at light at the end of the tunnel.  RealtyTrac is reporting that foreclosures were at a 44-month low in July 2011.  Foreclosures were down 35% from July 2010 to July 2011 nationally.

Sounds hopeful, until you consider that national numbers don't reflect the reality that different states are suffering more than others from the Foreclosure Crisis - and Florida has been one of the hardest hit. 

Consumer Affairs does point out that according to RealtyTrac,

1. There were a total of 22,377 Florida properties with foreclosure filings in July, down six percent from June and down 57 percent from July 2010;
2. Initial default notices and scheduled auctions in Florida were both down on a monthly and annual basis in July; and
3. REO (bank-owned properties) activity increased 8% from June 2011 but was still down 55 percent from July 2010.

3.  We Can't Get Distracted by False Hope in Falling Foreclosure Filings

Put that together, and Floridians are still having trouble making their mortgage payments and there are still a lot of foreclosure filings happening here in the Sunshine State, though banks seem to be foreclosing less. 

However, the falling foreclosure numbers are in many ways false hope.  The banks still have tremendous shadow inventories - large numbers of homes on their books that are not appearing in MLS - and now, banks are wary of foreclosing because of continued allegations of robo-sigining. As RealtyTrac's CEO James J. Saccacio explains:

Unfortunately, the falloff in foreclosures is not based on a robust recovery in the housing market but on short-term interventions and delays that will extend the current housing market woes into 2012 and beyond.

4.  Where We Stand in August 2011

Florida, particularly South Florida, is still in a real estate crisis and experts predict it will take a couple of years for Florida to win its battle over this downturn.  For those who can afford to buy real estate here, particularly those foreign investors in Israel, Brazil, Mexico, and Canada, this may be extremely good news. 

Looks like there are going to be lots and lots of good bargains here in beautiful South Florida for those with the wherewithal to purchase them. 

Meanwhile, Florida homeowners are still facing underwater mortgages (or the possibility of one, as fair market values decrease) and Florida lenders are still fighting both ForeclosureGate defense issues as well as the cold reality that they've got lots of homes on their books just setting there, and lots more that may be added if delinquencies continue to rise. 

Watch the RealtyTrac Video Synopsis of its July 2011 Foreclosure Report here:

This week two Florida Legislators, Representative Darren Soto and State Senator Eleanor Sobel, officially requested that the federal government become involved in yet another growing controversy here in Florida involving ForeclosureGate. 

Florida legislators ask DOJ and Congress to Investigate Clarkson and Edwards Exit From Florida AG's Office

Soto and Sobel have asked that the Department of Justice and Congress (through correspondence with Senator Bill Nelson and U.S. Attorney General Eric Holder) look into allegations that two Assistant Attorneys General, June Clarkson and Theresa Edwards  were fired - or forced to resign - because of political motivations.

Seems that Soto and Sobel are not happy with the recent announcement by Florida Attorney General Pam Bondi that an independent inspector general will investigate the Clarkson-Edwards exit, and that Florida Chief Financial Officer Jeff Atwater's inspector general would take on that job.

What's the Concern? Undue Influence by Special Interests

Clarkson and Edwards were the top Foreclosure Fraud investigators for the State of Florida until they were asked to leave their employment as Assistant Attorneys General.  They had overseen ForeclosureGate investigations under both Pam Bondi and her predecessor, Bill McCollum.

Until recently, they had received good job evaluations. However, it has been reported that they were asked to quit or face being fired after problems with their work were discovered by Richard Lawson, director of the Economic Crimes unit.

The controversy surrounds not only their past record of above-average job performance reviews but a suggestion by some that they were doing such a good job that they were booted because of political pressure. Specifically, there is talk that the two women were a problem for two companies they had deemed "mortgage mills":  Jacksonville's Lender Processing Services and Tampa's ProVest.

Two Sides To The Story - The Truth Will Out

Bottom line, one camp is forming that believes these two attorneys were so fierce in their efforts to expose foreclosure fraud in Florida and elsewhere that they became thorns in the sides of two powerful mortgage servicers, who used their power to get them removed from their jobs.  Undoubtedly, this camp will be looking into the campaign contributions made to Pam Bondi as well as other connections between the two "mortgage mills" and those responsible for firing the women.

The other camp will be considering the arguments made by those who wanted to see these two women out the door.  They will be investigating the possibility that overzealous actions, no matter how well-meaning, may have gone over the line and necessitated the two lawyers' departure.  Even attorneys can be too aggressive, after all.

Right now, the bigger picture remains the State of Florida.  We are living in serious times and we have enough serious controversies to resolve - including ForeclosureGate - without running rabbit trails or getting distracted by inuendo.  Let the investigators do their thing, the truth will out soon enough.  

This week David Streitfield's article, "Affluent Buyers Reviving Market for Miami Homes," was published in the New York Times -- which can only mean even more potential investors in Miami real estate will be aware of the inticing deals to be had here in South Florida for beautiful, oceanfront condos in one of the most cosmopolitan of cities. 

Word of Mouth for Miami Real Estate Bargains Is Good for Florida

In his article, Mr. Streitfield points out that the current ForeclosureGate situation -- where lenders are setting on their inventories and moving slow on pending and possible foreclosures because of robo-signing legality concerns -- has actually benefited the Florida real estate market because supply has shrunk ... and investors from other parts of the country and other parts of the world are taking advantage of the properties here, where local buyers are finding it hard to find lending. 

Brazil, Mexico, Latin America, Canada and Israel Are All Buying South Florida Real Estate

Bottom line, while the banks set on that real estate inventory and don't offer many home loans, foreign investors (as we've been discussing - those from Brazil, Mexico, and Israel among other countries) are coming to town and finding great real estate deals to be had - either for second homes, or rental investments. 

It's true that it is a great time to invest in Florida real estate if you have the funds to do so.  Bargains on very beautiful property abound right now.

However, as we've discussed before - the Shadow Inventory looms.  The banks are sitting on a lot of property - condos, homes, lots, etc. - that is not listed in the MLS and isn't for sale now.  Vacant properties that locals recognize because they have popped up everywhere. 

What will happen to that Shadow Inventory?  Rumors are that the federal government wants to find ways to rent those properties. 

What happens to the banks and home loans to Americans?  That's a more difficult question to answer. 

Tuesday's news of a Reuters expose that robosigning (and other forms of faulty and flawed foreclosure procedures) is still happening not only went viral among the financial and real estate industries, it has caught the attention of Congress. 

(For details on what robosigning involves, see our earlier post, "Defining RoboSigning: What Exactly Is RoboSigning and Why Is Everyone So Upset About It?")

As we noted on Tuesday, if extensive robosigning and other forms of impropriety are indeed continuing in the Florida real estate arena, much less on a national scale, then this is extremely serious and could have severe, negative ramifications on Florida's attempts to escape and recover from our Great Recession.  To have Congress investigating may alone have a negative impact on our financial community; however, that horse has already left the barn. 

Today, in BusinessWeek, it is reported that Senator Sherrod Brown (D-OH), chairperson of the Financial Institutions and Consumer Protection Subcommittee, has announced that his  subcommittee will hold a hearing to investigate this robo-signing allegation. 

The Senate's Financial Institutions and Consumer Protection Subcommittee is one of several subcommittees of the powerful Banking, Housing and Urban Affairs Committee of the United States Senate. 

Over in the House of Representatives, Representative Maxine Waters (D-CA) has voiced her concerns to the press and as a senior member of the House Committee on Financial Services, it's to be expected that her committee will also be looking into robosigning and current foreclosure practices in the country today. Representative Waters also looks to be putting pressure on the Executive Branch, telling the media that since the Office of the Comptroller of the Currency, or the OCC, is legally the federal regulator for banks, the OCC has a duty to investigate the situation.

Yesterday, Representative Waters released her letter to the Chairman of the Federal Reserve Board, Ben Bernanke; the Acting Comptroller of the Currency, John Walsh; and the Acting Chairman of the Federal Deposit Insurance Corporation, Martin Gruenberg (review the actual correspondence online here), which is joined by eleven of her colleagues in both the House and Senate, calling for an immediate investigation into the robosigning situation.  Here is the text of Representative Waters news release and call to arms:

Washington, Jul 20 -

“Recent news reports indicate that ‘robo-signing’ and other improper, and potentially illegal, practices continue unabated despite mortgage servicers pledging to regulators months ago that they would stop,” Congresswoman Waters noted. “It’s clear that, despite claims that they take these issues seriously, the banking regulators have failed to put an end to these predatory practices. It is therefore essential that documents submitted by banks to regulators regarding their mortgage servicing practices be made public, so that Congress and the public can hold servicers accountable.

"Enforcement actions were initiated by federal regulators because of the “robo-signing” scandal from last year, which revealed many servicers were wrongfully foreclosing on homeowners and not following existing foreclosure procedures and laws. Robo-signing is when banks falsely swear that they have reviewed property documents that are necessary to foreclose on a homeowner’s house. Recently both the Associated Press and Reuters reported that despite regulators’ assurances to the contrary, illegal robo-signing allegedly remains rampant in both foreclosure and non-foreclosure cases.

"The request for disclosures is also based upon concern over the fact the consultants performing foreclosure reviews have conflicts of interest since they are chosen by the mortgage servicers they are hired to investigate and have done past or future business with those same mortgage servicers. Members of Congress are requesting public release of Engagement Letters, Action Plans, Foreclosure Reviews, and other plans, policies, or processes submitted by mortgage servicers or third-party servicers to ensure that abuses in foreclosure practices are not being ignored by the review process.

“When the consumer protection performance reviews of banks are being conducted by outside consultants hand-picked by the banks themselves, I must question the regulators’ process. We need to shine more light on this issue to hold both the servicers, and their regulators, accountable,” Congresswoman Waters said.

"When news reports on robo-signing surfaced in November 2010, Congresswoman Waters immediately wrote to major mortgage servicers and the regulators of servicers asking for a foreclosure moratorium pending a comprehensive examination of servicer practices. Congresswoman Waters also held the first Congressional hearing in the House on robo-signing and wrongful foreclosures in November 2010, and she continues to press banking regulators for more aggressive action on servicing fraud.

The letter is signed by Representatives Frank, Ellison, Grijalva, Watt, Clay, Gutierrez, Miller (NC), Brown, Kaptur, Schakowsky, and Woolsey. The companion letter in the Senate has been signed by Senators Blumenthal, Franken, Akaka, Begich, Sanders, Cantwell, Tester, Rockefeller and Sherrod Brown. 

Brazil's economy is doing well, perhaps better than it's ever been before.  Brazil's unemployment rate in April 2011 was 6.4%, an all-time low record. Its economy is growing, its citizens are confident in their country's future. 

Brazil's economy is currently the 9th largest in the world.

Why Brazil Likes South Florida - Bang for their Real

And here's a big fact for South Florida:  in the past three years, the Brazilian real has gained 39% in value against the U.S. dollar - which means that coming to Miami and spending those reals gets the Brazilian buyer a lot more bang for their buck. (Import tariffs and sales taxes are other factors that make shopping in Brazil significantly more expensive than shopping in South Florida for many brand items.)

Consider this:  in a recent story covering Brazilian tourists flocking to South Florida, the Miami Herald gave an example of one pair of running shoes that cost six times more in Brazil than they do at a local Orlando shoe store. 

In fact, in that same story we learn that in 2010 Brazil-Florida trade increased by almost a third as Brazilians discovered South Florida’s bargain prices and ease of access.  Most of these purchases are in South Florida, where (in comparison to Tampa, which has no nonstop flights to/from Brazil) the Brazilian airline TAM offers nonstop flights to/from Miami and Orlando and American Airlines has 52 weekly flights from Miami to five different cities in Brazil.

Today, Brazil spends more reals in the Sunshine State than anywhere else in the United States.  Over one-third of the condos sold in downtown Miami today are being sold to Brazilians. 

Brazil's Growing Interest in Real Estate Investment and Development in South Florida

We post earlier about Brazilians buying more and more South Florida real estate, and it seems savvy for Florida real estate professionals to recognize and welcome Portugese-speaking Brazilians as potential investment partners, buyers, and more.  This should only increase in the future.

Long-Term Relationship Between Brazil and South Florida

However, given that the average retirement age for men in Brazil is 54 and for Brazilian women, 51, and the fact that there are some economists who are predicting that Brazil will have some economic trouble in the future (including inflation) unless some things change, it would seem that South Florida may well be a true Mecca for smart Brazilians looking for a safe retirement haven where their reals will have the most clout. 

Times are tough in Florida and many things are being done in both the public and private sectors to fight and win against the "Great Recession."  This week, news has started trickling in that suggests some light at the end of the tunnel.  Consider this:

1.  From the Naples News, we know that several developments will be proceeding in South Florida with homes projected to be ready for sale in 1 -5 years.  These include:

• Hacienda Lakes in Collier County (plan approved by the Southwest Florida Regional Planning Council)
• Alico West in Lee County (plan approved by county and state officials); 
• Sabal Bay in Collier County (approvals in process);
• Big Cypress in Collier County(approvals in process).

2.  The Naples News also reports that well known developer The Ronto Group has requested a ten year extension on its huge planned development on Bonita Beach Road to gain back the extra time at the end of the project that had been lost in the lull brought on by the recession. 

Moving back the deadline brings things back to a status quo as development chugs forward on The Rondo Group's planned development of a huge golf course and residential community.  Rondo representatives are telling the media that lots of homes are going to be built within the next year in their new Bonita Beach Road project.

3. Up in Jacksonville, commercial interests are seeing a big spurt as the Florida Times Union reports that it's a go for a new "superport" to be built,  a bookend to Keystone Industries' recently debuted shipping terminal over in Talleyrand.  

The new development wll be ten times the size of the Talleyrand terminal and it will have a manufacturing plant that will bring new jobs to the area (in addition to all that cargo work that will need workers to be hired).  This means literally thousands of new jobs in the long run for this area after the project is built, and lots of jobs in the short terms as construction begins on the new Superport. 

Mortgage fraud is a national problem that's getting more and more rampant in our area, according to  Interthinx, a company that periodically releases its research analysis of national fraud numbers.

Its warnings are particularly dire for the Miami area, where South Florida's ranking 2nd in the country for mortgage fraud risk in 2011.  Last year, that ranking was 20, making South Florida the only area in the country with a significant increase in mortgage fraud. 

You can read the Interthinx Mortgage Fraud Risk Report for the first quarter of 2011 here (downloadable pdf format).

The report is dealing with housing scams, and the study focuses upon a review of mortgage applications provided by cooperating lenders.  Interthink scans the applications for red flags that suggest something is not quite right in an application, using its internally devised system of mortgage fraud indicators.  The report itself measures (1) overall fraud as well as four subsets:  (a) property valuation fraud; (b) identity theft; (3) occupancy fraud; and (4) falsified income reports. 

Our local area is number 1 in all these rankings, except for the falsified income report frauds.

When considering occupancy fraud, identity fraud, and property valuation fraud, things may need to be clarified.  In many cases, fraud is very much what we think it is - scam artists falsifying documents, hiding relevant information, and wrecking havock with the lending community.  There are, however, instances where the fraud is to some extent more benevolent (though fraud nonetheless).  In these cases (and this happens often in South Florida), the "fraud" is really an attempt by family members to help eachother out, in transactions where individuals close on homes that become theirs, with mortgages that are kept current. 

It is true that mortgage fraud in this area is rampant.  There are con artists taking advantage of buyers from foreign countries as well as other parts of the country (in addition to Floridians), and general mortgage fraud that fits into the category of classic white collar crime - falsifying information, hinding information, and creating deals for short term transactional profit - at the expense of others and of our economy at large. It's good to make everyone aware of these scams.

However, this new Fraud Report provides numbers that also incorporate family members that are trying to help loved ones stay in their homes, however fraudulent their actions may be.  These instances do not reflect a danger to the investing public at large, and potential buyers and investors should not be swayed by the Fraud Danger that is being discussed as being overwhelming here in South Florida.

There may be a lot of hinky mortgage applications in South Florida right now; however, in our Great Recession there are lots of applications that are disingenuous as family members try and help each other out. 

These fathers and brothers and sisters and cousins are not a danger to the incoming investor, and that should be considered when pondering the impact of this new Fraud Report.