DAILY NEWS ARTICLE ON AV RETAIL GROWTH

On Thursday August 28th, the Daily News featured an article on retail growth in the Antelope Valley. Projects approved in boom years are now under construction. For example, in 2005-2006, 500,000 square feet was approved. By the end of the next year, 1.4 million square feet was approved. The article is linked below:

http://www.dailynews.com/antelopevalley/ci_10320591?source=email

North Los Angeles County Real Estate News: APPRAISAL INSTITUTE ANNUAL CONFERENCE

North Los Angeles County Real Estate News: APPRAISAL INSTITUTE ANNUAL CONFERENCE

APPRAISAL INSTITUTE ANNUAL CONFERENCE

I attended the Appraisal Institute's annual summer conference, which included presentations from Fannie Mae and Jack Kyser of the Los Angeles Economic Development Corporation. The biggest piece of information that resonates with me today is that Commercial Mortgage Backed Securities (CMBS) transactions are off 92% from last year. That is a near complete collapse of the secondary mortgage market.

While there were plenty of declarations yesterday that the worst is about over, or that the new home market was poised to recover because only 1,000,000 homes will be built this year, UNTIL LIQUIDITY RETURNS TO THE MARKET, THERE CAN BE NO RECOVERY.

SCV HOME SALES RISE IN JUNE

The Southland Association of Realtors reported that June transactions were up 11.2% compared to June 2007, also an increase of 4.1% from May 2008.

Median detached single family home prices dropped 25.6% from a year earlier and stands at $450,000, down from the $643,000 record high recorded in April 2006. The decline is exactly 30% from the peak over the 27 month period. The median price for condos was down 23% from a year ago to $285,000, and down from the January 2006 record of $397,000, down 28% from the peak. This indicates that the slide has been the most dramatic in the past 12 months.

Listings are down 16.4% from June 2007 and the current inventory represents only a 6.4 month supply at the current pace and slightly over the 5 to 6 month supply the Association deems to be "balanced" (though I don't know many sellers that would like to wait 5 to 6 months to sell their home).

The low inventory is optimism that once liquidity returns to the market, prices will stop declining.

The State of Commercial Real Estate

I am asked every day if commercial real estate is feeling the affects of the housing crisis and the economy. It's usually the last to be affected and the last to come out of a slump. From Marketwatch.com today and the world's leading commercial real estate company (red and italics added):

NEW YORK (MarketWatch) -- Shares of CB Richard Ellis Group Inc. (CBG:
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Last: 14.90-3.75-20.13%11:49am 07/30/2008Delayed quote data
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CBG 14.90, -3.75, -20.1%) , the world's largest commercial real estate services firm in terms of revenue, fell 22% on Wednesday after the company reported earnings and revenue came in short of analyst estimates. The company late Tuesday said that its profit fell 88% to $16.6 million, or 8 cents a share, down from $141.1 million, or 59 cents a share, a year earlier. Analysts' mean estimates were for per-share earnings of 44 cents on revenue of $1.42 billion, according to a poll by Thomson Reuters. "Based upon our initial review of the numbers we offer three key takeaways: sales weakness has spread globally now as opposed to mostly in the US in the first quarter of 2008, leasing activities are now also weakening after a strong first quarter, and lastly investment management incentive fees now look to be essentially non- existent in 2008," Citigroup analysts said in a Wednesday research report..

2,420 Homes: Homebuilder's Optimistic

The Signal reported today that nearly 2,500 homes are planned for Canyon Country. The following was reported:

Projects already approved include:
• Spring Canyon - 499 single lots on 551 acres, with 385 acres of open space which includes two parks and three open space lots. Plans also include land set aside for a Sheriff's station and a fire station.

• Tick Canyon - which the developer referred to as Park Place, includes 492 single family lots on 500.6 acres, with 271 acres of open space and one large 16-acre multi-purpose.

• Sierra Way - 75 single family lots on 246 acres with 172 acres of open space.

• Meadstone - 63 single family lots on 80 acres with 56 acres of open space.

• Shapell Plum Canyon - originally approved for 1,300 single family lots including 1,200 condos, now calls for 1,298 single family lots and 1,202 condos on 603 acres of land, with allotment made for a school site and a fire station.

I am back

Since my last post in late January, the real estate market has continued to deteriorate and transactions and credit for commercial property are less frequent. Other opportunities however have made my appraisal business busier than it has ever been, and I have been busier than ever. I will stretch a bit further and get back to blogging. Please let me know if you subscribe to this blog and tell me what you would like to see!

Finally, financial products are available for investors to bet on the direction in housing prices and for homeowners to hedge their equity in their homes. See the link below:

http://seekingalpha.com/article/81244-macroshares-to-launch-levered-up-down-housing-price-etfs?source=d_email

Too bad this wasn't available in early 2006 for home owners.

The last post I made pertained to a futures trade I made on the Los Angeles Case Schiller index and I promised to provide a result.

The trade was a bet that the market would drop; the only question was would it drop to the future value, more than the future value, or less than the future value. If the trade dropped to the future value, there would be no profit or loss; a value lower than the index would show a profit, and a value higher than the index would show a loss.

The index was slightly above the future value resulting in a small loss. The direction was right, but due to the illiquidity of trading futures, I could not get the future that I wanted. The new product mentioned above will have a much more liquid trading market and will be a better trade to make.

Until next time.......