Category Archives: Real Estate

Lennar to move forward

When WCI Communities, a “lifestyle community developer and luxury homebuilder” headquartered in Florida, announced last month that it agreed to a “definitive merger agreement” with fellow homebuilder Lennar for $643 million, the company said that its board was going to take a 35-day “go shop” period to seek a better deal.

Now, the 35-day “go shop” period is over and the merger with Lennar is moving forward, but it’s not a done deal yet.

WCI announced Thursday that its board actively solicited alternative acquisition proposals throughout the go-shop period, but did not receive “any superior proposals” to top the Lennar deal during those 35 days.

In the deal, Lennar agreed to acquire all of the outstanding shares of WCI common stock in a cash and stock transaction, which values WCI at $23.50 per share.

That price is based on a 37% premium above where WCI closed on Sept. 21, 2016.

The deal values WCI at approximately $643 million in equity, or an enterprise value of $809 million, the company said.

In the end, WCI’s board didn’t find a better deal. WCI’s board of directors unanimously approved the merger agreement with Lennar, and now the deal moves forward, with a caveat.

WCI is now subject to customary “no shop” provisions that limit the company’s ability to solicit alternative acquisition proposals from third parties or to provide confidential information to third parties, which basically means that WCI cannot actively pursue a better offer, but if one comes along, its board can consider it.

The “no shop” provision is subject to customary “fiduciary out” provisions, which again basically means that if WCI gets a better offer, it can take it.

According to WCI, it will file proxy materials with the Securities and Exchange Commission related to a special meeting of WCI’s common stockholders to vote on the merger agreement.

The company said that anticipates that the special meeting will be held in December 2016 or January 2017. The company said that if the merger agreement is approved, the merger would be expected to close shortly thereafter.

If the merger is completed, the transaction would include a portfolio of owned or controlled land totaling approximately 14,200 home sites, located in most of coastal Florida’s “highest growth and largest markets,” WCI said.

According to data provided by WCI, the company completed 1,118 homes with an average sales price of $444,000 during the 12 months ended June 30, 2016.

WCI is more than just a homebuilding business. The company also operates a real estate brokerage, title and lifestyles amenities businesses, all of which would be included in the Lennar deal.

“Our agreement with Lennar testifies to the legacy and quality of our brand, the attractiveness of our homes and communities, and the talent of our team members,” Keith Bass, president and CEO of WCI, said in September when the deal was announced.

Top spots with the most haunted house

It’s the season for boots, pumpkin pie, caramel apples and maybe even haunted houses. In these 10 cities, however, passing by haunted houses becomes just a little too real.

Across the U.S., over 40,000 single-family homes are vacant and have a homeowner who is now deceased, according to an ATTOM Data Solutions analysis of public record data.

Here are the top 10 zip codes with the most haunted houses, or homes that are left vacant after the homeowner passes away. One city stands out above the rest.

10. Youngstown, Ohio

In the zip code 44506, one in every 83 homes is “haunted.”

In one home in the city, the Punderson Manor, in the dining room in the late 1970’s, people claim that for a period of approximately three hours late one night, the ghost of a man who appeared to be a lumberjack seemed to hang from the rafters.

9. Gary, Indiana

In the zip code 46404, one in every 81 homes is “haunted.”

Are homes here really haunted? That’s hard to say, but we do know that the city is currently ranked fourth in homicide rates, and it was once ranked first.

8. Birmingham, Alabama

In the zip code 35207, one in every 81 homes is “haunted.”

One of the most haunted places in Alabama is in Birmingham’s Sloss Furnaces, [pictured below] which has many reports of paranormal activity over the years

7. Jackson, Mississippi

In the zip code 39203, one in every 74 homes is “haunted.”

At the Old Capitol building in Jackson legend claims that the office of a man who reportedly died at his desk is haunted by his ghost.

6. Detroit, Michigan

In the zip code 48217, one in every 71 homes is “haunted.”

In Detroit, the Masonic Temple seems to be haunted. When the founder’s wife left him over money problems Mr. Mason jumped to his death from the temple. Security guards claim they still see sightings of Mr. Mason and visitors often report an eerie feeling of being watched.

5. Mobile, Alabama

In the zip code 36610, one in every 69 homes is “haunted.”

Two separate homes in the city were joined together in the mid-1800s to form an inn. Since then, the apparition of a lady in white has been seen pacing the balcony of Room #007, as well as chandeliers swinging when no one is around, furniture getting moved around and lamps being unplugged.

4. Braddock, Pennsylvania

In the zip code 15104, one in every 57 homes is “haunted.”

This desolate town [pictured below] lost 90% of its peak population, and looks like the nightmare at the end of the American Dream, according to an article by Jim Straub and Bret Liebendorfer for Monthly Review.

3. Duquesne, Pennsylvania

In the zip code 15110, one in every 56 homes is “haunted.”

After the city took over Fisher Hall, formerly the Fisher Scientific building, it did major renovations, except on the second floor. After that, several mysterious happenings led the staff to believe the floor was haunted.

Housing burns to the ground

With vacations over and the holidays coming fast, home buying is beginning to slow down. So, given all of the predictions for 2016 (including mine), let’s review the better part of the 2016 home-buying season and see what we’ve learned, with an eye toward 2017.

1. Refis have finally dried up

The death of refis has been greatly exaggerated for a long time now, but given recent data and analysis, it may finally be here. Simply put, rates can’t get any lower, and those who qualified for refis have already done them. Given that refis have been the largest growth driver for the mortgage industry, banks need to find new opportunities to stimulate new purchases and borrowing.

2. Buyers want ‘new’ homes

The good news is that buyers want to own a home and that sales of newly constructed homes is healthy compared to recent years. However, existing home sales are down, partly because homeowners have been too cautious to upgrade. This has resulted in low existing-home inventory, especially at the starter home level.

3. Homebuyer confidence is strong (though maybe not for women)

Millennials, pegged as fiscally conservative, are increasingly more careful about what they do with their money. Still, even with economic, security and political concerns beyond their control, they want to own. But it must be on their terms: They are used to the flexibility and control renting affords, and given that 86% plan to stay in new homes fewer than seven years, prospective buyers need more assurance than a 30-year mortgage provides. Women are far more cautious in this area than men and need an even greater sense of security before they are willing to commit to buying or upgrading.

4. Low rates persist

Despite higher consumer confidence and lower unemployment, key indicators of economic growth such as GDP and international economic concerns such as Brexithave kept Federal Reserve chair Janet Yellen from raising interest rates – for now. Having rates stuck so low for so long will likely affect new home sales in the future. When rates inevitably do rise, possibly by the end of 2016, prospective homebuyers will probably overreact and pull back. The good news is that rising rates should lead to falling home prices.

5. Real estate is still local

With the yin comes the yang. While areas like Atlanta are experiencing the highest sales prices on record, other areas, like much of Connecticut, have been hit hard. Jobs and industry are the biggest issues here. GE leaving with 10,000 jobs hurt the Nutmeg state much like dropping gas prices hurt Houston and other oil-producing towns. Given that the average job tenure of a Millennial is 2.8 years, job mobility and the need for housing flexibility can have big impacts on them as homebuyers.

Where does this leave us for 2017? In a word, uncertain. There are a lot of what-if and wait-and-see scenarios right now, but if I had to guess, home prices will likely normalize and drop for several reasons:

1. Naturally, they have to

That’s the way markets work. They go up and down. Fortunately, real estate value has historically risen over the long term. But given the current highs, we may see correction in some overheated markets.

2. Higher rates are likely (at some point)

If it costs more to borrow, home prices will have to come down. Although buyers will head to the sidelines, more convertible-rate homeowners will need to sell as their current low-rate mortgage terms expire.

3. Inventory will rise

With new construction shifting from multifamily to single-family homes, the market should become less competitive.

4. We must still address affordability

Tackling this issue will have some kind of direct or indirect impact on prices if public policy efforts succeed. But again, if people can’t afford homes, the market should naturally adjust.

Facebook to increase real estate

In a move that shows how much better companies are getting at reaching their desired audiences no matter where they are, Zillow announced a partnership this week with Facebook that will allow Realtors and real estate agents to target potential homebuyers directly on their Facebook feed.

According to Zillow, the partnership is part of its Premier Agent program and is called Premier Agent Direct.

“Premier Agent Direct combines the power of the most visited real estate network with one of the most widely used social media platforms, allowing real estate agents or teams to expand the targeted audience they advertise to through a simple, easy platform using Zillow Group’s precision targeting,” Zillow said in a release.

According to Zillow, the technology identifies home shoppers who are using Zillow or Trulia and allows real estate agents to connect with them on Facebook.

Using the program, agents can feature a specific listing or automatically highlight new listings or recently sold homes. Plus the program allows agents to target potential homebuyers in a specific area.

“Premier Agent Direct helps agents more efficiently work their farm area and either extend or eliminate the need for a direct mail campaign by using precision targeting to connect with local home shoppers and sellers on a medium they are using every day,” Zillow said.

According to Zillow, the Premier Agent Direct program is now available on mobile and desktop.

 “We have worked incredibly hard this year to create new opportunities for agents to connect with buyers and sellers so they can scale their businesses with greater ease – the new products are the results of those efforts,” Greg Schwartz, Zillow Group’s chief business officer, said.

“Through this new publishing platform, we have created a way to significantly increase the agent’s reach to consumers who are in a transaction mindset,” Schwartz added. “With precision targeting, we know these people are using Zillow and Trulia, and now there’s a new opportunity to connect with them on Facebook.”

 

How to look out for housing

images-46Millennials haven’t taken over the housing market yet, but it’s only a matter of time before they do.

Many Millennials have not moved into homeownership due to a number of factors, including a preference for urban living and a high student debt burden.

However, now first First American created a chart that shows Millennials have a higher percentage of people with a college degree than any other generation.

This educational advantage bodes well for future homeownership rates among this generation. A study from Fannie Mae showed that the long-term benefit of a college degree outweighs the short-term burden of student loan debt when it comes to the likelihood of eventual homeownership.

The study showed that those who earned a degree without taking on student debt are the most likely to become homeowners, followed by those who graduated with debt, those who never went to college and lastly, those who took on student debt but never graduated.

So Millennials’ status as not only the largest demographic but also the most educatedgeneration ever could soon lead to abnormally high homeownership rates. That could come with a downside, however.

“The risk will be that prices will adjust to all of the demand and reduce affordability, making it more difficult,” First American Financial Corp. Chief Economist Mark Fleming told HousingWire.

“That’s why the issue of lack of inventory, whether in the form of less existing home sales than expected or a lack of right-priced new homes, is so important to the future success of the market to serve the possible tsunami of demand,” Fleming said.

Real estate in 2 years reviews

The confidence that consumers have in the economy dropped in the beginning of October, but by the end of the month it seems to have plummeted.

The Index of Consumer Sentiment dropped to 87.2 in October, the same low recorded last September and the lowest level since October 2014, according to the Survey of Consumers conducted by the University of Michigan.

“The October decline was due to less favorable prospects for the national economy, with half of all consumers anticipating an economic downturn sometime in the next five years for the first time since October 2014,” Survey of Consumers Chief Economist Richard Curtin said.

The Index dropped 4.4% from last month’s 91.2 and 3.1% from last year’s 90. It is also down from the beginning of October, when it came in at 87.9.

An article by Jill Mislinski for Advisor Perspectives explains what this means historically:

The Michigan average since its inception is 85.4. During non-recessionary years the average is 87.6. The average during the five recessions is 69.3.

The measure of Current Economic Conditions decreased 1% from last month from 104.2 to 103.2, and increased 0.9% from last year’s 102.3.

“Objectively, the probability of a downturn during the next five years is far from zero-this would be the longest expansion in 150 years if it lasted just over half of the five-year horizon,” Curtin said. “Nonetheless, the October rise may simply reflect a temporary bout of uncertainty caused by the election.”

The Index of Consumer Expectations decreased substantially at 7.1% from last month’s 82.7 and 6.5% from last year’s 82.1 to 76.8 in October.

Other sources are also reporting a drop in confidence. Consumers are less confident about the economy in October than last month, citing that, among other things, business conditions are bad, according to the Consumer Confidence Survey conducted by The Conference Board by Nielsen, a provider of information and analytics around what consumers buy and watch.

“Prospects for renewed spending gains will depend on continued growth in jobs and wages as well as low inflation and interest rates,” Curtain said. “The small rise in interest rates now expected in December will have a minimal impact on spending.”