THE HOUSING MARKET IS GREAT: IF YOU ARE RICH!

NEW YORK–It's starting to feel as if there are two housing markets. One for the rich — and international buyers — and one for everyone else.

Consider foreclosure-ravaged Detroit. In the historic Green Acres district, a haven for hipsters, a pristine, three-bedroom brick Tudor recently sold for $6,000 — about what a buyer would have paid during the Great Depression.

Yet just 15 miles away, in the posh suburban enclave of Birmingham, bidding wars are back. Multimillion-dollar mansions are selling quickly. Sales this August were up 21% from the previous year. The country club has ended its stealth discounts on new memberships. And Main Street's retail storefronts are full.

"We're getting more showings, more offers and more sales," says Ronnie Keating, a real estate agent with Sotheby's International.

Think of this housing market as bipolar. In the luxury sector, the recession is a memory; sales and prices are rising. Everywhere else, the market is moving sideways or getting worse.

In the housing market inhabited by most Americans, prices have fallen 30% or more since the peak in 2007. That's a steeper decline than during the Depression. Some people have had their homes on the market for a year without a single offer.

Almost a quarter of American homeowners owe more on their house than it's worth. Another quarter have less than 20% equity. About half of homeowners couldn't get a mortgage if they applied today, says Paul Dales, senior U.S. economist for Capital Economics.

Then, there is the other housing market, occupied by 1.5% of the U.S. population, according to Zillow.com.

Here, houses have outdoor kitchens and in-home spas, his-and-her boudoirs and closets the size of starter homes. This market is not local but global, with international buyers bidding in cash. And the gyrations of the stock market are cause for conversation, not cutting expenses.

In this land of luxury properties, the Great Recession seems over. Prices of $1 million-plus properties have risen 0.7% since February, according to Zillow. Prices of houses under $1 million have fallen more than 1.5%.

Normally, these two segments of the housing market rise and fall together. Now, they're moving in opposite directions.

"Luxury is the best performing segment of the housing market right now," says Zillow.com chief economist Stan Humphries.

After every recession since World War II, housing has led the economic recovery. Not this time. The renewed vitality in the comparatively small market for luxury homes is not enough to power a full-blown recovery.

This bifurcation in the market is yet another reason Michelle Meyer, chief economist at Bank of America Merrill Lynch, says her housing outlook is "increasingly downbeat."

The phenomenon is not limited to real estate. You can see the same split elsewhere in the economy. Sales at Saks vs.Walmart. Pay on Wall Street vs. Main Street. Corporate profits vs. family balance sheets.

The divide also is making credit a perk of the rich. Mortgage rates are the lowest in decades. But what good are absurdly cheap rates if you can't get a mortgage?

Banks aren't granting credit to anyone "who even has a smudge on their application," says Jonathan Miller, founder of real estate consulting firm Miller Samuel. Applications for new mortgages are at 10-year lows.

Across the U.S., prices on high-end homes fell after the subprime crash in the fall of 2008. The price on the $25 million mansion became $20 million, then $15 million. Such "bargains" are pushing luxury buyers to commit to more deals.

There are other factors, too. In Detroit, a recovering auto industry is helping propel high-end sales. All those car executives who helped turn around the auto industry used to rent homes. Now they are using their performance bonuses to buy.

Wall Street's recovery has brought back the market for mansions in the Hamptons, on Long Island, where the number of real estate closings has returned to the 2007 level, and for luxury co-ops in New York City. And because of social-network riches in Silicon Valley, twice as many homes have sold for $5 million or more this year than last.

But in the other housing market, an apartment tower built in 2007 in San Jose, Calif., recently converted to all-rental. The building had not sold a single unit.

In Miami, a city that exemplifies the foreclosure epidemic, idle cranes dot the skyline. Unemployment shot up again this summer from 12% to 14%, a level not seen since the energy crisis in 1973. There are so many two-bedroom condos in gated communities with golf courses, private pools and jogging paths that you can pick one up for $25,000, 66% off the price five years ago. But luxury condos priced at $1 million or more are selling as rapidly as they did during the boom.

"In the 20 years that I have been in South Florida real estate, I have never seen a greater divide between those who have and those who have not," says Peter Zalewski, founder of the real estate firm Condo Vultures.

One big factor in the divide in the real estate world is foreign cash. For international buyers, U.S. real estate is the new undervalued asset, the new fire sale, and foreigners are big buyers of luxury properties. International clients bought $82 billion worth of U.S. residential real estate last year, up from $66 billion in 2009. In states like Florida, international buyers account for a third of purchases, up from 10% in 2007.

"Luxury properties are drawing buyers from all over the world," says CoreLogic's chief economist, Mark Fleming.

That's true even in such seemingly all-American enclaves as Detroit. Step off a plane at the city's futuristic new airport and the internationalization of the Motor City is obvious. All the signs — as well as the announcements on the public address system — are in both Chinese and English.

In the middle of the terminal sits a five-star Westin Hotel, the better to serve the global executive class that jets in and out as the U.S. auto industry regains its footing. Many of them are buying in Birmingham, Mich.,, where home values are up 3.1% this year, according to Zillow.com.

In Birmingham, store owners say business is as good as it was during the boom years last decade. Chasta Fase, who owns Old World Olive Press, a boutique shop that sells $30 bottles of olive oil from around the world, says business "has been just awesome" since she opened in November. And since April, she says, customers have been spending more than ever.

Real estate agent Keating says the same is happening to her sales. In June, she sold a lakefront mansion in Birmingham to a Russian entrepreneur. He had purchased a local steel company that he plans to turn around.

"They're coming from all over," says Keating, who for the past 30 years has sold most of the car barons their homes, from Roger Smith, former CEO of General Motors, to former Chrysler CEO Bob Nardelli. "I don't know who any of them are anymore."

Copyright 2011 The Associated Press.

HOUSE ON THREE ACRES IN COPAKE-HILLSDALE AREA - $175,000.

This ranch-style home is strategically located on a mostly open three acre parcel to catch the best views of the nearby hills. The house was built in 1967 by the current owner and is being offered for sale for the first time. It has 1,000+ square feet of living area that includes three bedrooms, 1 full bath, triple-pane thermopane windows for energey efficiency, oil hot water heating, ceramic tile and carpeted floors, covered porch to enjoy the great views, and a 2-bay detached garage/barn with electric service and workshop. Total Annual real estate taxes are only $3,150. This house is in excellent, ready-to-move-in condition.

The property is located only a few minutes away from Catamount Ski Center, New York State Parks, Bash Bish State Park, and the Harlem Valley Rail Trail goes right by the property. You can also walk to the hamlet of Hillsdale for shopping and fine dining. More land is available.

For more information call John Wallace at 518-392-7062 or email him at John@GrayRider.com



FARM LAND RUSH IN THE USA

“It’s a feeding frenzy out there,” says Renee Harvey, ALC, of Century 21 Harvey in Paris, Texas. Farmers, private investors, and institutional owners are bidding up cropland prices to record highs, fueled by commodity prices that rose 29 percent in the year ending March 2011, according to the U.S. Department of Agriculture. In the Midwest alone, prices rose 23 percent during 2010, according to the Federal Reserve of Chicago, and have since spiked higher. Total returns for farmland were 2.4 percent in the first quarter of 2011, up 1.3 percent from a year ago and the strongest first quarter return since 2006, according to the National Council of Real Estate Investment Fiduciaries Farmland Index.

The eye-popping prices and impressive returns, in large part, reflect the relative scarcity of land for sale. Amid rising food prices, owners aren’t inclined to sell. “There’s just not much on the market and finding property for buyers takes a lot of networking,” says Ray Brownfield, ALC, of John Greene Land Co. in Oswego, Ill. In fact, the 2010 annual report of the Illinois Society of Professional Farm Managers and Rural Appraisers found that 57 percent of the farmland sold in the state came from estate sales. With relatively few sellers, transaction volume has stayed low, despite liquidity in the market. Data from the Farmers National Credit Services of America, an Omaha-based lender, found that transaction volume on crop and pasture land in Iowa, South Dakota, Nebraska, and Wyoming dropped 54 percent in three years from 2,326 sales in the first quarter of 2008 to 1,074 sales in the first quarter of 2011.

The appeal is easy to understand. “High-quality farmland can generate a 3 to 4 percent annual cash-on-cash return with low volatility,” says Murray Wise, ALC, of Murray Wise Associates, headquartered in Champaign, Ill. Compare that to a yield of less than 1 percent on six-month Treasuries, and you can see why income-hungry investors love farms.

Rising rents have also kept returns high despite higher land prices. In Illinois, for example, the cash rents for the mid-third range of leases on excellent farmland rose from $183 per acre in 2007 to $319 in 2011, according to a survey by the Illinois Society of Professional Farm Managers and Rural Appraisers. More owners are negotiating flexible profit-sharing agreements to capture rising commodity prices, says Winnie Stortzum, ALC, GRI, a land broker and appraiser at Farmers National Co. in Arcola, Ill.

Six Keys to Farm Land Value
Farmland investment income rests on crop production for much of its return on investment. What makes for a productive farm?
-Soil quality
-Water availability and control
-Fertilizer requirements
-Topography
- Percentage of tillable land
- Proximity to transportation

Another draw is land's inverse correlation with the stock market, says Jeff Conrad, president of Hancock Agricultural Investment Group in Boston. “You really saw that in 2008,” he says. Investors worried about inflation like that land is a tangible asset.

But even with strong investor activity, there are doubters. Yale University economist Robert Shiller, famous for predicting the fall in housing prices, cited farmland as his “favorite dark horse bubble candidate” over the next decade in a spring 2011 article in Slate. Some investors are already pulling back, especially in the hot Midwest farm belt. “When land reached $10,000 an acre in the first quarter of 2011, it was a mental stopping point for some cash in­vestors,” says Mark Goodwin, Goodwin & Associates in Shorewood, Ill. The U.S. Department of Agriculture is also reporting slight drops in income streams from such major crops as cotton, oilseeds like soybeans, and feed grains for the first quarter of 2011. Part of the challenge is that “the agricultural industry doesn’t set its own commodity prices; that’s done by traders and speculators,” says Kirk Goble, ALC, with The Bell 5 Land Co. in Greeley, Colo.

Many agriculture brokers agree that there may be a 5 percent drop in land prices, but “as long as people from developing countries want to increase the quality of their diets and their protein consumption, commodity prices and land prices will remain very strong,” says Mac Boyd, ALC, GRI, of Farmers National Co. in Arcola, Ill.

Another factor that mitigates a sharp drop in agricultural land prices is the low debt-to-asset ratios for most farmers today, says Conrad. “Farm debt is the lowest it’s been in 30 years. That’s not the sign of a bubble.” Brownfield agrees: “The average mortgage debt load for farmland purchases today is less than 20 percent.” Many current buyers are coming in with all cash. Those who do use debt are putting 40 or 50 percent down.

Does that mean that farmland investment is bulletproof? Not quite. Government policy—particularly anticipated changes in farm subsidies in the 2012 farm bill—could have “a significant impact on what goes in the farm market,” says Stortzum. While subsidies aren’t as critical when commodity prices are high, land ownership would get much riskier without some sort of federal backstop, notes Brownfield. A rising dollar could soften demand, while higher interest rates could pull investors away to higher returns elsewhere.

Flexibility Counts

Given the high prices and retreats in commodity prices, are there still opportunities in farmland investment? Yes, but only if you’re savvy and flexible, say land experts. Finding willing sellers is the toughest part, since only about 1 percent of U.S. farmland turns over every year, says Wise. His tip: If you do find a farm, be ready to make a cash offer in 24 hours. Other buyer-finding advice: Check tax rolls for absentee owners, who may have inherited farm property and now live far away.

Bargain hunting can also pay off. “It’s an imperfect market. Sometimes there aren’t any aggressive buyers at an auction, and the land sells for less than the perceived market,” says Randy Hertz, alc, of Hertz Farm Management Inc. in Nevada, Iowa. Another way to get a better buy: Look beyond the top cropland markets of the central Midwest to somewhat less fertile, but more affordable, land in states like South Dakota, he says. The Mississippi Delta, similarly, hasn’t been bid up as high, suggests Bob Turner, alc, with Southern Properties LLC in Cordova, Tenn. “Prices per acre are averaging $2,500 to $3,500 in our area,” he says. Another option: Focus on commodities that are soft at the moment, like wine grapes and cranberries, suggests Conrad. When these products rebound, land prices will rise, too.

A Comeback for Ag

The strength of farmland prices is even pulling some undeveloped transitional land back into the farming fold, says Nancy Surak, ALC, CCIM, of Eshenbaugh Land Co. in Tampa, Fla. With prices on bank-owned transitional land down as much as 80 percent from the peak of 2005, “ag may be the highest and best use,” she says.

Farmers in the collar counties around Chicago are following a similar pattern, says Goodwin. Those who sold to developers for $75,000 an acre a few years ago are now buying it back for $15,000. “They’ll farm it for five to 10 years and sell it to a developer again,” he says. Much of this land is REO from larger banks, which seem more ready than smaller ones to take write-downs, he says.
In some cases, this farming or grazing use is a temporary way to qualify for lower agricultural tax rates. “You can get a fence up and cattle on a property in two weeks and substantially lower your ­carrying costs,” Surak says.

Comparably lower prices on build-ready land are also attracting buyer interest. “We sold almost 1,000 finished lots last year, every one we had listed,” says Surak. Homebuilders who have cash as well as regional investors are snapping them up at 40 percent of the average $25,000 replacement cost, she says. Other buyers for build-ready land include state and local governments and local housing authorities, which have used federal Neighborhood Stabilization Program funds to buy bank-owned land for new construction.

Even recreational land is getting the farm bug. “The biggest trend in recreational land is multiuse opportunities, including farming, timber, and habitat development,” says Derrick Volchoff, manager of Cabela’s Trophy Properties, a network of more than 250 independent real estate affiliates based in Sidney, Neb. Income helps to offset carrying costs as buyers remain hesitant in a weak economy.
Like all real estate, agricultural land prices are ­cyclical—so the highest of today will decline at some point. But as the world’s population grows and needs to be fed, the future looks bright for U.S. farmland and for those who sell and manage it.

-----------------------------------
http://realtormag.realtor.org/commercial/feature/article/2011/09/farm-land-rush

HOW WILL THE U.S. CREDIT RATING DOWNGRADE IMPACT HOUSING FUNDAMENTALS?

Congress’ last-minute accord to raise the nation’s debt ceiling and avert a default wasn’t enough to save the United States’ AAA rating from Standard & Poor’s. The market’s reaction to the news could have an impact on Treasury yields and with these yields closely tied to mortgage rates, on homebuyers’ borrowing costs.

[Editor’s Note: As the day unfolded, following publication of this article, investors responded to the news with a Treasury bond buying spree, resulting in a 13 basis point drop in 10-year Treasury yields.]

The international ratings agency downgraded the long-term sovereign credit rating of the United States to AA+ late Friday night. That’s a grade level just below the AAA rating the U.S. had held for 70 years, going back to 1941 when S&P began assigning ratings to countries.

S&P said the fiscal plan that Congress and the administration agreed to last week “falls short” of what its analysts believe is “necessary to stabilize the general government debt burden by the middle of the decade.”

The agency also said the wrangling that went on in Washington – namely the use of the impending threat of default as a political bargaining chip – makes near-term progress on curbing public spending or reaching an agreement to raise revenues “less likely than we previously assumed.” S&P says the debate “will remain a contentious and fitful process.”

White House and Treasury officials fired back at S&P for basing the downgrade on what they said was a “math error of significant consequence.” The administration says S&P misquoted estimates from the Congressional Budget Office by $2 trillion in projecting the deficit over the next 10 years. S&P has since acknowledged the error but says that doesn’t change its decision.

So what does all this mean for the housing and mortgage markets?

Mortgage financiers Fannie Mae, Freddie Mac, and 10 of the 12 Federal Home Loan Banks also had their senior debt issue ratings cut from AAA to AA+ by S&P Monday morning. (The Federal Home Loan Banks of Chicago and Seattle were already rated AA+ prior to the U.S. sovereign downgrade.)

S&P says the downgrades were the result of the institutions’ “direct reliance on the U.S. government.” The agency warned back in April that the rating of the U.S. would have a direct impact on the ratings attached to the debt of these government-sponsored entities.

Reuters notes that a downgrade of Fannie Mae and Freddie Mac could also affect billions of dollars of debt issued by public housing authorities, debt that is secured by federally guaranteed mortgages.

The markets are bracing for an eventful week ahead, with expectations that the value of the dollar will slip and Treasury yields will begin to rise. The trajectory of mortgage rates typically goes hand-in-hand with Treasury yields.

But market participants point out that mortgage rates are already at historical lows, and it still hasn’t done much to boost demand from homebuyers.

Economists and housing experts alike were expecting mortgage rates to head higher later this year, even before the rating downgrade.

According to Paul Dales, senior U.S. economist for the research firm Capital Economics, “[A]ny spike in Treasury yields and/or fall in the dollar should be relatively short-lived. Once the dust settles, attention will turn back to the economic fundamentals, which are certainly consistent with low Treasury yields.”

The analysts at Barclays Capital don’t expect the ensuing shock to the market to run very deep.

“Treasuries are not going to sell off…but longer-run the fiscal problems are likely to mean a weaker dollar,” Barclays said.

The firm also stressed that for many observers, it was really a question of when the downgrade would happen rather than if it would since S&P had been very clear about its expectations.

“But it is yet another milestone in the ongoing financial crisis: another once-unthinkable event has taken place,” Barclays said. “For decades the 10-year U.S. government bond yield was the definition of the long-run risk-free interest rate; now that has been declared a less than top-notch credit risk.”

S&P is the only one of the three major ratings agencies to downgrade the United States.

Moody’s Investors Service and Fitch Ratings both confirmed their AAA ratings after the debt deal was reached last week.

By Carrie Bay
www.DSNews.com

TWO BEDROOM COUNTRY COTTAGE - ONLY $198,000.

This two Bedroom, two Bath, 1960's Cottage is located on 2.04 acres of mostly wooded land on County Route 24 (Red Rock Road) in the town of Canaan. It is in excellent condition, has oil hot water heating, 1,136 square feet of living space, double-hung windows, enclosed porch, seasonal stream at property border, 1-car detached garage, and plenty of storage.

For more information and/or an email brochure, please email John Wallace at: John@GrayRider.com

or call him at 518-392-7062

PROFESSIONAL OFFICE BUILDING IN CHATHAM, NEW YORK

PROFESSIONAL MEDICAL OFFICE BUILDING IN CHATHAM - $425,000.

Professional Office building fully leased. Excellent tenants with current leases. New rubber roof in 2010, new furnaces and hot water heaters. This 5,000 square foot professional office building was built in 1962. It sits on 3.8 acres of land on a side street in the Village of Chatham. It has waiting rooms, reception/office areas, 5 baths, and ample parking in both the front and the rear of the building. Tennants pay for heat and electric. There is a total of 4 furnaces (including backups) and the building is air conditioned. Total Annual Real Estate taxes are approximately $11,732. per year. Gross income is approximately $81,000+ per year. Owners pay the real estate taxes and tenants pay approximately 91% of the common charges.

Total Annual Income: $81,116.
Total Annual Expenses: $48,200.
Total net Income: $3,916.

Cick on the link below for more information:

http://www.grayriderrealestate.com/Form-MedicalBuilding-InfoRequest.htm

Survey: 87% of First-Time Homebuyers Don't Foresee Payment Troubles

Prospective homebuyers cite worries about future unemployment, concerns about property affordability, and the local economic outlook as issues that hold them back from jumping into the market, according to an industry survey commissioned by Genworth.

But the Virginia-based mortgage insurer says these economic concerns have not translated into excessive mortgage stress among recent U.S. homebuyers.

According to the survey, 87 percent of Americans who bought their first home in the past 12 months expect to easily meet their mortgage repayment obligations in the coming year.

Genworth debuted its new International Mortgage Trends Report Friday based on a global survey of current and aspiring homebuyers aimed at gaining local insight into key world markets. More than 9,000 respondents were interviewed from Australia, Canada, India, Ireland, Italy, Mexico, the United Kingdom, and the United States.

The company says the U.S. is the most optimistic among all the markets surveyed about buying a home. According to the findings, nearly two-thirds of Americans polled believe now is a good time to buy a home.

Genworth says indebtedness colors how households around the world view their financial situation and how they approach buying a home. Western countries tended to have higher levels of debt, but were also more comfortable taking on debt.

Of the many factors that influence the decision to buy a home, Genworth notes that consumer confidence is one of the most important.

The company’s survey found that homebuyer confidence has eroded due to property market instability and worries about personal finances, leading consumers to adopt a wait-and-see attitude.

Still, nearly two-thirds of Americans surveyed believe now is a good time to buy a home for those who can afford it.
------------
Article by Carrie Bay - www.DSNews.com