2013 Tennessee Excellence Award

FOR IMMEDIATE RELEASE:

T. C. Lewis & Co receives 2013 Tennessee Excellence Award 

December 4th 2013 - Nashville, Tennessee

T. C. Lewis & Co has been selected for the 2013 Tennessee Excellence Award amongst all its peers and competitors by the Small Business Administration and Institute for Excellence in Commerce.

Each year the organizations conduct business surveys and industry research to identify companies that have achieved demonstrable success in their local business environment and industry category. They are recognized as having enhanced the commitment and contribution of small businesses through service to their customers and community. Small businesses of this caliber enhance the business environment stature for which Tennessee is renowned.

T. C. Lewis & Co has consistently demonstrated a high regard for upholding business ethics and company values. This recognition marks a significant achievement as an emerging leader and is setting benchmarks that the industry should follow.

As part of the industry research and business surveys, various sources of information were gathered and analyzed to choose the selected companies in each category. This research is part of an exhaustive process that encapsulates a year long immersion in the business climate of Tennessee.

Back to Back Award Winner

FOR IMMEDIATE RELEASE

T.C. Lewis & Co Properties Receives 2013 Best of Johnson City Award

JOHNSON CITY, TN  May 27, 2013 -- For the second consecutive year, T.C. Lewis & Co Properties has been selected as the 2013 Best of Property Management Award recipient by the Johnson City Award Program.

Each year, the Johnson City Award Program identifies companies that we believe have achieved exceptional success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the greater Johnson City area a great place to live, work and play.

Nationwide, only 1 in 70 (1.4%) 2013 Award recipients qualified as Two-Time Award Winners. Various sources of information were gathered and analyzed to choose the winners in each category. The 2013 Johnson City Award Program focuses on quality. Winners are determined based on the information gathered both internally by the Johnson City Award Program and data provided by third parties.

The Johnson City Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the greater Johnson City area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value to both clients and the community.

The Johnson City Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations and other business advertising and marketing groups. Our mission is to recognize the small business community's contributions to the U.S. economy.

US Real Estate Braces for Foreign Markets Fallout

Troubles in emerging markets could stretch to the luxury apartment towers of New York and Miami.

Wealthy investors from Brazil and China have been big drivers of the high-end real-estate recovery—especially in New York, Miami and Los Angeles. But now, as emerging markets face slowing economies, sliding currencies and plunging stocks, the high-end real-estate market could feel the chill.

The biggest impact is likely to be Miami. Brazilians accounted for 12 percent of the city's real-estate sales in 2012, according to the Miami Association of Realtors. Yet they represent a far greater share at many of the high-end condo towers, which have helped lead the Miami real-estate recovery and building boom.

The majority of Brazilians buying in Florida purchased condos or apartments rather than detached family homes. And two-thirds of Brazilian buyers purchased homes priced at $200,000 or more, according to the association.

"The market could slow because of what's happening in Brazil," said Jorge Uribe, luxury real estate broker and senior vice president of One Sotheby's International in Miami. " I think there were a lot of people here putting a lot of emphasis on Brazil in terms of sales. And they could find themselves in a pickle."

Uribe said the troubles in Brazil could have both positive and negative effects on Miami. The luxury condo towers, with typical apartments selling for $500,000 to $3 million, could bear the brunt of the slowdown, he said. Such properties were purchased by upper-middle-class and single-digit millionaires, who have been hit harder by the stock market decline and economic turmoil.

Miami developments like Apogee, the Continuum and the MuranoGrande at Portofino all have large contingents of Brazilian buyers. At some condo towers downtown or in the so-called "Biscayne Corridor," 60 percent to 75 percent of the buyers have been Brazilian.

But Uribe said the very top of the region's luxury housing market could see a surge, as the ultra-rich in Latin America look for secure places to invest their still considerable fortunes. He said penthouses in a few select condo towers as well as waterfront mansions could see a rush of buyers looking for shelter from the economic storms.

"We may see an upside in the ultra-luxury market," Uribe said. "Whenever you have political turmoil in Columbia or Nicaragua or Latin America, you see an uptick in people buying assets here."

In New York, the big focus is on Chinese buyers. Brokers say the wealthy Chinese represent about 10 percent of the market. But some of the newer luxury towers are aimed squarely at rich Chinese buyers. One57, the residential skyscraper overlooking Central Park, has signed up several Chinese buyers. And 56 Leonard St, a downtown luxury tower, has also been popular with the Chinese.
Nikki Field, senior global real estate advisor with Sotheby's International Realty in New York, said Chinese buyers are still out in force. If anything, she said, the slowdown in China and turmoil in Asian markets could bring in more Chinese buyers into safer havens.

"They want to move a lot of money out as quickly as possible and get it somewhere safe," Field said. "Residential real estate here is safer than other options."

Still, other brokers say Chinese buyers have started dragging out their purchases over several months or even a year. And some newer developments are seeing delayed payments from Chinese buyers. Field said Chinese buyers like newer apartment towers, and "many of them don't come on line for another two or three years." So if there is a slowdown, it may take another year or two to show up in the market.

"Of course, the last 48 hours brings us some concerns," Field said. Chinese stock markets have been volatile amid concerns about tighter credit, which would slow economic growth.

"But the people buying real estate here are not using their last $5 million. These are people who already have the extra funds offshore and are diversifying their portfolio."

- Robert Frank, CNBC Contributor

Troubles in emerging markets could stretch to the luxury apartment towers of New York and Miami.

Wealthy investors from Brazil and China have been big drivers of the high-end real-estate recovery—especially in New York, Miami and Los Angeles. But now, as emerging markets face slowing economies, sliding currencies and plunging stocks, the high-end real-estate market could feel the chill.

The biggest impact is likely to be Miami. Brazilians accounted for 12 percent of the city's real-estate sales in 2012, according to the Miami Association of Realtors. Yet they represent a far greater share at many of the high-end condo towers, which have helped lead the Miami real-estate recovery and building boom.

The majority of Brazilians buying in Florida purchased condos or apartments rather than detached family homes. And two-thirds of Brazilian buyers purchased homes priced at $200,000 or more, according to the association.

"The market could slow because of what's happening in Brazil," said Jorge Uribe, luxury real estate broker and senior vice president of One Sotheby's International in Miami. " I think there were a lot of people here putting a lot of emphasis on Brazil in terms of sales. And they could find themselves in a pickle."

Uribe said the troubles in Brazil could have both positive and negative effects on Miami. The luxury condo towers, with typical apartments selling for $500,000 to $3 million, could bear the brunt of the slowdown, he said. Such properties were purchased by upper-middle-class and single-digit millionaires, who have been hit harder by the stock market decline and economic turmoil.

Miami developments like Apogee, the Continuum and the MuranoGrande at Portofino all have large contingents of Brazilian buyers. At some condo towers downtown or in the so-called "Biscayne Corridor," 60 percent to 75 percent of the buyers have been Brazilian.

But Uribe said the very top of the region's luxury housing market could see a surge, as the ultra-rich in Latin America look for secure places to invest their still considerable fortunes. He said penthouses in a few select condo towers as well as waterfront mansions could see a rush of buyers looking for shelter from the economic storms.

"We may see an upside in the ultra-luxury market," Uribe said. "Whenever you have political turmoil in Columbia or Nicaragua or Latin America, you see an uptick in people buying assets here."

In New York, the big focus is on Chinese buyers. Brokers say the wealthy Chinese represent about 10 percent of the market. But some of the newer luxury towers are aimed squarely at rich Chinese buyers. One57, the residential skyscraper overlooking Central Park, has signed up several Chinese buyers. And 56 Leonard St, a downtown luxury tower, has also been popular with the Chinese.
Nikki Field, senior global real estate advisor with Sotheby's International Realty in New York, said Chinese buyers are still out in force. If anything, she said, the slowdown in China and turmoil in Asian markets could bring in more Chinese buyers into safer havens.

"They want to move a lot of money out as quickly as possible and get it somewhere safe," Field said. "Residential real estate here is safer than other options."

Still, other brokers say Chinese buyers have started dragging out their purchases over several months or even a year. And some newer developments are seeing delayed payments from Chinese buyers. Field said Chinese buyers like newer apartment towers, and "many of them don't come on line for another two or three years." So if there is a slowdown, it may take another year or two to show up in the market.

"Of course, the last 48 hours brings us some concerns," Field said. Chinese stock markets have been volatile amid concerns about tighter credit, which would slow economic growth.

"But the people buying real estate here are not using their last $5 million. These are people who already have the extra funds offshore and are diversifying their portfolio."

- Robert Frank, CNBC Contributor

Consulting Service (REO) Heating Up

For Immediate Release
May 20, 2013
Johnson City, Tennessee

T. C. Lewis & Co. is proud to announce that it has been retained by two mid-size banks over the last two weeks to consult on bank-owned real estate (REO) properties covering: West Virginia, Virginia, Tennessee, North Carolina, Georgia, etc. Total estimated value of the combined portfolios are near $52MIL. "It's a great service that we can provide to small and medium-sized banks that don't want to try and develop their own REO department. And some large banks with a special assets division have had an excessive amount of properties and need help," says Cory Lewis (President/CEO). "Nobody wants to feel sorry for banks, and I don't think that these clients want anybody to feel sorry for them. But the fact remains that these banks are sitting on real estate that they now own. There are assets that are sitting right now that need to be put back into the market in a responsible way, and we hope that we can do our part in making that happen," says Lewis.

T. C. Lewis & Co. harnesses the power and knowledge of the divisions of the company to provide an REO Consulting service to financial institutions. Lewis explains, "Banks turn over the problems of a client with a non-performing loan before it goes into foreclosure, and we can work to prevent it. Or, they (banks) can provide us with properties that have gone into foreclosure, and we simply take over." The company uses its unique ability to analyze each property independently for value and strategy to sell, including: To show in-place value for investment properties and help cover expenses for a property by renting/leasing; to package and sell properties to investors; to market the properties in the right outlets to get them sold; to suggest and make repairs as necessary; complete projects as needed; manage leased properties to maximize potential and make as attractive as possible to potential buyers; etc.

This type of consulting service is becoming one of the premier services offered by T. C. Lewis & Co, along with investment management for domestic and international real estate investors looking for opportunities to make short and long-term money in the US real estate market.

Residential Rental Market - When is Enough, Enough?

I've had a lot of people ask this question with regard to all the new apartment buildings being built in the Appalachian region (and around the country). When are we going to hit a ceiling in the residential rental market? When is enough, enough?

People ask, "you see that new proposed project for 150 new residential units?"
And, "they're adding 50 units to that other complex - how do you think that will go?"

The simple answer is that I don't know. But just like the housing bubble, there is a limit. Everyone can't decide that building townhouses and apartments is where all the money is being made and jump in head first.

Here is a great article about Washington DC that explains where we could be headed in the Appalachian region if overbuilding of apartments continues...

Washington is poised to be one of the only major U.S. cities with a decline in apartment rents this year after a surge in construction outpaced job growth, leaving the nation’s capital with a glut of properties.

The Washington metropolitan area, including the suburbs of Maryland and Virginia, will see average rents decrease as much as 2 percent, making it only market other than Detroit to have a drop among the top 20 U.S. cities, according to Delta Associates. Rents will fall further in 2014, data from the Alexandria, Virginia-based property-research firm show.

Washington is at the forefront of a nationwide surge in apartment construction, as home foreclosures, stricter lending standards and a growing number of young adults forming households create the highest demand for rentals in a generation. Work on U.S. multifamily homes jumped 31 percent in March to an annual rate of 417,000, the most since January 2006, the Commerce Department said last week.

“Everyone around the country is really watching D.C. because it’s on the front wave of all these markets -- all the supply is coming back,” said Jay Denton, vice president of research at Axiometrics Inc., a Dallas-based multifamily research firm. Investors are looking “to see how it could play out if there isn’t enough demand for the new supply.”

Real estate investment trusts including Equity Residential (EQR), whose chairman is billionaire Sam Zell, and Home Properties Inc. (HME) are selling buildings in the region as more competition looms. About 30,211 apartment units are under construction in the Washington area, more than half of which will open this year, according to Delta Associates.

Budget Cuts

Job growth in the region, which is heavily focused on the government, has been too weak to support the construction, said Greg Leisch, chief executive officer of Delta Associates. Federal contracting has declined by $7 billion in the last two years and the spending cuts known as sequestration have limited employment and demand for rentals, he said.

“The supply would have been consistent with Washington’s job performance had the federal government not shrunk,” said Leisch, who expects the oversupply to be temporary. “In the new world with austerity and sequestration, it’s too much supply.”

Washington-area building began booming in 2010, after rents during the real estate crash fell half as much as in the rest of the country and began climbing toward a new peak sooner. That year, developers began work on 5,186 new apartments, and the region was among the top three U.S. markets for employment growth, according to Axiometrics.

New Units

In 2011, construction started on an additional 13,606 units, including 458 new apartments at CityCenterDC, a $700 million retail and residential project on the site of the former Washington Convention Center, which is being built by Houston- based office developer Hines.
“During the downturn, everybody knew that was the place to be,” Denton said. “But then that becomes the problem -- when everyone thinks that’s the place to be.”

 

The Washington area tops the nation in the number of apartments in the pipeline for development, while it ranks 11th in job growth, Axiometrics said. The region added 39,700 jobs in the 12 months through February, a pace that signals there will be 2.8 new jobs created for every new apartment being developed, among the lowest ratios in the country.

 

“We need job growth to double that for it to be a healthy relationship,” Denton said.
In New York, there will be 8.3 new jobs for every new apartment unit under construction and in Houston, the fastest- growing employment market in the country, the ratio is 15.6 new jobs to apartments, according to Axiometrics.

REIT Decline

Concerns that rising construction nationwide will lead to excess properties has contributed to a 2.3 percent drop in shares of apartment REITs in the 12 months through yesterday, the only property type to decline, according to data compiled by Bloomberg. The worsening performance by equities led Lehman Brothers Holdings Inc. to abandon plans for an initial public offering of apartment owner Archstone last year and instead sell the company to Chicago-based Equity Residential and AvalonBay Communities Inc. (AVB) of Arlington, Virginia.

After announcing the deal in November, the two REITs moved quickly to reduce their exposure to the Washington market. Equity Residential, the largest publicly traded apartment owner, sold the 914-unit Crystal Towers in Arlington in March. It also agreed to sell six other properties, totaling more than 1,700 units, in the region in January as part of a $1.5 billion portfolio deal with Goldman Sachs Group Inc. and Greystar Real Estate Partners LLC.

Crystal House

AvalonBay, the second-biggest apartment REIT, last month sold the 828-unit Crystal House that it acquired in its hometown through Archstone. It also sold the 564-unit Avalon Decoverly in Rockville, Maryland, part of which it acquired in 1995. It built the rest in 2007.

Jason Reilley, a spokesman for AvalonBay, declined to comment on the sales. Marty McKenna, a spokesman for Equity Residential (EQR), didn’t return a call for comment.

David Neithercut, Equity Residential’s CEO, said on a conference call after the Archstone deal was announced in November that while the purchase gave it more properties in the Washington area at a time of increased supply, “there have been bumps in the road from time to time over the years in this market but over the long-term, the greater D.C. market has been a terrific performer and should continue to be such.”

Scaling Back

Other companies are also seeking to reduce their presence. Home Properties (HME), a Rochester, New York-based REIT that owns apartments mostly in the mid-Atlantic states, announced the sale of its 450-unit Falkland Chase apartments in Silver Spring, Maryland, for $98 million this month. It wants to lower its exposure to the D.C. area to 30 percent of its net operating income from the 34 percent it had last year, according to Rod Petrik, a REIT analyst with Stifel Nicolaus & Co. in Baltimore.

“The state of the D.C. market, given the exposure of all the public companies, is probably going to be front and center in the earnings calls,” when apartment REITs announce first- quarter results this month, Petrik said in an interview.

REITs own close to 62,000 apartment units in the Washington area, or more than twice as many as they do in any other metropolitan region, according to Axiometrics. The publicly traded landlords are also developing the most units in Washington, with 2,947 under construction.

Nearing Peak

Deliveries of newly constructed apartment properties are expected to peak in the fourth quarter with 5,000 new units, before tapering to fewer than 400 each in the second and third quarters of 2015, according to Delta Associates. The region has historically been able to absorb about 1,425 new units per quarter in the last 18 years, according to Delta.

“It’s a supply problem and not a demand problem, which is the better kind of problem to have,” Leisch said. “When you have a demand problem, you’re called Detroit. When you have a supply problem you generally have a market that is attractive to investors.”

Buyers are still paying top dollar for apartment properties in the region as they bank on better times once the oversupply has been absorbed. Dweck Properties Ltd., which purchased Equity Residential’s Crystal Towers complex, paid $322.3 million, the largest amount ever spent on a single apartment property in the Washington region, Delta Associates said. Also last month, JPMorgan Chase & Co. bought the newly constructed 125-unit District building at 14th and S Streets for $76 million, or $608,000 per unit, another record, according to Delta.

Cap Rates

The dollar volume of Washington-area apartment-building sales increased 22 percent last year to $6.08 billion, according to data from New York-based research firm Real Capital Analytics Inc. There were 126 properties that changed hands, the most since 2007. Buildings in Washington proper traded at an average capitalization rate of 4 percent, the lowest the firm tracked since 2005. Cap rates are a measure of investment yield that fall as prices rise.

“If you look at it over the long run, we’re very comfortable,” said Sylvain Fortier, an executive vice president at Ivanhoe Cambridge, the real estate arm of Caisse de Depot et Placement du Quebec, Canada’s largest pension fund. It teamed with Goldman and Greystar to buy the apartment units in the region from Equity Residential.

“Will there be an impact the morning 500 new units open in the market? Probably,” Fortier said. “But in the longer term it’s OK. It doesn’t concern us.”

Charlotte Powell, a New York-based spokeswoman for JPMorgan Asset Management, which oversees the division handling real estate purchases, declined to comment. Ralph Dweck, a principal at Washington-based Dweck Properties, didn’t return a phone message.

Financing Deals

William Walker, chief executive officer of Bethesda, Maryland-based commercial lender Walker & Dunlop Inc., which financed the Crystal House acquisition, said his firm continues to fund deals in the Washington area, even as there will “no doubt” be a “glut” of apartments in the next 12 to 18 months.

Job growth through the private sector, as well as the omni- presence of the government and the procurement jobs related to it, means apartment properties can achieve more than enough cash flow required to service the debt, even at record prices being paid today, Walker said.

“We’re happy to do it all day long,” he said of multifamily financing in the region. “We’d do it till we’re blue in the face.”

Washington’s apartment market should be back to normal levels by around 2016, with annual rent growth of more than 4 percent, once the excess supply has been absorbed, said Leisch of Delta Associates. His firm forecasts an average of 48,000 new jobs added annually over the next five years, with a peak of 63,000 jobs added in 2016, just as the newly built supply becomes scarce.

“This stuff moves in cycles,” Leisch said. “The apartment market will be just fine in a couple of years.”

Source: Bloomberg
The reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net

2.0 Version of Website Unveiled

A 2.0 version of the T. C. Lewis & Co. website is being unveiled in a few days, and we wanted to give a preview to our newsletter readers. Please feel free to take the new site for a spin and see what you think.

The new site has a few highlights to note:

-It is designed on a platform that operates better with Safari browser users and Apple products in general, including the iPad and iPhone.

-The site still features a mobile site that will automatically generate for visitors from a mobile phone, but now has the option to view the full site if visitors prefer

-It provides for easier access to the mobile search app for free download right on the homepage.

-The site brings searching all properties for sale or lease in our areas of coverage to your fingertips for all of East Tennessee, Southwest Virginia, and Western North Carolina. Check out the 'My TCL Account' button at the top of the page to setup your own password protected account for viewing and saving properties for review.

-It features a 'company news' section to keep visitors in the know about the goings on inside the company.

-The site discusses expanded services and more in-depth detail of exactly what we have to offer, as well as maintaining an ease of operation and flow to find exactly what you want to see quickly and efficiently.

Thanks for keeping up with us via newsletter, and please enjoy the new site. We hope that it makes your online experience with us even better. Feel free to share with friends and family, and let us know if you find kinks in the site. We are still making tweaks and expanding the site as the company continues to grow and expand.
www.TCLewisProperties.com

Where Americans are moving to and from...

If you left the United States for a job abroad in 2012, there's a good chance you ended up in Germany.

UniGroup Relocations, moved 573 people to Germany last year, 29% more than to the United Kingdom, the second most popular destination, according to a report released Tuesday. And the relationship was reciprocal: Of foreigners migrating to the United States, Germany was the second most popular country of origin."

"[The] international migration study offers a unique perspective into what is happening with overall migration patterns to and from the U.S.," said Rich McClure, CEO of UniGroup Relocations.

One of the largest moving companies, many of UniGroup's international moves are corporate relocations, which reveal where firms are investing manpower. They also reflect the burgeoning economic recovery, as the total number of moves increased for the second year in a row after declining in 2009 and 2010.

"During the first and second years of the recession, there were steep cutbacks in corporate relocations," said McClure.

Many of the moves from the United States to Germany involved the U.S. military, as more than 50,000 members of the armed forces are stationed in the country. Foreigners moving to the United States were most likely to arrive from the United Kingdom.

But the hottest markets for migration are countries on the Pacific Rim. United's moves to that region have jumped by more than 10% over the last two years due to "an uncertainty about the U.S. economy," said McClure. Until things stabilize, he thinks many U.S. companies will focus on growing their overseas subsidiaries and invest human capital accordingly.

Australia, which has seen a recent boom in energy production and mining, finished third among people leaving the United States.

United Van Lines, the sister company to UniGroup, released data on domestic migration earlier this month. United's clientele tends to skew wealthier, but McClure says the company's report tracks closely with the Census Bureau's data on U.S. migration and population estimates.

Washington, D.C. had the highest proportion of people moving in rather than leaving. Corporations have been steadily expanding in Washington, as more companies - especially defense contractors, banks, pharmaceuticals and health care providers - open branch offices to be closer to the federal government, which is the source of much of their revenues. This was the fifth straight year Washington has had the highest ratio of people moving in to those moving out.

Oregon was the second most popular destination, followed by Nevada, North Carolina and South Carolina.

As for the states Americans were leaving? New Jersey topped the list, followed by Illinois, West Virginia, New York and New Mexico.

Source: Les Christie, CNN Money, January 30 article

Asheville Touted as Innovation Ecosystem

Can other cities learn a lesson from Asheville’s new emphasis on business innovators and start-up risk-takers?

The National League of Cities is blogging today about Asheville as a case study for best practices in promoting entrepreneurship.

Asheville economic developers were invited to present at a panel discussion along with Boston and Beaverton, Ore., a Portland suburb, at the annual Congress of Cities held in Boston in late November.
Ben Teague, executive director of the Economic Development Coalition of Asheville-Buncombe County, and Pam Lewis, the coalition’s director of entrepreneurship, outlined what Asheville is doing differently to create “an entrepreneurial eco-system.”

“A lot of cities were impressed with our going to South-by-Southwest as a creative way to do marketing,” said Lewis, who led a local delegation to the annual innovation conference in Austin, Texas, touting Asheville as an up-and-coming place to do business.

The case study outlined Asheville’s new emphasis on entrepreneurship in the past year.

“We pick cities and regions that are developing innovative models to strengthen their local economies,” explained author Katie McConnell, a senior associate with the league’s Center for Research and Innovation.

So far this year, the league has focused on economic development in case studies on just four cities: Asheville, along with Toledo, Baltimore and Longmont, Colo.
The report focused on Asheville’s identity as a foodie destination and the booming micobrewery business. Also noted was the Asheville Area Chamber of Commerce’s intentional focus on connecting innovators and the plans for a new Technology Accelerator this summer in downtown Asheville.

“I think what’s particularly striking about the Asheville region is the number of partnerships and stakeholders that come together to make a more friendly environment for entrepreneurs,” McConnell said.

The report notes a slew of activities geared toward entrepreneurs, including Ignite Asheville and Startup Weekend Asheville.

For business and real estate information, please contact T. C. Lewis & Co's Asheville office at 828.283.0433

Credit: Dale Neal (Asheville Citizen) and Katie McConnell
Read Katie's blog here: http://citiesspeak.org/2013/01/04/asheville-nc-focusing-on-its-strengths/

Home Building at 4 Year High

The pace of home building rose to its highest level in more than four years in October, according to a government reading issued Tuesday.

The Census Bureau report showed builders started construction at an annual pace of 894,000 homes last month, up 3.6% from the pace in September. Economists surveyed by Briefing.com had forecast a slight slowdown in building.

"The further rise in housing starts in October confirms that the previous month's very strong gain wasnot an unsustainable surge," said Paul Diggle, real estate economist with Capital Economics. "It's clear that the homebuilding recovery is gathering a real head of steam."

The stronger-than-expected report came because of a surge in construction of buildings with five or more residences in them. Single-family home starts remained little changed from September. But the September and October readings were the two best months for single-family home starts since 2008 as well.

Applications for building permits slipped 2.7% to an annual pace of 866,000. Despite that decline, the October reading was stronger than any month other than September over the course of the last four years.

Housing starts have soared about 42% from year-earlier levels, while permits are up about 30%. Joseph LaVorgna, chief U.S. economist for Deutsche Bank, says the recovery in housing is coming at a critical time for the overall U.S. economy, as the lift it was getting from exports and capital spending by businesses had started to slow.

The housing market has been showing numerous other signs of recovery in recent months. Demand for homes have been helped by mortgage rates at record lows.

The Federal Reserve's decision to buy $40 billion in mortgages every month is likely to keep rates low for the foreseeable future. The low mortgage rates, coupled with affordable housing prices and an improving jobs market have helped to restart home sales.

Foreclosures have fallen to a five-year low, reducing the supply of distressed homes available on the market. And four years of depressed levels of home building have cut the supply of new homes on the market to nearly record lows, according to a separate government report.

All these factors have helped to lift home prices and get builders back building again. So Tuesday's report is just one more sign that the long-awaited housing recovery is taking hold.

If you're interested in more information about the real estate outlook locally, please contact your nearest T. C. Lewis & Co. office. Or, if you're interested in construction, T. C. Lewis & Co. is now accepting clients for Fall 2013 start dates.

Source: CNNMoney's Chris Isidore

Your Real Credit Score

The credit score you buy may not be the credit score your lender uses when you apply for credit and, fortunately, most of the time it doesn't matter. However, for what the Consumer Financial Protection Bureau (CFPB) considers a "substantial minority," the difference could make or break a mortgage application or application for other credit. In from 1 percent to 24 percent of the time, the difference between consumer-purchased and creditor-purchased credit scores could toss consumers into one, two or more different credit-quality categories. Which way the score goes, better or worse, often isn't clear. The CFPB's new "Analysis of Differences between Consumer- and Creditor-Purchased Credit Scores" is a follow up to CFPB's report earlier this year, "The Impact of Differences Between Consumer- and Creditor-Purchased Credit Scores," which revealed the different sources and types of credit scores and potential for harm associated with the differences. The new report attempts to quantify the impact of those differences and says consumers do not know ahead of time whether the scores they purchase will closely track, vary moderately or vary significantly from a score sold to creditors.
What's a credit score? Credit scores are a numerical representation of your credit report. The lower the score, the worse your credit and the greater your risk for default on credit. Conversely, the higher the score, the lower your risk. How you handle your credit raises or lowers your score. Lenders widely use credit scores to make a decision about your application for most types of credit, including mortgages, auto loans, credit cards, personal loans and others. Credit scores are also used to make decisions about insurance, rental applications, even jobs. Scores also determine if your creditor will raise or lower your credit limits, change your interest rate or cut you off from existing credit. High credit scores will also get you the best credit rates and terms, while low scores will make you pay more for credit - if you can get it. By federal law, credit scores are free under certain circumstances, typically after the fact, say, because a lender rejected your application. Otherwise you pay $10 to $20 for the privilege of buying your score, often from companies that attempt to sell you other questionable services bundled with your credit score purchase. Purchased credit scores aren't gospel CFPB's new report advises consumers not to rely upon purchased credit scores as a guide to how creditors will actually view their credit quality. Because credit scores can vary from the scores actually used to approve or decline credit, consumers have no way of knowing if the purchased scores are the same, higher or lower than those used by creditors.  • If a purchased score leads the consumer to overestimate lenders' likely assessment of his or her creditworthiness, the consumer might be likely to apply for credit lines that would not be approved, with a cost of wasted time and effort on both the consumer’s and lender’s part.  • A consumer who underestimates a lender's likely assessment of his or her creditworthiness, might fail to or delay applying for credit to buy a house or a refinance. A consumer might also apply to lenders who offer less favorable terms than the borrower is qualified for or accept a less favorable offer than necessary. The study also admonishes and advises firms selling scores to consumers to disclose to consumers those credit score differences and the potential impact from those differences. Given the CFPB's new oversight on consumer financial matters, including the operations of consumer credit reporting agencies, regulations to mandate such disclosures are likely. The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Consumer Financial Protection Bureau (CFPB) to compare credit scores sold to creditors and those sold to consumers by nationwide credit reporting agencies to look at the differences. CFPB analyzed credit scores from 200,000 credit files from each of the three major nationwide CRAs: TransUnion, Equifax, and Experian. CFPB found:  • Different scoring models would place consumers in the same credit-quality category 73 to 80 percent of the time. That is, if a consumer had a good score from one scoring model, the consumer likely had a good score on another model.  • Different scoring models would place consumers in credit-quality categories that are off by one category 19 to 24 percent of the time.
• Different scoring models would place consumers in credit-quality categories that are off by two or more categories from 1 to 3 percent of the time.

For more information on credit scores and improving your score, contact a T. C. Lewis & Co. office near you.

Source: Realty Times, Broderick Perkins

Guts = Glory, Real Estate Comeback

The expected sale of a hulking, brick office tower in Midtown Manhattan is on track to net its seller the largest dollar profit to date on any single property that was purchased during the financial downturn.

But it isn't one of the big names in real estate, like Sam Zell or Goldman Sachs, that is poised to rake in hundreds of millions of dollars in profit from a quick sale of the copper-crowned One Worldwide Plaza. Instead, it is a group of investors led by a relatively obscure New York landlord, George Comfort & Sons Inc., which purchased the building in 2009 for about $600 million.

Rob Bennett for The Wall Street Journal

 

George Comfort & Sons is expected to realize a large profit from the sale of One Worldwide Plaza.

George Comfort, which declined to comment on the sale, has received multiple preliminary bids of well over $1 billion, according to real-estate executives informed of the status. The seller's target price for the 1.8 million-square-foot tower on Eighth Avenue is $1.5 billion, and final bids are due Friday.

As commercial-property values continue to rise in major cities around the U.S., gutsy investors who bought office buildings, hotels, stores and apartments when the commercial real-estate market hit bottom following the recession are making huge profits by selling them.

Values of top-quality properties, which fell 38% in the early years of the downturn, are now within 4% of the record highs hit in 2007, according to an index by real-estate research firm Green Street Advisors Inc.

The increase in values is being fueled largely by ever-lower interest rates, which has made debt financing cheaper and helped push up demand for real estate by investors searching for investments with good yields.

At the same time, more credit is becoming available. At the beginning of the year analysts projected that $30 billion to $40 billion of new commercial mortgage-backed securities would be issued in 2012. Now some analysts are saying the figure could rise as high as $45 billion.

The current cast of bottom feeders that are taking advantage of the sharp rise in prices looks different from those that swooped in during the prior real-estate mess in the early 1990s. Back then, it was largely big institutions like Goldman Sachs Group Inc., General Electric Capital Corp. and a venture of Mr. Zell and Merrill Lynch that purchased big portfolios of distressed debt and properties from lenders and the U.S.-controlled Resolution Trust Corp.

This time, while some big names like Starwood Capital Group and Blackstone Group LP did buy at the bottom, much of the quick selling is being done by lesser-known midsize players like George Comfort, which relied on their knowledge of local markets to snap up what are turning out to be huge bargains. Others include San Francisco-based TMG Partners, which made a set of well-time investments in that city's South of Market neighborhood; Savanna, a New York company that bought numerous older Manhattan office buildings; and Pacific Urban Residential, which turned around a big profit on a complex of apartment buildings in the Seattle area.

"We were not quite sure when [the economy] would get better, but we knew at those prices, we couldn't lose money," said Michael Covarrubias, TMG's chairman.

One reason for the success of these investors is that many of the pension funds and insurance companies that were active in the boom pulled back from real estate when prices were cheap. Also, some of the larger private-equity firms stayed on the sideline when the market hit bottom.

The opportunities to buy were "risks that institutional capital was not willing to take in 2009 and 2010," said Dan Fasulo, managing director at the research firm Real Capital Analytics Inc.

Mr. Zell and others have acknowledged that they were expecting lenders to dump assets in the same way they did in the early 1990s. But that never happened in large part because banks and other financial institutions this time were much more prone to extend troubled loans rather than foreclose.

Since hitting their trough in May 2009, commercial-property values have risen 57%, according to Green Street. To date, the largest single-building turnaround since the recession was the 42-story Seattle office building that was headquarters of Washington Mutual Inc. until the bank failed and vacated the tower, according to Real Capital Analytics. Northwestern Mutual Life Insurance Co. bought the building in 2009 for $115 million, filled it with new tenants and sold it in April for $480 million.

Prices haven't rebounded broadly, as properties in suburbs and smaller cities generally are trailing those in prime locations like New York, Chicago and San Francisco.

In those cities, high demand has pushed initial yields on some properties, particularly apartment buildings, down to 3% and even lower. High demand has led owners to put buildings up for sale. For example, Sony Corp. recently tapped Eastdil Secured LLC to market its Midtown Manhattan office tower.

George Comfort increased the occupancy of Worldwide Plaza, which was half vacant when the firm bought it, by leasing most of the empty space by luring Nomura Holdings Inc. from downtown Manhattan.

That empty space was a big reason the price was so low. "There were very, very few that would even look at that deal who would accept that kind of risk," said Douglas Harmon, of Eastdil, which is marketing Worldwide Plaza.

But values of properties in major cities also have been increasing faster than the buildings' income streams. And in some cases, investors didn't do much to the properties and still reaped big profits from selling them quickly.

For example, a venture of TMG and DivcoWest recently sold an empty office building in San Francisco's gritty mid-Market neighborhood to Dolby Laboratories Inc. for $110 million, more than double the amount they paid just last year.

Source: Rob Bennett for The Wall Street Journal

The Upside of a Down Market

The real estate market experienced such a prolonged downturn that it created a number of new opportunities for those who stopped wallowing in misery and got on with their business. Few areas were hit as hard as Las Vegas yet many investors and realtors are thriving. So many real estate agents left the business that it reduced competition among those who remained. It also allowed the truly skilled to standout. Some whined about the lost commissions of yesterday while others adapted by becoming experts in foreclosures, short sales, and property management. Guess which ones are thriving? Those investing in real estate experienced a similar shakeout. The pseudo-investors and part-time builders and Realtors who flipped houses like pancakes and later lamented the loss of double-digit monthly appreciation are gone. What remains are a lot of true investors who make decisions based on hard facts and numbers that pencil out. Good riddance to those who subscribed to the greater fool theory of finding someone even more reckless than them to pay ridiculous prices for what often turns out to be a terrible product.

Lately I’m seeing something I thought would take a decade or more – stalled projects are coming back to life. Whether investing in a low-cost fixer-upper or a multi-billion dollar project the factors are the same, only the scale is different. There is the cost of acquisition, carrying costs, and development costs. Many of these stalled projects wound up in foreclosure where investors were able to buy them at a fraction of their original price. Interest rates are at historical lows which greatly reduce the carrying costs. There is such a surplus of construction labor that those prices have been slashed as well. This means that the finished product can be sold at a realistic price. When a white elephant comes back to life it changes the way people feel. Who wants to invest in the vicinity of a failed real estate project? When work begins again and a development is completed it contributes to increased optimism. When people are more optimistic they buy and the market improves.

I’m not suggesting that things are going to instantly turn around, and we shouldn't expect instant gratification - that's what got us in this mess to begin with. I am saying we are rebounding. There is no sign of the irrational exuberance that characterized the real estate bubble. The market is strengthening in a way that should be sustainable and that is good for everyone.

-Richard Warren (Las Vegas, NV Broker and Investor) contributed to this post

International Investing Mistakes You Don't Know You're Making

What's scarier than making a real estate investing mistake? Easy: It's making a real estate mistake you don't know you are making.

Most buyers looking at property opportunities abroad are full of confidence. The relatively affordability provides strong motivation and they feel sure they'll be able to get a good deal. After all, they've bought property successfully in the US. They know how real estate markets work.
Trouble is; things are a little different in many international markets. If you apply the same strategies as back home, you may inhibit yourself from getting a great property deal. How do I know this? Well, because I made a boatload of mistakes when I first started investing in real estate internationally. But now, with the benefit of hindsight and after working with other international buyers and sellers, along with managing properties worlwide, I've come up with some solutions.
The good news; the mistakes are not that hard to fix. Take a look to see if you're at risk of making one of these common mistakes:

Mistake 1: Only viewing real estate with one agent
This may work in the US where agents are tapped into the MLS - effectively a giant shared database of properties for sale on the market. But in many international markets, MLS type databases do not exist. Instead, each agent maintains his or her separate, private listing database. So by limiting yourself to one agent you are unlikely to see all there is for sale.

It's also important to realize that in many emerging markets anyone can sell real estate. So yes, this means chasing down a listing given to you by your hairdresser or going on a detour to see a property with your taxi driver.
The fix: Book a property viewing with every active real estate agent. Then spread the net even further and tell everyone you meet that you are in the market for a property.

Mistake 2: Buying a vision; not reality
You stand in awe of the glossy rendering. You count out the 18 holes of the golf course on the master plan in front of you. You imagine having a massage at the planned "Wellness Center" to ease out those golfing-induced knots in your shoulder. You start to schedule monthly visits to your vacation home. After all when the new road gets built it will only take an hour to get to your property from the airport …

Hold on a moment. You're about to buy the developers vision of what their project may look like in the future. You've looked past the current reality. Look around. How much of the proposed master plan has actually been completed? Take a worst case scenario and ask yourself how much your vacation property will be worth if the golf course never gets built, the wellness spa never opens and the road from the airport is never paved?
The fix: Pay based only on what you can actually see and touch. Don't pay the price for what your property may be like in the future, if all goes well.

Mistake 3: Catching a case of land fever
Land fever … sunshine fever … we've all had it at some point in our international investing careers. I mean how can you not feel that tingle of excitement when you compare the prices with back home? The anticipation of ownership builds, you see other people hunting down the deals, and suddenly you find yourself caught up in a panic fueled land grabbing frenzy. After all they're not making any more beachfront are they?
The fix: Slow down. Realize that you've let your emotions take over. Start to engage your head. Let the facts, hard data and dry mathematics drive your investing strategy, not hype and raw emotion.

Mistake 4: Not leveraging the current buyers market
The financial crisis has been tough on many international real estate markets. Inventories are high and the gap between asking prices and sales prices has widened considerably since 2008. Use this to your advantage. Remember that many sellers like to keep their 'official' prices firm but will offer incentives on the side. It means they can lower their prices without actually lowering their prices.
The fix: Negotiate hard, especially if you are a cash buyer. The market is advantageous to buyers so use that to your advantage.

Mistake 5: Not getting good legal advice
I've seen buyers purchase property without an attorney. I've seen them agree to use the seller's attorney or the real estate agent's attorney. I've seen them hire attorneys they are unable to communicate with due to a language barrier. These are all big mistakes that can create problems down the line.

You must have the title researched by an independent attorney who is representing your interests before you purchase in any international real estate market. Title insurance is not a requirement in many countries, but I'd strongly recommend it. The process of applying for title insurance will force your attorney to dig deeply into the title history of your proposed purchase. Insurance is typically inexpensive at a cost of around 1% of the insured amount in most regions.
The fix: Hire a competent independent attorney to conduct your due diligence and back this up by applying for a title insurance.

In short, international real estate investing can be an unbelievably profitable and enjoyable experience. But, you can't let your excitement get the better of you. There are a lot of companies in the USA (including T. C. Lewis & Co.) who can point you to the right people in regions of interest around the world, so use them before you plan a trip to visit your dream property abroad.

Follow on Social Media for First Dibs on Properties

If you're in the market for real estate and have already checked the local realtor listings without finding the right property, you don't want to go back to Zillow or Trulia every day to see what's new. And, you definitely don't want to look at the homes books in your area because they're always at least 45 days outdated when they first come out because of printing and delivery timelines. Instead, check out www.TCLewisProperties.com and/or follow a few local social media-savvy realtors who tweet or post newly listed properties on Facebook. At the T. C. Lewis & Co. website, you can create an account for yourself with no strings attached that allows you to receive newly listed properties matching your criteria as soon as they come on to the market, as well as saving favorites to revisit and comapre. And, you can search using a map tool, by type (home, condo, sale, lease, commercial properties, etc), by street, MLS number, and more. We currently provide searchable properties for all of Northeast Tennessee, Southwest Virginia, and Western North Carolina - and as we expand the business, we expand the areas that can be searched for properties. You can inquire from each listing for more information, schedule an appointment to see the property, or share the property with friends or family on social media sites of by email right on the property page.

Tenants or prospective tenants can search properties for lease on our site - both commercial and residential properties. We tweet updates of new properties, post them to Facebook, and put them on our site as soon as they become available. We also update existing tenants on our social media sites seasonally.

So, to stay up to date on the newest properties hitting the market before they get picked over, follow T. C. Lewis & Co. on twitter by going to www.twitter.com/tclewisco (@tclewisco). Or, 'like' us on Facebook at www.facebook.com/tclewisproperties. If you've already signed with a realtor you can still use this technique to feed them interesting listings from our office. Happy 4th of July!

How to Retire Internationally on a Budget

One corner of France is so tucked away that even the French find it hard to place on a map. The Béarn region has a long and colorful history, from Roman times to the Renaissance to the days of Belle Époque and then Art Deco. This lovely region is often overlooked by foreigners, even though the locals are very welcoming of newcomers. This land of rolling wooded countryside, friendly people, and delicious wines and food is also notable for another reason: It qualifies as one of the most appealing and affordable retirement choices in all of France. This is a region of France where a retiree on a budget of as little as $2,500 per month could consider settling down to enjoy the best of French country life.

The Béarn region is the birthplace of a great French king and a one-time seasonal favorite locale for royalty of all nations. It was once named as “the center of the sporting world,” and is home to the first-ever Grand Prix and the Wright Brothers’ flying school. The Béarn area is also where Napoleon founded the first national stud farm and the British designed beautiful gardens and parks. Rightly proud of its past, this area has also embraced the present and now has impressive 21st century architecture, technology parks, sporting facilities, and a trailblazing communications infrastructure.
The Béarn region is located in the northwestern corner of the Pyrenees-Atlantic department in the region of Aquitaine in southwest France. The majestic mountains of the Pyrenees dominate the views, and beautiful beaches are just a short drive away. There is 3,000 meters between the highest point in the Pyrenees and the lowest on the Plein de Nay. But despite all this variation in geography, the Béarn has a gentle climate. During the winter months, temperatures hover between 32 and 42 degrees Fahrenheit. Springtime is mild, and summers are generally a pleasant 77 degrees. The even precipitation and regular sunshine make this a beautifully verdant region and explain the area’s success in agriculture and wine-growing. There is an amazingly wide variation of plant life. You’ll see palm trees swaying alongside pine trees with the snow-capped Pyrenees rising up behind.

The capital city of Pau is often called the green city or garden city and has one of the highest ratios of greenery per square meter per person of any city in Europe. Pau is also sometimes called English city, referring to the English who settled here during and after the Napoleonic Wars. They were generally well-received, as are English-speaking expats today, and left their mark on the architecture, gardens, and parks that flourish still in this city of 85,000. With so many pretty little towns in the region, it can be difficult to choose a favorite. Morlaas, however, stands out. It is not too big or small and is very welcoming to foreigners and retirees. Plus, Morlaas offers every facility and service you could need, has an interesting historical center, and is set amidst beautiful countryside. Morlaas lies 12 kilometers to the north of Pau, overlooking the Plain of Pau. To the south are views of the Pyrenees, and to the north the undulating wooded farmland continues on toward Bordeaux, 200 kilometers north. Some 4,100 inhabitants, known locally as Morlanais, live in this town that is connected by bus and road to Pau city center, and it’s just 15 kilometers from Pau airport. After the Roman city of Beneharnum was destroyed by the Vikings in 840, Morlaas became the capital of the ancient province of Béarn. During that time, it even had its own mint. Money from Morlaas was a sought-after commodity and used in the Navarre region, Aragon, and Italy. Morlaas remained the capital until the 12th century, when Orthez took over. Since 1154, Morlaas has been on one of the St. James of Compostela routes and was one of the original stopping points for pilgrims.

Today’s travelers are welcomed at a small dormitory-style resting place or the municipal campsite. As you drive into town, off to the right is the main sporting area (rugby and soccer), the open-air market, and the farmer’s market. On through toward the main high street you pass centuries-old buildings before coming to the steps of the 12th-century Romanesque gateway of Ste. Foy church. To the side is the main square surrounded by ancient buildings that now house the post office, the Mairie’s office, and the town hall.

You’ll find everything you need for daily living in Morlaas, including three large supermarkets and a medical center with family doctors, radiologists, physiotherapists, and dentists. There’s also a veterinary center, an animal protection center, schools, banks, bakeries, butchers, newspaper shops, and florists. Morlaas has a very active community center offering classes ranging from classic dance, to swimming, to guitar. There’s something for everyone and every age and interest.

The Béarn area’s position is one hour from the sea and one hour from the mountains, with lots to do in between. Plus, the people are friendly and very open-minded to expats, and there’s virtually no crime. The cost of living for the quality of life would be hard to match elsewhere.

There are many options for Americans looking to retire or invest internationally on a budget. T. C. Lewis & Co. can help advise consumers of the pro's and con's of investing in a variety of domestic and international regions, so please don't hesitate to contact us.

Source: Kathleen Peddicord, US News

Improvements that Entice Buyers

Over the last few years, some homeowners have opted to stay put for the time being and that's caused them to consider remodeling instead of moving. But most homeowners know that one day they might need or want to sell their home so which remodels help to add value and entice buyers? There are a few areas that are better than others to improve. It's pretty easy to understand why these home remodels are enticing buyers when you consider the way the housing market has been for the past several years. Here are a few of the renovations that are adding value to homes and creating appeal from home buyers.

Aging in Place
With the tough economic times, more short sales and foreclosures, extended families are combining homes and reducing their cost of living by residing together in one larger house. The National Association of Home Builders found that 62 percent of builders in a survey were working on home projects that were helping families "age in place". Included in these types of remodels are placing a bedroom on the entry-level of a home, wider doorways that would accommodate a wheelchair, and overall modifications for the elderly including reducing steps outside and inside. At one time, these designs might have been unattractive but with many Americans wanting to "age in place" and extended families living together, remodels like these are becoming common, necessary, and valued.

Savvy Kitchen
The great rooms that bring the kitchen and the eating areas together are still popular. More space is preferred so families can have room to sit and spend time together over a meal even if that means having less space to actually prepare the food. Cabinets and shelving are being customized to suit the homeowners' needs and many are favoring pantries or utility rooms. Kitchens are taking on the look of a chef's cooking space with open shelving and islands to help homeowners be able to quickly prepare meals and still mingle with guests and family.

Totally Wired
Fast-placed, busy buyers who often work from home will find smart homes that are wired and built to handle all the high-technology needs a huge plus when it comes time to market and sell their homes. Another plus is having space-saving workstations in the home. Remodeled homes that feature floor-to-ceiling bookcases and wiring for home offices are increasingly becoming the norm in many homes.

Outdoor Living
This continues to be a popular trend to bring the outside in. Making the most of living spaces, even those in the garage and outside, is a huge benefit. Homeowners are capitalizing on all possible livable space by creating outdoor living rooms complete with wiring for entertainment, cooking, and relaxing. Outdoor furniture is also being featured inside as well as outside the home, blending the line between the two.

Not all remodels add value to the home. The balance of achieving what you like in a home and which improvements can potentially increase the sale of your home, can allow you to make smart home improvement choices. And, try to avoid being so 'user-specific' with changes. Not everybody needs or wants a nuclear holocaust bunker...

Smart Math of Mixed-Use Development

Are cities across the country acting negligently in ignoring the property tax implications of different development types? Joseph Minicozzi thinks so, and he's done the math to prove it. I can only hope that this reaches the desks of the powers that be involved in downtown Johnson City. Maybe a financial implication will provide the city commissioners with the guts they need to make something happen as opposed to continuing with the urban sprawl through Boones Creek and Gray, TN...

Asheville, North Carolina, like many cities and towns around the country, is hurting financially. It’s not that Asheville is some kind of deserted ghost town. Rather, it’s a picturesque mountain city with a population of about 83,000 that draws tourists from all over the world, especially during the leaf-peeping season. But it’s also a city that appeals to its residents, who revel in strolling about a true walkable downtown chock-full of restaurants and retail shops featuring locally grown and crafted products. Downtown is not only one of Asheville’s main draws; it also serves as a major driver in helping the city overcome its budgetary doldrums.

Most of us – city planners, elected officials, business owners, voters, and the like – understand that the city brings in more tax revenue when people shop and eat out more. However, we often overlook the scale of the property tax payoff for encouraging dense mixed-use development.

Many policy decisions seem to create incentives for businesses and property developers to expand just about anywhere, without regard for the types of buildings they are erecting. In this article, I argue that the best return on investment for the public coffers comes when smart and sustainable development occurs downtown.

We’ll use the city of Asheville as an example. Asheville realizes an astounding +800 percent greater return on downtown mixed-use development projects on a per acre basis compared to when ground is broken near the city limits for a large single-use development like a Super Walmart. A typical acre of mixed-use downtown Asheville yields $360,000 more in tax revenue to city government than an acre of strip malls or big box stores.

Here is a breakdown of comparison of the Asheville Wal-Mart Center vs Mixed-Use Center downtown:

If you were a mayor or city councillor facing a budget crisis, this comparison should serve as an eye-opener, both in terms of your policies and your development priorities. The comparison should also get you thinking about not just how you could encourage more downtown development, but also what kind of development could increase the value of buildings in the surrounding neighborhoods.

It’s not just officials in Asheville who should be asking these questions. In the growing number of diverse cities where we have studied this same equation (such as Billings, MT, Petaluma, CA, and Sarasota, FL) we’ve found that the same principle applies: downtown pays. It’s simple math.

The more valuable downtown properties become, the more revenue the city can generate to address its budget gaps, while also serving the best interests of its citizens. Unfortunately, our public officials may not always make their decisions with full knowledge of the trade-offs.

Consider the story of how Public Interest Projects (PIP), a for-profit development company founded in 1990, first came to uncover this economic inequality.

A few years ago, PIP was looking to develop several parcels in a neglected section of downtown Asheville, just off the main core. At the time, it was filled with decaying auto shops, warehouses and semi-industrial space. In other words, it was ripe for mixed-use redevelopment. Unfortunately, while we saw visions of rehabbed living spaces intermixed with retail and office space, the leaders of Buncombe County had other ideas.

In close proximity to the parcels PIP was considering, the county owned a 1.7-acre parcel upon which leaders first announced plans to build a new jail, then, as an alternative, a 24 hour center for emergency vehicles. While few could argue that the community as a whole would benefit from the addition of such facilities, the county’s plan to plunk one of them right in the middle of an area so ripe for re-development didn’t make much sense to us. Although we weren’t on the same page as our county leaders, that didn’t stop us from trying to get them to see things our way.

Subsequently, we embarked on a comparative analysis of the impact of different development types and scales on the county’s tax rolls as a way to demonstrate the comparable benefits of mixed-use development versus the facilities they we considering. We tried to show them the money.

To do that, we set about analyzing various properties within our community to come up with an estimate of what kind of infill development would be feasible for the county’s site. What we found was striking. If the county continued with its plans for building the more objectionable uses, the loss of this property's tax base plus the detrimental effect on the surrounding property's development potential could actually result in a net loss of more than $1 million each year in property tax revenue for local government. That information got the County's attention and good sense prevailed.

Upon realizing that this equation had broader implication, we began applying the same analysis to other key Asheville landmarks. Our next test case involved a comparison of a high-visibility shopping mall located just outside of downtown with a historic downtown building, dubbed the Old Penney’s building, which we had restored into a six-story mixed-use structure. Once we ran the numbers, just as before, the results were dramatic. Whereas the mall, considered one of the county’s biggest revenue generators, yielded $8,000 an acre in annual County property tax, the downtown building’s yield was $250,000 per acre in County property tax.

It’s easy to see how you might now be scratching your head. How can you compare a mall with a building? Is that really comparing apples to apples? The point is that we have been perpetuating an error when it comes to how we think about real estate. Our mistake has been looking at the overall value of a development project rather than its per unit productivity. Especially relevant in these times of limited public means, every city should be thinking long and hard about encouraging, and not accidentally discouraging, the property tax bonus that comes with mixed-use urbanism. Put simply, density gets far more bang for its buck.

For comparison, let’s consider an everyday example of measuring economic value. When we buy our cars, do we make our buying decisions based on the vehicle’s miles-per-tank rating? If we did, we’d all be driving Ford F-150 Lariats that get, on average, 648 miles per tank versus a Prius, which boasts a modest 571 miles per tank. However when we look at the traditional metric for comparison - how many miles-per-gallon each vehicle gets - the value statement changes. The Lariat achieves a mere 13 miles-per-gallon while the Prius cruises along at 51 MPG. And, since you spend less to fill up the Prius, at today’s gas prices it covers 15,000 miles/year at $3,000 less the annual cost ($4,038/$1,029 respectively). We rank the value of our cars this way because we all know the price of a gallon of fuel. Why wouldn’t we do the same with our land? Shouldn’t we value the consumption of our land the way we value a gallon of gas? After all, an acre of land is far more expensive than a gallon of gas.

The flaw of our current property tax system is that when it comes to assessing how much a property owner owes, we place very little value on the land beneath a building as compared to the building itself. Compounding that issue is the fact that if you construct a building without innovative architecture or sustainable materials, you actually benefit by lower tax value. The combination of these two factors creates a disincentive for good architecture. The result is that the community loses, both in terms of the property tax it collects and the long-term legacy of cheap single-use buildings. In basic terms, we’ve created tax breaks to construct disposable buildings, and there’s nothing smart about that kind of growth.

What can we do about it? Moses did not come down from the mountaintop to deliver our current property tax policy on stone tablets. It’s just another rule we impose upon ourselves. And if we recognize that this policy is harming us in some way, it makes sense to change it. We simply cannot afford how the current system creates incentives for suburban sprawl – which is unsustainable both environmentally and, as I hope I have shown, financially. Communities across the United States are going broke, and we can rightly look to our municipal finance systems and our failure to fully appreciate the payoff for density as a big part of the cause. Let’s all do the math so we can make some positive changes in the system because, in the end, downtown pays!

We need incentives for downtown Johnson City re-development - big, financial incentives that the city is going to have to step up and provide. Here's another analyses from 1964 that discusses how 'vertical infrastructure' is taxable when 'horizontal' is not... http://www.masongaffney.org/publications/E3Containment_policies.CV.pdf

Source: Joseph Minicozzi, AICP, Principal Urban3, LLC via http://www.planetizen.com/

Too many potential real estate buyers pay way too much attention to short-term price changes. People are so worried that prices might drop a little and feel that maybe they should wait to buy something. So if you think you can predict the future, follow your beliefs! However, the reality is that the price, within reason, really should be a secondary matter in your search for a good property to purchase.

The main reason that price is less important is that individuals who want to increase their net wealth from real estate ownership, which is the goal of many buyers, should only be purchasing property that they will hold for a long time. The longer the better and a minimum of five years is probably the breakeven point to start building wealth. It is more likely than not that down the road, years after our economy has sprung back to life, real estate prices should be much higher than what people paid for properties in the next twelve months.

In 2020 or 2022, you won’t even remember the 2012-2013 price fluctuations. You’ll just be gloating to yourself how brilliant you were buying into the market ten years ago. Not only will you have purchased a great property at the most affordable pricing seen in decades, but you will probably have locked in an outrageously low interest rate on a mortgage that can be fixed for thirty years!

But, what if you buy and prices drop a little? Who cares! It won’t matter because you purchased a great property that you love for all the right reasons. You want to own real estate and any slight dip in the next year or two should be a wholly irrelevant short-term blip on the radar of a long term real estate holder.

In addition, in many areas right now, your monthly payment for ownership (including principal, interest, HOA fees if any, property taxes, and repairs) may be close to or less expensive than renting. That alone is an amazing turn of events in the history of personal residence ownership. This is more likely true for moderately priced properties. Even expensive, untouchable properties a few years ago are astonishingly affordable right now.

Now this doesn’t mean that it is the right time for just anyone to buy property. If you are not 100% sure you will own the property for a long time, it is probably smarter to stay a renter. If you move often, renting is probably a better option.

Additionally, this doesn’t mean that you can just buy any property to build wealth. You should probably avoid properties that need:
Significant rehabilitation work
Properties in HOAs where the association is in bad financial shape
Properties in areas where there are lots of foreclosures, high vacancy, near lots of buildable land
Areas where the local economy is in desperate shape.

Rarely are those wealth-building purchases. Go for the properties that are in better shape or in more stable areas with jobs and economic development.

For buyers who are too focused on price, are worried about short-term price drops and are holding off on buying, we long-term holding real estate buyers can only say thank you so much! Please keep obsessing over those monthly housing price reports and stay on the sidelines!

With less competition in the market, it makes the process of finding a great home to secure, and with those incredibly low interest rates, only sweeter for the rest of us who are charging forward to buy a property in the best buying environment in a generation!

Rent v Buy? What Should I do?

In having both rental and sales divisions within T. C. Lewis & Co, we are posed the question all the time about whether someone should rent or buy. What are the pros and cons? What should I do? Why? When will this change? Well the answers aren't simple, but one thing is for sure, paying rent is getting more painful for renters across the country in the face of rising demand and tight supply. This isn't as prevalent in the Appalachian region yet, but it will hapen.

Both the commercial and residential real estate markets are seeing increases, and more are expected in the months and years to come.

Office construction starts were at the lowest level since 1960, the oldest data available from McGraw-Hill Construction; and that means there will be less space available for companies looking to rent or expand their operations.

It’s also bad timing for people who have been spooked by, or pushed out of, the residential housing market and have decided to rent instead of buy. Home ownership in the United States is at historic lows, but at the same time rental prices are on the rise. Rent for a primary residence increased 2.5 percent in December, compared to the same month a year earlier, according to the Consumer Price Index. And Reis Inc.’s research shows that rents hit their highest level since 2007 last year, reaching $1,009 a month average rental price. At the same time, the company found, the vacancy rate dropped to 5.2 percent, from 6.6 percent last year.

“National vacancies continued to tighten sharply in the fourth quarter, bucking seasonal weakness typical of the colder months of the year,” said Victor Calanog, vice president of research & economic for Reis, in a report on the apartment sector. “In just two years after hitting all-time highs of 8 percent at the end of the tumultuous year that was 2009, vacancies have not just recovered, they have surpassed previous lows.”

Ironically, rising rents are actually making homeownership more attractive. One study by Trulia.com, a real estate research firm, found that “based on current market conditions, buying a home is cheaper than renting in 74 percent of major U.S. cities.”On the office rental side, this economic downturn has different from past ones, Calanog wrote, “Previous downturns for the office sector were complicated by overbuilding; this time around, the massive decline in aggregate demand at least isn’t weighed down by a supply glut.”

Unfortunately, that means the squeeze is on for renters from all walks of life as vacancy rates drop in the face of further shrinking of supply. Fewer places to rent means landlords have the upper hand when it comes to what they can ask. And that will probably be the case for the next few years, said Mark Stapp, professor of real estate practice at the W.P. Carey School of Business at Arizona State University.

On the residential side, there will be a push toward higher rents for the next two years, he explained, while commercial real estate rental prices may continue to increase for the next three to five years.

“The supply side is so constrained because no body has been building for years,” he said, because of the economy and the difficulties businesses and developers faced getting loans.

While lending is beginning to open up a bit now, it will take years before real estate firms are able to build enough space to meet the growing demand.

It’s good news for landlords, he added, who were forced to make concessions in recent years because of weakened demand, but it will be tough sledding for apartment and office dwellers who have to pay the escalating rents.

Is your rent bill going up?

Source: Eve Tahmincioglu