As the housing industry comes out of its recession, the big public companies have begun amassing land again at a frenzied pace.

Without question, as land prices have come down, more builders are pursuing land deals, some with a vengeance. In the first quarter of its latest fiscal year, Lennar spent $154 million to acquire 3,300 homesites. During the three months ended March 31, Standard Pacific spent $50.8 million on land, versus only $3.7 million in the same quarter in 2009. A few days ago, the Irvine, Calif.-based StanPac purchased 63 lakefront lots in the Rough Hollow community in West Austin, Texas, where it intends to build 2,200- to 3,200-square-foot homes.

“We would have done these deals in 2009, but land opportunities weren’t available,” Scott Stowell, StanPac’s COO, told BUILDER earlier this week. “Now, the curve is shifting towards us; land is breaking loose, finally, and we’re seeing more deals.” The builder expects to spend up to $400 million on land this year.

Also in Texas, Toll Brothers—which already sells out of 10 communities in Dallas-Fort Worth—last week picked up 171 homesites in The Reserve at Colleyville master plan. The Dallas Morning News reported that this was one of Toll’s largest land purchases in 15 years. Since November, Toll has spent over $100 million for 3,000 homesites nationwide.

Builders certainly aren’t alone in their pursuit of land for residential development, either. On Thursday, Forestar Land Partners, a venture joining the owners of the land investment company Foremost Communities and an affiliate of Starwood Capital Group Global, announced it has acquired 422 lots in the New Model Colony master planned community in Ontario, Calif., where Forestar will work with existing land owners to develop infrastructure in order to begin construction of new homes.

In fact, you can’t pick up the newspaper or turn on the TV or radio without reading or hearing about what Gregor Watson, a partner with the California-based real estate fund McKinley Partners, calls “the absolute land rush” among home builders. The Wall Street Journal last week homed in on Pulte, which paid a measly $5.7 million to an investor group to buy 88 lots for a new community in Gilbert, Ariz., it will call Lyons Gate. Dustin Bogue, a partner with Union Community Partners, a real estate development and management firm based in San Jose, Calif., told BUILDER that Pulte also recently picked up a $26 million land deal in the Bay Area.

However, the one builder whose lot accumulation seems to be attracting the most attention is D.R. Horton, which Bogue observed playfully “has been buying land like a drunken Russian sailor.” Other builders and developers, over the past several weeks, have singled out Horton to this reporter as the builder that has been most active on the land front in certain markets. “I’ve noticed it, and I really can’t figure out what they’re doing because no one really knows yet what the impact of the tax credit going away is going to have on buyer demand,” says Homer Williams, a principal with Williams & Dane Development in Portland, Ore.

Horton officials did not return calls from BUILDER requesting comment about their company’s land strategy. And competitors’ perceptions about the builder’s land-buying propensity weren’t borne out in its quarterly financial statement, which it released on Friday morning. In the three months ended March 31, the value of lots Horton had under development, held for development or controlled, stood at $3.76 billion, only around 3% higher than the value in the same period ended Sept. 30, 2009.

That doesn’t necessarily mean, though, that competitors are wrong about Horton’s ultimate land goals. Horton certainly has the financial wherewithal to be a player on any land deal that suits its fancy. Through the first six months of its latest fiscal year, Horton reported that its operating activities threw off nearly $428 million in net cash, which was due “primarily” to the sizable federal tax refunds the builder has received for past losses. And its CEO, Don Tomnitz, told investors last November that the company wanted to add as many as 10 new communities to each of its markets over the following 15 months.

Horton has 88,500 lots under its control, but only $8.7 million in net deposits. In their conference call with investors, Horton officials explained that their company has done more land option deals than any other public builder, and has been negotiating lot takedowns at more favorable terms than its competitors because it can more quickly turn those lots into homes to sell. (The company took down $200 million in land options in the quarter, most of it for finished lots.)

Indeed, Horton’s inventory bet that the federal homeowner tax credit, which expired on April 30, would stimulate sales paid off. During its latest quarter the builder’s closings jumped 19% to 4,260 homes and it sold 103% of its backlog. Horton is also hoping for some post-tax credit momentum in buyer demand, as it still had 2,153 unsold spec homes available across the 28 states in which it operates, according to its listing of “Quick Move-In” houses posted on its website. Its greatest exposure is in Texas, where it has 609 unsold specs. In Dallas-Fort Worth alone, 188 of the 271 spec homes it offered were unsold (the rest either have sales pending or are sold). Conversely, in Las Vegas, the builder has only 76 unsold specs left out of the 244 it offered.

By: John Caulfield, senior editor for BUILDER magazine. Senior Editor Teresa Burney provided reporting for this article.

Washington, May 04, 2010

Pending home sales increased again in March, affirming that a surge of home sales is unfolding for the spring home buying season, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in March, rose 5.3 percent to 102.9 from 97.7 in February, and is 21.1 percent above March 2009 when it was 85.0; this follows an 8.3 percent increase in February. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said favorable affordability conditions have been working with the tax credit. “Clearly the home buyer tax credit has helped stabilize the market. In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” he said. “Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing.”

The PHSI in the Northeast declined 3.3 percent to 75.1 in March but remains 27.2 percent higher than March 2009. In the Midwest the index increased 1.2 percent to 98.9 and is 18.5 percent above a year ago. Pending home sales in the South jumped 12.7 percent to an index of 121.2, which is 28.3 percent higher than March 2009. In the West the index rose 1.9 percent to 99.9 and is 8.8 percent above a year ago.

“Another encouraging sign is the improvement in the availability for jumbo and second-home mortgages,” Yun said. “As bank balance sheets strengthen, it is just a matter of time before lending of non-government-backed mortgages steadily opens up.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales. First quarter metropolitan area home prices and state home sales will be released May 11. Existing-home sales for April will be reported May 24 and the next Pending Home Sales Index will be on June 2; release times are 10 a.m. EDT.

FIRST-TIME HOMEBUYER CREDIT: MEMBERS OF THE MILITARY AND CERTAIN OTHER FEDERAL EMPLOYEES

The Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law: Extends deadlines for purchasing and closing on a home. Authorizes the credit for long-time homeowners buying a replacement principal residence. Raises the income limitations for homeowners claiming the credit.

Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.

For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.

Several new restrictions apply to homes purchased after Nov. 6, 2009.

Purchasers must attach a properly executed settlement statement to their return. No credit is available if the purchase price of the home exceeds $800,000. The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement. A dependent is not eligible for the credit. The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first audit a taxpayer’s return. Known as math error authority, this authority applies, retroactively, to credits claimed on original and amended 2008 returns, as well as to claims yet to be filed.

Additionally, there are new benefits for members of the military and certain other federal employees: Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010. In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer’s principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual’s spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer’s principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

Question and Answer

Q. Are both spouses required to be overseas for the requisite time period in order to qualify for the 2011 extension to claim the credit?
A. Only one spouse must be overseas on official extended duty for the requisite amount of time for either spouse to be eligible for the 2011 extension of time to purchase a principal residence and claim the credit.

GOOD NEWS FOR CHARLOTTE FROM THE CHARLOTTE BUSINESS JOURNAL

Five years ago, US Airways Group Inc. was mired in bankruptcy, pondering an uncertain merger with America West and causing local business leaders heartburn over the future of the airline’s Charlotte hub.

Today, that recruiting millstone has been transformed into the cornerstone of Charlotte’s economic future.

US Airways continues to ramp up its service at Charlotte/Douglas International Airport and, by June, will operate 615 daily flights, most in the airline’s history here. That represents a 14% increase in Charlotte since the 2005 merger and, along with a third parallel runway opened earlier this year, gives recruiters cause for optimism.

In recent months, star corporate recruits such as outdoor-equipment company Husqvarna and home-appliances manufacturer Electrolux AB have pointed to the city’s air service as a major factor in their decisions to come to Charlotte. Recruiters remain convinced a strong airport and direct flights to major business centers are huge selling points when prospecting for corporate relocations and expansion. So much so that the Charlotte Regional Partnership maintains a conference room at the airport next to the office occupied by Aviation Director Jerry Orr.


SELLERS: STAGING IS A MUST

You may not have the budget to hire a professional stager, but every home seller can follow a few helpful staging tips to make sure their house looks like a buyer's dream home. As a seller, you want your home to makea positive first impression. In order to do this, you repair, clean, and strategize marketing for your open houses, but home staging takes it one step further. It allows the buyer both the mental space to imaginetheir own belongings in the rooms and the ability to get excited about the life they could have in your home.

Here are some tips to get you started:

Declutter: Less is more. It's a motto that is true for so many things, and staging is no exception. Grab a box, label it "living room" and go through and remove the unnecessary decor. Remove family pictures and trinkets. A buyer needs room to see their lives in your home, not themselves in your life.

Remove Furniture: Bulky pieces, or too many furniture items, can clutter the buyer's vision of the room. There should be enough furniture to clearly spell out what the space is intended for (e.g. dining room), but not so much that the room seems smaller than it is. Also, do not "multipurpose" a room during staging, meaning that your "craft/living room" should now just function as a staged living room.

Fireplaces: If your fireplace is stained black, a cheap and easy fix can be paint. A simple white or cream can compliment many modern styles. If your fireplace has a tile surround, consider updating it as a do-it-yourself project.

Avoid Themed Rooms: Resist the temptation to redecorate your den in the theme of your favorite sports team, or make your daughter's room a princess palace. You want your home to appeal to a wide range of buyers. A single buyer will have a hard time imaging their exercise equipment next to all that pink.

Keep it Neutral: This doesn't mean monotone taupe, beige, and more eggshell. It means have the walls painted a neutral and then accent with color throughout the rooms with pillows, throw, artwork, and minimal accessories.

Clean Again: This should go without saying, but deep cleaning is an essential part of staging. Febreze is your friend. If you have animals in your house, you may have become acclimated to the odors. Consider having your carpets cleaned. Burn welcoming -- and odor covering -- candles, such as vanilla and gingerbread. Hang new shower curtains. And hang clean towels. Cover dirty couches with new, inexpensive slipcovers.

And finally, consider some of these inexpensive updates that can add value and staging appeal to your home. Outdated light fixtures can be changed rather inexpensively. Paint or stain patios and concrete that look dingy. Vinyl tile can be laid using easy snap lines. Carpet squares can be pieced together to freshen up tired flooring. You may also think about buying new appliances. These are great selling points, especially the stainless steel version, and you should be able to get money back on your investment.

Use these tips for your home staging and you're sure to impress your prospective buyers.

by Carla L. DavisPublished: March 1, 2010


HouseCharlotte DOWNPAYMENT ASSISTANCE PROGRAM

Click here for complete details. PROGRAM FEATURES
- Down payment assistance of up to $10,000 for qualified buyers in select "challenged" neighborhoods
- Down payment assistance of up to $7,500 for qualified buyers in select "transitioning" and selected "stable" neighborhoods
- Pre-purchase homebuyer education

ELIGIBILITY - Families with incomes that are 110% or less of the median income are eligible for assistance. - Participants must complete pre-purchase homebuyer education program.
- The home must be a family's primary residence and located in any of 87 designated neighborhoods.
- Maximum purchase price of home is $147,000.
- Employed police officers who purchase homes in designated neighborhoods are eligible for assistance up to $15,000.

HOW THE PROGRAM WORKS - Banks apply for the program on behalf of qualified buyers. To find out if you are qualified, contact approved lenders, which are included in the list linked to this website. The selected house must be located in one of the approved Charlotte Neighborhood Statistical Areas (NSAs). Each Charlotte neighborhood is grouped in an NSA, and builders do not use the same neighborhood names as the NSA listing. Buyers may check on the NSA of a particular house through this website.

In order to find out if a house is in a HouseCharlotte approved NSA, click on "Address Search" below. Enter the property address, determine NSA name, then cross reference that name to the Eligible Neighborhood list. Once you have found a house in the appropriate NSA, ask your lender to apply for the HouseCharlotte program. You also must attend a homebuyers training course and counseling. In order to register for a course and counseling, buyers may contact Community Link at 800.977.1969.

(Mortgage Rate Trend Index by Bankrate.com)

GOOD NEWS FOR INVESTORS AND FHA HOME BUYERS

FHA revises 'anti-flipping' rule The agency once again will provide mortgage insurance for some purchases where the seller closed on the property less than 90 days earlier. The objective is to speed up sales of renovated houses.

Reporting from Washington - Call it three birds with one stone: The federal government hopes simultaneously to help low-down-payment home buyers, investors who fix up foreclosures, and local communities burdened with too many bank-owned and foreclosed homes -- all with one potentially far-reaching policy change.

The Federal Housing Administration is revising its long-standing "anti-flipping" rule starting Monday and just might score a hit with all three target groups.

For years the FHA has had a strict prohibition: It wouldn't insure a mortgage on a house whose seller had owned it less than 90 days. The ban was a reaction to fraudulent quick flips of houses that inflated their values far beyond true market worth.

The flips often were pure cons: Buyer A would acquire a low-cost house in bad repair, do minor cosmetic changes and resell within days to Buyer B, who was also part of the scheme, at a significantly higher price. The sequence could involve a string of serial flippers within a month or two, and trumped-up prices spiraling upward.

The end game usually went like this: Find a hapless buyer for the flipped house who would apply for a low-down-payment FHA loan. Typically that buyer defaulted quickly -- leaving the FHA with a foreclosed house on its books and a loss to its insurance funds.

The FHA maintained its 90-day anti-flipping rule through much of the last decade. But now it's suspending the policy, at least for the next year. In an advisory to lenders, FHA Commissioner David H. Stevens said the agency would once again provide mortgage insurance for some purchases in which the seller had closed on the property less than 90 days earlier.

The objective, Stevens said, will be to speed sales of renovated houses to first-time buyers and other purchasers. With foreclosures at record levels -- an estimated 2.8 million filings last year alone -- many communities are faced with excesses of bank-owned properties sitting unsold, often in poor repair.

By waiving the 90-day rule, private investors will be more likely to bid on these houses, fix them up and sell them to buyers who will now be able to gain early access to FHA financing, which offers 3.5% down payments.

What's the significance of the 90-day timeline? It's huge, say investors who specialize in acquiring and renovating foreclosures and bank-owned properties. Paul Wylie, an investor active in the Los Angeles area, says his group generally can acquire and rehab a house and list it for resale within 60 days.

But under FHA's previous policy, large numbers of potential buyers couldn't bid on Wylie's properties as soon as they hit the market.

Barred from using low-down-payment loans until after 90 days, these buyers were forced to look to conventional mortgage sources, which often required 10% down plus private mortgage insurance.

"A lot of the people who want to buy our houses just don't have 10%," Wylie said. "But they can afford a 3.5% FHA down payment."

Bobby Taylor, a broker with Coldwell Banker Mountain West Real Estate in Salem, Ore., said the FHA's change of heart "is going to be absolutely terrific" for anyone looking to bid on a moderate-priced post-foreclosure house in good physical condition.

Some lucky buyers will even be able to combine the $8,000 federal tax credit with 3.5% FHA financing -- provided their contracts are signed by April 30 and closed by June 30, when the credit program expires.

FHA's revised policy does not throw open the floodgates to all post-foreclosure renovations, however. Stevens laid down two key restrictions designed to protect end buyers and FHA alike:

* There can't be game playing or conflicts of interest among buyers, sellers, realty agents or others involved in the deal. "All transactions must be arm's-length, with no identity of interest" among any of the participants.

* Price run-ups must be relatively modest and justifiable from the time of the investor's acquisition to what's paid by the applicant seeking FHA financing. Generally the limit will be 20%.

When the price jump exceeds 20%, FHA expects participating lenders to require extensive documentation of the renovation expenditures made by the investors to justify the hefty price increase.

Lenders also are required to order an independent property inspection so the buyer can understand the house's physical condition and the improvements made.

The takeaway for buyers and investors: Check out FHA financing early in the game on foreclosure turnarounds. It's now available and it just might work for you.
By Kenneth R. Harney, NATION'S HOUSING

NEW SHOP-AND-LOCK LOAN PRODUCT!

I’m really excited to share this “lock and shop” loan product. Interest rates moved slightly lower last week. Not-so-positive economic reports continue to be released, allowing for mortgage interest rates to remain at their all-time lows. While this is likely to continue for the near term, do not grow complacent and expect them to be at this level forever. Whenever we test new lows, the market is very volatile. Even if you are not buying right now, consult with your local mortgage and real estate professional to see if some of the enhanced refinance programs will work for you. If you are getting ready to buy, now would be a great time to lock in your long term interest rate, as rates will likely be higher when it comes time to close. Look for rising rates. This week, a majority of the panelists believe mortgage rates will rise over the next 35 to 45 days. Just 7 percent think rates will fall, and the rest believe rates will remain relatively unchanged (plus or minus 2 basis points).
(Mortgage Rate Trend Index by Bankrate.com)

CHARLOTTE MED SCHOOL OFF TO EARLY START

A faltering economy has delayed plans for a medical school in Charlotte. But one is starting here just the same, albeit on a tiny scale. Under a new pilot program, 18 UNC Medical School students are completing their final two years of training at Carolinas Medical Center. “We kind of treat them like our first medical school class,” says Dr. Jim McDeavitt, senior vice president of medical education and research for Carolinas HealthCare System, parent of Carolinas Medical. “They would, more or less, mirror the experience of the regional campus medical students.” The pilot program could serve as a blueprint for a full-fledged local medical school when state funding becomes available.