Brian Andrews: GSEs still in limbo
Fannie Mae and Freddie Mac, the two Government Sponsored Enterprises currently operating the conservatorship of the federal government, are still operating without a firm plan for the future. Both GSEs were taken over in September 2008 in response to their position in the housing crisis. Several plans have been proposed to resolve the GSE problem, including anything from a quick euthanasia to lingering and protracted life support. None have taken hold to date, a possible consequence of competing political agendas in Congress and of the fear that action will make a bad housing market even worse.
Last week, two members of the House Financial Services Committee, Reps. Carolyn McCarthy (D-N.Y.) and Gary Miller, (R-Calif.), proposed their own solution and introduced a bill to merge Fannie Mae and Freddie Mac into one new entity that would be run by the government rather than being a privately owned but government sponsored enterprise. There would be some level of governmental insurance, making banks and other similar lenders more willing to make residential home loans or purchase them in a secondary market.
Will this latest plan work where many have failed to garner enough support? It does have bipartisan authorship and the blessing of the National Association of Realtors and the National Association of Homebuilders, so there is chance; but the passage or the defeat of the bill will depend on grassroots participation at local levels as stakeholders educate themselves on the issues and contact their legislators.
Continued sources of financing for the housing industry are important to our local, state and national economies. I cannot tell you that the Miller-McCarthy proposal is one solution or another problem for the industry, but I do encourage you to research the issues and make your voice heard.
(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Real Estate Services and he can be reached at firstname.lastname@example.org.)
Real estate recap: Siegen Lane Marketplace apartment complex sold ... B.R. foreclosures continue to rise ... Preis says 'all options are open' for RiverPlace site
Property goes for $27.8 million: Tuscany Villas, an upscale Siegen Lane apartment complex, has been sold to a group of local investors for $27.8 million. New Hope Investors-Tuscany bought the 274-unit complex from Tuscany Reserve, which built the development. New Hope is led by John Noland. The group says it doesn't plan on making any changes to the complex, beyond some cosmetic improvements. Tuscany Villas, which is located in the Siegen Lane Marketplace center, opened in spring 2008. Units in Tuscany Villas rent for between $825 and $1,500 a month.
Increasing ahead of state rate: The foreclosure rate in Baton Rouge rose at a slightly faster rate than the state average in April. The percentage of outstanding mortgages that were foreclosed upon in the Capital Region during April was nearly 2.6%, says CoreLogic. That's 0.39 points up from the 2.17% foreclosure rate in April 2010. The percentage of outstanding mortgages that were foreclosed upon in Louisiana during April was just over 2.7%. That rate is 0.35 points up from the 2.37% foreclosure rate in April 2010. The U.S. foreclosure rate was up by 0.42 points, from 3.05% in April 2010 to 3.47%.
Looking at hotel, apartments for downtown property: After 10 years of trying to develop a piece of property at River Road and Laurel Street into a high-rise condominium tower and then an upscale hotel, Richard Preis is looking at selling the site. Preis says "all options are open," including building a 4 1/2-star hotel, building apartments, selling the land or just doing nothing with the RiverPlace property. "Lord knows I worked long enough on RiverPlace, but between Hurricane Katrina and the credit markets, the timing is just not right," he says. Preis says his wish is to build a hotel on the site, and he's had three visits with a major hotel group, including one last week.
Tom Cook: Beauregard Town tract sells
A 20,430-square-foot tract in Beauregard Town has sold. Michael Burns, represented by Scot Guidry at Mike Falgoust & Associates, represented the seller. The purchaser, A House on a Hill, was represented by Darryl Gissel at Oak Real Estate Company. The property wraps around the southwest corner of the intersection of America and St. Joseph streets, and it has approximately 60 feet of frontage on St. Joseph and 86 feet of frontage on America. The sale took place for $349,149, or $17.09 per square foot. According to Guidry, the property is zoned for office use. The new owner had no immediate plans for development. The sale closed on Wednesday.
A suburban office building on East Petroleum Drive has been sold. The 4,900-square-foot building went for $690,000. The seller was WSR Interest, represented by Ryan Greene of Maestri-Murrell Real Estate Company. The purchaser was Gizmo Investments, represented by Matt Shirley and Hank Saurage with Saurage Rotenberg Commercial Real Estate Company. The $690,000 sale price calculates to about $140 per square foot. The new owner intends to occupy the property.
(Appraiser Tom Cook owns Cook Moore and Associates. Reach him at 293-7006 or TCook@cookmoore.com.)
White House considers ways to tackle housing slump
The Obama administration is looking at ways to revive the housing market, which is dragging down the U.S. economy. According to The Wall Street Journal, the White House is going back to the drawing board after several plans, including tax credits for first-time homebuyers and loan modification programs to prevent foreclosures, failed to jump-start the housing market. Some policy ideas being discussed include letting Fannie Mae and Freddie Mac relax rules on loans for investors, in the hopes this could lead buyers to purchase some of the excess home inventory. Allowing Fannie and Freddie to rent out foreclosed homes in some markets is also being discussed, the Journal says. Another possibility is offering incentives for banks to reduce loan balances for homeowners who owe more than what their home is worth. To read the full story, click here. (Registration required)
This week's poll question: What should the federal government do to stimulate the housing market?
Capital Region home sales down 13% for first half of year
Through the first half of the year, the number of homes sold in the Capital Region is down 13% when compared with the first six months of 2010. There were 3,107 homes sold as of June, according to figures from the Greater Baton Rouge Association of Realtors' Multiple Listing Service. That compares with 3,586 MLS sales for the first half of 2010. The average sale price was $193,294 for the first half of 2010, virtually unchanged from the $192,274 average in the first half of this year. Sales were down 11% in East Baton Rouge Parish, from 1,923 in 2010 to 1,703 this year. The average sale price was $204,767, compared with $206,009 in 2011. Livingston Parish had a 17.5% sales drop from 2010, going from 661 MLS sales in the first half of the year to 545. The average sale price in Livingston also fell, going from $161,822 in 2010 to $154,053. Ascension Parish had the biggest drop in home sales, falling 21% from 749 in 2010 to 589. The average sale price was slightly unchanged, falling from $198,438 to $197,595. And in the other category, which includes the Felicianas, West Baton Rouge and Iberville Parishes, MLS sales actually went up 7% in 2011, going from 253 in 2010 to 270 this year. The sale price was down slightly from $173,082 to $171,183.
Nicholson property on the market
A 1.46-acre tract on Nicholson Drive, located at the foot of the Interstate 10 exit ramp, is up for sale. Will Adams IV of ASA Commercial Real Estate has been hired to market the property, which has a vacant 10,510-square-foot building on it. Adams says he expects potential buyers will be interested more in the land than in the building, which used to house a plasma donation center. "I don't think the highest and best use will involve keeping that building on it," he says. Adams says he thinks the most likely buyer would be one of the development groups that already owns property on the Nicholson corridor between downtown and LSU. Those include Moreno Properties, which is planning a mixed-use development across from Magnolia Mound Plantation; Marc Blumberg and Manny Organek, who are planning an apartment complex and office development at the site of the old Prince Murat Inn; and Brickyard Properties, a group headed up by Chad Ortte that owns the Montalbano Produce building at the foot of the Mississippi River bridge. Jonathan Walker, a commercial agent wtih Maestri Murrell, who is one of the owners of the Shammy's car wash across from the property, says he plans to put in a bid. Adams says the sale could attract some speculators who want to enter the Nicholson market. When Moreno started buying his property in late 2007, he paid an average of about $12 per square foot. Adams says he's not expecting to get a price that high, because of the current economic conditions. If no satisfactory bids are received by the Sept. 15 deadline, Adams says the land will remain on the market. For a Business Report cover story from August 2010 about the emerging Nicholson market, click here. —Timothy Boone