The Real Estate Weblog

According to an article by top journalist John Browne and reported on the Newsmax website,
the financial world was stunned by the fear that Bear Stearns may have to close 2 of its hedge funds which are
heavily invested in some twenty billion of subprime mortgage market instruments.
It appears that a central issue of contention was simply what the Financial Times called “cov-lite” deals.
This is short for dilution, or perhaps exclusion, of various restrictive covenants which have traditionally been generally standard in the lending industry.
Apparently, some hedge funds are using their huge leverage as well as major financial clout to force lenders to lend on conditions which include
small changes made to what is termed the “boiler plate,” restrictive covenants contained in the loan agreements.
This makes sure that the borrower meets certain financial standards on an up-to-date basis. Cash flow coverage of interest payments, margin call levels and debt/equity ratios would be examples.

According to reputable and respected journalists George Avalos and Barbara E. Hernandez of the MEDIANEWS network,  a two-year-old bill is about to become due for the San Francisco Bay Area as well as the rest of California in the form of job losses which have been triggered by the rather steep in the housing market, a recent forecast states.
Experience points to a lag time of two years between a peak in home-building activity and a pronounced slowdown, or even job losses, for industries whose fortunes are linked to the housing market, according to researchers with the UCLA Anderson Forecast. The economists studied four cycles involving housing slumps and the after-effects on the job market.
Job losses connected to the housing bust have already begun to come to the fore in some areas like the East Bay. Even more troubling is the fact that the early indicators seem to suggest that the Alameda-Contra Costa region is being hit quite a bit harder than the state of California, broadly speaking.

Over the past year, the East Bay has lost some eighteen hundred or so jobs in the normally robust construction sector. This is a decline of almost three percent.
 In the meantime, San Joaquin County has lost about eight hundred construction jobs, which is a reduction of just under five percent. And in the state as a whole, construction jobs have shrunk by some .7 percent during the year which ended in May.
And yet, the East Bay all by itself has been the hapless recipient of more than a quarter of all the construction positions which have been lost in the Golden State over that same time frame. More particulars about this available over at The Employment Outlook
In particular, 1,200 positions have been lost in the credit intermediation industry, which also includes many high paying positions for both loan officers and mortgage agents.
University analysts have predicted that the slump in house sales may be finally beginning to abate in the state. Prices are staying flat in certain individual markets.”Price appreciation has settled in around zero for the Bay Area,” one analyst recently wrote.
In spring or summer 2005, building permits in California hit a peak and then began to slide, stated Ryan Ratcliff, an respected economist from the University of California.

“Two years later is right now,” Ratcliff said.
Meanwhile, Canada’s unemployment rate should decline to a record low next year, according to the OECD.
While that nation’s  unemployment rate is expected to fall to a record low next year of six percent, according international economic think-tank
(the Organization for Economic Cooperation and Development), they also prrdict that general economic growth & job growth will outpace that in America both in the current year as well as the next.

Here is analysis on where the real estate market may be going in the very near future: In a recent article in the highly respected publication ‘The Washington Post’
entitled “Commercial Real Estate Sell-Off Puts Investors in a Tricky Position”
as reported by esteemed journalist Dina ElBoghdady on June 16,
it was noted that in the last 7 years or so, stocks of publicly traded commercial real estate firms had soared over one hundred and sixty percent, which actually far outpacing the wider market.
Then in the early part of the current year, the shares simply slipped, dropping around fourteen percent rouphly since the early part of February.
Why is this, many are asking? Dina and the Washington Post, as well as other trade journals and newspapers can only speculate on this.
However, it is quite obvious that many investors are simply grabbing their money and running, despite the fact that commercial real estate stocks are considered a staple of a well-balanced portfolio by many financial and investing experts & analysts.
 These shares are usually considered to be a sort of hedge against inflationary pressures since investors can collect some sizeable
 dividends which then actually tend to increase in the higher inflation time periods as landlords raise their rents (is that cynical, do you think?)
Als, after real estate assets go up in value, the investors get a share of the profit after the properties are eventually sold.
So what is the best course of action for most individuals who are playing the game right now but don’t want to lose their shirt?
Well, for smaller investors, the article goes on to say, the most affordable and also the most effective method for gaining said exposure to commercial real estate is simply through real estate investment trusts, which are also sometimes referred to as REITs. The majority of the firms involved own a mixture of buildings and such.
Yet certain investors in this game have flat-out confused the housing & commercial sectors, particularly after trouble surfaced earlier in the year regarding subprime home mortgages, which tend to service individuals who have flawed credit & likewise other riskier types.

We have added a new resources to the SI Real Estate Directory regarding Hilton head If you have ever been to Hilton Head Island before,  you might have already enjoyed on one of the great beaches, played on one of the top rated golf courses or shopped & dined at one of their unique shopping centers and restaurants. You might have also stayed in a top notch beachside Hilton Head resort or perhaps a property. This site has a lot of information and resources about hilton head, and it is highly recommended that you give them a look if you plan to be in that area any time soon, or if you already are. We will be giving you updates about their site as well, as time goes on.