National market report

<i>Commercial and residential real estate news briefs from the most active U.S. markets</i>


The $28 million Winnetka mansion — the priciest to hit the Chicago-area market in recent memory
Austin

The real estate market in Austin appears to be bucking a Texas trend and showing signs of stabilization, according to a report last month from the Austin Business Journal. Although the Texas capital lost 4,300 jobs between November 2008 and 2009, far more jobs were lost in Houston and Dallas, which saw losses of 88,900 and 50,700, respectively, according to the Texas Workforce Commission. The lower job-loss rate (government jobs didn’t seem to be as much of a factor) is credited with helping the housing market, according to Austin real estate expert Eldon Rude of research firm Metrostudy. Construction starts have stabilized over the last three years, while builders have been selling off more inventory than they’ve been creating, Rude said.

Boston

Harvard University has begun selling $400 million worth of tax-exempt bonds to help finance its recent expansion projects, including a new law school building. The university, the richest in the world, has almost doubled its debt in the last three years, according to Bloomberg News, due to the financial downturn and a dwindling endowment. Harvard is now moving toward refinancing some of the $6 billion in debt it currently maintains. But while parts of the school’s expansion have carried on, other projects have been put on hold. In December of last year, Harvard’s president, Drew Faust, announced that the university was halting work on a planned $1 billion science center in nearby Allston, due to new financial woes.

Chicago

A 26-room, 27,000-square-foot mansion hit the market in the Chicago suburb of Winnetka last month for $28 million, making it the area’s priciest listing in recent memory. While a 30,000-square-foot mansion with a list price of $25 million was up for sale in another suburb last year, it was eventually taken off the market. The Winnetka home is one of just nine Chicago-area homes on the market for $10 million or more. The Winnetka mansion is the only one to crack the $20 million listing price mark, according to the Chicago Tribune.

Some experts say a relatively low job-loss rate in Austin is helping stabilize the city's housing market.

Detroit

In the wake of a financial meltdown and the population exodus that followed, Detroit millionaire money manager John Hantz, head of Hantz Financial Services, believes the former industrial powerhouse of a city could be transformed into a pastoral haven, according to Fortune magazine. Hantz contends that the abandoned land in the greater Detroit area, an estimated 40 square miles, could be put to commercial agricultural use. The idea is catching on. The American Institute of Architects concluded that “Detroit is particularly well suited to become a pioneer in urban agriculture.” Hantz, who has a personal net worth of $100 million, told Fortune that he would make a $30 million all-cash investment in the project, which he hopes will create jobs in his city’s decimated economy.

Los Angeles

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Los Angeles-based home builder KB Home saw a $100.7 million profit in the fourth quarter of 2009, according to a report from Housing Wire, a Web site that covers the mortgage and financial markets. But the profit came after the company received a $191.7 million tax refund. KB Home, which operates in 11 states including California, Arizona and Nevada, would have posted a $91 million loss in the quarter had it not been for the tax return it received on boom-time profits. Still, the company’s CEO and president, Jeffrey Mezger, said, “KB Home’s 2009 fiscal year culminated with a solid fourth-quarter performance.” Even so, industry experts say KB Home will restrain its activity in the coming year. The company’s lagging home orders in Southern California, reported last month, raised concerns that the company might not be out of the woods yet. The Street noted that “a rebound … particularly in the bellwether housing market of California” would be a concrete signal of a recovery.

Miami

Bernie Kosar, the former University of Miami and Miami Dolphins quarterback, is facing a $2 million foreclosure lawsuit on his Weston mansion on Paddock Road in Windmill Ranch Estates, according to the South Florida Business Journal. Miami-based Ocean Bank sued after the football star’s Chapter 11 bankruptcy — filed after several of his real estate developments were hit with foreclosure suits in spring 2008 — became a Chapter 7 liquidation. Kosar’s debt totals $18.9 million. His assets, including a minority ownership stake in the Florida Panthers, are reportedly worth $9.2 million.

Phoenix

The end-of-the-year housing figures for Phoenix are in, and they aren’t pretty. The city saw approximately 41,000 single-family homes go into foreclosure in 2009, a record number, according to a year-end report from the W.P. Carey School of Business at Arizona State University. Foreclosures accounted for more than 35 percent of all existing-home transactions in the year. Perhaps most surprising, the residential market actually worsened in December, contrary to the stability seen in other residential markets nationwide. Over 4,000 Phoenix homes faced foreclosure in December, up from 3,000 the month before. This flies in the face of a market prediction from Mike Orr, principal with research group the Cromford Report, suggesting April 2009 was the bottom for the residential real estate market.

Detroit

Harvard University has seen its debt almost double in the last three years.

A group of investors with HSBC Holdings PLC has paid $203.4 million in debt and equity for a 90 percent stake in an office building at 1625 I Street, according to Bloomberg News. The 85,000-square-foot office building was valued at about $587 per square foot, which makes it one of the priciest office real estate deals in the city in the last year. This could be good news for Washington, where the office vacancy rate ballooned to 14.7 percent in the third quarter of 2009, up from 11.9 percent during the same quarter a year earlier, according to CoStar research group.

West Palm Beach

Ocwen Loan Servicing, a West Palm Beach company and pillar of the Florida mortgage industry, has gone global. It will use a Mumbai company to set up broker opinions on the value of bank-owned foreclosure properties, arrange property cleanings and repairs, and schedule showings, according to a report from Inman News. The surge in depressed property has created a backlog so large that selling the properties has become part of the $50 billion outsourcing industry. Bank of America, JPMorgan Chase and Citibank are among the banks using overseas labor to handle their foreclosure inventory, said Joe Greco, director of the Institute for Research and Education in Outsourcing at California State University-Fullerton and the author of “The Outsourcing Bible.”

Compiled by Amy Tennery