- CALL US TODAY!
- 720-575-2870
Unemployment is rising but still historically low, jobs remain plentiful in most industries, wages are up and the economy has withstood blow after blow without rolling over. So why does a sense of gloom pervade about where the economy is at and where it is headed?
Blame inflation and high housing costs for the sense of malaise, said Henry Sobanet, chief financial officer and senior vice chancellor for administration and government relations at the Colorado State University Systems, at the 2024 Economic Forecast hosted by Vectra Bank in Denver on Thursday.
“People feel like their dollar is not going as far as it used to,” said Sobanet, a longtime student of the Colorado economy at both the Colorado Legislative Council and the Governor’s Office of State Planning and Budgeting.
There is also a sense that the state might be entering a different era. Between 1990 and 2020, Colorado enjoyed job gains and population gains topping 70% versus increases nationally that ran closer to 30%. Colorado’s didn’t just run ahead of the rest of the country, it lapped it.
Most of those gains, however, were front-loaded in the first two decades when resources like water and developable land were more abundant, housing costs were lower and the state was perceived as being more business-friendly, Sobanet said.
Growth slowed last decade, even if it didn’t feel like it, and this decade it has come to a virtual standstill. Long accustomed to being an economic leader, Colorado found itself in the uncomfortable spot of being a laggard last year.
“What we had that drove this (growth) might not still be here,” Sobanet said.
Yet, the Colorado economy continues to chug along, despite higher interest rates and inflation, supply chain disruptions, labor shortages, the tech slowdown, and relatively high housing costs.
The ColoradoCast for the first quarter from the Colorado Futures Center at CSU predicts the Colorado economy will continue to grow modestly this year, about 2%, and gain momentum in the coming months.
Slower job gains in 2023 in Colorado indicate that the state is now underperforming the U.S. economy. But after struggling last year, the housing market is showing signs of rebounding.
“If housing in the early part of 2024 continues to regain momentum, the economy can be expected to continue to maintain strength into the year,” according to the report.
Nick Sly, vice president and Denver Branch Executive with the Federal Reserve Bank of Kansas City, noted at the Vectra forecast lunch that inflationary pressures are easing in several areas and that the once tight labor market is loosening.
Fed surveys of employers in Colorado, New Mexico and Wyoming, found that a smaller share, 25% at the end of 2023 versus 60% in 2022, plan wage hikes in the next 12 months. Fewer are looking to expand their workforce and about a fifth of respondents said they plan to shrink it.
A gap has also emerged between growth in hourly earnings and weekly earnings, Sly said, as employers switch away from offering overtime hours and shift more employees to part-time work.
Commercial real estate (CRE) poses one of the greatest risks to continued growth in the U.S. economy this year, Sly said, before unveiling a new CRE index for the region that the Federal Reserve Bank of Kansas City has developed.
The value of the index fell from -0.8 in the third quarter to -1.3 in the fourth, with a reading of zero indicating activity that matches historical norms. The index got as low as -2.5 during the financial crisis in 2008 and took a hit early in the pandemic before rebounding.
The index covers office buildings, which facing unprecedented weakness; apartments, which are peaking out; retail space and hotels, which have rebounded since the pandemic and industrial, which remains strong but is slowing.
As office leases roll over, tenants are leaving or asking for less space and demanding lower lease rates, which is putting additional pressure on landlords. Local and regional banks have a heavier concentration of CRE loans in their portfolios than the large national banks, which leaves them vulnerable as well.
WINCHESTER EQUITIES
Municipalities have long used incentives to spur investments they hope to see in their cities, or to solve for a persistent problem they’ve deemed requires private-sector participation.
Now, city officials are introducing or expanding upon programs to encourage office-to-residential conversion projects in America’s downtowns in the wake of a weak post-pandemic office market. With the national office vacancy rate hitting a record 19.6% at the end of the fourth quarter, and a key source of tax revenue dwindling as office building values decline, it’s become a top priority for elected officials and economic developers to figure out how to make more conversion projects happen.
The projects aren’t easy.
Based on physical characteristics alone, it’s estimated that 60% of office buildings are poor candidates for conversion to residential use, according to a 2021 algorithm developed by design and architecture firm Gensler. There’s also the state of financing on the building in question, the kind of investment that’ll be needed to bring the building to a new use, and how much a nearly empty office building could trade for. Developers frequently say it needs to trade at a deep discount if it’s earmarked for conversion.
Still, the desire to see more housing — and to see obsolete office buildings reimagined to make them revenue-generators once more — is top of mind nationwide. Affordability continues to be a serious challenge for homeowners, with the monthly mortgage payment on a typical U.S. home up 96% from early 2020, according to Zillow Group Inc. data. That’s thanks to rapidly rising mortgage rates since 2022 and record-high home-price appreciation during the pandemic. And, while the rental market has slowed, many U.S. metros saw double-digit percentage gains in rental-housing costs during the pandemic, and a record-high 22.4 million renting households are considered cost-burdened.
To spur office conversions, mechanisms like tax-increment financing, tax abatements and tax waivers are being proposed or are already in play in cities across the country as ways to reduce the cost of converting office buildings into housing or other private-sector uses, such as a hotel, lab or data center
While incentives are typically viewed as deal-sweeteners, those working on conversion projects today argue they’re more of a necessity than a bonus for a lot of conversions to make sense, especially given the current capital markets.
“It’s absolutely critical,” said Steven Paynter, building transformation and adaptive-reuse leader at Gensler. “There are very few other options to getting these projects moving at the moment at any kind of scale. The high interest rate on, especially, construction lending … is a dealbreaker for the projects.”
CBRE Group Inc.’s data on conversions shows an uptick in the number of office conversions underway nationwide since the Covid-19 pandemic but no evidence of a windfall, said Julie Whelan, global head of occupier thought leadership at CBRE.
“We know more housing is needed,” Whelan said. “It’s just that fulfilling that demand in the way that it needs to be fulfilled is very difficult to make work when you’re putting numbers down on paper.”
The Goldman Sachs Group (NYSE: GS) had similar findings in a recent analysis it did on the financial feasibility of converting office buildings into residential units. It found about 0.4% of office space had been converted into multifamily units on an annual basis before the pandemic, which rose only to 0.5% in 2023.
In many conversions, either the housing being added into a former office building has to rent or sell at a certain price (usually top-of-market), or the upfront basis — the cost of purchasing the building — has to be low enough that the project makes sense financially, Whelan said.
That’s difficult in many cities because office building trades haven’t necessarily reached those ultra-low levels yet. So, without aggressive incentives at the municipal level, a lot of conversions won’t pencil, Whelan said.
At the same time, she added, most downtowns aren’t lacking in luxury housing. Instead, affordable housing is what’s badly needed, and that usually requires some degree of subsidy, even for a traditional, ground-up development.
Goldman Sachs, using a discounted cash-flow model, also found current acquisition costs for struggling office towers are still too high for a conversion into a multifamily building to be financially feasible because of how much it costs to do that conversion.
Nationally, the average price of what Goldman deems as nonviable office buildings — those built before 1990, haven’t been renovated since 2000 and have a vacancy rate higher than 30% — has fallen 11% since 2019. In the hardest-hit cities, average transaction prices have declined by 15% to 35%.
If an office building is acquired for $307 per square foot (the average transaction price of nonviable offices, according to Goldman’s model) and the cost to convert it to a new use is $280 per square foot (slightly above average for a typical conversion cost), that project would result in a $164 loss per square foot if high-end multifamily units added in that building are rented at $4.50 per square foot. That means current office prices would need to fall by about 50%, or about $154 per square feet, for conversion costs to pencil, according to Goldman.
On the financing side, there’s a limit right now on banks’ willingness to lend to commercial projects, Paynter said. He added that the risk tolerance among lenders to take on conversion projects, which can come with unexpected costs and delays, has also been diminished.
Many capital sources won’t invest in a conversion until it’s significantly underway or close to completion. A five-story office building in downtown Newark, New Jersey, that’s being converted into a 92-unit residential development recently obtained a $22 million loan from Northwind Group. It was underwritten at the 70% or 80% completion stage, said Ran Eliasaf, founder and managing principal at Northwind.
“A conversion is a complicated execution,” he said. “It typically takes longer and costs more than what developers underwrite.”
Federal incentives available for conversion projects
In October, the White House issued guidance on how existing federal programs could be leveraged in the conversion of office buildings into other types of development, especially housing. The guidance includes programs from the Department of Transportation, the Department of Housing and Urban Development, and the General Services Administration.
Developers say while the programs are a good start, being able to put those incentives to work is another matter.
Paynter said the spirit of the guidebook is a good one, but there are a lot of fine-grain details and challenges in figuring out what the rules are for applying those programs to conversion projects.
“Because these programs weren’t really set up to deal with housing creation, there are some oddball requirements,” Paynter said. “It’s not as simple as everyone had hoped.”
Some developers are concerned about how long it might take to put that capital to work even if their deals qualify for any of the programs.
Since the pandemic, Keystone Development and Investment has waded into the conversion game. The West Conshohocken, Pennsylvania, company historically has been a significant office investor. It recently completed a conversion of the historic Curtis building in center city Philadelphia into life sciences space. It now is pursuing a conversion of several floors at The Washington — another historic building in Philadelphia — into luxury housing, in addition to converting a suburban office building it owns on a mall property in Plymouth Meeting, Pennsylvania, into housing.
KEYSTONE DEVELOPMENT AND INVESTMENT
Michael Brookshier, vice president of development at Keystone, said the company to date has leveraged traditional tools such as state historic tax credits for its conversions. But with higher interest rates and construction costs, new and different types of incentives are being considered by the developer.
Among the incentives offered in the White House guidance, Keystone is considering two DOT programs. Brookshier said that’s primarily because those programs don’t carry an affordable-housing requirement — Keystone is developing market-rate housing in its conversion deals — and many of the firm’s properties are close to mass transit, with the DOT programs specifically intended to incentivize new housing near transportation.
Echoing Paynter, Brookshier said because the programs are newly being used for housing conversions, everybody is still figuring out how they’re going to work. And with 2024 being a presidential election year, there’s potential risk the programs could go away if there’s a change in administration after November.
But the biggest challenge Brookshier sees with leveraging federal incentives for conversions is the time it could take for them to be deployed for projects his firm is pursuing right now. From letter of intent to closing on the financing, that could take 12 to 18 months, he said.
“I have a project I’d like to close on in March and June of this year, so [that] doesn’t work from a timing perspective,” Brookshier said. “On the flip side, there are projects I’d like to build in the future, so maybe I should get the application in so I have things in process … but at that point, you’re predicting the future.”
It also would be useful if there were one simple process to submit applications for federal incentives being offered, Paynter said.
Eric Stavriotis, vice chairman of advisory and transaction services and leader of the location incentives group at CBRE, said it’s most helpful when a developer can sift through a basket of incentives to figure out which ones make the most sense for their particular project. That could range from a tax-increment financing structure to the ability to use city transportation dollars at a former office site so as to make the property more accessible for residents instead of daytime office workers.
From conversations with CBRE clients, Stavriotis said it doesn’t seem the federal guidance alone is spurring deals.
“The old axiom applies here: All politics are local,” Stavriotis said. “Most of what we’re seeing nationally is that the assistance that is moving the needle for a developer — usually a private developer that’s looking to do a project — is oftentimes more local in nature than federal.”
Federal money can be an important part of a project capital stack, but many of those funds are channeled through the state or local level, even if it has federal origin, Stavriotis said.
Local and state officials propose incentives
San Francisco arguably has one of the nation’s bigger office-market problems. That metro’s office market ended 2023 with an eye-popping record-high vacancy rate of 35.6%, according to CBRE. Yet conversions haven’t taken off in San Francisco, even with 12 out of 36 buildings in the city’s downtown having been identified as good candidates for conversion, according to a 2022 study by Gensler.
Local developers and land-use attorneys say a number of initiatives have been proposed at the state and local level to try and spur those projects, but more is needed.
“This is classic economic development,” said Jack Sylvan, founder and principal of SDG LLC and the director of think tank San Francisco Bay Area Planning and Urban Research Association (SPUR). “The public invests in order to catalyze the private development, and that’s what San Francisco needs in this moment.”
Voters earlier this month were asked to weigh in on a measure known as Proposition C. If approved, the measure would waive a San Francisco transfer tax for projects that convert office buildings into housing.
But even before the vote, Prop C was deemed in an economic-impact report by the city controller’s office to be a largely insignificant measure to spur conversions. It determined the cost savings from waiving the transfer tax for those projects would be worth about $33,500 per unit for apartment projects and $9,000 per unit for condo projects, the San Francisco Business Times reported. It also projected it would take the city 29 years and 102 years, respectively, to recoup the revenue it foregoes from waiving the transfer tax in those projects.
As of last week, the outcome on Prop C was still too close to call, although “yes” votes had a slight edge.
Speaking ahead of the March 5 voting, Sylvan said it’s not that waiving the transfer tax itself will lead to a lot of conversions. Rather, it’s just one of many tools needed to make conversions feasible.
Sylvan said he’s estimated that between legislation passed by the city of San Francisco last summer that streamlined planning requirements and Prop C, if it were to pass, those measures would solve about one-quarter of the feasibility gap per unit in conversion deals. SPUR estimates there is a current feasibility gap of $267,000 per unit.
Another measure being closely watched in San Francisco and elsewhere in California is at the state level.
California Sen. Scott Wiener last month introduced State Bill 1227 that would give developers converting office buildings into new uses in downtown San Francisco a temporary exemption from the state’s Environmental Quality Act and also would expand a tax exemption for those projects from strictly affordable housing to also include workforce housing.
Sylvan said the measures collectively “are no silver bullet” but they start to unlock the potential for projects to begin and for capital to be reinvested in downtown San Francisco real estate.
“If you’re waiving fees, you’re waiving fees that would never be charged because nobody is doing anything with that building,” Sylvan said. “It’s basically foregoing [a tax] that [the city] would never have collected. It doesn’t exist but for the conversion.
“To me, that’s the most important piece of the policy conversation,” he said. “Yes, you are providing an incentive, but the city isn’t giving anything up because it wasn’t going to get anything [if] a building sits [empty].”
Conversions call for more than incentives
Beyond financial considerations, San Francisco is not unlike other U.S. cities in having inclusionary housing requirements that Sylvan said could be a barrier for conversions. That means even if more incentives become available, it could still be a challenge to get conversion deals done without policy changes, he said.
Other requirements can add cost and risk to conversion efforts. For example, converting an office building to a residential use may trigger earthquake-related code requirements, which could necessitate significant seismic upgrades, said Caroline Chase, a partner at law firm Allen Matkins Leck Gamble Mallory & Natsis LLP, who specializes in land-use law.
“That would likely include a substantial seismic upfit [and] that could hinder projects from moving forward,” she said.
She added that SB 1227 has prevailing-wage and skilled/trained workforce requirements associated with it that could create challenges and added costs for construction workforce.
The hurdles to converting office buildings in San Francisco into new uses are but one example in one city — albeit one of the more challenging markets to turn obsolete office inventory into new uses. But what’s stymying projects there illustrates how policy and regulation change are a significant piece of the puzzle in getting conversions anywhere in the U.S. across the finish line.
In some places, it’s simply how long it takes to get a project through a city land-use and planning department. Those focused on downtown revitalization and development say making that process more streamlined is one way to get projects approved quicker and provide greater certainty to developers embarking on already risky conversion deals.
Nolan Marshall, executive director of the South Park Business Improvement District in Los Angeles, said in a recent interview a lot of municipalities have struggled to streamline their regulation process.
“You have to disentangle the process and make it easier for people to get permits for capital to flow in your community, and flow in a fast way,” Marshall said. “It’s challenging enough to figure out how to do a conversion from an office building to a residential building. If it takes a developer 12 months in L.A. — and that’s being optimistic — [and] it takes them five months in Austin, Texas, that capital will flow to Austin, Texas.”
Paynter said state and local governments have the ability to move more effectively and quickly than the federal government, even if they are smaller-scale efforts. But in many places, he said, local programs on the whole are overly complicated.
Both Paynter and Whelan cited Calgary, Alberta, Canada as an example of a government with a relatively simple conversions program, including the clarity that’s provided around incentives.
Calgary says it currently has 13 office buildings actively being converted, and four under review, into new uses. In cities across the U.S., there were only 42 office conversions actively underway in September that were expected to be finished in 2024, according to CBRE.
“In talking to developers, the two terms that come to mind are certainty and ease,” Whelan said. “The lack of certainty in this whole process, given the risk and expertise associated with these projects, is holding some developers back from doing these projects.”
IMAGE FROM FORTUNE BUILDERS
Homeownership can be a powerful wealth-building tool, and one way homeowners can leverage their property to grow their wealth is through a Home Equity Line of Credit (HELOC). A HELOC allows homeowners to tap into the equity they’ve built in their home to access funds for various purposes, including purchasing an investment property. Here’s how homeowners can use a HELOC to make this move:
1. Understanding HELOC Basics:
• A HELOC is a revolving line of credit secured by your home, similar to a credit card but with a lower interest rate.
• The amount you can borrow is based on the equity you have in your home, which is the difference between your home’s market value and the balance you owe on your mortgage.
2. Benefits of Using a HELOC for Investment Property:
• Flexibility: You can use the funds from a HELOC for various purposes, giving you the flexibility to invest in different types of properties or projects.
• Potential tax benefits: In some cases, the interest paid on a HELOC used for investment purposes may be tax-deductible, but it’s essential to consult with a tax advisor to understand your specific situation.
3. Steps to Purchase an Investment Property Using a HELOC:
• Evaluate Your Equity: Determine how much equity you have in your home and how much you can borrow through a HELOC.
• Research Investment Opportunities: Research potential investment properties to find one that fits your budget and investment goals.
• Apply for a HELOC: Contact your lender or financial institution to apply for a HELOC. The approval process typically involves a credit check and an appraisal of your home.
• Use the Funds Wisely: Once approved, use the funds from your HELOC to put towards a down payment when purchasing an investment property.
• Manage Your Investment: After purchasing the property, manage it effectively to ensure it generates a positive return on your investment.
4. Risks to Consider:
• Risk of foreclosure: Since a HELOC is secured by your home, failing to repay the loan could result in foreclosure.
• Variable interest rates: HELOCs often have variable interest rates, which means your monthly payments could increase if interest rates rise.
Conclusion:
Using a HELOC to purchase an investment property can be a smart financial move for homeowners looking to diversify their investment portfolio and build wealth. However, it’s crucial to carefully consider the risks and seek professional advice to make an informed decision.
AARON ONTIVEROZ/MEDIANEWS GROUP/THE DENVER POST VIA GETTY IMAGES
Russell Wilson appears to be making a quick departure from Denver and will lose $3.5 million as he goes.
The Broncos’ recently released quarterback has sold his Cherry Hills Village home for $21.5 million, according to property records recorded on March 20. That’s compared to the record $25 million he and his wife, singer-songwriter Ciara, paid for the home at 10 Cherry Hills Park Drive on April 1, 2022.
After the Broncos released Wilson earlier this month, Wilson signed a one-year deal with the Pittsburgh Steelers. The Steelers will pay Wilson $1.21 million, while the Denver Broncos will pay the remainder of his $39 million salary, according to the Associated Press. In all, Wilson will essentially be paid $124 million for two years of service and 11 wins with the Broncos, according to 9News’ reporting.
It was reported in February that Wilson and his wife were quietly seeking offers on their 13,000-square-foot home on a 5.34-acre property. It boasts four bedrooms, 12 bathrooms and a 2,590-square-foot pool house with an indoor pool.
Property records show it is now owned by Cherry Park LLC, an entity formed just a week before the purchase, according to Colorado Secretary of State records.
The deed transferring the home was signed in Washington state by Duchess Investments LLC manager Scott Pickett. Pickett also appears to be the director of Russell Wilson Quarterback Academy, Wilson’s Seattle-based business that says it is “dedicated to providing the highest level of instruction for quarterbacks of all ages.”
Wilson also owns a waterfront mansion in the Seattle area that he listed in 2022 for $36 million, according to previous reporting. The price of the home, which originally included a second parcel of land valued at $8 million, has since dropped to $28 million and then $26 million as it sits on the market.
PHILLIP SPEARS, GETTY IMAGES
There remain a number of unknowns about how the National Association of Realtors settlement reached late last week will shake up the housing market.
The NAR on Friday said it had reached a $418 million settlement to end a number of class-action lawsuits targeting its commission structure. The lawsuits alleged a conspiracy between the NAR, multiple listing services and brokers to keep commissions high by largely requiring home sellers to pay buyer-broker commissions, and to require those commissions to be listed on listing services.
There is still a great deal of uncertainty about how the settlement will play out — among the actions still needed is a judge to approve it.
But one of the proposed changes, as part of the NAR’s agreement, is that buyers must enter formal representation agreements with MLS members so they’re aware of what their agents will charge for their services. The NAR also said it has agreed to put in place a new MLS rule that prohibits offers of broker compensation on the MLS. These changes are expected to go into effect in July.
While the biggest reform may be around how real estate agents get paid, most in the industry say it’s still too early to know what impact it’ll have more broadly on the business of buying and selling homes. That the shift is a significant one is obvious, but whether that will affect how buyers and sellers operate within the market — and when — is debatable.
“Real estate is always supply and demand,” said Brandon Brittingham, CEO of The Maryland and Delaware Group of Long & Foster Real Estate in Salisbury, Maryland. “A lot of things cause people to buy and sell a house. If there are structural changes to more cost being put on the buyer, I think that negatively affects the buyer and positively affects the seller.”
But, he continued, what’s still up in the air is how many buyers will ultimately be paying agent commissions, and how much. With a move to a more negotiated fee commission, that doesn’t necessarily mean the standard regime — a 6% commission split between the buyer and seller brokers, and paid for by the seller — will go away entirely.
Brittingham said it’s frustrating that the litigation was intended to protect consumers but some changes could ultimately end up hurting them. Most tracking the lawsuits have said, though, the homebuying process will become more transparent with the reforms.
In the wake of the settlement announcement, there have been a lot of myths about the 6% commission going away entirely, Brittingham said. Sellers may decide to continue offering to pay a buyer agent’s commission, he said, as a tactic to draw more potential buyers — and the more people interested in buying that house, the more money you could potentially get from selling it.
“For first-time homebuyers, it’s always a struggle for them from a financing standpoint, especially in a competitive market,” he said. “If they have to pay the commission, they’re going to get squeezed out of the market.”
Affordability has been a signature challenge of the pandemic-era housing market, especially in the wake of rapidly rising mortgage rates that began after the Federal Reserve started to hike interest rates in 2022. Zillow Group Inc. (NYSE: ZG) recently found buyers need to make more than $106,000 to comfortably afford a home, an 80% increase from the $59,000 needed in 2020.
If there’s even a perception that buyers — especially cash-strapped first-time buyers — will now have to pay another fee to close on a home, it could serve as one more deterrent to enter the housing market, some in real estate say.
Suzanne Seini, founder of Innovate Realty Inc. in Irvine, California, said in an emailed statement if a buyer’s agent fails to negotiate their commission with the seller, they will have to contract and arrange compensation to be paid by the buyer. That can then strain first-time buyers, in particular, who may already be exercising their maximum budget to buy a home in the price point and area they desire.
“This additional financial strain could potentially bump them out of their purchase price tier to cover buyer agent commission,” Seini said.
Although the spring housing market is already seeing more listings than last year, which is then predicted to lure more buyers into the market, it’s possible the recent headlines will detract would-be buyers.
“If somebody is on the fence, they may sit on the fence a little bit longer,” said Phil Crescenzo Jr., vice president of the Southeast division at Marlton, New Jersey-based mortgage lender Nation One Mortgage Corp. “If they’re ready to buy, then they’re going to do it — if interest rates aren’t going to deter them, (this won’t). It’s so case by case.”
There might be a perception, especially early on, among buyers that an agent commission is yet another fee to be paid on top of already high housing costs. But that amount can be negotiated, Crescenzo said, and will vary with market conditions.
“You’re going to see maybe stronger offers if they want to move a property,” he continued. “But (this is) all new. There’s no context to draw from.”
Questions have arisen, too, about how the mortgage industry may be affected by the upcoming changes.
The Mortgage Bankers Association in a statement to The Business Journals Tuesday said it was monitoring the outcome of the settlement, including the likelihood of new approaches to buyer agent commissions. An MBA representative wasn’t available for an interview by deadline but Bob Broeksmit, the association’s president and CEO, spoke briefly about the situation this week at the MBA’s National Advocacy Conference in Washington, D.C.
“There will be market reactions to this settlement, and it will create openings for other business models where we want the buyer represented, but the seller may not want to pay 3% for a buyer’s agent,” Broeksmit said at the conference. “One of those models could be that you, as lenders, license your loan officers as real estate agents and offer the buying agent service for less than a 3% fixed-fee point. And some of you will say, I want nothing to do with that. Others of you will say, that is a great retention opportunity for my loan officers and the market will figure all this out.”
A spokesperson for the MBA said it would continue its engagement with the Federal Housing Administration, Department of Veterans Affairs and Fannie Mae and Freddie Mac about any guideline changes that may be needed in the future.
The association continues to advocate that, if any buyer-agent commission is paid directly by the seller (rather than indirectly through the listing agent), that it not be included when calculating maximum seller contributions for conventional or government loans, the spokesperson added.
Many mortgage lenders share leads with a real estate brokerage in exchange for a fee — and a lot of lenders get referrals from buyer agents. But those practices might change with the buyer agreement requirement and commission structure shakeup, so there could be less reason to spend thousands of dollars a month in marketing agreements, Crescenzo said.
“That’s something as lenders we haven’t had to think about,” he continued. “That’s a change that we’ll have to monitor.”
Marty Green, a principal at law firm Polunsky Beitel Green, which specializes in serving mortgage lenders, said the possibilities that buyer broker costs will be passed on to the buyer may impact government-backed loans for veterans and first-time homebuyers, which often place limitations on what expenses buyers can incur.
While it is still too early in the process for mortgage lenders to craft definitive policies around these industry changes, it isn’t too soon for mortgage companies to start having discussions with government agencies on how to implement any needed changes once the dust settles, Green said.
Ultimately, some loan programs may be revised so that buyers can roll their broker costs into the home loan amount —essentially getting it financed.
“Absent such an adjustment in underwriting guidelines, the affordability of home ownership, which is already stressed, will simply become out of reach for many Americans,” Green said.
That is especially so for Veterans Affairs loans, which allow service members to purchase homes with no down payment, but with limitations on out-of-pocket costs.
“Without a change in VA loan guidelines, VA loans could become particularly tricky if the seller is unwilling to pay the buyer’s agent because of current limitations on what the veteran is allowed to pay in terms of expenses in the transaction,” Green said.
Why Join Us?
· As a sales agent you will be able to leverage the team’s existing listings, both residential and commercial to help build your business.
· You will have access to a strong support, marketing and administrative staff. Allow the team to do most of the administrative work for you so you can focus on what you do best…SALES! Service more clients when you are not busy with paperwork and operations.
· You will learn a lot about real estate investing. From beginner topics in residential to advance investing strategies in commercial multifamily assets
· Get access to the best real estate deals to purchase and invest for yourself.
· Financial Freedom! Since we specialize in real estate investments, our mission to ensure every team member builds wealth through real estate and achieves financial freedom!
View the Job Post Below
The Commercial & Residential Real Estate Advisor-Sales Agent is an individual who is highly sociable, draws energy from working with people, and is optimistic and outgoing. They must have strong business acumen and a strong sense of urgency, but not at the expense of quality. In addition, he/she demonstrates on a daily basis the knowledge, attitudes, skills, and habits of a high-achieving sales agent who is committed to putting clients first, doing the right thing, and seeking win-win agreements. The Sales Agent prospects for leads daily, closes those leads to appointments, closes for agreements, and then conducts a high-level fiduciary needs analysis for each client. They will also act as the Showing Agent who will select homes/properties that meet the criteria and will drive the clients to the homes or investment properties. This agent receives assistance from the team to negotiate the offer, write the contract, and oversee the deal through its close.
The Sales Agent also demonstrates a commitment to learning and strives for growth by regularly attending courses and regularly practicing scripts and dialogues. This person would be committed to learning more about both residential real estate and commercial multifamily investment sales.
View the Job Post Below
Want to apply? Send your cover letter and resume to:
C2 MEDIA
After two apartment communities in Denver and Castle Rock sold for a combined $132.5 million, brokers involved in the deal say the Denver multifamily market may be trending up.
The buyer, Virginia-based Harbor Group International LLC, also known as HGI, paid $75 million for The Prospector Modern Apartments at 3360 Esker Circle in Castle Rock, according to property records. It paid $57.5 million for the Ladora Modern Apartments at 18590 E. 61st Ave., near the Rocky Mountain Arsenal National Wildlife Refuge, according to property records.
HGI now owns 10 properties in the Denver area. Greg Heller, managing director of acquisitions at HGI, said in a release that Denver “is expected to attract more residents as the city’s investment in transportation and infrastructure creates additional jobs and opportunities in the market.”
CBRE’s Terrance Hunt, Shane Ozment, Andy Hellman and Justin Hunt and their multifamily investment properties team represented The Garrett Companies in the deal.
Both apartment communities are new construction and are currently more than 80% leased, according to HGI.
The Prospector apartments feature one-, two- and three-bedroom units with amenities that include a pool, fitness center, dog park and more. At 238 units, the sales price per unit was $315,126.
At 196 units, the sales price for the Ladora community was $293,367 per unit. Ladora apartments feature one-, two- and three-bedroom units with attached and detached garages, a pool, a fitness center and outdoor kitchens.
As part of CBRE’s multifamily team, Hunt and Ozment were part of ongoing litigation that sidelined them from working after they left Newmark for CBRE in 2021.
But since getting back to business, they’ve been on a roll.
“We’re ramped back up and feel we’re hitting our stride, and we’ve been able to perform in a difficult market because we’ve been through several downturns before, since we’ve been doing it almost three decades,” Hunt said.
In addition to these two property sales, the team brokered three deals in December, including the $125.5 million sale of Platform at Union Station. Hunt said the team is on pace to finish five deals in February, “a pace we haven’t seen in a while.”
Hunt added that HGI, an institutional buyer, came onto the scene even though the properties hadn’t stabilized yet. Plus, HGI was in a bidding war with another group for both properties, “something we haven’t seen in over a year,” Hunt said.
After the volatility created by interest rates, the multifamily market is getting more stable, and with rate cuts on the horizon, potential buyers are making sure they don’t miss their window of opportunity, according to Hunt.
“We are seeing some institutions call us and demonstrate through these transactions that they want to get in ahead of the wave,” Hunt said.
Looking ahead to the rest of the year, Hunt said the outlook is much more positive than it’s been in recent times.
“We’re optimistic, but one thing we’ve learned is you’re never too sure what’s going to happen around the corner,” Hunt said.
