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850,000 Properties Bounce Back to Positive Equity!

June 16, 2013

Residential property analytic provider

CoreLogic® recently released new analysis

showing the market is making big moves, with

850,000 additional residential properties turning

to positive equity during the first quarter of 2013.

In addition, the analysis shows good news for

mortgages: the total number of mortgaged

residential properties standing in negative equity

is down by nearly 1 million from the previous

quarter, moving from 10.5 million (21.7 percent)

at the end of the fourth quarter of 2012, to 9.7

million (19.8 percent) in the first quarter of 2013.

The national aggregate value of negative equity decreased more than $50 billion to $580

billion at the end of the first quarter from $631 billion at the end of the fourth quarter of 2012.

This decrease was driven in large part by an improvement in home prices.

“We are seeing an increase in homeowner equity as home prices continue to rise,” said Rei

Mesa, President & CEO of Prudential Florida Realty in January’s issue of RISMedia’s Real

Estate magazine. “This translates to a larger number of homeowners who are no longer

underwater and can move up, or make a lateral move or downsize because they are now in a

position to sell their home. With this lift in homeowner equity, we should experience a rise in

traditional home sales.” Of Quick read more or view full article the 39 million residential properties with positive equity, 11.2 million have less than 20

percent equity. At the end of the first quarter of 2013, 2.1 million residential properties had

less than 5 percent equity, referred to as near-negative equity. Under-equitied mortgages

accounted for 23 percent of all residential properties with a mortgage nationwide in the first

quarter of 2013. The average amount of equity for all properties with a mortgage is 32.8

percent.

“The impressive home price gains of 2012 and the beginning of 2013 have had a big impact

on the distribution of residential home equity,” says Dr. Mark Fleming, chief economist for

CoreLogic. “During the past year, 1.7 million borrowers have regained positive equity. We

expect the pent-up supply that falling negative equity releases will moderate price gains in

many of the fast-appreciating markets this spring.”

“The negative equity burden continues to recede across the country thanks largely to rising

home prices,” says Anand Nallathambi, president and CEO of CoreLogic. “We are still far

below peak home price levels, but tight supplies in many areas coupled with continued

demand for single family homes should help us close the gap.” Highlights as of Q1 2013:

Nevada had the highest percentage of mortgaged properties in negative equity at 45.4 percent,

followed by Florida (38.1 percent), Michigan (32 percent), Arizona (31.3 percent) and Georgia (30.5

percent). These top five states combined account for 32.8 percent of negative equity in the U.S.

Of the largest 25 metropolitan areas, Tampa-St. Petersburg-Clearwater, Fla. had the highest

percentage of mortgaged properties in negative equity at 44.1 percent, followed by Miami-Miami

Beach-Kendall, Fla. (40.7 percent), Atlanta-Sandy Springs-Marietta, Ga. (34.5 percent), Chicago-

Joliet-Naperville, Ill. (34.2 percent) and Warren-Troy-Farmington Hills, Mich. (33.6 percent).

Of the total $580 billion in negative equity, first liens without home equity loans accounted for onehalf,

or $290 billion aggregate negative equity, while first liens with home equity loans accounted for

the remaining half at $290 billion.

6.0 million upside-down borrowers hold first liens without home equity loans. The average mortgage

balance for this group of borrowers is $211,000. The average underwater amount is $48,000.

3.7 million upside-down borrowers hold both first and second liens. The average mortgage balance

for this group of borrowers is $294,000.The average underwater amount is $79,000.

The bulk of home equity for mortgaged properties is concentrated at the high end of the housing

market. For example, 88 percent of homes valued at greater than $200,000 have equity compared

with 73 percent of homes valued at less than $200,000. “As leaders and agents, it is up to us to get the word out,” said Gary Scott, President of Long

& Foster Real Estate, during RISMedia’s recent Power Broker Forum at NAR Midyear. “There

is a huge opportunity for people who had negative equity to come back into the market. We

have to help those sellers. It’s about a grass roots effort—about taking your sphere of

influence and walking them through the reality of the market.”

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Commercial resurgence? Gunnison real estate market springs to life in

June 8, 2013
 
 
Commercial resurgence? 
Gunnison real estate market springs to life in recent months
Times Editor
Originally published 2013-05-30

Over the last six months, a glut of commercial properties on the market in the City of Gunnison has been whittled away by a growing number of ventures new to town.

So far this year, a total of three noteworthy, non-lodging commercial or industrial properties have sold, accounting for nearly $1.2 million in sales within the city, according to Multiple Listing Service (MLS) data. And those only include parcels that were listed at the time of sale.

By way of comparison, four commercial properties (totaling $670,000) changed hands in Gunnison in all of 2012 — a year during which commercial sales activity was significantly higher than the three years prior.

Yet, common among many of the commercial sales in recent months is an influx of dollars from outside the community. Large national chains such as Tractor Supply Co. and Family Dollar have staked claims along Gunnison’s busiest thoroughfares. And a few smaller businesses born in Crested Butte have expanded southward, scooping up properties that in some cases had remained on the market for years.

Longtime Gunnison Valley realtors report being encouraged by the recent activity — including that it may be a signal of bigger things to come. One need only look to the concrete walls going vertical in Van Tuyl Village or demolition taking place at the former John Quick read more or view full article Roberts Motorworks building as the most poignant examples of Gunnison’s recent resurgence in the commercial real estate market.

“The fact is, they made a commitment to come in here,” said Dan McElroy, owner of Coldwell Banker-Bighorn Realty. “There seems to be a real key element in somebody’s ability to foresee or think that the future’s going to be pretty bright for Gunnison.”

On the other hand, Erich Ferchau, owner of Re/Max in Gunnison, offered a much more measured perspective on the recent activity.

“It’s Gunnison. It doesn’t take but a few things selling and we’re hopping,” he said.

 

Companies investing 
in Gunnison 

Whether through the purchase of property for expanding an existing, up-valley business or large national chain stores’ decisions to open branches locally, some recent sales point to an influx of money from outside city limits.

Drake Real Estate of Denver quickly pushed a commercial subdivision at Van Tuyl Village through the city’s planning pipeline late last year. The anchor within that development is a Tractor Supply Co. (TSC) store currently under construction.

The site was selected by Miller Frishman Group of Denver, who works on behalf of a numerous national tenants.

So, why Gunnison?

David Spriggs of Miller Frishman couldn’t disclose TSC’s specific criteria, but he did say that he sees the city providing “overall a very stable economy within Colorado.”

“The thing I like about Gunnison that makes it a unique community within that region, obviously you’ve got the college, which is a very captive audience from a retail standpoint,” he continued. “You also have a really high number of tourist visits on an annual basis to Gunnison and the surrounding area.”

And Spriggs said that as the Front Range’s population continues to grow, he expects those tourist visits to climb in step.

He noted that TSC is only the anchor tenant at the commercial development on the north side of Gunnison, and Drake is in the process of soliciting other businesses for Van Tuyl Village.

Meanwhile, demolition of the former John Roberts building at 231 W. Tomichi Ave. is underway in preparation for a Family Dollar store. Gunnison’s Community Development Director Steve Westbay said the company has presented site plans and is in the early stages of zoning and building permit review.

A couple businesses born in Crested Butte also have acquired commercial property in Gunnison in recent months. The Sherpa family in March purchased the former Tic Toc Diner building at 323 E. Tomichi Ave., where a second branch of Sherpa Café opened.

Michael Knoll, owner of The Eldo in Crested Butte, bought The Last Chance at 620 S. Ninth St. last November, which has also resulted in a down-valley expansion of Mikey’s Pizza within the establishment.

Knoll said that he was captivated by the prospect of bringing the caliber of music booked by the Eldo to The Last Chance. But he also saw a potential for a broader-based clientele — including college students, middle-aged residents interested in good music and much of The Last Chance’s previous, country-steeped customers — at the longtime Gunnison watering hole.

“The dynamic to reach all those groups of people was more enticing than what I have up here in Crested Butte,” Knoll said, “and the fact that Gunnison doesn’t really have anything like that.”

“I think what you have to realize is we’ve gotten to a point where there’s probably some opportunities for people to make some moves,” observed Re/Max’s Ferchau. “People who have more stability financially, they can make that move with a little more confidence. ... I’m encouraged, not because of the few little things that have happened, but because I think there’s more of an acceptance that we as a community need a little bit more going on.”

 

Commercial activity a signal of bigger things to come?

Despite recent commercial sales, there’s still more people selling than buying, noted real estate broker Bill Nesbitt, owner of Nesbitt & Company.

Through last week, 38 commercial or industrial properties in Gunnison were listed on the MLS. Numerous properties on Main Street — including all three spaces currently occupied by high-end furniture retailer Interiors with Oohs and Aahs — are on the market.

And since the beginning of last year, 68 other listings either expired or were withdrawn from the market.

“I think better times are coming,” said Nesbitt. “There seems to be a belief with people bringing in outside money that they can make money.”

The question on his mind is whether the recent activity in the commercial sector will impact the larger real estate market — including residential sales.

Bighorn’s McElroy tends to think so — especially as compared to the Crested Butte area, where there’s little question that residential activity tends to drive the overall market.

“In Gunnison, because it’s really a main service area, it really stands on its own,” he said. “When somebody comes into Gunnison and puts their money down on a commercial place, you gotta believe that there’s more to it than being drawn along with the residential real estate market.”

Alpengardener owner Krista Hildebrandt hopes that distinction as a service center will help entice customers to patron a new garden center she’s opening in Gunnison. While the business is leasing the property on the south side of the city, Hildebrandt’s aim is to serve a clientele that she has found difficult drawing to the business’ main Crested Butte South location.

“Here I am offering a full-service garden center 20 miles north and nobody will come there,” she said. “My idea of expanding in Gunnison was to get more of the Gunnison market.”  
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Posted by Sigrid A. Cottrell
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