By MICHELLE CONLIN, AP Real Estate Writer Michelle Conlin, Ap Real Estate Writer  – Mon Oct 4, 5:46 pm ET

The Viceroy, a swanky condominium complex in downtown Miami, gives the impression that the United States is in another real estate boom. The sales office is strangely exuberant. Buyers gush about the glam condos — designed by hipster tastemaker Kelly Wearstler — and their hotel-like amenities: poolside libations, daily housekeeping and room service food stirred up by a celebrity chef.

Since January, 262 of the Viceroy’s 372 units have sold. But there’s a twist: Almost 90 percent of the buyers are foreigners. And they all paid cash.

The Viceroy’s story is playing out across Miami. Individual investors from as far as Argentina, Canada, Colombia, France, Israel, Italy, Norway and Venezuela are swarming the city’s sales offices to get in on what they see as one of the greatest real estate fire sales in the history of the United States.

At one time, these people would have invested in the U.S. stock market. Now they see the opportunity of a lifetime in the nation’s debilitated housing market. The idea is to rent out the properties and then sell them once the economy turns around.

The math is seductive: Prices at the Viceroy are roughly 52 percent off the 2007 peak. Units once sold for as much $670 a square foot. Today the average price is $319.

“I have never seen such a high concentration of foreign nationals acquiring real estate,” says Peter Zalewski, who has been in real estate for 15 years and founded Condo Vultures, a consulting and brokerage firm. “Eighty percent of the sales in downtown Miami are foreign-based. This is unprecedented.”

Miami is hardly the only hot spot for buyers from outside the United States. Real estate brokers say they’ve seen a surge in Washington, New York, Las Vegas, Los Angeles and San Francisco. In Seattle, Asians are buying property sight unseen, says Joe Brazen of Brazen Sotheby’s International. In New York, 25 percent of buyers at the Armani-designed 20 Pine building, near the World Trade Center site, are from overseas.

“It’s a positive in a sea of negatives,” says Jonathan Miller, chief executive of Miller Samuel, a real estate consulting firm in New York.

This year in Phoenix, for the first time, there have been more buyers from Canada than from California, according to real estate data outfit Information Market. With the Canadian dollar approaching parity with its U.S. counterpart, the opportunity was simply irresistible to Jim Chuong, a 38-year-old Novartis sales manager from Toronto.

Chuong, whose house in Canada is already paid off, used to invest in U.S. stocks. Now he’s investing in Phoenix condos, paying $50 a square foot for units that would cost $500 a square foot in Toronto.

“It’s ridiculous is what it is,” Chuong says.

For foreigners with cash, the deals can make them money from day one. Chuong buys two-bedroom condos for less than $40,000 in low-crime areas. He only picks up units that already have renters. After paying association fees and taxes, he walks away with $300 a month, pre-tax, on each. The deals are now easy to do, thanks to the cottage industry of companies that has grown up to manage virtually everything for foreign buyers, down to badgering renters for the monthly check.

For the international investor class, the United States’ bloated inventory of homes, high unemployment and weak currency make for an unusually attractive buyer’s market.

“Never before have all these things come together like this,” says Patrick O’Neill, chief executive officer of the Hong Kong-based O’Neill Group, which helps Chinese invest in international real estate. O’Neill says Chinese buying in places like New York is on track to double this year.

“Unless you want to go to Baghdad,” O’Neill says, “the United States is the best you can get.”

The trend is showing up in the statistics. In a National Association of Realtors report released in July, 28 percent of brokers reported they had worked with at least one international client, up from 23 percent a year earlier. Among those, 18 percent had completed at least one sale, compared with 12 percent in the 2009 report.

“I was going invest in the stock market, but I decided to invest in real estate instead,” says Diego Garcia, a Mexico City native on assignment in New York City with Pfizer Inc., where he is a regional finance director. Garcia paid $850,000 for a Manhattan one-bedroom in a gleaming new high-rise that he plans to live in for now. “I’m a conservative guy,” Garcia says, “and this was more conservative.”

That’s not to say there aren’t steep risks. An economic jolt could easily throw the whole plan into disarray. The housing market is far from a recovery. In many places, prices continue to fall. What happens if currency values reverse and a foreign owner needs a quick sale? Or a renter bolts in the middle of the night, leaving an empty unit and no cash flow?

It’s not as if foreign buying can be counted on for a housing market turnaround. Overseas buyers represent a mere 7 percent or so of today’s total. Yet in some cities, such as Miami and Washington, the foreign sales are helping to stabilize the markets.

In past downturns, buying a property in the U.S. was the prestigious purview of the wealthy, but today the market is within reach of the swelling ranks of the global upper-middle class.

Colombians, who often call Miami the most beautiful city in their country, have always been drawn to Florida. The difference now is the upside-down economics. It is cheaper to buy in Miami than in Bogota, and you can fly between the two cities for $59 each way.

“Muchos muchos muchos muchos opportunity,” says Elsa de Blaschke, who owns a construction company with her husband in Barranquilla, Colombia, and is hunting for an investment property to buy in Miami. De Blaschke chose not to invest the capital at home because she says Florida offers a better chance of a bigger return.

“The international buyer pool is better than we have ever seen it before,” says Phillip White, president of Sotheby’s International, based in New York.

To match demand, U.S. brokerages are hiring agents who can speak foreign languages and are pouring more resources into marketing overseas.

In October, agents from 11 Sotheby’s International branches will descend on Hong Kong’s convention center to regale wealthy buyers there with slick visuals on showcase properties. In Toronto, agents from Florida Home Finders play to crowds of 800 every other Sunday at a Holiday Inn banquet hall. Jenny Huertas, Condo Vultures’ international sales director, throws seminars for potential clients across South America.

“Their jaws drop. They can’t believe it,” Huertas says. “They think these deals are too good to be true.”

By ALEX VEIGA, AP Real Estate Writer Alex Veiga, Ap Real Estate Writer   – Fri Sep 24, 4:43 pm ET

LOS ANGELES – KB Home said Friday it narrowed its fiscal third-quarter loss, as the homebuilder booked fewer write-downs and higher average selling prices helped boost revenue.

But the company’s backlog, which represents future housing revenue, dropped, and net orders fell 39 percent, as demand slowed after federal homebuyer tax credits expired in April.

President and CEO Jeffrey Mezger said orders in June — traditionally one of the builder’s best-selling months — fell by half versus the same month last year. Orders gradually improved as the summer unfolded, but they remained well below prior-year levels.

“While we have seen improvement in our net orders over the past few months, sales remain soft and the weak economy continues to be a major impediment to any housing recovery,” Mezger said.

The economic downturn, high unemployment and tight credit continue to keep many from buying homes, even with some of the lowest mortgage rates in decades. Demand for homes plunged to historic lows this summer following the end of the homebuyer tax credits.

The Commerce Department said Friday that new home sales in August were unchanged from July, but declined 29 percent from the same month last year.

Builders also face competition from a glut of unsold homes. At the current sales pace, it would take about a year to exhaust the supply of previously occupied homes on the market. Homes lost to foreclosure, which are expected to eclipse the 1 million mark this year, could further add to that glut, and put pressure on builders to lower prices.

So far, KB has been able to hold the line on prices overall, but Mezger noted that could change.

“Our primary goal right now is to hold margins,” he said. “On a community specific basis, we may need to get more aggressive as the quarter unfolds, if the markets don’t improve …”

KB Home said it lost $1.4 million, or 2 cents a share, in the three months ended Aug. 31. That compares with a loss of $66 million, or 87 cents a share, a year earlier.

The quarter’s results included $3.3 million in inventory impairment and land option contract abandonment charges. This is considerably lower than the $47.7 million for similar charges in the prior-year period.

Revenue rose 9 percent to $501 million, the first year-over-year increase in almost four years,

The performance was much better than the loss of 15 cents per share and revenue of $477.8 million that analysts polled by Thomson Reuters expected. These estimates usually take out one-time items.

The builder’s shares rose 40 cents, or 3.4 percent, to $12.11.

KB Home, based in Los Angeles, builds homes to order for entry level, move-up buyers and seniors in 11 states and Washington, D.C.

It closed the quarter with a backlog of 2,169 homes, indicating potential future housing revenue of about $455.3 million. This is below the prior-year’s total, which was 3,722 homes with potential revenue of approximately $734.1 million.

On the order front, KB faced a tough comparison to the third quarter last year, when it posted a 62 percent jump in contracts. Net orders fell to 1,314 compared with 2,158 a year earlier.

Still, the builder’s average selling price was a bright spot, climbing 6 percent to $214,200. And the number of homes delivered increased 4 percent to 2,320.

The company’s cancellation rate was slightly higher at 21 percent. It was 20 percent the year before.

Ticonderoga Securities analyst Stephen East said in a research note that the builder’s orders were “a disaster,” but noted the company’s average selling price suggests KB “is no longer in the business of driving volumes, but instead, in the business of driving profits.”

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By Lucia Mutikani Lucia Mutikani   – Wed Sep 22, 3:54 pm ET

WASHINGTON (Reuters) – U.S. demand for home loans fell for a third straight week last week while prices for single-family homes retreated further in July as the housing market struggles for balance with less government support.

Loan applications to buy homes fell 3.3 percent, the Mortgage Bankers Association said on Wednesday. A second report showed the Federal Housing Finance Agency’s house price index dropped 0.5 percent after falling 1.2 percent in June.

The beleaguered housing market, the main catalyst of the worst recession since the 1930s, has hit a soft patch following the end of a popular homebuyer tax credit in April, posing a threat to the fragile economic recovery.

While much of the housing market weakness has been blamed on the expiration of the tax credit, analysts said stubbornly high unemployment was also sapping demand for homes.

“We fear that a more long-lasting slide is under way. High unemployment, heavy indebtedness and widespread negative equity are weighing on housing demand,” said Paul Dales, a U.S. economist at Capital Economics in Toronto.

Although the U.S. recession officially ended in June last year, the pace of economic growth has been too sluggish to bring down a 9.6 percent unemployment rate.

The recovery has lost significant momentum, stoking fears in financial markets of a new recession.

STIFFER HEADWINDS

White House Council of Economic Advisers chairman Austan Goolsbee told the Reuters Washington Summit he did not believe a double-dip recession was a likely scenario.

“The headwinds have been stiffer than we wanted them to be in the summer and the first three months of the year looked like growth was going to be more robust than it’s been,” said Goolsbee. “But I anticipate steady growth, not a double-dip, but not a V-shape.”

With jobs scarce, homeowners are losing their houses, causing an oversupply that is weighing on prices.

Near record-low mortgage rates are doing little to stimulate demand with lending standards still tight. The Mortgage Bankers Association’s index measuring both purchase and refinancing applications last week fell 1.4 percent.

But there is room for guarded optimism. A report on Tuesday showed groundbreaking for new U.S. homes rose 10.5 percent last month, the biggest jump since November, offering some hope the market was stabilizing.

A cautiously optimistic tone was also sounded by David Stevens, head of the U.S. Federal Housing Administration.

“I think we are at minimum near bottom and we may be at bottom,” Stevens told a congressional panel.

The FHA, which provides federal guarantees on loans, is one of the government’s main props for the sector.

Data later this week is expected to show sales of previously owned and new homes rebounded in August from July’s steep declines. Although housing only accounts for a fraction of gross domestic product, it has an out-sized reach.

In the 12 months to July, the FHFA house price index fell 3.3 percent. It is 13.8 percent below its April 2007 peak.

“The big downward adjustment in prices is already behind us, but a second downward leg will still undermine the wider economic recovery,” said Capital Economics’ Dales.

(Additional reporting by Corbett Daly in Washington and Lynn Adler in New York; Editing by Chizu Nomiyama)

By Lucia Mutikani Lucia Mutikani   – Tue Sep 21, 4:36 pm ET

WASHINGTON (Reuters) – Groundbreaking for new U.S. homes jumped in August to a four-month high, a tentative sign of stability in the housing market after steep declines brought by the end of a homebuyer tax credit.

While the data on Tuesday further allayed fears that the recovery from the worst recession since the Great Depression was at risk, the Federal Reserve took a step toward a new round of monetary easing to stimulate growth.

In a statement at the end of a one-day meeting, the U.S. central bank said its policy-setting committee “is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.

Analysts said the Fed was likely to resume purchases of longer-term U.S. government bonds by year-end to keep interest rates low, but it would depend on economic data.

“By November, we believe that the evidence will continue to accumulate of very weak growth and continued disinflationary pressures,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington Massachusetts.

“There are greater-than-even odds that the FOMC will vote to take proactive measures on quantitative easing at the November meeting.”

Housing starts rose 10.5 percent, the largest increase since November, to an annual rate of 598,000 units, the Commerce Department said. Financial markets had looked for a rise to just a 550,000-unit rate.

Prices of U.S. government bonds rallied as investors welcomed the Fed’s bias toward further monetary policy easing, but stocks ended flat to marginally lower. The dollar fell sharply against the yen and the euro.

WEAK RECOVERY

Construction was bolstered by a big jump in activity in the volatile multi-family segment, which increased by nearly a third to an annual rate of 160,000 units in August. Single-family starts increased 4.3 percent to a 438,000-unit pace, the highest since June.

But analysts were concerned that most of the gains were coming from the multi-family segment, a smaller portion of the housing market, and saw only a subdued recovery.

The housing market has hit a soft patch following the end of a popular homebuyer tax credit in April and a survey on Monday showed sentiment among home builders remained mired at an 18-month low in September.

Although the recession ended in June last year, the unemployment rate is at a stubbornly high 9.6 percent, and there is an oversupply of homes on the market.

“It is reasonable to believe that the post-tax credit plunge in housing activity, both sales and construction, is over, but we do not expect to see a strong recovery any time soon,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

“Activity will likely creep higher as great affordability pulls people into the market, but that’s about the best we can hope for in the foreseeable future.”

Last month, new building permits for future home construction rebounded 1.8 percent to a 569,000-unit pace, lifted by a 9.8 percent rise in permits for multi-family units. Analysts had expected a 560,000-unit pace. Permits for single family homes fell for a fifth straight month.

(Editing by Dan Grebler)

By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer  – 11 mins ago

WASHINGTON – Nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out.

The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday’s report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year.

“The government program as currently structured is petering out. It is taking in fewer homeowners, more are dropping out and fewer people are ending up in permanent modifications,” said Mark Zandi, chief economist at Moody’s Analytics.

Besides forcing people from their homes, foreclosures and distressed home sales have pushed down on home values and crippled the broader housing industry. They have made it difficult for homebuilders to compete with the depressed prices and discouraged potential sellers from putting their homes on the market.

Approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the government program have been cut loose through July, according to the Treasury report. That’s about 48 percent of the those who had enrolled since March 2009. And it is up from more than 40 percent through June.

Another 421,804, or roughly 32 percent of those who started the program, have received permanent loan modifications and are making their payments on time.

RealtyTrac reported that the number of U.S. homes lost to foreclosure surged in July to 92,858 properties, up 9 percent from June. The pace of repossessions has been increasing and the nation is now on track to having more than 1 million homes lost to foreclosure by the end of the year. That would eclipse the more than 900,000 homes repossessed in 2009, the firm says.

Lenders have historically taken over about 100,000 homes a year, according to RealtyTrac.

Zandi said the government effort will likely end up helping only about 500,000 homeowners lower their monthly payments on a permanent basis. That’s a small percentage of the number of people who have already lost their homes to foreclosure or distressed sales like short sales — when lenders let homeowners sell for less than they owe on their mortgages.

Zandi predicts another 1.5 million foreclosures or short sales in 2011.

“We still have a lot more foreclosures to come and further home price declines,” Zandi said. He said home prices, which have already fallen 30 percent since the peak of the housing boom, would drop by another 5 percent by next spring.

Many borrowers have complained that the government program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.

The banking industry said borrowers weren’t sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.

Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers’ monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out.

Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period. Those who have successfully navigated the program to reach permanent modifications have seen their monthly payments cut on average by about $500.

Homeowners first receive temporary modifications and those are supposed to become permanent after borrowers make three payments on time and complete all the required paperwork. That includes proof of income and a letter explaining the reason for their troubles. But in practice, the process has taken far longer.

The more than 100 participating mortgage companies get taxpayer incentives to reduce payments. As of mid-June only $490 million had been spent out of a potential $75 billion the government has made available to help stem the wave of foreclosures.

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AP Real Estate Writer Alan Zibel in Washington and Alex Veiga in Los Angeles contributed to this report.