“Multicultural home buyers are younger and have larger families. They have a strong desire to own homes that are more than ‘average,’” said Lee, speaking here at the National Association of Home Builders’ International Builders Show. “New homes are special to them—nothing says to them more about success than a brand-new home.”

John Thatch, marketing coordinator with Dahlin Group Architecture Plan, Pleasanton, Calif., designs homes in the San Francisco area with Asian-American families in mind—able to accommodate large, extended families; a sense of feng shui (balance and harmony with the environment) and easy maintenance.

Neighborhoods designed for the Asian-American buyer stresses security and tranquility, with open living spaces and proximity to parks. “You don’t need a lot of space to attract the Asian-American homebuyer, but you have to be able to show that the space is used wisely. You have to ‘feel the width’ of the house—show that the family can maximize the space within the house.”

Multicultural buyers now represent one-third of all Americans today and they will make $3 trillion in annual home purchases by 2010. But they are just one of three emerging markets that home builders have their eyes on—they are also marketing to the Baby Boomers (those born between 1946 and 1964) and Generation X (1965-1979).

The Baby Boomers, an "emerging market?" Well, yes. The boomer generation—all 78 million of them—are now in their prime earning and spending years. Their appeal, Lee said, is simple—surveys show that 96 percent of boomers believe owning a home is a good investment, and they are leading the way in buying new homes. “They feel that they’ve earned the things they want to buy,” Lee said.

And Generation X, Lee said, has an emerging purchasing power that could exceed the boomers, purchasing 38 percent of homes in 2005. “They are the key trade-up demographic,” Lee said. “They, like the baby boomers, feel they are entitled to the homes they buy and the things they buy for those homes.

Thatch likes Generation X—a lot. “They are making more money at an earlier age and are better-educated,” he said. “They are willing to spend a lot of money—if they believe it is a ‘safe’ market. And they are quickly moving past the ‘first-time buyer’ demographic and into the ‘move-up’ buyer market.”

Builders have been using “target marketing” to reach niche markets for several decades, said Richard Elkman, president of Group Two Advertising, Philadelphia. Those targets range from the first-time buyer, “who is looking at price and the option of owning versus renting,” he said, to the active adult buyer who “wants it all.”

Continuity is important in the message, Elkman said. “You don’t just decide on Thursday what to have in Saturday’s newspaper,” he said. “There has to be consistency in your message—and you have to know your audience.”

Thatch is also designing neighborhoods with Generation X and Boomers in mind, incorporating elements such as open spaces, flexible room design (a four-car garage, for example, that can easily be partially converted into an apartment) and a sense of community. “Both groups like a distinctive community identity,” he said. “They like having a connection to the environment—trails, open space, walkable areas—with amenities and services close at hand.”

“You have to design to the marketplace,” Thatch said.

But Elkman warned that 80 percent of all homes sold are resales. “I can’t imagine any other market [than home builders] who are willing to ignore 80 percent of the market,” he said. “There are great opportunities to market to this marketplace, and you should be taking advantage of that.”

The multicultural market is ideally suited for new homes, Lee said. “Asian Americans and Hispanic Americans come from countries where the homeownership rate is less than 5 percent,” he said. “So the ability to own a home, particularly a new home, in America is a dream that is stronger among multicultural buyers than any other segment of the market.”

And with homeownership rates for minorities at a lower rate than that of whites, Lee said “there is ample opportunity to fill the gap.”
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Lockhart is currently a faculty member of Georgetown University's Walsh School of Foreign Service and chairs concentrations in International Business-Government Relations and Global Commerce and Finance. He also serves as an adjunct professor in the economics department at Johns Hopkins University's Nitze School of Advanced International Studies, where he teaches a course in international business.

From 1971 to 1988, Lockhart held a variety of international and domestic positions with Citibank/Citicorp (now Citigroup), including assignments in the Middle East, Latin America, New York and Atlanta. While in Atlanta between 1978 and 1986, he served as Citibank's senior corporate officer for the Southeast and was active in educational and civic affairs. From 1988 to 2001, he served as president of Heller International Group Inc. Following that service, Lockhart was managing partner at the private equity firm Zephyr Management in New York City.

Beis Resigns as Fed Governor
Susan Schmidt Bies submitted her resignation February 9 as a member of the Board of Governors of the Federal Reserve System, effective March 30. She said she does not plan to attend the March 20-21 meeting of the Federal Open Market Committee.

Bies, 59, was appointed by President Bush to a full term on the Federal Reserve Board ending January 31, 2012. During her time on the Board, she has served as chairman of the Committee on Supervisory and Regulatory Affairs; chairman of the Committee on Consumer and Community Affairs; and as a member of the Committee on Federal Reserve Bank Affairs. In addition, she represented the Federal Reserve in the Financial Stability Forum and led the Federal Reserve's efforts to modernize the Basel capital accord.

Credit Plus Promotes Kuttler
Credit Plus, Salisbury, Md., promoted Don Kuttler to Northeast regional sales manager, overseeing account executives in the Northeastern U.S. and developing new marketing opportunities.

Kuttler is a member of the Mortgage Bankers Association, National Association of Mortgage Brokers, New York Association of Mortgage Brokers and New Jersey Association of Mortgage Brokers.

Johnson, Pierce Take Positions with First American
The First American Corp., Santa Ana, Calif., announced that Philip Johnsen, has been named executive vice president of sales for the company’s Default Information Services group of companies. Filling the position previously held by Johnsen, Joni Pierce will now serve as chief operating officer for First American Residential Value View.

Johnsen will oversee all aspects of sales and marketing for First American’s Default Information Services group, which consists of product and service companies that fall into outsourcing, title and property services. He has 20 years of sales and marketing experience; he joined the company in 2002 as vice president of sales and marketing for First American Residential Value View, a position he held for three years before being promoted to chief operating officer in 2005.

Pierce, who has more than 15 years of organizational leadership, operations and product management experience, joined First American in January 2006 when she was named chief quality officer. Her prior experience includes management of multiple product lines at 3M Corp. and United Health Group and 10 years as operations manager with Medical Review Institute of America.

Kelsch to Head Fitch U.S. RMBS Groups
Fitch Ratings' Operational Risk Group, New York, has restructured its U.S. RMBS Servicer Rating and Originator Review, with Senior Director Mary Kelsch overseeing the merged groups.

Kelsch has been with Fitch for the last 10 years and was instrumental in development of Fitch’s RMBS servicer rating program. Kelsch has primarily focused on further refining the U.S. RMBS research and review into originator and issuer practices for the past five years.

ComplianceEase Promotes Travinsky
ComplianceEase, San Francisco, promoted former assistant vice president of sales Nina Travinsky to vice president of sales. She will be responsible for leading the sales efforts for ComplianceEase, which will include strategic initiatives such as the establishment of additional partner relationships with Wall Street firms and mortgage service providers. 

Since joining ComplianceEase in 2001, Travinsky has spearheaded implementation of more than 80 accounts, including GMAC Mortgage, MortgageIT, The Winter Group and Bear Stearns Residential Mortgage. Prior to joining ComplianceEase, Travinsky was a development executive with the Chinese Culture Foundation of San Francisco.
 
Portellus Adds Two to National Sales Team
Portellus Inc., Irvine, Calif., added Craig Anderson and Holt Crowder as business development mangers to Portellus’ national outside sales team.

Crowder joins Portellus as business development manager for West Coast sales, and brings more than 10 years of financial services sales experience to the company.  Prior to joining Portellus, Crowder was senior sales executive for Mortgage Cadence, and also held sales management positions at NovaStar Financial and Aames Home Loan, and served as senior vice president for Imperial Lending.

Anderson joins Portellus as business development manager for East Coast sales and brings more than 14 years of sales experience to the company. Previously, he was vice president of East Coast sales for Beanstalk Networks/OpenClose Mortgage Technology Group, and also held sales positions at First Street Mortgage, Alltel Financial Services and Community Mortgage.

Hunter Joins Visionet Systems
Visionet Systems, Cranbury, N.J., added David Hunter as senior project manager, responsible for guiding product development efforts at the company. 

Prior to joining Visionet, Hunter was a project manager for Philadelphia-based Meritor Savings Bank, a vice president of information systems at Cenlar FSB and a senior consultant for Key Properties Consulting, a N.J.-based real estate brokerage firm.
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The survey reported its Debt Financing Index slipped from last quarter to 56, but it stayed above 50 for the second consecutive quarter. A reading above 50 indicates that, on balance, conditions are improving; a reading below 50 indicates that conditions are worsening; and a reading of 50 indicates that conditions are unchanged.

The decline was likely the result of slightly higher interest rates during the last three months, according to NMHC. Meanwhile, 3 percent of respondents believed debt finance conditions worsened—a figure that tied the record low for this question. Borrowing conditions improved compared with the previous three months for more than 15 percent of respondents, and nearly 75 percent thought conditions did not change.

The Equity Financing Index showing little changed at 56 —the 14th straight reading above 50—showing that equity capital remains available for apartment investment. With two percent of respondents stating worse conditions in equity—the lowest figures ever recorded—nearly 80 percent viewed conditions as unchanged.

"Conditions remain favorable for the apartment industry across the board. The survey does hint at a possible cloud on the horizon with more than one-fifth of respondents saying that market conditions were looser over the past three months. While it's too early to say there's a problem, the increase in the number of condos and single-family houses in the rental market may dampen the otherwise positive outlook for the apartment industry," said Mark Obrinsky , chief economist at NMHC. "Over the long-term, however, fundamentals for the industry are extremely positive. Thanks to the echo boomers—the children of the baby boomers—the population aged 20-34 [the prime renter group] will increase by 3.5 million. Strong levels of immigration will also create new demand for rental housing."

The survey's Market Tightness Index slipped to 54, its lowest level in three years but the 14th consecutive quarter above 50. Demand for apartments, measured by lower vacancy rates, higher rents, or both, has been improving for 14 consecutive quarters and continues to do so, according to NMHC.

Nearly 30 percent of respondents reported tighter market conditions compared to three months ago. In most markets, conditions were generally unchanged, according to nearly half percent of the respondents. More than 20 percent reported seeing market conditions as looser.

The Sales Volume Index moved up above 40, a fifth straight sub-50 reading that indicates more markets with lower sales volume of apartment properties than there are markets with higher sales volume.

The further decline in the demand for apartment properties by condo converters continues to affect apartment sales volume, NMHC said. Excluding condo converters, apartment transactions strengthened in the last year. The volume of apartment property sales--excluding condos--in 2006 surpassed 2005's record level of $59 billion, reaching $72 billion, the survey said.
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“Why are people building in urban markets? Well, for one thing, people are moving back to urban areas in record numbers,” said Alan Lev, president of Belgravia Group, Chicago, speaking here at the National Association of Home Builders’ International Builders Show.

Urban building holds many advantages, not the least prime location. “For some builders, there are fewer barriers to entry, and it can be very profitable,” Lev said. “And you have a market of people who want to live close-in and who are willing to spend money on items, such as large windows, to enjoy that lifestyle.”

The drawbacks—and there are many drawbacks—include cutthroat competition, political red tape and zoning challenges. “You rarely get to build the same thing twice. It seems like you always have to start from scratch,” Lev said. “You’re always building next to another building, you have zoning restrictions, you have brownfields.”

Belgravia Group develops primarily in the Chicago area, which has seen a renaissance of development in the downtown/Grant Park area, drawing thousands of new residents, many of them young and affluent. Belgravia uses marketing campaigns built on the theme ‘move back to the city.’

“It’s an interesting niche, and it has appeal to those who want to be close to work, entertainment and public transportation,” Lev said.

They also have unique needs, said Charles Falls, president of Demi & Cooper Advertising, Elgin, Ill. “You have customers who have unique needs and lifestyle demands,” he said. “They want to know where the nearest movie theater is located. They want to know that their area is secure—a separate entrance from retail, security protection and good lighting.”

The key word is lifestyle, Falls said. “A lot of time you’re going to find land that is priced right, but it doesn’t have anything around it,” he said. “The buyers want to have things within walking distance. You will have to create the community to attract the community.”
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Rob LaRue of Live Oak Capital arranged the loan with NewStar Financial Inc., Boston, for $20.963 million.

Abitibi Paper Mill is at 18511 Beaumont Highway off Sheldon Road and Highway 90.  The property consists of more than 990 acres of land with 609,913 of first floor square footage. The Paper Mill has been vacant since 2001. Initially, the purchaser will be extracting the ferrous and non-ferrous metals, useable parts and equipment for sale to domestic and international buyers, according to LaRue. 

"Long term, the purchaser plans to redevelop the land and remaining structures for an industrial park.

Live Oak Capital estimates the site to contain significant amounts of non-ferrous scrap metals such as copper and stainless, ferrous scrap metals such as iron, steel beams, pipes and plate. It also has surplus parts and equipments, including electric motors, pumps, valves, electrical switch gear and transformers, overhead cranes, etc.

Live Oak Capital also arranged a fixed rate loan for the acquisition of the Eastex Industrial Park in Houston, by J. D. Hussion & Co.

Jim Kirkpatrick of Live Oak Capital arranged the loan with Ohio National Financial Services, Cincinnati, Ohio. The loan had a 75 percent purchase price and a 6.42 percent fixed-interest rate, fully amortizing for its 15-year term.

Live Oak Capital will service the loan as a mortgage loan correspondent for Ohio National Life Insurance Co. 

The buyer is CalTex Holdings LP, whose principals include Jerry Poyner,  founder and president, and Bradley Smith, vice president of Worldwide Services LLC, and Dennis Keating, a Calif.-based investor. 

The firm, established in 2004, specializes in dismantling, demolition and scrapping industrial plants and facilities.

Live Oak Capital Ltd. also arranged permanent financing for the expansion of the Tramontina Distribution Center, on Gillingham Lane. David Aaronson of Live Oak Capital arranged the loan with correspondent, Aegon USA Realty Advisors. The loan is long term and self-amortizing.

The expansion included a 175,750 square-foot new warehouse facility, making Tramontina the largest warehouse owner in the southwest Houston market, according to Live Oak Capital. 

As part of this expansion, Tramontina plans to add 60 new jobs to its workforce that already has 250 employees.

"Tramontina’s growth is evident by the need of this expansion, further enhancing the job market in Sugar Land and the surrounding area. Tramontina’s largest customers are Wal-Mart and Sam’s Club," Aaronson said.

The new expansion space will be used to store inventory for their growing business, while the previous square footage will be converted to light manufacturing space

Live Oak Capital, Ltd. will service the loan as a mortgage loan correspondent for Aegon USA Realty Advisors, Cedar Rapids Iowa.
 
Live Oak Capital, Ltd. arranged permanent refinancing for Washington Shopping Center Ltd. in Houston. Cutt Ableson of Live Oak Capital arranged the loan with Countrywide Commercial in Dallas. The loan was $3.43 million with a fixed interest rate of 5.84 percent for a term of 10 years with two years interest-only (IO) and amortized for 30 years.

Washington Plaza consists of more than 14, 600 square feet of space. It is 85 percent occupied. Center tenants include Catalan Restaurant, Amish Craftsman, River Oaks Cleaners and Cova Wine Bar. CVS Pharmacy shadow anchors Washington Plaza to the immediate east.

The center is on Washington Avenue, an east-west corridor inside loop 610. The area along this corridor is experiencing regentrification, including new retail establishments and new single family living. Washington Plaza has access to Houston Heights to the north and Rice Military and Midtown Houston to the east.

Meanwhile, Live Oak Capital arranged acquisition financing on behalf of Pelec Central City Ltd., a unit of Pelec Development Ltd. for Central City Industrial Park in Houston.

Rob LaRue of Live Oak Capital arranged the loan with Legg Mason Real Estate Investors Inc. in Los Angeles. “Legg Mason [appreciated] the underlying value of the assets, and in providing the leverage the borrowers needed to acquire this property.” LaRue said.

Hughes Tool Co. was the original name of Central City Industrial Park, a collection of 18 buildings totaling more than 1.01 million square feet of industrial space on a 75-acre site one-mile south of the Houston Ship Channel and three miles east of the central business district (CBD) .  South, in Polk, Texas, the property is nearby industrial suppliers and staging areas up and down the Port of Houston, with Harisburg to the east and Hughes to the south. The property has access to major roads, including Interstate 45 (the Gulf Freeway) and Interstate 10, according to Live Oak Capital.

Pelec Development Ltd., a Texas LP, with principals are John Frantz and John Pogue, intends to restructure existing leases on more than 290,300 square feet rolling in the next three years while pursuing a campaign to lease the 141.88 square feet of vacant space. 

Live Oak Capital is a member of the Strategic Alliance Mortgage LLC (SAM), an affiliation of 18 independent mortgage-banking firms with offices coast to coast.
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MBA has partnered with several corporations to offer members the best discounts available. One partner is CareerBuilder.com.

Q. Tell us about your company.
A. CareerBuilder.com is the nation's largest online job site with more than 23 million unique visitors and more than 1.5 million jobs. Owned by Gannett Co. Inc., Tribune Co, and The McClatchy Co., CareerBuilder.com offers a vast online and print network to help job seekers connect with employers.

CareerBuilder.com powers career centers for more than 1,100 partners that reach national, local, industry and niche audiences. These include more than 150 newspapers and leading portals such as America Online and MSN.
 
Q. What do you offer to MBA members?
A. MBA Members may purchase 30-day job postings, resume database access and combination packages at a 15 percent discount.
 
Q. What advantages do MBA members receive by using your services?
A. Not only will CareerBuilder.com provide MBA members a discount on products and services, but by using CareerBuilder they will be able to impact their bottom line by having the right candidates in place. According to the Society of Human Resources Management, the average cost per hire today is $7,123, MBA members will significantly reduce their cost per hire by using CareerBuilder.com. 

Join fellow real estate finance companies and vendors by investing in communities, as a member and discover what your MBA membership can do for you. For more information visit www.mortgagebankers.org/memberadvantage.
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Among the various program options:

Compensation Benchmarking: This comprehensive survey profiles more than 300 residential real estate finance positions. The survey includes three options offered to meet your company’s business needs:

• The Executive Management & Production Administration Survey
• The Loan Servicing/Loan Administration Survey
• The Corporate Administration & Support Survey

Other options include:
• The Incentive Plan Study
• The Productivity Analysis

New in 2007: The Benefits Survey, which provides financial services firms with key market data related to prevalence of plan types and policies, costs of individual benefit programs and employee participation and contribution rates. All important benefit categories are covered, such as: health and welfare, retirement, paid time off, relocation practices and personnel practices. MBA members will receive a complimentary custom mortgage industry benefits report.

All data gathered is confidential and no individual company information is published. MBA members receive a discount on survey fees.

The following links provide more information on the surveys as well as a registration form. 

Residential Mortgage Banking Compensation Survey Program Overview
2007 Benefits Survey Overview
2007 Participation Form

For more information, contact McLagan Partners at (203) 359-2878 or one of the following MBA contacts: Marina Walsh at mwalsh@mortgagebankers.org; (202) 557-2817; or Stephanie Giannori at sgiannori@mortgagebankers.org; (202) 557-2879.
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Home builders are being squeezed by a combination of a lack of available land and slowing housing activity that has limited their ability to develop the land they have, said Gopal Ahluwalia, staff vice president for research with the National Association of Home Builders, speaking here at NAHB’s International Builders Show.

The largest-producing home builder in 2005, D.R. Horton, built just more than 51,000 units. The top 10 builders combined created fewer than 300,000 units in 2005. Ahluwalia noted that as home building increased during the most recent boom, the share of home builders in the market has risen. “In 2005, just three home builders had a national share of more than 3 percent,” he said. The top 14 home builders are publicly traded, with only two, K. Hovnavian and MDC Holdings showing any sign of acquisition activity.

Despite the slowdown, the criteria for consolidation have not changed, Ahluwalia said. “If you are a company that owns land and build at least 200 units per year, you can be attractive to consolidation,” he said. “Land prices have softened, which means that if home builders can hold the land, the value will increase.”

Each down cycle is different, and so is this one, said Michael Kahn, president of Michael Kahn and Associates, Ponte Vedra Beach, Fla. “Interest rates are low, so that’s not a problem. Employment is strong, so that’s not a problem.”

The problem is, up until now, the home buyer has been staying away, Kahn said. “He keeps hearing that prices are going down, and he’s going to wait it out until he sees better deals,” he said.

Complicating the issue is the overhang, or inventory of new homes available for sale. “As long as we have that overhang, and continued speculative building by home builders eager to get rid of their land holdings, this condition will continue," Kahn said. "Investors stole 2007 from us, and until that inventory goes away, the market will continue to be slow.”

Buyers changed the paradigm, not the sellers, Kahn noted. “Now we’re returning to the market conditions of the early 1990s, in which the buyer has control of the process, not the seller,” he said.

Jody Kahn of Michael Kahn & Associates said merger and acquisition will pick up. “It’s just a question of ‘when,’ not ‘if,’” she said. “Wall Street is going to demand growth, and if it can’t be done organically, then it will have to be from acquisition.”

That leaves time, Jody Kahn said, for builders to prepare for what will be a “feeding frenzy” once activity picks up. “The company’s history will be important, as well as the share of the market and the name in the market,” she said. “Niche products, such as senior housing, will be an important consideration” as acquirers look to diversify their portfolios to spread risk.

“Right now, builders are interested in putting out fires and getting things in order,” Michael Kahn said. “But we hear that builders are getting ready to pull the trigger on acquisitions by early next year. But to get there, you have to be talking now.”

Kahn said unlike the banking industry, where the number six-ranked bank might buy the number seven-ranked bank to become the number four, home builders tend to look at a top-down strategy—for example, a top 10 builder looking at a top 50 builder.

“Builders have bigger egos than bankers,” Kahn said.
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“This year has seen a slowdown in condominium sales, like the rest of the housing industry,” said Bill Donges, CEO of The Lane Co., Atlanta, speaking here at the National Association of Home Builders’ International Builders Show. Donges said despite the slowdown, condos remain an “active, viable segment” of the housing market.

At its peak in 2005, condos accounted for nearly half of the 350,000 multifamily starts, according to NAHB data, compared to 2003 where condos represented just 20 percent of the market. Speculation resulted in overproduction, particularly in Florida and Las Vegas, resulting in the current slump.

After the “frenzied” pace in 2004 and 2005, the condo market has returned to a “normal” level, Donges said. “As a developer, we joined in the frenzy and saw the move to condominiums. Now in 2007, we’re back in the other direction—we’re building mostly apartments,” he said. “But condo sales are still steady—20-30 sales a month is a perfectly acceptable level.”

Donges said it will take some time to sell existing inventory, particularly high-end condominiums. But he noted that the demographics support continued growth.

“You have strong demographics supporting condominiums. People like condos,” Donges said. “Today’s buyers want to live close to work, transportation, entertainment and retail. A great location, a distinct product and a good price point for the market is critical to a condominium community’s success.”

For the rental market, the key word is “affordability,” said Steve Patterson, CEO of ZOM Development, Orlando, Fla. “Workforce housing is the key challenge we’re facing now.”

Patterson noted that there has not been an incredible amount of rental units over the past few years, because of condo sales, which has put pressure on the rental industry. Despite that, he said, rents have stayed relatively flat.

“This is a concern because of the increasing costs of construction and insurance,” Patterson said. “With insurance rates going up in coastal areas after Katrina, it’s really putting the squeeze on rental properties. And those expenses have to be passed along to the renter.”

On the affordable housing side, developers and policymakers never really fully meet the needs, said Bob Nielsen, president of Shelter Properties, Reno, Nev., which builds affordable housing for residents in Las Vegas and Phoenix.

“It’s the rental side of the business that best addresses the workforce housing issue,” Nielsen said.

But Nielsen noted that construction and land costs are up, which concerns apartment developers, especially those building affordable housing units. Rising operating costs continue to hamper apartment developers’ ability to produce affordable housing, even those financed with subsidies such as federal Low Income Housing Tax Credits.

“Instead of building 100 units, we’re building 50-60 units,” Nielsen said. “So the inventory of affordable housing is shrinking.”

Nielsen said he was “encouraged” by the change in control in Congress, in which leaders such as House Financial Services Committee chairman Barney Frank, D-Mass., has called for increases in federal funding for affordable housing programs.

“The change is that you have committees that can put pressure on the Administration. I don’t think the Bush Administration can ignore that,” Nielsen said. “They’re going to be required to address that. It doesn’t get anything built, but it gets the emphasis going to craft the legislation necessary to get some activity going.”
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