Economist: Real estate deals to increase after slow 2006

Construction prices will fall, says Donald Ratajczak, and help spur more building in the commercial sector. But the home market is still overbuilt, he says.

"ALTHOUGH THE PACE of real estate deals slowed during the last half of 2006, economist Donald Ratajczak predicted Thursday that things would turn up.
“A lot of construction material inventory was accumulated resulting from the slow down, which will cause its prices to fall,” Ratajczak said.
With the exception of steel, Ratajczak said most construction material prices will go down.He said cement prices are down 20 to 30 percent, copper prices are down 20 percent and lumber prices are down 20 percent lower than what they were last year.
He also said more projects are getting completed, thanks to a mild winter and uneventful hurricane season.
On the residential side, Ratajczak said demand and prices for materials used in home building, such as drywall and copper, have gone down because the housing market is overbuilt.
He said nationally there are 300,000 to 400,000 extra housing units.
“We believe that half of the excess is in condos, said Ratajczak.
As a result, home prices will decline, enabling more people to qualify to buy a house, and some of the housing stock will be moved off the market, he said.
Ratajczak said he believes the National Association of Realtors will see in 2007, for the first time in its history, the median house price lower than the previous year.
Ratajczak said he doesn’t see energy adding to inflation in 2007, also adding that heating bill amounts are dropping. He predicted gas prices falling below $2 in some areas.
“Energy prices are OK for the current conditions,” also due to the mild weather, he said, “and will continue to fall until inventory levels get back at a more normal balance.” ALTHOUGH THE PACE of real estate deals slowed during the last half of 2006, economist Donald Ratajczak predicted Thursday that things would turn up.
“A lot of construction material inventory was accumulated resulting from the slow down, which will cause its prices to fall,” Ratajczak said.
With the exception of steel, Ratajczak said most construction material prices will go down.He said cement prices are down 20 to 30 percent, copper prices are down 20 percent and lumber prices are down 20 percent lower than what they were last year.
He also said more projects are getting completed, thanks to a mild winter and uneventful hurricane season.
On the residential side, Ratajczak said demand and prices for materials used in home building, such as drywall and copper, have gone down because the housing market is overbuilt.
He said nationally there are 300,000 to 400,000 extra housing units.
“We believe that half of the excess is in condos, said Ratajczak.
As a result, home prices will decline, enabling more people to qualify to buy a house, and some of the housing stock will be moved off the market, he said.
Ratajczak said he believes the National Association of Realtors will see in 2007, for the first time in its history, the median house price lower than the previous year.
Ratajczak said he doesn’t see energy adding to inflation in 2007, also adding that heating bill amounts are dropping. He predicted gas prices falling below $2 in some areas.
“Energy prices are OK for the current conditions,” also due to the mild weather, he said, “and will continue to fall until inventory levels get back at a more normal balance." read more

By AISHA I. JEFFERSON, "Daily Report" Staff Reporter

Los Angeles drawing real estate investors from Korea after lifting of overseas cap

"LOS ANGELES: Choung Yang Suk just bought a condominium in the city's Koreatown district — far from her home in South Korea — and plans to retire there in a few years to be near her two grown children.
Choung is among a growing number of Koreans scooping up real estate in the United States and elsewhere after the overseas investment cap in their country was lifted.
Koreans are expected to invest nearly $2 billion in U.S. residential property in 2006, up from $1.27 billion in 2005, when such investments were mostly limited to large Korean corporations, said Brian Shaffer of the International Real Estate Trade Organization.
Koreans could spend at least $4 billion worldwide on overseas homes in 2007 as a result of the changes made in May that allow an individual to make as much as $1 million in foreign investments, analysts said.
Many of the purchases are being prompted by the strength of the Korean won against foreign currencies and by the economic and political stability offered in some other nations, analysts said.
Much of the money will likely be directed to U.S. cities with large Korean populations, including San Francisco, New York and Atlanta, to take advantage of lower home prices stemming from the weakening U.S. housing market.
Observers said the lion's share of the money will be invested in Los Angeles, which has one of the world's largest Korean populations outside the Asian nation.
"It could very well release a tidal wave of investment into Southern California, particularly Koreatown" said Peter Morrison, a demographer with the Rand Corp. research organization, who has studied home-buying patterns among immigrant groups." read more

By Jacob Adelman The Associated Press