Trump: Greatest Real Estate Opportunities Have Moved Overseas
By Matt Valley
Jun 4, 2008 4:23 PM
Once the place for the world’s great investors to park their money, the United States is no longer the kingpin for generating business opportunities and has lost respect around the globe, says famed real estate developer Donald Trump, who is convinced that the situation is not irreversible.
“I look at what’s going on in the rest of the world – Russia, India, China. You don’t hear about the United States in the same breath. When the great funds of the world come to me, they want to do a job in India, they want to do a job in other countries,” remarked the charismatic Trump during a luncheon speech Monday before several hundred hotel industry professionals at the Waldorf=Astoria. The appearance of the chairman and president of The Trump Organization marked one of the highlights of the 30th annual New York University International Hospitality Industry Investment Conference that attracted approximately 2,400 attendees.
“The problem that I see with the United States is that we’re no longer respected, we really aren’t,” lamented Trump, pointing out that there is plenty of blame to go around, starting with the political leadership. “I think that [perception] can be changed. We have the greatest people, the greatest businesses.”
One important issue that needs to be rectified, Trump says, is the U.S. trade deficit with China. Trump’s solution? “Put John Gray in charge of negotiating terms with China. Guess what? I think we’d do very well.” Jonathan Gray, of course, is a legendary tough-as-nails negotiator in his role as co-head of the real estate arm for The Blackstone Group. Trump’s suggestion drew a big chuckle from the audience.
The problem is that the U.S. has diplomats negotiating trade agreements with China and Japan, not seasoned business professionals and deal makers, argues Trump. “I’ve watched this for years, where Japan would just rip us. By the way, they [the Japanese] tell me, ‘I can’t believe we’re getting away with it.’” It’s much the same with the Chinese, says Trump.
When Trump talks, the industry listens. The Trump Organization owns several pieces of high-end real estate in New York, including Trump International Hotel & Tower, Trump Tower, and 40 Wall Street. The company also is one of the world’s largest operators of hotels and casinos, including three casino hotels in Atlantic City. Fortune magazine ranks The Trump Organization No. 31 on its list of the 35 largest private U.S. companies. The Organization generated $10.7 billion in revenues in 2007.
The company increasingly is developing projects overseas. The Palm Trump International Hotel and Tower in Dubai is a 48-story mixed-use condo-hotel and residence with a 300-room five-star hotel and 360 residential apartments. The $600 million development, a joint venture with Dubai-based Al Nakheel, is expected to be completed sometime in 2009.
“From the standpoint of everybody in this room, you go where the action is, but personally I’d rather not fly to the Middle East. I’d rather not fly to Dubai.” Trump is quick to add, however, that he cherishes his business relationships with his partners in Dubai.
The financing climate is the worst that Trump has ever encountered. The global credit crunch has a silver lining for the hotel industry because it will limit supply growth, Trump says, a starkly different situation than in the early 1990s when a supply glut existed.
Trump related the story of an office developer who can’t get financing despite the fact that a tenant with a Triple-A credit rating has committed to the space. “The banks don’t have money. They’ve hurt themselves, and what they’ve done is inexcusable, and now they’re starting to hurt the world,” says Trump. The European financial markets, for example, are starting to feel the effects of the subprime residential mortgage fallout.
Still, there are pockets of vigorous real estate investment activity in the U.S. market, most notably New York where investment capital continues to stream in from abroad. “But part of the reason that New York is working is the dollar is so low,” says Trump. If the dollar were to suddenly rise, the New York economy could experience some hiccups, he says.
brought to you by Sean McAlister
Fannie Mae Has $3.55 Billion Fourth-Quarter Loss (Update2)
By James Tyson
Feb. 27 (Bloomberg) -- Fannie Mae, the largest source of money for U.S. home loans, posted a $3.55 billion fourth-quarter loss and said its slump will worsen this year as rising foreclosures send credit costs soaring.
The net loss was triple analyst estimates. Fannie Mae recorded a $3.2 billion drop in the value of derivative contracts and $2.9 billion in credit expenses, according to a filing with the Securities and Exchange Commission.
``We are working through the toughest housing and mortgage markets in a generation,'' Fannie Mae Chief Executive Officer Daniel Mudd said in an accompanying statement.
Fannie Mae increased its estimates for credit losses and said home prices will decline more than its previous forecast, boosting costs for the $2.3 trillion of mortgages that the government-chartered company owns or guarantees. The prediction by Fannie Mae, which accounts for at least one in five home loans, heightened concerns that the housing market may drive the U.S. economy into recession and sent stocks lower.
``I expect it's only the beginning,'' said Joshua Rosner, the managing director of New York-based research firm Graham Fisher & Co.
Fannie Mae today raised its estimates for credit losses this year to a range of 11 basis points to 15 basis points from a range of 8 basis points to 10 basis points. Analysts including Paul Miller at Friedman Billings Ramsey & Co. in Arlington, Virginia, say credit losses will rise to a range of 15 basis points to 25 basis points this year and in 2009.
Loan Losses
The company has lost more than half its market value in the past year as the housing slump deepened. Analysts at Goldman Sachs Group Inc. and Merrill Lynch & Co. cut their recommendations to ``sell'' in the past week on concern that falling home prices will restrict earnings.
Fannie Mae fell 34 cents, or 1.2 percent, to $26.63 as of 9:40 a.m. in New York Stock Exchange composite trading. Freddie Mac, which ranks second to Fannie Mae, dropped 72 cents to $24.49 and is down more than 61 percent in the past year.
Fannie Mae's net loss amounted to $3.80 share, compared with profit of $604 million, or 49 cents, a year earlier, Fannie Mae said. Excluding some items, the per-share loss was $3.79, compared with the $1.20 average estimate of 12 analysts in a Bloomberg survey.
Foreclosures Rise
Fannie Mae and Freddie Mac profit by holding mortgages and mortgage bonds as investments and by charging a fee to guarantee and package loans as securities. They record losses when defaults rise.
Freddie Mac is scheduled to report tomorrow. The McLean, Virginia-based company had losses of $2.02 billion in the third- quarter and $480 million in the year-earlier fourth quarter.
Bank seizures of U.S. homes almost rose 90 percent to 45,327 last month from the same period a year ago, according to RealtyTrac Inc., a seller of foreclosure statistics that has a database of more than 1 million properties. Total foreclosure filings, which include default and auction notices as well as bank seizures, increased 57 percent. More than 233,000 properties were in some stage of default last month, RealtyTrac said in a statement.
Timely Earnings
Fannie Mae, by reporting timely audited financial results for the first time since 2004, met conditions for the removal of a federal limit on its $724 billion in mortgage investments imposed after a $6.3 billion overstatement of earnings. Its portfolio of home loans and mortgage-backed securities is one of its two main sources of profit.
Still, the need to bolster capital against the worsening housing market will inhibit growth this year, Miller said. Fannie Mae sold its preferred shares in December after its third-quarter loss of $1.4 billion.
``For me to get very comfortable in recommending this stock, I'd like to see something above $15 billion in capital raising,'' Miller said.
The cost of protecting Fannie Mae bonds from default have doubled this year. Credit-default swaps tied to the bonds rose 8 basis points to 87 basis points today, according to broker Phoenix Partners Group in New York.
A basis point on a credit-default swap contract protecting $10 million of debt for five years is equivalent to $1,000 a year. Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.
Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates. Fannie Mae and other companies use derivatives to hedge against losses on assets and investments including home loans and mortgage bonds.
To contact the reporter on this story: James Tyson in Washington at at jtyson@bloomberg.net
Peter Schiff vs a Real Estate agent with Caldwell Banker on Fox News stand off about this years housing market. While it is a good time to buy I agree with Peter Schiff. The market is simply overbuilt and new house construction will continue to decline over coming months and years.
Housing is still a bit over priced and will continue to adjust down. The fact that it is a buyers market does not mean that housing in 2008 will rebound. The ripple effect in the market stretches to far. What's your opinion.
Sean McAlister
Watch as some New Yorkers express their opinion on the New York Real Estate Market.
What's your opinion
Real Estate and searching for Real Estate can be difficult for the Real Estate Investor. Real Estate Taxes, Economic Conditions and Market Conditions can play a major role with your Real Estate Investments. Meridian Real Estate is committed to providing you with everything we can that may have an impact on your Real Estate Portfolio
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Planning on Buying or Selling? Find a Local Realtor
Tensions can run high in both the selling and buying of real estate. After all, there is a lot of money and emotion involved! There are also time pressures and numerous privacy issues to deal with. The sale and purchase of real estate can be a lengthy process involving numerous professionals from many fields.
The Real Estate Center at Texas A&M University asked 3,000 Texas home buyers to describe their recent purchase, about 400 replied. Their responses showed how stressful buying a home can be, for buyers and sellers. The Realtors and attorneys who try to keep all tensions at bay in order to complete the transaction also feel the burdens of stress!
"The process is grueling in the best of circumstances, and the severe buyers' market of recent times only increased the stress," says Dr. Jack C. Harris, Center research economist. "In conjunction with Lawyers Title Company, the Real Estate Center asked recent home buyers about their buying experience and what changes they think would make the process more buyer friendly."
The final question on the survey was, "If you could change anything about the home buying process, what would that be?" Almost a third answered the question, and most of them expressed dissatisfaction about some phase of the process.
Understandably some of the complaints were about circumstances beyond anyone's control. This included high prices, interest rates, the lack of listings in a specific area, where they wanted to buy, etc.
However, all of us Real Estate Professionals can learn much from some of the things that WE can, and should, do something about. Many of the folks surveyed felt that the Realtor did not perform up to their expectations. They were especially miffed when the Realtor assumed too much, that they understood what was going on, and didn't keep them well enough informed. In such a pressure cooker of financial and time constraints, the unfamiliar territory of buying and selling a property can be nerve wracking!
Many buyers and sellers need to be reassured and comforted. It is sometimes hard for the Realtor to know which of the dozens or even hundreds of people they are working with at one time need the most attention. Some of the Realtors' clients felt the agent did not take enough time with them. This was true even for some buyers who had a Buyer's Agent under contract to work on their behalf alone.
Realtors should alert and educate their clients, whether they be sellers or buyers, to the complexities and details of the real estate transaction. Some buyers feel that they are rushed through the looking, choosing, buying and settling process, and sometimes they are.
More and more buyers, especially the most savvy ones, are using Buyer's Agents. When there is a Buyer's Agency Agreement signed, most buyers expect far more service. Some feel that they don't always get it. In fact, according to the survey, 70% of those who had a Buyer's Agent wanted even more care, concern and service from their agent than they felt they had received.
The sellers, too, felt they had received too little service, care and attention in many cases, for the commission involved. Some seller's felt that the selling agent was not responsive enough to them, that calls were not returned promptly enough, or that not enough assurance, information, concern and communication was forthcoming from their agent.
Even though it is legally the seller who pays the Real Estate commission, it is really part of the overall transaction. Many buyers feel that they are the ones who are really paying that commission. They feel that the several thousand dollar commission is just tacked onto the selling price by the seller and thus it is they, the buyer, who is ultimately paying more for the property than they should! Buyers often feel that sellers inflate home prices to recover the cost of the commission.
Some purchasers want more contact with the sellers of the property; before, during and after they decide on the property and place a contract on it. Many wanted to develop a relationship with the seller of the property and have direct communication with them between the time of the contract and the settlement. Some felt that an agreement would have been more easily arrived at if the sellers and buyers could have hammered out details in person.
Other buyers had met with the sellers and considered that it had been the biggest error of the entire process. Most folks felt that the insulation of the Realtor(s), keeping the sellers and buyers apart and in communication only via written offers and changes to the contract was appropriate as it gave them the advantage of advice and discussion with their Realtor and time to think and discuss things before responding.
A huge part of the work and value that a Realtor or all the Realtors involved bring to the transaction is the mediation, conflict resolution, refereeing and monitoring of communications between buyer and seller. Often that is a huge and difficult task. Sometimes it is just too monumental to achieve satisfaction on the part of their client. Often it is those clients who are most difficult to work with that are the least satisfied with their Realtor. That is all part of the job we do. We do our best, from our own viewpoint, we try to satisfy the personality of our clients, and usually that is well appreciated!
After all, the natural flavor of a buying and selling transaction is adversarial. The Realtor is like a Gladiator in most cases; going to battle, in an honorable way and according to the rules, on behalf of their backer -- their client. There are many behind-the-scenes conflicts on behalf of clients that never are divulged and shouldn't be. It is the duty of the Realtor to put all parts of the transaction in the best, although truthful, light possible. A Realtor who transfers the natural adversarial animosities between buyer and seller does a disservice to his client no matter which side of the transaction is being represented.
Most buyers and sellers comments on the survey evidenced the importance and value of the agent in the transaction process. However, it is important that all of us Real Estate professionals (especially realtors) learn from our buyers and sellers, especially to responses they give about our profession when they are being surveyed on our service.
From the survey results of the Texas A&M University, Realtor(s )are well advised to learn that respondents praised especially helpful agents. It is reasonable to assume the majority who wrote nothing when asked to comment on any dissatisfaction, on this anonymous survey, were well satisfied with the service they received from their Realtor(s).
"We had a great experience," wrote one buyer. "The agent made all the difference. She kept us well informed almost daily. This was so important to us." While a majority of survey respondents had no comment regarding agents, 85% said they would use or recommend the agent again.
According to the survey report, complaints about the complexity of the home buying process fell into one of three categories: too complicated, too time-consuming or too costly. Many felt the process involved too much paperwork. Undoubtedly, they were reacting to the numerous, lengthy legal forms they had to sign before, during and after the contracting of the property as well as the seemingly almost unconfrontable stack of documents requiring a signature at closing.
It can take a terrific amount of time to find and buy a home. We often work with buyers for months seeking the right home. Some of them we've been working with, staying in touch with, and showing properties to -- for years. Those with some particular interests may find that a "possible" choice for them might only come on the market once in a great while! It is not an easy or comfortable situation for anyone involved, but the finding and buying or selling of a home or property can be made a MUCH more comfortable process with open, full and honest communication between the agent and the client at all times.
Many of our sellers would like us to find a buyer in a week or less for their property. Interestingly enough, it is often the property that is most difficult to find a buyer for that has the most impatient seller.
Even after a property is chosen by a buyer, there is a lot of time and work still needed from all those involved. The time, the continued negotiations, the inspections, reports, and evaluations needed, all the calls and appointments that need to be made on behalf of all parties involved almost always take far more time than anyone not directly involved can realize. This is usually frustrating to everyone. The sellers as well as the buyers often feel they are stuck in quicksand, unable to move or do anything without sinking further into the mire. At the same time -- that same quicksand of details required to complete the transaction seems at times to be filled with alligators ready to bite and take them down anyway. In some ways, that is all too true. And, it is the duty of all the Realtors involved to keep our clients and customers as comfortable as possible during these trying times of details and difficulties.
The Realtor usually spends a good deal of time trying to manage the lender(s) and get the money required to bring the deal to closing. Often this is the most difficult part of the transaction, even when the buyers and sellers are easy to work with. Usually, the first contact with a lender is all roses and sunshine. All too often however, the clouds and thorns of problems are soon evident. Realtors are often fully employed trying to get all the requirements fulfilled for the lender and the purchaser and when those are complete we work to make certain the promised funds are still available, approved and ready for closing, ON TIME.
At the closing, there is another 2% to 3% or, in some few cases, even more of the purchase price involved at closing for each the buyer and the seller. The long list of expensive items often seems too costly to both the buyer and the seller. Some folks find this irritating and feel it to be unfair. Some wonder why there are so many fees and services that find their way to the settlement table and may wonder if the fees and services were even necessary.
The myriad details involved with the finding, selecting, negotiating, contracting and transferring of ownership and funds at final settlement is time consuming, detailed, and often challenging.
People are accustomed to buying most things instantaneously and getting instant gratification for their decisions. Especially for those of us who use the Internet a lot. In a recent survey it was shown that most people who purchase via the Internet want the purchase delivered to them via overnight service. MOST buyers do not appreciate the legal complexities of taking title to real estate. They most often, simply do not understand why it should be so complicated to buy a piece of land or a home, nor do they understand the complexities of getting them approved for the best rate and terms in the mortgage obligation -- even if they have done it before.
The real estate industry has made great and consistent accomplishments in speeding up the entire buying process; from searching via the Web to getting mortgage approvals in sometimes an hour. Even title searches, lien searches, judgment searches and the typing of the dozens of pages of legal documentation has been streamlined with modern devices and techniques. However, there is another bundle of issues that slow the process while the aforementioned have sped it up. The litigious society we live in, the relatively recent and growing list of written disclosure requirements and legal contingencies have adversely affected the time and ease involved. It has limited the progress and speed of the individual parts of the transaction steps at nearly every point.
We, as Real Estate Professionals should, in fact we must, pay special attention and take special care in helping buyers and sellers understand what is going on at each step of the selling and purchasing process. We need to make it clear why the various expenses incurred at closing are ordinary and necessary. We need to alert our clients and customers to the potential consequences of each place where they can be financially and legally harmed or put at risk by cutting corners. We do our best!
Based on every available survey, it is evident that the Internet is growing and soon to be of utmost importance to buyers searching for a home. A review of 37 major search engines showed that Real Estate related searching and use was the third major use of the Internet, world wide. In America, it was second except for a temporary flurry of interest in searching for information on digital cameras which barely put it in third place here also.
The Internet is, however, not the only factor in the overall search. At price ranges of $300,000 and more; about 90% of the first contacts are to a Realtor with an attractive, informative, workable and fast acting Web site. As the price of the home descends, the percentage of buyers using the Web decreases. For homes under $100,000, only about 25% of our personal response is a result of our Web site presence and expertise.
Simultaneously, fewer Realtors instead of more, are finding the Web useful according to our recent survey. The reason is obvious to some of us; most users want sites to be far more informative, more private, and want the sites to have a lot more content. They want more pictures, better descriptions, related sales, crime reports, etc. Some of these things are not even available yet for our market area but the buyers still want them. People would like to rule out those homes they are not interested in before they even contact a Realtor in most cases -- especially for the more expensive properties.
Users want the sites to come up faster and to be more intuitive of their interests and needs. People are also reluctant to show what they don't know as it makes them feel vulnerable. Thus we try to have lots of data on our site so the sellers and buyers can educate themselves before they contact a Realtor.
Some clients seem to realize and appreciate that Realtors are also dependent on other professionals to make the home buying transaction go more safely, more legally proper and in all ways more smoothly. Buyers do expect the agent to keep them informed about progress and to effectively, quickly and professionally handle any obstacles to their goals and purposes in the transaction.
The entire process of selling and or buying a property, especially a home, can be nerve wracking and full of tension for everyone concerned. Some problems are unavoidable, some are unpredictable, some are created out of nothing by some party to the transaction. Many problems can be resolved or avoided if the sales agent provides information, reassurance and support to the buyer.
In the final analysis, it is up to you, the buyer or the seller to be the "squeaky wheel in need of oil" and call, write, e-mail and otherwise let your Realtor know immediately when you feel needy of more communication, care, solace or help. Our job is about 98% invisible to our customers and clients. Even when we tell everyone what we are doing, it is almost always hard for them to believe the time it takes for what seems, to them, a simple task. We usually have a few dozen customers and clients at any one time that we are trying to service as if they were the only person in our professional lives.
