However, in 2010, the FHA waived the rule in order to move more vacant, unsold homes off of the market. When the Obama administration opted to extend this waiver through the end of 2011, it sparked new debates about what the impact would be on the FHA, the flippers, and the country.  Here are some of the arguments for and against the extension of the anti-flipping rule waiver:

Arguments for the Home-Flipping Extension

1) It helps legitimate investors: The original FHA rule came with the unintended consequence of hurting honest investors – investors who purchased foreclosed properties and made substantial repairs and improvements to the home before placing it back on the market.

Those who were adding real value were hurt by flippers who were just trying to make a quick buck, making cheap cosmetic repairs and selling them a fair market value; with repairs not thoroughly made, this left new buyers with headaches, and the FHA with sub-standard inventory. The rule suspension now gives investors another option, so that they can quickly purchase, renovate, and re-sell those properties.

2) It’s good for buyers: Buyers who wanted to purchase the homes that were being renovated by investors were unable to take advantage of FHA financing, since most investors who rehab properties try to do so within 45 days on average. These were the kinds of homes that buyers wanted to purchase, since they were move-in ready and were in the lower end of the market budget. With the rule suspension in place, buyers have more choices in the neighborhoods they can afford.

3) It’s good for the neighborhood: Since more homes were sitting  unsold under the original FHA rule, many neighborhoods were filled with vacant properties that were deteriorating. This, in turn, caused the value of other homes in the neighborhood to decrease. By suspending the rule, more homes were sold, the surrounding area looked more appealing to potential buyers, and people in the area weren’t losing the equity in their homes.

Arguments against the Home Flipping Extension

1) It’s good for one market, but not the other: The rule waiver may help the REO market (bank-owned real estate), but not the overall real estate market. By allowing house-flippers to take advantage of FHA financing, the temporary rise in demand and prices hurts the rest of the market. The original FHA rule prevented flippers from buying low and selling at a wildly inflated prices just to make a profit.

2) House-flippers add no real value: While many investors purchase homes and make real improvements to the properties before placing them back on the market, house-flippers many times only make small or no improvements at all to a property – all with the goal of simply making a buck. The original FHA rule sought to prevent this from happening.

3) It hurts the buyers: Flippers can hurt real buyers by simply making “low-ball” offers on properties that they wish to flip, in essence “charging” the seller for the costs to rehab. The rule waiver makes it easier, then, for a flippers to sell higher by finding a buyer approved for FHA financing; increasing their overall profit.

There are valid arguments for and against the FHA rule suspension, with each side making valid points. It could lead to more homes being sold, more options for buyers, and prevent other homes in the area from losing value. However, the rule waiver extension could also hurt buyers by allowing flippers to utilize FHA financing when it comes time to sell their properties – which could artificially raise prices and hurt buyers. Which side are you on, and what reasons do you give for being for or against the FHA rule suspension?

Kerry Stevenson is a government insurance consultant from Great Britain, and a content contributor for companies providing home insurance like the UK coverage specialist Policy Expert.

Another potential commercial real estate crash may be waiting to occur. In February of 2010, the Congressional Oversight Panel (COP) released a report raising questions about $1.4 trillion in real estate loans coming due between 2010 and 2014. The COP said that the majority of the loans were made at the top of the market in 2007. Since then, the properties attached to these loans have lost 40% of their value, putting them into severe negative equity. The COP voiced fears that the commercial real estate sector would crash again when these loans came due. (2)

Despite the lingering damage from the last crash and the threat of a new one, there are signs of recovery. The crash in commercial property values has left a market littered with buying opportunities for investors. The record-low interest rates has made financing much easier, thanks to the Federal Reserve’s zero interest rate policy (ZIRP). As long as ZIRP continues, real estate financing should be easy to obtain. Investors looking to get into the real estate market can potentially enjoy some fantastic bargains.

Importantly, a report published by Credit Suisse indicated that a large amount of money was preparing to enter the commercial real estate market. Institutional investors, investment firms and pension funds are looking to allocate a portion of their portfolios to commercial real estate, according to the report. (3) This increased demand for commercial real estate could portend price increases for the first time in almost four years. Of course, the $1.4 trillion in bad loans coming due may put a dent in these ambitions. Time will tell which influence will win out.

A survey conducted by PricewaterhouseCoopers (PwC) revealed that investors are bullish on commercial real estate, but are not so enthusiastic about the retail sector. About 83 percent of the markets surveyed remained in a recessionary mode in 2011 and most investors did not feel they would recover until 2014. (4) Veteran real estate commentators like Lew Sichelman are concerned about the effects of excess inventory. Aside from foreclosures held by the banks, Mr. Sichelman voiced concerns about the inventory being held back by homeowners. Once property values stabilized, homeowners that would have liked to sell earlier will put their homes on the market, which combined with foreclosure inventory coming online portends a negative outlook. (5)

Overall, commercial real estate is a divided sector. Bullish sentiment on the part of investors combine with caution in some sectors. The property loans coming due in 2014 will probably make the difference in this market.

References

(1) http://www.realindices.com/pdf/CPPI_0511.pdf
(2) http://cybercemetery.unt.edu/archive/cop/20110402035627/http://cop.senate.gov/documents/cop-021110-report.pdf
(3) http://www.costar.com/News/Article/Dont-Just-Take-Our-Word-for-It-Upside-to-CRE-Market-Has-Begun/129867
(4) http://retailtrafficmag.com/charts/pwc_survey_finds_caution_06222011/
(5) http://online.wsj.com/video/real-estate-recovery-in-2011-not-likely/8FE7861C-C69F-44D1-82BC-381D01E00595.html

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Representative of Costa Rica Real Estate Law to the IUCN this year is the Minister of Housing, Clara Zomer, the Deputy Minister of Housing, Luis Fernando Salazar and Deputy Minister of Environment and Energy, Jorge Rodriguez.

The first day of debate, José Antonio Milan, an architect of Nicaragua, said the problem of overcrowding in the capital of Managua, which has 1246717 inhabitants and a density of 43.14 persons per hectare. According to Milan, Managua needs an area three times larger than it has to ensure the quality of life of its inhabitants. Unfortunately, Nicaragua has no immediate plans for urban development.