Manufactured Homes Industry Works

To Reverse Negative Perceptions

KAREN OTT MAYER | The Daily News

Every once in a while, someone needs to set the record straight, and it appears the time has come for the manufactured housing industry.

Hurricane Katrina stirred much controversy over housing. The August 2005 storm also sparked debates about design and the fear of endless trailer parks. But almost two years have passed, and manufactured housing sales are still strong in North Mississippi and Tennessee.

"It's the quality of the product at an affordable price," said Jerry Bell, general manager of Freedom Homes. "People may still have the impression that these homes are like older models, but they're not."

Not trash, but treasure

A retail sales center in Como, Miss., Freedom Homes is part of Clayton Homes, the largest manufacturer and distributor of manufactured housing in the country and a subsidiary of Omaha-based Berkshire Hathaway Inc. Berkshire Hathaway is a Fortune 500 company controlled by business mogul Warren Buffett. The company's core business includes property and casualty insurance.

Manufactured housing models have come a long way since earlier days. With costs hovering at about $38 per square foot versus $78 for a traditional site-built home, buyers represent all walks of life.

"The people I see are those wanting to move out of DeSoto County or Memphis and who realize they could realistically buy a manufactured house and land for around $100,000," said Mark Rotenberry, sales consultant for Freedom Homes. "We're also selling to retirees who want to downsize or who don't want any more debt."

Chris Nicely, vice president of marketing for Freedom Homes, has been with the company 12 years and travels nationally.

"We see first-time home buyers, baby boomers and working families," Nicely said.

With 450 retail stores and about 1,400 independent business owners, Clayton also finances and insures homes. Nicely said the industry isn't as rate sensitive as traditional real estate markets. Instead, sales are affected more by employment numbers.

The company built 125,000 homes throughout the country in 2006, Nicely said, with Tennessee ranking among the top 10 for sales.

"Arkansas, Tennessee and Mississippi are generally strong sales areas," Nicely said.

While rural markets still are strong, Nicely said a new trend has emerged in the last five years, as cities are buying manufactured housing for infill projects.

The truth about quality

While misconceptions might still persist about the industry, the reality is that quality has improved.

"In the past 12 years, the evolution of this product is wonderful," Nicely said. "No longer are there special dimension building products. We use the same materials as builders."

Models include high ceilings, drywall, copper wiring (replacing aluminum) and stronger construction using 2-inch by 6-inch wooden framing. Nicely said there is a continual evolution in design and visual street appeal as roof pitches increase, mirroring more residential styles.

Another advantage is that construction takes at most a month, decreasing time that materials are exposed to weather.

For buyers like Jenny Willard, all of the above made her want to buy. When she considered moving to help her middle-aged parents, she looked into a manufactured home because it was a quick process, was affordable and would allow her to save for land. When she put her house up for sale, she said it sold quickly.

She even grew up in a 1967 model home.

"I said I don't want to move back into another manufactured house, but a friend said I should check them out," Willard said. "There is a total difference. Some models are nicer than a regular house."

Back to basics

Willard chose a Southern Energy model, which has sheetrock, and she both financed and insured her home through Clayton. The entire process took about a month.

"Mark (Rotenberry) was really helpful," Willard said. "I told him that we'd basically have two families living in the home, and he helped with a floor plan. We picked out the colors and that was it."

Nicely said the company always has been more conservative on the lending side than other companies and has been able to withstand the fluctuations in the market to continue to grow.

After Katrina, Clayton was the first to respond to the demand for housing.

"We provided about 4,500 homes total from September (2005) until February 2006," Nicely said. "Our pricing was aggressive so that people could afford homes. For many people, it was their first experience with manufactured housing."

While recent reports of the housing market are less than bright, Bell and his team seem to be heading in another direction and taking consumers with them.

Cool housing market beckons buyers

December 16, 2006
Although it thundered along for most of the year, the local housing market is showing signs of cooling, and the chill could create opportunities for buyers.

According to the Memphis Area Association of Realtors, 1,369 homes were sold in November, down 4.1 percent from 1,427 last year.

Sales volume for November hit $237.4 million, down 2.2 percent from $242.6 million last year. Meanwhile, the number of homes on the market soared 23.1 percent to 10,910, from 8,864 last November.

"For those who might be unsure of current economic conditions, there couldn't be a better time than now to buy a home in the Memphis area," said MAAR president William Mitchell. "With our market's long track record of steady and measured increases in property values, the historically low mortgage rates and the good supply of homes available, buyers have a unique opportunity now invest in their future."

Year to date, sales volume is $3.17 billion, up 10.1 percent from last year. Total sales volume for 2005 was $3.2 billion.

NATIONAL

Merck wins 2nd Vioxx trial in week

Merck & Co. won its second Vioxx trial in less than a week Friday when jurors rejected the claims of a man who blamed the once-popular pain medication for a heart attack in 2001.

The jury of eight women and four men needed only one hour of deliberations to side with the drug manufacturer in the lawsuit filed last year by Gary Albright, 57, of Chelsea, Ala.

A federal court jury in New Orleans ruled for Merck on Wednesday.

Another Vioxx trial continues in Los Angeles, and Merck spokesman Kent Jarrell said six more lawsuits are set for trial between now and June, with the next slated to start in New Jersey Jan. 16.

The company is sticking by its plan of defending each of thousands of claims over Vioxx rather than settling the suits.

VP: Safety complaints led to firing

A former vice president at two Johnson & Johnson subsidiaries claims in a lawsuit he was fired for seeking recalls of numerous faulty products, including the Ortho Evra birth control patch, itself the subject of at least 1,000 product liability suits.

New Brunswick, N.J.-based Johnson & Johnson, one of the world's largest drug and medical product makers, said Friday the former executive was fired for inappropriate conduct.

In his civil complaint, Dr. Joel S. Lippman alleges he was unlawfully terminated May 15, after working for Johnson & Johnson for 15 years, because he repeatedly complained about product safety problems and urged that several products be recalled or not launched.

Lippman declined to be interviewed.

Three top executives will leave AOL

Three senior executives are leaving AOL following a recent shake-up that brought in a veteran NBC executive as the online company's new chief executive, two people familiar with the matter said Friday.

The executives are Joe Redling, who is chairman and chief executive of AOL International, Jim Bankoff, executive vice president for consumer and publisher services, and John Buckley, executive vice president for corporate communications.

The company had no official comment. The people who confirmed the changes spoke on condition of anonymity because they involved personnel matters that have not been announced yet.

Over the past two years, the company has been giving away more of its services to drive traffic to its Web sites and boost online advertising dollars.

In August, AOL accelerated the transition by deciding to give away AOL.com e-mail addresses and software once reserved for paying customers.

Miners vote on contract next week

The United Mine Workers said Friday it has tentatively agreed to a new five-year contract with the Bituminous Coal Operators Association.

About 16,000 union members across the country are scheduled to vote on the tentative pact next Thursday, UMW spokesman Phil Smith said. The agreement would take effect Jan. 1. It covers only workers at unionized subsidiaries of Pittsburgh-based Consol Energy, which make up the only members of the BCOA.

Waning membership in the union and the coal association has eroded the importance of the contract in recent decades. The UMW once had more than 700,000 members and the clout to shut down the industry. But the introduction of mechanized mining equipment and production shifts from Appalachia to western coalfields have cut that figure, and today the union represents perhaps one-third of coal miners.

However, Smith said other coal companies should pay attention to the new agreement. "We hope the ratification vote sends a message to the other companies in terms of what our members are prepared for."

INTERNATIONAL

U.S. gets standard replies from China

U.S. and Chinese officials pledged Friday to work on reducing China's swollen trade surplus, but ended two days of closely watched talks with little progress on currency and other disputes that are straining ties.

U.S. Treasury Secretary Henry Paulson said China would pursue currency flexibility, long-sought by Washington. But he seemingly came away with little more than Beijing's standard statement that it will relax currency controls and enact market-opening reforms at its own pace.

U.S. Federal Reserve Chairman Ben Bernanke, a member of Paulson's high-profile delegation, also urged Beijing to take faster action on its currency. He said a stronger yuan would boost living standards and help ordinary Chinese as well as promoting global economic stability.

The two sides promised to launch discussions on opening China's service industries wider to foreign competition and on cooperating in environmental protection and developing cleaner energy sources.

Japan Tobacco deal aims for W. Europe

Japan Tobacco Inc., the world's third-biggest cigarette company, is buying Britain's Gallaher Group PLC for about $14.7 billion in a deal that gives the maker of Mild Seven cigarettes a bigger stake in the Western European market. The deal would reportedly be the biggest Japanese overseas acquisition.

The move comes as Japan Tobacco, which already is the overseas distributor for Winston, Camel and Salem cigarettes, tries to bolster earnings by expanding outside of Japan, which has seen declining smoking rates. Like many tobacco companies worldwide, Japan Tobacco has also been looking to diversify outside cigarettes.

The deal would take Japan Tobacco into a Western Europe market where it has little presence. Japan Tobacco has operations in Russia, but was rejected last year in a bid for Turkey's state-run Tekel tobacco company.

Tokyo-based JT is offering 1,140 pence for each outstanding share of its British rival, or a total of 7.5 billion pounds.

-- From Staff and Wire Reports

Overall, real estate locally reflects a sturdy economy

By Amos Maki
December 29, 2006

The real estate industry experienced a tale of two years in 2006 with residential chugging along earlier in the year and commercial -- particularly industrial -- picking up steam in the second half of the year.

Although it thundered along for most of the year, the local housing market is showing signs of cooling, which should create opportunities for buyers.

According to the Memphis Area Association of Realtors, 1,369 homes were sold in November, down 4.1 percent from 1,427 last year.

Sales volume for November hit $237.4 million, down 2.2 percent from $242.6 million last year. Meanwhile, the number of homes on the market soared 23.1 percent to 10,910, from 8,864 last November.

"For those who might be unsure of current economic conditions, there couldn't be a better time than now to buy a home in the Memphis area," said MAAR president William Mitchell.

Year to date, sales volume is $3.17 billion, up 10.1 percent from last year. Total sales volume for 2005 was $3.2 billion.

It was a very active year in commercial real estate.

Meanwhile, after a slow start, absorption in the Memphis industrial market, including DeSoto County, has totaled more than 4 million square feet, according to CB Richard Ellis Memphis. The market ended 2005 with 5.4 million square feet of absorption.

"There was about 2 million square feet leased in the last couple months and the momentum is there for 2007," said Jim Mercer, industrial team leader for CBRE Memphis. "The attitude of business is more proactive, there's a lot of investment capital out there and we've got some buildings under construction.

"I think that bodes well for next year," he said. "Memphis is not going to be a home run market, but its going to be a market you can count on."

Nissan North America is launching a 413,000-square-foot parts distribution center in southeast Shelby county, a move that culminated two years of negotiations.

The Japan-based company will take up nearly half of Lauth's 885,000-square-foot Delta Point One building, the Indianapolis-based company's first building in the Memphis market.

Also, Terumo Medical Corp., Imation, Iron Mountain, Jacobson Warehouse Co., and Sharp Electronics all cut major leases this year.

Office developers were in a building mood in 2006, with Boyle Investment Co. and Highwoods properties stepping out with new buildings.

Boyle announced it was launching two, five-story, 155,000-square-foot buildings to finish off Ridgeway Center. Highwoods announced plans to build a seven-story 130,000-square-foot building at its campus at Poplar and Shady Grove.

Tightness in the office market -- particularly in the East and 385 submarkets -- caused landlords to raise rents.

In less than a three-month period, Class A office buildings went from quoting first year rents in the mid-$20 range to a new high of $27-$29 per square foot for the first year of rent.

The overall vacancy rate for the third quarter was 15.2 percent, a three-year low.

"The most exciting thing about the office market is we've been down for years and now we've got solid absorption and decreasing vacancies," said Joe Steffner, president of Grubb & Ellis|Memphis. "That, combined with a strong economy, bodes well for office real estate in 2007."

In 2006, national firms the Staubach Co., Grubb & Ellis and Marcus & Millichap entered the Memphis market.

Looking ahead to 2007, Class B office space will see a lot of activity.

On the retail side, several major projects were announced in 2006.

Poag & McEwen Lifestyle Centers, the Memphis-based development group that has become nationally recognized for creating "lifestyle centers" like the Shops at Saddle Creek, is moving forward with plans to turn the 10-acre Highland Street Church of Christ site near the University of Memphis into a $45 million mixed-use project offering a range of living, dining and shopping options.

Look for other moves by Poag & McEwen in 2007, including the announcement of tenants at the Highland site.

Weingarten Realty Investors is moving forward with plans for a $100 million retail center at Poplar and Interstate 240.

Weingarten plans to raze the 26-acre Ridgeway Trace apartment complex in East Memphis and launch a project with nearly 400,000 square feet of retail and restaurant space. Company officials said the project should be open in late 2008 or early 2009.

Kimbrell: Preparing for growth vital to life

By Ed Kimbrell

Ask any great coach about winning and you'll hear the word momentum before the answer is completed. So, too, is momentum the key to economic growth and prosperity.

The entire Middle Tennessee region seems to show attitudes toward the future I cannot recall seeing until now. At this season of the year, especially, it seems that our time to take the positive forces at play and use them wisely and prudently.

Channel 8 re-ran a documentary this week on downtown Nashville that was not only interesting history (can you imagine telling a teenager the entire area around the Capitol was a slum?) but the awareness of leaders old and new that the idea of a living, breathing, 24-hours-a-day downtown is now emerging, a long hoped-for revival.

From downtown lofts to high-rise condos to a $450 million civic center, with plans already being discussed to use the existing one, the vital mixture of housing, good restaurants, sports (new baseball stadium will work), and entertainment means the end of the old Nashville.

When I came to Nashville and Murfreesboro 35 years ago, they seemed to be so far behind all of the other places I had lived and worked. Nashville seemed a bit seedy around the edges and the downtown was in decline. Ah, those wonderful (?) suburbs were being built while 100 Oaks said you can buy everything you need (everything) under one giant steel tent.

Murfreesboro was quaint. One could even stretch a bit and call it a village. The university was beginning to stretch out, under the controversial leadership of then-President Mel Scarlett, as his vision forced it into new areas, new degrees and expansion.

Franklin was quaint, a toy town. Still wants to be a village (with lots, and lots of money).

Today, these three counties are in the midst of their greatest days. (I will always love a line in one of the fun murder-mysteries of Nick and Nora Charles where a guest cries out how he missed the "good old days" to which Nick observes that "these are the good old days."

Franklin-Cool Springs and the coming of Nissan headquarters means Williamson County must continue its excellent record of planning and expansion of services, especially in schools.

So too, Murfreesboro, now a regional hub of commerce and education, must continue to provide services which match Williamson County, as they do now.

While there isn't the wealth generation in Rutherford to match Williamson County (one of the richest counties in the nation), it provides a fine quality of life. Rutherford, with its location, the largest undergraduate university in the state, and its national ranking in growth, is on a great roll.

Take three announcements: 110 new stores and shops in one complex; a new ultra-modern, state-of-the-art hospital, and the completion of the Medical Center parkway, and it becomes clear.

Murfreesboro, however, must address one part of what must be, with all of the good news comes a cautionary note: transportation and planning. Critics of the city worry about the independence of the city from developers, and they can make a strong case for concern. The city must build permanent lungs: tracts of open space, parks and greenery.

It must realize it is not a country town. A park system is vital. It is also vital to plant trees, greenery, and quiet gathering places. The land must be bought now.

I remember when one of the City Council members chastised then-member Mary Huhta as wanting to make Murfreesboro a Germantown. (Germantown is a beautiful, planned suburb of Memphis, with signage laws.) Business is what matters, he shouted, not signage rules. Well, that is a lost battle. Our main commercial roads are a surreal Chinese dragon on steroids.

But, there are cosmetic ways to improve them and ensure that all new such construction matches the excellent new parkway in design and greenery.

Murfreesboro must be commended for buying buses. It is a decision filled with foresight. The entire city is sprawling outward and buses will help many people go to and from work. It's understandable the city didn't buy electric buses, which are environmental wonders, because they cost about twice what a fossil-fuel bus does. But, hopefully, the city will in the future.

Williamson is wisely buying and integrating parks into its designs. Davidson needs to rethink mass transit. The buses are too large and ponderous and research on new ways to move large groups of people in and out of the core should be done now. I love trolleys. How about it, Mayor Purcell?

Predicting the future is a fool's game. But, at this point in time, it's not too far a reach, as Eddie Cantor exclaimed after starring in the first talking movie, "The Jazz Singer," to say "You ain't seen nothin' yet!"

Washington developer bringing condos to Midtown

Memphis Business Journal - October 3, 2006
by John Scruggs
Staff Writer

Condo conversions are on the rise in Memphis and a Tacoma, Wash., developer is making a big entrance into the market, buying up aging apartment properties in Midtown for renovation and eventual sale.

The Gintz Group's first Memphis offering is The Villas at Chickasaw, formerly Central Terrace townhomes at 2681 Central.

Gintz purchased the property for $2 million and is converting it into The Villas at Chickasaw, a 32-unit condominium complex with new interiors and amenities.

In addition to The Villas project, Gintz Group purchased Woodmont Towers on North Parkway in September for $10 million.

Ron Gintz says tenants have been notified of the project and condo conversions will begin with the top floors, so the project will be completed in phases.

The Gintz Group also bought The Continental apartment building at Central and Lamar and plans to convert the property to condos after closing it in February 2007.

With the grand opening of The Villas at Chickasaw, the Gintz Group is starting what looks to be a serious commitment to redevelopment in Memphis and specifically for Midtown condo properties.

Prices in the gated Villas community range from $140,000 to $180,000 and association fees will be around $125 per month.

The condos range from 1,450 to 1,600 square feet.

The units are two and three bedrooms and all have two and one-half bathrooms. Renovations include bamboo flooring, granite countertops, stainless steel kitchen appliances, new bathrooms and smoothed ceilings.

Erik Robbins, a partner with Gintz on the project, says the property was a natural target for the conversion.

"The townhouse layout of the complex doesn't have an apartment feel to it," Robbins says. "There's no one living above or below you either."

But the location was the primary factor, he says, with the University of Memphis campus, Midtown and Cooper-Young all nearby.

"The central location was ideal for us, coming into Memphis and a new market," he says.

Gintz is acting as general contractor on the project and Robbins says that allows them to have hands on quality control and cut costs for resale of the units and on the development side.

The Gintz Group has multiple projects in Phoenix and the Seattle area.

Robbins says the condo boom in Downtown Memphis wasn't something the group had an interest in.

"We didn't want to compete with other developers who have a lot of experience in their local markets," he says. "We try to find projects that are good prospects for redevelopment that will benefit the community.

The interior renovations at the Villas are matched by a revamped pool and common area in the courtyard.

Real estate broker Debbie Bronson, of Bronson-Griffin Realty, says the response to the Villas at Chickasaw has been outstanding.

She says two tenants, who were renters in the complex, are purchasing units.

"We've heard nothing but positive feedback from everyone who has seen the renovations to the property," Bronson says.

Aging apartment communities in Midtown are attracting the attention of other developers.

Across Midtown on Madison Avenue, Gary Coscarart has converted an apartment building into The Carolinas Condos and with 15 of the 18 units sold, Henry Heidelberger, of Woodyard Realty, says the project has been a success.

"A lot of our buyers are people who have looked Downtown," he says. "For them to find something for $140,000 to $145,000 in Midtown, it's a great deal in comparison to Downtown prices."

Heidelberger says The Carolinas Condos, at an average size of 1,200 square feet, are selling at average for $140,000.

Home sales set Sept. record

But increases slip, more 'for sale' signs sprout
By Amos Maki

October 17, 2006
The Memphis housing market continues to buck national trends as local home sales hit a record for September.
However, there are signs of the local market slowing as sales and sales volume posted smaller increases than in previous months, and a larger supply of homes on the market has some analysts worried about a drop in prices.

According to the Memphis Area Association of Realtors, 1,522 homes were sold in September, up from 1,516 last year.
Although the increase is small, it is still the highest number of sales ever recorded for the month of September.

Sales volume for September hit $263.6 million, up from $260.6 million over the same period last year.

For the year, sales volume hit $2.3 billion, up 17.4 percent from $2.7 billion over the same period last year. Total sales volume for 2005 was $3.2 billion.

There was also a spike in the number of homes on the market. In September, MAAR recorded 11,178 home listings, up 22.6 percent from 9,121 last year.

"Buyers have plenty of homes to choose from, " said MAAR president William Mitchell. "Those factors make the time right to find that perfect home, and sellers need to respond with homes that have move-in readiness and are priced to be competitive in the given market."

MAAR recorded 10,962 home listings in August, up 18.9 percent from 9,217 in August 2005.

With more homes on the market and the possibility of falling prices, now is a good time to consider buying, said Jennifer Burda, general manager of Chandler Reports.

"It is more of a buyer's market," she said.

According to Chandler Reports, 7,176 homes were sold in Shelby County in the third quarter, up from 7,175 over the same period last year.

Cordova's 38016 Zip Code led the way, with 503 homes selling over the three-month period ending Sept. 30. The 38018 Zip Code, which also includes Cordova, posted 426 sales.

The fast-growing Lakeland/Arlington Zip Code of 38002 recorded 445 home sales, an 11.3 percent jump over the same period last year.

Collierville's 38017 Zip Code recorded 428 sales.

"Collierville used to be where all the growth was going, but it shifted gears to Northeast Shelby County," Burda said.

Nationally, home sales are bottoming out with lower home prices attracting buyers across many parts of the country, according to the National Association of Realtors.

Prices of new houses will fall this year for the first time since 1991, and existing homes will have the smallest gain ever, NAR said.

The median price for a new home will probably dip 0.2 percent to $240,500, the first decline since a drop of 2.4 percent 15 years ago, NAR said. The price for previously owned homes will probably rise 1.6 percent to $223,000, the smallest gain on record, NAR said.

The inventory of new and existing homes for sale ballooned to record levels as the five-year housing boom slowed. The large supply of properties is forcing sellers to accept lower offers.

Total sales for 2006 are expected to drop 8.9 percent to 6.45 million. However, 2006 will still be the third-strongest year on record, following 2004 and 2005.

"Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices," said David Lereah, chief economist for NAR.

"Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year."

-- Amos Maki:

Kenlan plans development in Oxford square

Three-story buildings will include condos, retail and office space
By Amos Maki
Contact
September 30, 2006
Memphis-based Kenlan Development LLC is building a landmark $15 million mixed-use development in Oxford.

The company is building the 80-acre "square" piece of the 580-acre Oxford Commons development at Highway 7 and Sisk Avenue.

"The square piece is significant because it's the only true mixed-use development besides the historic square," said Lance Forsdick, managing member of Kenlan Development. "It's a safe, clean, comfortable environment where people can live, work and play all in the same place."

Condominiums, retail and office space will be part of the mix at the square, located next to the recently opened American Screenworks movie theater.

A 25- to 30-room boutique hotel is also planned.

The project -- designed by Memphis-based Looney Ricks Kiss, the local firm that has created highly touted project designs for Downtown and Midtown as well as cities nationwide -- will consist of four three-story buildings. Two buildings will be residential and the other two commercial.

Construction is scheduled to start in December.

Each residential building will have 23 condominium units ranging in size from 1,269 square feet to 1,562 square feet.

The condos will have porches and balconies that overlook the new square.

The commercial buildings will total 46,000 square feet of retail, restaurant and office space.

The ground floor spaces in the commercial buildings are slated for restaurant and retail tenants, including upscale restaurants, a coffee shop, an ice cream store and an upscale men's and women's clothing and accessory shops.

The top two floors of the commercial buildings are designed as Class A office space.

The project will have more than 360 parking spaces for the four buildings, including 92 gated spaces for the condo owners.

Mayor Richard Howorth said Oxford -- which has seen a good deal of interest from developers -- is perfect for projects like Kenlan's, which aims to enhance the city's historic character.

"I think it's a project that has tremendous potential," he said. "Oxford is a small town and its recent success owes much to its original small town characteristics.

"I think duplicating the existing model in other areas is attractive. I'm excited about what their mission is and I hope they are successful."

Marchbanks Realty out of Oxford is marketing the residential pieces. TRI Realty of Tupelo is handling the commercial space.

The square development is just a small piece of a much more ambitious project.

Kenlan is planning a 300,000-square-foot department store-anchored retail center featuring a traditional "town center." There is also about 400 acres available for a mix of housing.

--------------------

The Square at Oxford Commons

Kenlan Development LLC is building a $15 million mixed-use project in Oxford.

The company is developing the 80-acre "square" piece of the 580-acre Oxford Commons development at Highway 7 and Sisk Avenue in Oxford.

It will contain a mix of condos, retail and office.

Web site: oxfordmscommons.com

$400M residential project to break ground in Tunica

Memphis Business Journal - 1:46 PM CDT Thursday

Landworks Communities, through a partnership with Highland Capital Real Estate Advisors, has purchased a 721-acre tract of land at Old Highway 61 and Casino Strip Boulevard (Highway 304) in Tunica with plans to turn it into a residential development with hundreds of homes.

The project, which is called Indian Creek, is scheduled to break ground in early 2007 and is estimated to cost $400 million.

The master plan calls for 18 acres of park land, professionally planned and maintained landscaping, recreational amenities, and waterway and lake systems covering 55 acres. The land has been rezoned and has received all approvals from Tunica County. The development will include 18 acres of park land and other amenities covering 55 acres.

Frank Aldridge, a spokesman for Landworks, said the project will be completed in 5-7 years and will include more than 900 homes, 400 multi-family units and over 35 acres of retail and commercial development.

With a population of less than 10,000 people, but an economy that sees over 12 million people come to town every year, Indian Creek is what the city needs, said Lyn Arnold, president of the Tunica Chamber of Commerce.

"This development will offer an outstanding lifestyle and amenities usually found in much larger areas," Arnold said. "This development also meets our goals of establishing high quality neighborhoods and providing a variety of housing."

28-story housing complex to rise near Uptown Square

By Amos Maki
Contact
July 13, 2006
St. Mary's Catholic Church is poised to sell part of its Downtown property to developers who plan to launch an $85 million, 28-story luxury housing complex on the site.

Developers Brian Thomson of Boston and Geoffrey LePlastrier of California have an option to buy the land for an undisclosed amount from the Catholic Diocese of Memphis.

The land -- about half a city block -- is adjacent to St. Mary's, which is at North Third and Market near the Memphis Cook Convention Center and Downtown Marriott.

The skyline-altering high rise would be the largest built Downtown since the 23-story Morgan Keegan tower in 1985. The tallest building Downtown is 100 N. Main at 37 stories.

The high-rise would include 200 housing units, and an additional low-rise building will include 40 units, according to a plan submitted to the Memphis and Shelby County Office of Planning and Development.

"We've invested a lot of time and money in this," Thomson said. "Our intention is for this to be a world-class, sustainable project that redefines the north end of Memphis."

Money raised from the land sale would be split between the Diocese and St. Mary's and could be invested in improvements to the church.

Bill Herbers, Diocese director of facilities and risk management, would not comment on possible church improvements.

However, the site plan specifies a "family life center," including a multi-purpose gymnasium, a music and performing arts center and a school library and resource center.

Plans for the residential development include 12,570 square feet of retail and 2,087 square feet of restaurant space on the ground floor. The project will have a total of 370,905 square feet of residential space.

"We were very impressed with (the developers') ideas and with them," Herbers said. "I think it could be wonderful for Downtown Memphis."

Developers expect the project will generate more than 300 jobs during two-plus years of construction and that sales tax on building material alone could generate nearly $3 million. They estimate that property tax revenues from the 240 units could mean $2 million a year to the city and county.

The developers, who work mainly in Boston and California, said they hope the upscale project will attract doctors and researchers from St. Jude Children's Research Hospital, which is in the midst of a $1 billion expansion.

The site is across the street from Uptown Square, the community that was formerly the Lauderdale Courts public housing complex.

Developers also want to attract Catholic buyers and affluent empty nesters looking for an urban lifestyle. Amenities will include a health club and swimming pool on the roof of the low-rise building. There will be a common room and terrace on the 27th floor of the 28-story tower.

On-site retail and entertainment will be "limited to those completely compatible with the Church's mission."

The project will also be environmentally friendly. Building materials will conform with the Green Building council's recommendations for sustainability. Waste streams and storm water will be reused for on-site irrigation.

Downtown officials said it is no surprise that developers are interested in the land.

"From a development perspective, it's another vote of confidence in near-North Memphis," said Jeff Sanford, president of the Center City Commission. "With St. Jude's expansion, the Uptown project and residential growth on Mud Island, I think development in this project area is inevitable."

Rising Interest Rates Could Force More Homebuyers to Use Government Assistance

ANDY MEEK | The Daily News

It says something about the usefulness of a housing assistance program offered by the Shelby County Department of Housing when one of its most recent beneficiaries is an employee of another housing department - the City of Memphis'.

Robert Brimhall, a planning analyst for the city's housing agency, moved with his wife into a new home a little more than a year ago thanks to help from Shelby County's Down Payment Assistance Program. The DPA program was set up to help middle-income homebuyers like him cover a portion of their down payment and closing costs.

As Brimhall remembers it, he and his wife ended up paying close to $500 out of pocket. Without the aid, their tab would have been closer to $3,000.

"Just from working here with the city and knowing how these sorts of programs work, it was kind of one of those word-of-mouth things," said Brimhall, whose job requires him to process statistics, GIS requests and other queries for the city housing agency.

Another kind of tsunami

Jim Vazquez, deputy administrator of the county housing department, sees the Brimhalls as the crest of a wave that could soon splash with a vengeance onto the housing market's closely watched shores. With interest rates swinging upward, he said, the evidence points to a subtle shifting of the real estate climate from a seller's to a buyer's market.

And given the sheer number of programs out there that offer help for cash-strapped homebuyers, housing analysts like Vazquez believe the number of people who depend on programs like Shelby County's could soon get large enough to fill every square foot of a suburban McMansion.

"We basically have two down payment assistance programs that are slightly different," Vazquez said. "One is the American Dream Down Payment Initiative, and the other is the county's Down Payment Assistance Program."

Here's how they work: Under the ADDI program, Shelby County funnels federal Housing and Urban Development (HUD) funds to first-time, low-income homebuyers. The DPA program is designed to help people with moderate-level incomes cover part of their down payment and closing costs.

The ADDI program offers a five-year forgivable grant, while the DPA money comes in the form of a low-interest loan. The maximum amount of assistance through DPA is $3,500. Under the ADDI program, the county can pay up to 75 percent of the down payment costs, up to $10,000, or 6 percent of the sales price - whichever is larger.

Hoops and red tape

But several steps have to be met, of course, before county officials simply hand over a check.

"Under the DPA program, basically what the homeowner has to do is go to a mortgage company and qualify with the mortgage company," said Israel Henry, finance manager for the county housing department. "Once they qualify and acquire the property, then the mortgage company will submit to us an application on their behalf.

"Once they submit that to us, we'll take a look at it to make sure it meets all of our program guidelines. And when that's done we submit an approval form to the mortgage company and go through the process of writing a check."

Homebuyers who use the DPA program also are required to go through a one-day counseling class, which new homeowner Delisha Moore said was indispensable to learning about the rigmarole associated with buying a home.

"I learned so much about the process going through the class," she said. "I loved the customer service and the whole idea of the program, because it actually got me into a beautiful home."

Instead of looking at help available through the office where Robert worked, the Brimhalls turned to the county's DPA program because Brimhall said their income knocked them out of the city's eligibility range.

"Basically, you went to a housing class that was an all-day class, they gave me a certificate, and with that certificate, I was able to get the down payment assistance," Brimhall said.

Catch-22

Low interest rates and a much-publicized housing boom aside, county officials admit a curiosity about the fact that fewer people than expected have applied for each program. The county's DPA program, which is almost three years old, so far has helped about 30 homebuyers pay part of their closing costs.

County officials are still waiting for someone to qualify for the ADDI program, which is a little more than a year old. Therein is the Catch-22 of housing assistance aid targeting low-income homebuyers: Credit problems have disqualified most of the 90 or so applicants who've applied so far, Vazquez said.

To actually get a check in hand through either funding arrangement, the steps are slight variants of each other. Under ADDI, a homebuyer must contact the county housing department and complete an ADDI application form. After eligibility has been determined, the buyer gets a commitment letter.

That's taken to a mortgage lender, who sends county housing officials a letter describing the value of a home for which the buyer pre-qualifies and the estimated closing costs. The county then responds with a letter committing ADDI funds for a percentage of the closing costs. At closing, a check is issued to the lender.

"We got off to a slow start with the DPA too, but we tweaked some things here and there - the income guidelines and such - because we have more flexibility with that program," Henry said.

Connecting Buyers and Sellers

Downtown Condo Connection attempts to make condominium market more transparent to everyone

ANDREW ASHBY | The Daily News

A local Realtor is looking to tap into the rising Downtown condominium market by providing an information center for potential buyers in the 38103 ZIP code.

Kendall Haney, owner of Kendall Haney Realty Group at 612 S. Cooper St., early this month opened the Downtown Condo Connection at 408 S. Front St. as a resource for potential buyers who might be confused by the sheer variety and availability of the area's condos.

In April 2006, 33 condos were sold in 38103, according to real estate information service Chandler Reports, www.chandlerreports.com. The average sale price was $188,301 and the average square footage was 1,161. In the first three months of 2006, 79 condos were sold in 38103.

The number of sales shows a steady rise from April 2005, when 10 condos were sold in 38103, with an average sales price of $179,530 and an average square footage of 1,383. In the first three months of 2005, 22 condos were sold in the same ZIP code.

Needles in a haystack

Many different real estate companies represent various Downtown condos, so it can be difficult for buyers or the Realtors representing them to get a feel for the entire market, which consists of more than 500 units spread across 43 buildings. Add in the 20 planned condo buildings and the 13 currently under construction, and it can be challenging to find the right unit.

"It's so hard to find out who's got them listed, where to go and where they're located," Haney said. "It's difficult for us as a Realtor, so it's definitely difficult for a buyer with no Realtor."

The Downtown Condo Connection actually is a converted condo in the Paperworks Building. It has a kitchen, restrooms and office space for three agents and an office manager.

The office contains information about every condo in the Downtown market, from a $59,900 unit in the Claridge House on North Main Street to a $613,000 model at the Shrine Building on Monroe Avenue.

DCC agents have created a book with floor plans, photos and information on condos that are for sale, as well as many that have yet to be built.

To narrow down what potential customers might want, Haney said agents ask questions about what the customers are looking for, from covered parking to river views.

"Then we can pinpoint certain buildings that will fit your needs," Haney said.

A piece of the pie

After discerning what buyers want, DCC agents call the condos' in-house real estate agents and set up a time to show the property.

It's a free service for buyers because sellers pay the commission. It's also good for the agents because it brings traffic to their offices.

"Every Realtor we've talked to has been happy to see us," Haney said. "It's a win-win because we can help them sell their condominiums."

Since DCC opened at the beginning of the month, the office has been getting two to three visitors a day just from the signage outside.

Principal broker Sue Tines said the company's e-mail list has been popular with visitors. After getting e-mail addresses from potential customers, Realtors can send them information based on their criteria, such as square footage or the number of bedrooms and bathrooms they'd like to have.

"That's less invasive on them, to do it that way," Tines said.

Tines has been in the Memphis real estate business 31 years and helped train Haney more than 20 years ago. She said all the in-house agents she deals with at the condos have been receptive since they can't leave and show buyers different properties around the Downtown area. The DCC Realtors can bring buyers to various properties, splitting the commission with the condos' real estate agents. Total commission for agents usually is 6 percent, with 3 percent going to the DCC agents and the other 3 percent going to the selling agents.

"They're glad for you to show the properties," Tines said. "They would rather have a piece of the pie then none at all."

Diversity of services

In addition to helping potential buyers find a condo, DCC also offers in-house mortgage lending. And the company is taking advantage of what Downtown has to offer. The company recently bought six trolley passes to take clients around various properties.

"It helps these condos that are on the trolley line," Tines said. "It helps people to understand how you can get around Downtown with it."

DCC affiliate broker Theresa Mynatt came back to Memphis after working in the Salt Lake City real estate market for five years. She said she thinks an event like the Vesta Home Show, which was held in the South Main Arts District in March, brought more attention to the growing Downtown real estate market.

"When I left, none of this was going on," Mynatt said. "I had heard rumors about people moving into the South End, but driving around it was like a ghost town full of nothing."

Young sees people moving back into cities as a nationwide trend.

"They want to get back into the city, away from the upkeep of a big home and the commuting," she said.

As an example of how the Downtown condo market has matured, Tines brings up the Claridge House, at which 400 hotel rooms were converted into 155 condos in 1985.

"The market was not ready then and they rented many of them out," she said. "Now, the market is ready and they have sold over 50 percent of their stock - just like you've seen the boom happen in Collierville, the boom happen in DeSoto County or the boom happen in Fayette County. Well, the boom is happening in Downtown Memphis right now."

Housing slowing in most regions, Fed says

By Rex Nutting, MarketWatch
Last Update: 4:05 PM ET Apr 26, 2006

WASHINGTON (MarketWatch) -- Home sales and construction are slowing in most regions of the nation, according to anecdotal accounts reported by the 12 Federal Reserve banks on Wednesday in the Beige Book.
"Most districts report cooling and moderation in their residential real estate markets," the Beige Book said. "In general, year-on-year price appreciation seems to be lower than in quarters past, with [Fed banks in] San Francisco, Cleveland, Kansas City, Richmond, New York, and Boston all reporting more modest price growth in residential sales." See full story on the Beige Book.
The Dallas region was an exception, reporting "particularly strong residential sales." The Dallas district encompasses Texas, southern New Mexico and northern Louisiana.
Inventories of unsold homes were said to be growing in the Kansas City, Minneapolis, Chicago, Atlanta, New York and Boston regions.
Almost all districts reported declining demand for residential mortgages. Read the full report from the Fed.
The Beige Book included information collected before April 17. In a separate report, the Commerce Department said sales of new homes jumped 13.8% in March. See full story.
Here's a look at housing in each region of the nation, according to the Beige Book:
Boston
The bank's contacts in the industry "uniformly cite a continued slowing" in sales. Inventories are climbing, and prices are leveling off. The slowdown in price appreciation was seen as a positive sign. "The general expectation is for prices to remain steady and for the sales pace to be slower than in recent years past," the Boston Fed said.
New York
The housing market was "mixed but generally softer," the New York Fed said. Prices of new homes had leveled off, but builders had not yet slashed prices. Inventories of unsold existing homes rose sharply to a seven-month supply. The Manhattan market for condos and coops was "mixed." Prices were flat from the previous quarter and the inventory of apartments on the market was up 60% from a year ago.
Philadelphia
The demand for residential mortgages slowed, the Philadelphia Fed said.
Cleveland
While builders reported sales strengthened from weakness earlier this year, sales are down compared with last year. "Accordingly, prices are rising less rapidly, with many builders more willing to discount," the Cleveland Fed said.
Richmond
Realtors reported "generally slower home sales and more moderate price growth," the Richmond Fed said. Buyers were taking time to shop around. High-priced homes were staying on the market longer. "It's clearly a buyers' market now and buyers can negotiate better prices," a contact in Washington said.
Atlanta
Home sales softened in some parts of the district and fell in Florida from record levels. "Despite this, single-family construction remained strong as builders worked to fill the backlog of orders made last year," the Atlanta Fed said. Condo sales in Florida weakened.
Chicago
"Construction and real estate activity was mixed by both location and market segment," the Chicago Fed said. Sales softened in Illinois, Indiana and Michigan, but sales "recovered some" in Wisconsin. Construction of new homes was slowing. Inventories were rising.
St. Louis
Home sales were mixed, the St. Louis Fed said. Sales were stronger in Memphis and St. Louis, but were down in Little Rock. Home building slowed in most areas.
Minneapolis
"Residential real estate softened," the Minneapolis Fed said. Building permits were down 10% in the Twin Cities. Plans were recently announced for a major new developing in Sioux Falls, S.D.
Kansas City
"Residential construction declined somewhat," the Kansas City Fed said. Builders expected further declines, although building is strong in some areas. Home price appreciation remained modest. Inventories were rising. Realtors expect sales to be little changed in coming months.
Dallas
"Construction and real estate activity accelerated, boosted by vigorous homebuilding and mounting commercial construction," the Dallas Fed said. "Residential markets remained strong." New home sales were at record levels in the first quarter. Contacts are confident the real estate market in the district will be unaffected by a national slowdown. Increased buying by investors was reported.
San Francisco
"Residential construction, sales activity, and price appreciation slowed slightly in most areas," the San Francisco Fed said. Residential markets were active, but moderating. Higher inventories and slower price appreciation "suggested significant cooling in most areas." Utah and parts of the Pacific Northwest were exceptions. "Mortgage lending, particularly in subprime categories, fell somewhat from very high levels."

Tapping the Hispanic Market

Insurance agent tailors new businesses to growing population

Recent Lead Stories Recent Lead Stories
ANDY MEEK | The Daily News

Lauda Martin Davis has seen the puzzled looks before. When she sees them directed at Hispanics in Memphis who are struggling to accomplish mundane tasks, she thinks of her Hispanic father, a man who never quite overcame his own language barrier.

"He had the thickest Spanish accent you've ever heard in your life, and I saw how much trouble he had because of it," said Davis, vice president of Servicios Bilingual Services.

It's a memory that puts her current job in perspective.

From behind the counter in a small Hickory Hill office, Davis and a handful of other Spanish-speaking employees do what few business people in Memphis can: offer basic services to Hispanics in the hope that people like her father don't have to be met with blank stares when they need help.

Following the demographics

The place where Davis works actually is three businesses in one. A grand opening for the entire thing will be held Monday.

SBS - Davis' division - offers a mix of services to Hispanics, including help with bookkeeping, translation and getting a driver's license. It shares space with a U.S. Post Office branch that was set up to handle Spanish-speaking customers.

Occupying most of the building at 3546 Hickory Hill is a Nationwide Insurance agency. It, too, deals especially with a Hispanic clientele.

All the divisions are under the umbrella of Larry E. Crum & Associates. Crum is the Nationwide Insurance agent who jumped at the chance to serve a demographic that's leading a seismic shift in the area's population statistics.

One estimate has put the Memphis area's Hispanic population between 260,000 and 300,000 people, which does not include undocumented residents. The most recent census figures put Shelby County's general population at slightly more than 900,000.

"The people, they're just like we are," said Crum, who owns nine Nationwide agencies in the Memphis area. "They want the same things we want: good jobs, good homes, good schools for their kids, and they pay their bills.

"It's just another culture is all, and we've learned how to deal in that culture because it seemed like another way to solidify our relationship with the community."

Cashing in

The three new businesses share space in a well-established, 17,000-square-foot strip center that's owned by Boyle Trust and Investment Co. and not far from the hustle and bustle of the Winchester Road corridor. It's less than half a mile from the Hickory Ridge Mall at 6075 Winchester Road.

Crum said customers from all over Memphis and DeSoto County already have flocked to his agency since it opened around the first of the year. Many of them might notice at least one thing that's not typical for businesses in the area: employees at Crum's agency don't lock the door whenever a customer comes in.

Hickory Hill is popularly known as a stretch of Memphis where the housing market is sluggish, the foreclosure rate is high, crime is up and businesses aren't exactly flocking for new opportunities.

The area's bad reputation aside, Crum's insurance agency has had a presence in Hickory Hill for about three years, and he said he likes it just fine.

"We don't have bulletproof glass," Crum said, noting a feature other businesses in the area have. "And we're open until six at night, which is an hour past when most businesses are open."

"You know, I was concerned when we went to Hickory Hill. But we're in a strip center that's pretty safe, and we haven't had any incidents of any kind. Hickory Hill has been okay with us."

Cultural enclave

Ivette Monzon, assistant for Hispanic affairs to Shelby County Mayor A C Wharton Jr., said the Hickory Hill community is home to a large Hispanic presence.

"Many businesses around there are closing, so I think (Crum's office) is a good idea," said Monzon, a Costa Rica native who has lived in the Memphis area for almost 30 years.

Davis, whose background is in accounting, is overseeing both the postal and bilingual services divisions of Crum's new enterprise.

"A lot of people here don't understand the ordinary things about living here," she said. "Typical things to you just aren't understood by them."

Some of those needs include writing business plans, basic birth certificate translation and aid with taxes. Davis has dreamed of working in her current job in some form or another since she saw her father struggle through life in America.

"I saw how much trouble he had, so I've always had the concept that I was going to do something like this," she said.

Monday's grand opening ceremony will be attended by officials from Nationwide's corporate office, the U.S. Postal Service and some influential Hispanic personalities, Crum said. As of mid-week, he was still in the process of confirming who would be able to show up.

If the office becomes successful over time, Crum said it could become a prototype for Nationwide agencies across the country.

All of the nine offices he owns reflect his desire to reach out to Spanish-speaking citizens and make sure people like Davis' father have somewhere to go for help.

"We put a bilingual person in our Olive Branch office, we put another bilingual person in our West Memphis office, and we just opened, on the first of January, a Hispanic insurance agency in Nashville," Crum said. "So we just recognize the diverse community is a good market."

New Homes Sales Fall in Jan.

5 percent decline shows softening in housing; Memphis market remains strong

By Martin Crutsinger
Associated Press
February 28, 2006

WASHINGTON -- The backlog of unsold new homes reached a record level last month, as sales slipped despite the warmest January in more than 100 years.

The Commerce Department reported Monday that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month.

That was the slowest pace since January 2005 and left the number of unsold homes at a record high of 528,000.

Analysts viewed the new data as further evidence that the nation's red-hot housing market, which hit record sales levels for five straight years, has definitely started to cool.

"The decline in new home sales in January makes it clear that there is some real softening in the housing market," said Joel Naroff, chief economist at Naroff Economic Advisors.

While the national market may be softening, a year-over-year comparison of local home sales indicates the housing market has not slowed down in the Memphis area, according to the Memphis Area Association of Realtors.

MAAR said 1,153 home sales were reported in January 2006, compared with 937 homes sold in January 2005, an increase of 23.1 percent over last year.

With the average sales price of a home increasing 14.3 percent from $150,400 in 2005 to $171,900 in 2006, total sales volume reflects a 40.4 percent increase over a year ago.

"With long-term interest rates still very low, the Memphis area is a highly desirable housing market," said MAAR president William Mitchell.

The national 5 percent decline was bigger than expected, dashing hopes that the milder-than-normal January would help to bolster demand. The warm weather had pushed up the level of construction starts last month by 14.5 percent, the fastest rate in three decades.

But the new report showed that with sales lagging, the increase in building activity left a total of 528,000 new homes still for sale at the end of the month, a nine-year high.

Even with the softening in sales, prices were up in January with the median price climbing to $238,100, up 4 percent from December, but below the all-time high of $243,900 set in October.

For the past few years, home prices have been surging at double-digit rates, gains that analysts said will likely slow now that sales are softening and inventories of unsold-homes are rising.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, predicted "real downward pressure on prices over the next few months."

David Seiders, chief economist at the National Association of Home Builders, said surveys showed that the number of builders who are throwing in various amenities for free in order to move homes has risen to 41 percent.

Seiders predicted that home price gains, which were running around 12 percent last year, will slow to about 6 percent this year.

He said a lot of this year's change will reflect less speculative investor activity and more sales spurred by people desiring to live in the homes. "Hopefully, that is all that is developing here," Seiders said.

Some economists are worried that with the inventory of unsold homes rising, there could be significant downward pressure on home prices, triggering a chain-reaction similar to the bursting of the stock market bubble in 2000, a development that contributed to the 2001 recession.

But new Federal Reserve Chairman Ben Bernanke told Congress earlier this month that for now he was looking for a moderate slowdown in the housing industry, not a crash.

The 5 percent January drop in sales followed a revised 3.8 percent increase in December and was the biggest setback since a 7 percent drop in November.

The biggest decline in sales was a 14.9 percent decrease in the Northeast, which followed an even bigger 23 percent plunge in sales in December. Sales in the Midwest were down 10.8 percent after having risen by 21.2 percent in December.

In the South, sales fell by 10.3 percent in January, following a 1.2 percent gain in December.

Bucking the national trend, sales in the West posted an 11.3 percent increase in January after a 6.3 percent gain in December.

Mortgage rates have been rising gradually with the 30-year mortgage now at 6.26 percent, according to the latest Freddie Mac survey. Many analysts believe 30-year mortgages will rise to between 6.5 percent and 7 percent by the end of this year.

They think that increase will be enough to trim sales of both new and existing homes and slow the double-digit gains in prices seen in recent years. The National Association of Realtors reported this month that a record 72 metropolitan areas saw double-digit gains in home prices in the final three months of 2005 compared with price levels at the end of 2004.

Vesta Home Show chooses Downtown for April event

By Amos Maki
February 9, 2006

As if Downtown needed any more confirmation of its energetic revitalization, the Vesta Home Show has tapped the South Main/South End area for its two-weeklong event in April.

An official announcement and groundbreaking ceremony for the event will be held Feb. 27 at 5050 Peabody Place, future site of the event's exclusive presenter, M&F Bank.

Organizers expect as many as 25,000 people to attend the event, scheduled for April 15- 30.

"What an honor this is," said Jeff Sanford, president of the Center City Commission. "To have the prestigious Vesta Home Show pick Downtown for one of its showcase events is proof positive that the Downtown housing market has come of age."

It is the first time Vesta has held its show Downtown since 1993, when Harbor Town hosted the event.

And it's the first time the 22-year-old show has been held within the Memphis city limits since 1997.

Downtown's sizzling residential growth compelled the Memphis Area Home Builders Association to hold the event there this year.

"The 38103 is one of the fastest growing Zip Codes in Shelby County and we wanted to make sure home builders have a presence in Downtown," said Dalene Wilson, director of special events for the Home Builders' Association. "There's a lot of buzz about it and we really want to reintroduce Memphians, many of them lifelong Memphians, to Downtown."

The demand for Downtown living is a bright spot in what are often dreary population and economic development numbers for the city.

According to a 2004 study commissioned by the CCC, the "high growth areas" of the Central Business Improvement District -- which includes Mud Island, Downtown Core and South Main District neighborhoods -- recorded a 10.3 percent average annual population growth 2000-2004, compared with the city's annual growth rate of 1 percent.

The entire CBID, which includes the Medical District, has a population of 25,142, and that number is projected to increase to 31,000 by 2009 and 38,000 by 2014.

The South End neighborhood covers a 30-acre area near the South Bluffs development and overlaps with portions of the South Main Historic District.

At least 13 developers are either building projects or have projects in the pipeline in the neighborhood.

Although $285 million in construction is planned or under way, that total is expected to reach $500 million during the next five to seven years.

The area is a blur of activity, with large earth movers, heavy construction vehicles, cranes and dozens of workers hammering, sawing and nailing away all day.

Some developers will be working overtime to get their products or models finished and ready for viewing.

"We're putting together our model very quickly for the show," said Scott Andrews of the Nashoba Group, which is partnering with AJW Partners to convert the former Piggly Wiggly headquarters on Front Street into the Nettleton, a 34-unit luxury condo development. "We're very excited and I think this says Downtown is a thriving market."

The Vesta event could also introduce many Mid-Southerners to "New Urbanism," the concept of integrating housing, offices, shops, entertainment, schools, parks and civic facilities in pedestrian-friendly developments.

Southland Development, which owns about 17 acres in the neighborhood, asked Looney Ricks Kiss to create a New Urbanism master plan for the area.

Jenny Wallace, marketing specialist for Beazer Homes, which is building a $49 million, 204-unit condo and townhome complex called State Place at South End, said the additional attention to the South End and South Main neighborhoods will ripple out to other parts of Downtown.

"Its a win-win for everybody," she said. "Everybody in the Downtown community will benefit from this."

More info:

Vesta Home Show

April's Vesta Home Show will take place in and around the South End neighborhood, where $285 million in projects are currently planned or under construction.

There are at least 13 developers with projects planned or under way in the general area.

For more information on the Vesta Home Show, please call 756-4500

Copyright 2006, commercialappeal.com - Memphis, TN. All Rights Reserved.

Memphis among least risky for home owners

Memphis is one of the top five least risky areas to own a home, according to the PMI U.S. Market Risk Index.

PMI Mortgage Insurance Co. released its data Tuesday, showing Memphis as the second least risky market in the nation's 50 largest housing markets, following only Pittsburgh. Indianapolis, Cincinnati and Nashville round out the top five.

Memphis scored 57, or a 5.7 percent chance of housing price decline, on the index, compared San Diego, the nation's highest risk market, which scored a 588, or a 58.8 percent chance of price declines.

The national average index score is 261.

PMI Mortgage, a subsidiary of The PMI Group Inc. (NYSE: PMI), publishes the market risk index quarterly. The index measures geographic house-price risk by predicting the probability of a regional decline in home prices over the next two years.

The index is based on the House Price Index from the Office of Federal Housing Enterprise Oversight, labor market statistics from the Bureau of Labor Statistics and the PMI affordability index, which uses local median household income, home price appreciation and the price of a conventional mortgage.

Apartment Market Finally Sees Pickup

Real Estate & Development

TRACY ADAMS | The Daily News

For the first time in the past few years, the Memphis multifamily housing market is gaining strength, and all signs point to growth in the year to come.

"The last couple of years have been very challenging for our business due to the fact that the pricing of single-family or for-sale housing alternatives has been very tempting for our residents," said Mark Fogelman, president of Memphis-based Fogelman Management Group. "In many cases, (renters) were able to buy a home for a lower monthly payment than actually renting an apartment. We lost a lot of residents over the last couple of years.

"But things are turning around. Quarter by quarter, the year has been picking up in growth."

Fogelman Management Group manages 41 multifamily properties totaling 16,000 units in 10 states, including 5,800 units in the Memphis market.

Positive numbers. The overall numbers for the Memphis multifamily market have been positive in the first three quarters of 2005, with increasing occupancy rates, rental rate gains and absorption that has outpaced the delivery of new units, according to a third quarter report by commercial real estate services firm CB Richard Ellis.

The report showed significant occupancy increases of 1.4 percent and 3.4 percent for 1980s construction and new construction, respectively. The largest increase among all categories was in Downtown Memphis, where new construction showed a 5.1 percent occupancy increase.

New construction in Downtown had the area's highest occupancy rate, at 97.3 percent. It was followed by Raleigh/Bartlett and Cordova/Germantown, which saw new construction occupancy rates of 95.8 percent and 94.9 percent, respectively.

Older construction in the Raleigh/Bartlett and Cordova/Germantown markets also showed positive numbers for the third quarter. Both areas saw an occupancy increase of 1.9 percent.

Higher absorption. Absorption in the third quarter more than doubled third quarter 2004 figures, with 1,156 units absorbed. The number of units absorbed was affected in part by Hurricane Katrina evacuees who needing immediate housing, Fogelman said.

"Unfortunately, Hurricane Katrina evacuees have contributed positively to our industry," he said. "Our company manages about 5,800 units locally, and we have leased to about 90 families that were fleeing Hurricane Katrina. Of that 90, about 50 remain with us today."

CB Richard Ellis predicted that many Katrina evacuees will stay in the Memphis area on a long-term basis, said Blake Pera, vice president of CB Richard Ellis' Memphis Multifamily Division.

"I do sense that those residents are longer term than displaced residents in Houston, Texas, and some other markets," Pera said. "From what we are hearing in the market, I think these people are continuing to stay."

Overall absorption through the third quarter was 1,156 units, which includes 257 1980s-built units and 1,206 new construction units, according to the report. New construction absorption was attributed to increased occupancy in the category and the delivery of 803 new units.

"The 1980s and new properties are doing really well," Pera said. "It is an encouraging sign that our market is turning the corner."

Rents finally increasing. Rental rates increased by about 1.5 percent in the third quarter, according to CB Richard Ellis. The data showed that the average market-wide rent was $658, compared with $651 at year-end 2004.

"2005 has been the first year in five years that we have had some pricing momentum behind us where we can rent a unit to a new resident at a higher rate than we rented to the previous resident," Fogelman said. "We're looking for that to continue in the coming year."

The East Winchester submarket experienced the largest rental rate gain among old construction properties, with a 3.7 percent increase, Pera said. In DeSoto County, where researchers found the highest rental increases among 1980s-built properties, rates increased by about 10.3 percent.

The growth experienced in the Memphis multifamily market could mean increased rental rates in 2006, Fogelman said.

"Over the last several years, a two-months-free rent giveaway has been very common in the market," he said. "We had higher occupancies, but the rental rates on a net effect basis were not positive.

"The city is experiencing improved job growth, there has been a lack of new apartment construction and interest rates are creeping higher, which all favor our industry. Our big focus is not going to be on occupancy in the coming year, but on pushing rental rates higher."

Continued growth. Fogelman also predicted the growth trend established this year will continue in the current quarter and into 2006.

"New construction, job growth, price of for-sale housing - these three factors are all starting to line up very nicely for us because we are at record lows for new apartment construction, jobs are improving and hopefully interest rates are improving, as well," he said. "We are bullish on the apartment market for 2006."

Pera agreed.

"I think we will continue to see an uptick in occupancy in the next several quarters," he said. "I would expect similar levels, with continued occupancy in the A and B properties in the mid 90s or better in 2006."

Local Realtors Expect Strong Sales to Continue

It comes as no surprise to Walter Molony that after five consecutive years of record-topping home sales nationwide, a slowdown is predicted for 2006.

"You can't keep setting records every year," said Molony, a spokesman for the National Association of Realtors.

Unprecedented boom. For the last five years, the housing market has been booming nationwide. It reached its peak in 2005. While NAR predicts a slowdown in 2006, Molony said he expects sales to remain strong.

Nationally, existing home sales are slated to rise 4.7 percent to $7.1 million in 2005. Next year, a decline of about 3.7 percent to $6.84 million is expected. Likewise, new home sales are projected to increase 7 percent to $1.29 million in 2005, then drop 4.8 percent to $1.23 million in 2006.

Even with the decline in both markets, 2006 is forecast to be the second best year in the real estate market, falling only behind 2005.

Memphis market. Local real estate professional William Mitchell said he doesn't believe the drop will be as significant in the Memphis area as it could be in certain hotspots - California, parts of Florida, Las Vegas and New York, to name a few.

"We're optimistic about the local real estate market," said Mitchell, president-elect of the Memphis Area Association of Realtors. "Memphis is more of a consistent market for real estate. We don't experience the high highs or the low lows."

Kirkpatrick said despite growing demand and rising asking prices for new homes and Downtown condominiums, Memphis is still an under-priced market compared to other markets.

Factoring variables. Molony said various micro-economic issues were used in predicting the 2006 market. Aside from examining historic housing trends and demand, other factors include economic growth, inflation, income, unemployment, consumer confidence and, most notably, interest rates.

"We are seeing inventory levels picking up and we're projecting a slow but modest rise in mortgage interest rates," he said.

Crye-Leike Realtor Angie Kirkpatrick agreed.

"Interest rates have been creeping up each year,