2008 October | MHN Blog

Capital Insights with Jack Kern

"The Accidental Economist" with Jack Kern 1 Response »

Oct 312008

Homeownership is a hot button issue politically. Recently, the four horsemen of HUD, secretaries Alphonso Jackson, Henry Cisneros, Jack Kemp and Moon Landrieu were together for a session at the Fall ULI Conference in Miami. As the discussion turned to housing needs and the concept of the suitability of homeownership for anyone so inclined, the secretaries, in one form or another claimed that the issues now facing the housing markets were politically motivated, corrupt practices in the mortgage industry, uninformed buyers or others that preyed on unsuspecting borrowers. They also suggested in some fashion that HUD was an essential tool in helping families obtain their first homes.

I say, let's lobby congress by telling the next administration to abolish HUD.

Nothing personal guys, but what I didn't hear and what no one seemed willing to acknowledge is that we need a non-politically oriented housing policy that is balanced and recognizes the value in quality, safe and responsive housing for the needs of every segment of society. Renter occupied housing is now more than one third of the nation's housing stock, and in some cities and certainly some segments, much higher. To continue to favor the policy line about homeownership does a disservice not only to those working hard to provide rental housing across the nation, but also to the millions of homeowners in all income brackets, who worked hard to buy and maintain their primary residences. Excessive homeownership contributed to the mortgage madness that began the economic slide we're seeing now. A future policy of continuing to support buyer initiatives, some of which are being pushed by the powerful homeowner and builder lobbies in Washington, DC is not the answer.

So let me ask you, Alphonso, Henry, Jack and Moon:
1. Where were you when the problems started to emerge?
2. Why did HUD never publicly acknowledge, until now, that it lacks the will to formulate balanced policy?
3. How is it that we've never seen a clear public accounting of the corruption at HUD under your watch?

I've met many people who lost their homes to foreclosures, and know even more now in trouble. They don't need new loans, they need affordable and reasonably adequate housing and a safe neighborhood for their families. Any additional nonsense policies that will put even more unfortunate people at risk is simply not warranted. Misery cuts across all boundaries and income divides, and if the four horsemen have their way, we're going to be bailing out failed borrowers for next 20 years.

Let's not let that happen.

The Big Picture with Erin Brereton: Energy-Efficiency’s Vitalizing Effect on Affordable and Low-Income Housing

Miscellaneous 1 Response »

Oct 302008

Green design has become a popular way to market new homes. Now, it’s catching on in a new segment of the housing market: Affordable and low-income housing building renovations. With benefits that include savings and a better overall residential experience, it’s a trend that’s likely to continue.

Increasing Energy Efficiency and Savings

LINC Housing Corp. is currently renovating the Terracina Apartments in San Jacinto, Calif., for general maintenance improvements. To offer residents energy savings, LINC also is making several green upgrades and renovations to the property, Hunter L. Johnson, LINC Housing president and CEO, tells MHN.

The alterations–which should offer a 25 percent improvement in energy efficiency—include:
•    Adding cool-roof radiant shingles
•    Installing CFL lighting
•    And adding energy-efficient water heaters, heating and cooling systems and appliances.

In market price properties, over-time energy savings may offer a huge draw for residents. With energy costs soaring, renters are looking to reduce their gas and electric bills.

If a property has been recently outfitted with extra insulation and energy-saving appliances that will allow
them to, the units will have an advantage over other area rentals that aren’t energy efficient—which the affordable housing industry is also starting to recognize.

Making Affordable More Reasonable
In affordable housing, energy efficiency can be even more of an issue.
It’s clear rising energy costs have become a concern for economically challenged residents and the states they live in.
• Illinois, for example, expects costs to be so high that it has added an additional $118 million to help low-income families with winter heating costs, according to Chicago’s ABC affiliate.
• The Metropolitan Housing Coalition, a Louisville, Ky.-based nonprofit housing group, released a study this week showing families are spending more of their income on utility bills due to rising energy costs.
The group is recommending new incentives and public funds be allotted to raise the energy efficiency of rental units and older homes, according to the Louisville Courier-Journal.

But residents aren’t the only ones who can benefit from increased energy efficiency. It can help management companies control their costs, as well.

Use of additional insulation and low-energy lighting can reduce the expense of lighting and heating of
common areas—and improve the bottom line for management companies.
Improving Resident Life

In addition to offering residents savings, going green can also help improve resident life.

Consider Wheeler Terrace, a development located in Washington, D.C.’s Anacostia, neighborhood. The 118-unit complex is about to undergo a renovation with green materials such as carpets that won't attract dirt and paints that aren't linked to asthma.

Using environmentally- and health-conscious materials can be a particularly important component of low-income housing, according to David Bowers, the Local Office Director for Enterprise Community Partners, which is overseeing the renovation.

"What often gets lost in the discussion about living green is that often, low-income folks and persons of color are disproportionately impacted by respiratory illness," Bowers told the Washington Post. "Many times that's related to the fact that they're living in substandard housing."

Conclusion

In many ways, adding energy efficient touches and green materials makes more sense than ever—partially because in many areas, the need for affordable housing appears to be on the rise.
That’s true in areas like California, where the housing market was particularly hard hit during the slump. In troubled markets, the need for rental housing is likely to be strong as single-family home foreclosures increase and home loans become harder to obtain due to tightened credit conditions.

We’re already seeing a need for more affordable housing in some parts of California. In San Mateo, Calif., for example, the city council last week approved a five percentage point increase in the number of mandatory affordable units in new developments, according to the Palo Alto Daily News.

And, in addition to the need for more housing, the recent U.S. financial stumbles may actually help green renovation practices take root.

A new report by McKinsey Global Institute called “Fueling Sustainable Development: The Energy Productivity Solution” suggests that the current rocky economy and recent oil price spikes could urge governments and businesses to invest heavily in energy efficiency, according to the New York Times.
That could mean more funding for adding energy-saving features during building remodeling—which could prompt more builders and developers to go green.

Green materials and design do add a slight additional cost to a project. (About 5 percent or less, according to the World Business Council for Sustainable Development.)

With today’s tight credit and budgets, increasing a development’s renovation costs can be a tricky proposition—especially for low-income and affordable housing remodeling jobs.

Could the extra cost have a deterring effect? Or will the eventual savings green design can offer residents and building owners outweigh the extra expense?

Tell us what you think.

Scary Times?

Miscellaneous No Responses »

Oct 292008

By Teresa O’Dea Hein, Managing Editor

Being scared is socially acceptable this week, with Halloween creeping up fast. But with job losses and fewer households being formed and tighter credit, even multi-housing executives are wise to be nervous.

FDR’s famous phrase about “the only thing to fear is feat itself” has taken on new life, to the point where one of the New York daily newspapers printed it on its cover a few weeks ago after one of the stock market’s big declines.

Plus, we should remember that many aspects of property management are controllable. For example, addressing maintenance/service needs promptly and with timely communication has often been cited as a key way to improve resident retention.

Still, while the apartment industry has fared better than other real estate sectors this year, the weakening economy is beginning to affect the sector. According to the National Multi Housing Council’s (NMHC) latest Quarterly Survey of Apartment Market Conditions, "Nine straight months of job losses have begun to cut into the demand for apartment residences," says Mark Obrinsky, NMHC’s vice president of research and chief economist. "While favorable demographics and a lower homeownership rate will benefit the apartment industry over time, owners and managers will first have to work their way through the current economic downturn before the benefits of that increased demand are likely to show up.”

The NMHC Market Tightness Index, which measures changes in occupancy rates and/or rents, dropped significantly from 40 last quarter to 24. This was the fifth straight quarter in which the index has been below 50. (For all of the survey indexes, a reading above 50 indicates that, on balance, conditions are improving; a reading below 50 indicates that conditions are worsening; and a reading of 50 indicates that conditions are unchanged.) In the previous four quarters, however, roughly half of respondents viewed market conditions as unchanged; this quarter less than one-third reported unchanged conditions, suggesting that the current situation is less stable.

So now it’s even more essential to ramp up property management performance and show the economic value of professionally managed assets.

And, according to an "Apartment Trends" report by Property & Portfolio Research, vacancies slipped by 10 basis points to 6.2 percent in the second quarter of 2008.

“A soft job market, an increasing pace of apartment completions and persistent shadow supply were the three main reasons for this trend,” explains Michael Cohen, research strategist. However, even at the current level, vacancies are a far cry from a cyclical high of 7.4 percent, reached in late 2003. Vacancies are expected to approach the high 6 percent range by end of this year before finding some stability in 2009, PPR predicts.

Even so, ghosts of recessions past haunt current events. Quick, pass the candy corn.

Capital Insights with Jack Kern

"The Accidental Economist" with Jack Kern No Responses »

Oct 242008

"Why, its getting so a man can't earn a dishonest living no more!" Yosemite Sam, (c) Looney Tunes 1949

In a rare misstep in an otherwise brilliant career, former Fed Chairman Alan Greenspan, who probably thought he was still on his book tour for the newly released "Geez, I had no idea and if I did, I wasn't aware of it," appeared before a Congressional Committee and gave his version of the subprime events showdown. In what was performance art, reminiscent of Yosemite Sam and Bugs Bunny, Greenspan maintained his composure in front of the moron squad, headed by Henry Waxman, Representative, from California's liberal elite zipcodes in Beverly Hills and the surrounding areas loaded with nuts and flakes. (A tribute to California's rich agricultural heritage.) You'll remember Henry, who while serving as Chairman of the House Oversight and Government Reform Committee, held hearings recently on the popular shooting gallery targets Lehman Brothers and AIG, but refused to look into GSE darlings Fannie Mae and Freddie Mac.

Dr. Greenspan, who has been, in the past resoundingly criticized by me for his monetary policy and the dubious distinction of having caused two, count them – two bubbles, (tech and housing) was treated to a barrage of questions and rampant accusations by Henry and his sidekicks. (By the way, if you're a Fed Chairman and you cause two bubbles during the hundred years you were on base, shouldn't that get you into the Guinness Book of World Records?)

After the day ended, I realized something. Dr. Greenspan was essentially right in his testimony and is not at fault, but perhaps at error. Let me explain. I know a lot of Fed guys. They're just about the most dedicated bunch you've ever seen and contrary to the Dr. Frankenstein version of scientists or economists (you'd never catch an economist wearing white, especially after Labor Day), the Fed guys pay attention to trends. In the Beige Book, they report on trends in each Fed district after speaking with lots of local business leaders and regional economists. I have been a sometimes participant in this process and have helped to represent our industry in some venues with the Fed. These are really brilliant guys.

When Dr. Greenspan told the committee that in essence, "This crisis has turned out to be much broader than anything I could have imagined," and "The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of crisis) would have been far smaller and defaults accordingly far fewer," he provided perhaps the best explanation so far for what really happened.

So, who, exactly is to blame for this resounding collapse in common sense and financial mis-engineering?

I'm putting this one at the steps of the Congress. Congress has pursued, to the exclusion of any rational purpose, a politically motivated, unbalanced housing policy. Congress has pushed, despite evidence to the contrary, homeownership at any cost. Congress has failed to keep in place legislation that kept banks as banks, insurance companies as insurance companies and opened up the floodgates of the capital markets to unregulated and poorly understood practices. Derivatives, no problem, credit default swaps, here you go, complicated, completely fraudulently packaged CMBS, how many do you want?

Feeling satisfied with the collosal clowns of the midway, the credit rating agencies convinced Congress it was ok for them to rate their client's paper, and it wasn't really a conflict that they were paid for that rating. These agencies, using models designed to support their scoring, promptly began an orgy of self interest, culminating, at their own admission in battles over market share for business, with little regard for the accuracy or integrity of the rated instruments.

In what I take to be a back handed slap at the Congress, Dr. Greenspan offered, "Had the models been fitted more appropriately to historic periods of stress, capital requirements would have been much higher and the financial world would be in far better shape today."

It is wrong for Waxman and his coterie of idiots to call into question the honor and integrity of Dr. Greenspan and the others during the hearings. The Congress is the one that needs to look at itself, eliminate corrupting earmarks and rather than measuring progress in political careers by how much legislation is introduced, instead focus on a rational, balanced set of policies, including a balanced budget.

Quoting Yosemite Sam in 1960:
Advisor: But Sire, there is no more money…
Yosemite Sam: You know the penalty for not having the books balanced!
Advisor: Oh no. Not the 'nose in the book' penalty.
Advisor puts his nose in the book.

I think you know what happens next.

The Big Picture with Erin Brereton: Green Building Is Popular, Profitable

Miscellaneous 1 Response »

Oct 222008

It’s clear California supports green building.

Starting Nov. 1, all new San Francisco buildings will be required to meet the city’s new green building standards, which were developed by the Green Building Task Force.

Two weeks ago, San Jose, Calif., adopted mandatory green building standards for all new construction.

The state of California also has general green building standards designed to increase energy and water efficiency, material conservation and air quality.

The currently voluntary building code alterations—which Governor Arnold Schwarzenegger called a move “to ensure that when we break ground on all new buildings … we are promoting green building and energy-efficient new technologies”—will affect government buildings, low-rise residential buildings, schools and more.

And they won’t be voluntary forever: The state’s green building code changes will become mandatory in 2010.

That’s good news—because two recently released reports suggest green building may also give California’s economy a boost.

• Building breaks. Starting in the 1970s, the state adopted building codes and home appliance standards to cut electricity use.

The efforts saved Californians $56 billion between 1972 and 2006 and created about 1.5 million jobs, according to a recent UC Berkley study.

• Citizen cuts. Personal energy consumption reduction is also helping the state, according to a study by Next 10, a California-based nonprofit environmental organization.

Tough mandates requiring Californians to reduce their carbon footprints and use more homegrown renewable energy will increase the state’s economy by $76 billion by 2020, the Los Angeles Times reports.

Much has been made of green building’s extra expense.

While it’s true green building adds to the upfront cost, it isn’t much—green building currently adds about 5 percent or less to a project, according to estimates from the World Business Council for Sustainable Development.

Still, the extra expense of building green means that many developers and clients continue see it as a luxury.

Despite the fact that half of Britain’s carbon emissions are linked to its buildings, according to government figures, a recent study of more than 100 U.K. real estate directors found that environmental and energy efficiency concerns had dropped to the bottom of the agenda.

Sustainability came in at No. 10 on a list of the 10 most important building planning factors, the Financial Times reported in early October.

No. 10? Really? Just about three months ago, the San Jose Mercury News was calling green building a clever and valuable marketing tool, saying that builders were "trying to woo customers with green building techniques and energy-saving features."

A National Association of Home Builders study found that 90 percent of homebuilders were employing green ideas in 2007, according to the Economist.

However, homebuilding and sales have struggled in the past year.

And, starting in summer, talk of a recession began picking up speed, due to the slow economy and the rising food and energy costs that tore into household spending.

Spending anything extra—even 5 percent—may be a hard argument for builders to make these days.

Luckily, green enthusiasts and the building industry now have some extra information to prove that green building does offer advantages beyond basic environmental responsibility.

Because, as it turns out, green isn’t just good for the earth—it’s also good for the economy.

Capital Insights with Jack Kern

"The Accidental Economist" with Jack Kern No Responses »

Oct 212008

Start Spreading the News, They’re Leaving Today…

I have been engaged in conversations with a variety of people very familiar with the New York metropolitan real estate market and they’re worried. Rightfully so, it seems as New York and the surrounding employment corridors are about to make history again, this time for job loss. Our estimates for the Manhattan-Northern New Jersey-Connecticut region show a loss of over 155,000 jobs, and for the first time, a very probable spike in apartment vacancies. The unemployment rate will probably vacillate between 5.8% and 6.8% (you know I think the household survey is inaccurate, but they get the trend right) and the economic engine that is New York will show little strength throughout next year. Apartment vacancies, at least in investment grade, professionally managed buildings could hit 9%, and concessions and genuine rent decreases could be in the offing. For those of you unfamiliar with New York area rental real estate, there are really two kinds of rentals – longer term, fairly entrenched owners who like 2 and 3 year leases, and then market rate, change every year apartment stock. While New York has some rent controlled units and rent increases are controlled by the rent stabilization board, for the most part, rents have not, and may not actually increase as much as allowed because of this really dramatic job loss. A lot of long term apartments are now coming off of 2 and 3 year leases and it remains to be seen if owners have any pricing power left.

For the long run, New York is seeing stresses. With the dissolution of some of the bright lights in investment banking and finance gone, effectively adding millions of square feet of sublease office space, there is no singular industry sector in the region taking their place. Consolidation and reorganizations will ultimately guarantee that Manhattan and the surrounding corridors are going to lose their jobs pretty consistently across northern NJ and NYC, and it will affect all of the ancilliary businesses that trade with these failing firms.

It may very well turn out that Frank Sinatra was wrong. If you want to "Wake up in a city that never sleeps," you might try Seattle, because for now, New York is down for the count.
–

Capital Insights with Jack Kern

"The Accidental Economist" with Jack Kern 1 Response »

Oct 202008

I Love the Smell of Cactus in the Morning

In what can only be described as an economic calamity meets public policy overload, today we travel to sunny Phoenix, where the cactus is in bloom, the temperature is a very modest 86 degrees and lots of apartments are empty. If you listen closely, you can hear the sounds of cars leaving Phoenix and not coming back. Phoenix, once the dominant poster child for institutional investment has achieved some level of notoriety lately since the city government, in their infinite wisdom passed a law suggesting that it was unlawful to hire anyone without absolute, ironclad, irrefutable, concrete proof they were here legally and could work legally. Apparently lots of residents got the hint and left town, in what turned out to be very large numbers. Oh, the law of unintended consequences.

From about 2005 to 2006, according to data from well known research firm Pierce-Eislen (www.pi-ei.com <http://www.pi-ei.com/> ) Phoenix garnered rent increases at 8.7%, and from 2006 to 2007,similarly saw rents rise by 4.3%. With strong rent growth driven by the relocation of businesses from administratively expensive California, Phoenix became a Wall Street investment grade phenomena. The Phoenix initiative to correct whatever problem the city felt it had, real or imagined, took Phoenix back to business conditions not seen since 2003 when year over year rent increases averaged, well nothing. With 2008 over 2007 running a very disappointing 0.3%, I can only imagine what the Chamber of Commerce is going to say on their next brochure. "Phoenix – a great place to, well leave…"

So is Phoenix, with falling apartment prices and deteriorating economic conditions a great place to buy units at a bargain? Opinion seems split, with some institutional investors carefully weighing out the future returns, and other local owners very wary of the situation. With Phoenix dependent on both local and regional employment growth and relocation, it’s probably unlikely market conditions will improve much faster than 2010. A major factor in the coming years will be the policy response of the new White House on immigration reform, with mounting court challenges to local initiatives becoming part of the local legal landscape. Only when these court actions are settled can owners in the Southwest feel confident about their undocumented residents.

Eye on the Economy with Adam Perrotta

Miscellaneous No Responses »

Oct 172008

The markets have whipsawed over the past weeks, with the Dow index seeing its worst stretch ever–an eight-day plummet of 2,400 points which wiped out some $2.4 trillion in market value–only to be followed by a record gain of 936 points.

Recent days, though, have seen a stepping up of efforts around the world to deal with the financial crisis. Some details of the government’s $700 billion financial rescue program have now been revealed, and the government announced plans to invest some $250 million into preferred stock equity positions in a number of banks. Across the Atlantic, 15 European nations devised a plan to aid their faltering banks by injecting capital and guaranteeing interbank lending.

Some better than expected news out of the single-family home sector, as it was revealed that pending home sales jumped in August. The National Association of Realtors’ index for pending sales of existing homes jumped 7.4 percent over July’s figure. Most observers had predicted a 1 to 2 percent decline for the month. August’s better than expected numbers, though, did come well before the financial crisis deepened over the past weeks. Meanwhile, the median price for an existing home sold so far this year was just over $200,000, according the NAR. That’s down from a median of $219,000 in 2007.

That good news though, was tempered with the announcement that housing starts reached a 17-year low in September, according to the Commerce Department. Privately owned housing starts fell to an annual rate of 544,000 in September, down 12 percent from August and 31.1 percent lower than September 2007.

While single-family home starts were down, new multi-family construction rose to an annual rate of 254,000 units, up 14,000 from September. The shift toward multi-family development may be an indicator of an overall demand shift from buying to renting as the days of easy-to-obtain mortgages at low rates seem to be over.

The employment market also saw some relief last week, as the number of American workers filing new jobless claims fell 20,000 during the previous week, according to the Labor Department. Initial claims for unemployment benefits declined to 478,000 during the week ending Oct. 4, largely due to easing of the impact from hurricanes Gustav and Ike. The reading was the lowest since mid September, but remained at a level indicating a weakened job market.

The Big Picture with Erin Brereton: Consumers Are Ready to Rent–But Not So Eager to Own

Miscellaneous No Responses »

Oct 162008

More homeowners are opting to rent, rather than buy, according to a recent Apartments.com survey.

As MHN reported last week, the survey found that a majority of U.S. renters are families who want to rent instead of owning a home.

The survey found that 11 percent have been renters for less than a year; 41 percent have been renters for less than five.

Renting offers consumers a number of options: Flexibility, lower overall cost, maintenance-free living and the chance to live affordably in popular neighborhoods.

But could the increase in apartment popularity be the result of more than just convenience?

It appears that many potential homeowners may be making the move–literally–to renting because they’re concerned about the uncertainty of the current housing market.

And with good reason.

Value can be hard to come by: The Wall Street Journal reported last week that nearly one in six U.S. homeowners was underwater—owing more on their mortgage than their home was actually worth.

Even California is less than sunny: Take, for example, California’s market. It experienced some of the biggest highs during the housing boom and some of the lowest lows during the bust.

Since values began falling nationwide, California home prices fell rapidly, along with sales.

Sacramento prices dropped 29.2 percent to $258,500 from last year; Riverside prices plummeted 27.7 percent to $287,100, according to the National Association of Realtors.

And in Miami, the condo market has taken a nosedive. Consider South Florida. During the housing boom, condos were easy to find–and fund–in the Miami area.

However, as the local and national housing market slowed, condo construction, at least initially, didn’t. The result: Miami-Dade County currently has a 41-month supply of condos, according to The Miami Herald.

The Rental Market is Ready to Go

Yet while the Miami area condo market may be overstocked and selling slowly, its apartment community is thriving.

Mixed-use projects like Sunny Plaza, which includes an apartment component, are getting approved.

The trend even rings true in markets that have not seen declines as sharp as California or Miami, like the Quad Cities, where some homeowners who found they couldn’t afford their mortgage payments have returned to renting.

The demand for rental property is related to the increase in home foreclosures and the difficulty many potential homeowners experience when trying to buy a home, according to the Quad City Times.

Is Ownership Worth the Effort?

As lending restrictions tighten–buyers in the Bay Area trying to take out jumbo loans, which are necessary to purchase many of the homes in the region, have to put down as much as 30 percent in many cases, according to the San Francisco Chronicle. And, it continues to be hard for even borrowers with good credit to get a loan.

High foreclosures and falling home values are causing more consumers to rent, either out of necessity or because of market apprehension. It may be a temporary trend linked to the economy–or a large paradigm shift in the American dream of homeownership.

Either way, it’s time to start funding and building more rental properties in areas where home values have declined dramatically. Those cities and regions will have the biggest need for non-permanent housing as the local market rebuilds itself.

Do you think the industry is ready to handle the influx of renters? Erincolumnpic_2

Foong on Finance: Relative Calm in the Midst of Turmoil

"Foong on Finance" with Keat Foong No Responses »

Oct 152008

By Keat Foong

It was certainly hair-raising to
watch the stock market in the past week. By Friday, the Dow Jones
industrial average had fallen from 9,955.50 on Monday to 8,451.19
points—a drop that was reportedly even worse percentage-wise than the
17 percent plunge in the week ending July 22, 1933.

Part of
the current panic has to do with the suspended financing markets—which
one would think at its worse can lead to economic collapse. In this
regard, the Treasury’s announcement this week of the plan to inject
$250 billion into banks, guarantee inter-bank lending and backstop the
commercial paper market, hopefully will help unfreeze the credit
markets. Already, there are reports of the credit markets easing. We’ll
see.

Through this swirl of serious distress in capital
markets, it is good to be able to say that multifamily financing—that
is, on the permanent debt side—has not been adversely affected to the
same, severe, extent, for now.

The multifamily market is
backstopped by the now government-owned Fannie Mae and Freddie Mac
financing. And sources provide the assurance that the government wants
“full speed ahead” with multifamily lending through these two agencies.
Permanent, acquisition and rehab financing that can be obtained from
Fannie Mae and Freddie Mac programs are still relatively
available—though much more competitive now, and projected income is no
longer acceptable in underwriting. And the all-in interest costs remain
surprisingly attractive and historically low—being still in the low- to
mid-6 percent range.

Construction financing, however, is
another story. The banks have pulled back and it is now very difficult
to obtain such interim financing from banks. However, take notice that
FHA-insured financing is doing good business in this environment. And
if developers don’t mind the arguably longer time frames and greater
amounts of paperwork of HUD processing, they may want to explore
FHA-insured financing for new construction or substantial rehab.