High frequency trading is set to shake up the opaque European options trading market in more or less the same way it has transformed cash equities in recent years, a new report has found.
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
Tuesday, September 27, 2011
HFT ‘to shake up Europe options market’ - FT.com
High frequency trading is set to shake up the opaque European options trading market in more or less the same way it has transformed cash equities in recent years, a new report has found.
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
HFT ‘to shake up Europe options market’ - FT.com
High frequency trading is set to shake up the opaque European options trading market in more or less the same way it has transformed cash equities in recent years, a new report has found.
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
HFT ‘to shake up Europe options market’ - FT.com
High frequency trading is set to shake up the opaque European options trading market in more or less the same way it has transformed cash equities in recent years, a new report has found.
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
HFT ‘to shake up Europe options market’ - FT.com
High frequency trading is set to shake up the opaque European options trading market in more or less the same way it has transformed cash equities in recent years, a new report has found.
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
HFT ‘to shake up Europe options market’ - FT.com
High frequency trading is set to shake up the opaque European options trading market in more or less the same way it has transformed cash equities in recent years, a new report has found.
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
A study by Tabb Group, the US-based consultancy, forecasts that the firms, which use cutting-edge technology to trade in and out of shares in fractions of seconds, will use the new trading platforms created by incoming European regulation to spearhead an aggressive push into European options.
The findings come only a day after a separate Tabb report found that European use of US options for trading had risen between 30 per cent and 73 per cent compared to a similar study conducted in 2005.
The report, commissioned by the Options Industry Council, found that 10 per cent of volume in US-listed options originated from Europe in 2010. Although that number represented a decline from the 15-20 per cent market share Europe held five years ago, Tabb pointed out that total US options market volumes had soared to 3.9bn contracts from 1.5bn in 2005.
Market infrastructure operators have been preparing the ground for a shake-up of European derivatives trading in recent months. Turquoise, the dark pool owned by the London Stock Exchange, has launched equity derivatives in a bid to take on rivals NYSE Euronext and Deutsche Börse, which collectively dominate European derivatives trading. The two companies are also planning to merge to create an overwhelming position in futures and options trading but face an in-depth probe from European antitrust authorities. A decision is due in December.
At the same time, European regulators are pushing through a review of European trading rules contained in the Markets in Financial Instruments Directive (Mifid) which will see large parts of the vast but opaque over-the-counter (OTC) derivatives market traded on exchanges and “organised trading facilities” (OTF) – an as-yet undefined new type of trading platform.
Will Rhode, author of the report, said the changes would provide more transparency over pricing and lead to competition between interdealer brokers, exchanges and broker-dealers to provide the best OTF, the gateway for high frequency liquidity providers.
The growth of high frequency trading on cash equity markets in recent years has been controversial. Its proponents argue that the practice increases trading volumes and tightens spreads on prices. Detractors say their often aggressive tactics amplify market volatility. It has grown to account for around 60 per cent of daily average volume in US markets and around a third of European trading.
There are, however, stark differences between US and European options markets. The former is a highly liquid and regulated market, while Europe is more opaque, with business often conducted by interdealer brokers.
Mr Rhode estimated US listed options volumes had grown at a compound annual growth rate of 20 per cent since 2002 but Europe’s listed options market has grown at a rate of 5 per cent in the same period.
“Without sufficient liquidity found on-exchange, specifically with single-stock options, buyside firms choose to execute block-sized orders over-the-counter, which is why only 26 per cent of notional turnover of European single-stock options traded on exchanges in 2010, compared to 74 per cent in the over-the-counter market,” he said.
However, he said there were some obstacles to further development of the European options market. They included uncertainty over clearing, a lack of product fungibility and monopoly ownership of tradeable products. Ownership of an index allows exchanges to spin off new derivatives contracts based on them, locking out rivals.
by Phillip Stafford Financial Times Sept 7, 2011
HFT ‘to shake up Europe options market’ - FT.com
Tuesday, September 20, 2011
Federal loan guarantees set to shrink
A temporary boost to Federal Housing Administration-guaranteed loan limits passed in 2008 is set to expire Oct. 1 unless Congress acts to extend it.
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Federal loan guarantees set to shrink
A temporary boost to Federal Housing Administration-guaranteed loan limits passed in 2008 is set to expire Oct. 1 unless Congress acts to extend it.
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Federal loan guarantees set to shrink
A temporary boost to Federal Housing Administration-guaranteed loan limits passed in 2008 is set to expire Oct. 1 unless Congress acts to extend it.
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Federal loan guarantees set to shrink
A temporary boost to Federal Housing Administration-guaranteed loan limits passed in 2008 is set to expire Oct. 1 unless Congress acts to extend it.
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Federal loan guarantees set to shrink
A temporary boost to Federal Housing Administration-guaranteed loan limits passed in 2008 is set to expire Oct. 1 unless Congress acts to extend it.
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Federal loan guarantees set to shrink
A temporary boost to Federal Housing Administration-guaranteed loan limits passed in 2008 is set to expire Oct. 1 unless Congress acts to extend it.
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Federal loan guarantees set to shrink
A temporary boost to Federal Housing Administration-guaranteed loan limits passed in 2008 is set to expire Oct. 1 unless Congress acts to extend it.
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market.
But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be.
In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire.
Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.
Since the major mortgage lenders began phasing out subprime loans in 2007, the market share for FHA-guaranteed loans has skyrocketed from about 4 percent of all loans to more than 15 percent, according to HUD data.
In Maricopa County, the temporary FHA limit currently in effect is $346,250. If Congress does not act to extend it, the FHA limit would drop to $271,050 on Oct. 1, a difference of $75,200.
The decrease would be even more significant in the Flagstaff and Prescott areas, according to FHA documents.
The FHA loan limit in Coconino County, where Flagstaff is located, would drop from the current limit of $450,000 to $333,500, a difference of $116,500.
The FHA loan limit in Yavapai County, where Prescott is located, would drop from the current limit of $390,000 to $271,050, a difference of $118,950.
FHA loan limits are based on median home prices in each county, but they can't fall below the federally mandated minimum of $271,050. That bottom limit would not change even if the 2008 legislation were allowed to expire.
As of August, the median price for a detached, single-family home in Maricopa County was $120,000, according to an Arizona State University report.
FHA-backed loans act like an insurance policy against borrower default.
Borrowers with FHA loans are required to pay a down payment of only 3.5 percent, compared with a 5 percent minimum for most non-FHA loans.
Borrowers with FHA-backed loans usually get a very low interest rate, as long as the loan amount is low enough to qualify for purchase by Fannie Mae and Freddie Mac.
Those two government-sponsored enterprises, currently under U.S. conservatorship, bundle loans they buy into mortgage-backed securities and sell them to investors.
Some analysts said that because the median home price is so much lower than it was in 2008, the FHA has been artificially propping up the market with its government guarantee of repayment on loans as large as $729,750 in some high-priced markets.
They argued that such a high ceiling places undue risk on taxpayers, who essentially foot the bill when a borrower defaults on an FHA loan.
Tony Yezer, a professor of economics at George Washington University in Washington, D.C., said a recent study by the university shows the decrease in loan limits would not affect most borrowers, and that extending them would put the FHA at greater risk of becoming insolvent.
"If you are putting 3.5 percent down on a $300,000 house, maybe you need to buy a little less house," Yezer said.
by J. Craig Anderson The Arizona Republic Sept. 19, 2011 05:04 PM
Federal loan guarantees set to shrink
August home building fell 5 percent
WASHINGTON - Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
August home building fell 5 percent
WASHINGTON - Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
August home building fell 5 percent
WASHINGTON - Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
August home building fell 5 percent
WASHINGTON - Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
August home building fell 5 percent
WASHINGTON - Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
August home building fell 5 percent
WASHINGTON - Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
August home building fell 5 percent
WASHINGTON - Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
New-home sales fell in July to a seasonally adjusted annual rate of 298,000, the weakest pace in five months. This year is shaping up to be the worst for sales on records dating back a half-century.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. Still, the surge in apartments has not been enough to offset the loss of single-family homebuilding.
Another reason sales have fallen is that previously occupied homes are a better deal than new homes. The median price of a new home is nearly 28 percent higher than the median price for a re-sale. That's almost twice the markup in a healthy housing market.
The trade group said Monday that its survey of industry sentiment fell slightly to 14 in September. The index has been below 20 for all but one month during the past two years. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
by Associated Press Sept 20, 2011
August home building fell 5 percent
Part of Glendale Westgate City Center repossessed by lender
David Kadlubowski The Arizona Republic Westgate City Center, a retail-and-entertainment center with opulent fountains and flashy billboards, opened in Glendale in 2006.
The core of the Ellman Cos.' project, outside University of Phoenix Stadium and Jobing.com Arena,was repossessed Monday by the lender, iStar Financial, after it failed to sell at a foreclosure auction for a reserve price of $40 million.
History of Westgate City Center in Glendale
The 33-acre property, which features restaurants, shops and an AMC movie theater along with Bellagio-like fountains and Times Square-style billboards, was designed as a suburban sports, entertainment and commercial hub to rival downtown Phoenix.
The remaining land owned by Ellman Cos., 95 acres of mostly parking lots slated for future development, is scheduled for foreclosure auction in November by lender Credit Suisse.
The auction is the latest blow to Glendale's prestigious sports district and another example of how the city has been shaken by the economic downturn.
The Phoenix Coyotes went through bankruptcy two years ago and still have no permanent owner. Now Westgate, at Loop 101 and Glendale Avenue, has been taken away from Steve Ellman, the city's development partner for more than a decade.
Westgate's opening in 2006 was like a launch party for the West Valley, with excitement brimming about the region's future as the flashy complex rose out of farm fields.
The Coyotes played next door, and the Arizona Cardinals had just moved in nearby.
Ellman, the chief executive of the company, called Westgate his favorite project.
At the time, a planning expert had cautioned the project was a gamble that relied on synergy between sports fans and shoppers.
Ellman Cos. initially struggled to secure financing and finished construction later than expected.
Then the recession further challenged the company's ability to keep tenants and expand development.
Ellman failed to pay the balance of $97.5 million in loans from iStar Financial and at least $202 million from Credit Suisse that came due two to three years ago.
By this summer, the lenders declared Ellman in default and began foreclosure proceedings.
Ellman cited the recent two-year struggle to find a Coyotes buyer and the real-estate meltdown as reasons Westgate went into foreclosure but would not elaborate on why he failed to pay the principal balances on the loans.
Hadden Schifman, a real-estate analyst with Phoenix-based Vizzda, said Westgate's massive size and various uses, from office to retail to dining, make it unique and add to the difficulty of finding a buyer.
"There's really not a comparison. And there's a huge amount of complexity in this deal," he said. In other commercial-property foreclosures, it's common for investors to wait until after an auction to negotiate with lenders to buy a foreclosed property, he said. Westgate could be similar, Schifman said.
Schifman's business partner Kris Thompson said investors could be interested in buying Westgate if they see the property as a "rare find," have the money to wait for long-term returns and are looking for an investment at a steep discount.
Westgate "requires Donald Trump vision," Thompson said.
One possibility that has been floated is finding an investor willing to buy both Westgate and the Coyotes. When Ellman began the project, he owned both the shopping complex and the team, which feed business to each other.
Ellman later split the entities and kept Westgate.
Whether the lender will keep Ellman Cos. as property manager remains an open question.
Westgate's "sheer scope" makes it logical for the lender to hire Ellman Cos., Schifman said.
On the other hand, if the lender and Ellman Cos. have a bad relationship, the lender may hire someone else, he said.
Ellman said this summer he believed his company could stay on as manager.
Ellman Cos. on Monday directed requests for comment to iStar Financial. A representative for iStar did not return calls.
Jeff Blake, dean of DeVry University's Westgate campus, said he's "as curious and concerned as anybody" but has no plans to change anything at the school, since tenant leases will remain intact. The school moved into Westgate last year.
Glendale spokeswoman Jennifer Stein said the city continues to consider Westgate "a strong destination point and economic engine."
Westgate generates about $8 million a year in sales-tax revenue for Glendale.
City officials plan on "business as usual" as they promote businesses and events in the sports district, Stein said.
by Rebekah L. Sanders The Arizona Republic Sept 19, 2011
Part of Glendale Westgate City Center repossessed by lender
David Kadlubowski The Arizona Republic Westgate City Center, a retail-and-entertainment center with opulent fountains and flashy billboards, opened in Glendale in 2006.
The core of the Ellman Cos.' project, outside University of Phoenix Stadium and Jobing.com Arena,was repossessed Monday by the lender, iStar Financial, after it failed to sell at a foreclosure auction for a reserve price of $40 million.
History of Westgate City Center in Glendale
The 33-acre property, which features restaurants, shops and an AMC movie theater along with Bellagio-like fountains and Times Square-style billboards, was designed as a suburban sports, entertainment and commercial hub to rival downtown Phoenix.
The remaining land owned by Ellman Cos., 95 acres of mostly parking lots slated for future development, is scheduled for foreclosure auction in November by lender Credit Suisse.
The auction is the latest blow to Glendale's prestigious sports district and another example of how the city has been shaken by the economic downturn.
The Phoenix Coyotes went through bankruptcy two years ago and still have no permanent owner. Now Westgate, at Loop 101 and Glendale Avenue, has been taken away from Steve Ellman, the city's development partner for more than a decade.
Westgate's opening in 2006 was like a launch party for the West Valley, with excitement brimming about the region's future as the flashy complex rose out of farm fields.
The Coyotes played next door, and the Arizona Cardinals had just moved in nearby.
Ellman, the chief executive of the company, called Westgate his favorite project.
At the time, a planning expert had cautioned the project was a gamble that relied on synergy between sports fans and shoppers.
Ellman Cos. initially struggled to secure financing and finished construction later than expected.
Then the recession further challenged the company's ability to keep tenants and expand development.
Ellman failed to pay the balance of $97.5 million in loans from iStar Financial and at least $202 million from Credit Suisse that came due two to three years ago.
By this summer, the lenders declared Ellman in default and began foreclosure proceedings.
Ellman cited the recent two-year struggle to find a Coyotes buyer and the real-estate meltdown as reasons Westgate went into foreclosure but would not elaborate on why he failed to pay the principal balances on the loans.
Hadden Schifman, a real-estate analyst with Phoenix-based Vizzda, said Westgate's massive size and various uses, from office to retail to dining, make it unique and add to the difficulty of finding a buyer.
"There's really not a comparison. And there's a huge amount of complexity in this deal," he said. In other commercial-property foreclosures, it's common for investors to wait until after an auction to negotiate with lenders to buy a foreclosed property, he said. Westgate could be similar, Schifman said.
Schifman's business partner Kris Thompson said investors could be interested in buying Westgate if they see the property as a "rare find," have the money to wait for long-term returns and are looking for an investment at a steep discount.
Westgate "requires Donald Trump vision," Thompson said.
One possibility that has been floated is finding an investor willing to buy both Westgate and the Coyotes. When Ellman began the project, he owned both the shopping complex and the team, which feed business to each other.
Ellman later split the entities and kept Westgate.
Whether the lender will keep Ellman Cos. as property manager remains an open question.
Westgate's "sheer scope" makes it logical for the lender to hire Ellman Cos., Schifman said.
On the other hand, if the lender and Ellman Cos. have a bad relationship, the lender may hire someone else, he said.
Ellman said this summer he believed his company could stay on as manager.
Ellman Cos. on Monday directed requests for comment to iStar Financial. A representative for iStar did not return calls.
Jeff Blake, dean of DeVry University's Westgate campus, said he's "as curious and concerned as anybody" but has no plans to change anything at the school, since tenant leases will remain intact. The school moved into Westgate last year.
Glendale spokeswoman Jennifer Stein said the city continues to consider Westgate "a strong destination point and economic engine."
Westgate generates about $8 million a year in sales-tax revenue for Glendale.
City officials plan on "business as usual" as they promote businesses and events in the sports district, Stein said.
by Rebekah L. Sanders The Arizona Republic Sept 19, 2011
Part of Glendale Westgate City Center repossessed by lender
Part of Glendale Westgate City Center repossessed by lender
Part of Glendale Westgate City Center repossessed by lender
David Kadlubowski The Arizona Republic Westgate City Center, a retail-and-entertainment center with opulent fountains and flashy billboards, opened in Glendale in 2006.
The core of the Ellman Cos.' project, outside University of Phoenix Stadium and Jobing.com Arena,was repossessed Monday by the lender, iStar Financial, after it failed to sell at a foreclosure auction for a reserve price of $40 million.
History of Westgate City Center in Glendale
The 33-acre property, which features restaurants, shops and an AMC movie theater along with Bellagio-like fountains and Times Square-style billboards, was designed as a suburban sports, entertainment and commercial hub to rival downtown Phoenix.
The remaining land owned by Ellman Cos., 95 acres of mostly parking lots slated for future development, is scheduled for foreclosure auction in November by lender Credit Suisse.
The auction is the latest blow to Glendale's prestigious sports district and another example of how the city has been shaken by the economic downturn.
The Phoenix Coyotes went through bankruptcy two years ago and still have no permanent owner. Now Westgate, at Loop 101 and Glendale Avenue, has been taken away from Steve Ellman, the city's development partner for more than a decade.
Westgate's opening in 2006 was like a launch party for the West Valley, with excitement brimming about the region's future as the flashy complex rose out of farm fields.
The Coyotes played next door, and the Arizona Cardinals had just moved in nearby.
Ellman, the chief executive of the company, called Westgate his favorite project.
At the time, a planning expert had cautioned the project was a gamble that relied on synergy between sports fans and shoppers.
Ellman Cos. initially struggled to secure financing and finished construction later than expected.
Then the recession further challenged the company's ability to keep tenants and expand development.
Ellman failed to pay the balance of $97.5 million in loans from iStar Financial and at least $202 million from Credit Suisse that came due two to three years ago.
By this summer, the lenders declared Ellman in default and began foreclosure proceedings.
Ellman cited the recent two-year struggle to find a Coyotes buyer and the real-estate meltdown as reasons Westgate went into foreclosure but would not elaborate on why he failed to pay the principal balances on the loans.
Hadden Schifman, a real-estate analyst with Phoenix-based Vizzda, said Westgate's massive size and various uses, from office to retail to dining, make it unique and add to the difficulty of finding a buyer.
"There's really not a comparison. And there's a huge amount of complexity in this deal," he said. In other commercial-property foreclosures, it's common for investors to wait until after an auction to negotiate with lenders to buy a foreclosed property, he said. Westgate could be similar, Schifman said.
Schifman's business partner Kris Thompson said investors could be interested in buying Westgate if they see the property as a "rare find," have the money to wait for long-term returns and are looking for an investment at a steep discount.
Westgate "requires Donald Trump vision," Thompson said.
One possibility that has been floated is finding an investor willing to buy both Westgate and the Coyotes. When Ellman began the project, he owned both the shopping complex and the team, which feed business to each other.
Ellman later split the entities and kept Westgate.
Whether the lender will keep Ellman Cos. as property manager remains an open question.
Westgate's "sheer scope" makes it logical for the lender to hire Ellman Cos., Schifman said.
On the other hand, if the lender and Ellman Cos. have a bad relationship, the lender may hire someone else, he said.
Ellman said this summer he believed his company could stay on as manager.
Ellman Cos. on Monday directed requests for comment to iStar Financial. A representative for iStar did not return calls.
Jeff Blake, dean of DeVry University's Westgate campus, said he's "as curious and concerned as anybody" but has no plans to change anything at the school, since tenant leases will remain intact. The school moved into Westgate last year.
Glendale spokeswoman Jennifer Stein said the city continues to consider Westgate "a strong destination point and economic engine."
Westgate generates about $8 million a year in sales-tax revenue for Glendale.
City officials plan on "business as usual" as they promote businesses and events in the sports district, Stein said.
by Rebekah L. Sanders The Arizona Republic Sept 19, 2011
Part of Glendale Westgate City Center repossessed by lender
Part of Glendale Westgate City Center repossessed by lender
Part of Glendale Westgate City Center repossessed by lender
David Kadlubowski The Arizona Republic Westgate City Center, a retail-and-entertainment center with opulent fountains and flashy billboards, opened in Glendale in 2006.
The core of the Ellman Cos.' project, outside University of Phoenix Stadium and Jobing.com Arena,was repossessed Monday by the lender, iStar Financial, after it failed to sell at a foreclosure auction for a reserve price of $40 million.
History of Westgate City Center in Glendale
The 33-acre property, which features restaurants, shops and an AMC movie theater along with Bellagio-like fountains and Times Square-style billboards, was designed as a suburban sports, entertainment and commercial hub to rival downtown Phoenix.
The remaining land owned by Ellman Cos., 95 acres of mostly parking lots slated for future development, is scheduled for foreclosure auction in November by lender Credit Suisse.
The auction is the latest blow to Glendale's prestigious sports district and another example of how the city has been shaken by the economic downturn.
The Phoenix Coyotes went through bankruptcy two years ago and still have no permanent owner. Now Westgate, at Loop 101 and Glendale Avenue, has been taken away from Steve Ellman, the city's development partner for more than a decade.
Westgate's opening in 2006 was like a launch party for the West Valley, with excitement brimming about the region's future as the flashy complex rose out of farm fields.
The Coyotes played next door, and the Arizona Cardinals had just moved in nearby.
Ellman, the chief executive of the company, called Westgate his favorite project.
At the time, a planning expert had cautioned the project was a gamble that relied on synergy between sports fans and shoppers.
Ellman Cos. initially struggled to secure financing and finished construction later than expected.
Then the recession further challenged the company's ability to keep tenants and expand development.
Ellman failed to pay the balance of $97.5 million in loans from iStar Financial and at least $202 million from Credit Suisse that came due two to three years ago.
By this summer, the lenders declared Ellman in default and began foreclosure proceedings.
Ellman cited the recent two-year struggle to find a Coyotes buyer and the real-estate meltdown as reasons Westgate went into foreclosure but would not elaborate on why he failed to pay the principal balances on the loans.
Hadden Schifman, a real-estate analyst with Phoenix-based Vizzda, said Westgate's massive size and various uses, from office to retail to dining, make it unique and add to the difficulty of finding a buyer.
"There's really not a comparison. And there's a huge amount of complexity in this deal," he said. In other commercial-property foreclosures, it's common for investors to wait until after an auction to negotiate with lenders to buy a foreclosed property, he said. Westgate could be similar, Schifman said.
Schifman's business partner Kris Thompson said investors could be interested in buying Westgate if they see the property as a "rare find," have the money to wait for long-term returns and are looking for an investment at a steep discount.
Westgate "requires Donald Trump vision," Thompson said.
One possibility that has been floated is finding an investor willing to buy both Westgate and the Coyotes. When Ellman began the project, he owned both the shopping complex and the team, which feed business to each other.
Ellman later split the entities and kept Westgate.
Whether the lender will keep Ellman Cos. as property manager remains an open question.
Westgate's "sheer scope" makes it logical for the lender to hire Ellman Cos., Schifman said.
On the other hand, if the lender and Ellman Cos. have a bad relationship, the lender may hire someone else, he said.
Ellman said this summer he believed his company could stay on as manager.
Ellman Cos. on Monday directed requests for comment to iStar Financial. A representative for iStar did not return calls.
Jeff Blake, dean of DeVry University's Westgate campus, said he's "as curious and concerned as anybody" but has no plans to change anything at the school, since tenant leases will remain intact. The school moved into Westgate last year.
Glendale spokeswoman Jennifer Stein said the city continues to consider Westgate "a strong destination point and economic engine."
Westgate generates about $8 million a year in sales-tax revenue for Glendale.
City officials plan on "business as usual" as they promote businesses and events in the sports district, Stein said.
by Rebekah L. Sanders The Arizona Republic Sept 19, 2011
Part of Glendale Westgate City Center repossessed by lender
Part of Glendale Westgate City Center repossessed by lender
Part of Glendale Westgate City Center repossessed by lender
David Kadlubowski The Arizona Republic Westgate City Center, a retail-and-entertainment center with opulent fountains and flashy billboards, opened in Glendale in 2006.
The core of the Ellman Cos.' project, outside University of Phoenix Stadium and Jobing.com Arena,was repossessed Monday by the lender, iStar Financial, after it failed to sell at a foreclosure auction for a reserve price of $40 million.
History of Westgate City Center in Glendale
The 33-acre property, which features restaurants, shops and an AMC movie theater along with Bellagio-like fountains and Times Square-style billboards, was designed as a suburban sports, entertainment and commercial hub to rival downtown Phoenix.
The remaining land owned by Ellman Cos., 95 acres of mostly parking lots slated for future development, is scheduled for foreclosure auction in November by lender Credit Suisse.
The auction is the latest blow to Glendale's prestigious sports district and another example of how the city has been shaken by the economic downturn.
The Phoenix Coyotes went through bankruptcy two years ago and still have no permanent owner. Now Westgate, at Loop 101 and Glendale Avenue, has been taken away from Steve Ellman, the city's development partner for more than a decade.
Westgate's opening in 2006 was like a launch party for the West Valley, with excitement brimming about the region's future as the flashy complex rose out of farm fields.
The Coyotes played next door, and the Arizona Cardinals had just moved in nearby.
Ellman, the chief executive of the company, called Westgate his favorite project.
At the time, a planning expert had cautioned the project was a gamble that relied on synergy between sports fans and shoppers.
Ellman Cos. initially struggled to secure financing and finished construction later than expected.
Then the recession further challenged the company's ability to keep tenants and expand development.
Ellman failed to pay the balance of $97.5 million in loans from iStar Financial and at least $202 million from Credit Suisse that came due two to three years ago.
By this summer, the lenders declared Ellman in default and began foreclosure proceedings.
Ellman cited the recent two-year struggle to find a Coyotes buyer and the real-estate meltdown as reasons Westgate went into foreclosure but would not elaborate on why he failed to pay the principal balances on the loans.
Hadden Schifman, a real-estate analyst with Phoenix-based Vizzda, said Westgate's massive size and various uses, from office to retail to dining, make it unique and add to the difficulty of finding a buyer.
"There's really not a comparison. And there's a huge amount of complexity in this deal," he said. In other commercial-property foreclosures, it's common for investors to wait until after an auction to negotiate with lenders to buy a foreclosed property, he said. Westgate could be similar, Schifman said.
Schifman's business partner Kris Thompson said investors could be interested in buying Westgate if they see the property as a "rare find," have the money to wait for long-term returns and are looking for an investment at a steep discount.
Westgate "requires Donald Trump vision," Thompson said.
One possibility that has been floated is finding an investor willing to buy both Westgate and the Coyotes. When Ellman began the project, he owned both the shopping complex and the team, which feed business to each other.
Ellman later split the entities and kept Westgate.
Whether the lender will keep Ellman Cos. as property manager remains an open question.
Westgate's "sheer scope" makes it logical for the lender to hire Ellman Cos., Schifman said.
On the other hand, if the lender and Ellman Cos. have a bad relationship, the lender may hire someone else, he said.
Ellman said this summer he believed his company could stay on as manager.
Ellman Cos. on Monday directed requests for comment to iStar Financial. A representative for iStar did not return calls.
Jeff Blake, dean of DeVry University's Westgate campus, said he's "as curious and concerned as anybody" but has no plans to change anything at the school, since tenant leases will remain intact. The school moved into Westgate last year.
Glendale spokeswoman Jennifer Stein said the city continues to consider Westgate "a strong destination point and economic engine."
Westgate generates about $8 million a year in sales-tax revenue for Glendale.
City officials plan on "business as usual" as they promote businesses and events in the sports district, Stein said.
by Rebekah L. Sanders The Arizona Republic Sept 19, 2011
Part of Glendale Westgate City Center repossessed by lender
Part of Glendale Westgate City Center repossessed by lender
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