Real Estate Industry

The long-running torment of the commercial real estate industry dragged on in the third quarter, but the world's largest brokerage of office buildings, warehouses and other business properties managed to eke out a small profit. CB Richard Ellis Group Inc. reported net income of $12.4 million, or 4 cents a share, after spending the first two quarters of the year in the red. However, profit was down 69% from $40.4 million, or 15 cents a share, in the same period last year. The Los Angeles company posted adjusted earnings of 8 cents a share after deducting one-time charges mostly related to cost-cutting measures.

After spending more than a year in suspended animation, the commercial real estate industry is expected to hit bottom in 2010 with a wrenching thud. Owners of business properties such as office buildings, warehouses and malls will suffer a surge of painful defaults, write-downs and workouts with their lenders as the market finally faces up to the reality of its diminished conditions, according to a report set for release today. The long-awaited blood bath, however, will benefit investors who are able to swoop in to take advantage of record bargains.

Panden Rota, a Nepalese producer of fine rugs, is about to become a Manhattanite, the owner of a sumptuous apartment in the luxurious downtown neighborhood of Battery Park City. His primary residence will remain Katmandu, but his new home will enable him to spend more time at U.S. showrooms that display his rugs and with a brother and sister in New York. "I looked at many places and I decided that a Manhattan apartment will always hold its value," he said.

The no-worries lending that inflated the housing bubble is resulting in a flood of soured option-ARM loans, adjustable-rate mortgages that allow borrowers to pay so little every month that their loan balances rise rather than fall, sometimes sharply.

U.S. existing-home sales will reach a bottom in 2008 as buyers find it tougher to get mortgages, according to a forecast by the Mortgage Bankers Assn., the industry's largest trade group. Sales of previously owned homes probably will drop to an 11-year low of 4.94 million from 5.68 million last year and then increase to 5.12 million in 2009, the Washington-based group said Monday. New-home sales are likely to tumble 15% this year to 666,000 before rising 6.6% in 2009.

The American Dialect Society picked "sub-prime" as its word of the year for 2007. It may seem the obvious choice. But what the language group also noted was that the 2007 housing woes created a new category, solely of real-estate-related words, that rose in prominence in the American lexicon. Among the winners: exploding ARM (an adjustable-rate mortgage whose rate rises beyond a borrower's ability to pay); liar loan (stated-income or no-documentation loans that permit borrowers to exaggerate income)

What's in, what's out with home buyers in 2008? Mark Nash, author of several real estate books including "1001 Tips for Buying and Selling a Home," has completed his annual survey of buyer preferences. Among his findings: Buyers want a destination bathroom -- the kind of getaway that has multiple task areas like a free-standing or throne bathtub, a flat-screen TV, wireless Internet and an in-home hair salon. And because we love our pets so, how about a shower for Fido that he can simply step into instead of having to be hoisted?

Beazer Homes USA Inc., which is under investigation by the Securities and Exchange Commission, plans to exit the mortgage business and stop selling homes in four markets. The Atlanta-based builder will withdraw from Charlotte, N.C.; Cincinnati-Dayton and Columbus, Ohio; Columbia, S.C.; and Lexington, Ky. Countrywide Financial Corp. will become the company's preferred loan provider, Beazer said. Its shares rose 6.9%. Beazer said in October that it found evidence that employees of its mortgage unit violated federal rules.

The Federal Reserve said it became tougher for U.S. companies and consumers to get loans in the last three months, particularly to buy real estate. Most lenders anticipate more delinquencies and losses this year, assuming that "economic activity progresses in line with consensus forecasts," according to the central bank's quarterly survey of senior loan officers released Monday in Washington. The survey, conducted last month through Jan.

The British government introduced emergency legislation Monday to take temporary public ownership of Northern Rock, a major mortgage lender threatened with failure as a result of the sub-prime-spawned credit crunch. The government stepped in with about $104 billion in loans and guarantees in the fall. Now, it has rejected two private rescue plans for the ailing bank and hopes to stabilize the bank, then resell it.