Financial thoughts

Builders have found a way to make money in a decrepit home market: Apartments.

Permit requests to build apartments jumped to a three-year high last month. In 12 months, they’ve surged 63 percent.

Blame the housing bust, which left many people without the means, the credit or the stomach to buy. More people need apartments. The demand has driven up monthly rents. And apartment-home builders are rushing to cash in.

That said, the overall home market remains depressed. Builders are still struggling. They broke ground on a seasonally adjusted annual rate of 628,000 homes last month, the government said Thursday. That’s barely half the pace that economists equate with a healthy market.

High unemployment, stagnant pay and waves of foreclosures have slowed sales of single-family homes, which make up about 70 percent of the home building market. Apartment construction may be surging, but it’s a small portion of the industry.

More apartment building won’t add enough jobs to reduce unemployment or hasten an end to the housing crisis. Still, it’s contributed to the overall economy’s growth for two straight quarters. And many economists expect apartment construction to grow for at least the next 12 months, as long as the economy avoids another recession.

“You’re not going to see apartments as an economic driver,” said James Marple, senior economist at TD Economics. “But it’s renters who are clearly going to drive the demand for housing.”

It’s also worth keeping the increase in perspective: The growth in apartment construction is coming off extremely low levels. Last year, for example, only 146,000 apartments were built. That was the fewest since 1993. This year’s pace isn’t much more.

By comparison, in 2005, just before the housing market went bust, 258,000 apartments were built. Some signs suggest that builders could match that level over the next few years.

One such sign: Permits for apartment buildings, a gauge of future construction, have jumped more than 60 percent over the past year. That compares with just 6.6 percent growth in permits for single-family construction over the same period.

“The demand is there,” said Mark Obrinsky, chief economist at National Multi Housing Council. “Rents have recovered, much of them to where they were before the recession.”

Bob Champion, who runs a real estate company in Los Angeles, says he has four apartment projects in development. That matches the number he had in 2005.

It’s quite a shift from 2006, when Champion’s company stopped building apartments because the cost of land had skyrocketed.

Champion has raised rents about 4 percent this year. His occupancy rate is 95 percent. As recently as last year, his rents were flat, and he was dangling incentives, like a free month’s rent, to woo tenants.

“People who can’t afford to buy a home, rent,” Champion said. “That’s why the apartment market has stayed healthy.”

Champion won’t likely be building as many apartments next year, though. Land prices have doubled in the past two years, he said. Competition for apartment land has intensified.

For many builders, financing for a project remains a big obstacle. So is time. Apartment projects take an average of 18 months to build.

Still, fewer home buyers mean more people must rent. Nearly 4 million new renting households were created between 2005 and 2010, according to Harvard’s Joint Center for Housing Studies. Under normal economic conditions, that’s more than 10 times the number of new renters who would be expected in a five-year span.

Homeownership has fallen more over the past decade than in any other 10-year stretch since the Great Depression. Roughly 65 percent of Americans own homes. That’s down from a peak of nearly 70 percent in the middle of the decade.

As more people have become tenants, landlords have felt emboldened to raise rents.

The average rent in the United States has risen 2.4 percent over the past 12 months to $1,004 a month, according to the real estate data firm Reis Inc. Over the previous year, rents rose just 1 percent. Between 2008 and 2009, they actually fell 2.7 percent.

AvalonBay Communities Inc., based in Arlington, Va., has raised rents by an average 6 percent in the past year. The company earned 11 percent more in rental revenue in the July-September quarter than in the previous quarter.

With nearly 54,000 units, AvalonBay is one of the largest apartment developers in the country. Nearly 96 percent of its apartments had been occupied by the end of September, according to its earnings reports.

The average rent at AvalonBay’s cheapest complex under construction, in Seattle’s Ballard neighborhood: $1,715. The builder completed 1,280 more apartments between July and September and started work on 933 others.

At Equity Residential, whose chairman is real estate magnate Sam Zell, rental income jumped 12.7 percent in the July-September quarter over the same period a year before.

Equity Residential is the nation’s largest apartment owner. Nearly 25 percent of its apartments are in Phoenix, Orlando and South Florida, which were hammered by the housing bust and where its average rents are the lowest.

Yet Equity’s properties there are faring well. The average rent for one of the company’s 9,300 apartments in Phoenix rose from $837 last year to $925 this year.

Zell, whose net worth is roughly $5 billion, has publicly extolled the prospects for his apartment business over his office and retail operations.

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The economy of the 17-nation euro bloc avoided contracting in the third quarter, thanks mainly to Germany and France, but is widely expected to fall into recession imminently as a result of its raging debt crisis.

In its first estimate for the third quarter, the EU statistics office’s Eurostat, said Tuesday that the eurozone economy grew by a paltry 0.2 percent for the second quarter in a row.

And that is likely to be as good as it gets for some time, with economists predicting a recession in coming quarters. Consumers and governments are expected to spend less due to the uncertainty spawned by the debt crisis that is threatening to spiral out of control as it moves from relatively small economies like Greece to much-bigger Italy.

Forward-looking indicators, such as surveys of business managers, households and investors, have all disappointed recently.

“The economic slump will accelerate in the coming months,” said Christope Weil, an economist at Commerzbank. “The uncertainty caused by the sovereign debt crisis is lying like mildew upon the eurozone economy.”

The worry is that the slowdown will hurt governments’ ability to reduce their debt loads as state revenues shrink and interest payments pile up.

For now, the eurozone has managed to avoid a recession _ technically defined as two consecutive quarters of negative growth.

The data showed Europe’s two powerhouses Germany and France were still growing _ 0.5 percent and 0.4 percent _ during the July to September period as consumers continued to spend.

Tuesday’s figures did not include a number of countries, such as Greece, Ireland and Italy. Their preliminary figures are due later this month but are unlikely to cause much of a change in the headline rate payday advance.

How much longer Germany and France can keep the eurozone afloat, however, is debatable.

“Future growth prospects have deteriorated markedly since the summer, making a ‘mild recession’ more likely,” said Frederik Ducrozet, an economist at Credit Agricole.

Signs of a looming eurozone-wide recession were evident in the figures _ Cyprus, Portugal and, perhaps most surprisingly, the Netherlands, all contracted during the quarter.

“There is no reason for growth optimism,” said Ferdinand Fichtner of the German Economic Institute, DIW, warning that fourth-quarter growth is expected to be much slower as the bite of the eurozone crisis is felt.

“People are uncertain,” Fichtner told the news agency dapd. “That is poison for growth.”

When the debt crisis erupted in 2009, Europe’s economy was just recovering from its deepest recession since World War II largely on the back of Germany, the region’s biggest economy. Germany enjoyed a boom in exports and improved domestic demand, even as many in the eurozone struggle in the face of mammoth debts.

The eurozone’s third quarter performance compared poorly with those of its peers. Eurostat said the United States grew by a quarterly rate of 0.6 percent, while Japan boomed by 1.5 percent, though largely because it was making up for lost output in the aftermath of a devastating earthquake and tsunami.

The economy of the wider EU, which also includes Britain and Sweden, also grew by 0.2 percent.

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Fairview Heights-based Impact Strategies Inc., a construction-management company, has started Phase I of a $4 million renovation project at the Granite City office of Chestnut Health Systems.

The project will double the size of the office at 50 Northgate Industrial Drive to 70,000 square feet. Renovations are being made to two current buildings to connect them, while enabling the owner to maintain daily operations and regular hours of business. The architect is Gray Design payday loans lenders.

Upon completion in the spring, the new facility will accommodate Chestnut Health Systems’ expanded service lines, including pharmacy, crisis residential, counseling, case management and chemical dependency services.

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Employees are more focused on pay and less on whether their occupation is rewarding, according to a recent survey by compensation specialists Mercer. In previous studies, Mercer found most Canadian respondents said job fulfillment was the key issue.

Yet 47 per cent of survey participants say they are not satisfied with base pay and 42 per cent do not feel they are paid fairly, given their performance and contribution to the organization. At the same time, fewer employees than five years ago understand how their pay is determined, which may contribute to their overall sense of dissatisfaction.

Mercer partner Iain Morrison thinks base pay is a primary concern because  of anxiety about job security and being able to pay for the most basic things. “Since 2008 employees have seen layoffs, pay freezes and reduced availability of training and development,” he says.

The large number of Canadian employees considering leaving their job within six months (36 percent) or who are not looking for work but open to new offers (22 per cent) further underscores high levels of employee disengagement. In fact, employees “sitting on the fence” are more negative about their employment situation than people who are actively seeking new employment.

“You can’t just throw money at these people. You have to find ways to motivate them,” Morrison continues. “If they cannot be re-engaged, it may make sense to try and manage some of them out, because they are the least productive employees and they are not saying anything good about the business.”

After base pay, survey results reveal that Canadian respondents view a good retirement savings or pension plan as the second most important element of the employee value proposition. And somewhat unexpectedly, having a company-provided retirement plan rivals or is more important to younger respondents than having a flexible work schedule.

“Retirement savings have not been on the radar for 25-40 year olds before. But the media has created awareness and employees in their 20s hear their parents close to retirement worrying about pension savings,” says Mercer principal Madeline Avedon.

Overall benefits programs were rated as good or very good by the majority of survey respondents and more than half said they are satisfied with their health benefits. However, 43 per cent want more choice and control to reduce the value of some benefits in order to increase the value of others to meet their needs. About the same number also said they would be willing to contribute towards the cost of new or improved benefits that are important to them.

Also read: Your 2012 raise may be less than inflation and How to improve your odds of getting a raise .

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Thailand’s energy minister said the flood crisis in Bangkok is likely to drag on for another month, as authorities issued another evacuation advisory in a northern neighborhood and floodwaters inched further into the city’s heart.

Energy Minister Pichai Naripthaphan said, however, that floods may finally begin to subside in the capital by mid-November, according to a government statement late Monday. On Tuesday, Prime Minister Yingluck Shinawatra announced that she would not be attending the APEC summit this coming weekend in the U.S. due to the floods.

“Now it’s time for all Thai people to help each other, so I’ve informed (the host) that I would not go,” Yingluck said.

Top officials and experts have given varying estimates of how much Bangkok would flood and how long the threat would loom over the city, with some claiming several weeks ago the biggest window of danger to the sprawling metropolis of 9 million people had already passed.

Instead, the flood threat has only intensified, straining sandbag-stacking residents as more and more neighborhoods are swamped each day. The seemingly unstoppable floodwaters have overwhelmed canals, seeped up through drains and poured down condominium-lined highways. The water has now begun surrounding the city’s northernmost subway stops, threatening to shut them down.

Evacuations have been ordered in 12 of Bangkok’s 50 districts, with residents of the northern district of Klong Sam Wa told to leave Monday. The evacuations, which also effect parts of several other districts, are not mandatory, and many people are staying to protect homes and businesses.

On Tuesday, Football Federation Australia said a World Cup qualifier against Thailand scheduled for next week was moved to a smaller stadium in Bangkok because the original venue is being used as a flood evacuation center.

The FFA said in a statement that the Asian Group D match scheduled for Nov. 15 will be moved from the Rajamangala National Stadium in Bangkok’s suburbs to the Suphachalasai Stadium downtown.

The flooding began in late July and has killed 527 people so far, mostly due to drownings. Some provinces to the north of Bangkok have been inundated for more than a month, and waters have started to recede in recent days as massive pools of runoff flow south.

In Nakorn Sawan province, Anan Dirath was forced to live on the second floor of his home for two months. But now that the water has receded to knee level, he has begun to clean up.

This week, Anan armed his two teenage children with mops, scrub brushes and garbage bags. Wading in the water, his family began scrubbing dirt off the walls and collecting the garbage around the house. He said the dirt was difficult to wash off and he has had to scrub the paint off to get rid of it.

“Oh my pretty home. It used to be a pretty two-story home,” he said Monday.

In nearby Nakorn Sawan town center, where the water has dried completely, the government sponsored a cleanup day last week when roads were scrubbed down to get rid of the oily mud left from the floods. Back hoes were used to carry garbage away.

The cleanup also has begun in some parts of Thailand’s ancient capital of Ayutthaya. The prime minister planned to visit the province later Tuesday to witness recovery efforts.

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President Barack Obama said Friday the U.S. economy is growing “way too slow” but that leaders at a world summit have made progress at getting their countries on a firmer footing.

“Put simply, the world faces challenges that put our economic recovery at risk,” Obama said in a news conference at the meeting of the 20 major developed and emerging economies as he promoted a jobs theme central to his re-election campaign.

He said Europe has rallied around a plan to address a debt crisis from spiraling beyond the financial emergency in Greece and potentially dealing another blow to the U.S. economy.

As for a new jobs report back at home that showed only modest employment growth, Obama said the economy was expanding too slowly.

The president said the United States had acted aggressively to manage its economic crisis a couple years ago, and he prodded his partners in Europe to do the same.

“They’re going to have a strong partner in us,” Obama said, “but European leaders understand that ultimately what the markets are looking for is a strong signal from Europe that they’re standing behind the euro.”

About one year from the 2012 presidential election, Obama brushed off the political implications of his economic agenda. Republicans have him hammered over the pace of the economic rebound.

“I have to tell you, the least of my concerns at the moment is the politics of a year from now,” Obama said. “I’m worried about putting people back to work right now because those folks are hurting and the U.S. economy is underperforming.”

The gridlock of domestic politics followed Obama to France. He urged House and Senate Republicans to join him in passing a jobs bill now moving in pieces.

The U.S. unemployment rate slipped one-tenth of a percent in October to 9 percent as the economy generated 80,000 jobs. The nation’s unemployment rate had held at 9.1 percent for three straight months.

Stalled joblessness poses significant problems for Obama, who has been unable to get Republican support for a $447 billion jobs plan. The Senate on Thursday defeated Obama’s proposal to spend $50 billion to modernize roads and bridges and put idled construction workers back on the job.

Obama spent much of the day in private meetings with world leaders. He met separately with Argentine President Cristina Fernandez, telling reporters beforehand that they would discuss “how we can set an agenda that focuses on increasing prosperity and employment and opportunity for people throughout the Americas.”

After the news conference, Obama joined French President Nicolas Sarkozy for a ceremony honoring the U.S.-French alliance and service members from both countries who helped the successful allied campaign in Libya. He and Sarkozy then taped a joint interview to be aired on French television, before Obama boarded Air Force One for the trip back to Washington after a quick two days in France.

At his news conference, Obama gave a vote of confidence to European leaders and warned of the domino effect if the debt crisis wasn’t solved.

“If Europe isn’t growing, it’s harder for us to do what we need to do for the American people: creating jobs, lifting up the middle class and putting our fiscal house in order,” he said.

He added: “There’s no excuse for inaction. That’s true globally. It’s certainly true back home. And I’m going to keep pushing it.”

Obama arrived at the summit on Wednesday as leaders worried about the Greek prime minister’s call for a public vote on the bailout plan. While the referendum was scrapped, Greek Prime Minister George Papandreou still faced a difficult confidence vote Friday.

Chevron Corp.’s quarterly profit more than doubled as a jump in petroleum prices made up for declining production.

Chevron, the second-largest U.S. oil company after Exxon Mobil, said Friday that oil prices soared 41 percent in the U.S. and 47 percent internationally. Natural gas prices also rose.

The third-quarter results mirror other oil giants that reported earlier this week. Despite lower oil production, Exxon Mobil’s net income rose 41 percent while profits doubled for BP and Royal Dutch Shell.

Chevron, based in San Ramon, Calif., reported net income of $7.83 billion, or $3.92 per share, for the quarter. That compared with $3.77 billion, or $1.87 per share, a year earlier. Revenue rose 26 percent to $61.3 billion instant credit reports.

Results beat expectations of $3.47 per share but fell short of revenue estimates of $70.4 billion, according to FactSet.

Shares slipped 75 cents to $108.51 in premarket trading.

Increased prices lifted Chevron exploration and production profits 74 percent, even though oil and natural gas production declined 5 percent.

Similarly, higher prices for gasoline, diesel, jet fuel and other petroleum products boosted profits at the company’s refineries. Chevron’s downstream business, which includes refineries, posted a more than threefold jump in profit.

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Orders are now being taken for the Kobo Vox, a full-colour seven-inch tablet the same size as the BlackBerry PlayBook.

TORONTO — The Canadian ebook company Kobo is getting into the crowded tablet market and beating a major competitor to the punch.

Orders are now being taken for the Kobo Vox, a full-colour seven-inch tablet the same size as the BlackBerry PlayBook.

It’s selling for about $200 and shipping starts on Oct. 28.

It’s a Wi-Fi only device, runs on the Google Android operating system and has eight gigabytes of memory. Kobo says it has up to seven hours of battery life.

The Vox will compete against a long list of tablets on the market, including Apple’s bestselling iPads, the PlayBook, Samsung’s Galaxy Tabs, Motorola’s Xoom and a host of smaller rivals online payday loans. But the Vox is about 40 per cent cheaper than the most-inexpensive iPad.

Kobo’s largest ebook competitor, Amazon, also announced its own tablet recently with similar specifications.

Called the Fire, it’s not due for release until Nov. 15 and is also selling for $199 in the U.S. There’s no release date set for Canada.

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When realtor Desmond Brown walks into a house that’s just too stunning to be someone’s home, he heads to the fridge.

An empty fridge is his second clue that the home has been super staged to appeal to a new generation of buyers who are looking for more of a showcase than a sound house to call their home.

“Gone are the days that you walk into a house and think, ‘Wow, they really lived in this place,” says Brown.

Brown has seen first-time buyers walk out of well-priced condos because the appliances aren’t stainless steel. Even classic old homes graced with original wood trim and hardwood floors are taking longer to sell, he finds, than those that have “the look.”

Call it the HGTV effect.

“This generation’s expectations of what’s reasonable and livable in a house is significantly different than previous generations,” says John Pasalis, a Leslieville realtor whose office deals with a lot of first-time buyers.

“People have this vision based on what they see on TV. Generally, if a house doesn’t have stainless steel appliances, granite countertops, new bathrooms and pot lights, there’s a sense that you’re slumming it.”

Snazz sells, says realtor Irene Kaushansky who has seen young buyers so blinded by the glint of a Wolf gas stove and Sub-Zero fridge, they’ll drive themselves into heavy debt in bidding wars that skew the market by driving prices wildly out of whack.

“I watch some of those shows and I know that’s not reality,” says Kaushansky. “I warn buyers that after they’ve bought the house and all that stuff is gone, it’s not going to look like the same place.”

Staging used to be largely about refreshing a tired-looking home by removing clutter, painting walls and replacing worn carpeting, says Diane Black, who stages more than 200 homes a year in Peel and Halton regions, as well as Toronto’s west-end.

Now it’s all about evoking a lifestyle and making the home appear move-in ready with the “right” modern furniture, art and accessories.

She’s finding a new generation of buyers — on average 15 years younger than sellers — don’t want to do the work, or don’t have the imagination or the money after scrapping together down payments on pricey homes.

“They want that status,” says Black. “They want labels and instant gratification and they want it all yesterday.”

The stakes have been raised since MLS house listings went online and buyers have been able to do more looking on their own, says Black.

“If I can only do one thing for a seller, I want to give that wow HGTV factor online,” which is why art, accessories, materials have become more critical to setting homes apart.

It’s routine now for agents — even in newer suburban neighbourhoods — to recommend that owners spend at least a few thousand dollars on new counters, flooring and fixtures before staking a for sale sign on the front lawn.

But not everything can be “refreshed.”

“The 1980s (suburban) homes are dying because nobody wants eight-ceilings anymore,” says veteran Oakville agent Dan Cooper. “If a house doesn’t have at least nine-foot ceilings, it’s very tough to sell.”

Super staging is so critical in real estate now, Cooper has hired stager Kathy Wood of Divine Design and is now looking to rent space, buy furniture and hire movers to help sellers turn around their homes quickly for what he calls “the want-now generation.”

“The low interest rates don’t help,” because younger buyers tend to take the view they’ll buy the best now and pay for it later, says Cooper. “That’s a recipe for disaster if rates go up.”

Of course, there is obviously payback for putting in a little work before pricing a home for sale, as Janice Hornick discovered when her parents went into long-term care and needed to get rid of the Burlington home where they’d lived for 25 years.

“I thought let’s just get rid of it as is,” says Hornick. “I didn’t want the bother.”

One agent suggested a list price of $360,000. A second agent suggested Hornick call in Diane Black.

Within a month, Black had pink and blue walls repainted in neutral taupes, old carpeting upstairs was replaced with lush berber and the kitchen got a dramatic stainless and granite makeover. Black even removed window mullions to open up the view into the backyard ravine.

Hornick’s jaw dropped when she saw the $35,000 transformation.

The place sold quickly — for $479,000.

What stagers say is in or out, at least as of today

In

“Depersonalized” décor (get rid of all those family photos)

Neutral taupe colours

Natural stone—granite, travertine, slate

Wide-plank flooring

Stainless steel appliances (a must)

Crown moulding

High ceilings

Spa-like bathrooms

Apothocary jars and Pottery Barn-type accessories

Bedrooms retreats with a chaise lounge or comfy seating area

Berber carpeting

Brushed nickel fixtures

OUT

Black or white appliances

Laminate countertops—even in the bathroom

Ceramic tile

Wallpaper

Pinky-beige, yellow and bold wall colours

Panelling/wainscotting

Plastic venetian blinds

Carpeting (except berber)

Brass fixtures

Original thin-strip hardwood/parquet

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Anti-Wall Street protesters exulted Friday after beating back a plan to clear them from the park they have occupied for the past month, saying the victory will embolden the movement across the U.S. and beyond.

“We are going to piggy-back off the success of today, and it’s going to be bigger than we ever imagined,” said protester Daniel Zetah.

The showdown in New York came as tensions were rising in several U.S. cities over the spreading protests.

The owners of Zuccotti Park in lower Manhattan had announced plans to temporarily evict the hundreds of protesters at 7 a.m. Friday so that the grounds could be power-washed. But the protesters feared it was a pretext to break up the demonstration, and they vowed to stand their ground, raising the prospect of clashes with police.

Just minutes before the appointed hour, the word came down that the park’s owners, Brookfield Office Properties, had postponed the cleanup. A boisterous cheer went up among the demonstrators, whose numbers had swelled to about 2,000 before daybreak in response to a call for help in fending off the police.

In a statement, Brookfield said it decided to delay the cleaning “for a short period of time” at the request of “a number of local political leaders.” It gave no details.

Brookfield said it would negotiate with protesters about how the park should be used. But it was unclear when those discussions would occur.

Over the past month, the protest against corporate greed and economic inequality has spread to cities across the U.S. and around the world. Several demonstrations are planned this weekend in the U.S., Canada and Europe, as well as in Asia and Africa.

In Denver, police in riot gear herded hundreds of protesters away from the Colorado state Capitol early Friday, arresting about two dozen people and dismantling their encampment. In Trenton, N.J., protesters were ordered to remove tents near a war memorial.

Organizers in Des Moines, Iowa, warned of a possible “big conflict” Friday night after the state denied their permit to continue overnight protests at the Capitol. Demonstrators in San Diego formed a human chain around a tent in a downtown plaza and ignored police orders to take it down.

In New York City, police arrested 15 people, including protesters who obstructed traffic by standing or sitting in the street, and others who turned over trash baskets, knocked over a police scooter and hurled bottles. A deputy inspector was sprayed in the face with an unknown liquid.

In one case, a defense attorney marching with the group refused to move off the street for police and his foot was run over by an officer’s scooter. He fell to the ground screaming and writhing and kicked over the scooter to free his foot before police flipped him over and arrested him.

Though the park is privately owned, it is required to be open to the public 24 hours per day.

Brookfield, a publicly traded real estate firm, had announced plans to power-wash the plaza section by section over 12 hours and then allow the protesters to return. But it said it would begin enforcing the park’s rules against tents, tarps and sleeping bags, complaining the grounds had become unsanitary and unsafe.

The New York Police Department had said it would make arrests if Brookfield requested it and laws were broken.

As the morning deadline drew near, some protesters rushed to scrub and sweep the park and pick up trash in hopes of preventing a crackdown.

Mayor Michael Bloomberg, whose girlfriend is on Brookfield’s board of directors, said his staff was under strict orders not to pressure the company one way or the other. He noted that Brookfield can still go ahead with the cleanup at some point.

“My understanding is that Brookfield got lots of calls from many elected officials threatening them and saying, … `We’re going to make your life more difficult,’” he said on his weekly radio show.

In Philadelphia, protester Matt Monk, a freelance writer, was cheered by the news out of New York.

“That means at the very least, the powers-that-be, wherever they are, know that they have to contend with us in a less heavy-handed way,” he said.

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