Arizona State University professor and real-estate development veteran Mark Stapp sees a troubling disconnect between local efforts to build sustainable communities and the globalized mechanisms through which those efforts are funded.
The Phoenix-area commercial real-estate market's problems, which include but are not limited to $3.5 billion of securitized commercial mortgage loans currently in default, are largely the result of that disconnect, he said.
Stapp, still active as a developer, is executive director of the Master of Real Estate Development program at ASU's W. P. Carey School of Business.
He said communities need to get away from relying on massive, corporate lending institutions to fund the development of local real-estate projects. In other words, go back to the way things used to work: local investors funding local development.
Stapp explained the problem this way:
"Real estate is location-specific, unique and small, which makes it really hard to trade and value on a significant scale. Still, the financial world took properties with fundamental differences and bundled them together, in order to create a larger scale, offset transaction costs and trade a bunch of properties together (as commercial mortgage-backed securities)."
Each pool of disparate real-estate assets then was assigned a single investment rating, Stapp said.
"This overlooked the nuances of the individual properties," he said.
Stapp said it's not too late for areas such as metro Phoenix to turn back the clock by setting up local real-estate funds that would finance local development on a project-by-project basis. Everyone involved would benefit, he said, because investors would have more control over where their money was being spent, and developers would know that a project was being financed on its merits, not some financial algorithm devised hundreds of miles away.
by J. Craig Anderson The Arizona Republic Jul. 31, 2011 12:00 AM
Real-estate expert sees disconnect in lending
Reuters: Business News
National Commercial Real Estate News From CoStar Group
Latest stock market news from Wall Street - CNNMoney.com
- ► 2018 (76)
- ► 2017 (81)
- ► 2016 (145)
- ► 2015 (146)
- ► 2014 (102)
- ► 2013 (395)
- ► 2012 (392)
- Almost half of mortgages in Arizona are 'underwate...
- Study: Arizona among worst states for consumer cre...
- Real-estate expert sees disconnect in lending
- Phoenix-area homebuilders adjust to market
- Gilbert new-home construction on rise, leading Val...
- Demolition site in Phoenix scheduled for trustee's...
- Scottsdale-based Meritage home sales, profits plun...
- Dissecting the rival debt plans' key differences
- Home-price index finally lines up with local reali...
- U.S. debt default would harm nation, individuals
- Fannie Mae Downgrades Housing Outlook. Again
- Can Brian Moynihan fix America's biggest bank? - T...
- Surprise! The big bad bailout is paying off
- Phoenix-area homebuilders adjust to market
- Savings Bonds' shift to digital-only marks end of ...
- Gilbert considers large apartment complex near San...
- A boom in corp. profits, a bust in jobs, wages
- Scams, manipulation, fraud targeting elderly on th...
- ASU launching 2 programs to offer help in resolvin...
- $86 million land purchase would expand Scottsdale ...
- Old Rawhide site in Scottsdale might become new ap...
- UPDATE: Freeport-McMoRan 2Q Net Income Doubles As ...
- Luxury-home broker Danley opens his own firm
- Storytellers: For 30 years, Walt Danley quietly cl...
- Realtors' confidence levels shoot up, survey repor...
- Chandler's office vacancy rate drops sharply
- Hispanic organization loan brings CityScape hotel
- FTC paying nearly $108M to Countrywide borrowers
- Bipartisan debt-reducing plan targets mortgage ded...
- Mortgage 'robo-signing' goes on
- 2 Phoenix medical-office buildings sell for $32.75...
- Analysis: Banks in Arizona need cash
- Lenders must give details on credit denials
- Home building jumps 14.6% in June
- Most of Tempe condo project is acquired
- Group proposes to build beach club in Entertainmen...
- Expert: Commercial loan modifications possible
- US builders' outlook rises after 2011 low
- 7 tips for rebalancing your fund portfolio
- Citigroup Q2 Profit Rises 24%, Tops View - Update
- Down on the farm, investors see big potential
- Apartment community is sold to fund for $40 millio...
- Prescott bank to open as a Foothills branch
- JPMorgan investment banking gains
- Foreclosure delays could hold off housing rebound
- Phoenix-area leasing of offices up in 1st half of ...
- Developer ready to channel energy into completing ...
- 26 acres in south Chandler sells for $2 million
- azcentral.com blogs - Scottsdale Republic Editoria...
- Settlements, lower trading to hurt 2Q bank earning...
- Feds ease foreclosure rules for unemployed FHA bor...
- Part of Scottsdale Promenade purchased
- Phoenix-area foreclosures are down again
- Bankruptcy filings in Phoenix area fall again
- Tenants, Glendale officials retain high hopes for ...
- 'Strategic defaulters' tend to be affluent, savvy ...
- Weidner fattens property portfolio
- Jobless homeowners to get more leniency
- Dimon-Bernanke Skirmish Shows Bankers Losing - Bus...
- JPMorgan pays $211M to settle bid-rigging charges
- Phoenix area housing market gaining ground, new da...
- New IMF chief vows to empower developing nations
- New regulation governs short sales
- Q&A on eligibility for homeowner aid
- Downtown Phoenix parcel set for housing
- Construction spending falls, manufacturing recover...
- Musical nameplates
- Office leasing may soon revive
- ASU realty professor Jay Butler retires
- Viad buys resort for $16 million
- Treasury secretary may exit after debt talks
- Scottsdale council increases maximum building heig...
- Fed limits debit fees retailers pay
- Bank of America pays $8.5 billion investor settlem...
- Phoenix shopping center sold for $30 million
- Scottsdale office buildings sold for $60 million
- Despite bad economy, homebuilder has Valley's top-...
- Fulton Homes to exit Chapter 11
- Former home of McCains up for foreclosure auction
- French finance minister appointed to lead IMF
- ▼ July (80)