LUMBERYARDS

Jewett-Cameron delists from Toronto Stock Exchange

BY HBSDealer Staff

Jewett-Cameron Trading Company has voluntarily delisted its common shares from the Toronto Stock Exchange (TSX), effective at the close of business on Oct. 11. The company said it no longer wants to maintain dual listings, due to the costs and the minimal volume of trading on the TSX.

Jewett-Cameron continues to trade on the NASDAQ Capital Market under the symbol “JCTCF.”

Jewett-Cameron is a holding company that, through its subsidiaries, operates out of facilities located in North Plains, Ore. Jewett-Cameron Lumber Corp.’s business consists of the manufacturing and distribution of specialty metal products and wholesale distribution of wood products to home centers and other retailers located primarily in the United States.

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Housing market boosts consumer spending index

BY Brae Canlen

The Deloitte Consumer Spending Index rose to 3.53 in September, from a reading of 3.27 the previous month, based largely on the strength of the housing market. The index, which tracks consumer cash flow as an indicator of future consumer spending, attributed its growth primarily to the nearly 11% increase in home prices, which offset weakness in other areas. Besides home prices, the index is also based on tax burden, initial unemployment claims and real wages.

"The sizable increase in home prices may overstate the strength of the real estate market, though on a positive note, the declines may be over and the market stabilizing," said Carl Steidtmann, Deloitte’s chief economist and author of the monthly index. "The increase may also provide a much-needed boost to consumer confidence as other hurdles lie ahead. Consumer spending growth has slowed, and the primary reason that it is flat but not declining is that households are putting less into their savings. Energy prices remain a drag on household incomes, and rising prices account for the largest month-to-month drop in real wages since September 2005."

Highlights of the index include:

Tax burden: The tax burden rose slightly in the most recent month to 11.05%. A rising tax burden is often a sign of healthy income growth.

Initial unemployment claims: Jobless claims moved higher this month to 371,000 and were 2% higher than this time last year.

Real wages: Rising energy prices sent real wages tumbling to $8.71 — the largest month-to-month drop since September 2005.

Real home prices: In a thin market, housing prices can be volatile as the mix of homes sold becomes more significant. Real home prices soared 10.5% in the latest month, accounting for all of the gain in the index.

Deloitte’s retail and distribution practice provides audit, consulting, risk management, financial advisory and tax services to 80% of the Fortune 500 retailers, according to the company.

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NAR survey breaks down appraisal problems

BY Brae Canlen

In a survey by the National Association of Realtors (NAR) in September, 65% of realtors reported they had no contract problems relating to home appraisals over the past three months; 11% said a contract was canceled because an appraised value came in below the price negotiated between the buyer and seller; 9% reported a contract was delayed; and 15% said a contract was renegotiated to a lower sales price as a result of a low valuation.

Lawrence Yun, NAR chief economist, said these findings are notable given that homes in many areas are selling for less than replacement construction costs. “Though the real estate recovery is taking place, the combined issues of stringent mortgage lending requirements and appraisal frictions are hampering otherwise qualified buyers from purchasing a home in a timely fashion, and in some cases are preventing them from buying at all,” he said.

Major problems reported by realtors surveyed included:

• Some appraisers are using foreclosures, short sales and run-down properties as comparable homes, and are not making adjustments for market conditions or the condition of the property.

• Appraised values that do not reflect market conditions such as rising prices, the presence of multi-bidding and low inventory.

• Appraised values are very inconsistent and fluctuate widely.

• Out-of-town appraisers, who are not familiar with the area or local market conditions, are being used.

• Turnaround time by both appraisers and banks is slow, which delays closings.

• Appraisers who don’t make distinctions between distressed and non-distressed properties.

In addition to these problems, some appraisers are required to provide as many as eight to 10 comparable sales, which almost guarantee the use of distressed properties as comps, the NAR said. Previously, three comparable homes were the norm for most appraisals. In many cases there simply aren’t enough apples-to-apples comps to comply with the excessive demands by lenders, so discounted distressed homes are sometimes used in valuating traditional homes in good condition without appropriate adjustments. 

Fortunately, the NAR said, the level of distressed sales is trending down — they accounted for about one-third of all sales in 2011, but have averaged roughly a quarter of sales in recent months. By 2013 the NAR expects the distressed market share to decline to about 10% to 15%. As distressed inventory is cleared from the market over the next two years, it should help to correct ongoing problems.

“In the meantime, buyers, sellers and real estate agents need to be aware that there are problems with some real estate appraisals, but also be aware of their rights to communicate with appraisers and lenders about errors or concerns with individual valuations,” said NAR president Moe Veissi, broker-owner of Veissi & Associates in Miami. “In some cases, a second appraisal may be justified.”

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