Items of Interest PRICES EDGE UP, SALES FALL AS JUNE INVENTORY TAPERS OFF Sales of previously owned homes fell during the month, but prices rose modestly as inventories eased, according to the National Association of Realtors (NAR). Total existing-home sales - including single-family, townhomes, condominiums and co-ops - declined 3.8 percent to a seasonally adjusted annual rate of 5.75 million units in June from May; activity was 11.4 percent below June 2006. Commented Lawrence Yun, NAR senior economist: "Home buyers have been getting mixed signals about the housing market, which is causing some of them to hesitate. . . Two bright spots in the June report are a decline in housing inventory and a modest gain in home prices. Although we've seen seasonal month-to-month price increases over the past four months, this is the first time in 11 months that the median home price is higher than the year-ago price." The national median existing-home price for all housing types was $230,100, up 0.3 percent from one year earlier. Meantime, the Federal Housing Finance Board (FHFB) reported that the average home purchase price increased 4.3 percent from May to June, to $309,700, according to Inman News. The FHFB's data, based on a monthly survey of conventional purchase loans made by major lenders, excludes FHA- and VA-guaranteed mortgages and balloon loans. As for total housing inventory, the NAR said it dropped 4.2 percent at the end of June, representing an 8.8-month supply at the current sales pace, the same as in May. FOR NEW-HOME SALES, THE DROP WAS STEEP IN JUNE Sales of new single-family homes fell 6.6 percent to a seasonally adjusted annual rate of 834,000 units as home buyer demand continued to weaken, according to figures released by the U.S. Commerce Department. The June sales pace was 22.3 percent below a year earlier and 40 percent from the housing market peak in mid-2005. "A significant increase in prime mortgage interest rates, along with the tightening of mortgage standards in subprime and other components of housing finance, clearly weighed on home buying in June," said Chief Economist David Seiders of the National Association of Home Builders (NAHB). "We still expect to see signs of stabilization later this year, although downside risks appear to be mounting." The inventory of new homes for sale was 537,000 in June, equaling the May inventory figures, although the equivalent months' supply at the June sales pace edged up to 7.8 months from 7.4 months in May. The median length of time that completed homes were on the market was 6.0 months, up from 5.7 months in May. THE SURGE IN INVENTORIES IS STARTING TO EASE A quarterly
Wall Street Journal survey of 28 major metro areas shows that
the surge in inventories of unsold homes is slowing. In two of
those markets - Boston and Denver - the number listed for sale
has actually declined from a year ago. But there is still a glut
of homes on the market in much of the country, especially in Florida
and parts of Arizona, Nevada and California. In the San Fra ONE INDEX RECORDS DECLINING GROWTH RATE IN MAY A home-price index that tracks 20 U.S. metropolitan areas showed a 2.8 percent decline in the annual home-price growth rate for May, according to Inman News. It was the 18th consecutive decline in the monthly Standard & Poor's/Case-Shiller 20-City Composite index, which has been in negative territory since January 2007, when compared with index results in 2006. The 10-city index experienced an annual decline of 3.4 percent in May, the largest decline since mid-1991 for that index. Fifteen of 20 metro areas in the 20-city index had year-over-year price declines in May. The most extreme price-index drops were reported in Detroit, down 11.1 percent; followed by San Diego, down 7 percent; Tampa, down 6.7 percent; and Washington, D.C., down 6.3 percent. The metro areas with the largest year-over-year price increases were Seattle, up 9.1 percent; Charlotte, N.C., up 7 percent; and Portland, Ore., up 5.7 percent. BUT A REALTOR GROUP SEES A RAY OF SUNSHINE The Pending Home Sales Index, based on contracts signed in June, was 5 percent higher from the downwardly revised May index of 97.5, but is still 8.6 percent below June 2006, when it stood at 112, reports the National Association of Realtors (NAR). Nevertheless, this 5 percent monthly gain is the largest in more than three years; a 6.1 percent increase was recorded in March 2004. "However, it is too early to say if home sales have already passed bottom," commented Lawrence Yun, NAR senior economist. "Still, major declines in home sales are likely to have occurred already and further declines, if any, are likely to be modest given the accumulating pent-up demand." HOMEOWNERSHIP RATE IS AT A FOUR-YEAR LOW The nation's rate has declined to its lowest level since 2003, reports the Wall Street Journal. New data released by the Census Bureau put the share of American households that own their own homes at 68.4 percent in the second quarter. The homeownership rate, which peaked at 69.4 percent three years ago, has declined steadily over the last three quarters, on a seasonally adjusted basis. Economists say it could drop further over the next two years. The homeownership rate fell most sharply for blacks. It dropped 3.4 percentage points over the last three years to 46.3 percent in the second quarter. The Census Bureau report did contain one bit of good news for the housing market: The number of vacant homes for sale dipped to 2.04 million in the second quarter from a record 2.18 million in the first quarter. "Vacancies are definitely peaking," says Mark Zandi, chief economist of Moody's Economy.com. But he cautions that the census figures are based on a small sample and can be volatile. "I wouldn't be surprised" if the vacancy rate increases again in the third quarter, he says. HOW MUCH IS THAT DOGGY (CARE) IN THE WINDOW Nationally, spending on veterinary care is expected to reach $9.8 billion in 2007, up from $7.2 billion five years ago, according to the American Pet Products Manufacturers Association, says the New York Times. A survey released by the group last month found that 47 percent of dog owners say their pet sleeps in a family member's bed. New Yorkers bought more new pet health insurance policies last year than residents of any state except California, according to VPI Pet Insurance, a leading insurer. The policies pay not only for routine care but for high-cost specialists who provide near-human levels of medicine, everything from neurosurgery to radiation therapy for cancer. CALL IT THE BIG BOWLER A confluence of powerful forces - from low mortgage rates to Russian petro-riches and the teeming wealth of the City of London - has supercharged home prices across the British capital, says the Washington Post. The average price of prime London homes, the ones brokers consider the most desirable, has soared 254 percent since 1997, when the Labor Party came to power, according to London-based real estate firm Knight Frank. The average rose 28.7 percent in 2006, the steepest increase since 1979, and then jumped 18 percent during the first half of this year. The decade-long leap in prices has made London the most expensive city in the world for high-end homes, according to Knight Frank, which says prime London houses cost about $10 million and prime flats run about $5 million. The most-sought-after properties in areas such as Kensington and Chelsea, the priciest of London's 32 boroughs, sell for an average of $4,710 a square foot by Knight Frank's calculations. Comparable living space in Monaco, the world's second-most-expensive locale, costs $4,485 a square foot. Similar digs in No. 3 New York fetch $3,277 a square foot, according to Knight Frank. IF YOU'RE MORE THAN 50, AARP SAYS TO CONSIDER ATLANTA The organization's
magazine put Atlanta; Beacon Hill in Boston; Chandler,
Ariz.; Milwaukee; HIGH HOME PRICES AND INCOME TAXES GO HAND IN HAND The parts of the United States where home prices are highest - New York, Boston, Washington, D.C., San Diego, Los Angeles, the San Francisco Bay Area and Hawaii - are also areas where residents pay the highest taxes, finds Forbes in Realtor magazine. New York City high-earning residents face a 6.85 percent top state income tax and a 3.65 percent top city tax. That's before facing a 35 percent federal tax rate. The California state income tax is 9.3 percent, kicking in at $43,500. And for people who make more than $1 million a year, California adds another 1 percent. As a result, some big-city millionaires are taking their money and moving. Outgoing California millionaires of recent years include Netscape's founder, Jim Clark, who moved to Florida, and eBay's Pierre Omidyar, who moved to Nevada. Says Rich Karlgaard, publisher of Forbes magazine: "Markets decide house prices. People decide tax rates. I have a hunch we'll see a Blue State tax revolt soon." THAT DEDUCTIBLE ON INSURANCE COULD COST YOU MORE A growing number of homeowners are facing sharply higher costs as more insurers change how they calculate deductibles, especially for damage caused by windstorms and other natural events, according to the Wall Street Journal. The newer method of figuring deductibles is based on a percentage of the insured value of your home - typically 1-5 percent. That approach often works out to be far more costly to the homeowner than the traditional flat-dollar method of figuring deductibles, by which you pay the first $1,000 or so of home repairs. As a result, homeowners increasingly are on the hook for thousands of dollars in repairs before the insurer pays any part of a claim. Percentage deductibles were first widely implemented in earthquake insurance in the West in the early 1990s and later spread to hurricane and windstorm coverage in the South. Now, millions more homeowners are being affected as insurance companies, including State Farm Allstate and Travelers, continue to expand percentage deductibles for damage from high winds in the Northeast and from tornados and hail in the Midwest. HOW ABOUT A PIED-A-TERRE WHERE THE NAME ORIGINATED A Parisian entrepreneur has successfully used the concept of fractional ownership to sell Americans shares in Paris pied-a-terres, says the New York Times in Realtor magazine. Walid Halabi is offering apartments within sight of the Eiffel Tower for as little as $82,000 euros, or about $112,000. The purchase entitles buyers to four weeks of residency each year. Two of the weeks stay the same and two float. Halabi and his expatriate American wife, Charla, established Paris Pied-a-Terre in 1999 as a Delaware company so buyers don't have to pay a 7.5 percent French transfer tax and to avoid the French inheritance taxes, which can be up to 60 percent. The bylaws of the corporation are established under American law and, should conflicts arise, they will be resolved in a U.S. court. Customers tend to be middle-age Americans who somewhere along the way fell in love with Paris and want to own a romantic place of their own, Halabi says. THIS PERFECT RENTAL WAS A BAD IDEA Two scam artists in Hialeah, Fla., have been arrested for renting a model home to a couple eager for a nice place to live, reports the Miami Herald in Realtor magazine. The couple paid $1,200 in rent and $1,200 in security deposit for the new three-bedroom, two-bathroom town house shown them allegedly by Joel Del Rosario and Daniel A. Argilagos. The couple had met the two men at the house after calling a phone number on a handmade sign posted on a telephone pole. When the couple, who were not named by Hialeah police, called the number on the sign, Del Rosario answered and agreed to meet them at 6 p.m. - after workers had left for the day. Police said Del Rosario took their cash and gave them a handwritten receipt as well as a new lock and. After they moved into the unit, the couple noticed a water leak and complained to the security guard, who called police. REBNY SEES AN 8 PERCENT PRICE RISE FOR APARTMENTS Average and median home prices in all five boroughs rose steadily in the second quarter of 2007, with average apartment prices rising 8 percent citywide and average prices for one-to-three-family dwellings increasing 5 percent throughout the five boroughs, according to the Real Estate Board of New York (REBNY). In its latest report, the organization found that the average sales price overall for cooperatives and condominiums was $831,000, compared with $769,000 during the second quarter of 2006. For one-to-three-family dwellings, the average sales price was $622,000 versus $592,000. Manhattan had the highest average sales price for an apartment at $1,196,000, with Brooklyn second at $484,000. For one-to-three-family dwellings, Manhattan recorded the highest average price at $5,150,000, while Brooklyn registered the next highest average sales price at $671,000. The more telling median sales prices for New York City apartments climbed 16 percent to $525,000 in contrast to $452,000 last year. The Bronx and Manhattan showed the highest percentage increases for condominiums at 26 percent and 18 percent respectively. The report also found that the average price per square foot (psf) for all cooperatives in New York City increased 6 percent to $708 from $669 last year. For condominiums, it rose 8 percent to $877, versus $811 last year. The average price per square foot for a Manhattan co-op or condo increased 5 percent to $1,083. PITY THE DEVELOPERS For developers to make money on their new buildings, whether luxury condos or offices, the Real Deal magazine notes that they have typically followed a simple rule of thumb: The profit margin should equal around 20 percent of the project's cost. In the current market, though, that's becoming increasingly difficult, as labor and materials costs remain overheated. Another obstacle is if projects drag on for longer than expected, owing to structural problems, bad weather or community opposition. Currently developers are finding that once they pay back any borrowed capital - and subtract smaller expenses like closing and recording costs, and brokers' fees, in addition to transfer taxes - their profit is thin, and in many cases growing thinner. Also, buying the land that the developments will sit on is getting prohibitively high, now often about $450 per buildable foot in Manhattan. Materials and labor can now cost about $500 a foot; architect, loan, and sales and marketing fees are additional costs. It also doesn't help that demand for homes has fallen off, meaning that selling 10 units now might take 10 months - not three months like a few years ago, says Abraham Hidary, president of Hidrock Realty, which recently completed Kensington Townhouses, a ground-up 10-unit condo development in Kensington, Brooklyn. VETS ARE UPSET ABOUT THE PARK AVENUE ARMORY A group that promised to fix the famed Park Avenue Armory has made a "mockery" of soldiers by trying to turn its headquarters into a chic restaurant, legal papers claim, according to the Daily News. Veterans said leaseholder the 7th Regiment Armory Conservancy tricked supporters into believing the building would be restored and opened as a military museum. Instead, the Conservancy planned to open a performing arts center and a restaurant that has attracted interest from high-end operators, including Four Seasons and the World Trade Center's Windows on the World. "The Conservancy's plans for the armory are to use all of the . . . interior spaces as attractions for an elite clientele of wealthy individuals," contend legal papers filed in Manhattan Federal Court by groups such as the Disabled American Veterans, Department of New York. The spaces will be "priced to exclude the general public and to make a mockery of the tributes to the heroism of the 10 Congressional Medal of Honor awardees and other soldiers who served in the 7th Regiment," the suit claims. The land for the armory, which takes up an entire city block between 66th and 67th Sts. and Park and Lexington Aves., was leased to the regiment by the city in 1874. The terms of the lease said the regiment had use of the land for as long as it existed, as long as it was for military purposes. But in 2000, the Empire State Development Corp. and the state Division of Military and Naval Affairs invited bids to develop the armory. And in 2004, the state passed a law giving it authority over the building. The changes have been subject to several unsuccessful lawsuits. "This is the latest and most ridiculous lawsuit in a string of losing legal actions that the state and federal courts have rejected again and again," said Conservancy spokeswoman Maureen Connelly. LOOK HARD BEFORE YOU LEAP INTO NEW CONSTRUCTION They just don't
build 'em like they used to, notes Habitat magazine. They
used to build 'em so that they didn't fall down. At
a freshly built condominium on West 53rd Street, residents say
the undersides of ASIANS WERE THE ONLY POPULATION GAINER IN THIS AREA They were the sole major racial or ethnic group to record population gains in every county in the New York metropolitan region since 2005, according to new census figures, reports the New York Times. The Hispanic population grew in most counties, except New York (the borough of Manhattan), Kings (Brooklyn) and Hudson in New Jersey. The number of blacks declined in every borough except Richmond (Staten Island) and in some suburban counties. Whites increased in only two counties in the region: New York and Kings. Since 2000, New York has recorded the greatest increase in Asians (309,773) of any metropolitan area (Queens was fourth among all 3,100 counties, with 58,515). The largest percentage increases in the city were on Staten Island (35 percent) and in Manhattan (20 percent). Metropolitan New York ranked fourth nationally in growth among Hispanic residents (418,720). Since 2000, the Hispanic population increased by 31 percent on Staten Island. Since 2000, the New York metropolitan region lost nearly 250,000 white residents. The largest decline was in Nassau County (71,651), followed by Queens (59,056). Since 2000, the Bronx lost nearly 11 percent of its white population; Manhattan's rose by nearly 9 percent. REMODELING EXPENSES SHOULD SHOW STEADY GROWTH Even with the recent weakness in house prices and consumer confidence, growth in home improvement expenditures will hold stable in the low single digit range according to the leading indicator developed by Harvard's Joint Center for Housing Studies. Homeowner spending for home improvement activity will essentially remain constant through the first quarter of 2008, the Center estimates. Overall growth in spending for 2007 is projected to be 3.0 percent. "Homeowners continue to draw on built-up equity in their homes to finance home improvements," said Center Director Nicolas P. Retsinas. "However, the pace of spending remains moderate and tempered in the context of a very soft housing market." Added Kermit Baker, director of the Remodeling Futures Program: "With borrowing costs remaining favorable, owners are still able to take advantage of the run-up in their house's value over the past decade to finance home improvement projects." BUT IT AIN'T HAPPENING YET Remodeling activity slowed slightly in the second quarter of 2007, according to the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). The current market conditions component slipped from 46.1 to 44.8 on a seasonally adjusted basis, and the future expectations measure declined by more than two points to 44.1. The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view the market conditions as improving. "Not surprisingly, the remodeling market is following the downswing we are seeing in the overall housing market," said NAHB Chief Economist David Seiders. "We expect some further erosion in the second half of this year and in 2008, followed by a gradual recovery in 2009 and beyond." CONSUMERS ARE HOT FOR AIR CONDITIONING Aside from extra garage
space, what home buyers especially want, according to the National
Association of Realtors (NAR), is air conditioning, with 75 percent
of respondents to a survey ranking it as "very important."
Similar important were master bedroom walk-in closet ( FOLKS ARE PREPARING TO GROW OLD WHERE THEY LIVE Seventy-two percent of remodelers surveyed by the National Association of Home Builders (NAHB) said that their company is involved in home modification work relating to aging-in-place - up from 60 percent in 2006. According to the survey, respondents indicated that some of the most popular types of aging-in-place remodeling projects included installing grab bars (90 percent), higher toilets (75 percent) and curbless showers (63 percent), and widening doorways (56 percent). More than 75 percent of respondents noted an increase in the number of requests for aging-in-place features over the past five years. Respondents reported that the top reasons for their customers to undertake aging-in-place work included planning for future needs (78 percent), living with older parents (54 percent) and acute age-related disabilities. VIDAL SASSOON IS WASHING THAT HOUSE OUT OF HIS HAIR The hairstylist, who sold his product line in 1983, is asking nearly $20 million for a Los Angeles house designed by famed mid-century architect Richard Neutra, reports the Wall Street Journal. In 2004, Sassoon and his wife Rhonda paid $6 million for the roughly five-acre Bel Air property, known as the Singleton Residence. The couple spent millions renovating and expanded the 1959 home to 5,500 square feet from 3,400, says the listing. Although the Sassoons held some parties at the home, they never moved in. The house overlooks Stone Canyon Reservoir, the city and the San Fernando Valley, and it has a reflecting pond and pool. A RECENT RETIREE IS SKATING AWAY Brian Leetch, a high-scoring New York Rangers defenseman for more than 16 seasons, has sold his apartment at the Bromley on West 83rd Street for $3.718 million, according to the New York Observer. The combined-unit apartment went to neighbors, lawyer Igor Kirman and his wife Galina. "We had a painter that came in," Kirman said. "The first thing he said is, 'It looks like an athlete lives here.'" The apartment's 47-foot-wide living and dining room has a floor-to-ceiling waterfall, which the Leetch family "turned off because their kids figured out that it was fun to play with the water." WILL THERE ALWAYS BE A PARIS The Hilton one has put her Los Angeles home on the market for $4.25 million, according to the Wall Street Journal. She wants to buy a larger home in a gated community or, at least, one with a long gated driveway, says her aunt and informal spokeswoman, Kyle Richards. Her current house measures about 3,000 square feet on a 7,000-square-foot lot, modest by Los Angeles celebrity standards. Hilton bought the four-bedroom residence in 2004 for about $2.9 million during the second season of her reality show, "The Simple Life." She redecorated the interior in black and white and transformed one bedroom into a walk-in closet and another into a security control room. She made over the family room with beaded walls and added a modern audio/visual system throughout the house as well as extra security features. Built in 1926, the property includes a pool, a Jacuzzi and a waterfall. Elsewhere in Los Angeles, actress Anne Heche is asking just under $3.8 million for the home in Hancock Park that she bought with her soon-to-be ex-spouse. In 2005, Ms. Heche, 38, and cameraman Coleman Laffoon, paid $3.15 million for the 1929 home, designed by architect Paul Williams, with four bedrooms on 0.3 acre. PRETTY FACES PAY OFF Estee Lauder President and CEO William Lauder, 46, son of Leonard Lauder and the grandson of matriarch Estee, is said to be paying approximately $27.5 million for a residence at 778 Park Avenue, according to the New York Post. The pre-war apartment, which had an asking price of $29.5 million, takes up the entire 14th floor of the building with five bedrooms, seven and a half baths, a library, three terraces, wood-burning fireplaces, maid's quarters, high ceilings and 360-degree views above Vera Wang's six-bedroom unit, which just went on the market at $35 million. (See next item.) AIN'T THAT GRAND Vera Wang and her family are moving from their spacious Park Avenue apartment into an even more prestigious - yet familiar - residence a few blocks away, says the New York Observer. The fashion designer is about to list her 12-room apartment (with six bedrooms) at 778 Park Ave. and move into her late parents' duplex co-op at 740 Park Ave. Wang's father, Cheng Ching Wang, who died last September at age 87, was a pharmaceutical mogul and the bankroller of his daughter's bridal-wear business. He bought the sprawling co-op in 1983. A HEDGE FUND TYCOON BUYS A BIG PIECE OF CALIFORNIA COAST Trusts and partnerships linked to billionaire hedge-fund manager Bruce Kovner paid about $70 million earlier this year for a swath of oceanfront properties in California's Santa Barbara County, the Wall Street Journal reports. Taken as a whole, the purchases of 12 adjacent acres, in February and March, are believed to rank among the largest U.S. residential real-estate deals. (That's a lot of lawn to mow, no?) Kovner runs Caxton Associates, one of the largest hedge funds in the world with about $16 billion under management, and has donated tens of millions to New York's Juilliard School and Lincoln Center. He declined to comment, and his plans for the properties couldn't be learned. The purchases were made in Carpinteria, a coastal community about 12 miles from Santa Barbara. Records and listing data show that in February, the Kovner-related entities paid $35 million for a three-acre lot, including an 8,000-square-foot Tuscan-farmhouse-style home with six bedrooms, and $20 million for a four-bedroom house on three acres. A month later, they paid $15 million for six acres. The most expensive home deals in the U.S. include investor Ron Baron's $103 million purchase earlier this year of 40 acres in East Hampton, N.Y., and in 2001, a $94 million Bel Air, Calif., estate acquired by Gary Winnick, Global Crossing's former chairman. THAT WOULD BE JUST HOW MUCH A MINUTE Rachael Ray, that perky overexposed talk-show hostess who's into speed cooking and her husband, are in contract to buy a fancy weekend compound in Southampton for just under $3 million, according to Page 6 of the New York Post. Included in the 6.2-acre Tuckahoe Lane estate, bordering the Southampton and Shinnecock golf courses, are a three-bedroom main house, two-bedroom pool house with sauna, separate guest cottage, pond, heated pool and lush gardens. The kitchen is, however, minuscule. RATES SLIP FOR CONFORMING MORTGAGES (BELOW $417K) The 30-year fixed-rate mortgage dropped to an average 6.59 percent this week from last week's 6.68 percent, according to Freddie Mac. The 15-year fixed-rate mortgage fell to 6.25 percent from 6.32 percent. Adjustable-rate mortgages (ARMs) were up this week, with the five-year Treasury-indexed hybrid ARM rising to 6.33 percent from 6.29 percent and the one-year ARM growing to 5.65 percent from 5.59 percent. "Interest rates on prime conforming fixed-rate mortgages eased further in the past week, according to the Primary Mortgage Market Survey, even though other sources such as HSH Associates reported that jumbo fixed rates increased by a quarter percent or more last week," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. "Job creation fell short of market expectations, with 92,000 jobs added in July, the smallest gain since February, and June's number was revised down by 6,000. In addition, the unemployment rate ticked up for the first time in four months to 4.6 percent." RATES FOR JUMBO LOANS ARE CLIMBING Turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records, reports the Wall Street Journal. These mortgages exceed the $417,000 limit for loans eligible for purchase and guarantee by Fannie and Freddie. Lenders were charging an average 7.34 percent for prime 30-year fixed-rate jumbo loans early this week. That is up from an average of about 7.1 percent the previous week and 6.5 percent in mid-May. Even borrowers with good credit records who can afford a large down payment are finding rates surprisingly steep if they can't qualify for a loan that can be sold to Fannie or Freddie. Rates on prime jumbo loans have risen so fast that "nobody in their right mind would pull the trigger" and accept one now, unless they couldn't delay a home purchase, said Darren Weisberg, president of PFG Mortgage Services, a mortgage broker in Lake Forest, Ill. COUNTRYWIDE FINANCIAL SAYS IT IS WORRIED Tthe nation's largest mortgage lender said the debt markets were "experiencing unprecedented disruptions" that could hurt its profits and financial health. The company said it planned to hold more loans on its own books because investors were not willing to buy them. But it noted that its capacity to do so was "not unlimited." FORECLOSURES ARE UP 55 PERCENT IN FIRST HALF OF 2007 There was one foreclosure filing for every 134 U.S. households during the first half of the year, according to RealtyTrac's midyear report, says Realtor magazine. The report shows that foreclosure filings rose to 925,986 for the first six months of 2007. That's an increase of more than 55 percent over the same time last year and a jump of 30 percent over the last half of 2006. "Despite a slight drop in June, foreclosure activity shows no sign of slowing down," said James J. Saccacio, CEO of RealtyTrac, an Irvine, Calif.-based company that manages an online database of foreclosures. "Based on the rate of foreclosure activity in the first half of 2007, we could easily surpass 2 million foreclosure filings by the end of the year, which would represent a year-over-year increase of over 65 percent." The top 10 foreclosure states were Nevada, Colorado, California, Michigan, Florida, Ohio, Georgia, Arizona, Connecticut and Indiana. SOME STATES AIM TO STEM FLOW OF THOSE FORECLOSURES Hoping to slow the quickening pace of home foreclosures, about a half-dozen states are setting up funds to help homeowners with high-risk subprime mortgages refinance to more-affordable loans, according to the Wall Street Journal. The states - which include Maryland, Massachusetts, New Jersey, New York, Ohio and Pennsylvania - are expected to invest a total of more than $500 million in the effort. New York Mortgage Agency officials announced a $100 million program that would help an estimated 500 homeowners. Homeowners can qualify as long as they are no more than 60 days behind on their payments. The program, which will begin accepting applications in September, will not be open to those in foreclosure because the state does not have the resources to assist someone losing a home. More than one million American homes are expected to enter foreclosure this year; the total represents about 2.3 percent of the nation's 44 million home loans, according to Freddie Mac. LOAN VOLUME GOES UP AGAIN For the week ended Aug. 3, mortgage loan application volume increased by 8.1 percent on a seasonally adjusted basis from one week earlier, according to the Mortgage Bankers Association. On an unadjusted basis, the change was 7.7 percent; it was up 18.0 percent from the same week one year earlier. Refinancings grew by 9.1 percent from the previous week, while purchase applications rose by 7.4 percent. The refinance share of activity went up to 39.9 percent of total applications from 39.4 percent, and the adjustable-rate mortgage (ARM) share edged up to 22.5 from 22.3 percent. HOW TO COUNTER THE COCKROACH Good luck! The Washington Post notes that sprays that kill on contact aren't much use because they don't reach critters still hidden in the walls or under cabinets. But baits, which contain slow-acting poisons that the cockroaches share with each other, can be more effective because they ultimately kill even hidden creatures. Gels with slow-acting pesticides also work well if they are squeezed into crevices where cockroaches travel, says Michael Potter, a pest-control expert at the University of Kentucky. Look on the packaging for at least one of the active ingredients proven effective: fipronil, hydramethylnon, sulfluramid and boric acid. Baits come in enclosed packages so they don't contaminate surrounding surfaces, but gels are more discrete and can't be carried off by pets or children. If you use baits, Potter recommends buying plenty - at least a dozen for an apartment or small home. Place them against walls and corners, where cockroaches usually travel, not in the middle of the floor. Prime locations include walls near toilets, the refrigerator and the trash can, and under the sink and dishwasher. Gels should go in similar locations. Don't spray insecticides or cleaning products near the bait stations or gels, since this action might discourage the cockroaches from feeding on them. Boric acid is sold as a powder in a plastic, squeeze-type bottle with a narrow applicator tip. Apply the powder in a very thin layer; don't pile it up, or cockroaches will find a route around it, much as we might do when confronted by a snowdrift. HOW DOES YOUR (CONTAINER) GARDEN GROW For both the vegetables and the flowers, think seasonally when selecting the plants to grow, counsels the Washington Post. In the heat of summer, you can grow some tomatoes in the largest of your containers, along with eggplant and Malabar spinach. Peppers also do well in containers. Don't discount the ornamental power of vegetables. You can effectively incorporate them into the overall design. In September, plant lettuce, spinach, dwarf peas and chard. All of these will grow until hard frost kills them. You also can grow a wide range of flowers on your balcony. Stick to heat-tolerant selections because the building's mass may accumulate heat during the day and radiate it at night. Angelonia, phygelius and coleus should do well for you and pack a wallop of color. If you want the tropical look, you can grow cannas and bananas. In autumn, you can plant pansies to give you some color throughout the winter. Among evergreen plants, junipers, Japanese false cypress and dwarf Alberta spruce grow well in containers. You can add redosier dogwood to give some winter color along with the green of the conifers. The new Midwinter Fire dogwood has bright orange and yellow twigs that are very attractive. DON'T SIT ON IT While mid-20th-century furniture continues to command huge sums, now much younger designs - some just a few years old - are increasingly seeing hefty premiums when resold at auction, observes the Wall Street Journal. Four steel "Tom Vac" chairs by designer Ron Arad sold for $19,200 at a Sotheby's auction in June; in 1997, when they were originally produced in a limited edition of 500, they sold for about $1,000 each. A "Lit Clos" bed from a 2002 edition of eight by designers Ronan and Erwan Bouroullec sold at Phillips de Pury last summer for $96,000, about double its original price. This spring, a 1987 Marc Newson cabinet sold for $1.05 million at Christie's, setting a record for a price paid for a work by a living designer. Increasingly, furniture designers and manufacturers are borrowing a strategy that has proved successful in collectors' markets from sneakers to watches - producing small runs of furniture designs in order to create rare, collectible versions of widely owned objects. Now, art-market insiders say some collectors are buying new furniture pieces with an eye toward flipping them on the auction market in a year or two. "The logic is that you hold it, say, for two years, before going to auction to see a giant increase," says Franklin Getchell, president of design retailer Moss. That means a commitment to stashing away new furniture in storage or resisting the temptation to sit on it too often. For furniture to resell at auction, it needs to be in pristine condition. Bill Stewart, an interior designer based in Atlanta, has become an avid collector of contemporary furniture. In June, he sold a piece at Sotheby's that he bought a year and half ago at a design fair in Miami. When he bought the piece, a 2004 limited edition "assemblage," or arrangement of furniture, by Ronan and Erwan Bouroullec, he paid $40,000. He sold it at Sotheby's for $60,000. LET YOUR FINGERS DO THE UNLOCKING Lost your key? Can't remember your key code? No problem. At least not with the SmartScan keyless entry system from Kwikset, a Black and Decker company. Taking personalized access control and home security to new levels, SmartScan is activated by swiping a valid fingerprint across an indicator keypad. The system also has a "lock out" feature that allows owners to program specific times of day when it can be operated only by certain users. SmartScan can be applied to external and internal doors with no hard wiring. Up to 50 user fingerprints can be stored in the system. REAL ESTATE INDUSTRY ADVOCATE LOWERS FORECAST "Existing-home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who've been on the sidelines," said Lawrence Yun, senior economist of the National Association of Realtors (NAR). "Mortgage disruptions will hold back sales over the short term, but long-term fundamentals are favorable. A modest upturn is projected for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008." Sales of previously owned homes are forecast at 6.04 million in 2007 and 6.38 million next year, below the 6.48 million recorded in 2006. That prediction was 1 percent, or 70,000 homes, below the previous one. New-home sales are expected to total 852,000 this year and 848,000 in 2008, down from 1.05 million in 2006. Housing starts, including multifamily units, are likely to total 1.43 million in 2007 and 1.40 million next year, below the 1.80 million units started in 2006. "More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation, but general gains will be modest next year. Serious buyers today have a long-term view of housing as an investment - speculators have left the market." Existing-home prices should ease by 1.2 percent to a median of $219,300 in 2007 before rising 2.0 percent next year to $223,600, according to Yun, who added that the median new-home price will probably fall 2.3 percent to $240,800 in 2007, then rise 2.3 percent next year to $246,300. HOUSING WOES COULD LAST UNTIL 2009, SAYS COUNTRYWIDE The nation's largest mortgage lender said that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades, reports the New York Times. In a conference call with analysts that lasted three hours, Countrywide Financial's chairman and chief executive, Angelo R. Mozilo, said home prices were falling "almost like never before, with the exception of the Great Depression." Nationally, home prices have not fallen in the 35 years or so that the government and private services have tracked them. Some researchers like Robert J. Shiller of Yale have compiled data that goes as far back as 1890 and shows that home prices fell for several years during the 1930s. Mozilo said that because of a large number of homes on the market, the housing sector would continue to suffer until sometime in 2008 and not begin recovering until 2009. The company said about 5.4 percent of the home equity loans to customers with good credit that it held an interest in were past due at the end of June, up from 2.2 percent at the end of June 2006. By comparison, more than a fifth of subprime loans were past due at the end of June, up from 13.4 percent a year ago. LEADING BUILDER OF LUXURY HOMES WON'T EVEN GUESS In reporting a 21 percent decline in its third-quarter revenues, Toll Brothers cited a high level of market volatility, making it impossible to give earnings guidance. Said CEO and Chairman Robert I. Toll: "We believe significant pent-up demand is building, based on solid demographics, a decent economy and still-strong employment. However, we caution that, with the uncertainties roiling the mortgage markets right now, the pace of home sales could slow further until the credit markets settle down. In the near term, tightening credit standards for borrowers should reduce the pool of potential buyers: Liquidity and affordability issues may impede some customers from closing, while others may find it more difficult to sell their existing homes. Excess supply exists in most markets and there is concern that additional inventory will emerge due to mortgage defaults. Although some markets have remained strong and some appear to be stabilizing, albeit at much lower activity levels, most markets remain weak." What Are You Looking At? When viewing properties they might purchase, buyers have a tendency to forsake all the rational criteria they have learned for an emotional assessment that can be hard to explain. Those who have insisted on a parking garage in the building are capable of minimizing that firm requirement if the glamour of the kitchen transfixes them. The bonus maid's room can trump a desire for outdoor space. Even more likely, the ambience of the apartment can strike a chord that overcomes all other possible concerns - e.g. the size of the dining room, the level of the unit, the absence of a full-time doorman. A free daily breakfast in a communal room, a swimming pool on the roof, the presence of an old friend, an Old World bakery in the neighborhood can each contribute to an emotional decision. Although such influences are not easily ignored (and perhaps should not be), there are simple approaches to evaluating your next home. Some are obvious, and many occur at a subconscious level. Make them conscious and know well what you're looking at by:
Happy hunting! Since the last Realty Digest, these are some of the properties seen that have been listed by various brokers: Upper East Side
Upper West Side
Elsewhere in Manhattan
Mortgage Matters
To
prepay or not to prepay, that is the question; There are many nuances to living with residential mortgages as a borrower, but none can be more daunting than deciding whether or not to prepay the principal, or continue making scheduled payments with no additions. As with most troublesome financial questions, a case can be made for either decision, and much has to do with your psychology rather than the finances. Actually you need to answer the question, "How much debt am I comfortable living with?" There are lots of people who cannot sleep if they have any creditors and others who do not give debt a second thought. I would counsel that if you are not comfortable living with debt, then pay your mortgage (and other long term debt) as quickly as possible. If however, you are not uncomfortable with outstanding loans, then a quick financial analysis of the debt structure will give you a good read as to what to do. The first thing to determine is where your money is working harder for you. Can you earn more with the money in savings or investments than what it is costing you in interest payments (net of taxes) to carry the debt? If the answer is yes, then you are better off with the debt than with paying it off early. The next thing is to determine how much liquidity you want to have and feel comfortable. Regardless of the position of the cost of the debt versus the investment options, you should have a certain liquidity minimum that makes you secure in case of the proverbial "rainy day." Don't use the lunch money to pay down your mortgage. The next thing to look at is how your partial mortgage prepayment will affect your ongoing payments. As you may know, many mortgages use prepayments to reduce the term of the loan by applying the additional contributions to principal to the back end while keeping the monthly payments unchanged. Other mortgages give immediate credit to the principal and recast the monthlies to reflect a new interest amount and reduce the ensuing payments by the newly computed interest on the unpaid balances. If you have the former, maybe you want to set up a separate savings or investment account and make the "contributions" to it rather than to your mortgage holder. When the amount in that account equals the balance of your loan, pay it off in full. That way you still have the funds in your control, but are making silent prepayments. Again, you need to calculate the options and see what gives the best result. That brings
me to a subject that is sure to bring mixed reactions. I always
hear the phrase about paying down mortgage principal increases
equity in the property. I'm not sure I understand that one.
After all, the equity in the property is determined by the difference
between the cost of purchase (plus additions) and the ultimate
selling price. At least that's what I think. By paying more
of your mortgage now rather than later will get you more cash
when you do sell, by the amount of the prepayments - but it will
not change the difference between the selling price and the cost
of purchase. And that is the equity. So other than the possible
interest savings associated with prepayments, can someone please
tell me how the equity in the property has been increased by making
prepayments to the mortgage principal? I must be missing something
because too many people are convinced this is right. We are all attacked by different theories as to how to most effectively use our liquidity to provide the best financial result. Most times, there are multiple ways to analyze these theories that yield less than clear cut answers. Many economists use the expression 'cash is king' as a way of saying not to jump too quickly into any investment or savings/spending plan because once you spend the money you don't have it anymore. You always have time to prepay your mortgage. It's not a bad thing to do, but it's not always the best thing to do either. Make sure you understand your choices and what the results of those choices are. The right answer is always there - just not always obvious. Some of Manhattan's Latest Listings Please click here to view available properties. (To view all photos, tours, floor plans and maps, please use Internet Explorer.) Click Here to Sign Up For Your Free Issue of Realty Digest!
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2007 Service You Can Trust |
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ncisco
Bay area, prices have continued to rise briskly in Marin County
and Santa Clara County. House prices are likely to remain weak
in many areas until inventories of unsold homes fall. That process
has begun in a few places, including the Boston metro area, where
the number of homes listed for sale at the end of June was down
16 percent from a year earlier. In the Denver area, the number
of homes listed for sale is down 5 percent from a year ago. Yet
inventories have continued to bloat in Florida, where a speculative
binge has led to an enormous glut of condos. Miami-Dade County
has enough condos on the market to last 31 months at the current
sales rate, says Esslinger-Wooten-Maxwell, a big real-estate brokerage
firm there. Still, the rate of increase in unsold homes in the
Miami area has slowed recently, says Ronald Shuffield, president
of the firm. Atlanta's inventory of unsold homes is up 43 percent
from a year ago, according to Smart Numbers, a local research
firm. It says there are enough homes on the market to last more
than 10 months at the current sales rate, up from six months a
year earlier. In the Seattle metro area, the number of listings
is up 55 percent from a year ago; however, inventories were unusually
lean there last year, and the market is now regaining balance.
And in the New Jersey suburbs near New York, listings surged in
2005 and 2006. At the end of June, though, listings in 12 northern
New Jersey counties were up just 3 percent from a year ago, according
to Otteau Valuation Group, an East Brunswick, N.J., appraisal
firm. 
and
Portland, Ore. at the top of its list. Named the top four places
to watch were Austin; Burlington, Vt.; Mankato, Minn; and Traverse
City, Mo. The selections were based on specific criteria for what
the magazine says make a community livable: new urbanism, smart
growth, mixed-use development, and easy-living standards. The
selections focus on livable community characteristics in each
location, including mass-transit systems so residents can drive
less, expanded sidewalks to encourage walking, better health care,
and a wide range of mixed use housing. These qualities attract
members of the 50-plus age group, a segment that spends more than
$2.2 trillion on goods and services each yea
r and is expected
to grow in size by 32 percent in the next 15 years, according
to the publication.
the
concrete balconies have started collapsing onto the floors below.
At the Empire Condominium Tower, filling the west side of Third
Avenue from East 77th to 78th Streets, buckling floors, leaks,
and other problems in its $3 million apartments led to the state
attorney general's office requiring the developer to make
$2.5 million in repairs. "There's no question there's
been a decline in the quality of construction over time,"
says the lawyer, engineer, and author Oliver A. Rosengart, who,
until his recent retirement from the attorney general's
office to go into private law practice, had spent a quarter-century
as a state assistant attorney general. "Buildings constructed
before the mid-1950s or maybe the 1960s are much better constructed
than today, partly because the labor doing the work [today] is
less skilled." 
53
percent); hardwood floors (28 percent); granite countertops (23
percent); cable/satellite TV-ready (46 percent); and energy efficiency
(65 percent for buyers of new homes and 39 percent for buyers
of existing homes). According to the survey, nearly six out of
10 recent home buyers took on remodeling or home improvement projects
within three months of their purchase. Close to half of home buyers
who remodeled or made improvements updated their kitchen, and
nearly half remodeled or improved their bathroom. Age was the
biggest differentiation in what buyers were looking for in a home.
Buyers 75 years old and older wanted a single-level home (74 percent)
that was less than 10 years old (43 percent) with a walk-in closet
in the master bedroom (74 percent). More than half of buyers over
65 wanted a separate shower enclosure in the master bathroom compared
with only one-fourth of buyers ages 25-34. Also, older buyers
placed a higher priority on energy efficiency home features than
did younger buyers; 63 percent of buyers 75 and older said it
was very important, but only 32 percent of buyers who were 18-24
agreed.
