Realty Digest
A Quirky Collection of News and Information
From Malcolm Carter

**** February 17, 2007 ****

Have you checked the Service You Can Trust Web site recently? It's filled with helpful information from mortgage calculators to vendors for homeowners and a way to search for properties.
Happy clicking! And happy long weekend!

IN THIS ISSUE:

• Items of Interest
• Out and About
• Empty Nests s
• New Listings

Items of Interest
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Research

APPRAISERS SAY THEY ARE UNDER INCREASING PRESSURE: Nine out of 10 real estate appraisers say they've been pressured to raise property valuations by mortgage brokers, realty agents, lenders and individual home sellers, relates Inman News. That represents a huge increase over just the past three years, according to October Research Corp., the principal sponsor of a survey of 1,200 appraisers from all 50 states plus the District of Columbia and Puerto Rico in 2003 and 2006. Forty-five percent of those polled in 2003 said they had "never" been pressured to fudge the numbers on valuations, but just 10 percent of those participating in the latest survey said the same. The research found that 75 percent of appraisers reported "negative ramifications" when they declined requests for inflated valuations. Nearly 70 percent said they lost the client altogether, and 45 percent said they never received payment for the work they did.

CONDO BUYERS ARE COMMITTED: Nearly half of all condo buyers choose their new homes without considering any other style of housing, according to a new survey by the National Association of Home Builders (NAHB). The survey found that the majority of condo buyers are looking not just for a home, but a lifestyle. With lifestyle and affordability the top factors driving condo sales, most industry experts expect the condo market - which had reached nearly half of all multifamily starts in 2005 - to stabilize at a healthy and sustainable 30 percent of the approximately 350,000 multifamily units produced annually. According to the survey, two groups of condo buyers drive the condo market: young, well-paid professional singles or couples who want to own their first home close to urban amenities and older households who want to remain in the suburbs but shed the maintenance burden of a house. Both groups also clearly indicated that they expect their condos to appreciate in value.

WHERE THE PENSIONERS ARE: Bizjournals.com, the Web site of American City Business Journals Inc., identified 100 cities nationwide where residents are over 65 have increased rapidly in the last five years. The business-newspaper chain compared 938 markets in eight statistical categories to come up with a list that includes communities all over the country. Gardnerville Ranchos, Nev., ranked as the hottest spot for retirees. So pack your bags! The small town near Lake Tahoe is within a four-hour dive from San Francisco, San Jose and Sacramento, Calif. Its senior population soared by 45 percent between 2000 and 2005 - nine times the national growth rate of 5 percent for the same age group. In addition, 19 percent of its residents are 65 or older, a higher concentration than 900 of the nation's other 937 markets. As identified by Bizjournals, the other fast-growing destinations are: Punta Gorda, Fla.; Pahrump, Nev. (sic!); Crossville, Tenn.; Homosassa Springs, Fla.; Sebring, Fla.; Del Rio, Texas; Brevard, N.C. ; Georgetown, S.C.; and Ocean Pines, Md. Why these are the top choices is unexplained.

BUILDERS ARE FEELING BETTER EVERY DAY: Their confidence continued to rise this month, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI increased from 35 in January to 40 in February, up from a low of 30 last September and the highest level since June of 2006. "Builders are becoming increasingly convinced that the abrupt downslide in home sales is in their rear view mirrors and they see better times as they look at the road ahead," said Chief Economist David Seiders of the National Association of Home Builders.

Home and Hearth

OH NO! NOT THOSE ARMOIRES AGAIN! FORTUNATELY, NOT: Big home-entertainment systems and flat-screen plasma television sets may remain status symbols for some, but as prices continue to drop - and the devices become ubiquitous - an increasing number of consumers are downplaying their living-room gadgetry, says the Wall Street Journal. Manufacturers, for their part, are adding decorative touches to soften their components' looks. Others are offering products that disguise liquid-crystal displays as Picassos and speaker systems designed to be works of art in themselves. For example, the Artcoustic system includes an "acoustically transparent" fabric that consumers can have images printed on, making the speakers look like framed artwork or a wall panel. The company's sales have increased 50 percent a year in the U.S. for the past four years and are poised to generate more than $3 million in revenue in 2007. VisionArt, a unit of Solar Shading Systems of Costa Mesa, Calif., makes prints that retract in their frames to reveal plasma TV sets. The motorized frames sell for as much as $18,000. Vice President Dave Froerer says the line, now in its fifth year, has seen sales increase 40-50 percent a year, helped, he adds, by falling flat-panel prices.

THE TIME IS NOW FOR BUYING BARGAIN ANTIQUES: Decorators, antique dealers and even eBay report demand and prices for antiques are down sharply, says the New York Times. Reasons include a change to more casual, family-oriented lives; the rise of the current modern aesthetic; fear of buying fakes; and the growth of a talented new crop of furniture designers creating artful alternatives. "Incredibly beautiful antique pieces are going for almost nothing," said Robert Couturier, an interior designer and architect in New York. Bargains are particularly plentiful in 18th-century pieces. Victorian is unpopular (dealers and auctioneers say they can't give the stuff away), while 19th-century French still has some fans. But regardless of era, the prices of truly exceptional museum-quality pieces remain high.

REMODELING ACTIVITY IS FORECAST TO RISE: Spending on remodeling by homeowners is likely to increase by at least 3 percent a year over the next decade, according to both the National Association of Home Builders and Harvard University's Joint Center for Housing Studies, reports Realty Times. Over the last decade, the remodeling sector has grown at an annual rate of roughly 3 percent, NAHB's chief research analyst, Gopal Ahluwalia, said. Despite the slowdown in the broader U.S. housing market, remodeling will remain at the level, he added. The Joint Center's Remodeling Futures Program is calling for a somewhat larger yearly gain of 3.7 percent. That's a "more sustainable pace" than over the last 10 years, when the home improvement market doubled and reached a new high of $280 billion in 2005, the group's latest report says.

The Big Apple

UNSURPRISINGLY, THERE'S BEEN A BOOM IN BUILDING PERMITS: New York City, in the throes of the biggest residential building boom in three decades, issued permits for 30,927 new units of privately owned housing in 2006 - a near-record number, according to figures released by city officials. The New York Times says the 2006 number falls just short of the 31,599 units for which permits were issued in 2005, according to the new figures, which were collected by the U.S. Census Bureau. But the combined total for those two years is the highest two-year total since 1965, the first year for which city officials say there are reliable statistics. The 2005 number is topped only by the 33,084 permits issued in 1972, at the height of the Mitchell-Lama subsidized housing program.

FORECLOSURES IN THE BOROUGHS LEAP UP: The number of homes in foreclosure rose 18 percent in the last six months of 2006 compared with the same period of 2005, according to data from RealtyTrac, says NewYorkBusiness.com by Crain's. More worrisome is the fact that filings tabulated by Profiles Publications show that 100 homes in both Brooklyn and Queens are entering the foreclosure process each week - double the numbers of a year ago. "The numbers here are going up by the week," says Jessica Davis, president of Profiles Publications, which tracks foreclosure figures. "The last time I saw it this bad was in the early 1990s." Worst hit are subprime borrowers, those with spotty credit ratings.

The Soothsayers

FED CHIEF TENTATIVELY ENVISIONS STABILIZED DEMAND: Federal Reserve Chairman Ben Bernanke told the Senate Banking, Housing and Urban Affairs Committee that the economy is reaching a "more sustainable average pace of growth," according to Dow Jones Business News in Realtor magazine. "The principal source of the ongoing moderation has been a substantial cooling in the housing market, which has led to a marked slowdown in the pace of residential construction," he declared. "However, the weakness in housing market activity and the slower appreciation of house prices do not seem to have spilled over to any significant extent to other sectors of the economy." He added that the "faster pace of rent increases last year may have been attributable in part to the reduced affordability of owner-occupied housing, which led to a greater demand for rental housing." Said he: "Rents should rise somewhat less quickly this year and next, reflecting recovering demand for owner-occupied housing as well as increases in the supply of rental units. But the extent and pace of that adjustment are not yet clear." He added that inventory may well normalize next year. "The predicate is that we have seen what we think or what we call tentative signs of stabilization in demand for housing," Bernanke observed. "If, in fact, the demand for housing is stabilizing – and, again, we won't know that for sure, I think, until we see sales figures in the spring – then we should see from here a gradual decline in the months for sale inventory. The normal is, at least for the last eight to 10 years, four-and-a-half months of homes for sale. And my anticipation would be that we would get back toward that general level by the end of [2008] assuming that demand stabilizes."

OLDER FOLKS WILL HEAD MANY HOUSEHOLDS: A new report from the National Association of Home Builders' (NAHB) 50+ Housing Council predicts that 40 percent of all households will be headed by someone 55 or older by 2012. The 55+ population is expected to reach 85 million by 2014. The number of households in the 65-74 age bracket by itself will grow by 4.5 million between 2005 and 2014, an increase of more than 38 percent in only ten years.

ONE CONSENSUS IS REACHED ON PROSPECTS FOR RECOVERY: The U.S. housing market has not reached bottom and will likely not begin to recover until the middle of this year, according to three housing economists quoted by MarketWatch in the Wall Street Journal. The weakness will extend to existing-home and new-home sales and housing starts as well as to home prices, which are likely to show their first full-year decline nationally since records have been kept, the economists told home builders at their annual convention. "I don't think we've seen the bottom," said David Berson, chief economist for Fannie Mae. "We're going to see a much bigger drop in investor demand this year. But by the second half of the year the market will stabilize, if investors pull out quickly." Berson said he expects the home-price index calculated by the Office of Federal Housing Enterprise Oversight (OFHEO) will show a nationwide decline in values for 2007, the first time that will have happened since the data began being collected in 1975. "It won't be a big decline, maybe 1 percent. And the declines will be far more centered in areas that have had the most investor activity," he said. "Real home-price gains, adjusted for inflation, will be negative this year, next year and possibly the year after that." The biggest problem the housing market faces is "a seriously large inventory situation," added David Seiders, chief economist for the National Association of Home Builders (NAHB). Seiders said, though, that he believes home sales did hit bottom in the fourth quarter and that housing will make a "gradual recovery" over the next two years. "There is still a little room for sales and starts to weaken," commented Frank Nothaft, chief economist for Freddie Mac. "We should hit the trough in the first half of the year. But we're a few years away from the robust levels of activity we saw in 2005."

ON THE OTHER HAND: Has the housing market landed softly? No, responds Forbes money manager Kenneth L. Fisher in Realtor magazine. He discounts the notion of a soft landing, saying that housing isn't going to land at all - because it's already accelerating. "In the last six months housing stocks are up 24 percent, well-ahead of the overall market," Fisher notes. "If housing were destined to fall apart in 2007, these stocks wouldn't be so strong now." In his view, stocks in Pulte Homes, Toll Brothers and Beazer Homes are worth considering. Other analysts are similarly optimistic. Horton, the country's biggest home builder, earns "buy" recommendations from Goldman Sachs, AG Edwards, UBS and Citigroup. Even WCI Communities, whose Florida developments sit at the center of the homebuilding black hole, has seen its shares gain almost 50 percent since last summer, thanks in part to buying by mogul Carl C. Icahn.

The Market

BUST? WHAT BUST: So this is the much-feared "housing bust"? asks BusinessWeekOnline, which is quoted directly. Bust Lite is more like it. Existing-home prices are as high as they were a year ago, while sales have receded only to 2003 levels. The only extreme decline is in construction: Builders are trying to get rid of the houses they've already built before they put up more. The overhang of unsold homes could be back to normal by around midyear. The credit goes, at least in part, to low interest rates. Fixed-rate 30-year mortgages averaged a modest 6.2 percent in the last quarter of 2006 - well below a decade ago. That, combined with income growth, means houses in most areas remain affordable even though prices rose more than 50 percent nationally in the past five years. The affordability index of the National Association of Realtors is still over 100, meaning a family making the median income can afford to buy a median-priced house. The market began gaining momentum in 2001 when the Federal Reserve started lowering rates to end a recession. Corporations cut back on borrowing, but homebuyers exploited the low-cost money. Says Citigroup economist Steven Wieting: "The housing sector acted as a bottom feeder, taking advantage of cheap capital flows." The surprise is that low rates are still keeping a floor under housing. Thirty-year mortgage rates are no higher than in June, 2004, even though the Fed has since pushed up the federal funds rate by 4.25 percentage points.

ADVOCACY GROUP FORESEES STRONGER MARKET: Existing home sales are expected to increase steadily into 2008, according to the latest forecast by the National Association of Realtors (NAR). "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008," says David Lereah, NAR's chief economist, who invariably manages to find silver linings. Existing-home sales, which reached the third-highest total on record of 6.48 million in 2006, are forecast at 6.44 million in 2007 and 6.64 million in 2008. But new construction will take longer to recover, according to Lereah, who projects a decline from 1.06 million new homes in 2006 to 961,000 this year before rising to 971,000 in 2008. Other highlights: Housing starts will fall from 1.8 million last year to 1.56 million this year; the 30-year fixed rate mortgage will rise to 6.7 percent by the second half of the year; when existing-home supplies become "more balanced between buyers and sellers this spring, we'll see some modest price gains;" the national median existing-home price should grow 1.9 percent to $226,200 in 2007, after rising only 1.1 percent in 2006; and stronger gains are forecast for 2008, with existing-home prices rising 3.2 percent and new-home prices increasing 3.4 percent. Existing-home sales in most states declined from year-ago levels in the fourth quarter, marking the likely bottom for the current housing cycle, the NAR said, noting that prices dipped slightly overall, as sellers were more willing to negotiate. (See item below for additional details.) "This information confirms 2006 was the year of contraction," Lereah maintains. "Hopefully the fourth quarter was the bottom of this current business cycle." He says home sales are leveling at historically high levels, and examination of data within the fourth quarter shows home prices began to stabilize near the end of the year. "When we get the figures for this spring, I expect to see a discernible improvement in both sales and prices," according to him.

STATS DOCUMENT FALLS IN 4TH QUARTER PRICES, SALES: Total state existing-home sales, including single-family homes and apartments, were at a seasonally adjusted annual rate of 6.24 million units in the fourth quarter, down 10.1 percent from a 6.94 million-unit level in the fourth quarter of 2005, according to the National Association of Realtors. Even with the general decline, six states showed increases in the sales pace from a year ago and one was unchanged. The national median price for existing single-family homes was $219,300 in the fourth quarter, down 2.7 percent from a year earlier, when the median price was $225,300. For all of 2006, the median price rose 1.4 percent to $222,000. Among the 149 metropolitan statistical areas examined for the fourth-quarter survey, 71 showed price gains from a year earlier, including 14 metros with double-digit annual increases; 73 areas had price declines and five were unchanged. The largest single-family home price gain was in the Atlantic City, N.J., area, where the median price of $339,800 was 25.9 percent higher than a year ago. Next were the Salt Lake City area, where prices rose 22.7 percent to $223,600, and The Trenton-Ewing area of New Jersey, with an 18.9 percent increase to $289,000. Metro area condominium and cooperative prices — covering changes in 58 markets — show the national median existing apartment price was $220,900 in the fourth quarter, down 2.1 percent from the same period in 2005. Thirty-one metros had annual increases in the median condo price, including seven areas with double-digit gains; 27 metros had price declines. The strongest condo and co-op price gains were in the Austin-Round Rock area of Texas, where the fourth quarter price of $160,000 rose 16.5 percent from a year ago, followed by the Newark-Union area of New Jersey and Pennsylvania, where the median apartment price of $352,600 rose 16.4 percent from the fourth quarter of 2005, and Springfield, Mass., at $160,400, an increase of 14.6 percent. Metro area median existing condo prices in the fourth quarter ranged from $102,600 in Wichita, Kan., to $580,300 in the San Francisco-Oakland-Fremont area. The second most expensive reported condo market was Los Angeles-Long Beach-Santa Ana, at $402,000, followed by the San Diego-Carlsbad-San Marcos area of California at $358,200.

The Mortgage Biz

RATES DRIFT HIGHER: The 30-year fixed-rate mortgage (FRM) averaged 6.30 percent for the week ended Feb. 15, up from last week's 6.28 percent, reports Freddie Mac. Last year at this time, the 30-year FRM was 6.28 percent. The 15-year FRM averaged 6.03 percent compared with 6.02 percent last week and 5.91 percent a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.01 percent, up from last week, when it was 5.99 percent. A year ago, the 5-year ARM averaged 5.95 percent. One-year Treasury-indexed ARMs were 5.52 percent this week; it was 5.49 percent last week and 5.36 percent a year earlier.

LOAN LOSSES HURT A BIG BANK: HSBC says losses from home loans to high-risk borrowers at the American consumer finance unit increased more than expected last year, according to the New York Times. HSBC, which derives about a third of its profit from North America, said that higher-than-expected default rates by borrowers with poor credit records meant that the bank would need to set aside an additional $1.8 billion to cover losses on loans that soured in 2006. That is about 20 percent more than previously forecast by industry analysts.

REFINANCING CAN BE A TOUGH OPTION: With rates on many homeowners' adjustable-rate mortgages rising, some who would like to refinance into a new loan are finding they can't, reports the Wall Street Journal. In some cases, that is because their loan carries a prepayment penalty, which would force them to come up with thousands of dollars if they refinance in the first few years. Such penalties are common with so-called option adjustable-rate mortgages, which typically carry a low teaser rate that rises sharply after an introductory period. Other borrowers are getting caught short by a changing housing market - one in which home prices have flattened and lenders are beginning to tighten their standards after a long period of making mortgages easier and easier to get. The challenges are greatest for homeowners whose credit has declined since they took out their last loan and for those who have little if any equity. Some of these borrowers are still able to refinance but are finding it more costly than they expected. These new challenges come at a time when many borrowers who took out adjustable-rate mortgages are facing higher payments. There are about $1.1 trillion-$1.5 trillion in ARMs that will face rate increases this year, according to the Mortgage Bankers Association. The MBA expects borrowers to refinance as much as $700 billion of those mortgages. "The best deals in going from an ARM to a fixed-rate are passing," says Doug Duncan, chief economist at the Mortgage Bankers Association. "If anything, rates are likely to move up rather than down." In a survey released by the Federal Reserve Board, roughly 15 percent of domestic banks reported that they had tightened credit standards on residential mortgage loans in the past three months, the highest share since the early 1990s.

HOME EQUITY FINANCING SLOWS DOWN: The dollar amount of home equity loans and lines increased at a 14.6 percent annual rate over the first three quarters of 2006, according to the American Bankers Association, down from 17.4 percent in 2005 and a 31.2 percent increase in 2004. As a result, it is not surprising that 25 percent of homeowners say they have both a first mortgage and a home equity loan or line in a recent Experian/Gallup Personal Credit Index (PCI) poll. Of the three in four Americans saying they own their homes in the poll, only about two in three (63 percent) report having a first mortgage. About one in five (21 percent) homeowners report having a fixed- or variable-rate home equity loan that they are currently paying off.

REVERSE MORTGAGES ARE GAINING IN POPULARITY: The number of federally insured reverse mortgages made in the United States last year jumped 77 percent, and legislators and lenders are bracing for another huge increase in 2007. The Federal Housing Administration insured 76,351 Home Equity Conversion Mortgages (HECMs) in 2006 compared with 43,131 for 2005. The HECM is the most popular reverse-mortgage program and accounts for nearly 85 percent of the reverse market. A reverse mortgage is a loan against a home that is not payable until the homeowner dies, sells the home or permanently moves out of the home. Reverse mortgages allow homeowners age 62 and older to turn the equity in their home into cash without having to move or make a monthly mortgage payment. There is no minimum credit or income requirement to qualify for a reverse mortgage.

BUYERS ARE BACK: For the week ended Feb, mortgage loan application volume grew by 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the increase was 4.5 percent and, compared with the same week one year earlier, 10.9 percent. Refinancings went up 4.5 percent from the previous week, but purchase applications slipped 1 percent on a seasonally adjusted basis. The refinance share of mortgage activity remained unchanged at 46.1 percent of total applications, and the adjustable-rate mortgage (ARM) share dipped to 21.2 from 22.3 percent.

Boldface

SUPERMODEL PROFITS FROM APARTMENT SALE: When she pleaded guilty last month to assaulting her maid with a cell phone, Naomi Campbell, the supermodel with a temper, issued a brief statement to the court beginning with the words, "I had an apartment at 500 Park Avenue," notes the New York Times. Now public records show that Ms. Campbell had sold her expansive loftlike apartment on Park just four days before her court hearing on Jan. 16. The apartment, where the assault took place, is on the 12th floor of the modern aluminum and glass building at 59th Street. It has 3,100 square feet of space, with 18-foot ceilings, a four-person marble whirlpool and a separate staff entrance. The apartment went on sale last April at $5.5 million. But in September, Ms. Campbell dropped the asking price to $4.95 million, and in October, to $4.75 million. According to city records, the final sale price was $4.5 million. The buyer is Walter Rogers, an American businessman based in London who had previously lived in the building. Still, Ms. Campbell appeared to come out ahead on the real estate deal: She bought the apartment for $3.9 million in November 2004.

QUARTERBACK PUTS HIS CONDO ON THE MARKET: It didn't take long for New England Patriots quarterback Tom Brady to run a reverse on his recent apartment purchase, the New York Post discloses. He has put his sky-high Time Warner condo back on the market, this time for $16.5 million. Measuring approximately 3,000 square feet, the three-bedroom, 3-and-a-half-bath apartment, above the 70th floor in the complex's North Tower, features 12-foot ceilings and direct Central Park views from every room. The two-time Super Bowl MVP bought the pad for $14.5 million last September to be closer to his ex, whose TV series "Six Degrees" is now on hiatus.

This and That

HOMEOWNERS REMAIN OPTIMISTIC: Most acknowledge that a collapse in housing prices is possible, even likely, in neighborhoods - just not in their own - according to the Experian-Gallup Personal Credit Index, reports Realtor magazine. More than 47 percent of those surveyed say that housing prices in their area will increase in the next year. Eighteen percent of respondents say housing prices in their area will decrease, while 33 percent say they will remain the same, according to the survey, which was conducted in November and December of 2006. But respondents disclose less optimism over the longer term: Approximately 16 percent say a collapse of housing prices is very likely and 31 percent say it is somewhat likely sometime within the next three years. Expectations for a decrease in average housing prices are greatest in the West (23 percent) and the East (22 percent), areas experiencing the sharpest run-up in prices during recent years. Those expectations are less pronounced, however, in the Midwest (16 percent) and the South (11 percent), according to the survey.

ZILLOW DATA ARE QUESTIONED: In the year since its launch, Zillow Inc. has made millions of Americans familiar with computer-generated estimates of home values. But just how accurate is it? A Wall Street Journal analysis of 1,000 recent home sales shows that Zillow's "Zestimates" often are very good, frequently within a few percentage points of the actual price paid. But when Zillow is bad, it can be terrible - off the mark by more than 25 percent on one in 10 homes. In one case it was off by $2 million. The Journal looked at transaction prices recorded for 1,000 recent home sales in seven states, using data from First American Real Estate Solutions, a data provider in Santa Ana, Calif., and compared those prices with Zillow estimates, which didn't yet reflect the sales. The median difference between the Zillow estimate and the actual price was 7.8 percent. (That was close to the 7.2 percent median "margin of error" reported by Zillow itself on all transactions involving homes whose value it has estimated.) The estimates were about equally split between ones that were too high and those below the mark. Zillow came within 5 percent of the price in a third of the transactions studied by The Journal. It was more than 25 percent off target on 11 percent of them. In 34 of the 1,000 transactions, Zillow was off by more than 50 percent. New York City is a difficult area for Zillow and other estimate providers because of the large number of cooperative buildings. Tax assessments are made on the co-op buildings rather than individual units, removing one indicator of value. And there is less public information on such things as square footage in individual homes, Zillow says, though the company is finding alternative sources for such data.

LUXURY BUILDER POSTS BIG DIP IN REVENUES: Toll Brothers says its initial results for the quarter ended Jan. 31 included home building revenues at $1.09 billion, a decline of 19 percent compared with the first-quarter record of $1.34 billion one year earlier. Backlog was approximately $4.15 billion, a decline of 30 percent from the same time in 2006. Its first-quarter, net signed contracts were approximately $749 million, a decline of 34 percent and the company signed 1,463 gross contracts (before cancellations), 14 percent below the year earlier. Said Robert I. Toll, chairman and chief executive officer: "A few markets, such as Hoboken, Jersey City, Manhattan and Brooklyn, are quite strong."

ANOTHER BUILDER REPORTS LOWER INCOME: For the full year in 2006, KB Home reported a net income of $482.4 million, down 41 percent from 2005. CEO Jeffrey T. Mezger averred that last year was "clearly a turning point" and added: "During the second half of the year, an oversupply of unsold new and resale homes reduced affordability, and greater caution among potential home buyers heightened competition among home builders and sellers of existing homes, prompting the aggressive use of price concessions and sales incentives." Backlog totaled 17,384 units as of Nov. 30, 34 percent lower than the $6.76 billion backlog value a year earlier. Net orders decreased 38 percent in the fourth quarter to 6,059 compared with 9,747 in fourth-quarter 2005, "primarily due to higher contract cancellations by buyers," the company reported. The cancellation rate in the fourth quarter was 48 percent, compared with 31 percent in fourth-quarter 2005 but down from 53 percent in third-quarter 2006. A JP Morgan analyst, Michael Rehaut, wrote in a note reported by Reuters in the New York Times that "we remain encouraged" that KB's orders and cancellation rates, like those of other builders, "both showed modest sequential improvement."

Out and About
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The Right Address

There are two words that resonate virtually around the world when it comes to Manhattan real estate: Park Avenue. Such is its prestige that many apartments there naturally command a premium when they are on the market. Stately, elegant and encrusted with pre-war details, the majority of buildings on that stretch of the Upper East Side are much desired. Especially lustrous are those designed by Rosario Candela, whose name is inevitably trumpeted when apartments in his buildings are for sale.

As Michael Gross notes in his highly regarded book about a single Park Avenue building, 740 Park Avenue, few and far between are luminaries in the world of finance who haven't rested their heads on pillows in Park Avenue buildings. Among those at 740 alone, Gross relates, have been the future Jacqueline Kennedy Onassis, Saul Steinberg, Ronald Perelman and Henry Kravis along with the heirs to the fortunes of Standard Oil, Gulf Oil, Havemeyer Sugar, Seagram, Gimbel, Pullman and TV Guide, among numerous others.

That is not to say that other Upper East Side thoroughfares and other neighborhoods don't also warrant the caché of the "the right address," including Fifth Avenue, Sutton Place and Central Park West. But the sellers of Park Avenue apartments and others nearby don't shrink from that wide boulevard's repute and do not, accordingly, shrink their asking prices. The right address does, indeed, add value, whether on Park Avenue or other streets with high status. Witness this small sample of dwellings being marketed by various brokers:

• Three condos in a gut renovated apartment house offered between approximately $12 million and $16 million. The 12-story building has been divided into just three stylish units, each with a private elevator, towering ceilings, expansive windows, glorious kitchens, fireplaces and four levels. Consider the 12-room penthouse, which posts four bedrooms, six baths, two outdoor spaces, lots of staircases and 5,577 square feet. The living room represents high drama, the kitchen is Poliform, and the oversized baths are stunning. Of course, for $16 million, with $9,244 in common charges, all that would be appropriate. Indeed, the penthouse is like a townhome in the sky, and the Park Avenue premium seems well justified.
• On a corner of Fifth Avenue, a ground-floor doctor's office that once was a 10-room apartment. Imagination is required here, since the maisonette needs a total renovation. On the plus side are the big windows lining the walls against the side street and also facing Central Park. Some buyers may see the ground floor location as unacceptable so close to traffic as they are, but this high-ceilinged space in a 1920 building offers considerable potential – at a price of $14 million, with $7,739 in monthly maintenance.
• Raw space a block away in a formerly 23-unit building designed by C.P.H. Gilbert built in 1904 as a 50-foot-wide mansion with a memorable beaux-arts façade. With a beguiling lobby that features a sweeping marble staircase, the building now houses merely eight units; a small one sold last summer for $7 million. The penthouse is listed at $20 million, and it includes 7,570 square feet on two and a half floors, of which 3,600 square feet are three terraces with wonderful city and Central Park views.

• In Clinton, a handsome two-bedroom, two-and-a-half bath post-war condo with awesome views from the 30th floor in a well-run building. The approximately 1,200-sf apartment has an expensively modernized open kitchen, balcony, baths tiled with marble, customized closets and a reasonable monthly common charge of $1,015 plus a special assessments totaling $280. The building itself offers a roof deck, exercise room, meeting room, recreation room, pool and 24-hour service. It is priced somewhat optimistically at $1.475 million.
• *A one-bedroom apartment in a 279-unit Upper West Side building that is undergoing conversion from rental. The post-war condominium, which remains about two-thirds filled with renters, has a distinctly institutional ambience that doesn't prevent tenants from attempting to flip their units for huge gains. On a high floor with relatively open city views, the drab 740-sf corner apartment has a hopelessly dated kitchen, slightly improved bath, oppressively low ceilings and the promise of new bamboo flooring. Asking $650,000 with $493 in common charges, the owner is living a fantasy.
• *In Chelsea, an exquisitely designed two-year-old loft condo with elements that shouldn't be touched. The apartment has only one bedroom, plus a den easily used as a bedroom, two baths, a breathtaking open kitchen with island, creatively fashioned units that emphasize flexible use of space (for example, a flat-screen TV that pivots for use in either the living room or bedroom built into a 16-foot-long ebonized white oak wall), huge and elegant master bath, Bang and Olufson sound system, and other pluses that are literally too numerous to list here. The approximately 2,500-sf unit is offered at $3.1 million, about $200,000 to much, with a $1,329 monthly common charge.
• A pleasant pre-war co-op on the Upper West Side that boasts a very good layout with two bedrooms, one and a half baths and space off the foyer that easily accommodates a dining table or a home office sans view. The windowless kitchen is out of date but big enough, there are numerous closets and built-ins, and the old floors are nicely refinished. The price of $925,000 with monthly maintenance of $925,000 is on target.
• *In the heart of Greenwich Village, a beautifully renovated four-story, single-family Greek revival 1844 townhouse with elevator. The owners preserved seemingly all of the period details, including five fireplaces (now gas) while updating the entire space sensibly and sensitively. Although the exterior appears to be slightly neglected, there is much to commend about this property: three bedrooms plus office with separate entrance; four and a half baths; pumpkin pine wide-plank floors; five-zone central heating and cooling; video security system; and front and rear gardens. Price: $9.995 million.
• A depressing one-bedroom, one-and-a-half-bath duplex that boasts considerable sizzle but little in the way of steak on the ground floor and basement of a Chelsea condominium with eight of 10 new units now sold. The apartment is burdened by having windows at only one end, and the terrace there is enveloped by surrounding buildings. The lower floor has daylight only via skylights. Despite the flash of stainless-steel kitchen appliances and baths with marble mosaic floors, this 1,366-sf condo is overpriced at $1.4 million, with $728 in common charges.
• *On Carnegie Hill, a one-bedroom pre-war apartment touted as a "condo cutie" because of its size and somewhat eccentric style – for example, painted floors with area rugs that have zebra stripes. This Lilliputian unit has a bedroom measuring 11' x 10' and a living room that is 16'7" x 12'4". The dated kitchen is just 5'6" x 9". You do the math. Still, the place, which has high ceilings, sunny exposures and very low common charges ($283), is undeniably cute. And expensive: $685,000.
• An 1895 four-story brownstone that has been on and off the market on the Upper West Side for two years. Among its many praiseworthy features: the original stoop, pocket doors, original window shutters, working fireplaces, deep south-facing garden surrounded by others, fully renovated basement, and an almost overwhelming amount of well preserved original detail. The kitchen is large, modern and, unfortunately (but not surprisingly) tucked a floor below the dining room, which occupies the parlor floor with its double living room. This 3,800-sf home, plus that renovated basement, is listed at a not unreasonable $4.695 million.
• A one-bedroom plus den penthouse that is priced high presumably because of the wood-burning fireplace and wraparound terrace, which has an open eastern exposure. Ironically, the pre-war co-op itself has such small proportioned rooms that it would be best suited for a recluse rather than social butterfly. But the condition is good, the unglamorous kitchen is minuscule, having been stolen from part of the living room, and the floors are carpeted. The price? Well, it's $795,000 with monthly maintenance of $1,720.
• In Clinton, a decent, if plain, post-war condo with two bedrooms, two baths, low ceilings and dated open kitchen featuring white laminate. Containing 992 square feet, the apartment is modest in the extreme, but its price of $949,000 with $468 in monthly common charges is about right.

Empty Nests
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Choice Apartments in Manhattan Sit Unoccupied
By Troy McMullen
The Wall Street Journal Online

Five-Fifteen Park Avenue has everything one could want in a Manhattan home: sprawling floor-through apartments, unobstructed views, and concierge and maid services. But on most days, the limestone and beige-brick tower at the elegant Upper East Side address lacks one thing: many of its residents.

More than half of the building's 35 units belong to absentee owners, whose main residences stretch from Tokyo to Wichita, Kan., city deeds and mortgage documents show. Some spend little more than a few weeks a year at their apartments, say other owners and building staff.

It can feel a little empty," says Las Vegas developer and billionaire Phillip Ruffin, who stays "a day or two" a month at his $2.8 million home at 515 Park.

Wealthy jet-setters have long maintained cozy Manhattan pieds-à-terre, but the city's choicest properties are increasingly being scooped up by out-of-towners. More than 10 percent of Manhattan apartment sales are second-home purchases, up from about 5 percent eight years ago, estimates Jonathan Miller of Miller Samuel, one of Manhattan's largest real-estate appraisal firms.

Donald Trump says that more than half the condo owners at his buildings on Central Park West and Park Avenue are part-timers. These people "may not even know the address" of their New York holdings, says Mr. Trump, but "they'd still rather own a place in New York than schlep to a hotel."

The lavish part-time spreads underscore a shift among the wealthy, who increasingly split their time among three or four homes. The investment potential of the city's blue-chip real estate also appeals to rich people looking to diversify their portfolios.

Developers are targeting these absentee owners by packing buildings with amenities such as housekeeping, limousine services and even dog walkers, making it simple to ease in and out of town. Maids at Ian Schrager's 50 Gramercy Park North even will stock the fridge with groceries before the owners arrive.

But the occasional occupants are troubling to some full-time residents, who say their buildings are left depressingly hollow. And the popularity of the costly apartments helps boost Manhattan prices for everyone, draining away developers' interest in erecting middle-class buildings on the city's few available parcels and making one of the world's most expensive real-estate markets even more forbidding to average buyers.

To have so many apartments sitting empty when there is an affordable-housing crisis in New York City raises a "political question," says Mitchell Duneier, a professor of urban sociology at Princeton University.

New York, of course, has long attracted out-of-town buyers and it's certainly not the only city luring highfliers. Paris, London, Palm Beach and Aspen also attract wealthy part-time owners. But what's new is the enormous amount of money individuals are forking over for part-time Manhattan residences and their ballooning size and scope.

At the One Beacon Court tower in Midtown, for instance, a 12-room apartment on the market with five bedrooms and 5½ baths is described in its marketing materials as "the perfect pied-à-terre." Price: $25 million.

Though he spends less than two weeks a year in Manhattan, Italian financier and Formula One team manger Flavio Briatore owns a 3,000-square-foot apartment at One Beacon Court, where his neighbors include part-time resident and former General Electric chief Jack Welch. Yet because he wants more space, Mr. Briatore says he recently agreed to buy a $25 million home at the Plaza hotel, part of which is being converted to apartments. The new five-bedroom flat measures 5,000 square feet and overlooks Central Park and Fifth Avenue.

"I travel to 16 countries a year for business," Mr. Briatore says. "I'm sick of hotels, so when I'm in New York I want to sleep in my own bed."

A number of the 180-plus residences at the Time Warner Center condominium, twin 80-story towers overlooking Central Park, belong to absentee owners, according to city deed transfers and other public records. Among the out-of-towners: Thomas Siebel, founder of software maker Siebel Systems, who paid $28 million for his full-floor home, has rarely been there since buying it early in 2006, say real-estate professionals and others with knowledge of the apartment. (The condo fees and taxes on the 79th-floor unit total almost $20,000 a month.) Mr. Siebel, who also owns properties in Montana, Florida and Northern California, couldn't be reached for comment.

Out-of-town buyers like Messrs. Siebel and Briatore have traditionally tended to stick close to Central Park. The string of hotel-residences along Central Park South is known among some brokers as "absentee row" because of the area's strong appeal to foreign buyers. But downtown is gaining currency. A three-tower, glass-and-steel complex along the Hudson River in Greenwich Village, designed by architect Richard Meier, is filled with out-of-town owners from Los Angeles to London, public records show. Among them: Sun Microsystems co-founder Bill Joy, who paid $17 million for a duplex in 2002 and uses it infrequently, say people at the building. (Reached by phone, Mr. Joy, whose main home is in Colorado, declined to comment.)

In general, these part-time residents aren't speculators angling to make a quick profit by flipping their units. Instead, they view Manhattan property as an excellent asset, especially since it has largely escaped the real-estate downturn that has hit much of the country.

Manhattan real-estate prices rose 6 percent on average in 2006 over the previous year, while the median price of a home went up 11 percent, according to a report by the real estate firm Prudential Douglas Elliman. The average sale price for Manhattan apartments in 2006's fourth quarter was more than $1.2 million, up 3.2 percent in a year. And in the 10 years from 1996 to 2005,
Manhattan real-estate prices rose 205 percent, says Mr. Miller, the appraiser.

Michael Linn, founder and chief executive of Linn Oil in Houston, and his wife, Cate, recently spent about $2.3 million for a Manhattan residence. The couple grew tired of booking hotel suites on their occasional trips to the city for shopping and business, so they bought the two-bedroom apartment with a concierge and Empire State Building views. Mr. Linn, 55 years old, splits his time, via the company jet, between Houston and the couple's main residence outside Pittsburgh. He says he bought the Manhattan home for convenience, but "putting money in New York real estate was an important investment for us."

Another building popular with out-of-town buyers is 838 Fifth Ave., an 11-story limestone building facing Central Park. Bruce Toll says he spends less than a week there each month while splitting his time among homes in Nantucket, Mass., Palm Beach and a property near the Horsham, Pa., headquarters of his company, home builder Toll Bros.

The rise in absentee owners worries some Manhattan residents and urban-affairs experts, who say too many out-of-towners can sap the vitality out of buildings. "It deadens the whole neighborhood," says society decorator Keith Irvine, a long-time Upper East Side resident. "You sometimes get a sense that whole streets are deserted."

Antonio "L.A." Reid, chairman of Universal Music Group's Island Def Jam label, calls 515 Park Ave. a "wonderful place" for him and his family. Mr. Reid owns three homes, but says he's a full-time resident at the building and his three children are enrolled in nearby schools. Mr. Reid says the building can "go dead" some weeks when many residents are gone, leaving hallways empty and his kids without playmates. "Let's just say that my kids aren't going next door to borrow a cup of sugar," he jokes.

Condominiums, which make up about 25 percent of Manhattan's apartments that are owned rather than rented, are the purchase of choice for out-of-towners. Prickly boards at cooperative buildings - the most prevalent form of apartment ownership in Manhattan - rarely allow absentee owners, out of concern they may let noisy relatives or friends use their units and that a leaky pipe in an empty apartment could do major damage. And unlike condo buildings, many co-ops forbid or strictly limit owners in renting out their homes.

Mr. Duneier of Princeton and others believe Manhattan's building boom over the past few years is contributing to the rise in wealthy part-time residents. Developers completed more than 4,506 condo units in Manhattan between 2001 and 2003, compared with 2,167 in the prior three-year period, according to the Real Estate Board of New York. Because the bulk of these units target the upper end, which often attracts out-of-town investors, many buyers in the middle are being priced out.

But not everyone is bothered by the perpetual out-of-towners. Vicki Been, director of New York University's Furman Center for Real Estate and Urban Policy, says parts of Manhattan are beginning to resemble other affluent second-home areas. "For the second- or third-home buyer, Manhattan is just like any other beachfront or winter retreat location," she says. "Their neighbors have almost come to expect not to see them year-around."

Of course, even some longtime New Yorkers who consider Manhattan their home are, in effect, part-time residents. "They own country houses and summer estates and travel to Europe in the summer," says Sharon Baum, a broker. "Every weekend they're out of town."

Some see an upside to the empty apartments. Michael Holtz, who owns an 1,800-square-foot unit at the Richard Meier towers, says the lack of neighbors limits competition for the buildings' amenities. "I go to the pool and the gym a lot and there's almost no one ever there," says Mr. Holtz, who owns a travel agency. "It's great for me, but the pool attendant doesn't have much to do all day."

Yet while the dearth of full-time residents can mean less work for building employees, it can have a downside for them as well. A doorman at one of the Meier-designed towers blames these virtual owners for a shortfall in holiday tipping. "This Christmas was probably the worst for me in years," he says. "I guess when nobody's here most of the time a lot of people just forget to tip."

New Listings
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Some of Manhattan's Latest Listings

Below are just a few of the newest listings of condominiums and cooperatives put on the market by various brokers.

45 W 54th St - 9A, NEW YORK, NY, 10019
$649000
Bedroom(s): 1
Bath(s): 1
Square Feet: 900
In the listing agent's inimitable words: "A true work of Art....across the street from MOMA ! Graciously renovated, spacious one bedroom home, in a full service building with four abundant closets. Huge living room with beamed ceiling detail, hardwood floors throughout, and separate dining alcove"
Listing #: 902235J

305 E 88th St - 2A, NEW YORK, NY, 10128
$715000
Bedroom(s): 2
Bath(s): 1
In the listing agent's inimitable words: "Hurry, just reduced! Why settle for a junior 4 when you can have this true 2 bedroom! Prewar circa 1927 building with an excellent layout, 9" 5' ceilings, crown moldings, and beautiful herringbone hardwood floors. "
Listing #: 807320

595 West End Ave - 12D, New York, NY, 10024
$845000
Bedroom(s): 1
Bath(s): 1
Square Feet: 702
In the listing agent's inimitable words: "595 West End Avenue at 89th Street snuggled peacefully next to Riverside Park- This pre-war gem offers world chic within the heart and soul of the upper West side. An address with style, a design with vision and a community with heart. "
Listing #: 1171296J

400 E 85th St - 20E, NEW YORK, NY, 10028
$875000
Bedroom(s): 2
Bath(s): 2
Square Feet: 1200
In the listing agent's inimitable words: "Dramatic open city & skyline views to the North & West from this family sized two bedroom two bath find. Beautifully renovated windowed kitchen with granite counters. Fantastic layout offers a grand living room with custom built-ins, crown moldings, a was"
Listing #: 806942

418 Central Park West - 64, NEW YORK, NY, 10025
$1100000
Bedroom(s): 3
Bath(s): 2
In the listing agent's inimitable words: "Here is a great opportunity to live in a turn of the Century, Prewar 24 Hour Doorman Condo Building Located on Central Park West. An amazing converted three bedrooms with two full bathrooms, a large separate windowed kitchen with dishwasher, high ceilings"
Listing #: 808410

575 Park Ave - 404, NEW YORK, NY, 10021
$1150000
Bedroom(s): 2
Bath(s): 2
In the listing agent's inimitable words: "Maintenance includes maid service, Monday through Friday, utilities, window washing. Apartment has storage space. Building has gym."
Listing #: 806993

263 West End Ave - 4G, NEW YORK, NY, 10023
$1295000
Bedroom(s): 2
Bath(s): 2
Square Feet: 1350
In the listing agent's inimitable words: "Be the first one to see this elegant home on Prime West End Avenue. Sunny South exposure two bedroom, two bath + windowed Den in move-in condition. Square Foyer leads to 25 Living Room with a top-of-the-line open Kitchen perfect for entertaining"
Listing #: 807656

207 E 57th St - 8B, NEW YORK, NY, 10022
$1799000
Bedroom(s): 2
Bath(s): 2.5
Square Feet: 1423
In the listing agent's inimitable words: "This contemporary beauty features floor-to-ceiling windows, with generous spaces, and a huge sunny south-facing living room/dining room! <p> An artfully designed gourmet corner kitchen with island faces into the dining area. The bright spacious north-face"
Listing #: 807538

1 W 67th St - 712, NEW YORK, NY, 10023
$1995000
Bedroom(s): 2
Bath(s): 1
In the listing agent's inimitable words: "Be one of the prvledged few to call the Hotel des Artistes your home. One-of-a-kind seductive parisian left bank home featured on the front cover of INTERIOR DESIGN. Features a double height 22' ceiling and 14' windows"
Listing #: 808057

175 E 62nd St - 12A, NEW YORK, NY, 10021
$1995000
Bedroom(s): 2
Bath(s): 3.5
Square Feet: 1900
In the listing agent's inimitable words: "Elegant classic six room in long established Coop. Large Foyer with powder room opens into Living Room and Formal Dining Room. Seperate wing leads to two Bedroom suites. Windowed Kitchen with Breakfast Room , Washer & Dryer and oversized Maids Room. "
Listing #: 808404

150 Columbus Ave - 22F, NEW YORK, NY, 10023
$2150000
Bedroom(s): 2
Bath(s): 2.5
Square Feet: 1609
In the listing agent's inimitable words: "First showing will be at the open house on Sun 1/7 from 1-230. This beautiful and spacious 2Br/2.5 bath condo is in excellent condition. The apartment also features a large entry foyer, oversized windows with expansive city views, herringbone floors, marb"
Listing #: 807277

899 Park Ave - NEW YORK, NY, 10021
$2350000
Bedroom(s): 0
Bath(s): 1
Square Feet: 1450
In the listing agent's inimitable words: "Beautiful wood paneled waiting room and office. Reception room. Three additional examining rooms/offices. Separate filing or storage room plus two baths."
Listing #: 806919

595 West End Ave - 2A, New York, NY, 10024
$2595000
Bedroom(s): 3
Bath(s): 2.5
Square Feet: 2010
In the listing agent's inimitable words: "At 89th Street snuggled peacefully next to Riverside Park- This pre-war gem offers world chic within the heart and soul of the upper West side. An address with style, a design with vision and a community with heart. Designed by acclaimed designer Sean Joh"
Listing #: 1171291J

75 East End Ave - 2E, NEW YORK, NY, 10028
$2750000
Bedroom(s): 4
Bath(s): 4
In the listing agent's inimitable words: "New on Market! Unique sprawling Family home in Full Service building on East End Ave. Ideal for a growing family. The apartment boasts 4 large bedrooms and 4 baths plus a double size family room--could be 5 or 6 bedrooms--tons of closets and storage"
Listing #: 807563

186 Riverside Dr - 14E, NEW YORK, NY, 10024
$2995000
Bedroom(s): 2
Bath(s): 3
Square Feet: 1750
In the listing agent's inimitable words: "This superb prewar (1929) home is in a much sought after Riverside Drive building. In addition to a gracious layout of rooms this home features beautiful panoramic views of Riverside Park and the Hudson River. The entry gallery leads to the large West fac"
Listing #: 807139

17 E 16th St - 7FL, New York, NY, 10003
$5950000
Bedroom(s): 4
Bath(s): 3.5
Square Feet: 4000
In the listing agent's inimitable words: "Full floor in prime 50 wide loft building on the best UNION SQUARE block. Impeccably renovated with every amenity. Beautifully detailed throughout, it has an expansive open living-dining area with bright south facing floor-to-ceiling window wall, custom"
Listing #: 806909

502 Park Ave - 3A, NEW YORK, NY, 10022
$11100000
Bedroom(s): 4
Bath(s): 5.5
Square Feet: 5473
In the listing agent's inimitable words: "This sunny and special 4 bedroom, with 5 and 1/2 baths, is located in a top white glove condominium. With ceilings over 10 feet, this grand corner apartment features picturesque Park Avenue tree-top views and is ideal for casual and formal entertaining. "
Listing #: 807558

To see photos, more information and scores of other listings by brokers throughout New York City and Long Island, please visit our website at http://www.ServiceYouCanTrust.com, then click on the appropriate area. To view details of a particular property listed above you will need to note the address.

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