Items of Interest SHIFT SEEN TO FIXED RATE MORTAGES First mortgage originations shifted dramatically to fixed rate products in the second half of 2006 from the first half of 2006, according to the Mortgage Bankers Association. For first mortgages, fixed-rate loans - including interest only (IO) loans - accounted for 60.5 percent (based on the number of loans) in the second half of 2006 compared with 54 percent in the first half of 2006. FORECLOSURES ARE ON THE RISE, BUT LESS SO IN NEW YORK THOSE PESKY BUILDERS ARE DEPRESSED A surplus of unsold homes on the market - combined with ongoing concerns in the subprime mortgage arena and affordability issues associated with tightened lending standards and higher interest rates - continue to take a significant toll on builder confidence, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI declined four points to 24 this month, its lowest level since January of 1991. "The bottom line is that the single-family housing market is still in a correction process following the historic and unsustainable highs of the 2003-2005 period," Chief Economist David Seiders of the National Association of Home Builders spun the findings. "Builders are actively trimming prices and offering buyer incentives to work down their inventories, but meanwhile there is a large supply of vacant existing homes on the market, and affordability problems persist despite efforts to attract buyers."
Still, the number of new condominium offering plans submitted to the office of the state attorney general took a nosedive in the first two quarters of the year, according to an analysis by the Real Deal monthly magazine. Developers submitted 50 percent fewer condominium offering plans to the attorney general's office. Paperwork seeking approval for 2,305 units was filed in the first quarter as compared with the whopping 4,874 projects in the year-ago quarter, when the development boom reached a peak. In stark contrast to the robust 2006 market, 2007 started sluggishly and continued to lag in April and May, hinting at a further slowdown in new projects for the rest of the year. "The heyday is over," said developer Henry Justin of HJ Development. From January through May, there were only 3,340 projects filed in contrast to 8,528 for the first six months of 2006 and 6,159 for the first half of 2005. The figures are a good indication of what the development pipeline will look like 12 to 24 months out, when those projects first begin sales. Mounting land and construction costs - and a scarcity of prime property - have hampered development in the last 12 months. MORE ON THE MARKET IN THE SECOND QUARTER The number
of Manhattan apartment sales is at record levels, notes the Miller
Samuel appraisal firm in its quarterly report. It continues: "Listing
inventory has fallen sharply from recent highs. Two of three price
indicators tracked in this study set records. Days on market and
listing discount indicators are EVERYBODY INTO THE WATER Manhattan rental building developers are taking on more high-end amenities to entice would-be dwellers, reports the Real Deal magazine. From swimming pools and saunas to playrooms, dog services and state-of-the-art health clubs, rental buildings seemingly have it all. But the perks are not exactly freebies: Tenants are increasingly paying more to live in these buildings. "The rental buildings are almost being taken to the level of condominiums [or] hotels," said Daren Hornig, managing partner of Saxa, a real estate investment and development company that is scouting out Manhattan sites for a rental building. Some developers charge extra fees, others build it into a higher rent, while still others - often those developing buildings in fringe neighborhoods - chalk it up to the cost of doing business. ALTERNATE SIDE OF THE MARKET PRICING Parking spaces are in such demand that there are waiting lists of buyers, says the New York Times. Eight people are hoping for the chance to buy one of five private parking spaces for $225,000 in the basement of 246 West 17th Street, a 34-unit condo development scheduled for completion next January. Parking in new developments is selling for twice what it was five years ago, said Jonathan Miller, an appraiser and president of Miller Samuel. According to Miller Samuel, the average parking space costs $165,019, or $1,100 per square foot, close to the average apartment price of $1,107 per square foot. Those are averages, of course. A $200,000 parking space is about $1,333 per square foot. Although spaces in prime sections of Manhattan are the most expensive, even those in open lots and in garages in Brooklyn, Queens, Riverdale and Harlem are close to $50,000, although at least one new Brooklyn development is asking $125,000. Miller estimated that less than 1 percent of all co-op and condominium buildings in the city have private garages. The city also limits how much parking new buildings below 110th Street can offer, requiring that no more than 20-33 percent of the units have spaces. "It's a fairly rare amenity," Miller said. "And in the world of pet spas and on-site sommeliers, it's actually a pretty functional amenity." HAVE THE TWAIN FINALLY MET Historically, Central Park West - though lined with architecturally significant apartment buildings and boasting wonderful park views - never achieved the level of cachet and wealth of its more exclusive eastern sibling. But now there are signs the twain are meeting, says the Real Deal magazine. In the first quarter of 2007, apartment sales on the East Side averaged $1,128 per square foot, up 7.7 percent over the prior year quarter; the West Side averaged $1,088 per square foot, up 6.6 percent over the prior year quarter, according to data from the Miller Samuel appraisal firm. Sales of condominiums have remained fairly steady in both neighborhoods, clocking in at roughly 700 a year through the past decade, with the Upper West Side seeing marginally more sales than the Upper East. The median sales price of a condominium has typically been a bit higher on the Upper East Side, but both neighborhoods have seen the prices of condos grow by more than 200 percent in the past decade. By contrast, a decade ago the median sales price of a co-op apartment on the Upper West Side was $230,000, actually exceeding - though not by much - that of a co-op on the Upper East Side, according to Miller Samuel's numbers. Now, the median sales price of a co-op on the Upper East Side, at $755,000, is slightly more than for one on the Upper West Side. On the Upper East Side, the rows of opulent mansions and townhouses around Fifth Avenue, once known as the Silk Stocking District, still fetch the highest prices by far in New York City. The differences in townhouse prices on either side of the park are perhaps some of the more striking remaining disparities between the neighborhoods. BUDDY, CAN YOU SPARE A MILLION, OR FIFTY-ONE Deeds filed in public records have disclosed that a six-apartment spread on the seventh-floor of the gold-bedecked Central Park Plaza Hotel were sold and closed, reports the Observer. The single contract, signed in March 2006, rounds out to the gorgeous amount of $51,539,180. This is the first apartment in New York City to close above the $50 million mark. (Other published reports, without the benefit of public records, have said Harry Macklowe will spend $60 million on Plaza apartments and that a London-based oilman will buy a $56 million triplex.) It isn't clear whether this seventh-floor sprawl went to the oilman, Macklowe or someone else: The buyer is listed anonymously as Plaza 7 Apartment LLC. GIBSON IS GOING FROM GREENWICH Mel Gibson has put his sprawling estate on the market - $39.5 million for the 28-room Tudor-style mansion on more than 75 acres, says the New York Post. He bought the property on Old Mill Road in 1994 for a reported $9.25 million. Included in the stone-and-timber main house are 15 bedrooms, 12 full bathrooms, six half-baths, a screening room, formal dining room, a great room with a 40-foot ceiling and a massive fireplace, a gourmet kitchen, and servants' quarters. Neighbor Diana Ross also is selling her Greenwich home a few miles away for the same last asking price of $39.5 million. But the Post says the price may soon be lowered. THERE'S NOTHING SILLY ABOUT THIS SALE John Cleese and his wife Alyce Faye Eichelberger Cleese have purchased a co-op at 196 E. 75th St. for $1.4 million, according to city records, reports the Observer. The couple will have open city views facing east and west, plus a new gym in the building for pumping up his 67-year-old pectorals. According to the Los Angeles Times, they also own a 16-acre equestrian ranch in Santa Barbara, which includes a 16,000-square-foot barn with 25 stalls and a two-bedroom apartment, plus a three-bedroom Mediterranean-style house. It's called Stalloreggi ("the King's Stables"), and it was listed this summer for the serious sum of $28 million. A STAR CLEANS UP ONCE AGAIN Yue-Sai Kan, characterized as the "most famous woman in China" by People magazine, sold her Sutton Place mansion for $22.25 million, according the Real Deal magazine, which cited public records. The five-story Georgian townhouse at 8 Sutton Place is a 41-foot-wide property that comprises two combined townhouses. All 23 rooms in the property have views of the East River, and it boasts two elevators, a garage and a private garden. The identity of the townhouse's buyer remains a mystery. Kan, who was born in China and moved to New York in the early '70s, is best known as the host of popular Chinese television shows such as "One World" and as the creator of Yue-Sai Kan Cosmetics, which was one of the first companies to market beauty products specifically to Asian women. Before Kan sold the cosmetics line to L'Oreal in 2004, it was reportedly generating annual revenues of around $50 million. COULD THE TOUR D'HAMPTONS BE NEXT It looks as though Lance Armstrong will soon be pedaling into Southampton, the New York Post reports. His wealthy fashion-designer gal pal Tory Burch has just rented a spread in the estate area of Captain's Neck Lane for the next four (four!) weeks for around $360,000. The five-bedroom, five-and-a-half-bath waterfront house, which wasn't listed as a rental, includes a pool and tennis court. Sources say it's Tory's estranged husband, venture capitalist Chris Burch, who actually signed the lease. YOU CAN SET SAIL IN THESE CONDOS Four Seasons Hotels & Resorts' new venture offers an on-the-water alternative: sales of units on the first-ever wholly residential cruise ship. For sale now and expected to set sail in 2010, the 112 residences range from $3.8 million for an 800-square-foot one-bedroom to more than $40 million for a 7,800-square-foot triplex penthouse with a 3,700-square-foot outdoor deck, private elevator and skylight-domed club room, observes the Real Deal monthly magazine. The 13-deck, 719-foot ship boasts five-star resort-style amenities, and each unit will have a private terrace, floor-to-ceiling windows in both living rooms and bedrooms, full-size kitchens and a private entrance. Launched with much fanfare in 2002, the World was built to accommodate both apartment owners and cruise passengers. It had condominium residences, which sold at very high prices, but the mix of owners and tourists at sea proved unwieldy. Ultimately, the ship was bought by the residents from the developer, and all the passenger cabins were converted into apartments. Now, a limited number of units are on sale, ranging from a tiny hotel-room-size studio listed at $825,000, with annual fees totaling more than $88,000, to the three-bedroom, 3,242-square-foot penthouse, asking $7.3 million with carrying fees of over half-a-million dollars a year. You, too, can be taken for a ride. TAX TIP 1 To qualify for the Internal Revenue Code 121 exemption on capital gains up to $250,000 ($500,000 if filing jointly and both spouses meet the occupancy test), the sellers must have owned and occupied their primary home at least 24 of the 60 months before its sale, Robert J. Bruss reminds readers of the Washington Post. But IRC 121 can be used only once every 24 months. Even owners who need to sell in less than two years may qualify for special relief if they had to sell because of "unforeseen circumstances," according to a 1997 law. A recent survey of Internal Revenue Service rulings indicates the agency generally has been "very sympathetic" to taxpayers in cases of unexpected distress - such as crime victims - says Gail Levin Richmond, a law professor at Nova Southeastern University Law Center in Davie, Fla., according to the Wall Street Journal. An IRS publication offers a general definition of unforeseen circumstances as "the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home." In the latest issue of a quarterly publication of the American Bar Association tax section, Richmond summarizes 10 so-called private-letter rulings since 2004 in which the IRS agreed that taxpayers had sold in less than two years because of "unforeseen circumstances." In one ruling, a taxpayer had to provide a separate bedroom in order to adopt an orphan child from another country. In another ruling, released recently, marriage was the issue. Taxpayers A and B each had purchased a home. Later, they met, got married and bought a new, larger home for their blended family. They each sold their prior homes. Taxpayer B had owned it less than two years. The IRS said the occurrence of the marriage and the need to "suitably accommodate their blended family" represented "unforeseen circumstances." TAX TIP 2 You are allowed to take a deduction on your personal tax return for mortgage interest you pay on a loan that is secured by either your principal residence or a second home; the max is up to one million dollars in acquisition indebtedness. That means mortgages, lines of credit and home equity loans all qualify as long as they are secured by your home, and you are the primary borrower legally obligated to repay that loan. THE HOUSING MARKET IS AFFECTING RETAILERS Home Depot and Sears Holdings said they expected second-quarter net income to drop far more than they anticipated just two months ago, the New York Times reports. Home Depot said its earnings per share would decline by 15-18 percent for the fiscal year. In May, the company estimated a 9 percent decline, but that was before it announced the sale of its contractor supply company, HD Supply. Sears, which also runs Kmart, has been recording shrinking sales since it united with the struggling discount chain in 2005. The company said it expected net income to be $160 million to $200 million. In the corresponding period last year, net income was $294 million. Home Depot blamed a weakening housing market and the sale of its contractor unit. Sears acknowledged that it needed "to become more relevant" to its customers and to do more to control its costs. Analysts said both companies were the victims of the sluggish housing industry. TO START A SMALL BUSINESS, THINK FLORIDA Four of America's five best markets for small businesses are in Florida, led by No. 1 Orlando, according to a new Bizjournals study. Orlando is the economic hub of central Florida, No. 2 Sarasota-Bradenton overlooks the Gulf of Mexico, No. 3 Miami-Fort Lauderdale is a gateway to the Caribbean, and No. 5 Jacksonville hugs the Atlantic coast 350 miles north of Miami. Each has experienced rapid growth since 2000 in population, employment and the number of small businesses. Bizjournals used a 12-part formula to rate small-business vitality in the nation's 75 largest metropolitan areas. Four metros, including two in Florida, have more than 3,000 small businesses per 100,000 residents. Miami-Fort Lauderdale's ratio of 3,161 is the nation's highest concentration, followed by Bridgeport-Stamford, Conn. (3,094), Sarasota-Bradenton (3,067) and Denver (3,043). The highest-rated market outside of Florida in the overall standings is Las Vegas, which ranks fourth on Bizjournals' list. Las Vegas is the national leader in population growth, adding 335,000 individuals between 2000 and 2005, an increase of 24.3 percent. Sixth through 10th on the list of America's best markets for small businesses are Raleigh, the District of Columbia, Salt Lake City, Oxnard-Thousand Oaks, Calif., and Minneapolis-St. Paul. AND MONEY MAGAZINE WEIGHS IN WITH 100 'BEST' SMALL CITIES KITCHENS ARE QUIETING DOWN The latest trend in kitchens and bathrooms is an emphasis on larger spaces and quiet, tasteful luxury, says the Real Deal magazine. Several interior designers are creating kitchens that conceal major appliances or use appliances with smaller footprints. They are delivering larger spa-style bathrooms to appeal to buyers craving privacy and luxury, but they are also making eco-friendly choices when it comes to materials, using more teak, lava stone and bamboo. "Everything is going from being exposed to being hidden," says Andres Escobar, a New York- and Montreal-based interior designer. "People no longer feel the need to flaunt their appliances [such as] the Sub-Zero, the Viking, the Wolf. Today people are looking for kitchens to be more sleek and concealed. They are looking for a more seamless look." Sleek (and often smaller) appliances with brand names Fisher & Paykel, Liebherr, Gaggenau, Miele, Bosch and others more obscure are increasingly replacing commercial-style appliances made by companies such as Viking and Wolf. "The consumer is very savvy about appliances and the names of appliances. It really has become the new status symbol. Having the right appliances and the right combination of appliances, especially for a developer, is crucial," according to architect and interior designer S. Russell Groves, who recently designed the Lucida, a 110-unit project at 151 East 85th Street on the Upper East Side. Yet, while appliances are getting smaller, kitchens are not. Out are kitchens one can't use: those without counter space. In are enlarged kitchen areas that are extensions of living spaces. READERS OF ECCLESIASTES, TAKE NOTE The vanity table, a standard in 18th-century paintings and grandmothers' houses, is showing up, glamorously, in suburban master suites and teenage bedrooms, notes the Washington Post. And it's no longer designed just for women. New York designer Charlotte Moss begins and ends the day at the vanity table in her dressing room, skirted in mauve silk from an antique Chinese robe. The top is covered with bowls and shagreen trays holding amber and coral necklaces, cuff bracelets and chunky pearls. There's an antique black chinoiserie mirror on it. She sells a similar vanity at her new shop in Manhattan. At West Elm, a sleek chocolate vanity table with a pull-up mirror is new for fall. "Anyone getting ready to go out could use this table," says Kate Mulhearn, spokeswoman for West Elm. "The darker color makes it unisex." Right! Says Moss, "I have male friends who spend more time getting ready in the morning than some women I know." BAR THE DOOR The Better Business Bureau (BBB) is warning consumers to be on the lookout for charlatans masquerading as locksmiths, observes Realty Times. Complaints about locksmiths to the nation's 114 BBBs was up 75 percent in 2006 compared with 2005. This year, several faux locksmith companies, all using similar cons are largely to blame for the complaints for significantly overcharging consumers, charging them for unnecessary services, using intimidation tactics and failing to give refunds or respond to consumer complaints. IT'S HOT AT THE HIGH END Even as foreclosures keep rising and overall sales continue to plummet, the New York Times finds that more expensive homes have staged a bit of a comeback in recent months. They're spending less time languishing on the market than others, and their prices appear to be holding up better, the newspaper notes. This split in the market helps explain why the sales of Manhattan apartments, some of the priciest homes in the country, have remained fairly strong. The national trend has gone largely unnoticed, though, because neither the federal government nor the National Association of Realtors - the main sources of housing data - report statistics for different price segments. But after just about every home sale, documents must be filed with a local government office. A research firm called DataQuick Information Systems gathers these records, and a New York Times analysis of them shows that the story of today's real estate market is really two different stories. In the Boston area, for instance, the number of homes selling for at least $1 million plummeted to 619 in the first five months of 2006, from 773 in the period in 2005, according to DataQuick. But the number jumped to 711 in the first five months of this year. In the New York region, sales at the top end - that is, homes in the most expensive 5 percent of the market - have also been rising, while they have been falling in the middle and bottom of the market. The same is true in the San Jose, Calif.; Seattle; Denver; and Houston areas. In San Francisco, Los Angeles, Phoenix and Miami, high-end sales are down but not by nearly as much as sales in other price segments. Separate statistics from the California Association of Realtors also show million-dollar-plus homes to be selling better than others in that state. HOUSING STARTS EKE OUT AN UNPROMISING INCREASE IN JUNE In the latest indication that the housing market remains in a correction phase, housing starts rose 2.3 percent to a seasonally adjusted annual rate of 1.467 million following downward revisions for the previous two months, the Commerce Department reported. Building permits, which generally are a harbinger of future building activity, were down sharply last month for both single-family and multifamily construction. "The small overall increase in total housing starts does not signal the end of the housing downswing," said Chief Economist David Seiders of the National Association of Home Builders. "Looking toward future single-family production, permit authorizations fell to their lowest level since December of 1996 and now stand 43 percent below the recent peak in the fall of 2005." He added his expectation for further erosion in housing starts during the second half of this year. "However, we expect to see signs of stabilization by the end of this year and we're projecting a gradual recovery process in 2008," Seiders continued. CREDIT-RATING FIRMS ARE REACTING TO SUBPRIME MESS Standard & Poor's said that it would tighten the standards it used to rate bonds backed by subprime mortgages, a tacit acknowledgment that it might have been too optimistic about the housing market, according to the New York Times. At the same time, Standard & Poor's said that it would probably downgrade bonds totaling a relatively small $12 billion, a move that surprised investors with its tone and timing. A rival agency, Moody's Investors Service, followed suit later on, saying that it would downgrade 399 bonds with a face value of $5.2 billion and put another 32 bonds on watch. NEW FAIR LENDING DIVISION IS STARTED BY THE FEDS The U.S. Department of Housing and Urban Development, aiming to strengthen fair lending practices, said it is creating a new Fair Lending Division that will review mortgage lending practices throughout the nation, according to Inman News. HUD said it has hired a senior-level economist and has advertised to hire five fair lending specialists to enhance its capacity to investigate allegations of mortgage lending discrimination. The new Fair Lending Division will investigate discrimination complaints against lenders who have allegedly violated the Fair Housing Act by refusing to make mortgage loans, refusing to provide the same information regarding loans, or imposing different terms or conditions for granting a loan, such as factors based on the race or national origin of the borrower. The division will also conduct investigations where lending patterns or other information suggests discrimination by a lender but no individual has come forward to file a complaint. HUD's announcement arrives on the heels of a new analysis of loan data by the National Community Reinvestment Coalition that suggests minorities are more likely to get stuck with high-cost loans because they are targeted by lenders, not because they are less creditworthy. In its analysis of loan data collected by the Federal Reserve in 2005, NCRC staff found wealthier borrowers of all races were less likely to take out higher-cost loans than low- and moderate-income borrowers of the same race. But the study found the reduction in the use of high-cost loans by relatively wealthy whites was more pronounced than for minorities in the same income range - an indication that race influences lenders in their decisions on what loans to push. Also, the NAACP has filed a lawsuit against more than a dozen lenders seeking class-action status to represent African Americans who were allegedly steered into higher-cost subprime loans because of their race. The NAACP's complaint in U.S. District Court in Los Angeles names Ameriquest Mortgage, Fremont Investment & Loan, Option One Mortgage, WMC Mortgage, Countrywide Financial, Long Beach Mortgage, CitiGroup, BNC Mortgage, Accredited Home Lenders, Encore Credit, First Franklin Financial, HSBC Finance, and Washington Mutual. TO BORROW FROM MORTGAGE BROKER, GET UPFRONT INFO "Upfront" brokers provide four guarantees to borrowers that all brokers could provide if borrowers insisted on them, says the Washington Post. First, the broker's total income from the transaction will not exceed the fee agreed on with the borrower. Second, the broker will provide the borrower with a copy of the rate-lock commitment from the lender as soon as it is received. Third, the fixed-dollar lender charges shown on the legally required good-faith estimate, which are usually not part of the lock commitment, will not be changed as long as the transaction is not changed. And fourth, third-party fees will be passed along with no direct or indirect markup by the broker. QUEENS WINS A DUBIOUS DISTINCTION The borough experienced the largest jump in foreclosures among the five boroughs during the second quarter, according to data released by research firm PropertyShark.com. The borough had a whopping 324 foreclosure auctions during the latest three-month period, up 102 percent from a year earlier and 1.6 percent from the first quarter, according to a Crain's story, which quoted PropertyShark.com Chief Executive Ryan Slack. "Typically the second quarter foreclosure numbers are lower than the first quarter, but this year the numbers keep climbing," he said. Overall, there were 643 new residential foreclosures in New York City during the quarter, marking a 19.5 percent increase from the same period last year and a 16.1 percent rise from the first quarter. All of the boroughs reported a quarterly increase in foreclosure auctions, with the largest quarter-over-quarter increase coming from the Bronx, which jumped 76.6 percent from the first three months of the year, and Staten Island, which increased by 58.8 percent. Seventy-three percent of the city's foreclosures were on Queens and Brooklyn properties. But increases in New York were dwarfed by foreclosures elsewhere. (See second item in "Research" above.) MORTGAGE VOLUME INCREASE FOR THE WEEK ENDED JULY 13 It went up 0.9 percent on a seasonally adjusted basis from the previous week. On an unadjusted basis, the rise was 25.9 percent compared with the previous week, which included the Independence Day holiday, and was up 15.7 percent from the same week one year earlier. Refinancings grew by 4.9 percent from the previous week and purchase applications declined 1.6 percent seasonally adjusted. The refinance share of mortgage activity increased to 37.7 percent of total applications from 36.2 percent, and the adjustable-rate mortgage (ARM) share of activity rose to 21.0 percent. MIXED RESULTS FOR LATEST RATES The 30-year fixed-rate mortgage (FRM) was unchanged at 6.73 percent for the week. Last year at this time, it averaged 6.80 percent, according to Freddie Mac. The 15-year FRM this week was 6.38 percent, down from last week's 6.39 percent and last year's 6.41 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were unchanged at 6.35 percent. A year ago, the five-year ARM averaged 6.36 percent. One-year Treasury-indexed ARMs were 5.72 percent compared with 5.71 percent the week before and 5.80 percent a year ago. "In a week marked by stock indexes reaching new highs on Wall Street, mortgage rates lingered near the previous week's level as the latest economic indicators did not affect inflation expectations significantly," said Frank Nothaft, Freddie Mac vice president and chief economist. "June's core producer price index inched up higher than market expectations, pushing the year-over-year growth rate to 1.8 percent, while the core consumer price index held steady at a 2.2 percent annual growth rate." Add the economist: "The most recent statistics suggest that the housing market has yet to reach a trough. Although June's housing starts unexpectedly rose to 1.47 million units, construction of one-unit houses still saw a decline of 0.2 percent: At 1.15 million units, it was the slowest pace since January. Building permits fell by 7.5 percent last month to the lowest level since June 1997." FED CHIEF SEES CONTINUED SLUGGISHNESS The pace
of home sales seems likely to remain sluggish for a time, partly
as a result of some tightening in lending standards and the recent
increase in mortgage interest rates, Chairman Ben S. Bernanke
testified. "Sales should ultimately be supported by growth
in income and employment as well as by mortgage rates that - despite
the recent increase - remain fairly low relative to historical
norms," he said. "However, even if demand stabilizes
as we expect, the pace of construction will probably fall somewhat
further as builders work down stocks of unsold new homes. Thus,
declines in residential construction will likely continue to weigh
on economic growth over coming quarters, although the magnitude
of the drag on growth should diminish over time." Noting
that "rising delinquencies and foreclosures are creating
personal, economic, and social distress for many homeowners and
communities," the Fed chief said they were "problems
that likely will get worse before they get better." He added
that the Federal Reserve was conducting NAR ISSUES A SUNNIER FORECAST The latest economic forecast by the National Association of Realtors (NAR) shows home prices recovering in 2008 as housing inventory falls from current levels. Said Lawrence Yun, NAR senior economist: ". . . with profit margins coming under pressure, homebuilders will limit new construction well into 2008. This should help the overall inventory level to move steadily into a more balanced state." NAR says existing-home sales will begin picking up late this year, rising to a total of 6.11 million for 2007 and 6.37 million in 2008 in contrast to last year's 6.48 million. New-home sales are projected to reach 865,000 in 2007 and rise to 878,000 next year, compared with 1.05 million in 2006. Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year; they are predicted to start rising early next year. Existing-home prices are likely to rise 1.8 percent to a median of $222,700 in 2008 after a 1.4 percent decline this year to $218,800. The median new-home price should rise 2.2 percent to $245,400 next year following a 2.6 percent drop in 2007 to $240,100. "Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008," Yun said. "Local conditions vary considerably, but with historically low mortgage interest rates this summer and sustained job gains, it could be a good time for first-time buyers with a long-term view to test the housing waters." TOLL BROTHERS' CEO ALSO SEES A 2008 RECOVERY Robert Toll, founder and CEO of the luxury home builder Toll Brothers told Fortune magazine in Realtor magazine that he doesn't see the market getting better until, at the earliest, April of 2008. "But I do think that when a recovery occurs, it will be much quicker than it has in the past because of pent-up demand," he allowed. "You've got decent job growth, low unemployment, low interest rates, great corporate earnings reports and tons of money being created and sloshing around the world." AND A RATING SERVICE SEES MORE CLOUDS AHEAD Excess supply, buyer psychology and tightened underwriting standards in subprime and Alt-A mortgage lending have analysts at Fitch Ratings more pessimistic than previously about the prospects for new-home construction and sales in 2007, says Inman News. Fitch analysts forecast new-home sales in 2007 will fall 15 percent, to 902,000 in contrast to their previous forecast of an 11.5 percent decrease. That would still be less severe than last year's 17.9 percent decline in new-home sales. But Fitch is forecasting a 19.9 percent cutback in single-family housing starts for 2007, which fell 15.1 percent in 2006. Excess supply continues to be the most troubling issue, Fitch analysts said, a problem largely driven by the fact that investors who represented a large portion of buyers in 2005 remain absent from the market. The "dumping of their housing on the market has caused considerable pain," the analysts added, and the negative impacts will continue to be felt by builders in 2007. Negative psychology "seems to have become pervasive," the report said, with an "expectation or fear" that home prices have peaked and buying now would be a mistake. Such fears apply especially to trade-up and second-home buyers. Wouldja Like to Buy a Bridge? No? Well then, how about a roof? Actually, just space on a roof, a veritable tar beach on which you could build perhaps 4,000 square of combined interior and exterior space on the Upper West Side. Replete with a forest of exhaust pipes, adjacent common space and other elements of a 16-story building's infrastructure, the roof offers obstructed views of Central Park as well as gritty urban vistas. This unparalleled opportunity to create a duplex apartment with 10-foot ceilings can be yours for $8.695 million and possibly just a little less, previous lower offers since the property was listed in October having been rejected. Are they kidding? As they say in Hollywood, the back story goes like this: The undistinguished 150-unit co-op has a mortgage that the board would like to retire in one fell swoop. The building is counting on a buyer of the roof space to pay the asking price in order for the board to achieve its goal, even if the market is balking. It is the classic case of a seller who values a property according to what that seller needs, rather than what the market dictates. Someday, or more likely, some years from now, maybe the market will rise to the seller's aspirations, which may well rise too. But such an approach is almost invariably a fatal one, and the proof is in the many months that the pudding on the roof has been hardening. Let us count some of the ways the price is too high:
The listing agent maintains that constructions costs can be held to approximately $300 per square foot. Perhaps so – if a bland modular unit is desired. But anyone willing to fork over $8.695 million for an empty, not merely vacant, space assuredly would seek to live in a luxury apartment at a much, much higher cost. That any degree of luxury may well be elusive on an unappealing rooftop is another question entirely. So far, no one has been willing to make an offer at the unrealistic level that the co-op board is demanding. Now, about that bridge. . . Below, a sample of listings by various brokers that have been viewed since the last issue: The East Side
Greenwich Village
The Upper West Side
Creative Housing
(In the following column, which has been slightly edited, the author considers what would happen if the city starts enforcing one of its laws.)
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!
©
2007 Service You Can Trust |
Data
released by two research firms shows that New York City's
foreclosure rates have risen more slowly than those in the rest
of the nation, reports the New York Times. The number of foreclosure
auctions in New York City increased 19 percent from the second
quarter of 2006 through the second quarter of this year, according
to data tracked by the research firm PropertyShark.com. The increases
are far smaller than in Miami, where they rose 146 percent, and
Los Angeles, where they jumped 202 percent, according to Ryan
Slack, PropertyShark's chief executive. Data released by
RealtyTrac, a research company in Irvine, Calif., show that filings
in all stages of the foreclosure process were 42 percent higher
last month than in June 2006 and that national rates rose 87 percent.
contracting. In contrast, national housing statistics, while not
reflective of individual markets, show just the opposite. The
New York City economy continues to show improvement coming after
two consecutive years of record Wall Street bonus payouts. Preliminary
indicators from the financial services sector show more of the
same strength bonus income in the coming year. Mortgage rates
are low despite recent increases. The government is running a
budget surplus, unemployment is low and the weak dollar has brought
in significant foreign investment. The constant in the demand/supply
equation has been new development activity, whose pace has not
abated for the past three years. It contributed to the rise in
inventory levels of 2005 and 2006, but the significant demand
has more than offset new product added to the market in 2007.
The relatively inelastic short term response to demand suggests
that the high level of demand is something to focus on for the
remainder of the year and through 2008."
For
this year's list, the periodical (for which this writer once worked)
focused on smaller places that offered the best combination of
economic opportunity, good schools, safe streets, things to do
and a real sense of community. At the top of the list: Middleton,
Wis., population 17,400. If you're compulsive enough to find out
the other 99, click in the box. Middleton is cited for its family
life, parks, bike trails, beer garden and mix of good jobs and
restaurants. This year's ranking also includes: the 15 top-earning
towns (No. 1, Hillsborough, Calif.), the 25 most affordable towns
(No. 1, Northbrook, Ohio) and where the most singles are (No.
1, State College, Pa.). As for the best of years past, apparently
they've lost their luster. But you can find them on the same site.
