Items of Interest INDUSTRY GROUP SAYS THE THIRD QUARTER WAS PRETTY GOOD The vast majority of U.S. metropolitan areas showed rising or stable home prices in the third quarter, with most experiencing modest gains compared with a year earlier, according to the latest quarterly survey by the National Association of Realtors (NAR). A total of 93 out of 150 metropolitan statistical areas showed increases in median existing single-family home prices from a year earlier, including six areas with double-digit annual gains and another 21 metros showing increases of 6 percent or more. Fifty-four areas had price declines, and three were unchanged. Regionally, prices rose in both the Northeast and Midwest, as did the national condo price. Still, a disruption in higher-priced sales caused the national median existing single-family home price, which was $220,800 in the third quarter, to be 2 percent lower than it was a year earlier. The largest single-family home price increase was in the Bismarck, N.D., area, where the median price of $161,600 was 15.1 percent higher than a year ago. Median third-quarter metro area single-family home prices ranged from $81,600 in the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to $852,500 in the San Jose-Sunnyvale-Santa Clara area of California. In the condo sector, the national median existing apartment price was $226,900 in the third quarter, up 2 percent from $222,500. Forty-one metros showed annual increases in the median condo price, including six areas with double-digit gains; 18 areas had price declines. Metro area median existing-condo prices in the third quarter ranged from $114,000 in the Rochester, N.Y., area, to $663,700 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was Los Angeles-Long Beach-Santa Ana, at $388,800, followed by the San Diego-Carlsbad-San Marcos area at $351,900. Total state existing-home sales, including single-family and condo, were down 13.7 percent. "The housing market correction is clearly focused on transaction volume and not on home prices," commented NAR Chief Economist Lawrence Yun. ANOTHER FINDING THAT IT AIN'T SO BAD Home prices fell in 17 states during the last year, but most states "continue to have stable home values," and a half dozen others even showed moderate price growth, according to a new analysis of repeat sales by First American LoanPerformance, reports Inman News. Home prices in Wyoming, Utah, North Carolina, Alabama and Maine grew 5-10 percent in the year since September 2006, LoanPerformance said. The rise was more than 10 percent in Hawaii. Although most states -33 in total - saw at least modest price appreciation in past year, the trend has already reversed in some states. Prices have been falling for two months in New York State, for example. But the state still makes LoanPerformance's list of 27 states where prices are up 5-10 percent and 10 percent declines have yet to overtake the gains. Still, First American LoanPerformance's analysis of the top 31 "core based statistical areas" showed prices fell in 19 metro areas, or 61 percent of those studied. Communities in California and Florida held six of the top 10 spots on the list of areas experiencing the greatest price declines. Are you ready to be tested on this information? LITTLE TO CHEER IN SINGLE-FAMILY SALES They were stable in October while the condo sector was down, according to the National Association of Realtors (NAR). Total sales of previously owned homes - including single-family, townhomes and apartments - were 1.2 percent lower than September and 20.7 percent below September 2006. The national median existing-home price for all housing types was $207,800 in October, down 5.1 percent from the previous October. Also, total housing inventory rose for the ninth consecutive month, by 1.9 percent, at the end of October to a 10.8-month supply at the current sales pace. That's up from a downwardly revised 10.4-month supply in September, the highest level since July 1985. Single-family home sales were unchanged from September but off 20.8 percent from October 2006; the median existing single-family home price was $205,700 in October, down 6.3 percent from a year ago. As for existing condominium and co-op sales, they fell 9.1 percent in October below September and 20.2 percent below the prior October. The median existing condo price was $223,500 in October, up 4.9 percent from a year ago. BUT NEW-HOME SALES EDGED UP IN OCTOBER The increase was 1.7 percent following a dramatic downward revision to the preliminary estimate for September, the U.S. Commerce Department reported. Still, October's seasonally adjusted annual rate of 728,000 units was 23.5 percent below a year ago. The inventory of new homes for sale was down 2.3 percent as builders continued to work down their inventory. The equivalent months' supply at the October sales pace was down to 8.5 months from 9.0 months in September. The median length of time that completed homes were on the market was 5.9 months, up from 5.8 months in September. HOUSING STARTS FELL BY 16.4 PERCENT IN THE LAST YEAR A bounce-back in the volatile multifamily market lifted total housing starts 3.0 percent in October to a seasonally adjusted annual rate of 1.229 million units, but total starts were down 16.4 percent from a year earlier, according to the U.S. Commerce Department. Single-family housing starts dropped 7.3 percent for the month to a seasonally adjusted annual rate of 884,000 units, the lowest monthly production rate since October 1991 and 25.1 percent below October 2006. Multifamily housing starts rose 44.4 percent after dropping 35.9 percent the month before; the pace was 19.4 percent above October 2006. Also down were total building permits, off by 6.6 percent in October; compared with a year earlier, the decline was 24.5 percent. PERCENTAGE PRICE DECLINES DIP TO 20-YEAR RECORD Housing prices last summer fell the most in almost 20 years, the New York Times reports. Prices of single-family homes in the third quarter fell 4.5 percent nationwide compared with a year ago, according to the Standard & Poor's/Case-Shiller National Home Price Index. It was the largest drop since records for the index began in 1988. A separate survey by S.& P./Case-Shiller of home prices in 20 major metropolitan areas showed a drop of 4.95 percent in September from a year ago, the biggest decline in more than six years. Prices declined 0.9 percent in September alone, and were down in all 20 areas, the survey found. The National Association of Home Builders countered the statistics by saying that the same 20 markets have appreciated in value by more than 95 percent since January 2000. Nationally, the increase was said to be 80 percent. "We are fast approaching the rate of price decline seen at the end of the 1990-91 recession," Joshua Shapiro, chief United States economist at MFR, wrote in a research note in the Case-Shiller report. "The odds strongly favor blowing past this mark in coming months." Miami, San Diego and Phoenix recorded the steepest monthly declines in single-family home prices in September, all in excess of 1.5 percent. Prices in the New York City area dipped 0.3 percent in September after a 0.7 percent drop in August. They are down 3.64 percent over the last 12 months. Patrick Newport, economist at Global Insight, a research firm in Lexington, Mass., said that home prices were dropping more sharply on the less expensive end of the housing market, the sector most significantly hurt by the subprime collapse. "The subprime problems are a little bit messier than we thought," he said. Remaining true to form, Yale University economist Robert Schiller added, according to Inman News, that he takes as "very significant" that "we're out of the range of normal variation in data." Said he: "I think there is a significant chance of recession - of probably over 50 percent at this point." The only comparable period in U.S. history to the latest housing boom occurred in the 1940s, fueled by a surge in home construction at the close of World War II, Shiller noted. The massive home-price gains of the past decade are not explained by building costs, population or interest rates, he said. "I think we are in a period of exceptional uncertainty about the value of our homes," the economist continued, contending that home-price declines of 50 percent in real terms "is not out of the question." He said that prices fell more than 40 percent in the Los Angeles area in 1989-1997 and "substantially" in the 1990s in London, giving up most of the gains they had experienced in the 1980s. FEDS REPORT FIRST QUARTERLY DECLINE IN 13 YEARS Based on data from sales and refinance transactions, the Office of Federal Housing Enterprise Oversight (OFHEO) found that prices of properties valued at $417,000 or less were 0.4 percent lower in the third quarter than in the second quarter of 2007. The annual price change, comparing the third quarter of 2007 to the same period last year showed an increase of 1.8 percent, the lowest four-quarter increase since 1995. OFHEO's purchase-only index, which is based solely on purchase price data, indicates the same rate of appreciation over the last year. Said OFHEO Director James B. Lockhart: "While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country. Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial." Many of the cities and states experiencing the sharpest declines this quarter were the same cities and states experiencing the sharpest increases just a couple of years ago, suggesting some price corrections in those markets, the agency said. The OFHEO index weights sales prices differently than other measures, incorporates data from a wider geographic area and is focused on homes with conventional, conforming loans. The states with the greatest rates of appreciation between the third quarter of 2006 and the third quarter of 2007 were: Utah (12.9 percent), Wyoming (11.8 percent), Montana (7.7 percent), New Mexico (7.4 percent) and Washington (7.0 percent). The states with the largest depreciation for the same period were: Michigan (-3.7 percent), California (-3.6 percent), Nevada (-2.4 percent), Massachusetts (-2.3 percent) and Rhode Island (-2.2 percent). DOES COST CUTTING AID BUILDERS When
freebies like granite countertops and no-cost closings didn't
woo enough buyers, many home builders began trying to outdo one
another with price cuts, observes the Wall Street Journal. Now
the tactic appears to be backfiring. Potential home buyers are
proving unwilling to purchase homes until PAUL REVERE HAD A POINT The U.S. property market has suddenly become great value for Britons dismayed by sky-high house prices at home, says the Observer in London. The market has been driven by an exchange rate that has risen above $2 to the pound for the first time since the early 1980s. Some are looking for holiday homes at prices they could not have hoped to pay a few years ago. Others are selling their British houses and moving to the U.S. Still others are starting to buy shops and businesses. A recent survey showed that one in five U.S. real estate agents has sold a home to a foreign buyer in the past year, and 12 per cent were British, representing a third of all European buyers. In Manhattan the situation is even more foreign-dominated, with overseas buyers making up about a third of purchases in new condominiums. Elsewhere, falling house prices have seen flocks of Britons attracted to other states such as California and Florida. FORECLOSURES CLAIM UNINTENDED VICTIMS They are tenants. There are no exact figures for how many renters have been evicted because of foreclosures, but a survey taken this year by the Mortgage Bankers Association found that one in eight foreclosures was non-owner-occupied, says the New York Times. This figure probably underestimates the problem, according to the association, because buildings receive tax benefits if they are registered as owner-occupied. More than one million properties are expected to enter foreclosure this year. Many renters say they never even knew their buildings were heading for foreclosure. "This is an explosion," said Judith Liben, a lawyer at the Massachusetts Law Reform Institute. "This isn't business as usual. These are investors that overleveraged themselves, and the renters are collateral damage in the mortgage crisis." Foreclosing lenders typically evict tenants in order to sell the property, said Vicki Vidal, senior director of loan administration and government affairs at the Mortgage Bankers Association. "Banks don't want to be landlords," Vidal said. "They're in the business of making mortgages. You need to recoup the money to keep the process moving." LOWER PRICES ARE CAUSING CHANGE IN RELOCATION BENEFITS Some companies are adjusting their relocation policies to provide more help to employees in troubled housing situations, including absorbing losses on home sales, observes the Wall Street Journal. "Companies have had to change their programs and policies and step it up to keep their employees mobile," says Cris Collie, chief executive of the Employee Relocation Council, an industry group. Collie's group estimates that it cost about $62,000 on average to move an employee this year. Of that amount, $15,000 went for so-called loss on sale assistance, where companies make up the difference when employees sell their homes at a loss. Last year, loss-on-sale assistance averaged about $9,000. The most generous companies are buying employees' homes from them at an appraised value, often determined by averaging two or three appraisals from real-estate professionals and reimbursing the employee the difference - or, more often, a portion of it - if the price is lower than what the employee originally paid. The company will then resell the house - often at a loss. And because homes are selling slowly, some companies that offer this benefit are seeing their inventory of unsold homes climb. About 6.4 million people moved in 2005 for job-related reasons, according to the Census Bureau. About 500,000 of those moves received some sort of benefit from an employer, according to Internal Revenue Service statistics. HE WHIPPED UP MILLIONS AND RECEIVED HIS JUST DESSERTS Matthew Bevan Cox, who eluded authorities for nearly three years before pleading guilty in April to mortgage fraud charges in three states, has been sentenced to 26 years in prison and ordered to pay $5.9 million in restitution to more than 100 victims, according to Inman News. Cox, 37, and his accomplice, Rebecca Marie Hauck, were dubbed "The Bonnie and Clyde of mortgage fraud" for a string of crimes involving identity theft and mortgage fraud in several states including Tennessee, Georgia and Florida RAISE THE ROOF Squeezed by rising maintenance costs and in search of new sources of income, dozens of small-to-midsize co-ops and condos across the city are looking to their rooftops - the latest frontier for cashing in on every available inch of space - and are opting to sell building rights to top-floor residents or to other apartment owners, the New York Times reports. The owners of the top-floor apartments pay for the chance to expand their apartments into duplex penthouses and to create roof decks with panoramic city views. The buildings, in turn, get money to pay for major projects such as replacing the elevators or remodeling the lobby, as well as additional monthly income through higher maintenance or common charges as a result of the new space. The roof additions tend to be in loft conversions and brownstones - smaller-scale prewar buildings that have not been built to the full height allowed by zoning regulations. The city's Buildings Department says that by late October, 35 buildings in Manhattan had applied for rooftop additions, already exceeding the 2006 total of 34. In the 1990s, there was just a handful of applications each year. The price of roof rights is linked directly to the apartment beneath it and varies greatly, said appraiser Jonathan Miller of Radar Logic. He said that rights generally sell for anywhere from 15 to 50 percent of the value, on a square-foot basis, of the apartment that will be connected to it, depending on whether the buyer plans to build a terrace or a new room. "It's really what the market will bear because you're giving somebody the potential to upgrade their apartment," Miller said. DO CO-OP BOARD APPLICATIONS THREATEN YOUR IDENTITY A board is a treasure trove for identity thieves, thanks to the data it collects: bank and investment records, employment history, that all-important Social Security number, observes New York magazine. (Rental applications are fodder, too, providing much of the same information.) And yet few safeguards exist, says Avivah Litan, an identity-theft analyst, despite the fact that "the housing industry has the most flagrant examples of abuse." Litan adds that real estate would be a "gold mine" to an identity thief. Though the state licensing application asks real estate agents if they've committed a crime, they aren't subjected to background checks - and neither are their employees. Nor has the government imposed data-privacy regulations, as it has with the banking and health industries. Michael Slattery of the Real Estate Board of New York quotes its code of ethics as stating that confidential information cannot be disclosed for personal interests but doesn't require brokers to protect client information. Management companies are supposed to shred board packets, but they don't always. And then there are the packet handlers - from those who collate copies to doormen charged with handing them out to board members. Until changes are made in the system, it's up to consumers to watch their backs, and for brokers to help protect them. THE CITY IS THE MARKET TO WATCH, STUDY SAYS A CONDOMINIUM PROVES YOU CAN, AFTER ALL, FIGHT CITY HALL After 13 years of legal wrangling, the owners of Donald Trump's Parc Condominium have won a tax refund from the city likely to exceed $10 million, reports Crain's. The 340-unit, owner-occupied building at Central Park South and Sixth Avenue has been suing the city each year for the past 13, alleging that the city's tax assessment was inflated. A Supreme Court judge ruled last month that the city had indeed inflated the building's value by $60 million and owed the owners a tax refund for nine of the past 13 years. The dollar amount of the refund is being calculated, said Joseph Giminaro, co-manager of the real estate tax department of New York law firm Stroock & Stroock & Lavan, which is defending the Trump Parc Condominium. He estimated the amount, which will include interest, will likely exceed $10 million. The ruling is precedent-setting because it is the first residential condo real estate tax case to go to trial in New York City, Giminaro added. "The city is not in the business of giving money back," said Giminaro. "It's in the business of collecting taxes. This case sends a message to the city that we will not roll over and die." FORECLOSURES ARE EXPECTED TO REACH 14,000 HERE THIS YEAR Housing Commissioner Shaun Donovan told the City Council that he expects approximately that many filings in the five boroughs this year in comparison with 6,870 filings in 2004 and in 2005, according to NY Metro. "I think it's likely we'll see a jump in foreclosures next year," he said. "We do think the scale of this problem is really still growing." Jamaica is the neighborhood at greatest risk, followed by Bellrose/Rosedale and Flatlands/Canarsie. "What we often find, people are selling their distressed properties in order to avoid foreclosure and avoid that stain on their credit history," Donovan said. "That does not mean the problem is averted. People have their equity stripped, they're turned into renters or could be forced into homelessness." The commissioner noted that some neighborhoods may see 10 percent of their community displaced. "We want to make sure this doesn't destabilize neighborhoods," he said. So, his Department of Housing Preservation and Development is offering legal counseling to homeowners and is hoping to ward off speculators by buying properties at a discounted price and then working with nonprofits to turn the buildings into affordable housing. THE MOST DESIRED PUBLIC SCHOOLS ARE JAMMED Since the real-estate market began its relentless ascent in the mid-nineties, neighborhoods with decent schools such as P.S. 199 have grown coveted - and crowded, notes New York magazine. New development is largely to blame. At P.S. 199 on the Upper West Side, more than 10 percent of the students come from Riverside Boulevard high-rises that didn't exist a decade ago. Seven more residential buildings are under construction nearby and will bring at least 1,000 more units. Those buildings are put together explicitly for families with children. In every neighborhood with a beloved school, classrooms are stuffed. The Manhattan New School (P.S. 290) has reached 155 percent of its capacity as one condo after another rises in Yorkville. Park Slope's William Penn School (P.S. 321) has seen its kindergarten classes grow by 20 percent. East 33rd Street's Mary Lindley Murray School (P.S. 116) gained 77 students this year, many from the 32 apartment buildings put up in its catchment these past two years. SALES OF INVESTMENT PROPERTIES SOAR IN MANHATTAN The number
of closed sales was up in New York City by 11.3 percent in the
first half of 2007 compared with the prior six-month period. Driving
the increase was the amount of sales activity in MORE EVIDENCE THAT DEVELOPERS ARE CUTTING PRICES Roughly a dozen new developments have slashed their prices by as much as 13 percent over the last several weeks, according to the New York Sun. Developments in areas that began gentrifying in the latest real estate boom cycle, including Central Harlem, Chinatown, DUMBO and Prospect Heights, are now cutting their prices to compete better, according to brokers representing the developments and statistics from the real estate site Streeteasy.com. "Any time you have a change - meaning a perceived change in psychology of the market between buyers and sellers - the first place you are going to see it is in newly developing markets," commented Radar Logic executive Jonathan Miller. For this reason, he said, up-and-coming neighborhoods tend to have more of an inherent risk. "Not all of the residential support services have been built up enough for the neighborhood to have its own legs, so to speak," Miller added. Two buildings each in Central Harlem and Chinatown have recorded significant price cuts. For example, the price of a three-bedroom in Graceline Court, at 106 W. 116th St., dropped by $90,000, or more than 10 percent, to $895,000, and a two-bedroom dropped by $80,000, or nearly 12 percent, to $595,000. CATCH HIM IF YOU CAN Leonardo DiCaprio is purchasing a one-bedroom, one-and-a- half-bath condo of approximately 1,200 square feet in the West Village's Hudson Blue building, reports the New York Post. Included in the top-floor unit in the 10-story glass-encased building are a private 800-square-foot rooftop terrace with a hot tub, a fireplace in the living room, a gourmet kitchen with a skylight, high ceilings and lots of marble. It's a stone's throw from the triplex penthouse that his former flame, Gisele Bundchen, owns and is now selling. Other notables who have been spotted inspecting Hudson Blue include Heidi Klum, Russell Simmons, Brett Ratner and Oscar-winning screenwriter Akiva Goldsman. THIS SALE WOULD BE NO LAUGHING MATTER Sun Microsystems co-founder and former chief scientist Bill Joy is seeking $40 million for the massive Manhattan apartment that he bought five years ago, notes the Wall Street Journal. The apartment is in one of three condominium towers designed by Richard Meier in the West Village overlooking the Hudson River. The asking price is likely the highest ever for a downtown Manhattan residence. The 53-year-old computer engineer paid about $17.57 million for the unfinished, roughly 11,000-square-foot triplex in 2002, the year of the building's construction, and hired Meier to design the interior. Spanning the entire eighth through 10th floors of the southern Perry Street tower, it's the largest unit in the building. Calvin Klein's triplex penthouse three floors above measures close to 10,000 square feet, city records show. Joy created a double-height living room on the ninth floor. The master suite, spanning the 10th floor, includes an exercise room and a sauna. The lower floor includes bedrooms, a library and a recreation room. Who's laughing now? HE IS, NO DOUBT, PROUD AS A PEACOCK NBC Universal's president/CEO Jeff Zucker and his wife Caryn closed earlier this month on the late Kitty Carlisle Hart's 11-room apartment at East 64th Street, says the New York Observer. They paid $12.3 million, $200,000 below the asking price. The 99-year-old apartment has five bedrooms, five fireplaces, four bathrooms, wood paneling, a maid's room, a salon and an eat-in kitchen. The Zuckers sold their Central Park West duplex for $15 million two years ago. BUT HER APARTMENT IS NO MODEL Supermodel and sometime actress Emma Heming, who moved back to the Big Apple after parting with her longtime boyfriend, L.A. nightclub kingpin Brent Bolthouse, paid $1.85 million for a two-bedroom condo on 17th Street in Chelsea, according to the New York Post. Heming, who's lately been keeping company with John Stamos, has taken a 1,500-square-foot, two-bedroom, two-bath apartment in a doorman building. ELLEN DEGENERES SCALES DOWN AND CLEANS UP The comedian and talk-show host has found a buyer for her $24 million Santa Barbara County estate and recently bought a furnished house in Beverly Hills, Calif., according to the Wall Street Journal. The property in contract is the four-acre Montecito retreat that the 49-year-old DeGeneres bought just 14 months ago, paying $15.75 million and then making some improvements. The compound includes a 1926 Mediterranean-style house, two guest houses, a tennis court and a pool. The sale price could not be determined. She recently purchased the roughly 6,000-square-foot Beverly Hills home of Max Mutchnick, a co-creator of "Will & Grace." That sale price included many home furnishings and art, a person familiar with the transaction said. The television producer bought the 1.75-acre property for $5.8 million in 2004 and renovated it extensively, according to records. SOME OF TRUMP'S PROJECTS ARE TARNISHING HIS IMAGE Donald Trump's reputation as a real-estate developer could take a hit as some condominium projects emblazoned with his famous name run into trouble, observes the Wall Street Journal. In recent years, Trump has lent his name, and in some cases his own money, to at least 20 projects in the U.S. and another half dozen abroad, including buildings in Dubai and Seoul. While in some cities such projects are doing fine, others face slow sales, project delays and cancellations - and irate buyers. In Tampa, Fla., buyers who placed deposits of $200,000-1.2 million on units in the 52-story Trump Tower Tampa are fuming. Nearly three years after the $260 million skyscraper was started, construction has stopped. Meantime, a Fort Lauderdale, Fla., tower with Mr. Trump's name on it was put on hold indefinitely last month, and a West Palm Beach project could be put on the shelf shortly. Construction on a Trump Tower in Toronto is just getting under way after years of delays and a reduction in height. And at Trump Tower Chicago, a hotel and condo project set to be the second tallest building in the city after the Sears Tower, 30 percent of the 825 units remain unsold as the condo market there slows. MY DOME IS BIGGER THAN YOURS At the top of the ornate Police Building, the former police headquarters, there is a three-bedroom apartment with a 25-foot-high living room incorporating a cupola-topped tower. Steffi Graf was an occupant, and in 1998 the unit was sold to Calvin Klein for $1.8 million. Last month, two buyers bought the gold domes, both 16 feet in diameter, at the corners of the O'Neill Building, a former department store on the Avenue of the Americas and West 20th Street, along with new rooftop penthouses connected by glass-covered walkways on private terraces. Mariska Hargitay bought the south tower, a 4,819-square-foot three-bedroom, for $7 million. Clifford Burnstein, a music manager who represents Metallica and the Red Hot Chili Peppers, bought the other unit, a four-bedroom, for $7.2 million. The domes are 32 feet high and have two levels of windows. HOW DO YOU SAY ‘DUH' IN ARABIC The former Saudi ambassador to the United States has pulled his Aspen, Colo., estate off the market because a buyer couldn't be found to pay anywhere close to the $135 million price tag that the Saudi prince wanted, says the Aspen Daily News in Realtor magazine. Quel surprise! The 56,000-square-foot mansion has been on the market since 2006. If someone had been willing to pay the price, the property would have set a U.S. record. Prince Bandar purchased the land in 1989 for $3.5 million; the house was finished in 1991. THE OLSEN TWINS HOPE TO MAKE MILLIONS, MORE MILLIONS Ashley and Mary-Kate Olsen, whose preteen entertainment firm Dualstar does $1 billion a year in merchandising, just listed their five-bedroom, 53-window, 5,725-square-foot penthouse at One Morton Square for $11.995 million, the Observer reports. City records show they paid $7.3 million in December 2004, three months before they listed the apartment for nearly $2 million more. By that summer, the place was asking $35,000 a month in rent. The Olsen duo helped create the penthouse, even though they mostly rented it out. They bought four properties from the developer pre-construction and designed their own floor plan in collaboration with the developer, creating a 53-foot-long entertainment space interrupted only by a glass-enclosed fireplace. The dramatic living/dining room, the master bedroom, the master dressing room and two extra bedrooms have open harbor views facing south. The three other bedrooms, plus the kitchen and home office, face north toward the Hudson. Marketing photographs show a pink bedroom with a yellow-orange shag carpet, a white-and-orange orb chair (with Union Jack pillow) and something pink hanging from the ceiling. The penthouse has its own elevator landing, and then there's a freight elevator off a separate hallway that skips the lobby and goes to the garage. BUILDERS REMAIN GLUM Their confidence in the market for new single-family homes remained unchanged in November at the lowest point since the research began 22 years ago, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Said Chief Economist David Seiders of the National Association of Home Builders (NAHB): "While they continue to work down inventories of unsold homes and reposition themselves for the market's eventual recovery, they realize it will be some time before market conditions support an upswing in building activity - most likely by the second half of 2008." TIED TO INCOME, U.S. HOUSING AFFORDABILITY EDGES UP Indianapolis maintained its standing as the most affordable major U.S. housing market for a ninth consecutive time in the third quarter of 2007, according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). Why that is so can only be imagined. Nationwide housing affordability rose on a year-over-year basis but slipped for the quarter owing to higher mortgage rates. Forty-two percent of all new and existing homes that were sold during the third quarter were affordable to families earning the national median income of $59,000 versus 40.4 percent of homes within reach of median income-earners a year earlier. But affordability reached 43.1 percent in this year's second quarter. In Indianapolis, 87.5 percent of homes sold in the third quarter were affordable. Maintaining its long-held standing on the HOI was Los Angeles-Long Beach-Glendale, Calif., which has been the nation's least-affordable major housing market for a dozen consecutive quarters. There, just 3.7 percent of new and existing homes sold during the third quarter were affordable to those earning the area's median family income of $61,700. FED CHAIRMAN TELEGRAPHS ANOTHER INTEREST RATE CUT When members of the Federal Open Markets Committee met at the end of the October, Ben S. Bernanke recalled in a speech Nov. 29, they believed that tightening credit conditions and "some intensification" of the correction in the housing sector were likely to restrain economic activity going forward. Specifically, growth appeared likely to slow significantly in the fourth quarter from its rapid third-quarter rate and to remain sluggish in early 2008, the Fed Chief recounted. "The Committee expected that economic growth would thereafter gradually return to a pace approaching its long-run trend as the drag from housing subsided and financial conditions improved," he said. But times have changed. "The fresh wave of investor concern has contributed in recent weeks to a decline in equity values, a widening of risk spreads for many credit products (not only those related to housing), and increased short-term funding pressures," Bernanke continued. "These developments have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors. Needless to say, the Federal Reserve is following the evolution of financial conditions carefully, with particular attention to the question of how strains in financial markets might affect the broader economy." REPORT FORESEES A $1.2 TRILLION DECLINE IN PROPERTY VALUES The forecast
released by the U.S. Conference of Mayors for 2008 envisions an
impact on consumer spending, property tax revenues, job creation
and economic growth, according to Inman News. The MORTGAGE RATES FALL AGAIN The 30-year fixed-rate mortgage (FRM) averaged 6.10 percent for the week, down from last week's 6.20 percent and last year's 6.14 percent. The 30-year FRM has not been lower since the week ending Oct. 13, 2005, when it was 6.03 percent. The 15-year FRM averaged 5.73 percent in comparison with 5.83 percent last week and 5.87 percent a year ago at this time. The 15-year FRM has not been lower since the week ending January 26, 2006, when it averaged 5.70 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were 5.86 percent, down from 5.88 percent the previous week and 5.95 percent a year ago. It has not been lower since the week ending January 26, 2006 when it averaged 5.75 percent. One-year Treasury-indexed ARMs were 5.43 percent this week, up from last week's 5.42 percent. At this time last year, it averaged 5.46 percent. "Interest rates for U.S. Treasury securities have been drifting lower this month over market concerns that the housing slump and stress in the credit markets could slow future economic growth," said Frank Nothaft, Freddie Mac vice president and chief economist. "As a result, interest rates for fixed-rate mortgages had room to slip lower this week. In addition to these concerns, the Federal Reserve also noted in its November 28th Beige Book that the glut of available homes continued, keeping downward pressure on prices and construction activity." FORECLOSURE FILINGS NEARLY DOUBLE IN A YEAR RealtyTrac says 224,451 default notices, auction sale notices and bank repossessions were reported during October, 2 percent more than in September and 94 percent more than in October 2006. The national foreclosure rate for the month was one foreclosure filing for every 555 households. "Overall foreclosure activity continues to register at a high level compared to last year, but it appears to have leveled off over the past two months after hitting a high for the year in August," said James J. Saccacio, chief executive officer of RealtyTrac. "Default notices were down nearly 9 percent in October, indicating that some of the efforts on the part of homeowners, lenders and advocacy groups to find alternatives to foreclosure may be starting to have an impact. On the other hand, bank repossessions were up nearly 35 percent, evidence that more homeowners who enter foreclosure are losing their homes." THANKSGIVING CUTS INTO MORTGAGE ACTIVITY For the week ending Nov. 23, loan application volume decreased 4.3 percent on a seasonally and holiday adjusted basis from one week earlier, according to the Mortgage Bankers Association. On an unadjusted basis, the decline was 25.5 percent compared with the previous week, but volume was 24.6 percent higher than the same week one year earlier. Refinancings dropped by 15.3 percent from the previous week, while purchases went up by 6.1 percent. On an unadjusted basis, purchase applications fell by 18.7 percent. The refinance share of mortgage activity decreased to 45.8 percent of total applications from 50.3 percent the previous week, and the adjustable-rate mortgage (ARM) share slipped to 14.6 percent from 15.8 percent. WELLS FARGO RAISES ITS STANDARDS The bank said it is tightening underwriting standards on home equity loans as it takes a $1.4 billion fourth-quarter write-down on loans originated through wholesale and correspondent channels, says Inman News. It said it will no longer originate home equity loans through wholesalers when the combined loan-to-value ratio of first and second mortgages exceeds 90 percent or when Wells Fargo is not the holder of the first mortgage. HOME IMPROVEMENT IS CHEAPER, EASIER IN SOME AREAS Some homeowners are moving forward on renovation or building projects they've put off for years, the Wall Street Journal observes. Others are exacting substantial price cuts from contractors desperate for work. More homeowners will renovate their kitchens this year - 7.57 million, up from 7.44 million in 2006 - but they will spend a lot less, $96.2 billion compared with $127 billion, according to the National Kitchen & Bath Association. Bathroom renovations this year are expected to rise by 5.3 percent to 10.9 million from 2006, while spending on them will grow 3.8 percent to $70.2 billion from 2006, the trade group projects. One reason some renovations will cost less this year is the falling price of many key building materials. The price of oriented strand board, a plywood substitute used for walls and roof sheathing, dropped 40 percent from the third quarter of 2005 to the same quarter this year, according to the National Association of Home Builders. During the same period, framing-lumber prices fell 24 percent, says the association. And drywall prices dropped 35 percent from last year's third quarter, according to United States Gypsum Co., the largest manufacturer of drywall in North America. "If you're going to do any kind of construction...now is the best time you're going to have to do that in the next five years," says Bill Harrison of Harrison Design Associates, an Atlanta-based architecture firm that specializes in high-end homes. Not all parts of the country have been affected equally. Builders in Seattle, New York and Los Angeles, where the job and housing markets have remained firm, report business as usual. And many architects who specialize in high-end homes say they are as busy as ever. WORRIED ABOUT YOUR HOME'S VALUE? TAKE A BET Futures contracts traded on the Chicago Mercantile Exchange show that traders expect double-digit declines in nine out of the 10 biggest housing markets in the U. S., says BusinessWeek Online. The only exception is Chicago, where prices are still expected to fall by 5.6 percent over the next year. Investors' predictions may not prove to be accurate, but they do provide insights into what people with skin in the game think lies ahead. Yale economist Robert Shiller suggested that homeowners may want to consider hedging their homes - looking for ways to protect themselves against declines in their home values. "I believe people should consider hedging their real estate risks," he says. In theory, a homeowner in Boston, Las Vegas, or elsewhere could sell, or short, the futures contract for that city. Then, if the value of that person's home fell, he would reap an offsetting financial gain from the futures contract. In practice, however, the housing contracts may not have yet evolved to the point where they would work well for individual investors. The futures contracts for individual cities are thinly traded and on some days, certain contracts don't trade at all. (See last item in "The Market" above for more from Shiller.) BOTTOM FEEDERS, BEWARE With home sales slowing to a crawl and buyers unable to qualify for mortgages, some home builders are struggling to keep their operations going, notes the Wall Street Journal. Already, Levitt Corp.'s Levitt & Sons unit has filed for bankruptcy-court protection, and a second builder, Tousa Inc., said it is considering several "in and out of court restructuring and reorganization" options, including a possible Chapter 11 filing. While those small Florida-based builders were partly crippled by company-specific issues, the make-or-break matter for most builders - and for those who may be enticed by their cheap stock prices - is the ability to generate cash to service debt and to pay for the construction of new homes. Such liquidity risks could trap investors, who may be tempted to go bargain hunting. According to UBS, the home builders are trading on average near 40 percent of their tangible book value. That makes them appear extremely inexpensive. One red flag: Some builders have violated, or are close to violating, credit agreements with their banks. But John Gould, a portfolio manager at Schafer Cullen Capital Management, says D.R. Horton, the nation's largest builder, "looks interesting because its balance sheet is in good shape and it appears that the majority of write-downs are behind them." Luxury builder Toll Brothers also has a solid balance sheet, ample cash and a low level of debt, making it a possible buy. Some investors believe that even the strongest companies may have further to fall, as the housing market worsens. "We think it's too early" to invest in the home builders, Schafer's Gould continued. "I think 40-50 percent of book value is a better entry point for us." Room with a View Who would dispute that views are nice, desirable, even enviable? Few would, yet only a relatively small percentage of properties can boast sweeping vistas of the skyline, inspiring views of a river or merely open exposures. Of course, nobody knows the percentage, but it is obviously true that dwellings with windows worth peering through can command steeply higher prices than those worth ignoring. Views are often associated with height, and it is a well known fact that societies have for eons taken height as a gauge of an individual's standing. The higher the castle, the easier it is for a potentate to survey and defend his kingdom. Height reflects power and wealth. And Manhattan is filled with princes of power whose wealth helps support the housing market and whose assets allow them to aim high. As everyone knows, top floors can be especially appealing because no sounds will emanate from above, though water does have a way of being intrusive. It is hardly surprising that lower floors and those with absent vistas tend to discourage prospective buyers of apartments (including those folks who are cash constrained), while, ironically, buyers of townhouses often overlook the matter. Views are one thing, but windows opposite walls that are suffocatingly close can be anathema to prospective buyers of all types. Indeed, views into blocks with narrow interiors can affect sale prices too. But aren't such preferences good for buyers who are willing to make the tradeoff of space for sun by taking advantage of the lesser demand for units from which the most exciting sight may well be rated XXX? The added value of room to roam easily can compensate for the cost of rooms with a more conventional view - if the price is right. Consider these two Upper West Side apartments:
Other units being marketed by various brokers on the Upper West Side:
Upper East Side
Tribeca
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prices
stabilize, fearing further price depreciation, so builders have
not gotten the sales volume needed to compensate for their reduced
margins. "If people stop cutting prices, that's actually
good [for builders]," said David Goldberg, an analyst with
UBS Investment Bank. "If everybody does it, it works. If
one builder does it, it doesn't." Apparently, it doesn't
work if 60 percent of them do it. That's the share of builders
that cut prices in October. About half of them labeled the cuts
at least "somewhat effective" in bolstering sales or
limiting cancellations, down from nearly three-quarters in May,
according to the National Association of Home Builders. In California,
for example, Meritage Homes Corp. has cut some prices, inclusive
of incentives, by as much as 40 percent. The Arizona company's
prices have slipped to levels not seen since before 2004. Meritage
noticed that potential buyers are coming in "nine or 10"
times and "if they hear the deal today is better than the
deal was two weeks ago or a month ago, they're not going to buy,"
said Steven J. Hilton, the builder's chief executive, at a recent
UBS AG building conference in New York. The fourth-largest builder,
Centex Corp., has said it is offering "record" discounts,
and Ryland Group Inc. recently coughed up savings as high as 25
percent nationwide.
New
York City ranks as the top domestic real estate "market to
watch" in 2008 and alongside London as the top world market,
according to a study by PricewaterhouseCoopers and the Washington-based
Urban Land Institute, reports the Real Deal. The study shows that
New York is driven by the nation's tightest rental market, single-digit
commercial vacancies, solid infrastructure and transportation
access and record-breaking real estate prices. "New York
is really looked upon as the ultimate 24-hour American city,"
said Susan Smith, manager of real estate business advisory services
at PricewaterhouseCoopers. "Everybody who has an international
presence somewhere wants to have an office in Manhattan."
Manhattan,
including northern Manhattan, according to a new survey. Manhattan
saw twice as many walk-ups sold in the first six months of 2007
in contrast to the second half of 2006, the report by the Miller
Cicero real estate advisory firm finds. Along with the increase
in the number of sales, the median price of a Manhattan apartment
building showed a sharp increase as well, breaking $500 per square
foot for the first time. The median price of a walk-up apartment
building in northern Manhattan also set a record, exceeding $300
per square foot. The outer boroughs were mixed, however, as the
price of walk-up apartment buildings in Brooklyn and Queens remained
relatively flat, while the Bronx saw a decline in price to $100
per square foot. Although the number of sales was up sharply from
the second half of 2006, with 2,063 closed sales compared with
1,852, there were 13 percent fewer sales than the most active
period of the past four years - the first half of 2006. 
group
said that weaker market demand and large inventories of homes
for sale would have reduced home values by $676 billion in 2008.
With the added impact of the foreclosure and mortgage crisis,
home values are projected to fall an additional $519 billion,
the report said.Crain's quoted the report as projecting that the
region covering New York City, Northern New Jersey and Long Island
is on track to lose $10.4 billion in 2008 gross metropolitan product
- one of several measures of a given metro area's economy. Next
year, the state stands to lose $686 million in property taxes,
$97 million in sales taxes and a $47 million in transfer taxes,
according to the report, prepared by Global Insight Inc. In the
U.S., the study estimates a potential loss of $6.6 billion in
tax revenue in 10 states, with the upswing in foreclosures slowing
economic growth below 2 percent in 128 metro areas. Home-price
declines across the U.S. are projected at 7 percent and as high
as 16 percent in California. 
