Items of Interest HOUSING STARTS PLUNGE 2.6 PERCENT IN AUGUST The seasonally adjusted annual rate was 1.331 million units, according to the Commerce Department today. Starts were down 19.1 percent from a year earlier, falling to the lowest level in 12 years. Presaging a salutary decline in inventory, total building permits fell 5.9 percent in August, down 24.5 percent from a year earlier. Said Chief Economist David Seiders of the National Association of Home Builders (NAHB): "We expect starts and permits to bottom out by mid-2008 before a systematic recovery process gets underway." PRICES ON THE JERSEY SHORE HAVE SLID As summer draws to a close, it's clear that the real estate frenzy has ended at the Jersey Shore, with the leveling off of the wild price rises of the early part of this decade, reports the Record of Hackensack. The number of properties sold so far this year is down 22 percent in Monmouth County, 32 percent in Ocean County and 38 percent in Atlantic County compared with the same period in 2005, according to the Realtors associations in those counties. Statewide, house sales volume this year is running about 20 percent lower than in 2005. Prices at the Shore have fallen about 5 percent or less from their peaks in 2006, according to data from Realtors. That reflects the statewide situation, where prices are generally either flat or down slightly. IF YOUR EYES ARE BIGGER THAN YOUR BACKSIDE, READ ON Major furniture sellers have begun offering sofas that are 94 inches or more in length and 43 inches or more in depth, compared with maximums of about 86 and 36 a decade ago, the New York Times observes. The number of desperate calls for help moving such large pieces, usually by taking them apart, also has grown, as has the number of businesses offering such help. The four most established furniture service companies in the New York City region - Dr. Sofa, based in the Bronx; Garry Furniture Service, in Queens; M.J.S. Furniture Service, in Massapequa, N.Y.; and Z Brothers, in Thornwood, N.Y. - all report a boom in business, even though none of them advertises. They charge $200 -400 to get any couch into any space. YOU CAN GET ROBBED NOT GETTING ROBBED Sales of home security
systems are booming for middle- and upper-class homes, according
to ADT Security Services and the market research firm Parks Associates,
says Forbes in Realtor magazine. LIGHTS OUT The House and Senate are working on legislation that over the next seven years would phase out the conventional light bulb, a move aimed at saving energy and reducing man-made emissions believed linked to climate change, says the Wall Street Journal. General Electric, Philips Electronics and other manufacturers have been meeting with conservation and environmental groups and say they are close to agreement on the general terms of a phaseout. Bipartisan coalitions in Congress are likely to add these terms to a broad energy bill expected to be voted on next month. COMPUTERS MAY SOON RULE THE KITCHEN (TOO) Dream kitchens may soon include a computer along with the latest refrigerator or oven, says the New York Times. That way, people gathered at the family hub can satisfy their digital needs along with nutritional ones. For example, Hewlett-Packard's new TouchSmart IQ770 PC ($1,699 at Circuit City) is designed for that kitchen of the future, where people turn on the computer along with the coffeepot, and then check the screen for the weather, ball scores and the family calendar as they breakfast. The computer also has a high-definition TV receiver, a DVD player and a 19-inch screen that moves up and down as well as tilting. BUT LOOK FOR AN EASING OF GLAMOR IN THE KITCHEN The Wall Street Journal notes that many Americans are losing their appetite for costly kitchen makeovers. Spending on kitchen renovations costing more than $20,000 was $53.4 billion in the year ending last month, a 40 percent drop from the same period a year earlier, according to new data from the National Kitchen and Bath Association, which surveyed about 20,000 consumers. Homeowners aren't tossing in the dish towel altogether, however. The roiling market has convinced many people that it's important to update their kitchens at least somewhat to preserve resale value. Approximately 7.6 million kitchens were remodeled in 2007, according to the trade-group survey, about 200,000 more than the year before. The resale value of kitchen renovations has been shrinking since the end of the real-estate boom. In 2006, a major, mid-range kitchen remodeling job - one that includes such items as new appliances and cabinets - cost $54,241 and returned an average of 80.4 percent of its original price on resale, according to the 19th annual Cost Versus Value survey of more than 2,000 real estate agents in the U.S. by Remodeling Magazine; in 2005, the same job cost $43,862, and recouped 91 percent. Less drastic jobs, such as changing out countertops and refinishing existing cabinets, bring better returns, but there, too, value is shrinking. A minor kitchen remodel cost $17,928 and returned 85.2 percent of its value in 2006; a year earlier, it cost $14,913 and recouped 98.5 percent. FIRST-TIMERS MAY WANT THIS BOOK The mother-daughter duo who collaborated to write "The Pocket Decorator" have teamed up again to produce another portable primer, "The Pocket Renovator: An Illustrated Guide to the Language of Home Improvement and Renovation" (Universe Publishing, $19.95). In a way that is neither pretentious nor boring, according to Terri Sapienza in the Washington Post, mother Pamela Banker (an interior designer) and daughter Leslie Banker (a journalist) decipher the language of home improvement. They discuss general prep work, including building codes, permits and construction plans, and offer renovation tips. (Shelves in a bookcase should be a minimum of seven to eight inches deep. Wall sconces provide the best bathroom lighting, placed on either side of the mirror, 66 to 70 inches from the floor.) Helpful appendices explore the topics of green design, a safe and healthy house, financing and real estate. This guide is written with first-time homeowners and renovators in mind, but it's also a handy reference for those who consider themselves old pros. PAMPER YOUR PET. . . CAR Upscale car condos are a growing trend, according to the New York Times. For example, Jack Griffin, a founder of Dream Garage USA, who recently broke ground on a car condominium complex in Dallas, offers buyers the opportunity to purchase a climate-controlled car condo of 600-2,000 square feet for $140,000-440,000. The spaces are fully customizable, so that the owners can add amenities such as private restrooms, wet bars and entertainment centers; lofts overlooking their collection; or small offices with Wi-Fi networks. Similar car condos - or Auto-Miniums, as one developer calls them - are now being developed in Florida, Arizona and Minnesota. In Phoenix, Goodwood Motoring Club will break ground next year on a development that will offer 15 car condos built around a resort-style courtyard, priced at $680,000 to $1.4 million. Each unit will come with brick-plate tile floors, full bathrooms with granite and travertine, a wine refrigerator and a security system that will allow owners round-the-clock access via the Internet to view their cars or control the unit's lighting and temperature. Bruno Silikowski, the developer of the Auto MotorPlex, a 160-unit car-condo complex that will open this fall outside Minneapolis, says he has already presold about 40 percent of the space. "People will be able to express their personalities in each garage," Griffin says. "There's an element of art involved." Some of Silikowski's clients have a diverse assortment of rare cars, while a few actually have no exceptional automobiles at all. "About a third of them that come in just want a man-cave," says he. "They want a place to get away from everybody." Good! PEEL ME A GRAPE For house hunters at the highest echelon of Britain's housing market - properties valued in the millions - touring homes may involve being escorted in a private jet or helicopter for an aerial view, according to the website for the Daily Telegraph and the Sunday Telegraph of the United Kingdom, says the Wall Street Journal. Buyers of such homes often acquire their residences through private sales, "low-key transactions" in which the availability of the residence is known only to a select few, and the home never actually hits the public market. Buyers can be charged "house-search fees." For instance, one company, Quintessentially Estates, charges clients 1.5 percent the worth of a property. The real-estate agents who facilitate such sales often do more than just initiate and close the transaction; they often stay involved (for a fee) afterwards, helping with details like finding furnishings, introducing families to local schools and hosting house-warming parties, according to the story. HOMES ARE SHRINKING ALONG WITH THE MARKET Many home builders are putting up fewer supersize homes and offering smaller floor plans, notes the Wall Street Journal. That seems to be what buyers suddenly want in an era of high prices and tougher financing. "Financing has tightened down so much that many people aren't able to qualify for the larger houses," said Kathryn Boyce, an account executive with real-estate research firm Hanley Wood Market Intelligence. "Throughout the U.S. people can't afford what they previously did. Floor plans are going to get smaller." Over the past three decades, prosperity and a demand for space to accommodate home theaters, offices, gyms and palatial kitchens has pushed up the average size of newly constructed single-family homes by nearly 45 percent even as the size of the average family has declined. Last year, according to the Census Bureau, the median size of a newly completed single-family home reached 2,248 square feet, up from 1,560 square feet in 1974. The expansion continued into the first quarter of this year, with the median home size inching up to a near-record 2,302 square feet. But it slipped to 2,241 square feet in the second quarter, and many analysts think a broader decline may be in the offing. GOING ONCE, GOING TWICE, GOING 700 TIMES Nearly 700 homes in the Detroit area will be auctioned on three days through Sept. 23, one of the biggest home auctions ever, reports CNNMoney. Rising default rates in the economically hard-hit auto-industry town have riddled the Detroit housing market. There's an abundance of bank-owned properties available for sale. "Because many of these properties have been on the market for a year or more, banks are very anxious to find buyers . . . It's not unusual for the properties to sell at auction below their price list," said Dave Webb, one of the owners of Hudson & Marshall's home auction division, the property auction giant that is conducting the auction. "Right now, it's a buyer's market and there are tons of inventory. I expect prices to come way down," he said. One house in Highland Park, an independent town almost completely surrounded by Detroit, was marketed at $5,900 and did not sell. It's a cute, 900-square foot cottage with three bedrooms and a bath and needs considerable work. One property in West Bloomfield was last listed for $609,000. It is nearly 4,000 square feet with four bedrooms and three baths and reputedly needs only cosmetic work. IF IT LOOKS TOO GOOD TO BE TRUE, LOOK AGAIN Staging -the art of decorating a home to appeal to buyers - does more than make a house pretty: It can trick buyers into buying a home they shouldn't or paying more for a house than they should, according to the Herald Tribune of Sarasota, Fla. In an article quoted by the Wall Street Journal, the newspaper draws upon a study by the National Association of Exclusive Buyers Agents, which found that home staging can draw the attention of four out of five buyers away from important issues such as a home's cosmetic or structural flaws, with half of survey respondents reporting they've seen staging used to cover up home defects. The newspaper says furnishings have been used to hide cracks in walls, broken windows and carpet stains. (And that is a no-no.) In addition to standard staging techniques such as applying a fresh coat of paint to a home's interior and clearing out clutter, other home-staging tricks include using small, apartment-sized furniture to make a room appear larger; placing less furniture in a space to create a feeling of spaciousness (e.g., placing a bed and a chair in a small room, but no dresser); and using glass-covered tables and chairs with slatted-backs to enlarge a space visually. Some other tricks: spray painting lawns green and using a fountain to make a standard bathtub look like a jetted one. Traditional staging is okay, but such tricks are not only unethical but, generally, illegal. THE BEST ANALYSIS YET OF THE FED RATE CUT Consumers should soon start feeling the impact of Tuesday's Fed rate cut in the form of lower borrowing costs and stingier savings rates, says the Wall Street Journal. But the rate cut doesn't offer much help for the key problems bedeviling many mortgage borrowers. 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NEW YORK AND CALIFORNIA PRICES MAY FALL AS RATES RISE Moody's Economy.com co-founder Mark Zandi reports that residential values in the country's most high-priced areas could decrease by as much as 11 percent over the next three-plus years, according to Bloomberg News in Realtor magazine. He and other market watchers forecast that property prices in the ritziest areas of California, New York and the nation's capital will fall in the next 12 months or so in the broadest decline since 1995, a year in which the Federal Reserve hiked interest rates seven times in 11 months. Zandi forecasts that prices could begin their descent in the New York City metro area as early as this year's October-through-December period and continue declining 1-7 percent per quarter through all of next year. Other areas pinpointed for price declines include the San Francisco Bay Area, which saw its home sales decrease in July to their lowest level in a dozen years; Orange County, Calif., where prices began to drop around this time last year; and Long Island, N.Y., which has seen its inventory of unsold residences steadily climb. INDUSTRY GROUP REVISES FORECAST TO 17-YEAR LOW Tighter credit for home mortgages will measurably soften home sales in the short term and postpone an expected recovery for existing-home sales until 2008, according to the latest forecast by the National Association of Realtors (NAR). In its monthly forecast, the advocacy organization cut its estimates for all housing-related indicators for this year and next year compared with last month's forecast. The group expects housing starts and sales of new homes to continue falling through 2008 but forecasts a mild recovery in sales of existing homes next year. Existing-home sales are projected at 5.92 million this year and then expected to rise to 6.27 million in 2008, compared with 6.48 million in 2006. New-home sales should total 801,000 in 2007 and 741,000 next year, below the 1.05 million in 2006. Said NAR Senior Economist Lawrence Yun: "A sharp production pullback by homebuilders deep into 2008 is a healthy trend that will help trim down housing inventory. Housing starts, including multifamily units, are expected to total 1.37 million this year and 1.26 million in 2008, compared with 1.8 million in 2006. That would be the lowest since 1992. Yun sees prices of previously owned homes slipping 1.7 percent to a median of $218,200 this year before rising 2.2 percent in 2008 to $223,000. The median new-home price is estimated to drop 2.2 percent to $241,100 in 2007, then increase 1.7 percent next year to $245,100. THE ANDERSON FORECAST PREDICTS A BUMPY RIDE While an earlier Anderson Forecast called for housing starts to bottom-out at an annual rate of 1.2 million to 1.3 million, the latest forecast report expects a range of 1 million to 1.1 million for housing starts, says Inman News. "And perhaps more importantly, we now believe that the recovery will be far more tepid with starts barely recovering to a 1.4-million-unit annual rate by the end of 2009," according to the report. Housing starts are projected to experience a 55-60 percent peak-to-trough decline, said David Shulman, senior economist for the quarterly University of California, Los Angeles, forecast. He added that home prices would fall 10-15 percent. The decline in housing starts would resemble a similar drop-off in 1986-91, he said, expressing the "hope we're done lowering our numbers." The report comments that "we forecast that it will take years for the housing market to recover to 'normal,' and the situation will be exacerbated in the short-run by changes in legislation affecting the mortgage industry." MANY BUYERS GOT COLD FEET IN AUGUST A new survey of mortgage brokers reveals that one in three prospective home buyers who had signed purchase and sale agreements in August ended up canceling, says Inman News. Not all of the cancellations reported in the survey of 1,744 mortgage brokers by Campbell Communications were the result of problems funding loans. Some deals fell through because buyers could not get approved for a loan or withdrew their offer. In other cases the lender did not honor a loan commitment, went bankrupt or stopped funding loans. Interest-rate changes killed some deals, and sellers backed out of others. Survey designer Thomas Popik of Geosegment Systems said mortgage brokers reported that about one-third of all subprime mortgage applications - both purchase and refinance - were declined in August. A "much lower" percentage of prime conforming and prime jumbo loans were turned down, he added. Popik said 56 percent of subprime borrowers who had signed purchase and sale agreements in August saw those deals fall through for various reasons, compared with a cancellation rate of 21 percent for prime borrowers. When Campbell Communications surveyed real estate agents in 2004 - when the housing boom was in full swing - only 4 percent of home purchase closings failed for mortgage-related reasons. Mortgage brokers surveyed said the ratio of loan to property value for prime jumbo loans had tightened substantially, averaging 90 percent, with the minimum acceptable credit score averaging 679. One-third of mortgage brokers said their most frequently used subprime lenders were no longer accepting applications or funding loans in August and that 15 percent of jumbo lenders had taken similar steps. HELP FOR JUMBO LOAN MARKET IS ADVOCATED The Bush administration will consider allowing Fannie Mae and Freddie Mac to guarantee loans in excess of the $417,000 conforming loan limit to inject liquidity into the secondary market for jumbo loans, officials told Congress, Inman News reports. In testimony before the House Financial Services Committee, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke said that any such move would be temporary. Bernanke also said such action would have to be taken promptly, noting that "if it comes on line in March, it's not going to be effective." In his prepared remarks to the committee, Paulson said there was "little question" any such action "would give a short-term lift which would be helpful." The secondary market for jumbo loans, he said, "has shown some recent improvement but is not functioning as normal." Agreeing that Fannie and Freddie's entry into the jumbo loan sector would improve liquidity, Paulson said logic suggests "that this market will right itself in the weeks and months ahead." RATES EDGE UP The 30-year fixed-rate mortgage (FRM) averaged 6.34 percent this week, up from last week's 6.31 percent but a bit lower than 6.40 percent last year at this time, says Freddie Mac. The 15-year FRM was 5.98 percent, up slightly from 5.97 percent last week and below 6.06 percent last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.21 percent in comparison with last week's 6.17 percent and last year's 6.08 percent. One-year Treasury-indexed ARMs were 5.65 percent this week, down slightly from 5.66 percent. At this time last year, it averaged 5.54 percent. BANKS ARE WOOING BORROWERS WITH GREAT CREDIT While subprime and jumbo mortgage loans are drying up, there is plenty of cash flowing to borrowers with stellar credit who want conventional fixed-rate mortgages, reports the Wall Street Journal. Banks and credit unions are battling for these customers with fee waivers, competitive interest rates and a willingness to negotiate on rates that have dropped in the past three months. "I've talked to many banks who are anxious to lend," says James Chessen, chief economist for the American Bankers Association in Washington. "A good credit risk will always have access to funds at the best rates in the market." LOAN VOLUME ROSE FOR THE WEEK ENDED SEPT. 14 Applications went up by 2.4 percent on a seasonally adjusted basis from one week earlier, which was a holiday shortened week, according to the Mortgage Bankers Association. On an unadjusted basis, the increase was 26.6 percent from the previous week and 12.8 percent compared with the same week one year earlier. Seasonally adjusted, refinancings grew by 4.6 percent from the previous week, while purchase activity rose by 0.9 percent. On an unadjusted basis, the purchase volume increased 23 percent. The refinance share of mortgage activity rose to 43.5 percent of total applications from 42.1 percent the previous week, and the adjustable-rate mortgage (ARM) share fell to 12.6 percent from 13.2 percent. FORECLOSURES SURGE IN THE U.S. New foreclosure activity soared 36 percent from July and more than doubled from a year earlier, according to data provider RealtyTrac in a Wall Street Journal story. The firm said there were 243,947 foreclosure filings - default notices, auction sale notices and bank repossessions - last month. That means there was one foreclosure filing for every 510 U.S. households in August. Having the highest foreclosure filing rate in the country last month was Nevada at one for every 165 households. The total of 6,197 filings was up 21 percent from July and more than triple a year earlier. California was next with a rate of one per 224 households. Its 57,875 filings in August represented a 48 percent surge from a month earlier. In Florida, filings soared 77 percent from July to 33,932, resulting in a rate of one for every 243 households. YVES SAINT-LAURIE KEEPS IT IN THE FASHION FAMILY Pierre Berge, the longtime partner and former lover of the designer, has sold his Fifth Avenue pied-a-terre to Valentino's lifetime partner, Giancarlo Giametti, for a fashionable $7.5 million, according to the New York Post. Berge's two-bedroom, two-bath, 39th-floor co-op in the Pierre hotel had an asking price of $7.75 million. MORE PROOF THAT THERE WILL ALWAYS BE PARIS Paris Hilton, who agreed last month to sell one home near Hollywood, has bought another more than twice the size, says the Wall Street Journal. The 26-year-old hotel heiress and reality-TV star closed a week ago on a nearly 7,500-square-foot Beverly Hills mansion in Mulholland Estates, a guard-gated community with shared tennis courts. Hilton wanted a home with more privacy and paid $5.9 million for the Mediterranean-style house on more than three-quarters of an acre; the asking price was $6.25 million. Built in 1991, the home has five bedrooms and five and a half baths. The shy heiress plans to convert a fitness room into a shoe closet, according to her uncle. Her former house in the Hollywood Hills, of about 3,000 square feet, has a signed purchase contract for $4.2 million. SCAASI HAS DESIGNS ON MOVING Fashion designer Arnold Scaasi, who has dressed the likes of Laura Bush and Elizabeth Taylor, has officially put his One Beekman Place co-op on the market for $9.85 million, reports the New York Post. The spectacular 12-room duplex, with direct East River views from most rooms, includes five bedrooms, four and a half baths, a 30-foot living room, a large formal dining room, a library, a maid's suite and a wine cellar. Other features in the pre-war pad are high ceilings, three wood-burning fireplaces, two staircases, riverfront balconies and "endless walk-in closets." Scaasi's neighbors include Jane Pauley and hubby Garry Trudeau. The exclusive white-glove building has a professional-quality gym, Olympic-sized pool, large riverfront gardens and a garage with valet service. DO TRY THIS AT HOME Trial attorney and author Gerry Spence is asking nearly $35 million for his log cabin-style residence near Jackson, Wyo., according to the Wall Street Journal. The clients of Spence, 78, have ranged from the estate of activist Karen Silkwood to former Philippines First Lady Imelda Marcos. His eight-bedroom home on close to 34 acres in Wilson, Wyo., just west of Jackson, is being offered furnished. The nearly 12,000-square-foot main house includes a media room styled to resemble a stone cave, an exercise room, a steam room and his-and-her offices. QUE BIEN PARA UN CANTANTE Ricky Martin has closed on his new apartment at 40 Bond St. The Puerto Rican-born pop star, who sold his four-bedroom apartment at the Time Warner Center last year for $9.75 million, has paid $6.3 million for a three-bedroom, four-and-a-half-bath condo in Ian Schrager's new building. Martin's 2,637-square-foot unit with 11-foot ceilings includes a great room, a gourmet eat-in kitchen, a dining room and a study off the master suite. The residence features oak floors and a master bath with a "wet room." THE CONDO MARKET IS RATTLING BUILDERS The Multifamily Condo Market Index (MCMI) just released by the National Association of Home Builders (NAHB) lost 14 points in the second quarter of this year to stand at 18, 14 points lower than it was a year ago and its lowest level since NAHB created the index five years ago. The index is derived from a quarterly survey of multifamily builders and developers, in which their responses are rated on a scale of 1 to 100, with a rating of 50 generally indicating that the number of positive responses is about the same as the number of negative responses. According to the index, multifamily builders do not expect improvement in the condo sector through the end of the year. The index gauging condo builders' expectations for the next six months declined to 26.3 in the second quarter of 2007, compared with 33.6 at the same time a year ago. But the builders did report an uptick in traffic of prospective buyers in the second quarter; that index jumped 10 points, up to 36.8 in the second quarter. NOW, FEWER HOMES ARE SAID TO BE OVERVALUED Overvaluation in the nation's housing market continues to decline, with home prices up just 2.6 percent year over year, the weakest gain since 1995, according to real estate forecasting firm Global Insight, reports Realtor magazine. In all, 80 of the 330 metro areas in the analysis experienced price declines from the first quarter. Those 80 metro areas account for 22 percent of the nation's single-family housing units. On a year-over-year basis, 93 metro areas had lower prices in the second quarter. More than half of them were in California, Florida, and Michigan. Overvaluation remains largely a coastal phenomenon - every state on the West Coast, as well as Nevada, Utah, Arizona, New Mexico and, on the East Coast, Florida as well as the Washington, D.C. to Boston, Mass. corridor. BUILDER CONFIDENCE ON THE RENTAL MARKET SLIPS TOO It dipped in the second quarter of 2007 amid concerns that an excess supply in the for-sale market is creating a shadow inventory of available rentals, according to the latest results of the National Association of Home Builders' (NAHB) Multifamily Rental Market Index (MRMI). "Occupancy rates are still reasonably good for rental apartments, but the significant correction we are currently experiencing in the for-sale segment is having some spillover effect," said David Seiders, NAHB's chief economist. "It is probably good for the long-term health of the market that rental apartment developers are easing up their plans for new supply." The component of the index that tracks rental demand slipped to 63.8 percent for Class A (luxury) apartments, off nearly 10 points from its all-time high of 73.2, recorded at the same time last year. FROM THE DEPARTMENT OF THE HARDLY SURPRISING Housing costs ate up more of the monthly paycheck for millions of Americans in 2006 than the year before, according to Census Bureau, says the New York Times. Nationally, half of renters and more than one third of mortgage holders - 37 percent, up from 35 percent in 2005, or a rise of more than 1.5 million households - spent at least 30 percent of their gross income on housing costs, the level many government agencies consider the limit of affordability. Fourteen percent of mortgage-holders spent at least half their income on housing in 2006, up from 13 percent last year, while among renters there was little change. Housing values and rents both rose in 2006. The median gross rent inched up to $763 per month, from $751, and the median home value rose to $185,000 from $173,000. The highest median home values were all in Southern California: Santa Barbara, Santa Monica and Newport Beach, each slightly over $1,000,000. The combined five boroughs of New York City were far down the list, at $496,000, but Manhattan finished fourth among counties, with median home values of $788,000. AND THIS, TOO, FROM THE SAME DEPARTMENT A new Federal Reserve Board analysis of millions of home loans made in 2006 shows a correlation between higher-priced loans that carry heftier interest rates and the rate of serious delinquencies, according to Inman News. As in past years, data collected under the Home Mortgage Disclosure Act revealed blacks and Hispanics were more likely to take out such loans than whites, although it remains a matter of debate whether they are targeted for such loans. At 29 percent, the denial rate for all home loans in 2006 was up slightly from 27 percent in 2005, but varied greatly by race and ethnicity. For home-purchase loans, the gross mean denial rate was 31.6 percent for blacks, 25.4 percent for Hispanics and 17 percent for Asians, compared with 13.1 percent whites. Blacks and Hispanics were also more likely to be stuck with higher-cost loans than whites. Blacks got higher-cost loans 53.7 percent of the time and Hispanics, 46.6 percent of the time in 2006 compared with 17.7 percent of the time for whites. Asians were the least likely of any racial or ethnic group to take out higher-priced loans, at 16.8 percent of the time. Part of the difference in both denial rates and the incidence of higher-cost loans between ethnic groups can be explained by factors such as property location, income relied on in underwriting, and loan amount, Federal Reserve Board analysts said. After adjusting for such factors, and factoring in the specific lending institution used by the borrower, the differences between groups were less pronounced. BUILDERS ARE DEPRESSED FOR THE SEVENTH STRAIGHT MONTH Concerns about the substantial inventory of new homes for sale and the effects that deepening mortgage market problems are having on buyer demand caused builder confidence to decline for a seventh consecutive month in September, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI dropped two points to 20, tying its record low reached in January of 1991. (The measurements began in January, 1985.) Commented Chief Economist David Seiders of the National Association of Home Builders: "We now expect to see home sales return to an upward path by the second quarter of 2008 and we expect housing starts to begin a gradual recovery process by the third quarter of next year. At that point, the market will have substantial growth potential." ARE THERE SIGNS THAT DEVELOPERS ARE GETTING DESPERATE The first concrete signs of a slowdown in the city's residential markets are appearing, with an increasing number of developers promising to cover buyers' closing costs or offering brokers higher commissions if they bring in sales, observes the New York Sun. Incentives to lure buyers are increasing in new developments in some neighborhoods of Manhattan and Brooklyn. At a new 45-unit development in Hell's Kitchen - which has seen price tags cut on 11 units by as much as $50,000 since March - the developer is offering to pay the closing costs that are traditionally shouldered by the buyer. Closing costs, which include state and city transfer taxes, and fees for the brokers and lawyers, add up to thousands of dollars. For example, a two-bedroom unit at the building has an asking price of $1.4 million, with closing costs of about $30,000. And in East Harlem, one developer is advertising an even more generous deal: In addition to paying the closing costs, it will pay two months of maintenance and the first month of common charges and insurance. Another strategy developers are employing is to offer brokers higher commission checks. For example, a few months ago brokers were offered a commission payment of 3 percent of the unit's price in a Carnegie Hill building, where now 4 percent commissions are offered. NEW YORK MAGAZINE ASKS A QUESTION
THE WHITE AND NON-HISPANIC POPULATION IS LEVELING OFF After shrinking for decades, the proportion of New Yorkers who are white and non-Hispanic appears to have leveled off since 2000 and may even have risen slightly in 2006, the latest year surveyed by the census, according to the New York Times. If that trend is sustained, it would make New York one of a handful of major cities - with Atlanta, Boston, San Francisco and Washington - where whites had become a minority, but where black flight has exceeded the departure of whites since the beginning of the decade. In Boston, the figures indicate that whites became a majority again in 2006. New York City lost 361,000 white residents in the 1990s, but since 2000 has gained more than 53,000. They accounted for 34.8 percent of the population in 2006, slightly more than in 2005. The citywide trend was propelled by growth in Manhattan and Brooklyn, the only counties in the region where the number of white residents increased since 2005. According to the latest census count, more than 27 percent of New Yorkers are of Hispanic origin, nearly 24 percent are black and almost 12 percent are Asian. "The decline of the white population seems to have come to an end," said Andrew A. Beveridge, a demographer at Queens College. But Joseph J. Salvo, director of the New York Department of City Planning's population division, cautioned against reading too much into the latest figures, given that many Hispanic people identify themselves as white and taking into account the diversity within the white population. That "internal mix of ethnics" has shifted, he said, as older Europeans die or move away and are replaced by, among others, Eastern Europeans from the former Yugoslavia and Soviet Union. The proportion of immigrants in the city, 36.9 percent, continued to inch toward the record of about 40 percent early in the 20th century. The proportion of people who speak a language other than English at home rose slightly to nearly 48 percent. HOME OWNERSHIP LAGS THE REST OF THE COUNTRY It is barely half the rate of the rest of the country, reports the New York Post. More than two-thirds, or 67.3 percent, of single-family homes, co-ops and condos nationwide were owner-occupied in 2006, the last year for which figures were available. The figure in New York City was just 34.4 percent, according to a Census Bureau report. About 1 million New Yorkers owned their own homes last year; the market consists of approximately 3 million residences. According to the New York Times, large percentages of New Yorkers see an increasing proportion of their income go to their mortgages and rents. Homeowners in Brooklyn and renters in the Bronx are carrying the heaviest burdens, with many spending half or more of their monthly paychecks on housing. In Brooklyn, 31 percent of homeowners with a mortgage are spending 50 percent or more of their income on housing costs. In the Bronx, 32.9 percent of renter households are paying a similar share of their income for their apartments, according to analysis of the Census Bureau's 2006 American Community Survey. In 2006, 26.4 percent of homeowners with a mortgage in the city paid half or more of their income on housing, up from 25.4 percent in 2005. About 49.8 percent of homeowners with a mortgage in the city were paying 30 percent or more of their income on housing, a level commonly viewed as a limit of affordability, compared with 48.8 percent in 2005. The city's median gross rent climbed to $945 a month, up from $909 in 2005. In Manhattan, the median rent was $1,081; renters in the city spending at least half their income on housing remained unchanged from 2005 to 2006, at 27.9 percent. TOWNHOUSE PRICES QUINTUPLED IN THE LAST 10 YEARS SOME LENDERS ARE ROOTING FOR FORECLOSURES They are investors who make mortgage loans with their IRAs, observes the Wall Street Journal. Through a little-known tool known as a self-directed individual retirement account, individuals can pursue a wide variety of investments, from real estate to businesses. Now, at least several thousand people are trying to goose their retirement savings by using self-directed IRAs to invest in mortgages. Typically, IRA investors make loans with terms lasting from three months to a few years to fixer-uppers, small-scale developers or families who are relocating and need a bridge loan between home sales. They normally find borrowers through an informal network of real-estate agents, mortgage brokers and other investors. IRA owners pay an annual custodial fee and transaction fees, ranging from $50 to a few thousand dollars a year, depending on asset size and activity. They typically charge borrowers a rate of at least 10 percent. If the borrower defaults, the IRA can wind up owning the property at a deep discount, since these deals are typically structured with the property as collateral. Ground Zero? In the debatable event that the housing market turns in New York City, as some are predicting, where will the greatest impact surface first? Logic suggests that it will be in the neighborhood called the Financial District (aside from areas still considered transitional), where volatility in the New York Stock Exchange and a crunch in the credit markets can reverberate almost palpably. Minutes from Wall Street,
Greenwich Village, Battery Park, Chinatown, SoHo and the site
of the World Trade Center, New York's Financial District
is literally in the middle of everything. From high atop the soaring
office buildings being converted at breakneck speed into high-end
condos, this area provides a great view of the New York Harbor,
the Statue of liberty and those deep, unnatural canyons. But there is little
to commend it after business hours. Proximity to much of the financial
services industry in an exceptional center of finance may account
for the popularity of the dark and forbidding canyons on and surrounding
Wall Street as a place to live. Normally considered the place
for daytime traders and office workers, the Financial District
has, in fact, somehow become increasingly residential over the
last few years. Who wants to live there now? Not surprisingly, many of the new residents are those who want to be close, have significant dollars to spend on apartments with panache and who hanker for downtown's charged club, bar and restaurant scene. (Those will money to spend in the many millions of dollars also contribute mightily to the luxury market throughout Manhattan, and that market may already be softening, as well, if change occurs.) Well can they afford such a choice. Indeed, the Downtown Alliance estimates that the median annual income among the households in the financial district is $165,000, which is about triple the figure for Manhattan as a whole. Would you expect ground zero for real estate to be anywhere else? Is the handwriting already on the wall? The Trullia real estate website recorded a 17.5 percent decline in the average price of apartments in the neighborhood between February-April this year and May-July. But prices were higher than one year earlier: $1.2 million for the most recent three-month period versus $903,750 for those months in 2006. If every cloud has a silver lining, the Financial District may well be the neighborhood where the biggest potential for reward over time will be the biggest; perhaps this is the time for bottom fishing. But do bear in mind that any forecast at this point is built on numerous assumptions that amount to unreliability. Clouds in the forecast are, thankfully, still unformed and undetectable with any certainty. Equivocal? That's not an unintended. Meantime, consider these properties in the Financial District, or FiDi, as insiders call the neighborhood:
Upper West Side
Upper East Side
Elsewhere in Manhattan
Some of Manhattan's Latest Listings Please click here to view available properties. (To view all photos, tours, floor plans and maps, please use Internet Explorer.) Click Here to Sign Up For Your Free Issue of Realty Digest!
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2007 Service You Can Trust |
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Among
the newest high-end approaches to home security are a $1 million
system from a Los Angeles company that includes bulletproof walls,
ceilings and windows, and an option that drops gas blankets on
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contains a unique forensic code that glows under ultraviolet light,
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of burglars.
It's
this: Is New York immune to the market forces presently shaving
billions off home values in the rest of the country? "Irrational
exuberance or irrational paranoia? Bubble or Biodome?" the
magazine wonders. The publication "turned to some of the
brightest minds in real-estate economics" - Harvard professor
Edward Glaeser, Brad Inman of Inman News, NYU economics professor
Nouriel Roubini, Tim Harford (author of The Undercover Economist),
George Mason University's Tyler Cowen, and Urbandigs.com founder
Noah Rosenblatt - to come up with competing best-case and worst-case
scenarios from now to 2010. Following that piece, check out the
analysis by neighborhood.
The
Manhattan townhouse market is a fixed form of residential housing
stock that has very few new structures added owing to limited
acceptance of new construction, notes Jonathan Miller of the Miller
Samuel appraisal firm. That market accounted for 2.8 percent of
all the sales over the past 10 years, with a 3.1 percent market
share in 2006. The average square footage was 4,188 in 2006, the
average width was 19.1 feet and the average number of stories
was 3.9. Over the past ten years, there has been a significant
increase in market share of Uptown townhouses, growing from 6.2
percent of all townhouse sales in 1997 to 45.1 percent in 2006.
The average sales price of a townhouse, excluding Uptown, was
$6,398,223 in the current year, up 14.5 percent from the prior
year average sales price of $5,587,277 in 2005 and up 251.2 percent
from the $1,821,980 average sales price in 1997.
