Items of Interest SURPRISINGLY, SALES OF PREVIOUSLY OWNED HOMES RISE Existing-home sales - including single-family, townhomes, condominiums and co-ops - rose 2.9 percent to a seasonally adjusted annual rate of 5.03 million units in February from January, says the National Association of Realtors (NAR). Ending six months of reduced sales, they remain 23.8 percent below one year earlier. One apparent cause of the boost was a decline in the national median existing-home price for all housing types to $195,900 in February, down 8.2 percent from a year earlier. Because the slowdown in sales from a year ago is greater in high-cost areas, there is a downward pull to the national median price because of relatively fewer sales in higher priced markets. POPULAR INDEX RECORDS STEEP DECLINE OVER A YEAR Home prices across
the country continued to fall in January at record rates, according
to the New York Times. The value of single-family homes plummeted
10.7 percent in January compared with a year earlier, as measured
by the Case-Shiller index, a closely watched survey of 20 major
metropolitan regions. It was the steepest year-over-year decline
since the index began eight years ago, and GOVERNMENT INDEX SHOWS 3 PERCENT PRICE DECLINE IN 2007 U.S. home prices fell approximately 1.1 percent on a seasonally-adjusted basis between December 2007 and January 2008, according to a new monthly index by the Office of Federal Housing Enterprise Oversight (OFHEO). For the 12 months ending in January, U.S. prices fell 3.0 percent. Since its peak in April 2007, the monthly index was down 4.1 percent. The monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac; that is, for properties then selling for less than $417,000. THREE REPORTS (ABOVE) AND THREE DIFFERENT RESULTS Why? As Blanche Evans notes in Realty Times, the S&P Case-Shiller Index is "notoriously pessimistic backward-looking." As stated above, that index says housing prices fell a record 2.4 percent between December and January and 10.7 percent for the year. Following on the heels of the February report from the National Association of Realtors (NAR), the Case-Shiller report appears to contradict the NAR's findings that home sales went up 2.9 percent and home prices fell 8.2 percent over the past year. "Well, there's a reason for that" Evans points out. "The two reports don't cover the same period, the same markets, or the same types of housing. The NAR's report covered February, not January, and it includes all market areas where there's a Realtor reporting sales, and it includes multifamily housing such as condos and coops. So to say the NAR's report is a little more relevant is an understatement." Then there are the federal government's figures, which omit housing sold for more than $417,000 last year. SALES OF NEW SINGLE-FAMILY HOMES DROP 1.8 PERCENT February posted sales posted the lowest annual rate in 13 years, a 59.8 percent plunge from July 2005, when a record annual rate of 1.39 million units was recorded. The median sales price of new houses sold in February 2008 was $244,100, down 2.7 percent from the prior February; the average sales price was $296,400, down 7.8 percent. The supply of new, single-family for-sale homes was estimated at 9.8 months in February, the time it would take to exhaust the inventory at the month's pace of sales. Unchanged since January, inventory was up 21 percent compared with February 2007, the highest level since October 1981's estimated 10.3 months' supply. CONDOS WILL BE FLOODING THE MARKET The condominium market is about to get worse as many cities brace for a flood of new supply this year, observes the Wall Street Journal. More than 4,000 new units will be completed in both Atlanta and Phoenix by the end of the year. Developers in Miami and Fort Lauderdale, Fla., are readying nearly 10,000 total new units in a market already struggling with canyons of unsold condos. San Diego, another hard-hit region, will add 2,500 units, according to estimates provided by Reis Inc., a real-estate-research firm. The new building comes on top of unprecedented supply. The U.S. finished 2007 with a supply of condos large enough to absorb 10 months of demand, the highest level since the National Association of Realtors began the tally in 1999. Lenders of all sizes have $42 billion of condominium debt on their books, according to Foresight Analytics. In just three months - between the third and fourth quarters of last year - the delinquency rate rose to 10 percent from 5.9 percent, says the research firm. Many developments nationwide are being canceled, suggesting that by next year or 2010, the number of new condos coming onto the market may slow to a trickle. Prices of condos have been steady in some areas and have fallen elsewhere. For example, inside the newly minted Quantum on the Bay in Miami, prices for two-bedroom units have plunged from the high $700,000s to around $500,000. As more condominium projects get into trouble, investors are looking to pounce; some 700 people showed up for a distressed-real-estate conference in Miami. SALES OF VACATION PROPERTIES FELL IN 2007 They plummeted 30.6 percent in 2007 compared with the prior year, with investment-property purchases down 18.1 percent, according to the National Association of Realtors, says Inman News. Based on responses from 1,965 second-home buyers, the survey concludes that investment-property purchases accounted for 21 percent of total home sales in 2007, down from 22 percent in 2006, while purchases of vacation properties accounted for 12 percent of all home sales in 2007, down from 14 percent in 2006. The median sales price of vacation properties was estimated at $195,000 in 2007, down 2.5 percent from a year earlier; investment properties remained flat at $150,000. DATA COLLECTION COMPANY SEES IMPROVEMENT AHEAD Segments of the U.S. residential market are showing signs of stability and improvement, according to Radar Logic, noting that its data are from January, the low point in the seasonal cycle. "While we see similar pressures as have been reported by others, these may be the result of a specific confluence of factors which we believe need to be watched closely," said CEO Michael Feder. "The spring is when most markets show seasonal rebounds, and there is some evidence that we could observe this phenomenon in the next several months." Still, of the 25 Metropolitan Statistical Areas (MSAs) examined, only two residential markets (New York and Charlotte) showed price increases, two markets (Milwaukee and Philadelphia) were neutral, and 21 markets experienced price declines on a year-over-year basis. "However, since December 2007, seven markets show price increases and two other markets, although down, show relative improvement," according to the company. "Prices in the two largest markets, New York and Los Angeles, exhibit some bifurcation, with 'motivated sellers' accepting lower prices and non-motivated sellers holding or increasing prices." Luxury and mainstream markets are behaving differently, Radar Logic's report said, outperforming the broad real estate market in both New York and Los Angeles. "The impact of the recently increased levels and availability of Federally supported mortgage credit likely does not influence the January figures and may become increasingly important as we enter the traditional buying season over the course of the next few months," the company speculated. MOVING COMPANIES ALWAYS WARRANT INVESTIGATION So says Linda Bauer Darr, president and chief executive of the American Moving and Storage Association, who notes that there are two primary scams: the hostage-goods scam and the advance-deposit scheme, according to the Washington Post. "In a hostage-goods situation, somebody has already moved your stuff and quoted you one price. But by the time you get to the destination, they’re holding on to the goods and they ask you to pay an inflated price," she said. "We all know that when someone's charging twice the amount they originally quoted, something's gone afoul.” In a deposit scam, movers ask for a lot of money upfront and then never show. Red flags include movers which have no interest in an on-site inspection of your goods, accept only cash or a large deposit beforehand, have no local address or information about licensing on their Web site, provide estimates that are much lower than any other estimate you receive, or refuse to put everything, or anything, in writing. You can also check out a company with the Better Business Bureau and on these Web sites: fmcsa.gov, protectyourmove.gov, moving.org and movingscam.com. ACTING EMOTIONAL, SELLERS ARE STICKY ABOUT PRICING Although overall home
sales have fallen a remarkable 33 percent since the summer of
2005, the New York Times notes that home prices continued to rise
until 2006 and are now only 5-10 percent below where they were
in mid-2005. For both economic and psychological reasons, there
is no asset more NOT ONLY ARE SOME HOMEOWNERS HURTING In the first wave of the housing crisis, homeowners across the U.S. lost their properties to foreclosure, says the Wall Street Journal. Now, many of the nation's small and midsize home builders are on the ropes. And builders' problems are now threatening losses for small and medium-size regional banks, which flocked to construction lending as the housing market boomed. Though these institutions were generally less exposed to the subprime-backed securities that have generated billions of dollars in losses for national banks, they are the front-line casualties when builders and developers can't make their payments. Delinquencies on loans to build single-family houses reached 7.5 percent of the value of all such loans in the fourth quarter, up from 2.1 percent a year earlier, according to Foresight Analytics, an economic and real-estate research firm. "Even rock-solid, generational businesses are taking desperate measures," says Jerry Howard, the chief executive of the National Association of Home Builders. Banks in Georgia are requiring some builders to pay off their loans in full or contribute additional equity that they don't have, according to the 2,000-member Greater Atlanta Home Builders Association. Builders' struggles mean that when housing demand recovers, the industry could be more consolidated and dominated in many markets by large builders such as D.R. Horton, Lennar, Pulte Homes, Centex, KB Home and Toll Brothers. DETROIT IS TURNING INTO A HOT MARKET - FOR INVESTORS From as far away as Hong Kong and Hawaii, investors are going to Motown to make their fortune buying foreclosed homes in bulk, reports the Free-Press. Some buyers are looking to buy 100 or more homes at a time. Smith Kitporka, 28, an investor in San Jose, Calif., said he has been buying Detroit foreclosures for two years, often paying as little as $10,000. Last year, metro Detroit led the nation in foreclosures. Of the 10,342 homes on the market in Detroit recently, 3,355 were bank-owned foreclosures, according to Realcomp Inc. And in the tri-county area, 7,104 bank-owned foreclosures were listed out of 47,095 homes on the market. The new trend is to buy properties cheap from banks in bulk and then sell the properties to investors who hope to collect rent until the market improves. In the business, such investors are called vultures. En masse, they must be flocks, all of them banking on a Detroit recovery in the next 5-10 years. BUS RIDES TO A BARGAIN ARE BECOMING THE RAGE A new form of sightseeing is catching on in the Washington, D.C. suburbs, offering investment advice, free cookies and some eye-opening discoveries among the empty ramblers and forsaken townhouses of the region, according to the Washington Post. They are known as foreclosure tours or home buyer tours. One that originated at a Northern Virginia Long and Foster office was labeled "The Centreville Gateway Foreclosure Tour of Homes." More than 30 "tourists" squeezed onto a green passenger bus for a three-hour spin through parts of Fairfax, Loudoun and Prince William counties. Some said they were looking for their first home, others were looking for a good investment, and some were just looking. FORECLOSURES ARE CREATING FOUR-LEGGED VICTIMS Shelters and animal rescue organizations across the country are packed cage-to-cage with dogs and cats, even birds and reptiles, that have been ditched or dropped off as scores of foreclosed-upon homeowners relocate, says the Wall Street Journal. "There are a lot of people who are just walking away and leaving their pets behind, which breaks everyone's heart," said Barbara Ward-Windgassen, president of Anthem Pets, a nonprofit animal welfare organization in her Arizona community. The number of abandoned pure-bred dogs in her neighborhood alone has jumped 10-fold just since Christmas. "It just boggles my mind," she said. "It's cutting across all income levels and age levels." There are no national statistics on pet abandonment or on the number of pets found in vacant properties. But Stephanie Shain, director or outreach for the Humane Society of the United States, said shelters are reporting full capacity and rescue organizations tell of sharper increases in the numbers of animals coming in. "The economic times are making everyone pull their belts in a little tighter and people are having trouble taking care of their pets or keeping them if they've lost their home," she said. As consumers face foreclosures, they often move first to rental apartments or homes that won't allow pets. They're also likely to give their pets up if they find themselves imposing on a family member for housing. TORRID PACE OF SALES IS SLOWING, YET PRICES RISE The elevated pace
of sales from the past five quarters is cooling as the volatility
in the financial markets begins to touch Manhattan, according
to a report on the first quarter by the Miller Samuel appraisal
firm for Prudential Douglas Elliman. Skewed by anomalous activity
in the luxury market, the PERMIT ISSUANCE PLUMMETS The number of new building permits issued in New York City in January and February was down about 40 percent compared with the same period last year, according to the city's Department of Buildings, says the Observer. The city issued 451 new-building permits in January and February and 764 during those months last year and 859 during the same period in 2006. LENDERS HAVE YET TO WISE UP ABOUT APARTMENTS HERE Paul Cole, of the mortgage-brokerage firm Trachtman and Bach, notes that New Yorkers who are neither subprime borrowers nor financially dicey are often confounded by arcane house rules that are incompatible with our urban landscape, says New York magazine. "The business of mortgages and common sense don't necessarily mix,” says Cole. Take four-unit co-ops. While they’re standard-issue in well-off brownstone neighborhoods like Park Slope, Cole says they’re practically untouchable for some lenders. So are apartments with window bars; if an appraiser photographs them, a red flag will sometimes go up. Some banks won’t fund co-op deals at all, says Jeffrey Guarino, managing director of Gotham Capital Mortgage - and cooperatives constitute 75 percent of New York’s salable housing stock. Small properties can also be suspect. Even though the city is thickly speckled with bank branches, lending rules are often hatched in far-off places, where walk-ups are considered slums and 500-square-foot apartments are hard-to-sell oddities. "Here's the thing: We forget sometimes that New York City is a small piece of a lender's portfolio," says Guarino. Today's suspicious mortgage climate doesn’t help, either. "No one's in the mood to make exceptions," explains Cole. "You may think you're qualified, but that may not matter." MATCHMAKER, MAKE ME AN UNLIKELY MATCH Hosts (people with an extra bedroom in their home) can locate guests (those who need an affordable place to live) with the help of the New York Foundation for Senior Citizens, which in 1981 started an intergenerational roommate service that makes such matches, notes the New York Times. The foundation recently expanded the age range for those eligible from both host and guest being 60 or over to just one of the two. Guests provide a monthly contribution toward household expenses - usually less than $1,000 - and, often, some household services. The typical host is a widow who owns a house in a borough outside Manhattan or rents a large apartment. Guests are often students, artists or recently divorced persons, sometimes new to New York. To learn more about the organization's Home Sharing Program, check out nyfsc.org. IS THIS THE TIME TO SNAP UP A MILLION-DOLLAR HOME Maybe, if you want to live in Rancho Santa Fe, Calif., Marco Island, Fla., Castle Rock, Colo., Annandale, Va., or Bergen County, N.J. Those are five high-end areas where million dollar foreclosures abound, according to Forbes in Realtor magazine. Traditionally good borrowers with strong credit scores previously purchased a lot of these homes. In many cases, the foreclosure has come about because the homes are now worth significantly less than the inflated prices the owners originally paid. The homes have sunk into negative equity situations and the previous owners don't want to make the payments, so they walk away, says Wendell Cox, founder of Demographia, a housing research company. THE MARKET FOR TROPHY APARTMENTS HAS BEEN STRONG While sellers of lower- and mid-priced homes have suffered, some real estate watchdogs maintain that the market for trophy properties has remained insulated from price fluctuations, according to the Real Deal, which set out to get a sense of how the ultra-high-end of the market was faring. The monthly publication looked at sales of $20 million and over in the first two months of 2008 and compared them with sales in the first two months of 2007. Also examined were data for the top 25 sales between January 2007 and March 10, 2008. Sales ranged in price from $26 million to a record $51.5 million-plus. "Data show that this top slice of the eight-figure niche is still holding up," the magazine recounts. The number of these sales doubled in the first two months of 2008 over the first two months of 2007. In January and February, there were 11 closed sales of $20 million and over, compared with five in the first two months of 2007. Ultra-high-end prices also increased modestly year over year. This year, the average sales price of the top deals increased 5.7 percent, or $1.6 million, to $29.1 million from $27.5 million in 2007. The top sale on record in the first two months of this year was $11 million higher than the priciest sale, $35 million, in the first two months of last year. The $46 million sale, a record price for a New York City co-op, was for a 17-room, seven-bedroom duplex penthouse at 1060 Fifth Ave. The buyer was hedge funder Scott Bommer and his wife, Donya, a former television anchor. Their purchase contrasts to the top sale in January and February 2007, a four-story townhouse at 36 East 75th St., which the Russian Federation purchased for $35 million. PRICES OF RENT-STABILIZED BUILDINGS SHOOT UP The median sales price of a rent-stabilized building in Manhattan skyrocketed from $1.99 million to $4.5 million between 2003 and 2007, according to figures from the Rent Guidelines Boards, reports the New York Post. Prices for rent-regulated buildings in the other boroughs also zoomed: 78 percent in Queens, 81 percent in Brooklyn and 92 percent in the Bronx. PROSPECTIVE TENANTS WITH SUBSIDIES CANNOT BE DENIED The City Council has overridden Mayor Bloomberg's veto of a bill to prohibit landlords from discriminating against tenants who intend to pay their rent with federal rent-subsidy vouchers or any other form of government assistance, says the New York Times. The law takes effect immediately. The mayor had described the measure as well-intentioned but flawed, in part because it forced private landlords to participate in a voluntary public program. Tenants who receive the rent subsidies, known as Section 8 vouchers, pay about 30 percent of their income toward rent, and the vouchers cover the rest. Many Section 8 tenants are low-income residents, and supporters of the bill argued that landlords were frequently turning away voucher holders to keep poor tenants out and were thus cutting off a much-needed form of housing for them. New York City is home to the largest Section 8 program in the country, with more than 85,000 vouchers subsidizing apartments for about 270,000 New Yorkers. The new law applies to buildings with six or more units. Owners of five or fewer units, with some exceptions, are excluded. The law allows Section 8 tenants who feel that they have been discriminated against to file a complaint in State Supreme Court or with the city's Commission on Human Rights. SOME CONDOMINIUMS ARE GETTING STIFFED BY RESIDENTS The buildings are increasingly seeing residents fall behind on their payments of common charges, a stark reminder that condo boards don't exercise the same level of financial stringency that co-ops do, observes the Real Deal. Analysts aren't quite alarmed by the trend yet, but even a small rise in fee delinquencies is noteworthy. Attorney Bruce Cholst, who specializes in co-op and condo law, said he has seen an increase in the volume and frequency of warning letters sent to condo owners for fee delinquency over the past six months. He said many of those owners heed the warnings, but end up back in arrears a couple months later. Others interviewed said some condos are asking for common charges several months in advance as delinquent owners refinance. They also warned that more condo owners could fall behind as adjustable-rate mortgages reset to higher rates. "I see some condos starting to request additional information or documents [from buyers]," said Michael Motelson, a New York attorney and president of Dome Property Management, which manages more than 100 condo buildings in the New York metropolitan area. NEWLY APPROVED FHA LOANS WILL COST BORROWERS MORE Mortgage borrowers seeking the new supersized loans backed by the Federal Housing Administration will have to pay a sizable premium, Wall Street analysts say, according to the Wall Street Journal. Congress recently approved legislation that raises the ceiling on loans the FHA can insure to as much as $729,750 from $362,790 in the highest-cost areas. The limits are due to expire at the end of this year, but pending legislation could bring a permanent increase in loan sizes. Early bidding by mortgage-bond dealers suggests the larger FHA-insured loans will require interest rates around 0.375 percentage point higher than rates on normal FHA loans, said Mahesh Swaminathan, a mortgage strategist at Credit Suisse in New York. The rates could be higher than that estimate, though. Chris Freemott, president of All American Mortgage, a lender in Naperville, Ill., said early indications from the investors that buy his loans are that the rate will need to be at least about 0.5 point higher on the bigger loans. Government-sponsored investors Fannie Mae and Freddie Mac also are introducing larger loans under the temporary authority from Congress. Early indications are that the larger Fannie and Freddie loans may require interest rates about 0.5 point higher than ordinary ones, Swaminathan said. Even so, the rates on these loans are expected to be lower than those on mortgages that aren't backed by Fannie, Freddie or the FHA. LOAN APPLICATIONS NOSEDIVE The Mortgage Bankers Association (MBA) says seasonally adjusted volume for the week ending March 28 was 28.7 percent below the previous week. On an unadjusted basis, the decrease was 28.1 percent, but it was 4.8 percent higher than the same week one year earlier. Refinancings went down 38.1 percent from the previous week, and seasonally adjusted purchase activity declined 11.8 percent. The refinance share of mortgage activity decreased to 53.4 percent of total applications from 62.0 percent the previous week, and the adjustable-rate mortgage (ARM) share increased to 5.4 percent from 3.8 percent. BANKS ARE BECOMING MORE OPEN TO SHORT SALES After about a year of dealing slowly and reluctantly with short sale offers, many banks are reconsidering. They are looking for solutions that will allow them to recoup debt in foreclosure situations, says Forbes in Realtor magazine. Observers indicate that if the trend continues, it will reduce or eliminate the need for taxpayer bailouts. The National Short Sale Center, which helps short buyers negotiate with banks, says three-quarters of its short offers are approved now, up from maybe half six months ago. "Before, people on the phone at banks didn't even have the authority to negotiate. Now they're calling us with numbers," says Pam B. Canada of nonprofit NeighborWorks in Sacramento, Calif. THOSE MORTGAGE BROKERS FIND OTHER WAYS TO MAKE $$$ Across the country,
key players in the real estate boom are adapting to the new reality
of the marketplace, observes the Wall Street Journal. Some former
mortgage brokers have become credit counselors, trying to help
homeowners avoid foreclosure on the loans they previously sold
them. SOME FOLKS ARE CLEANING UP FROM FORECLOSURES It’s that small army of law firms and default servicing companies who represent mortgage lenders. They have been raking in mounting profits, according to the New York Times. These little-known firms assess legal fees and a host of other charges, calculate what the borrowers owe and draw up the documents required to remove them from their homes. As the subprime mortgage crisis has spread, the volume of the business has soared, and firms that handle loan defaults have been the primary beneficiaries. Law firms, paid by the number of motions filed in foreclosure cases, have sometimes issued a flurry of claims without regard for the requirements of bankruptcy law, several judges say. Court documents say that some of the largest firms in the industry have repeatedly submitted erroneous affidavits when moving to seize homes and levied improper fees that make it harder for homeowners to get back on track with payments. Consumer lawyers call these operations "foreclosure mills." JUMBO LOANS BEYOND $417,000 ARE NOW AVAILABLE But don't expect eligibility standards to be as generous as with the lesser loans, Kenneth R. Harney warns readers of the Washington Post. For example, in the guidelines for what Fannie Mae calls its new "jumbo conforming" program, the company will, beginning April 1, buy fixed-rate mortgages up to $729,750, but only with the following conditions: Minimum down payment of 10 percent; minimum FICO credit score of 700 for any loan with less than a 20 percent down payment; nontraditional" credit histories as alternatives to FICOs are not permitted; minimum 40 percent down payment and 660 FICO for second homes and investor properties; no balloon or negative-amortization payment terms allowed; household debt-to-income ratios cannot exceed 45 percent. Freddie Mac announced similar standards but wants minimum 700 FICO scores on any loan with less than a 25 percent down payment. And don't expect interest rates on the new super-size conforming jumbos to be anywhere near competitive with smaller mortgages. FANNIE MAE TIGHTENS ITS STANDARDS The government-sponsored provider of funding for home loans told lenders it will require a minimum credit score of 580 for most loans it buys on an individual basis, reports the Wall Street Journal. Credit scores, which range from 300 to 850, are designed to measure borrowers' likelihood of repaying loans. In the past, Fannie had no minimum score. The company said it will still acquire loans with lower credit scores in certain circumstances. Among other changes announced to lenders, Fannie also said it will increase the period needed for borrowers to "re-establish" their credit history after a foreclosure to five years from four years. Fannie said it would allow shorter recovery periods for borrowers with "documented extenuating circumstances" that caused the foreclosure. FORECLOSED HOMEOWNERS TAKE THAT AND THESE Bankers and mortgage companies often are finding that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc, says the Wall Street Journal. Real-estate agents estimate that about half of foreclosed properties to be sold by mortgage companies nationwide have "substantial" damage, according to a new survey by Campbell Communications, a marketing and research firm based in Washington, D.C. The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. A ransom? A bribe? "Yeah, somewhat," says John Carver, an agent specializing in foreclosed homes for Prudential Americana Group in Las Vegas. But "you lose a house, and then you get some financial help - it's a good thing. . . It's a win-win for both parties." REAL ESTATE DATA SITE RECORDS BOOMING FORECLOSURES Despite the improvements over January, according to PropertyShark.com, all regions had higher numbers of new foreclosures when compared with February 2007, ranging from a 9 percent increase in Seattle to 96 percent in Miami and 210 percent in Los Angeles. New York City saw an increase, as well, of 121 percent. After setting monthly records in January 2008, Los Angeles (down 35 percent), Miami (down 21 percent) and Seattle (down 18 percent) saw significant improvements in the number of new scheduled foreclosure auctions compared with the prior month. However, New York City set another two year high, with a 13 percent increase over the previous month. There were 300 first time foreclosures scheduled in New York City for February 2008, a 12.78 percent increase in new foreclosures over January 2008 and an increase of 112.8 percent over February 2007. New foreclosure auctions in Queens and Brooklyn jumped by 25 percent and 20 percent respectively in comparison with January 2008, with Queens reaching two year highs. "New York City first time foreclosures reached record monthly highs since we have been tracking them, led by 20 percent-plus monthly increases in Queens and Brooklyn," commented Ashleigh Rose Clark, data acquisitions manager at PropertyShark.com. RATES DRIFT UP The 30-year fixed-rate mortgage averaged 5.88 percent for the week, up from last week's 5.85 percent but lower than the 6.17 percent of one year earlier, according to Freddie Mac. The 15-year FRM this week was 5.42 percent, up from 5.34 percent the previous week. It was 5.87 percent a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.59 percent, down from 5.67 percent and last year's 5.92 percent. One-year Treasury-indexed ARMs were 5.19 percent this week, down from the prior week's 5.24 percent and 5.44 percent at this time last year. "While prime, conforming rates still remain at historically low levels, long-term mortgage rates did drift slightly upwards this week on signs that the economy may have a little more strength than what financial markets forecasted," said Frank Nothaft, Freddie Mac vice president and chief economist. "Strong economic growth can lead to an up-tick in inflation fears, which tends to place upward pressure on mortgage rates; however, fears of economic recession, too, are putting pressure on the markets." A BEAR TAKES A BEATING Bear Stearns Chief Executive Alan D. Schwartz has taken off the market his suburban New York house, listed for $4.5 million, and is renting it instead, says the Wall Street Journal. Meanwhile, Bear Chairman and former CEO James Cayne closed last month on a $27.4 million purchase of two adjacent apartments at the Plaza condominium in New York, according to public records. In 2000, Mr. Schwartz paid $2.75 million for the newly built, 7,850-square-foot house in Purchase, N.Y., overlooking the ninth green of the Golf Club of Purchase. The three-story home has views of Long Island Sound, plus six bedrooms, a playroom and a wine cellar. In 2003, Schwartz paid $10.4 million for a 17-room, 11,000-square-foot mansion on seven acres in Greenwich, Conn., records show, and he also owns a condo in Edwards, Colo. A HOUSE THAT ANDY ONCE OWNED IS ON THE MARKET The Upper East Side town house where Andy Warhol created some of his earliest and most influential Pop Art is about to go on the market, giving Warhol scholars and fans a rare opportunity to explore the space where he painted his early Campbell's soup cans, dollar bills and comic strips, says the New York Times. The modest 16.5-foot-wide five-story house, at 1342 Lexington Ave. near 89th Street, is part of a row designed in 1889 by Henry J. Hardenbergh, the architect of the Plaza Hotel and the Dakota. Warhol bought it in 1959 and moved in with his mother. He lived there until 1974, and in the early 1960s used the ground floor as his studio. The house is often regarded as the first in a series of Warhol factories in Manhattan. In 1974, he leased it to Frederick W. Hughes, his business manager and later the executor of his estate. In 1989, Hughes bought it from the Warhol estate for $593,000. After Hughes's death in 2001, it was sold to Dennis Omar and Nancy Smith of Analytic Partners, a global marketing research firm, for $2.55 million. The asking price today is $5.99 million. THIS WRITER IS ADDING TO HIS CONDO, AND IT'S TRUE According to city records, fabulist James Frey has a fabulous new unit to add to his three-bedroom apartment at 505 Greenwich St., notes the Observer. Last month, Frey and wife Maya closed on a $985,000 one-bedroom apartment, next door to the three-bedroom condo. They bought that first place for $2.55 million in May 2005, half a year before his two best-selling addiction memoirs were exposed as massively fictitious. "I don't think it is a novel; I still think it’s a memoir," he contended about A Million Little Pieces. Frey now has an extra 722 square feet to add to his 2,039. According to old listings, his new unit has a cook's kitchen and a luxury marble master bathroom. Having been forced by Oprah to acknowledge that he spent a few hours in jail instead of 87 days, Frey nonetheless received perhaps $2 million from HarperCollins for his upcoming novel, Bright Shiny Morning, no doubt inspired by the views from his condo. HE AIN'T WASTIN' TIME NO MORE Allman Brothers Band drummer Claude "Butch" Trucks cut the asking price on his Palm Beach, Fla., house again last month, to $4 million, down 17 percent from the original $4.8 million, says the Wall Street Journal. Trucks, a founding member of the legendary Southern rock band, first listed in August, but in November changed brokers and cut the price to $4.2 million. One block from the ocean on 0.37 acre, the Mediterranean-style house measures 4,600 square feet and has six bedrooms. There's a pool and patio. Trucks, 60, and his wife Melinda paid $1.325 million for the home in 1999, records show. They're selling because they plan to spend more time at a recently purchased country house in France. A TOWERING ARCHITECT GETS HIS DUE Frenchman Jean Nouvel, known for such wildly diverse projects as the muscular Guthrie Theater in Minneapolis and the exotically louvered Arab World Institute in Paris, has received architecture's top honor, the Pritzker Prize. Among the architect's New York buildings are 40 Mercer, a 15-story red-and-blue, glass, wood and steel luxury residential building completed last year in SoHo, and a soaring 75-story hotel-and-museum tower with crystalline peaks that is to be built next to the Museum of Modern Art in Midtown. BRIGHT DAWNS FOR HOUSEWARES MANUFACTURERS This year's International Housewares Show last month was a cacophony of color, says the Washington Post, as manufacturers seem to have decided that brighter and bolder shades are the way to attract consumers in a recessionary year. KitchenAid introduced a new shade of green, pear, which is available throughout the product line. Adding to its classic black products, Oxo introduced silicon spatulas in spring-bright colors. Over at Zak Designs, polycarbonate and melamine dishware and nesting bowls in bright colors, including orange, green and sky blue, were on display. The company also showcased a speckled line called Confetti, made out of recycled materials. At the show, green wasn't just a color but a hot design trend, too. Manufacturers tried to do everything they could to show that they're eco-friendly. Lisa Casey Weiss, a spokeswoman for the International Housewares Association, said she has seen a dramatic increase in the number of products that feature recycled materials, are multi-functional and use renewable resources. This year's show also featured more products that are multi-functional. "Consumers want their products to take up less space," Weiss said. Perhaps the best multi-functional gadget on display was Hamilton Beach's OpenStation can opener; it removes jar lids, pop-top cans, glass and plastic bottle caps, and hard-plastic clamshell packaging. HONEY, THEY SHRUNK THE CHAIRS After a decade of catering to Americans' appetite for large living with giant-size sofas, chairs, ottomans and tables, furniture makers are starting to think small, observes the Wall Street Journal. U.S. home-furnishings companies for several years have seen growing demand for smaller-scaled furniture from aging Baby Boomers downsizing to condos and first-time home buyers settling into urban neighborhoods. But there's a new factor driving a desire for less-bulky home décor: Homeowners whose plans to trade up are on hold because of the chill in mortgage lending and the housing market. "They're finally getting it," says Jodi FitzGerald, owner of Door Store Furniture, an 11-store retail chain in metropolitan New York that specializes in small-scale furniture. She estimates the number of smaller offerings has grown by about a third over the past year. As home sales started drying up last year, growth in furniture sales slowed precipitously. According to the Commerce Department's Bureau of Economic Analysis, personal consumption of furniture and bedding grew only 2.4 percent in 2007, far short of 5.8 percent growth in 2006 and 6.1 percent growth in 2005. January sales fell 1.9 percent compared with January 2007. IT’S POSSIBLE TO MOVE YOUR COMPUTER SMOOTHLY Naturally, you'll make copies of data files; creating a hard-drive image backup could not hurt, the Washington Post suggests. Move at least one backup copy separate from your computer. Map components before disassembling computers or electronic equipment - for example, photograph your setup so you can see how you have stacked electronics, cable layouts and so forth; color-code cables and jacks or label them; and sketch back panels and label switches and jacks for quick re-assembly. Same Line This Year It isn't often that co-ops in the same line come on the market at the same time. When that circumstance occurs, the opportunity to examine pricing considerations is one worth pursuing. Such is the case in a prime Emery Roth 1929 building in sight of the Museum of Natural History and Central Park on the Upper West Side. The 19-unit white-glove building features a stunning period lobby, children's playroom, storage rooms, bike room, new gym, resident manager and staff of 17. It is a short walk to everything Upper Westsiders covet - Zabars, inviting neighborhood restaurants and excellent public transportation. With identical original layouts, the corner apartments contain 1,350-1,400 square feet and beautifully proportioned rooms. The ceiling heights are the same; walls have not been removed; each has a washer/dryer installed; each has a cedar closet; each has handsome baths that retain their vintage finishes; there is through-the-wall air conditioning in both apartments; and the condition of each is first-rate, including original details. But these co-ops are $50,000 apart in price. The same experienced broker put them on the market within a day of each other in February, so two variables - broker and timing - cannot account for the difference. Then, floor height is responsible for the $50,000 gap, you are thinking. But, as you've already surmised, there's much more to the story than that. You might expect the views and amount of sunlight reaching each unit to explain the difference. Not only would that reasoning prove to be simplistic, but neither apartment has anything beyond views of brick walls. If the light in the higher apartment is brighter, are the additional lumens worth the additional cost? The benefit is hard to quantify and the cost is, therefore, hard to justify. What else went into the pricing equation? For one thing, the kitchens. The higher one has had a more expensive update that included top-of-the line appliances such as Sub-Zero and Viking, natural stone countertops, dual-zone wine cooler, self-closing drawers and unequivocally sophisticated style. The lower kitchen also has been updated nicely but with neither the cost nor the flair of the one higher up. The lower apartment has two features that the upper one lacks. For example, built-in bookcases have been well integrated along a living room wall. In addition, the owners have divided the natural master bedroom into children's bedrooms separated by a partial-height wall of closets. Each of the smaller rooms has windows, and one gives access to the second of the apartment's two baths; either could serve as a spacious enough home office. Other differences between the apartments are subtle and relatively insignificant. When asked to expound on the pricing strategy, the broker did not speak with particular clarity. So, it seems potentially instructive to examine the history of the apartments in question. The present owners bought the apartment on the higher floor just two years ago. The asking price was $1.396 million, and that was the purchase price. Today, the asking price after a month on the market remains $2.250 million with monthly maintenance of $1,548, maximum financing of 50 percent and a 2 percent flip tax paid by, yes, the buyer. As for the unit on the lower floor, those owners bought it in November of 2004 for $1.2 million. It is offered now for $2.2 million with monthly maintenance of $1,377. Extrapolating the 12 percent difference in maintenance, the apartment on the higher floor theoretically ought to be listed for $2.64 million - all things being equal, though demonstrably they are not so. Consider, as well, the prices of other co-ops that have sold in the same line, which is the smallest (other lines have fetched prices as high as $6.3 million):
How to make sense of these disparities? Well, you can't. Pricing is as much art as science, and sometimes the artist is not up to the challenge or, conversely, easily meets it. To the extent that pricing is a science, the question, of course, centers on comparable sales. Geographic location and location within a building are important to this calculation. The quality of the building is important. The financial security of the building is important, too. The art of pricing also concerns the amount of inventory (down these days compared with last year), the demand for similar apartments, the economy, consumer confidence, the real estate market's vigor at various price levels and the ability to persuade sellers to be realistic, among other factors. Do you price high with the expectation of negotiating down? Or do you price low in the hope luring buyers willing to pay more than they set out to spend? When it comes to pricing right, strategy is everything and is the chief component of the art of real estate brokerage. In the case of the two apartments compared above, both the difference in their asking prices and the prices themselves are, on the surface hard to explain. What do you get for that extra $50,000 on a higher floor? A little more light, a nicer kitchen and undivided rooms of wonderful scale. For less money, you get less light, a perfectly decent kitchen and an extra room. In the end, only the eventual buyer will decide what the differences are worth. The market inevitably speaks the truth. Below, properties for sale by various brokers seen recently: Flatiron
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economists
said the slump was probably worse than at the height of the last
housing recession in the early 1990s. The positive sales figure
led some analysts to suggest that the housing market is approaching
its bottom, but many economists predict that prices will fall
for several more months before sales pick up in earnest. "It's
a necessary thing," said Joshua Shapiro, the chief United
States economist at MFR, a New York economic research firm. "It's
like the mess going down in financial markets. You gotta get through
it. The sooner you get through it you can look for better times."
All 20 regions included in the latest Case-Shiller survey recorded
price declines, with Sun Belt cities such as Las Vegas, Phoenix
and Los Angeles suffering the worst losses in January. Prices
in Miami and Las Vegas have lost nearly 20 percent in the 12 months
ending in January. Only one region, Charlotte, has seen prices
rise over the past year. Over all, prices dipped 2.36 percent
in January alone after falling 2.1 percent in December. Prices
in Washington were down nearly 11 percent year-over-year, and
prices in Denver have lost 5 percent since January 2007. In the
New York metropolitan area, home values fell just 0.9 percent
in January and, compared with a year earlier, 5.8 percent. But
the drop-off appeared to be gaining speed: Values are down nearly
10 percent on a three-month annualized basis.
conducive
to hopeful overvaluation than real estate. That means real estate
slumps tend to grind on for years, until sellers submit to reality
and reduce their prices. What’s the hurdle? For starters,
people have an obvious emotional connection to their house. In
normal times, buyers and sellers can still come to an agreement
because inflation allows sellers to feel that they have made a
nice return on their house. People don't sell houses frequently,
so the sale price of a house is almost always higher than it was
when the current owner bought it. David Laibson, a leading behavioral
economist and Harvard professor, says people often go to great
lengths to avoid taking a loss or simply having to acknowledge
one: "Even a small loss evokes a sense of frustration. There's
something magical about 'at least breaking even.' " Often,
this hurts no one so much as it hurts the would-be sellers. They
stay in homes where they no longer want to live, rather than accepting
their loss and moving on. Or they move but endure the hassle of
renting out their old home, waiting, usually in vain, for the
mythical buyer who understands its charms. All the while, their
money is tied up in the house, and inflation is eating away at
its real value. 
average
price of a Manhattan apartment in the first three months of this
year was $1.7 million, up 33.5 percent from the same period last
year, the report found. In this year’s first quarter, 71
apartments sold for more than $10 million, compared with 17 apartments
in that range for all of 2007. This year’s first quarter
also included the sale of dozens of apartments at the extremely
high-priced 15 Central Park West and the Plaza Hotel. "Based
on activity in the first quarter, it is likely that the record
number of sales in 2007 will not be repeated in 2008," wrote
CEO Jonathan Miller. "Sales in the current quarter declined
to levels seen two years ago. The reduction of available credit,
less favorable mortgage terms, the national economy moving towards
a recession and the specter of additional layoffs in the financial
services sector over the next two years has begun to restrain
the demand for Manhattan residential real estate. Still, the regional
economy is performing well, tourism and hotel occupancy rates
are at or near record levels and the New York City government
is financially well positioned for the next two years. The U.S.
dollar has set new lows against several currencies, which continues
to bring new sources of demand, with specific emphasis on condo
new development projects." 
Others
have started up new real estate-related businesses. On Mar. 24,
in one of the highest-profile startups, Stanford Kurland, the
former president of Countrywide Financial, launched a new company,
Private National Mortgage Acceptance, or PennyMac, to buy troubled
loans from banks. There is also plenty of surplus labor available.
Brian Koss, a former New England area regional manager for Countrywide,
figures that unemployment rates for the many mortgage-industry
workers who specialized in buying and selling big portfolios of
loans - what the industry calls its wholesale business - are approaching
70 percent. "Not a day goes by that I don't get a résumé
via e-mail," Koss says. "When the tide goes out you
have to feed yourself." Kurland calls his new outfit "ultra-consumer-focused"
and says he wants to work with advocacy groups to improve conditions
for borrowers in distress. But consumer advocate Bruce Marks,
founder of the Neighborhood Assistance Corp. of America, says
he's skeptical that "bottom feeders" such as Kurland
really have homeowners' interests at heart: "The predators
are resurrecting themselves. He knows where the most valuable
assets are." 
