Items of Interest MANHATTAN POSTS 4TH QUARTER GAINS In the final quarter of 2007, the Manhattan real estate market continued to see increased price levels and sales with declining inventory as compared with the same period last year, according to a report by the Miller Samuel appraisal firm for Prudential Douglas Elliman. The greatest price gains were in larger apartments, specifically two- and three-bedroom units, which averaged respective growth of 22.1 percent and 39.8 percent since 2006. A portion of the increase in price was attributed to an increase in the size of the units sold. For all apartments, the median sales price increased 6.4 percent to $850,000 over the prior year quarter result of $799,000, but it was1.7 percent below the preceding quarter's $864,397. The average price per square foot increased 18.2 percent to a record $1,180 over the prior year quarter result of $998; it was 3.1 percent above the previous quarter's $1,144. Inflated by an influx of very high-end condos such as 15 Central Park West and the Plaza Hotel, the average sales price grew by 17.6 percent to a record $1,439,909 since the last quarter of 2006 and by 5.1 percent over the third quarter of 2007. For more on the fourth quarter, see the story below. And for even more details, click here. A RESPECTED INDEX RECORDS FAST AND WIDE DECLINES The decline in home prices accelerated and spread to more regions of the country in October, says the New York Times. Prices fell 6.1 percent from October 2006 in 20 large metropolitan areas, according to Standard & Poor's/Case-Shiller indexes, compared with a 4.9 percent decline in September. (The indexes omit condo sales.) On a monthly basis, prices fell 1.4 percent in October, the fastest they have declined in at least the last seven years. All but three of the 20 regions experienced a fall in real estate values, and even the three areas where prices were up from a year ago - Seattle, Portland, Ore., and Charlotte - had a decline from a month earlier. "We are in uncharted territory," said Yale economist Robert J. Shiller. "This was the biggest housing boom we have ever seen." By his calculation, the decline in home prices is greater than at any time since 1941, when the housing market was faltering at the start of the American entry in World War II. Since their peak in July 2006, home prices in the 20 regions have dropped 6.6 percent. Many economists are predicting that home prices will fall 10 percent to 15 percent from their peak to their trough, though some pessimists say the drop could be as much as 30 percent. Prices are dropping fastest in the Midwest, which has been hit hard by job losses in manufacturing, and in California, Florida and the Southwest, where the housing boom was most pronounced. Prices have fallen the most in Miami (down 12.4 percent from a year ago), Tampa (11.8 percent) and Detroit (11.2 percent). Prices also are falling in the nation's two largest metropolitan areas, Los Angeles (8.8 percent) and New York (4.1 percent). "It suggests to me that the psychological factor is very important," Shiller said. "Even in cities that are doing well, people see what is going on nationwide and they don't want to bid as much." NEW-HOME SALES PLUNGE TO 12-YEAR LOW IN NOVEMBER That is the slowest pace since April 1995, says to the New York Times. New-home purchases are down 34.4 percent from a year earlier, according to the U.S. Commerce Department; it was the biggest year-over-year drop since January 1991 and leaves a large, if shrinking, inventory of unsold homes to be worked off before the glut can be dissipated. "Right now there is a huge gulf between what buyers are willing to pay for a house and what sellers are willing to take for it," said Mark Vitner, senior economist at Wachovia. "People are sitting on the sidelines for a good reason," added Patrick Newport, an economist at Global Insight, an economic research firm in Lexington, Mass. "You're taking a big risk because the asset you are buying may depreciate a lot between now and a year from now." Analysts say home sales could bottom out as early as the middle of 2008 but any recovery will be gradual. "The laws of supply and demand will work," Vitner said. "We built around 800,000 more units of housing than the market needed. It's going to take us a couple of years of reduced home construction in order to clear up its excess." Statistically, the size of the slump is staggering, the Times continues. In the summer of 2005, annual sales of new single-family homes hit a high of 1.39 million. They have since dropped to an annual rate of 647,000 - a loss of 53.4 percent. The current decline is the steepest peak-to-trough drop since the 1982 housing bust, said Michael T. Darda, chief economist at MKM Partners, and it could grow steeper if sales continue to flag. "With prices going down and income continuing to grow, that's helped to push up affordability," he suggested, saying that the industry appeared to be coming closer to "the lows of this cycle." WITH PRICES FALLING, EXISTING-HOME SALES ARE RISING Total November sales of previously owned homes - including single-family, townhomes, condominiums and co-ops - rose 0.4 percent from October to a seasonally adjusted annual rate of 5 million units, according to the National Association of Realtors (NAR). That amount was 20 percent below one year earlier. "Near term, existing-home sales should continue to hover in a narrow range, just as they have since September, and that's good news because it'll be a further sign that the housing market is stabilizing," commented NAR Chief Economist Lawrence Yun. "Mortgage interest rates are near historic lows, and the most current data shows decelerating price declines along with a modest reduction in the number of homes on the market." The national median existing-home price for all housing types was $210,200 in November, down 3.3 percent from the previous November, when it was $217,300. Meanwhile, total housing inventory declined 3.6 percent at the end of November to 4.27 million existing homes available for sale. That represents a 10.3-month supply in comparison with a 10.7-month supply in October. "Inventory is still high, and further reduction in prices may be required in some areas to induce buyers back into the market," Yun said. As for single-family homes alone, sales rose 0.7 percent, though 19.9 percent below one year earlier; the median was $208,700, off 3.7 percent. Condos and co-ops had sales slip by 1.6 percent from October and BY 20.6 percent from November 2006; the median was $221,100, down 0.7 percent. OCTOBER PRICES SLID IN 19 OF 25 METRO AREAS The latest
monthly report by Radar Logic disclosed that only three of the
25 Metropolitan Statistical HOUSING STARTS FELL 3.7 PERCENT IN NOVEMBER Said NAHB Chief Economist David Seiders: "It's no surprise that builders are starting fewer homes and pulling fewer permits for new home construction at a time when home buyer demand is weak and there's a heavy supply of vacant homes on the market." U.S. Commerce Department figures show that single-family housing starts declined 5.4 percent in November to the lowest level since April of 1991. And permit issuance for new single-family homes dropped 5.6 percent, their lowest level since June of 1991. BREARLEY GETS BRAWNY A prestigious Upper East Side girls school says it has a contract to buy part of an adjacent apartment building and will relocate its rent-regulated tenants to make way for classrooms, according to the New York Post. Residents of the 12-story rear tower at 85 East End Ave. have been wary for more than a year of expansion plans of the elite Brearley School, whose alumnae include Caroline Kennedy Schlossberg and actress Kyra Sedgwick. The school promised yesterday to make moving easy for the tenants, who have said they pay less than $2,000 monthly. State law bars the building's current owner, BlackRock Realty, from evicting its rent-regulated tenants. But the law exempts buildings owned by institutions "operated exclusively for charitable or educational purposes." After hearing of Brearley's interest in their building last year, tenants lawyered up. The 12-story building's rear tower has 57 apartments, of which 24 are already vacant, said a source familiar with the deal. A NEW LAW GIVES CO-OPS A BREAK The Mortgage Forgiveness Debt Relief Act of 2007 modifies what is known as the 80-20 rule, which co-ops must meet so that their shareholders can get the same tax benefits as homeowners, says the New York Times. The 80-20 rule requires that no more than 20 percent of the co-op corporation's gross income come from sources that are not tenant-shareholders - usually, commercial tenants. Co-op lawyer Dennis H. Greenstein noted that the measure, which went into effect immediately, provided three ways for a co-op to ensure that tenant-shareholders got the same tax treatment as homeowners. The first, he said, is to comply with the original 80-20 rule. The second is for a co-op to ensure that at least 80 percent of its total square footage is used by tenant-shareholders for residential purposes. The third is for a co-op to spend at least 90 percent of its total income for the benefit of shareholders. "The second and third alternatives are going to cover most co-op buildings with 80-20 problems," Greenstein said. "There will be a lot of buildings that will benefit from it." MORTGAGE FRAUD IS OVERWHELMING PROSECUTORS The number of mortgage
fraud cases has grown so fast that government agencies that investigate
and prosecute them cannot keep up, lenders and law enforcement
officials have said, reports the New York Times. Reports of suspected
mortgage fraud have doubled since 2005 and increased eightfold
since 2002. Banks filed 47,717 reports in 2007, up from 21,994
two years ago, according to statistics from the FBI and the Financial
Crimes Enforcement Network of the Treasury Department. In 2002,
LICENSING FOR MORTGAGE BROKERS PICKS UP STEAM A nationwide licensing system that's intended to help states track mortgage brokers and lenders under their jurisdiction launched this week with seven states participating and 31 more expected to join by the end of next year, says Inman News. The Nationwide Mortgage Licensing System (NMLS) creates a single file for each state-regulated mortgage lender, broker, branch and loan originator, simplifying the process of licensing and monitoring companies and individuals who do business in more than one state. First proposed in 2004, the NMLS launched with New York, Massachusetts, Rhode Island, Idaho, Iowa, Kentucky and Nebraska on board. All told, 38 states, plus Washington, D.C., and Puerto Rico, have committed to participate in the system by the end of 2009. Members of the National Association of Mortgage Brokers have complained that the system excludes originators at banks and other federally regulated financial institutions. LOAN APPLICATIONS ARE ON THE DECLINE For the Christmas holiday shortened week ending Dec. 28, volume was 11.6 percent below the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association. On an unadjusted basis, the decrease was 47.2 percent; it was off 20 percent compared with the same week one year earlier. Refinancings decreased 15.4 percent, and purchase applications dropped 8.5 percent. Unadjusted, the loan volume for purchases declined 44.9 percent from the previous week. The refinance share of mortgage activity fell to 50.9 percent of total applications from 53.0, while the adjustable-rate mortgage (ARM) share slipped to 9.8 from 10.4 percent of the total. SPENDING ON RESIDENTIAL CONSTRUCTION CONTINUES TO FALL The rate of such spending fell for the 21st consecutive month in November, the U.S. Census Bureau reported, says Inman News. It dropped 17.8 percent compared with the previous November. The seasonally adjusted annual rate of spending on private residential construction projects was $484.9 billion, 30.3 percent lower than the record peak rate of $696 billion in February 2006. RATES DIP TO FOUR-WEEK LOW The 30-year fixed-rate mortgage (FRM) averaged 6.07 percent for the week, down from last week’s 6.17 percent and 6.18 percent last year at this time, says Freddie Mac. The 15-year FRM this week was 5.68 percent versus 5.79 percent last week and 5.94 percent last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were 5.78 percent, down from 5.90 percent; a year ago, they averaged 6.02 percent. One-year Treasury-indexed ARMs were 5.47 percent in comparison with last week’s 5.53 percent and last year’s 5.42 percent. ONLY MODEST IMPROVEMENT, IF ANY, SEEN THIS YEAR It's difficult to
get a consensus on exactly when housing will turn the corner,
the Wall Street Journal reports. Local markets will certainly
vary, but at the least it's likely that some of the same problems
that plagued 2007 will carry over into next year, the newspaper
finds. At best, market conditions could start ONCE AGAIN, NEVADA TOPS THIS LIST It returned as the nation's fastest-growing state, with a population increase of 2.9 percent in the year ending last July 1, according to estimates by the U.S. Census Bureau. Arizona, fastest-growing between 2005 and 2006, slipped to second place, while Louisiana began to rebound from its post-Hurricane Katrina population loss, gaining nearly 50,000 residents for a total population of 4.3 million. The state lost 250,000 residents during the previous one-year period. Texas gained more people than any other state; its increase of almost 500,000 was ahead of runner-up California, which added slightly more than 300,000. The New York Times said the bursting housing bubble had squelched expansion in some of the nation's fastest-growing states during the year reported by the Census bureau. The newspaper went on to say that Wyoming bumped Florida from the list of the top 10 fastest-growing states. Only 35,000 Americans moved to Florida from elsewhere in the United States, compared with nearly five times as many the year before. Michigan and Rhode Island registered their second consecutive annual losses in population, and the outflow of residents from high-cost states like California, New York, New Jersey and Massachusetts to more affordable states slowed last year. ANGIE'S LIST FORESEES INCREASED REMODELING According to the popular home-repair referral service, Angie's List, its annual poll indicates that home owners will spend an average of $11,250 on home improvement and maintenance projects in 2008, up 13 percent over the average they reported spending in 2007, says Realtor magazine. Homeowners responding to the unscientific survey say they plan to spend 2.9 percent of their home's value on repairs and renovations this year (implying a belief that their homes are worth $387,931). "Building experts tell us they're getting calls for work from home owners who would otherwise move and put their current home on the market, but are afraid they can't sell it quickly enough to afford the newer, bigger house," says Angie's List founder Angie Hicks. The most frequently planned projects are kitchen and bath updates - areas that real estate experts say provide the best return when selling a home. CONGRESS GIVES A BREAK TO SURVIVING SPOUSES Until now, widows and widowers had only until the end of the year in which their spouses died to take advantage of $500,000 in exclusion of capital gains taxes by selling their property. The exclusion dropped to $250,000 if the sale occurred in the next year. Just before recess, the Congress enacted a new two-year deadline. NOT ONLY STOCKS CAN BE BLUE-CHIP, SAYS FORBES It found that properties
in some well-established neighborhoods have held onto and increased
in value over the last 17 years. They include segments of Pacific
Palisades in Los Angeles, areas of Chicago DOES LOOKING AT YOUR FIREPLACE BURN YOU UP For less than $300, consider painting the existing brick and/or the interior of the firebox, suggests the Washington Post. (For the latter, use high-heat paint.) Then replace a worn or dated fire screen and tools to harmonize with other furnishings. For under $1,000, you can replace a damaged or dated tile hearth with a slab of slate, granite or other stone. Or you can add a new or vintage fireplace surround or mantel, or replace one that is outdated or poorly proportioned. With $5,000 or less, box in the existing brick or stone with drywall and paint, then enlarge and reface the surround and mantel, or both, with simple custom carpentry, porcelain or limestone tiles, mirror, stone (real or fake) or poured concrete. Do you have more than $5,000 for your fireplace? Face the entire fireplace with exotic stone or elaborate custom millwork and acquire an antique fireplace surround, preferably ornately carved marble or rare wood from a centuries-old French chateau, English manor house or Italian villa. For other fireplace facelift ideas, check out "Fire Spaces: Design Inspirations for Fireplaces and Stoves," by Tina Skinner (Schiffer Publishing, 2003, $34.95). ECONOMISTS SAY HOUSE PRICES AND RENTS ARE OUT OF WHACK U.S. house prices "likely would have to fall considerably" to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists, reports the Wall Street Journal. The study suggests prices would have to fall 15 percent over five years, assuming rents rose 4 percent a year. House prices would have to fall further if the adjustment took place more quickly. Going back to 1960, the study found annual rents fluctuated at around 5-5.25 percent of home prices until 1995, when the average monthly rent was about $553 (or about $6,600 a year) and the average home price was about $134,000. But starting in 1996, home prices started to grow much more rapidly than rents. By the end of 2006, they had more than doubled to an average of $282,000, while the average rent had risen 48 percent to $818, creating an annual rent/price ratio of 3.48 percent. (That means the rent/price ratio is about a third below its long-term average.) The paper suggests house prices would need to fall about 3 percent a year, if rents grew in line with their 4 percent average annual growth this decade to return to a normal ratio. The U.S. study is by Morris Davis, an economist at the University of Wisconsin-Madison and until 2006 a staff economist at the Fed; and Andreas Lehnert and Robert F. Martin, staff economists at the Fed. Davis told the Journal that only rapid growth in growth in rents could justify current price levels. But it's hard to imagine the scenario that would justify such rapid growth in rents, he added. Indeed, it's possible rents will grow more slowly than 4 percent, reflecting the overhang of unsold homes that might be rented out. The authors postulated a five-year horizon for the rent/price ratio to return to normal by looking at previous downturns, Davis said, observing that "when a downturn begins, it will last for a while." A PRODUCER'S ONETIME ESTATE COULD PRODUCE REAL CASH A Southampton, N.Y., estate formerly owned by Martin "Marty" Richards, who produced the Oscar-winning 2002 film "Chicago" and many Broadway plays, has just gone on the market for $65 million, reports the Wall Street Journal. The current owner, a European businessman, paid Richards $23 million for the estate in 2003 and spent more than $25 million overhauling the property. The six-acre oceanfront estate on Gin Lane includes a 13,000-square-foot, eight-bedroom main house and a 7,500-square-foot "guest house" with three bedroom suites, staff quarters and a four-car garage. With more than 400 feet on the ocean, the grounds include a pool and spa, a self-watering clay tennis court and a lily pond, presumably not self-watering. SEAN CONNERY, MEET JUDGE NO A Manhattan judge has had enough of a court feud between the actor and his neighbor and is urging the James Bond star and his real-life arch-enemy Dr. Sultan to make peace, according to the New York Post. Manhattan Supreme Court Justice Marcy Friedman chided Connery and his family for their "blunderbuss" court attacks on eye doctor Burton Sultan and his family, but she fined Sultan $1,000 for repeatedly filing lawsuits on claims he's already lost. "Regrettably, both parties to this dispute have engaged in a 'slash and burn' litigation strategy," Friedman wrote. She threw out the bulk of the Sultans' claims against the Connerys and several contractors who have worked on the East 71st Street building the families share. The Sultans blame the Connerys and their workers for trashing the condo, causing leaks and other damage to the home they share with their two adult daughters. The Connerys blame the Sultans for blocking them from completing necessary repair work on the townhouse's roof, which they say is jeopardizing their safety and giving them higher repair costs. They've filed about 10 lawsuits against each other. In one of Sultan's, he called Connery a "rude, foul-mouthed, fat old man" who plays "loud music all the time while stomping about" the apartment. The judge's ruling bars both sides from filing any other suits without her permission. The ruling does not, however, bar Connery from stomping about. A MANSION THAT CHARLIE WILSON VISITED IS ON THE MARKET A Houston mansion originally owned by a socialite who figures prominently in the film "Charlie Wilson's War" has gone on the market for $3.5 million., says the Wall Street Journal. Joanne King Herring, the politically active Texan who had the house built, is played by Julia Roberts in the film. In 1954, Ms. Herring built the four-bedroom, 5,500-square-foot house on nearly 4.5 acres in a French baroque style. There's a large ballroom with wood paneling decorated with gilded bronze cherubs, violins and lyres. Herring and her first husband, Robert King, hosted Princess Grace and Prince Rainier of Monaco in 1968, among many others, including Wilson. The sellers, Cesar Rodriguez and his wife, Magdalena, bought the home about seven years ago. HE'S HOT, BEAUTIFUL AND VERY MUCH IN DEBT A Harvard MBA, an entrepreneur, a corporate lecturer and the runner-up on the first season of "The Apprentice," Kwame Jackson is about to lose his triplex condo in Harlem, reports the New York Post. According to papers filed with the city, a lien has been placed on Jackson's West 123rd Street apartment in Manhattan for nonpayment of common charges of more than $12,000 dating back to April 2006. "We've had a few payments in the past," the building's lawyer, Lisa Breier Urban, said, "but nothing has come in for the last eight months." Jackson, one of People magazine's 50 Most Beautiful People and 50 Hottest Bachelors, could not be reached. The Reality of Realty Today Manhattan may be an island in the literal sense, and it may feel that way even more so from the perspective of the national housing market. In truth, however, it already seems to be acting more like a peninsula than an island. Faithful readers of the market information that is published here every two weeks and regularly in local newspapers could not help but notice that the Manhattan market has changed, however much in denial sellers may be. Ever hopeful that the market will tank, buyers, on the other hand, undoubtedly are hanging onto every shred of bad news; as a result, they are hanging onto a white-picket fence of decision making. Understandably uncertain whether now is the time to buy or wait for a bust, they are seemingly oblivious to two certainties: 1. Market timing is almost always folly, whether in stocks, bonds, currencies, pork belly futures or housing, and 2. Other uncertainties such as lending rates easily can offset any benefit of timing the market correctly. As the New York Times has pointed out, there is a growing chasm between the prices that sellers are setting for their properties and their value in today's market, causing buyers to dig in their heels against intransigent property owners. In addition, the subtext of this and many recent Out and About columns is that a wealth of apartments and townhouses is obviously overpriced. And data previously published here from Radar Logic, where appraisal executive Jonathan Miller of Miller Samuel issues highly respected analysis, already demonstrates that price acceleration has steeply declined in Manhattan. In fact, the median actually fell 1.7 percent between the third and fourth quarters of 2007, as reported in the story below. Miller is forecasting very modest increases this year, and the possibility is that prices will remain flat at best. (One important imponderable is whether the trend of declining inventory will abate.) Consider what Alfred Renna of Prudential Douglas Elliman found in his analysis of sales at the company's biggest office during the first half of December - hardly a scientific assessment but perhaps telling. Fully 60 percent of the sales were below the asking price versus 50 percent the prior month. The discounts were 2.4 percent below the original price and 2 percent below the most recently reduced price. At the same time, median days on the market once the price was ultimately reduced increased over the previous month - from 46 to 56 days, 22 percent longer. Finally, inventory continued to slide, slipping by 3 percent. Why are properties consistently offered too high? Sellers' expectations obviously have not caught up with the status of the market. Worse, they are enabled by those brokers who will agree to list an apartment or townhouse for too much money just to get the listing, knowing that the owner eventually will get tired of preparing for open houses, vacating their residences for visitors at inconvenient times and waiting interminably to collect the proceeds of selling. (That questionable tactic is called 'buying the listing.') The right price of a property that is marketed correctly brings virtual certainty of a relatively swift sale, and smart sellers act accordingly. Those whose expectations are out of synch with the market, refusing to face reality, are doomed to learn the hard way that no block, neighborhood or county is entirely removed from the rest of the country. Moreover, the psychological impact of bad news elsewhere exerts a more powerful effect on a buyer even than any bonus or any emotional response to the home of his or her dreams. And if the perception persists that the market is tanking, buyers develop the belief that if they lose a property for which they make a lowball offer, there will be another at least as good just around the corner. Forget the bidding wars of yore, except for the most desirable and well priced properties. Mass psychology knows no bounds, and no market is an island. Now, a sampling of properties that various brokers are marketing and that have been seen since the last issue: Upper West Side
East Side
From There to Infinity? The median sales price of apartments increased 6.4 percent to $850,000 over the prior year quarter result of $799,000, but it was1.7 percent below the preceding quarter's $864,397, according to a report by the Miller Samuel appraisal firm for Prudential Douglas Elliman. The average price per square foot increased 18.2 percent to a record $1,180 over the prior year quarter's $998; it was 3.1 percent above the previous quarter's $1,144. Inflated by an influx of very high-end condos such as 15 Central Park West and the Plaza Hotel, the average sales price grew by 17.6 percent to a record $1,439,909 since the last quarter of 2006 and by 5.1 percent over the third quarter of 2007. Other highlights of the report:
Co-ops
Condos
Luxury
Market
Loft
Market
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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Areas
(MSAs) tracked by the company showed increases in residential
price per square foot over the same period last year (Charlotte,
New York City and Seattle), three markets were neutral and 19
markets showed price declines. The results were roughly the opposite
the same period last year, when 14 markets showed an increase,
three markets were neutral and eight markets declined. The Miami
MSA declined 7.4 percent over the preceding 90 days and 3.5 percent
in just 30 days after rising 144.2 percent over five years. For
condos, the five leading markets (New York, Philadelphia, San
Francisco, Seattle and Milwaukee) had greater one-year increases
in price per square foot than their respective MSAs. All but Philadelphia
also were in the top five MSAs. 
banks
filed 5,623 reports. Mortgage fraud covers crimes like false statements
on mortgage applications and elaborate "flipping" schemes
that involve multiple properties and corrupt appraisers, title
companies and straw buyers. Law enforcement agencies say they
are overwhelmed, especially because investigating and prosecuting
fraud can be complex and time consuming. The officials say career
criminals and organized-crime rings have increasingly turned from
other crimes to mortgage fraud because it offers lower risks and
high profits. Losses involving federally insured banks totaled
$813 million in the 2007 fiscal year, more than double the $293
million lost in the 2002 fiscal year. These figures most likely
represent "the tip of the iceberg," said the Mortgage
Bankers Association, an industry group, because they do not cover
mortgage brokers, who arrange more than half of new mortgages.
The industry estimates the total loss this year at $4 billion.
And the Wall Street Journal notes that such fraud goes a long
way toward explaining why mortgage defaults and foreclosures are
rocking financial institutions, Wall Street and the economy. In
2006, losses from fraud could total a record $4.5 billion, a 100
percent increase from the previous year, says Arthur Prieston,
chairman of the Prieston Group, which provides lenders with mortgage-fraud
insurance and training. "We've created a culture where a
great many people know how to take advantage of the system,"
said Prieston.
to
stabilize, with home sales regaining strength. If more buyers
get back into the market, some of the huge inventories of new
and existing homes for sale can begin to be worked off. "The
only reason why demand is finding a bottom is because sellers
are cutting their prices," said Mark Zandi, chief economist
of Moody's Economy.com. "There was a sense that the market
would cool - I don't think there was a sense it would crash. And
it crashed." The National Association of Realtors predicts
a slight increase in existing-home sales next year but a decline
in new-home sales. Others aren't as optimistic, including the
Mortgage Bankers Association, which is predicting that sales won't
pick up until 2009. The home price drops encouraged a number of
people to put home buying decisions on hold. In some of the most
sluggish markets, sellers who don't absolutely need to sell aren't
attempting to do so; those who do are offering price cuts and
concessions to make the deal. "A hallmark of the downturn
is how broad it is across the country," said Zandi. But even
in poor-performing markets there could be good neighborhoods,
he said, adding that housing conditions vary "block to block."
and
parts of University Park in Dallas. In these spots, the median
home sale price has grown by 440 percent, 236 percent and 148
percent, respectively. In some cases, the magazine's blue-chip
picks encompass a city's priciest area - for example, in New York,
where a swath of the Upper East Side in the east 70s was found
valuable in 1990 and has appreciated by 325 percent since then.
Of course, stability and strong, consistent growth gets cooked
into the neighborhood's $2.45 million median home price tag. Another
consideration for some blue-chip areas: the range of housing prices.
In the Embassy Row section of Washington, D.C., there's little
available much below the $2.84 million median price. But head
to the Walnut Street and Third Street section of Philadelphia,
and you'll find townhouses listing above $2 million, but about
30 percent of the homes for sale are available for between $340,000
and $670,000. 
