Items of Interest GAUGE OF PENDING SALES SURPRISINGLY RISES 6.3 PERCENT So, the eternally optimistic National Association of Realtors (NAR) is forecasting a modest gain in the level of home sales over the next couple months. The industry group said its Pending Home Sales Index rose to 88.2 from a reading of 83.0 in March, the highest reading since last October and 13.1 percent lower than in April 2007. Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it's unclear if they are investors or owner-occupants," observed NAR Chief Economist Lawrence Yun, treading in the footsteps of his determinedly buoyant predecessor David Lereah. (For jaundiced comments on Lereah's book, check Amazon by clicking here.) In their periodic forecast NAR and Yun imagine growing affordability, a rise in mortgage rates, an increase in demand for housing and stabilized prices in the second half of the year. Existing-home sales are projected to rise 6.3 percent. "Sales gains will be greatest in areas that underwent sharp price declines," Yun said. New-home sales are likely to fall 31.7 percent in 2008 before rising 12.5 percent next year, according to the forecast, while housing starts are projected to drop 27.2 percent this year and another 0.6 percent in 2009. As for prices, the median for new homes is expected to decline 3.1 percent to $239,500 in 2008, then rise 5.4 percent next year to $252,400. For previously owned homes, the median is likely to decline 8.4 percent in the first half of this year, stabilize in the second half and rise 4.4 percent next year to $213,900, Yun says. THE FED FINDS TIGHTER CREDIT STANDARDS IN 2ND QUARTER Reports from the 12 Federal Reserve districts suggest residential real estate markets remained weak in most areas during the second quarter, with tighter credit standards reported for most loan categories, according to Inman News. The Federal Reserve's latest "Beige Book" report documented flat or declining home sales in the Boston, New York, Cleveland, St. Louis and Dallas districts. Inventory levels of new and existing homes remained high or were rising in New York, Philadelphia, Cleveland, Richmond and San Francisco. Home sale prices decreased somewhat in Boston, Atlanta, Kansas City and San Francisco but remained relatively stable in Richmond and Chicago. Residential lending activity remained generally weak in Richmond, Atlanta and Chicago. In contrast, demand picked up in Philadelphia, Cleveland, Kansas City and Dallas but was about the same in St. Louis. Sales transactions for Manhattan co-ops and condos were down sharply from a year earlier in April and May, while inventories of unsold units were up by much more than the seasonal norm since the beginning of the year. A leading appraisal firm reported that average and median selling prices were buoyed by a skew in volume toward the high end, with prices of comparable units flat to lower than a year ago. Sales activity in the outer boroughs was also reported to be down sharply from a year earlier. One industry contact said he'd heard of quite a few deals falling through owing to difficulties in obtaining financing. SOME VACATION RENTALS COME WITH SILVER LININGS Fluffy bathrobes. High-end linens. Plasma televisions. Original artwork on the walls. Such are the perks that beach-house owners are increasingly providing their renters this summer, the Wall Street Observer observes, as unsold vacation homes swell the supply of houses on the rental market. Sales of vacation homes last year fell almost 31 percent, to 740,000, from the year before, more than triple the decline in sales of primary residences, according to the National Association of Realtors. Some of the unsold houses are ending up on the rental market. Homeaway.com, which lists more than 115,000 vacation-home properties for rent, says the supply in popular destinations rose significantly during the prime February-through-April renting season over the same 2007 period. The number of properties was up 57 percent in Miami, 42 percent in California's wine country, 32 percent in New York's Hamptons and 31 percent on Cape Cod in Massachusetts, the Web site says. In a survey released last month, Zonder, another vacation-home rental site, found that 60 percent of a representative sample of companies that manage rental properties saw a significant percentage increase in inventory in the 12 months ending in April. STUDY FINDS SATISFACTION WITH HOME EQUITY LENDERS But that's just because of lowered expectations, according to the J.D. Power and Associates, which conducted the research. "Ongoing troubles in the housing and mortgage lending markets have had the effect of lowering customer expectations around the home equity loan and line of credit origination process," says Tim Ryan, a senior research director at the company. Based on reports from 3,176 customers who took out a home equity line/loan between February 2007 and January 2008, satisfaction averaged 780 on a 1,000-point scale. Topping the rankings, by a hair, was Bank of America, which scored 811. Following were SunTrust, 809; Wachovia, 807; Chase, 791; WaMu/Washington Mutual, 773; CitiMortgage/Citibank, 762; National City Bank, 756; Wells Fargo, 755; and Countrywide Home Loans, 728. TWO-THIRDS OF RENTERS DON'T PLAN ON BUYING SOON A new survey commissioned by the National Apartment Association (NAA) finds 69 percent of current renters do not expect to buy their own home in the next year. Also, consumer confidence in the state of the U.S. housing market reached a low point, with 80 percent of U.S. adults believing the situation will not improve over the next six months. In addition, the survey by Harris Interactive recorded an increase from last year's survey with respect to the perceived financial benefits of renting vs. owning - 48 percent for renting in 2008 compared with 43 percent in 2007. IF YOU THINK YOUR HOME IS A CASTLE, YOU'RE LIKELY CALM When it comes to anxiety about family finances, where you live is critical. According to a Pew Social & Demographic Trends survey, adults who call themselves middle class and who live in the nation's most expensive metropolitan areas have higher incomes and higher costs than do self-identified middle class adults who live in lower-cost regions. They also have more financial stress: RATES ZOOM TO HIGHEST LEVEL IN NEARLY EIGHT MONTHS The 30-year fixed-rate mortgage (FRM) averaged 6.32 percent for the week, up from last week's 6.09 percent but lower than 6.74 percent one year ago, according to Freddie Mac. The last time the 30-year FRM was higher was the week ending Oct. 25, 2007, when it was 6.33 percent. The 15-year FRM this week averaged 5.93 percent in comparison with 5.65 percent the previous week and 6.43 the previous year. The last time the 15-year FRM was higher was eight months ago, at 5.99 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were 5.70 percent this week, up from 5.51 percent last week but below 6.37 percent a year earlier. One-year Treasury-indexed ARMs averaged 5.09 percent this week; last week, it was 5.06 percent and last year, 5.75 percent. "Mortgage rates jumped this week after a number of Federal Reserve (Fed) officials, most notably Chairman Bernanke and Vice Chair Kohn, expressed concern over a threat of inflation," said Frank Nothaft, Freddie Mac vice president and chief economist. "This led some market participants to believe that the Fed will raise rates more aggressively over the year than previously thought." LENDERS CAN'T RID THEMSELVES OF FORECLOSED HOMES The number of foreclosed homes owned by lenders continues to rise despite signs that they are increasingly willing to slash prices to sell those properties, notes the Wall Street Journal. Lenders and investors in mortgages owned some 660,000 foreclosed homes in April, up from 493,000 in January and 231,000 in January 2007, according to First American CoreLogic, a research firm that collects data from lenders and county clerks. The April total works out to roughly one in seven previously occupied homes available for sale nationwide. Some lenders now are cutting prices as often as every 20 days on homes that aren't selling, said David McCarthy, chief executive officer of Integrated Asset Services, a company that helps banks value and sell real estate owned homes (REOs, as they are known). Mark Zandi, chief economist at Moody's Economy.com, forecasts that the inventory of REOs won't peak before the end of 2009. In dollar terms, foreclosed one- to four-family homes owned by lenders whose deposits are insured by the FDIC more than doubled to $8.56 billion at the end of the first quarter from $3.59 billion a year earlier. The Real Deal says Queens had 629 REOs in March 2007 and a stunning 2,391 in May 2008, while Brooklyn saw a spike from 285 to 737 during the same period, according to Property Shark. AN H&R BLOCK UNIT IS SUED FOR LENDING DISCRIMINATION The office of Massachusetts Atty. Gen. Martha Coakley is alleging in a lawsuit that subprime lender Option One Mortgage Corp. and its parent company, H&R Block Inc., discriminated against black and Latino borrowers, reports the Wall Street Journal. The suit also alleges that Option One engaged in "unfair and deceptive lending practices" by selling extremely risky mortgages that were destined to fail and that it "continues to engage in additional and unfair and deceptive acts and practices as the servicer of these same loans." An H&R Block spokeswoman said the complaint is being reviewed by counsel. H&R Block stopped making mortgage loans in December and in April sold Option One's loan-servicing unit to investor Wilbur Ross. Option One was the seventh-largest subprime lender in 2007 in terms of dollars of loans originated, according to Inside Mortgage Finance. The lawsuit says Option One charged black and Latino borrowers higher points and fees at closing and targeted them with special marketing campaigns promoting predatory lending products. It further alleges that Option One "steered even prime borrowers into more costly subprime loans." APPLICATIONS TO BORROW AND BUY JUMP UP Loan volume rose 10.9 percent on a seasonally adjusted basis for the week ending June 6 over the previous week, according to the Mortgage Bankers Association (MBA). On an unadjusted basis, the increase was 23 percent, though it was 16.5 percent lower than the same week last year. Refinancings were 8.4 percent higher than the prior week, and purchase applications increased 12.8 percent over one week earlier seasonally adjusted. The refinance share of mortgage activity decreased to 39.8 percent of total applications from 40.6 percent the previous week, and the adjustable-rate mortgage (ARM) share grew to 10.3 percent from 8.7 percent. DELINQUENT LOANS REACH 29-YEAR HIGH The seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties rose 0.53 percentage points from the previous quarter to 6.35 percent of all loans outstanding at the end of the first quarter of 2008, according to the Mortgage Bankers Association (MBA). That was up 1.51 points from one year ago. The delinquency rate includes loans that are at DOJ WILL RELY ON LOCAL OFFICES TO PURSUE MORTGAGE FRAUD U.S. Atty. Gen. Michael B. Mukasey has rejected the idea of creating a national task force to combat the country's mortgage fraud crisis, calling the problem a localized one akin to "white-collar street crimes," according to the New York Times. He said he was confident that the Justice Department's current approach of using local prosecutors' offices around the country to oversee separate F.B.I. investigations was adequate. "This is disappointing," said Rep. Barney Frank, chairman of the House financial services committee, who noted that a $2.4 billion bill to prevent mortgage foreclosure approved by the House includes a provision backed by Republicans to provide an additional $300 million for law enforcement officials to fight mortgage fraud. He questioned how that money could be spent without a more centralized effort. The F.B.I. is investigating 19 major corporate fraud cases related to the mortgage crisis. The targets of most of those investigations have not been disclosed. In addition, the F.B.I. has 1,380 small mortgage fraud investigations now open in field offices around the country, a sharp increase over previous years, officials said. LIVE ON CENTRAL PARK SOUTH, IT'S NO LONGER THIS ACTOR Darrell Hammond and his wife Elizabeth sold their co-op apartment at 230 Central Park South for $1.37 million, according to property records, says the Real Deal. The couple bought two neighboring sixth floor units for a total of $1.25 million in May 2005. Hammond, 52, is SNL's longest-serving cast member, having joined in 1995. In case you don't stay awake that late, you may be interested to learn that he's known for his impressions of Bill Clinton, Dick Cheney and Donald Trump. IF YOU LIKE MOVIES, WHY NOT STAR IN THEM Brad Pitt, who professes a passion for architecture, will be a design consultant for an 800-room hotel and resort that Zabeel Properties plans to build in Dubai, the developer said. The Graft architecture firm, hired to design an America-themed hotel in the United Arab Emirates city, has worked with Pitt on rebuilding efforts in New Orleans. "Acting is my career, architecture is my passion," Pitt said in the statement. As "my first major construction project," the Dubai hotel will feature "environmentally friendly architecture, but also embrace my career in entertainment." Huh??? Pitt joins Wimbledon champion Boris Becker, fashion designer Giorgio Armani and golfers Greg Norman and Tiger Woods, among others, who have staked their reputations on helping Dubai property agents lure wealthy foreigners, notes the Wall Street Journal. HE'S NOT LAUGHING NOW Ed McMahon faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp, notes the Wall Street Journal. McMahon spokesman Howard Bragman said his client is having "very fruitful discussions" with the lender and hopes to find a resolution. It isn't clear whether that would allow the 85-year-old McMahon and his wife Pamela to remain in the six-bedroom home. A Countrywide spokeswoman said the lender couldn't comment in such cases "due to privacy issues." ReconTrust, a unit of mortgage lender Countrywide Financial, on Feb. 28 filed a notice of default on a $4.8 million Countrywide loan backed by McMahon's home. Public records also show that he had a separate home-equity line of credit from Countrywide of up to $300,000 secured by the same house. McMahon's home has been on the market for about two years, his real-estate agent said. McMahon broke his neck in a fall about 18 months ago and hasn't been able to work, Bragman said, adding that the health problem, along with the weak housing market and economy, has forced McMahon into the foreclosure proceedings. WILLIAMSBURG SUITS HIM, SAYS CHRISTIAN SIRIANO The Project Runway winner moved in early May into a newly renovated 1,400-square-foot loft that he is renting, says the Sun in an orgasmic profile. Siriano, 22, who was reared in Annapolis, said he appreciated that he could live by the waterfront. He also fits in well with the neighborhood's young, fashion-forward residents. "There's a great little park around here that's like a mini Central Park," he said. "On the weekends it's just full of fabulous-looking people on their fabulous bikes." The loft's open space features an entire wall of windows that creates a constant stream of light, and a sunken living/dining/kitchen/work area. The apartment's appliances are brand new and stainless-steel (though Siriano admits he doesn't cook much), and slate countertops and slate bathroom walls add to the modern, clean look of the place. He also loves the floors. "They're concrete and acid-stained. Aren't they fabulous?" he asked. On dress forms next to his design table are two of Siriano's most recent works - a skirt he designed for his "Project Runway" model to wear to the "Sex and the City" premiere, and a dress featured during his guest-starring stint on "Ugly Betty." Nearby is one of his proudest achievements, an oversize knockoff of the $100,000 check he received from Bravo. As he might say, "Fierce." To get the full Siriano effect, click here. JAYNE MANSFIELD'S DAUGHTER IS LOOKING UP Mariska Hargitay, who earns $7 million a season on "Law & Order: Special Victims Unit," and her actor/writer husband Peter Hermann have put on the market their 4,900-square-foot turreted penthouse in the O'Neill Building at 655 Sixth Avenue, according to the New York times. They bought the unit, which has more than 2,500 square feet of outdoor space, for $7 million last year and now offer the place for $8.25 million. Motivating the move from Chelsea was admission of their 2-year-old son, August, to an Upper East Side preschool. "All his friends live uptown," Hargity said, and "I work 16 hours a day." Which doesn't leave much time for apartment hunting. THREE YEARS LATER, THIS NEWS PERSONALITY GETS RELIGION Ted Koppel has chopped the price of his suburban Washington, DC-area home by more than half since he first put it on the market in 2005 for $4.1 million, says the New York Post. The former "Nightline" star is now asking $1.94 million for the nearly 9,000-square-foot spread in the expensive suburban retreat of Potomac, Md., after lowering it to $2.3 million last August. The six-bedroom Contemporary on 2.5 landscaped acres includes an indoor pool, a gym with a sauna, maid's quarters and a horse barn. Koppel and his wife Grace have since moved to a larger place directly on the Potomac River a few miles away and finally evince true appreciation for what the market will bear. AN INSIDER SNAGS A MODEL'S APARTMENT The New York Daily News says that Heidi Klum sold her penthouse at 166 Bank St. overlooking the Hudson for approximately $5.6 million to the owner of apartments 3-A and 3-B in the same building. The newspaper's sources say Klum, who made $14 million last year, may relocate to Los Angeles, where the next edition of Project Runway may be filmed. THE OTHER HOFFMAN IS BUYING IN THE VILLAGE Not fellow Oscar winner Dustin, but Philip Seymour Hoffman and his longtime squeeze, Mimi O'Donnell, have contracted to buy a West Village loft, according to the New York Post. The actor and his girlfriend, who have two children together, are buying a three-bedroom, three-bath co-op on Jane Street that has an asking price of $4.4 million. The pre-war unit features high ceilings, doors from Provence and polished wood floors. Hoffman scoured the Village for more than two years before signing on the dotted line. AT LAST, DAN FOGELBERG'S RANCH FINDS A BUYER The longtime ski retreat of the late singer-songwriter is in contract after three years on and off the market, says the Wall Street Journal. Fogelberg, who died in December at age 56 after a prolonged bout with prostate cancer, first listed the 610-acre ranch in 2005 for $17.5 million. Its most recent asking price was $15 million. The planned purchase price couldn't be learned. Fogelberg, who rose to fame during the 1970s, custom-built the estate, in Pagosa Springs, Colo., near the Wolf Creek Ski area. Dubbed "Mountain Bird Ranch," it comprises a four-bedroom main house with a greenhouse, a gym and a professional recording studio; a caretaker's house; and a studio apartment above a three-car garage. The property's terrain includes many hills, creeks, lakes and ponds. There are 12-stall stable, riding arenas and other outbuildings. The performer's widow Jean also owns a home in Maine. GOOD POLICIES MAKE GOOD NEIGHBORS, SAY SOME In the wake of a report that says owners of more than 200 residential buildings in Manhattan are improperly renting to tourists, the Sun reports that elected officials are calling on Mayor Bloomberg and Gov. Paterson to pass legislation cracking down on illegal hotels. Compiled by the so-called Illegal Hotels Working Group, the report said landlords are exploiting a loophole under which they can rent out "affordable" housing for short-term stays and risk only a onetime $800 fine. Because building owners can make thousands of dollars each night from tourists, elected officials said, the fine is insignificant. "It's creating incentives for landlords to push out tenants," City Councilman Daniel Garodnick, said at a press conference in Midtown. "Illegal hotels are proliferating in Manhattan, and it has to stop." Matthew Abuelo, a tenant at 345 W. 86th St., said an influx of tourists has resulted in constant noise and broken elevators in the building. "Our neighbors have been getting harassed endlessly," Abuelo said. Among buildings in the report are Trump Place and Worldwide Plaza, the managers of which could not be reached for comment. IS IT A RENTERS' MARKET After checking with a few "real estate analysts," the New York Post says it is, in fact, a renters' market, citing fewer new jobs for young grads and job losses in the financial sector. As always, the best deals are said to be farthest from the subway lines such as a large studio in an elevator building on York Avenue in the 70s for $1,500 or a two-bedroom in Fort George, in the West 170s, for $1,500. The Upper East Side near the river now offers some relative bargains, real estate pros are quoted as saying, as does the Wall Street area. According to the newspaper's sources, healthy bargains also can be found in some of the brand-new luxury buildings and between Ninth and Tenth avenues in the 40s to the 60s. In addition to lower rents, landlords are also dangling some other goodies in front of prospective tenants. At 20 Exchange Place in the financial district, New York magazine notes that creditworthy renters are allowed to waive security deposits. "We are sensitive to what's happening in the market," says Jack Berman of Metro Loft Management, which owns the building. "I'm starting to get calls from existing tenants [up for renewals], who say they like the building but they're worried they may not have a job." NO, IT'S NOT A RENTERS' MARKET, SAYS THE OBSERVER New York apartment rents remain at or near records, according to the publication. That's because AND A RENT-STABILIZED APARTMENT IS A DIMINISHING OPTION The number of rent-stabilized apartments in shrank 4 percent to 836,004 last year, the state Division of Housing and Community Renewal says, according to the New York Daily News. At the same time, complaints of landlords harassing stabilized tenants went up almost 31 percent to 344 this year, and complaints of overcharging shot up almost 20 percent to 1,038. CONDO DEVELOPERS ARE OFFERING MORE CONCESSIONS
FORECLOSURES ARE WANING CITYWIDE The numbers declined for the second month in a row, with a 4.8 percent drop in May compared with the previous month, according to PropertyShark.com's, reports the Real Deal. That follows a 6.8 percent drop in April. But the city's 313 foreclosures in May were still nearly 50 percent higher than in May 2007. The city's epicenter for foreclosures in May 2008 was District 12 in Queens (Jamaica, South Jamaica, Hollis and St. Albans), which recorded 80 foreclosures in that month alone. However, Queens as a whole showed a marked improvement compared with April, with 8.3 percent fewer foreclosures. But compared with last year, there were 113 percent more foreclosures than one year earlier. In Brooklyn and the Bronx, foreclosures fell versus the previous year; Brooklyn was down 13 percent and the Bronx, 39 percent. Manhattan had 14 foreclosures in comparison with just 23 in the first quarter. APARTMENT PRICES ACTUALLY ROSE LAST MONTH A preliminary tabulation by the New York Times of sales completed in May shows that median and average co-op and condo prices edged up slightly to a record of nearly $1.54 million (excluding recent closings at two of the most expensive new developments ever, at 15 Central Park West and at the Plaza Hotel). The number of sales in May, filed with the Department of Finance toward the end of the month, was higher than in any month since August 2007, and the number of sales above $4 million - 52 - was the highest ever. However, the number of sales closed during May was 20 percent below May 2007 - an all-time record month - while higher than in May 2006. May sales of apartments under $1 million were roughly flat compared with recent months, but off by nearly a third compared with the year before, according to the sales tabulation. According to appraisal guru Jonathan J. Miller, unsold inventory was running about 27 percent above that of the previous May, a time when inventory was unusually low. He said the market was "moving sideways, flat" with some apartments selling for less than they would have a few months ago, and some selling for more, a trend that he believes is likely to continue. CONDO RESALES ARE HOLDING UP, SAYS NEW YORK MAGAZINE The monthly reviewed a number of sales and found that every apartment it examined has at least held its value, and nearly every one has seen some substantial appreciation. Nothing has gained value like an apartment in 15 Central Park West, where resold apartments have gained an average of 92 percent in price - several of them in a matter of months. For comparison's sake, the publication learned that sales at the Plaza recorded an average increase of 41 percent. See the magazine's revealing chart by clicking here. PICTURE THIS. AND PAY FOR IT TOO The This Old House program is for the first time seeking historic home to renovate in New York City. The TV crew is hoping to find a dynamic family with a great old house in need of help, with plenty of things to save and update. (A "dynamic" family would be running a marathon, scaling the social ladder or rushing into a divorce? It is not explained.) The project's scope must be "just right" - not a whole house, but more than just a kitchen. The renovation must be completed in four to five months, with construction beginning as early as August and finished by December. The ideal project should already be under way with design plans and have the ability to be fast-tracked. Renovations are completely funded by the homeowners, though the show arranges for product discounts and donations where possible. All donated items are considered gifts, on which the homeowners pay taxes. LOAN DELINQUENCY CLIMBS IN THE CITY The percentage of borrowers in the New York City area delinquent on their mortgages almost doubled in the first quarter to 2.7 percent compared with the year earlier figure, according to a report by TransUnion.com, a credit and information management firm, says crainesnewyork.com. The 60-day delinquency rate climbed in all five boroughs, with the steepest hike, 92 percent, in Queens. Queens, Brooklyn and the Bronx all had delinquency rates greater than the national average of 3.2 percent. At 2.6 percent, New York State had the 28th highest delinquency rate in the country. BY ONE RANKING, AT LEAST BAGHDAD IS WORSE Hard to believe and harder to accept, a new annual ranking based on 39 quality of living factors places New York City 49th. In the survey conducted by a global consulting and investment firm, Mercer, New York dropped from 48th in 2007 and 46th in 2006, says the Sun. Zurich was listed as the international city with the highest quality of living, followed by Vienna, Geneva and Vancouver. The top-ranking U.S. city was Honolulu, which came in at 28th place, followed by San Francisco (29th). Boston was 37th and Chicago and Washington, D.C., tied in44th place. "It depends what standard," Mayor Bloomberg commented. "If the standard is, do we have hot weather in the winter, we would lose that. If the standard is, do you have a billion acres per person so you can ride a horse, we will not compete in that case. If the standard is, where do you want to raise your kids, get medical care, get an education, understand the world, and compete in the biggest pond in the world, New York's the place for you." See the Kiplinger's item below for another ranking. THIS IS TRULY FOR THE BIRDS A group of pigeon-loving bird watchers wants New Yorkers to thank their feathered friends today for all the "charm" they bestow on Gotham. So reports the New York Post, which says that "National Pigeon Day" is set to be celebrated in Central Park with songs, prayers and speeches to honor the urban species. Insisting that the feathered creatures are totally misunderstood, organizers with the New York Bird Club have let drop the announcement that the pigeon proceedings will take place at Pilgrim Hill, near the park entrance at Fifth Avenue and East 72nd Street, at 4 p.m. today, June 13. You'd think it was April 1, no? BUT FOR YOU DAHLINK, A SPECIAL PRICE In fact, would you believe two houses for the price of one? That, according to Inman News, is what a Southern California developer is offering in an effort to unload new-home inventory in a struggling market. Escondido, Calif.-based Michael Crews Development says it will toss in a second home for buyers of high-end homes with an advertised price of about $1.6 in the San Pasqual Valley, 30 miles north of San Diego. Three homes at the Royal View Estate development are eligible for the two-for-one offer, for which the additional home carries a $400,000 price tag in beautiful downtown Escondido. The median price of single-family detached resale homes in the San Diego region dropped about 27.4 percent year-over-year in April, to $443,520, and sales rose approximately 1.2 percent. A spokeswoman said the company is targeting investment buyers and that none of the three homes has sold in the nearly three weeks after the promotion was launched. The offer will be extended until the end of the month. Appraisal guru Jonathan Miller notes that seller concessions are deducted from the sales price of any of these sales that are used as comparables. Therefore, any buyer would be paying cash for the cost of the lower priced home by having extracted a massive discount from the sales price of the higher priced home versus the price of the lower priced home. DOES HE KNOW SOMETHING FEW OTHERS SEEM TO THINK Billionaire hedge-fund manager Edward S. Lampert is placing new bets on a U.S. housing recovery, buying stakes in beaten-up home builders, mortgage lenders and a home-improvement retailer, says the Wall Street Journal. Lampert's ESL Investments Inc., which controls investments it valued at about $11.6 billion in its most recent government financial report, began picking up shares in hard-hit housing-related stocks. ESL acquired small stakes in U.S. home builders Centex and KB Home, according to its latest Securities and Exchange Commission filings. At recent prices, the stakes in the two home builders are valued at $10.4 million and $10.8 million, respectively. ESL also is tip-toeing into mortgage origination and servicing, acquiring about four million shares of CIT Group, a struggling subprime home and commercial lender, as well as 1.4 million shares of PHH, a mortgage originator and mortgage-service company. In another bet on a housing turnaround, Lampert this spring increased his stake in Home Depot. IF YOU BUILD IT, BIG PROFITS MAY NOT COME So it would seem if one developer's budget is to be swallowed. The cost to renovate the 76,500-square-foot building (purchased on May 4, 2007) is roughly $76 million: $46 million for acquisition, $16 million for hard costs including material and labor, and $14 million for soft costs including financing, brokerage and professional fees, the June Real Deal relates. Total cost for an average 856-sf one-bedroom apartment: $1,041,096. Average home asking price: $1.1 million. Profit: $58,904 or 5.7 percent. That is a low rate of return, but developer Henry Justin said he still expects to earn his usual 10-15 percent profit, still relatively low, on the whole project by factoring in the commercial units. Asking prices for the commercial units are $2.7 million for one (under contract) and $2.8 million for each of the other two. The 14-story building has 73 residential units, three commercial condos and 34 storage spaces. The apartments run from 505 square feet to 2,405 square feet with one to three bedrooms, eight units with terraces. The storage units, to be sold on a first-come, first-serve basis, cost around $19,950 each. As of mid-May, 11 units were under contract and closings are slated to begin next month. The line-by-line budget demonstrates that developers have to allot funds for even the smallest items - for example, robe hooks ($200 each). "This will show you why prices can't drop 10 or 20 percent," Justin said. For details, click here. KIPLINGER'S TELLS YOU WHERE TO GO The Personal Finance magazine sought out places with strong economies, abundant jobs, reasonable living costs and plenty of fun things to do. "When we ran the numbers, some of the names that popped up made us do a double take at first," the publication relates. "So we hit the road to meet movers, shakers and regular folks, experience the ambience and take in the sights. It also relied on Kevin Stolarick, research director at the Martin Prosperity Institute, which studies economic prosperity. "Our formula highlights cities not just with strong past performance, but also with all the ingredients for future success," Stolarick said. Among those ingredients: a "healthy shot of people in the creative class" such as scientists, engineers, architects, educators, writers, artists and entertainers, who are described as catalysts of vitality and livability in a city. In order, the cities are Houston, Raleigh, Omaha, Boise, Colorado Springs, Austin, Fayettville, Sacramento, Des Moines and Provo. To decide for yourself whether the creative people at the magazine are on drugs, take their virtual tours by clicking here. WHEN THERE'S AN ILL, THERE'S A WAY In markets hit hardest by falling home prices and rising foreclosures, lenders and brokers are discovering a new phenomenon: the "buy and bail, in which borrowers with good credit buy a new home - often at a much lower price - then bail out of the "upside down" mortgage on their first home, observes the Wall Street Journal. Homeowners are able to pull off this gambit - which some lenders and real-estate agents call mortgage fraud - by taking advantage of mortgage-lending practices that allow them to buy a new primary residence before their existing residence has been sold. Still, borrowers lose the ability to take out unsecured loans, since foreclosures can stay on a credit report for seven years. And in some states, lenders can sue for assets, including a new house. While buy-and-bail is on the rise, the practice doesn't appear to be widespread. Buy-and-bail is "certainly fraudulent and unfortunately on an uptick," says Gwen Muse-Evans, a Fannie Mae vice president, who adds that the agency to draft tougher regulations aimed at closing a big loophole that allows underwater homeowners to qualify for new home loans. Under revised guidelines, loan applicants who claim they will rent out their first home will have to produce supporting evidence. Borrowers also will have to prove that they can pay the mortgage, property taxes and insurance for both residences. TV SHOWS ABOUT HOUSING ARE BOOMING The audiences for HGTV and TLC, the two channels with the most so-called property programming, have grown steadily over the last three years, reports the New York Times. The reason appears to be their shift in focus away from buying real estate as speculative sport to more educational and emotional shows. "If anything, there's more interest than ever before, because of what's going on in the market," Jim Samples, the president of HGTV, said. HGTV's prime-time schedule - built around the shows "Designed to Sell," "House Hunters" and "My House Is Worth What?" - now average more than a million viewers every evening. Shows that were hallmarks of the bubble such as "Flip That House" (on TLC) and "Flip This House" (on A&E) are still around but have been retooled with less-than-happy endings. The TLC episodes are repeated several times each week and still draw an average of 700,000 viewers a showing. New shows - for example, "Date My House" on TLC, highlight the emotional aspects of home-buying (prospective buyers can spend a night or throw a dinner party in a home to "date" it). HELP YOURSELF (AND OTHERS, TOO) There has been a growing interest in the "freecycling" process: repurposing potential landfill material by putting it into the hands of needy individuals or organizations, notes the Wall Street Journal. The nonprofit freecycle.org is the largest of a number of sites dedicated to connecting donors and recipients. Habitat for Humanity (habitat.org/env/restores.aspx) will connect you to a local bricks-and-mortar "ReStore" where you can donate leftover building materials or buy them for a fraction of their retail cost. Many cities have Web sites (New York City's is nyc.gov/html/stuffex/html/home/home.shtml) that refer you to organizations that will help you donate or resell your stuff. For a list of reuse organizations nationwide, check reDO.org and click on "Find a Reuse Center." Neighborrow.com lets you put anything you own into a free virtual-lending library for reciprocal borrowing with your neighbors. The Sky is Not the Limit Sometimes a property is so egregiously overpriced that it merits special attention. Such is the case for the penthouse offered in a six-unit condominium in Chelsea. The 1912 building converted in 1999 is worse than nondescript, having retained more than the essence of its cramped and grimy original entrance in what must have begun life for offices or light manufacture. At least the elevator works pretty well, but the location almost at the corner of a gritty block on a busy avenue is prime only in terms of proximity to public transportation and other neighborhood amenities. On the entire sixth floor plus a seventh floor loft and 500-sf terrace, the 2,450-sf unit numbers among its pluses central air conditioning, washer/dryer, wood-burning fireplace in a 21'6" x 24'1" living/dining room with double height ceilings, key-lock elevator and four exposures. Unfortunately, the exposures provide views sullied by surrounding rooftops that are at about the same level. Configured with three true bedrooms and three baths, this property randomly rambles and rambles. The floors, which may go back to the building's construction, have character, too much so: They are spongy underfoot. The baths and kitchen are all dated. Eighteen steps above the living room is the loft that measures 14' x 18'8"; it could be used as an office or, for someone wouldn't mind being blinded by the light pouring in from a memorably huge uncovered skylight, a bedroom. The terrace is up there too. Perhaps this condo has potential, but the layout, condition and location make laughable the asking price: $3.995 million with common charges of $1,180 per month. What follows are some other properties recently viewed and listed by various brokers (including an East Side triplex that underscores the point of this little essay): Upper East Side
Upper West Side
Elsewhere in Manhattan
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They're more likely to say that they barely make enough to get by and expect to have trouble paying their bills in the coming year. Moreover, middle class homeowners in high-cost areas are less likely to have paid off their homes than are middle class homeowners in less expensive areas. The Pew survey of 2,413 adults found that the median middle class income in high-cost areas is in the range of $50,000-75,000 a year; in low-cost areas, it is $30,000-40,000. But the self-defined middle class is more financially stretched in high-cost regions than in low-cost regions. For example, more than a quarter of middle class residents of high-cost areas (26 percent) say they have just enough money for basic expenses, or not even that much. That is higher than the proportion saying so (16 percent) among middle class residents of low-cost metropolitan areas. Many middle class residents of pricey areas also see financial problems in their future; 27 percent say it is likely they will have trouble paying their bills in the coming year.
least one payment past due but does not include loans in the process of foreclosure. About 1 in 11 American mortgages were past due or in foreclosure, according to the MBA figures. Loans in the foreclosure process amounted to 2.47 percent at the end of the first quarter, an increase of 0.43 points from the fourth quarter of 2007 and 1.19 points from one year ago. The seasonally adjusted total delinquency rate is the highest recorded since the MBA began its survey in 1979. All told, about 8.8 percent of home loans were past due or in foreclosure, or about 4.8 million loans. That is up from 7.9 percent at the end of December. (About a third of American homeowners do not have mortgages.) Delinquencies and foreclosures increased at the fastest pace for borrowers with prime adjustable-rate mortgages (ARM), though borrowers with subprime ARMs still account for the largest share of troubled loans. The number of new prime ARM foreclosures increased by 29,000 to 117,000 in the first quarter, while the number of new subprime ARM foreclosures increased by 20,000 to 195,000. This is the first time prime foreclosures have grown faster than subprime foreclosures, the MBA said. The 30-day delinquency percentage is still below levels seen as recently as 2002."
it's cheaper for landlords and tenants if nobody moves, not because of college grads arriving in droves. Both tenants and landlords, having weighed the options, are deciding to renew at around the same rents. For the landlord, the No. 1 reason is knowing that the rent from a good tenant comes in like clockwork. The No. 2 reason is much costlier: renovations and repairs. There's also the maintenance of (and taxes on) an empty apartment that are all expense and no return. For tenants, the expense of moving almost always exceeds the expense of simply paying a higher rent. The financial burden of marketing a vacant apartment often falls on new tenants, and not on landlords, through thousand-dollar broker fees. Add in van rentals, security deposits, credit-check fees, money to have the lights turned on, missing work for the cable guy to show et cetera, and the ease of renewal with the flourish of a pen becomes that much more appealing to many tenants. 
Amid concerns about oversupply, they are now far more willing than in the recent past to offer buyers concessions and, from time to time, discounts, says New York magazine. According to TrueGotham and UrbanDigs, two blogs that track incentives, buyers are getting everything from $10,000 worth of custom closets to paid transfer taxes and fully covered closing costs, which can amount to the mid-five figures, the magazine reports.
