Items of Interest The U.S. Market: Is the Bottom in Sight? MULTIFAMILIES MASK DIP IN SINGLE-FAMILY CONSTRUCTION The downswing in the single-family housing market deepened in April, while a bump up for the month in the extremely volatile multifamily market lifted total housing starts 8.2 percent, according to the Commerce Department. Still, total starts were down 30.6 percent from a year earlier. Single-family housing starts dropped 1.7 percent for the month to the lowest rate in 17 years; production was 42.2 percent below April 2007. Said NAHB Chief Economist David Seiders: "The fundamentals point to further deterioration of single-family housing production over the balance of this year, and the condo component of the multifamily sector also is destined to lose more ground." Yet single-family permit issuance rose 4.0 percent, marginally lower than the first quarter average and 40.1 percent below one year earlier. "We do not think the [housing] problem is over . . . and still expect declines through the summer," wrote S&P economist Beth Ann Bovino in a note cited by Business Week in Realtor magazine. And in another e-mail note, John Ryding, chief U.S. economist at Bear Stearns, advised against reading too much into the rise in permits. INDIANAPOLIS CLINGS TO ITS DUBIOUS DISTINCTION In the first quarter, it remained the most affordable major U.S. housing market for the 11th consecutive time, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). Nationwide, homes became more affordable for the third consecutive quarter, with the HOI rising to the highest level since the second quarter of 2004. Ninety percent of homes sold were affordable to families earning the Indianapolis area's median household income of $65,100. Also near the top of the list for affordable major metros this time around were Youngstown-Warren-Boardman, Ohio-Pa.; Grand Rapids-Wyoming, Mich.; Detroit-Livonia-Dearborn, Mich.; and Harrisburg-Carlisle, Pa., in that order. Also maintaining its long-held standing on the HOI was Los Angeles-Long Beach-Glendale, Calif., which has now been the nation's least-affordable major housing market for 14 consecutive quarters. Other major metros at the bottom of the housing affordability chart included New York-White Plains-Wayne, N.Y.-N.J.; San Francisco-San Mateo-Redwood City, Calif.; Miami-Miami Beach- Kendall, Fla.; and Santa Ana-Anaheim-Irvine, Calif., in that order. APRIL SALES SLOW FOR PREVIOUSLY OWNED HOMES Existing-home sales - including single-family, townhomes, condominiums and co-ops - declined 1.0 percent to a seasonally adjusted annual rate of 4.89 million units in March and were 17.5 percent below one year earlier, according to the National Association Realtors (NAR). It was the second consecutive month that sales have declined, and it was another record low since the NAR began reporting the figure in 1999. The national median existing-home price for all housing types was $202,300 in April, 8.0 percent below a year ago. Total housing inventory at the end of April rose 10.5 percent to 4.55 million existing homes, representing an 11.2-month supply at the current sales pace. Single-family home sales slipped 0.5 percent from March to a level 16.1 percent below April 2007. The median existing single-family home price was $200,700 in April, down 8.5 percent from the prior April. Sales of previously owned apartments fell 5.2 percent lower than the previous month and 7.9 percent below the previous April. For existing condos alone, the median price was $214,900 in April, 3.7 percent below a year ago. NEW-HOME SALES RISE BUT DROP MOST IN A YEAR SINCE 1981 The increase was 3.3 percent in April, the U.S. Commerce Department reported. However, this gain reflected downward revisions to sales numbers reported for each of the previous three months, including a particularly large revision for March. Said Chief Economist David Seiders of the National Association of Home Builders (NAHB): "Sales were down 42 percent on a year-over-year basis, the largest such reversal since September 1981. Our latest builder surveys actually show that home buying has not yet stabilized, and we are anticipating some further erosion over the coming months." The inventory of new homes for sale declined 2.4 percent in April to a 10.6-month supply at the current sales pace. Completed homes accounted for 40 percent of total new homes for sale, up from 33 percent a year earlier, and the median number of months for sale since completion rose to 8.0 - the highest since mid-1991. IN SOME AREAS, HOME SALES ARE ACTUALLY RISING PRICE DECLINES ACCELERATED IN THE FIRST QUARTER So reports the U.S. Office of Enterprise Housing Oversight (OFHEO), which said its index for purchases was 1.7 percent lower on a seasonally adjusted basis from the last quarter of 2007. The index decline exceeded the 1.4 percent price drop between the third and fourth quarters of 2007 and was the largest quarterly price decline on record. Over the past year, prices fell 3.1 percent between the first quarter of 2007 and the first quarter of 2008, the biggest decrease in the index's 17-year history. Said OFHEO Director James B. Lockhart: "For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets. To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news, as are continued low mortgage rates." While the national purchase-only house price index fell 3.1 percent between the first quarters of 2007 and 2008, prices of other goods and services rose 4.6 percent; accordingly, the inflation-adjusted price of homes fell 7.7 percent over the latest year. "The large overhang of real estate inventory awaiting sale continues to force price declines in many areas, but particularly in places that had seen very sharp appreciation in previous periods," commented OFHEO Chief Economist Patrick Lawler. With prices falling in the latest quarter in 43 states, eight states exhibited quarterly price declines of more than 3 percent and two states - California and Nevada - saw prices fall more than 8 percent. ANOTHER INDEX RECORDS 14.1% PRICE DROP IN FIRST QUARTER The S&P/Case-Shiller Home Price Indices show that prices for existing single family homes in the U.S. went down 14.1 percent in comparison with the first quarter of 2007, the yearly biggest drop in the measure's 20-year history. During the 1990-91 housing recession, the annual rate bottomed at -2.8 percent. S&P executive David M. Blitzer finds "very few silver linings" in the data. "Most of the nation appears to remain on a downward path, with 19 of the 20 metro areas reporting annual declines, and six of those now at negative rates exceeding -20 percent," he adds. "Looking closely at these returns, you can see that 15 of the metro areas are also reporting record lows, and eleven are in double digit decline, with Chicago being the latest metro area to join these ranks." The monthly data paint a similar picture, Blitzer notes; 18 of the metro areas reporting at least seven consecutive months of negative returns. At the same time, there was monthly price appreciation in two of the metro areas: Charlotte and Dallas. Las Vegas remained the weakest market, followed by Miami and Phoenix, down 24.6 percent and 23.0 percent respectively. FOR HOMES WITH CONFORMING MORTGAGES, PRICES PLUNGE Based on sale prices in the first quarter, Freddie Mac says its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 10.4 percent drop in U.S. home values during the first quarter on an annualized basis. The decline follows a downwardly revised 9.9 percent annualized drop in the fourth quarter. Over the four quarters ending with the first quarter of 2008, home sales prices fell an average of 4.4 percent in the CMHPI Purchase-Only Series - the largest annual decrease over the 39-year history of the series. Including data from both home purchase transactions and mortgage refinancings, Freddie Mac found a 2.4 percent decrease, the steepest quarterly decline since 1971; over the year ending with the first quarter, home values depreciated 0.8 percent, the first annual drop in 39 years. MEMBERS OF THE NAR AND THEIR INCOMES ARE SHRINKING A new survey by the National Association of Realtors (NAR), which numbers among its member approximately 60 percent of the nearly 2 million active real estate licensees across the country, has found a 1.5 percent decline in its ranks. The survey shows the typical member is 52 years old, works 40 hours per week and specializes in residential brokerage; 60 percent are women. The median Realtor income was $42,600 in 2007, down from $47,700 in 2006. In recent years, the typical member's income had been diluted by a large growth in membership, and income trended down since peaking in 2002. Members licensed as brokers earned a median of $65,200 in 2007, while sales agents earned $31,000. Realtors in the business for two or fewer years earned a median of $10,500, while those with three to five years of experience earned $34,600. For six to 15 years, the median was $52,000, and members in the business for 16 years or more earned $69,500. The modest decline in membership last year comes almost exclusively from newcomers who weren't able to sufficiently develop their business, according to NAR. Eight-three percent of Realtors work as independent contractors for their firms, and 70 percent of them receive no fringe benefits. Only 5 percent of members report real estate is their first career. According to the survey, 10 percent of respondents work fewer than 20 hours per week; 30 percent, 20-39 hours per week; and 15 percent, at least 60 hours per week. For 77 percent, real estate is their only occupation. STILL TRYING, JULIAN SCHNABEL SPLITS THE DIFFERENCE The artist has cut the price on a Manhattan duplex in his well publicized Palazzo Chupi, dubbed the "pink building" by offended locals, from $32 million to $29.5 million, says the Wall Street Journal. It earlier was listed at $27 million. Schnabel, 55, sold units directly to Richard Gere and investment banker William J.B. Brady while the building was still under construction. Brady paid $15.5 million for his fourth-floor apartment, and Gere reportedly paid $12 million but then put his unit on the market for nearly $18 million. The building, a nine-story addition on top of a three-story former horse stable that Schnabel owns in the West Village, contains five residential units of about 18,500 square feet in total. Each unit comes with outdoor space, private storage and access to a shared indoor pool, as well as double-height ceilings, six-foot-tall fireplaces and earthenware or marble tubs. Schnabel, who has said the building is colored red, is using the lower three floors as an art studio and is keeping one apartment. A RENNAISANCE MAN'S LAST ABODE WILL SOON BE LISTED The Park Avenue maisonette where the late William F. Buckley and his late wife Pat entertained guests at perhaps 1,000 dinner parties is going on the market next month, now that the co-op board has cleared the way, according to the New York Times. At 778 Park Avenue, the writer, conservative thinker and aristocrat with a large vocabulary and a common touch, presided over wide-ranging discussions about literature and music, philosophy and sailing. Buckley died in February at age 82 while working at the desk in his study in his home in Stamford, Conn., 10 months after the death of Mrs. Buckley. Inherited by their son, writer and satirist Christopher Buckley, the 5,000-square-foot duplex apartment has been freshly restored. The apartment has four bedrooms upstairs connected by a curved staircase to the entertaining space (a 29-foot-long dining room and 27-foot-long living room), a library, and three staff rooms. THE GAMBLER IN HIM MAY PAY OFF AGAIN Country-music superstar Kenny Rogers, planning to live full time on a ranch that he's building, has put his Atlanta mansion on the market for $7.9 million, according to the Wall Street Journal. This is the 10th house the singer has bought, fixed up and put back on the market. "It's a hobby with me. Once I get finished, owning it doesn't mean anything to me," he says. Rogers, 69, and his wife Wanda plan to live full time at their 150-acre country estate in Athens, Ga., where he put in a pond and is building a 3,000-square-foot ranch house, two guest bungalows and a barn. Although he still tours about one-third of the year, Rogers is thinking about retiring. "This may be my last year," he says. The roughly 9,000-square-foot listed house, built in 1997 in the Buckhead neighborhood, sits on a 1.5-acre corner lot and has six bedrooms, six baths, a pool and a gym. It comes furnished. The singer and his wife bought the Italian-style home in March 2006 for $2.8 million and spent $3 million renovating. Among other things, they raised the roof, added landscaping and redid "every floor, ceiling and wall," Rogers says. HER CLOTHES WEREN'T THE ONLY THINGS CUT WELL So was the price of the late fashion designer Liz Claiborne's ranch. After more than a year on the market and a $1 million price cut, the Montana spread has sold for close to its recent $7.5 million asking price, reports the Wall Street Journal. The buyer is a Florida entrepreneur and the seller, Claiborne's husband, Arthur Ortenberg, 81, who co-founded her clothing company. About 75 miles north of Missoula's airport, the ranch sits on a private lake and includes a two-bedroom main house of nearly 9,000 square feet, an indoor pool, a guest house, an indoor riding arena and a helicopter pad. The couple bought the 720-acre ranch in pieces in the 1980s. A TV NEWSWOMAN IS TAKING UP HER ANCHOR CNN's Soledad O'Brien has put her downtown Manhattan loft up for sale for $4.6 million, according to the Wall Street Journal. The former "American Morning" co-host says she's shopping for a home that's a shorter walk to school for her kids and is larger: "[I] had no idea I was having twins when we bought the place. Quite a surprise." The 41-year-old anchor has four young children with her husband Brad Raymond, an investment banker, and designed the roughly 4,000-square-foot co-operative apartment to be child-friendly. The seven-room, full-floor apartment, with a custom open kitchen, is in Chelsea and has a 42-foot-long living room, 11-foot-high ceilings and a double home office. O'Brien and her husband bought the apartment four years ago - she declined to give the price - and completely renovated it. SO MUCH FOR THE BEST LAID PLANS The widow of best-selling author Sidney Sheldon, Alexandra, has sold one of the Palm Springs, Calif., properties she listed earlier this year and cut the price of the others by 30 percent, reports the Wall Street Journal. In the Old Las Palmas section, a midcentury modern, four-bedroom home known as the "playhouse" and used for entertaining sold for $1.425 million, slightly less than its asking price, to a pair of enthusiasts of the style. The 1954 house has an indoor pool and a miniature golf course. The buyers plan restorations. Sheldon is now asking $2 million for the adjacent main house - a seven-bedroom 1959 single-story home on 0.62 acre, where her husband did much of his writing - and $2.3 million for a guest house. Earlier, she'd listed both those houses together for $6.5 million. A second guest house, across the street, now sells for $3 million, down 25 percent from its original asking price of $4 million. That five-bedroom home on 0.8 acre has a pool and gym. WIDOW WITH ONE HEAD HOPES TO CLEAN UP Philanthropist Lois Pope, widow of National Enquirer founder Generoso Pope Jr., is asking $36.5 million for her ranch in Colorado, says the Wall Street Journal. The 12,800-sf European-chateau-style house, with a stone exterior, was built in 2001 on 200 acres in Snowmass, near Aspen. There are six bedrooms, two elevators and a gym. The property is next to a 200-acre ranch bought for $36 million last month by Russian billionaire Roman Abramovich. That contemporary-style house is roughly the same size. THE TIMES THEY ARE A CHANGING DOWNTURN AFFECTS BOTH LOWE'S AND HOME DEPOT Lowe's, the world's second-largest home improvement retailer after Home Depot, reported net earnings of $607 million for the quarter ended May 2, a 17.9 percent decline versus the same period a year ago. Sales for the quarter declined 1.3 percent, and comparable store sales for the first quarter declined 8.4 percent. Commented Chairman and CEO Robert A. Niblock: "The generally poor economic outlook, including well-known housing pressures, rising food and fuel prices and a more negative employment picture eroded consumer confidence and impacted discretionary purchases for the home." Home Depot also recorded a drop in earnings - $356 million from $1.0 billion in the same period in fiscal 2007. Excluding a nonrecurring charge, the company reported consolidated net earnings of $697 million. Sales for the first quarter totaled $17.9 billion, a 3.4 percent decrease from the first quarter of fiscal 2007, reflecting negative comparable store sales of 6.5 percent. FRANK LLOYD WRIGHT HOUSES ALWAYS SELL AT A PREMIUM The architect, who died in 1959 at the age of 92, completed more than 500 buildings in his lifetime, of which the 400 or so that still stand are mostly residences, says the New York Times. At any given time, up to 10 of these homes may be up for sale, and they are highly sought after. "It's a narrow market. It's an active market. And it can be a lucrative market," said Ron Scherubel, executive director of the Frank Lloyd Wright Building Conservancy, an international preservation organization based in Chicago. "Some of these houses can be seriously overpriced. But most of the time, buyers pay a 25- 40 percent premium because it's a Wright design." A renewed interest in midcentury modern American architecture has widened the pool of interested buyers, particularly for the Usonian Wright houses, which he began designing in the late 1930s as affordable homes for the middle class. Where once Wright fixer-uppers may have been passed over, they now sell no matter what their condition. "Today's buyer has both the means and the desire to restore a Wright house," Scherubel said. "This is not the Home Depot set, either. When a door hinge is missing, they call us to find an artisan who can create a custom reproduction." RENTALS SURGE IN THE U.K. AS CREDIT CRUNCHES People with enough capital and credit to buy a house are staying on the sidelines until it is clear exactly how far prices are likely to fall, says the Wall Street Journal. And with lenders becoming more careful about to whom they lend as a result of the credit crunch, many people who would like to buy a home are finding it difficult to come up with the funds. The Royal Institution of Chartered Surveyors said property sales in England and Wales would tumble 40 percent in 2008. Data released by mortgage lender Paragon showed the average rent for residential property in the U.K. has risen 12 percent since the credit crunch hit in August last year. And data from letting agents Hamptons International show the number of tenancies surging by a third in the first four months of 2008. "Prices have gone up 10-20 percent on new tenancies since last summer," said Ed Phillips, Lettings Director at Foxtons, a leading U.K. estate agent. "On average we have about four to five applicants for each property so we are seeing things go quickly." THE HOUSING MARKET IS HURTING ELSEWHERE AS WELL There's a glut of housing in Spain and Ireland, where home building grew by 187 percent and 177 percent respectively between 1996 and 2006, reports the Economist in Realtor magazine. Home prices in Ireland are falling, while Spanish numbers still show a small annual increase. Still, New Zealand house prices are 82 percent higher than they were in the last quarter of 1999; they have risen by 70 percent relative to household income. In Singapore and Hong Kong, which have benefited from the booming Asian economy, an analysis by DTZ Debenham Tie Leung, an estate agency, found that the number of homes bought by foreigners in Singapore jumped by 71 percent last year. TIMES COLUMNIST DECIDES BUYING IS BETTER AFTER ALL "Most of the
time, the decision whether to rent or buy should be based above
all on life circumstances," writes New York Times columnist
David Leonardt, whose latest screed is excerpted and slightly
re- REALTOR TRADE GROUP AND JUSTICE DEPARTMENT SETTLE SUIT The Justice Department said it reached a settlement with the National Association of Realtors (NAR) in an antitrust case over the trade group's effort to control how home listings are displayed on the Internet, reports the Wall Street Journal. The settlement prevents the NAR - whose more than 1.2 million members handle nearly all U.S. home sales made through agents, few of them in New York City - from adopting rules that the department said could have handicapped discount brokers that rely heavily on the Internet to attract and work with clients. The department said the settlement should encourage more competition among real-estate brokers. But it appears unlikely to have much influence on the commissions consumers pay on home sales, at least in the near term, industry executives say. MANHATTAN RENTS ARE VIRTUALLY UNCHANGED SINCE LAST YEAR A new report shows average monthly rents in many neighborhoods, including perennial favorites the Upper West Side and the Upper East Side, virtually unchanged from the same period last year, the Observer reports. The average monthly rent for an Upper West Side one-bedroom in a non-doorman building was $2,457 this May, according to the report. In June of 2007, the average was $2,518. On the Upper East Side, the one-bedroom, non-doorman average was $2,352 in May; it was $2,366 last June. A big reason is, of course, demand. Another report last week, from investment-sales brokerage Marcus & Millichap, put the vacancy rate for large, market-rate Manhattan apartment buildings at under 3 percent for the first quarter of 2008. It is not expected to rise above that percentage this year. THE MARKET REMAINS HOT FOR RESIDENTIAL RENTAL BUILDINGS Multifamily residential rental apartment buildings with values under $50 million are not coming down in price, the chairman of Massey Knakal Realty Services, Robert Knakal, said, according to the Sun. "The volume of sales in this niche is down slightly, but mainly due to supply constraints," Knakal noted. "The demand is still excessive, which is keeping prices buoyed." A senior broker at Besen & Associates, Adelaide Polsinelli, said many owners have been offered "crazy" prices and thus became sellers. "Many of the sales that took place were not due to a 'need' to sell, but rather the market was being so generous that it was more profitable to sell than to own," she said. LOWER EAST SIDE IS AMONG THE NATION'S ENDANGERED PLACES The National Trust for Historic Preservation has designated the Lower East Side of Manhattan as one of the 11 most endangered in places in America, according to the New York Times. The National Trust warned that construction of new hotels and apartment towers threatened to efface the area's immigrant past. "The community, with little recourse for protection," it said, "is reeling from the recent destruction of its cultural heritage, including the defacing of several historic structures and the loss of First Roumanian Synagogue. Slapdash and haphazard renovations have led to the destruction of architectural detail, while modern additions to historic buildings sharply contrast with the neighborhood's scale and character." The designation carries only symbolic significance, but the attention could spur efforts already under way to protect the Lower East Side's buildings from being demolished or profoundly altered. THOUGH SKEWED, APRIL CONDO PRICES SOARED 49 PERCENT In Manhattan alone, condo prices grew by 48 percent, to $1.492 million, since April 2007, according to the Real Estate Board of New York (REBNY). It was high-end sales at the Plaza and 15 Central Park West that accounted for the very strong growth. Discounting those buildings, the average reached $1.475 million, up 12 percent. On the Upper West Side, which includes 15 Central Park West, condo prices averaged $2.673 million, up 103 percent; they averaged $1.478 million, up 12 percent, without the expensive building, where prices per square foot ranged around $6,000, sometimes significantly higher. With the Plaza included, the Midtown West area had an average price of $2.461 million, up 106 percent; without, the price was $1.379, up 15 percent. The New York Times reports that Dr. Lindsay Rosenwald, a physician and venture capitalist, is said to have been offered $85 million for his 5,870-square-foot duplex penthouse (with a 1,128-square-foot terrace), or $14,480 per square foot (not counting the terrace), at 15 Central Park West, designed by Robert A. M. Stern. When asked for confirmation, Rosenwald said he had actually received five or six calls from brokers offering as much as $100 million for his apartment. He said he had turned the offers down. In April, Rosenwald paid $30 million for his apartment on parts of the 18th and 19th floors, below the $42.4 million rooftop penthouse bought last August by Sanford I. Weill, the former chairman and chief executive of Citigroup. Somehow, though, the New York Post notes, the property just went on the market for $90 million. Go figure. RESIDENTIAL PERMITS FALL AGAIN IN THE FIVE BOROUGHS They were 51 percent lower than a year earlier, reports crainsnewyork.com. The total number of permits issued in April fell to 223, from 459 in April 2007, according to data released by the U.S. Census Bureau. The number of permits issued during the first four months of the year dropped 48 percent compared with 2007 levels. The number of units covered by the permits fell 29 percent in April, to 1,989 from 2,809 a year earlier. In the first four months of the year, permitted units fell 42 percent. The decline follows a year in which more permits were issued citywide than in any year since 1972, bucking a national slowdown. LOOKING UP IS HEADED DOWN The cathedral-ceilinged "great room" - a defining feature of big suburban houses for the past 15 years - is losing favor, says the Wall Street Journal. Owners say these double-height rooms are expensive to heat and cool. They can be drafty and reverberate noise. Cobwebs are hard to reach, painting requires long ladders and washing the second-story windows can be a nightmare. Moreover, growing numbers of home buyers think these soaring rooms waste space. HOME FURNISHINGS ARE BECOMING THE COLOR OF MONEY In every industry there's a push to be ecologically aware, observes the Wall Street Journal, adding that many deploy under-the-cover green techniques, such as using recycled raw materials. But some home furnishings designers are displaying their eco-awareness on the surface. Catalogs and specialized retailers are selling goods ranging from a chair covered with recycled yarn to planters made from old tires. Many of these products have a modernist flair as opposed to the frumpy green-oriented products of a decade ago such as beanbag chairs made of hemp. When designer Thaddée de Slizewicz turned recycled tires into rubber tubs for the home, he didn't make any effort to disguise their origins: "Of course you are thinking about the tire when you're looking at it," says the French designer. "That's why people love it." One version of his rubber planters and tubs has sold out at the Design Within Reach chain since it was introduced in April. MORTGAGE APPLICATIONS SLIP The Mortgage Bankers Association says volume fell for the week ending May 23 by 4.6 percent from one week earlier and 7.5 percent compared with the same week one year earlier. Refinancing volume dropped by 8.9 percent from the previous week, while purchase applications inched up by 0.1 percent. The refinance share of mortgage activity decreased to 46.1 percent of total applications from 48.2 percent the previous week, and the adjustable-rate mortgage (ARM) share declined to 9.3 percent from 10.0 percent. LENDERS ARE FACING HUGE LIABIITIES FROM INVESTORS Already burned by bad mortgages on their books, lenders now are feeling rising heat from loans they sold to investors, according to the Wall Street Journal. Unhappy buyers of subprime mortgages, home-equity loans and other real-estate loans are trying to force banks and mortgage companies to repurchase a growing pile of troubled loans. The pressure is the result of provisions in many loan sales that require lenders to take back loans that default unusually fast or contained mistakes or fraud. The potential liability from the growing number of disputed loans could reach billions of dollars, says Paul J. Miller Jr., an analyst with Friedman, Billings, Ramsey & Co. Some major lenders are setting aside large reserves to cover potential repurchases. FANNIE MAE LOWERS DOWN PAYMENT MINIMUM The loan guarantor also said it would no longer require higher down payments in areas of the country where home prices are declining. Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its automated underwriting system and 95 percent loan-to-value ratios for loans otherwise underwritten. The new national down payment requirements of 3 percent or 5 percent will apply to loans for purchase of single-family primary residences. Down payment requirements will vary for other occupancy, property and transaction types. LOWER-INCOME INDIVIDUALS HAVE SURPRISING CREDIT SCORES They have slightly
higher FICO scores, reports Kenneth R. Harney in the Washington
Post. The finding, INFLATION FEARS NUDGE UP RATES The 30-year fixed-rate mortgage (FRM) averaged 6.08 percent for the week, up from last week's 5.98 percent and 6.42 percent a year ago. It was an 11-week high. The 15-year FRM this week was 5.66 percent in comparison with 5.55 percent last week; it was 12 percent last year at this time. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.62 percent this week; they were 5.61 percent last week and 6.19 percent last year. One-year Treasury-indexed ARMs averaged 5.22 percent this week, down slightly from 5.24 percent the previous week and down from 5.57 percent a year ago. "Mortgage rates drifted up this week over market concerns that the Federal Reserve Board may raise short-term rates later this year," said Frank Nothaft, Freddie Mac vice president and chief economist. "A recent working paper published by the Federal Reserve Bank of Minneapolis suggested that the recent rate cuts run a risk of unhinging long-term market expectations for inflation. Indeed, market inflation expectations increased over the last few weeks and the federal funds futures market now has a 25 basis point rate hike priced in by the end of the year." REPORT FINDS THAT CONFUSION HELPS LENDERS CLEAN UP The home-mortgage industry takes advantage of consumers' confusion to charge some people much higher fees than others, according to a study prepared for the Department of Housing and Urban Development, reports the Wall Street Journal. The study by Susan Woodward, a former chief economist for HUD, also found that loans arranged by brokers typically carried higher fees than those obtained directly from lenders. The study says lenders typically make better offers to borrowers in neighborhoods with higher general levels of education. Total fees paid to the lender and broker averaged nearly $3,400 on loans with an average initial principal balance of $105,000, the report said. For brokered loans, the average fees were $4,000 compared with $3,150 for loans made directly by the lender. Those fees are a combination of upfront charges and additional funds brokers and lenders get for selling loans with relatively high interest rates. Getting in on the... . . . ground floor. Unless commercial establishments occupy the whole space, rare is the building that lacks a ground floor or first floor apartment, right? ("Ground" and "first" will be used interchangeably here.) Ground-floor opportunities for prospective apartment buyers are pervasive, yet only a small proportion of prospective buyers will entertain them as an option. They cite a number of concerns, and most of those are valid, if sometimes overrated. But buyers frequently overlook the benefits. Consider first the concerns. The amount of light is usually first on the list, and no one would argue that there is more - except possibly from street lights and headlights - on a first floor. But not all ground-floor apartments are created equal. While some are burdened with views of grim brick walls, others may have windows overlooking gardens, open courtyards and streets that permit considerable amounts of reflected light from across the way. Safety often is mentioned. That's an objection which fails to take into account bars on the windows or other protections that are less visible. True, such barriers create a questionable aesthetic, but folks who in live in iron-barred apartments usually say they stop seeing the devices over time. Moreover, buyers who grew up in or live in single-family suburban homes seem to forget that every one of them has a first floor. And many apartment seekers ignore the fact that townhouses fetching many millions of dollars have first floors too, and the owners don't seem particularly troubled by their presence. It even can be argued - and will be below - that apartments on the first floor are the safest of all. Lobby noise is occasionally a concern. Depending on the apartment's location, that can be a legitimate issue. If someone works at home or otherwise is sensitive to sound, crying babies, barking dogs and loud conversation can be issue. Yet, they occur in hallways on higher floors as well. It's a matter of degree. Street and sidewalk noise often seems louder too. However, double-pane windows and door insulation can minimize sound very well, whether from street or lobby. Status can be an issue for some potential buyers, and rarely do they mention it. But the well known fact is inescapable that humans have for millennia preferred to lord their status over others by being higher on the hill, the top of the heap. No wonder, then, that many of those looking for an apartment tend to look up. Views certainly are lost on the ground floor. But aren't they compromised or even absent in most other urban settings? Of course, they are, though it is true that looking down on city scenes from even the second or third floor is something many folks prefer to looking out at them. But why some buyers would choose views of brick walls over exposures toward relatively distant buildings and tree boxes is a question worth asking. There may be additional reasons in the minds of buyers, but it's appropriate to turn now to the advantages of the first floor. And they are numerous. One plus is safety. In the event of fire, escape is simple and safe through a window or just out the door. If there is a lobby attendant, that's like having your personal watchman. Convenience is another major consideration. No impatiently waiting for elevators to arrive and carry you between floors. No climbing stairs when the power or elevators fail. No confinement in a small elevator cab with unruly children, overly affectionate dogs or undesirable neighbors expecting conversation that can be only awkward. No schlepping heavy shopping bags an unreasonable distance. No leaving your apartment to accept deliveries of food, packages or dry cleaning. No time and energy wasted to retrieve an umbrella when rain is discovered out the front door, to discard outwear that becomes obviously too heavy for the day or to return home for forgotten sunglasses or a hat. In addition, what location could be easier than a first-floor apartment to check frequently on mail deliveries? With respect to other less pervasive advantages, there are water pressure and common walls. Because water generally is supplied from rooftop water tanks, guess where the stream is strongest: the ground floor. Because of construction anomalies, it seems that often there are no, or at least few, adjoining apartments and common walls. Such a situation can lead to quieter enjoyment than in the units above. Certainly, price is the best reason to select a first-floor apartment. Consider these two apartments that other brokers have listed and that turned up during recent tours of some properties on the market around Manhattan: Two First-Floor Apartments
Upper West Side
East Side
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That's
the situation in those U.S. metropolitan areas where lenders have
slashed prices on foreclosed properties such as Las Vegas; Sacramento,
Calif.; Fort Myers, Fla.; and inner-city Detroit, according to
the Wall Street Journal. Sellers "have moved into the acceptance
mode" and are pricing homes more realistically, says Thomas
Lawler, a housing economist in Leesburg, Va. "I think it
is the first stage of good news for the market." Lenders'
inventory of foreclosed homes has steadily increased in the past
couple of years and is believed to total around half a million
homes. Many lenders initially were slow to slash prices, partly
because they hoped to avoid huge losses. But more lenders have
been capitulating as it becomes clear that delays often merely
result in lower proceeds and higher costs for taxes, insurance
and upkeep. 
For
baby boomer Americans, retirement looks a whole lot different
from the way it did for their parents, Gene Warren, president
and chief executive of Thomas, Warren and Associates, unsurprisingly
notes, according to the Washington Post. Warren, an economist
who specializes in the study of retirement, helps developers and
communities figure out how they're going to attract future retirees.
For example, baby boomers are much more likely than their parents
were to move when they retire. Warren says that just 10 percent
of retirees typically move, but he expects 20 percent of those
individuals retiring in the next 21 years, approximately 18.2
million of them by his estimate, to relocate. "Boomers are
much more active than their parents were," Warren adds.
"They are amenity-migrants, not sun-migrants. They're not
necessarily going to buy a house on a beach but will look at all
the amenities in the area." 
arranged
here. "Do you expect to move again in a couple years? Or
is there a good chance that you're ready to settle in -
and stop worrying about real estate for a while? . . . When the
prices of houses get out of line with the competition's
prices - that is, those in the rental market - a correction is
coming. The question facing my wife and me was whether we were
entering the market before the correction had gone far enough.
I really didn't know what the answer would be. So as we
looked at houses, I started calculating rent ratios. . . No matter
the price range, pretty much every apples-to-apples comparison
produced a similar ratio. . . Historically, this is still a bit
high. But it's very different from where the market was
just a couple of years ago. With house prices having fallen over
the last two years and rents continuing to rise, the decision
became a much closer call. We would now have to spend only a little
more each month for the privilege of owning. . . This month, we
found a house that we really liked, and we made an offer. It was
accepted. I'm still not sure how good our timing was. Based
on the backlog of houses on the market, I fully expect that our
new house will be worth less in six months than it is today."
which
emerged from a statistical analysis of all approved mortgages
insured by the FHA during fiscal 2007, is buttressing a forthcoming
major policy switch that could affect thousands of buyers and
refinancers. The FHA, which for decades has used a one-size-fits-all
approach to price its insurance on home loans, plans to shift
to a "risk-based" system keyed to FICO scores and down
payments beginning as early as mid-July. Private-sector lenders
and insurers have priced interest rates and premiums using sliding
scales of FICO scores and down payments since the mid-1990s. The
FHA's move, which will cover all new applications including "jumbo"
loans up to $729,750 in high-cost markets through December, will
bring the agency in line with the private sector's predominant
approach. According to the study, applicants with FICO scores
of 680 to 850 had a median income of $48,756 last year, while
those with scores of 500 to 559 had a median income of $53,388.
