Items of Interest DOES A SLIP IN SALES OF $1 MILLION UNITS MEAN ANYTHING: Fewer $1 million Manhattan apartments traded in the first half of 2008 than in the first half of 2007, says the Observer. The total number of closings on $1 million-plus apartments fell from 3,569 in the first half of 2007 to 3,347 during the first half of this year, a 6.22 percent drop. Still, almost one out of every two Manhattan apartments sold in the first half of 2008 traded for at least $1 million. The numbers are based on analysis by research firm StreetEasy. On average, prices only increased anyway. The average sales price for million-dollar apartments jumped 22.9 percent from the first half of 2007 to the first half of 2008, from $2,380,850 to $2,925,053. The median price also increased, by 9 percent, from $1,690,000 to $1,842,500. Commented Derrick Gross, a business analyst at StreetEasy: "The high price figures," Gross said, "have something to do with the really high end, not just 15 CPW and the Plaza, but a lot of townhouses and other new developments, too." DEVELOPERS ARE SHOWING LESS NERVE, MORE NERVES: In the wake of a building boom that has added thousands of condos to the New York market over the past five years, Crain's says many projects are foundering as the local economy cools. Brokers report that developers in some areas of the city are struggling to sell units as consumers and lenders grow increasingly skittish. Hardest hit are developments now seen as inappropriate for their neighborhoods or those located in peripheral parts of the city that are still gentrifying. Many developers are targeting buyers of individual units by cutting prices or offering to pay closing costs. A few others are taking more drastic action. Unable to sell their units, they are converting their projects to rentals - typically taking a major financial hit in the process. The owners of 99 Gold St. in Dumbo and 192 Spencer St. in Clinton Hill, Brooklyn have converted their projects, as has the owner of the Bridges NYC North on Third Avenue in Harlem. As of last week, according to the real estate Web site StreetEasy.com, 14 percent of the new developments in Brooklyn have lowered their prices, while only 8 percent have increased them. The results were the same in upper Manhattan: 14 percent of developers have cut their prices, while only 8 percent have raised them. In contrast, on the Upper East Side, 20 percent of new developments actually hoisted their prices, while only 7 percent lowered them. HERE'S WHAT A CRITIC REALLY, REALLY THINKS ABOUT 15 CPW: ONLY MONACO AND HONG KONG TOP PRICES ON FIFTH AVENUE: With apartments fetching an average price of $7,500 per square foot, Fifth Avenue ranked third in a new survey of the top 10 most expensive residential streets in the world from Barclay's Wealth Bulletin, reports the Observer. Avenue Princess Grace in Monaco ranked No. 1 in the survey with homes fetching an average of $17,750 a foot. "Properties on the avenue change hands for up to $41 million - and many of them are fairly modest four-bedroom apartments," the report said. A pad on Hong Kong's Severn Road will set you back about $11,200 a foot, earning it second place on the list. London's Kensington Palace Gardens, a.k.a "Billionaires Row," came in fourth with an average price of $7,196 a foot, followed by Paris' Avenue Montaigne at $5,046. C'est la vie. THE BRONX IS A MAGNET FOR GAY PARENTS: A new survey by UCLA's Williams Institute has found that the borough accounts for 32 percent of all children in the Big Apple being raised by such partners, the city's highest rate, though only 11 percent of city's gay people live there, according to the New York Post. Just 8.5 percent of children in the city's same-sex households live in Manhattan, despite the borough's having 38 percent of New York City's gay homes, the institute's report said. Nearly half of the Bronx's gay households are raising kids - a rate that nearly matches the 55 percent of married straight couples in the borough who have children. "I've never seen any jurisdiction [in the United States] where those figures are that close," said Gary Gates, senior research fellow. Gates added that same-sex couples of ethnic minorities are "much more likely" than their white counterparts to have children, a factor that could explain the Bronx's higher rate of gay-household kids. "The numbers are surprising," said Tawana Avery, who, with partner Lisa Burton, is raising an adopted 5-year-old son, Nasir, in the Bronx's Highbridge section. "We don't have neighborhoods like the Village or Chelsea. There is only one community center for [gays] in The Bronx." IN FLIPPING, ONE COUPLE SETS A RECORD: Young hedge fund executive Scott Bommer and his wife Donya, once an anchor for Good Day Philadelphia, have sold their duplex penthouse at 1060 Fifth Avenue for around $48.9 million, according to a source, says the Observer. They bought the apartment in January for $46 million, setting a record for a Manhattan co-op sale. That record was broken this summer, when the chairman of the Loews conglomerate, Jonathan Tisch, agreed to pay $48 million for a co-op at 2 East 67th Street (though the deal hasn't closed yet). It's not clear who's buying the penthouse duplex, with its greenhouse and a 114.5-foot-long terrace facing south, plus a maze-like master bedroom suite and a corner living room facing Central Park. Its price notwithstanding, the apartment still needs quite a bit of work, a reason the Bommers decided to sell. Among other things, the top and bottom floors have to be combined into a real duplex, an idea the building's board had rejected previously. If the Bommers are jumping for joy, perhaps they can be forgiven. TO BUYERS, SIZE DEFINITELY MATTERS: Considering the intangibles that can factor into buying an apartment, getting a handle on how much space there is may seem straightforward. But the Real Deal says it isn't. "For condos, appraisers generally use one method, brokers prefer others, and it can be anybody's guess how developers stretch their measuring tapes (though the results are often, er, generous)," the monthly publication adds. "Co-ops, meanwhile, are an entirely different beast, owing to their unique ownership structure, so square footage usually isn't included in listings. If it is, brokers admit that they often eyeball it. But this customary patchwork approach may not be flying anymore. A tightening market has buyers and sellers demanding more data about apartments, including more precise square footage figures, according to lawyers, brokers, developers and appraisers." For more on this combustible issue, check out the whole story here. ENTREPREURSHIP IS THRIVING FOR CASH-STRAPPED TENANTS: Students, retirees and people between jobs are exploiting the gray area in the city's housing code to supplement their income by renting out rooms to tourists, says the Sun (which also is strapped and may fold this month). Most rooms range between $50 and $150 a night, a fraction of the $325.94 average daily hotel rate in June, according to the city's tourism board, NYC & Co. The rooms, available everywhere from tenements on the Lower East Side to luxury apartments on the Upper West Side, are advertised on craigslist.org and through Web domains. While New York City does not have a law forbidding these temporary boarders, operating a de facto hotel out of an apartment "probably runs afoul" of the law, a real estate partner at the law firm Morrison & Foerster, Andrew Weiner, said. "It's almost universal that conducting a quasi-hotel business in your apartment violates the terms of any residential lease," Weiner said. "Most leases prohibit daily rentals of units." Fearing eviction, tenants take precautions to stay anonymous and instruct their guests to identify themselves to neighbors and landlords as "friends visiting from out of town." Should Norman Bates come calling, well... YOU CAN GET MORE THAN A DEGREE AT COLUMBIA: You can get rid of unwanted electronics and clothing 8 a.m.-2 p.m. on Saturday, Sept. 13 at the university, 116th Street between Amsterdam Ave. and Morningside Dr. Accepted for recycling will be only computers, monitors, desktop printers and scanners, keyboards, mice, TVs, VCRs, DVRs, DVDs, portable digital music players, and cell phones. The first 100 New York City residents (not businesses) will receive a $5 (!) Best Buy gift card, and no receipts will be issued. But Goodwill will provide receipts for tax deduction for "gently used" clothing and linens in securely tied plastic bags. For more details or other options, visit nyc.gov/wasteless/electronics or nyc.gov/stuffexchange. PEOPLE WHO LIVE IN GLASS HOUSES MAY WONDER WHY:
THE QUESTION IS HOW TO TURN YOUR BATH INTO A SUBWAY STOP: The answer: Why? To find out how DeKalb Ave. ended up in Glasgow, Scotland - yes, Scotland - visit the Web site here. MODELS BY SOME ECONOMISTS MAY GLIMPSE THE FUTURE: The New York Times asked economists across the country to share the data they use to figure out how much houses in regional markets are overvalued, a calculation that approximates where the bottom may be. Models built on these variables show that while some markets - such as California - are on a road to recovery, others - such as south Florida - have a way to go. "These signs cannot possibly tell the whole story, especially since they point more toward where prices should be valued than where they will be," the Times says, adding that the measures are nonetheless helpful to anyone buying, selling or borrowing against their home sweet home. "I try to avoid house price forecasting," said Paul S. Willen, senior economist and policy adviser at the Federal Reserve Bank of Boston. "Let me just say this, as an economist, that asset pricing is something we're exceptionally bad at." More info: Click here. ECONOMISTS SEE ‘WILD' EXAGGERATION IN LOSS PROJECTIONS:
ADVOCACY GROUP LOWERS ITS SALES FORECAST: The National Association of Realtors (NAR) says its index of pending home sale dropped 12.3 percent between June of 2007 and last June. In an earlier forecast, notes Inman News, the notoriously upbeat trade group projected that sales of existing homes would fall about 6 percent this year and rise 5 percent in 2009. The latest forecast calls for a 7 percent increase next year. NAR expects the median resale home price to fall 5.6 percent this year compared to 2007 and then rise 4.4 percent in 2009. Single-family housing starts are expected to drop 39.6 percent this year and 21.1 percent next year, following a 14.6 percent drop in 2006 and a 28.6 percent drop in 2007. Single-family new-home sales are expected to drop 34.3 percent this year and 8.8 percent next year, following an 18.1 percent drop in 2006 and a 26.3 percent drop in 2007. Still, the index rose 5.3 percent from May to June to 89 (out of 100), the highest level since October 2007. WHAT WILL THIS MONTH BRING: Watch for the end of the month to be marked by closings of spring deals, an influx of homes being listed (or re-listed) and buyers taking out their checkbooks, the Real Deal avers. But although fall is typically when the market goes on an upswing, the publication says buyers are still expected to be hesitant to pull the trigger this year, and September data is expected to be somewhat off from years past as economic uncertainty lingers. "September is probably going to look like it did a few years ago. It's normally a light month for activity [in the beginning of the month] but is expected to be less than last year. The fall market begins to see increased activity toward the end of September, peaking at the end of October," said Jonathan Miller, president and CEO of appraisal firm Miller Samuel. MOST CONSUMERS ARE ACTUALLY PLEASED WITH THEIR AGENTS: A survey published in the September issue of Consumer Reports shows that most consumers are pleased with the services of their real estate practitioner, according to Realtor magazine. The survey of 9,141 readers who bought or sold a home (or tried to) found that 71 percent were very or completely satisfied with their practitioner, while only 12 percent said they were dissatisfied. Practitioners with most of the larger real-estate chains and independent brokers earned reader scores of 79 or higher, indicating that respondents found these professionals provide "very satisfying" service. Eighty-six percent of those surveyed who put their homes on the market made a sale; only 8 percent of would-be sellers eventually gave up and took their homes off the market, and the remainder was still trying to sell when the survey was completed. Eighty-two percent of respondents who sold with the help of a practitioner received $5,000 less, on average, than their original asking price. Almost all of the 17 percent who sold their homes without professional help said they received about what they originally asked. But 66 percent of Consumer Reports' readers who used a practitioner to help them buy a home paid an average of $5,000 less than the listing price, while the 34 percent of buyers who negotiated their own contracts, without representation, paid close to the asking price. NEW YORK IS TOPS - IN CLOSING COSTS: A new study released by Bankrate shows that the cost of getting a mortgage continues to rise despite a soft housing market. The 2007 average closing cost of $2,736 has gone up to an average of $3,118 in 2008, a 14 percent increase. In the study's geographical breakdown, New York City leads the nation at an average fee of $4,016, with Texas, Buffalo, Miami and Oklahoma rounding out the top five. North Carolina is the least expensive area; it averages $2650. Researchers picked a zip code in some of the largest cities in each state and requested information on the closing costs for at $200,000 loan. They requested fees on a 30-year, fixed-rate mortgage for a borrower with a 20 percent down payment and good credit to buy a single-family house. Bankrate's survey includes lenders' origination fees and title and settlement fees, and not taxes or prepaid items. FOREIGN BUYERS DISPLAY SLACKENED INTEREST: Foreign apartment buyers are disappearing from New York City as the dollar has started to rise, says the Real Deal. It's the foreign buyers that new condominium developers have been counting on, so a slowdown could foreshadow rougher times ahead. However, as Europeans lose purchasing power, other nationalities are stepping up to take their places. For example, the New York Times reported in July that wealthy Russians have been buying ultra-luxury properties in Manhattan. A LOT OF PEOPLE LIKE TO MOVE A LITTLE: Between 2006 and 2007, 38.7 million people moved in the United States, according to the U.S. Census Bureau, which said that 25.2 million stayed in the same county, 7.4 million moved to a different county within the same state, 4.9 million moved to a different state and 1.2 million moved to the U.S. from abroad. The Northeast had the lowest moving rate (9 percent), followed by the Midwest (13 percent), the South (14 percent) and the West (15 percent.) Housing-related issues such as the desire to own a home or to live in a better neighborhood were the most common reasons given for moving (42 percent), followed by family-related issues (30 percent), employment reasons (21 percent) and other (7 percent). Of the 12.3 million people who moved to another county, the largest group moved fewer than 50 miles (42 percent); 22 percent moved more than 500 miles. The black population had the highest moving rate (17 percent) among race and ethnic groups, followed by Hispanics (16 percent), Asians (15 percent) and non-Hispanic whites (12 percent). Among movers in metropolitan areas, principal cities experienced a net loss of 1.9 million people in 2007, while the suburbs had a net gain of 2 million people. Those 20-24 years old and 25-29 had the highest moving rates (27 percent and 26 percent). People who were separated and people who were married with their spouse absent were the most likely to move, while those who were widowed were the least likely to move. People who were never married were more than twice as likely to move as people who were married with their spouse present. RATES EASE BELOW LAST YEAR AT THIS TIME: The 30-year fixed-rate mortgage (FRM) averaged 6.35 percent for the week, down from last week's 6.40 percent and last year's 6.46 percent, according to Freddie Mac. The 15-year FRM was 5.90 percent, below the 5.93 percent recorded last week and 6.15 percent at this time last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were 5.97 percent this week in comparison with 6.03 percent last year and 6.32 percent a year ago. One-year Treasury-indexed ARMs averaged 5.15 percent, down from last week, when it was 5.33 percent, and from 5.74 percent in 2007. "Mortgage rates eased a bit over the holiday-shortened week following release of economic data that suggest consumer spending may slow," commented Frank Nothaft, Freddie Mac vice president and chief economist. "The economy grew at an upwardly revised 3.3 percent pace in the second quarter, boosted by the smallest trade deficit in eight years, and residential fixed investment slowed growth by 0.6 percent, the least amount since the same period a year ago. However, personal income fell 0.7 percent in July, the first decline since August 2005 and will likely slow consumer spending in the third quarter." WILL HIGHER MORTGAGE RATES HURT PURCHASING POWER: Or, to put it another way, asks the New York Times, is it better to jump into the market now before it hits bottom? In some parts of the country where prices may fall much farther, it could pay to hold off even if mortgage rates do continue to rise. But in places where houses no longer look so overvalued, such as San Francisco, it may be tempting to start testing the waters. "You might find more desperate sellers because rates have gone up," said Keith T. Gumbinger, vice president of HSH Associates in Pompton Plains, N.J. "When rates go up and that impacts affordability, it tends to pressure prices downward even further." Economists at Moody's Economy.com expect the average 30-year fixed rate to increase to 7.01 percent by the end of next June and home prices over all to drop about 9 percent more over the same period. If everything follows their model, the economists say property values should bottom out by mid-2009. For more on this, click here. MORTGAGE FRAUD LEAPS BY 42 PERCENT IN A YEAR: An outfit called the Mortgage Asset Research Institute (MARI) says data from its 600 subscribers discloses the 42 percent increase based on loans that were originated in the first quarter of this year and have since been classified as fraudulent. Florida continues to lead all states in mortgage fraud, according to the provider of mortgage fraud prevention solutions and information services to the mortgage and financial services industries. That state accounted for 24 percent of all properties with material misrepresentation. California was second, followed by a three-way tie for third among Illinois, Maryland and Michigan. For all states, the top fraud incident type was in "general application misrepresentation" followed closely by misrepresentations related to "income" and "employment." In addition, MARI continues to see multiple fraud types, such as identity theft and identity fraud, in loan transactions. MARI says its subscribers represent the entities involved in more than 80 percent of the wholesale mortgages originated in the United States. APPLICATIONS FOR PURCHASE ARE GROWING: The Mortgage Bankers Association (MBA) said loan application volume rose 7.5 percent on a seasonally adjusted basis for the week ending Aug. 29 from one week earlier. It was the second increase in a row. On an unadjusted basis, the increase was 5.8 percent compared with the previous week but was off 27.0 percent from one year earlier. Refinancings went up 2.1 percent, while purchase loans climbed by 10.5 percent. The refinance share of mortgage activity decreased to 34.0 percent of total applications from 35.2 percent the previous week, and the adjustable-rate share slipped to 6.6 from 7.9 percent. NYC FORECLOSURES REACH HIGH AS OTHER CITIES TAPER OFF: Rates in New York City reached a three-year high in August, while rates in Los Angeles, Miami and Seattle fell slightly from July, according to a monthly foreclosure report by real estate website PropertyShark.com, says the Wall Street Journal. In the one month period, Los Angeles improved the most with a decrease of 18 percent to 4,907 foreclosures. Miami's rate declined 10 percent to 994 foreclosures, while Seattle's declined 8 percent to 175. New York City's rate increased 13 percent to 383 foreclosures from July to August, the report said. The average lien on those homes was about $485,000. Queens was where all the increase took place. The 254 foreclosures in that borough in August represented a 43 percent jump from July's 178 and a 113 percent jump from the 119 in August 2007, making it a two-year high for Queens. The number of foreclosures decreased in the four other boroughs. From July to August 2008, foreclosures in Brooklyn declined by 29 percent, Manhattan by 21 percent, the Bronx by 17 percent and Staten Island by 9 percent. Rates for all four cities were up from August 2007. In Los Angeles, the foreclosure rate went up 159 percent over August 2007. Miami's rate went up 72 percent, while New York City's and Seattle's rates increased by 53 percent and 27 percent, respectively. CORELOGIC FINDS A ‘GLIMMER OF HOPE' IN 3RD QUARTER: More markets are seeing home-price declines, but the severity of the declines appears to be moderating, according to a quarterly forecast of mortgage risk compiled by First American CoreLogic, reports Inman News. A "moderating trend" in price declines over the last two quarters "indicates that the house-price rate of decline is slowing down, a first step toward the bottoming out of price declines," the company's third-quarter Core Mortgage Risk Monitor concludes. The increasing stock of real estate-owned properties (those the banks have seized), the economy and inflationary risks could still spell trouble, "but for now we view the trend data as a glimmer of hope for the market." Home prices in 380 markets tracked by the forecast fell by an average of nearly 11 percent from a year ago. Nearly 200 markets saw price declines, up from 176 in the second quarter and 143 in the first quarter. The most severe declines remain concentrated in states that saw the most speculation during the boom. The 40 worst markets, which have each seen prices fall at least 15 percent in the last year, are in California, Florida, Arizona and Nevada. The survey's Core Mortgage Risk Index (CMRI), which forecasts delinquency risk, was up 12 percent from a year ago and 55 percent above a baseline established in 2002 at the end of the dot-com bust. "Although significantly higher now than during this base period, the CMRI is likely to continue rising nationally over the next 18 months," the forecasters said. Eight of the 10 markets identified as having the highest risk of delinquencies were in California. Outside of California and Florida, they included Las Vegas, Phoenix, and Washington, D.C. Markets seeing home-price appreciation were concentrated in five states: Texas, Pennsylvania, Indiana, Alabama and Iowa. JULY SALES RISE, INVENTORY GROWS AND PRICES PLUMMET: Existing-home sales - including single-family, townhomes, condominiums and co-ops - were 3.1 percent above June but 13.2 percent lower than July 2007, reports the National Association of Realtors (NAR). The national median existing-home price for all housing types was $212,400, down 7.1 percent from $228,600 one year earlier. Total housing inventory at the end of July rose 3.9 percent, one tenth-percent more than in June, representing an 11.2.-month supply at the current sales pace. A six-month supply is considered a normally balanced market. The rise in supply results from a sharp increase in condo inventory; the supply of single-family homes declined. Single-family home sales rose 3.1 percent, but activity was 12.4 percent below a year ago. The median existing single-family home price was $210,900, down 7.7 percent from July 2007. Previously owned apartment sales increased 3.4 percent over June, but they plunged 18.6 percent below July 2007. The median existing condo price was $223,400 in July, 2.7 percent below a year ago. FOR NEWLY BUILT HOMES, SALES INCH UP AS SUPPLY DIPS: Sales of newly built single-family homes rose 2.4 percent, the Commerce Department reported. The report also indicated continuing contraction in the number of new-homes for sale as builders keep a tight rein on inventories to help restore better balance between market supply and demand. "While the improvement in new-home sales in July is definitely a favorable development, it comes on the heels of two consecutive months of significant downward revisions to sales numbers for May and June, so we have to keep the latest report in perspective," said eternally hopeful NAHB Chief Economist David Seiders. "Nevertheless, we are cautiously optimistic that home sales are approaching a bottom." Commerce's report indicated that the inventory of new homes for sale declined for a fifteenth consecutive month in July to 416,000 units, the lowest number since April of 2007, reflecting a 10.1 months' supply at the current sales pace in contrast to 10.7 in June. The median price of a new home decreased by 6.3 percent to $230,700 in July from a year earlier. The average price dropped by 4.1 percent to $294,600. In June, the median price was $230,100 and the average was $296,500. TWO OTHER GAUGES POSTED MODERATING PRICE DECLINES:
2ND QUARTER SALES WENT UP AND DOWN HERE AND THERE: Existing-home sales rose from the first to second quarters in 13 states, largely from buyers responding to discounted home prices, according to the latest quarterly survey by the National Association of Realtors (NAR). Nearly one-quarter of metropolitan areas had home prices rising in the second quarter above a year ago with greatly mixed conditions continuing around the country. A total of 35 out of 150 metropolitan statistical areas (MSAs) showed gains in median existing single-family home prices from the second quarter of last year, while 115 had price declines. NAR's track of metro area home prices dates back to 1979. Because foreclosures and short sales are accounting for about one-third of transactions, there is a downward pull to the national median price; for existing single-family homes, it was $206,500, down 7.6 percent from the second quarter of 2007. Total state existing-home sales, including single-family and condo, were down 0.8 percent from the first quarter and 16.3 percent the prior year. Commented Lawrence Yun, NAR chief economist: "The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops." Compared with the first quarter, sales volume was up 25.8 percent in California, 25.0 percent in Nevada, 20.5 percent in Arizona and 10.1 percent in Florida. "Buyers in these areas are responding to deeply discounted home prices," Yun said. The largest sales gain during the second quarter was in Idaho, up 51.7 percent; Virginia sales rose 10.5 percent. The steepest declines in single-family home prices in the second quarter were in the Sacramento-Arden-Arcade-Roseville area of California, where the median price of $229,500 dropped 35.6 percent from a year ago, followed by Cape Coral-Fort Myers, Fla., at $178,100, down 33.1 percent. For previously owned apartments in 54 metro areas, the median was $220,000, down 3.0 percent from 2007. Seventeen metros showed annual increases in the median condo price and 37 areas had price declines. Metro area median existing-condo prices in the second quarter ranged from $107,500 in the Wichita, Kan., area to $523,500 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was Honolulu at $330,000, followed by Los Angeles-Long Beach-Santa Ana at $327,800 and by Peoria, Ill., at $124,800, up 3.7 percent from the second quarter of 2007. HOUSING STARTS DROP TO 17-YEAR LOW: Single-family housing starts in July slipped to the lowest rate since January 1991, the U.S. Census Bureau and Department of Housing and Urban Development, according to Inman News. The seasonally adjusted annual rate of single-family starts was 641,000 in July, down about 39.2 percent compared with the same month last year. The rate of total starts, at 965,000, was down 29.6 percent year-over-year in July. The rate of building-permit authorizations was 937,000 in July, down 32.4 percent in a year, while the rate of single-family permit authorizations was off 41.4 percent. The rate of housing completions dropped 31.7 percent in July compared with the same month last year. FREDDIE MAC RECORDS WANING OF PRICE DECLINES: Its index of purchase mortgages registered a modest 0.4 percent annualized decline in U.S. home values during the second quarter of 2008, following a downward revised 10.8 percent annualized drop in the first quarter. Over the four quarters ending with the second quarter of 2008, home sales prices fell an average of 6.0 percent - the largest annual fall in values over the 39-year history of the series. Said Frank Nothaft, Freddie Mac vice president and chief economist: "While we expect to see further declines in average U.S. home values throughout this year and into 2009, we will be watching for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales and for-sale inventories." Thirteen states registered price gains over the past year, and 33 states had increases in the second quarter, according to the index, while annual drops of more than 10 percent occurred in Arizona, California, Florida, Michigan and Nevada, which have experienced either weak local economic conditions or overbuilt markets. IT’S COLD UP THERE, THEIR DOLLAR IS STRONG, HERE THEY COME: The largest proportion of foreign buyers of U.S. homes from May 2007 to May 2008 - 24 percent - were Canadian, double the percentage a year earlier, according to a recent report by the National Association of Realtors, notes the Wall Street Journal. Most Canadian buyers head for the Sunbelt, with Florida accounting for a third of all of their purchases, the report said. The Realtor group estimates there were 7,200 Canadian buyers of Florida homes in the period covered by the report, more than double the 3,500 a year earlier. In some Florida resort communities, so many Quebec residents have bought second homes that French is now commonly spoken. After Florida, the second most popular U.S. destination for home-buying Canadians is Arizona, the report says. In Phoenix, 752 Canadians bought homes in 2007, almost double the number of the year before, according to Information Market, a data firm. LOS ANGELES BUYERS ARE MOVING UP: An ultra luxury condo market is new in the sprawl of Los Angeles, where a New York-style luxury high-rise lifestyle is creeping into the wealthiest echelons, according to the New York Times. The trend is fed by buyers looking to own more than one home, foreigners drawn by the weak dollar to invest in Los Angeles, and new residential buildings being designed by celebrity architects. Although sales above $5 million are still few, 59 percent of new home sales were condos. Yet hundreds of units already under construction or planned promise a higher level of services and more square footage than the typical luxury condo there, which usually sold for under $10 million. The new pampering, with prices to match, includes restaurants open 24/7, outdoor entertaining spaces and patrols by Israeli-trained security guards to foil the paparazzi. For example, the Century, a project of Related Companies, the developer of the Time Warner Center in New York, sits on three acres of green and offers a 200-foot-long entrance driveway, "meditation cabanas" in the gardens (for California dreaming?), a wine storage and tasting room (for California preening?), and guest suites for home offices or household staff (for California scheming?). Units go for $3.5 million-10.5 million and penthouses for $15 million-29 million. SOME BIGGER CITIES ARE BUYING UP FORECLOSED PROPERTIES: Using taxpayer and private money, Boston, Minneapolis, San Diego and a handful of other places are buying foreclosed properties to refurbish and resell them to developers and homeowners in an effort to prevent troubled neighborhoods from sliding into urban decay, reports the Wall Street Journal. The efforts so far have been taken on a small scale. But local officials say they can become an important pillar of any housing recovery with the help of $4 billion in federal grants that were part of a housing bill that Congress approved in July. IT'S RAINING IN SPAIN: Home sales and new mortgage approvals fell sharply again in June, signaling continued pressure on Spain's once-flourishing home-building industry that fed the country's decade-long economic boom, says the Wall Street Journal. Home sales fell at an annual rate of 29.6 percent in June, while the number of new mortgages fell 37.7 percent, data released by Spain's National Statistics Institute, or INE, showed. In May, annual home sales plunged 34.3 percent, and the number of new mortgages fell 36.2 percent. Spain had been among the euro zone's hottest real-estate markets, but house prices fell for the first time in a decade between April and June as chronic overbuilding and eight-year-high mortgage rates added to the impact of the U.S. subprime credit crunch. THE BRITISH MARKET IS ALL WET TOO: "For sale" signs clutter the streets in London these days, an ever-present reminder of the deteriorating housing market and economy, reports the Wall Street Journal. But homes in the capital remain so expensive that the government's new housing stimulus plan falls short, economists and real-estate agents said. The plan to excuse people from paying a tax on buying residential property up to the value of £175,000 ($315,000) for one year isn't going to help many in a city where the average home costs double that amount. As Peter Bolton King, chief executive of the U.K.'s National Association of Estate Agents, said: "£175,000 doesn't get you very much in London." The Land Registry, which records housing transactions in England and Wales, said nearly 570,000 homes were sold at £175,000 or less in the year to May 2008, but only 3 percent of those sales were in London. The latest figures show that the average price of a home in the U.K. capital in July was £348,366. In addition, the tax suspension does little to tackle one of the economy's major underlying problems: the lack of mortgage financing. A NEW LAW GIVES A BREAK TO FIRST-TIME HOME BUYERS: April 9, 2008 through next June marks the eligibility time span for a home-purchase tax credit, notes Kenneth R. Harney in the Washington Post. If you have not owned a house during the past three years and can go to closing before the end of next June, you may be eligible for up to a $7,500 credit against your federal taxes for 2008 or 2009 ($3,750 if you file taxes as a single person). If you own a home you are ineligible, but if you sold one more than three years ago and now rent, you can take advantage of the credit. Close on a house before June 30 and you can claim a credit of up to 10 percent of the purchase price of the property, up to $7,500. If your adjusted gross income exceeds $150,000 ($75,000 if you're single), the credit maximum begins to phase down. Unlike some other tax credits, this one requires beneficiaries to repay the credit over 15 years unless you sell before then and have no gain. At its core, the new tax credit functions very much like an interest-free loan for up to $7,500. You pay only the principal back over time. CANDY STILL HAS A SWEET TOOTH: Candy Spelling, widow of the television producer Aaron Spelling, is downsizing, reports the New York Times. After nearly 20 years in The Manor, a 56,500-square-foot French chateau-style home that includes a wine-tasting room, a bowling alley, a silver room, a china room and a well-known gift-wrapping room, she says she is ready for the next trophy property: a condominium. Robert A.M. Stern designed The Century, the 140-unit building under construction where Spelling recently bought the top two penthouse floors - 16,500 square feet - for $47 million. (See the Los Angeles item above.) She is entertaining offers in the $150 million range for her W-shaped mansion, which the couple built in the late 1980s in the neighborhood known as Holmby Hills. Her idea of downsizing does not mean shedding a dining table for 26, or the private pool and rose garden, all of which Spelling plans to install in her new digs. Her solution was to combine two duplexes on the 41st and 42nd floors, with 4,000 feet just for the master bedroom. Spelling said she was shrinking her staff of 20 to less than half, three of whom will continue living with her and her wheaten terrier Madison. Her china, silver, Impressionist art, wardrobe, wine cellar, ball clock collection and, yes, the gift-wrapping room are nonnegotiable, she said. That gift-wrapping room is, the lady averred, her "hobby and therapy." Poor Candy. RAY ALLEN IS AIMING LOWER: The Boston Celtics sharpshooter has dropped the price of his former Seattle-area home to $5.2 million from $6 million, according to the Wall Street Journal. Allen, 33, was traded to the Celtics last summer from the Seattle SuperSonics (along with Minnesota's Kevin Garnett). His 10,000-sf house was built in 2001 in Carnation, Wash. It has five bedrooms, eight bathrooms, floor-to-ceiling windows, a theater and a six-car garage. On 4.5 acres, the property includes a pool and putting green. He put it on the market about six months ago and also owns homes outside Boston and in Connecticut, according to his business manager, Orin Mayers. A few miles away in Fall City, Wash., former Seattle Mariners outfielder Jay Buhner has listed his custom-built home on 80 acres for $12 million. The ranch has a 7,500-square-foot, wood-and-stone main house, a pool, a pond and a guest house. A BUSH HOUSE, NOT THE WHITE ONE, IS ON THE MARKET: The three-bedroom house in Midland, Tex., where George W. Bush lived with his wife Laura when he began his political career, is up for sale for $239,900, according to the New York Times. The 2,406-square-foot brick home, built in 1976, has the original appliances, fixtures and draperies (yes! the draperies) from the Bushes' years there. It is "in good condition," cared for by the Presidential Museum of Odessa, Tex., and a Midland volunteer committee over the last several years. Bush bought the house in April 1977, about six months before he and Laura married, and the couple lived there after twin daughters Jenna and Barbara were born in 1981. The Bushes sold the house, which has been on the market for a couple of weeks, in 1985, the museum said. Features include new heating and air-conditioning, a formal dining room separated from the living room by a fireplace, an atrium entryway and a skylight, and two bathrooms. A HEARST COMPOUND NOW CAN’T BE YOURS, AT ANY PRICE: The owner, who sought $165 million for the Hearst estate in Beverly Hills, Calif. - at one time the most expensive U.S. home listing - has taken it off the market, says the Wall Street Journal. Financier Leonard Ross listed the 6.25-acre property last summer but now wants to keep it. "He just changed his mind. He loves it and didn't like the idea of parting with it," says listing agent Stephen Shapiro, who adds that he showed the property to seven or eight buyers. The compound, where William Randolph Hearst and Marion Davies once lived, has 72,000 square feet of living space, three pools and two tennis courts. The Mediterranean-style main house, built in 1927, has a living room with 22-foot ceilings, a two-story, wood-paneled library and a series of cascading ponds descending to the swimming pool. The property also has three additional houses but no castle. THIS ACTOR PROVES YOU CAN GO HOME AGAIN: Ben Stiller just spent $10 million on a duplex in a prewar orange-brick co-op on Manhattan's Riverside Drive in the 80s, the same building that his parents, Jerry Stiller and Anne Meara, have lived in for years, reports the Observer. The actor's name isn't on the deed, though the duplex was bought through a trust that shares the actor's billing address. His seller is Ann Zabar of that family, whose store's Web site says she helps her father Saul roast coffee and buy smoked fish. Her parents live in the building, too. As it happens, a May essay in the Israeli paper Haaretz about a visit to the building parenthetically mentions that Stiller would be buying a $10 million apartment there. The apartment wasn't on the market, and Ben Stiller didn't return messages left with his publicist and assistant asking why the actor and his actress wife Christine Taylor, who both have that happy California glow, would want a place here. "I grew up in the Upper West Side of Manhattan in the '70s," he said in an interview last month. "There were. . . fires and riots and serial killers. It was great. My kids, it's L.A., it's sunny and nice. They don't have any excitement." And the whitefish just has to be better at Zabar's. PERHAPS A DOORMAN TRUMPS A GARDEN: Actor Matthew Modine, 49, has purchased a condominium in New York's Chelsea section for $1.7 million, according to the Wall Street Journal. The 1,600-square-foot condo, in a converted industrial building with a brick façade, comes with two and a half baths and a custom Italian kitchen. The doorman building includes a screening room and a gym. The actor, who also owns a townhouse in Greenwich Village, recently founded Bicycle for a Day, a nonprofit that promotes cycling. Real Estate's Four-Letter Word That four-letter word is "wars," as in bidding wars. For sellers, a surfeit of bidders is heaven on earth. For their part, buyers view such competition as a living hell. In a sellers' market, let the battles begin. In a buyers' market, bidding wars are, if infrequent, hardly mere relics of the housing boom. However dreaded, justification can be found for bidding wars. They are not always a bad thing - for buyers as well as sellers. They are not even usually a bad thing. Even in a buyers' market, certain properties are bound to attract multiple offers. That's normally because they are perceived as some combination of underpriced, rare or high quality. Maybe their value lies in a convenient location, prestigious address, outdoor space, thoughtful renovation, unobstructed views, exceptional amenities or myriad other characteristics. Sometimes the desirability of a property is only in the eye of the beholder: Friends or relatives live in the same building; the property evokes waves of nostalgia (as in reminiscent of a childhood home); an office is nearby. It takes just two beholders to start a war, and so many buyers will shrink from the challenge. Many maintain before they've begun their search that they will refuse to engage in the battle. Having made an offer and discovered that another is due or received, others become dispirited and walk away. Still others personalize what is, after all, a business transaction and decline to negotiate against another buyer or buyers; for them, the request to negotiate is experienced as rejection. It also suggests to them that they will have to pay top dollar, more than the property is worth to them. Such buyers need to get a grip. What is a bidding war but an auction? It is not a war but merely the market placing its value on a property. What the last person is willing to pay is what the property is worth. The result is the same whether that individual is raising his or her hand to purchase a Picasso at an auction house or submitting an offer for an apartment. Since when was war declared at an auction house? For that matter, when was war declared over the purchase of a stock or a bond, for which thousands of bidders are trying to buy at the lowest price? True, a bidding war will almost certainly obviate a bargain. If a bargain is what the buyer seeks above all - more so than the perfect home - then the search can move in a particular direction. However, if buying a place within budget with virtually all the qualities that the purchaser seeks is the goal, than a bidding "war" should not be shunned out of hand however much it may not be desired. Bidding wars do not foretell the end of the world. If a property is underpriced, the seller is most cases is aware of the market and will hold out for the right price with or without a war. If a property is the one - the one - for which the buyer has been searching, it is advisable to appreciate that wars are not a four-letter world. It may even be of some comfort to know that the property was purchased for precisely its worth - not a penny more. Below are some of the properties offered by various brokers and visited during this newsletter's recent hiatus:
Upper West Side
Murray Hill One-Bedrooms
Elsewhere in Manhattan
Some of Manhattan's Latest Listings Please click here to view available properties. (To view all photos, tours, floor plans and maps, please use Internet Explorer.) Click Here to Sign Up For Your Free Issue of Realty Digest!
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"The highest-priced new apartment building in the history of New York - indeed, at roughly $2 billion in sales, the most lucrative in the world - isn't a sleek, one-of-a-kind glass tower," writes Vanity Fair in its introduction to a critique of the edifice. "It's architect Robert A. M. Stern's 15 Central Park West, an ingenious homage to the classic Candela-designed apartment buildings on Park and Fifth Avenues where apartments have been snapped up by hotshot hedge-fund managers, established financial titans, and celebrities such as Sting, Denzel Washington, and Bob Costas. From the marble-columned lobby to the wine cellar and pool, the author examines the art, as well as the limits, of Stern's grand nostalgia."
Wall-to-wall windows have become a signature of chic urban living, from Minneapolis to Miami, observes the Wall Street Journal. Home magazines and real-estate ads depict fashionable people in glass-walled towers lounging in front of endless views. But some residents say the reality can be less glamorous. Their windows often are streaked or spotty, even when washed regularly. The sun fades not just furniture but also kitchen cabinets, wood floors, artwork and even books. While urbanites are used to nearby neighbors, a glass-walled apartment without shades can be akin to being on display in a terrarium, especially at night. And temperatures near the glass can be chilly in the winter and roasting in the summer. 
"The projected losses have been wildly exaggerated," contends Charles W. Calomiris of Columbia along with Stanley D. Longhofer and William Miles, each of Wichita State. Writing in the Washington Post, they say that "most Americans have not experienced any significant decline in the value of their homes - nor are they likely to." Analyzing widely quoted price statistics, the trio concedes that foreclosures and home prices have negative effects on each other over time. But, they argue that the result will not be a "vicious cycle of collapsing prices." The economists declare their models predict that as foreclosures continue to climb in many states, "house prices will remain flat or decline in those states - but will not collapse." In their worst-case scenario, the average cumulative decline is about 5 percent, and only 12 states experience declines greater than 6 percent by the end of 2009. Still, they write that some homeowners who had the misfortune to buy in the hottest markets have experienced significant declines in value and will experience further declines. "But fears of a huge loss in home values for most homeowners - and especially for middle-income homeowners - across the United States, and fears of the devastating losses by financial institutions that would accompany them, are greatly overblown," the economists maintain. 
In a separate report, the S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, again hit record lows in June, but the declines appeared to be moderating, notes the Wall Street Journal. And the Office of Federal Housing Enterprise Oversight (OFHEO), which tracks mortgages issued by Fannie Mae and Freddie Mac, showed a 4.8 percent decline in home prices in the second quarter from a year earlier. OFHEO reported a smaller price declines as it tracks only so-called agency-backed mortgages, which exclude homes purchased with subprime loans. S&P/Case-Shiller, on the other hand, records larger price declines in part because it tracks metropolitan areas, where prices are more sensitive than in rural locations. Prices will have to keep falling, economists told the New York Times, before the housing market can make a full recovery. Much of the buying in July stemmed from fire sales of foreclosed homes. And prices are expected to keep sagging under the weight of an enormous backlog of unsold homes. For now, "it's still a buyer's market, and likely to be so for a while," said Stuart Hoffman, chief economist of PNC Bank. "Home buyers are holding all the aces."
