Items of Interest SALES OF PREVIOUSLY OWNED HOMES RISE 5.1 PERCENT Existing-home sales increased in February, reversing losses in January, according to the latest report by the National Association of Realtors (NAR). However, sales activity remained relatively soft, reflecting additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect, the NAR said. Including single-family, townhomes, condominiums and co-ops, sales were 4.6 percent below a year earlier. Although seasonal adjustment factors are more volatile in winter months, sales rates over the past few months show dampened sales activity, according to the NAR. The national median existing-home price for all housing types was $165,400 in February, down 15.5 percent from a year ago, when the median was $195,800. Commented NAR chief economist, Lawrence Yun: "Because entry level buyers are shopping for bargains, distressed sales accounted for 40-45 percent of transactions in February. Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price." Total housing inventory at the end of February rose 5.2 percent, representing an unchanged 9.7-month supply at the current sales pace. Single-family home sales rose 4.4 percent to a level 3.6 percent below February 2008. Sales of existing apartments went up 11.4 percent, but volume was 13.1 percent lower than the pace a year ago. AND, SURPRISINGLY, SO DO SALES OF NEW HOMES AS PRICES DROP In February, the first increase in seven months was 4.7 percent, according to the Commerce Department. "February's gain may be tied to demand delayed in January, when potential buyers were waiting to see what kind of incentives would be included in the economic stimulus package," said David Crowe, chief economist of the National Association of Home Builders (NAHB). "Keep in mind that the January-February average for new-home sales is still below the fourth quarter 2008 average, and we do expect sales numbers to bounce around a bottom before climbing slowly mid-year and beyond." The results beat economists' expectations of a 2.9 per cent fall, noted the Wall Street Journal, which pointed out that the median price of a new home fell to $200,900 in February from $206,800 the month before. The data "have allayed some fears that the housing market would continue to freefall," said Omair Sharif, an economist with RBS Greenwich Capital, "but it's way too early to say if we've hit bottom." At the current sales rate, the supply of new homes would take 12.2 months to clear, compared with 12.9 months in January and 9.7 months a year ago. A six-month supply of homes is considered a more normal balance between supply and demand. JANUARY PRICES WERE OFF 11.6 PERCENT IN A YEAR National resale housing prices fell 11.6 percent in January from a year ago, according to First American CoreLogic. Home prices have declined by at least 10 percent on a year-over-year basis FEDERAL AGENCY RECORDS DECEMBER TO JANUARY PRICE RISE U.S. home prices rose 1.7 percent on a seasonally-adjusted basis, according to the Federal Housing Finance Agency's (FHFA) monthly House Price Index. December's previously reported 0.1 percent increase was revised to a 0.2 percent decline. For the 12 months ending in January, U.S. prices fell 6.3 percent. The U.S. index was 9.6 percent below its April 2007 peak. The gauge reflects only homes with mortgages backed by Fannie Mae and Freddie Mac and excludes homes backed by subprime loans as well as the high-cost "jumbo" mortgages often used to finance the most expensive homes. Month-to-month changes in the geographic mix of sales activity explain most of the unexpected rise in prices in January. Sales disproportionately occurred in areas with the strongest markets. It also should be noted that sales volumes, in absolute terms, were relatively low, the FHFA said, so subsequent revisions to the monthly figure could be significant. CASE-SHILLER INDEX POSTS 19 PERCENT PRICE DECLINE IN A YEAR Data through January in S&P/Case-Shiller Home Price Indices show continued broad based declines in the prices of existing single family homes across the U.S. Thirteen of the 20 metro areas surveyed had record rates of annual decline, 14 of them reporting declines in excess of 10 percent versus a year earlier. The 10-City and 20-City Composites posted annual declines of 19.4 percent and 19.0 percent, respectively. Commented David M. Blitzer, chairman of the Index committee: "There are very few bright spots that one can see in the data." All of the 20 metro areas reported annual declines, and nine of the [Metropolitan Statistical Areas (MSAs)] fell more than 20 percent in the last year, he said. "Indeed," Blitzer added, "the two composites are very close to that rate and have been reporting consecutive annual record declines since October 2007." So, too, with the monthly data, which posted 30 consecutive months of negative returns. From the peak in the second quarter of 2006, the 10-City Composite is down 30.2 percent and the 20-City Composite is off 29.1 percent. The pace of month-to-month declines accelerated in 13 markets, but eased in five others: Las Vegas, Charlotte, Minneapolis, New York and Washington, D.C. In Dallas and Seattle, the rate of month-to-month price declines was essentially the same in December and January. Some critics say the S&P/Case-Shiller indices and others relying on repeat sales have overstated recent price declines because a high percentage of sales are of distressed properties. FORWARD-LOOKING INDICATOR LOOKS UP The Pending Home Sales Index rose 2.1 percent in February from the prior month, but it was 1.4 percent below one year earlier, says the National Association of Realtors (NAR). "Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we'll see additional sales gains," said NAR Chief Economist Lawrence Yun. "More buyers are getting into the market to take advantage of stimulus incentives and much improved housing affordability conditions, but it will take a few months before we could see this turn up in measurable sales contract activity." Yun said he believes that housing inventories will rise through early summer from a normal seasonal pattern of more sellers appearing in the spring. "But with the positive housing stimulus incentives now in place, we expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory," he continued. "Under these conditions, we should see price stabilization in most markets by the end of the year." RETIREMENT COMMUNITIES ARE CUTTING FEES The sagging economy has forced the owners of some of the country's more lavish retirement communities to slash fees and offer other incentives to fill empty units, but seniors in need of assisted-living care aren't catching the same big breaks because demand for those facilities remains high, reports MarketWatch. Occupancy rates declined slightly last year, and by the fourth quarter, when the economy took its deepest hit, they had already shown signs of stabilizing, said Robert G. Kramer, president of the National Investment Center for the Seniors Housing & Care Industry (NIC). "It's still too soon to say it's definitely bottomed out, though, because there is sensitivity to two factors - what's happening in the residential housing market and unemployment rates among adult children," he said. Monthly rates for a single-occupancy unit in an assisted living community average $3,430, or $41,160 per year across all 50 states, according to a Northwestern Mutual Life Insurance Company study released in February. In contrast, continuing care retirement communities typically not only charge monthly rent but also require entrance fees that can be as high as $400,000 or more, about 90 percent of which will be repaid to residents or their estate when the unit is reassigned to a new occupant. RATES PLUNGE TO 37-YEAR LOW, A FREDDIE MAC RECORD The 30-year fixed-rate mortgage (FRM) averaged 4.78 percent for the week, down from last week's 4.85 percent and from 5.88 percent last year at this time. It has not been lower in the life of Freddie Mac's weekly survey, which dates to 1971. The 15-year FRM was 4.52 percent, also down from last week, when it averaged 4.58 percent. A year ago, it was 5.42 percent and never has been lower since FRM began surveying that rate in 1991. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.92 percent in comparison with 4.96 percent last week and 5.59 percent a year ago. It, too, has not been lower since 2005, when Freddie Mac began that survey. One-year Treasury-indexed ARMs were 4.75 percent, down from last week's 4.85 percent and last year's 5.19 percent, lower than it has been since the week ending September 29, 2005, when it averaged 4.68 percent. "Mortgage rates followed other interest rates lower this week amid reports of slower economic growth," said Frank Nothaft, Freddie Mac vice president and chief economist. POTENTIALLY GOOD NEWS FOR SEEKERS OF JUMBO MORTGAGES Major banks will begin originating big loans at affordable rates, reports Kenneth R. Harney in the Washington Post. Bank of America is rolling out a large program to finance jumbo loans between roughly $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5 percent range. With little fanfare, other financial institutions have become more active. For example, ING Group offers jumbos as large as $2 million through its online ING Direct unit. The minimum down payment for an ING Direct jumbo is 25 percent; Bank of America quotes a minimum 20 percent. ING's jumbos typically are "5/1" and "7/1" hybrids with a fixed interest rate for the first five or seven years, followed by an adjustable rate tied to the Libor index for the balance of the 30-year term. Current rates start around 5 percent. Bank of America's new program requires six months of principal, interest, property tax and insurance payments in reserve plus fully documented income, solid credit scores and a full appraisal. HOUSING DOWNTURN IS CAUSING LAYOFFS AT THE MBA The Mortgage Bankers Association (MBA) has laid-off 20 employees, including four vice presidents, sources familiar with the group's operations tell the Wall Street Journal. The group also instituted a five-day furlough for employees. "The real estate finance industry and MBA member firms have been facing tough economic challenges," the MBA said in a statement. Over the past year, the statement added, "MBA has aggressively implemented rigorous cost cutting measures, from streamlining program expenses to eliminating lower priority product offerings." The MBA currently has roughly 2,400 members, down from 3,000 in January 2007. It moved into new $100 million headquarters in June 2008 as the mortgage market was melting down. LONG ISLAND EX-LEGISLATOR ACCUSED OF MORTGAGE FRAUD Five suspects, including a former Long Island lawmaker, have been accused of grand larceny and a scheme to defraud in connection with a $50 million mortgage fraud involving millions of dollars worth of properties in the Hamptons and other tony parts of Suffolk County, says the New York Post. The suspects include former Suffolk County legislator George Guldi. Wachovia Federal Savings Bank filed a civil lawsuit in February against Guldi claiming that he pocketed about $1.8 million as part of a mortgage fraud scheme involving a Water Mill home owned by his late father and appraised at $3.5 million. HOME BUILDERS SOMETIMES OFFER CUT-RATE MORTGAGES As mortgage rates fall to near historic lows, the Wall Street Journal reports that some home builders are offering even lower interest rates. The latest sales promotion: Lennar Corp. is offering a fixed 3.625 percent rate over the life of a 30-year fixed rate mortgage. But Hovnanian Enterprises' recent offer of a 3.99 percent rate sparked "underwhelming" interest from home buyers, says Dan Klinger, president of the builder's mortgage operation. "It wasn't like we needed crowd control," he acknowledged. Earlier this year, luxury builder Toll Brothers was offering a 3.99 percent interest rate in many of its developments nationwide, but today that rate is no longer available nationally. MORTGAGE SERVICER SAYS FORECLOSURES ARE BOOMING The Hope Now alliance of mortgage servicers says it helped 244,000 borrowers avoid foreclosure in February, but completed foreclosure sales reached 56,000, an increase of 86 percent compared to January, according to Inman News. Foreclosure starts on prime loans numbered 157,000 in February, a 25 percent increase over January. Hope Now says that a rising number of prime borrowers are getting repayment plans - 64,605 compared with 46,033 of subprime loans. AND DELINQUENT FHA LOANS GROW TO 7.5 PERCENT IN A YEAR ACCELERATING REFI VOLUME PUSHES UP LOAN ACTIVITY The Mortgage Bankers Association (MBA) reported that loan application volume went up 3.0 percent on a seasonally adjusted basis for the week ending March 27 from one week earlier. On an unadjusted basis, the increase was 2.9 percent compared with the previous week and 68.8 percent versus the same week one year earlier. Refinancings were 3.7 higher than the previous week, while purchase applications inched up by 0.1 percent. As a result, the refinance share of mortgage activity increased to 79.1 percent of total applications from 78.5 percent the previous week. The adjustable-rate mortgage (ARM) share rose to 1.5 percent from 1.4 percent of total applications over the previous week. HIS HOUSEWARMING PARTY SHOULD BE SOMETHING A LEHMAN EVP WHO BAILED HAS OCEANFRONT ESTATE FOR SALE The former head of a Lehman Brothers company has put his oceanfront estate in Amagansett on the market for $31 million, says Newsday. Jack L. Rivkin, who retired last summer as executive vice president, chief investment officer and head of private asset management at Neuberger Berman, owns the gated 1.86-acre property off Further Lane with his wife Jane. The 7,000-sf house built in 1990 has six bedrooms and seven and a half bathrooms. There are a separate guest wing, three fireplaces, a gym and a private deeded path to the beach. The house has panoramic views of the Atlantic Ocean, as well as a 365-year-old renovated and expanded barn brought from England, heated pool with pool house and a bowling alley. Another former Lehman executive also is trying to sell in the Hamptons. That would be Joseph Gregory, ex-president and chief operating officer of Lehman Brothers, listed his eight-bedroom, 8 ½-bath oceanfront home in Bridgehampton for $32.5 million last summer. FOR HER, THIS WOULD BE ONE SWEET DEAL HIS COMPOUND IS FOR SALE MORNING AND NOON AND NIGHT Don Imus has put his Connecticut waterfront country compound up for sale for $30 million, reports the Wall Street Journal. The 10,000-sf white clapboard Georgian Revival main house is in Westport, a suburban community 48 miles northeast of Manhattan. The 16 rooms include six bedrooms and six baths, with white-painted wood interiors and multiple bay windows. Also on the four acres are a two-bedroom guest house and a two-bedroom gatehouse with parking for six cars. The property has 215 feet of sandy beach frontage, and a pool could be built. Imus, 68, bought the property in 1997 for $4.6 million and completed his home in 2000, according to the listing. He briefly listed the home in 2005 for the same price. Imus declined to comment, but while broadcasting "Imus in the Morning," he announced that he's battling Stage II prostate cancer and that the disease hasn't spread. The town record is the $25 million sale in 2006 of talk-show host Phil Donahue's home. A HOUSE ON THE LEFT COAST, NOT FIELD, IS ON THE MARKET Seattle Mariners outfielder Ichiro Suzuki, who recently built and moved into a new larger home on Washington's Lake Sammamish, is asking $1.75 million for his old home with views of the lake. The 5,000-sf contemporary house is in Issaquah, about 15 miles from Seattle. The star outfielder remodeled the 1997 house extensively in 2003, adding dark walnut paneling and cabinetry, granite countertops and commercial-grade kitchen appliances. The five-bedroom house includes four baths, a powder room, a lighted sport court and gardens with two ponds. The master suite has a two-sided fireplace, Italian marble bath and a private viewing deck. FOR THE MAYOR, LIFE IN THE BIG EASY MUST BE HARD New Orleans Mayor Ray Nagin could lose a vacation home in a foreclosure sale next week, reports the Wall Street Journal. His homeowners association filed a notice of lien with the county court last month over failure to pay his association dues. The sale is scheduled for April 7. Nagin and his wife Seletha Smith-Nagin bought the 1,700-sf home in Frisco, Texas, a wealthy, growing Dallas suburb, in 2007. The Nagins took out a mortgage for $156,490 when they bought the two-bedroom, two-bathroom house, which is now listed for $173,500. County assessors valued the home at $182,000. In 2006, Nagin told his hometown paper that he was considering the purchase as "a second hurricane home" and called the property a "modest" townhome. A spokesman for the mayor released a statement calling the issue a "personal matter" that would be "resolved shortly." 23 PERCENT OF AMERICANS PLAN TO BUY A HOME WITHIN FIVE YEARS While half (52 percent) of all Americans are concerned that they or someone they know will face foreclosure in the next six to 12 months, 23 percent plan to purchase a home in the next five years, according to a new survey commissioned by Move Inc., which operates Realtor.com. More than half (53.5 percent) are first time homebuyers. The survey also found nearly one out of five homeowners (18.9 percent) plan to take advantage of the administration's new program to help prevent foreclosures. To benefit from the $8,000 new tax credit, 18.1 percent of adults plan to buy a home this year in order. Nearly two-thirds (62.5 percent) now consider their home primarily a place to live as opposed to an investment. Adults earning up to $20,000 and between $30,000 and $39,900 annually are significantly more likely to feel most strongly that a home is more of a place to live than an investment as compared to those earning $50,000 or more. SECOND-HOME SALES SLID 31 PERCENT IN 2008 The combination of vacation- and investment-home sales slipped to 30.8 percent of all existing- and new-home transactions in 2008, according to the National Association of Realtors (NAR). The median price of a vacation home was $150,000 in 2008, down 23.1 percent from $195,000 in 2007. The typical investment property cost $108,000 last year, 28 percent below the 2007 median of $150,000. The typical vacation-home buyer in 2008 was 46 years old, had a median household income of $97,200 and purchased a property that was a median of 316 miles from their primary residence. Eighty-nine percent of buyers wanted to use the home for vacation or as a family retreat; 27 percent, to diversify investments; 27 percent, to rent to others; 26 percent, to use as a primary residence in the future; and 17 percent, for use by a family member, friend or relative. GEE, SOME PLACES ARE WEALTHIER THAN OTHERS While many people might think that the greatest pockets of wealth reside in elite areas such as Manhattan's Upper East Side, Greenwich, Conn., or Bel Air in Los Angeles, these places are so large that they include both residents who are extremely rich and those of more modest means, Business Week has learned. In fact, with few exceptions, most of the places that have the highest income and net worth in the country are unfamiliar to nearly anyone who doesn't actually live there. And that's just how the people who live there like it. So where are these places? Click here to find out. OF ALL STATES, VERMONT HAS THE HIGHEST PER CAPITA TAX Including property, individual income, sales, alcoholic beverages, tobacco, motor vehicles, hunting and fishing, motor fuels, death and gift taxes, as well as insurance premiums, Forbes magazine calculates that Vermont's tax per person is $3,861. Rounding out the top 10 were Hawaii, $3,856; Connecticut, $3,596; Minnesota, $3,203; New Jersey, $3,024; New York, $3,019; Massachusetts, $2,953; Washington, $2,553; Wyoming, $2,357; and Pennsylvania, $2,223. 1st QUARTER PRICES AND SALES CONFIRM 4TH QUARTER RESULTS EVIDENCE MOUNTS OF RENT BREAKS AT THE TOP END NEW WEBSITE GIVES EASY ACCESS TO COMMUNITY INFORMATION The Department of City Planning has launched a new user-friendly community data portal that provides a single central access point for varied data, project information, land use maps, demographic analysis and other resources. The site streamlines the process by linking all of the resources for community districts and making them searchable by neighborhood name or navigable through a community district map. Check it out here. EVICTION EFFORTS ARE SOMEHOW DIMINISHING New Manhattan housing court statistics show that the number of holdover cases in that and other boroughs continued to drop through the first few months of this year, says the Real Deal. Holdover cases are when landlords seek to evict tenants for reasons other than their failure to pay rent. In February, 353 residential cases were filed, down from 398 cases in January and 415 in December. Last year, the housing court received 5,621 holdover filings in comparison with 2007, when it received 6,047. "As the housing market has weakened, the incentive has gone down. The potential rewards don't seem so shiny," said Arlene Boop, a partner at law firm Alterman and Boop, which handles some holdover cases (without the help of Betty, it seems). "You may not want to push out your current tenant, because you might not get as much from the next one." What's less clear, though, is why the number of non-payment cases, which are brought by landlords to collect unpaid rents, also is also falling. There were 4,158 in Manhattan in February, 5,090 in January and 5,515 in December. MORE OWNERS ARE FIGHTING CITY HALL AND OFTEN LOSE The city's Tax Commission has been swamped with appeals this year from major property owners hoping to lower their tax bills, according to the New York Post. Officials said 44,488 appeals were filed by owners of apartment, co-op, condo and office buildings, up 5.6 percent from the 42,106 filed last year. In Manhattan last year, just 2,500 of 18,830 challenges were successful. 'TAKE MY PLACE, PLEASE' More and more New Yorkers are looking to defray the costs of home ownership by renting out their apartments for short periods of time, says the Real Deal monthly trade publication. Brokers say they are doing more short-term rentals than ever, representing landlords and new condo owners who previously would have refused to rent their apartments for less than a year. For some owners whose plans to sell their apartments have been foiled by the real estate slump, the tactic is a last-ditch effort. For others, it is simply a money-making strategy. Many co-ops do not allow rentals, but condo owners who can't sell their apartments (or don't want to reduce the sale price) often turn to renting as an option. However, because of the market, owners are finding that renting out their apartments at the price they want is not easy, either. So they're turning to leases that last only three to six months, hoping to get a better sales price or a higher rent a few months down the road. ASKED TO TAKE IT OFF, THEY DON'T DISCOUNT COMMISSIONS Scores of professional New York women stripped of their six-figure jobs are now working as "gentlemen's club entertainers" at upscale Manhattan jiggle joints, leers the New York Post. Former Wall Streeters, fashion executives and real-estate agents are pole dancing and stripping for as much as $1,500 a night. Peter Feinstein, owner of the Sapphire Club on East 60th Street, said, "I am receiving a lot of applications from women who recently lost their jobs - in particular New York City real-estate agents." Katie Haverton, 27, is one of them. She worked as a broker for a large real-estate company for three years until January, when she says she hadn't made a sale in six months and had $2 left in her bank account. She now performs at Flash Dancers in Midtown. "With real estate, you can work 10 hours a day showing people apartments and you never know when the next sale will be," said Haverton. "But with dancing, the money is instant. Now that I make better money as a stripper than as a real-estate agent, I'm going to buy my own apartment." Good for her! DO YOU REMEMBER 'I'VE GOT A SECRET' Brokers are increasingly turning to sealed-bid auctions, sometimes called a "highest and best" bidding process, as the economy continues its downward slide and other, more standard selling strategies fail to achieve results, according to the Real Deal. Although time-consuming, sealed bids can help build buzz and distinguish a property in a market that has a growing supply of inventory competing for the attention of a small pool of qualified buyers, brokers say. MONTHLY CHARGES ARE UP BUT ALL OVER THE LOT - GET IT? Co-op and condo maintenance or common charges in some buildings have increased by more than 10 percent this year, according to a new online poll of board members by Habitat magazine. Although 37 percent of respondents said their building's cost went up 1-3 percent, or not at all, the poll in the last week of March found 30 percent of the respondents saying they've increased fees a range of 4-7 percent this year. A full quarter of those surveyed say they've raised monthly fees a range of 7 to 10 percent. Monthly costs went up a whopping 10-percent-plus in 7 percent of the board members' buildings. WITH PRICES FALLING, SOME DEVELOPERS WILL RAISE THEM THIS FLUID SITUATION WILL PROVE TO BE COSTLY The New York City Water Board is expected to raise water and sewer rates by 14 percent as of July 1. Over the last few months, consumption has dropped as much as 7 percent, compared with a normal decline of 1 percent through conservation, Steven W. Lawitts, acting commissioner of the city's Department of Environmental Protection, tells the New York Times. He says that residents seemed to be cutting down on water during the recession in much the same way they are cutting back on everything. It also has not helped, Lawitts adds, that fewer people are working in offices and fewer tourists and business travelers are checking into the city's hotels. Over all, the city is on pace to collect roughly $80 million less in water bill revenues than in previous years, one reason, city officials said, that the water board is expected to consider a rate increase similar to the 14.5 percent increase in 2008, which was the largest since 1992. For the average single-family homeowner, a 14 percent increase would mean a new annual bill of roughly $910, compared with the current bill of about $800. The increase would take effect on July 1. BUYING IN CHINA MAY BE LIKE DIGGING A HOLE FOR MONEY BUT FEEBLE SIGNS OF IMPROVEMENT ARE EMERGING IN CHINA IN SWITZERLAND, HOMES NEAR THE SLOPES ARE SELLING WELL IF YOU WANT TO REAP THE $8,000 TAX CREDIT, READ THIS NONPROFIT IS BUYING UP FORECLOSED HOMES IN NEW JERSEY FEDERAL EFFORTS ARE CAUSING BOND PRICES TO RISE SOME REITS ARE SHOWING GOOD RETURNS, THE TIMES REPORTS NOT SO FAST, THE WALL STREET JOURNAL DISCOVERS Overall, the Dow Jones Equity All REIT Total Return Index, which tracks 113 stocks, posted a negative total return of 32 percent in the first quarter. That was slightly better than the negative 39 percent return in the fourth quarter. The index is now down about 68 percent from its February 2007 peak. There was little difference in performance between real-estate sectors considered the most and least vulnerable to the downturn. REITs that manage hotels and retail space, which tend to get hit the hardest during recessions, were down 38 percent and 39 percent, respectively, for the first quarter. Health-care and self-storage REITs, considered more recession-resistant, were down 28 percent and 32 percent, respectively. YOU, TOO, CAN GAMBOL NOW WITH THE RICH AND FAMOUS Chris Matthews has a summer home there, says the Wall Street Journal. So do John and Theresa Kerry, Jack Welch and Google boss Eric Schmidt. When the boom times rolled, the richest hedge fund managers simply wouldn't buy anywhere else. Nantucket is so upper crust that it makes nearby Martha's Vineyard look positively working class. But prices have fallen by about a quarter or more from the peak. The island has a glut of unsold homes, and even some foreclosures. Hardest hit of all? Vacant land. "The theory that land on Nantucket would always increase in value has been blown out of the water," says local Realtor Kate Ranney Sayle of Denby Real Estate. "Nobody wants to buy it. Right now, you can't give a vacant lot away." Adds broker Cynthia Lenhart of Compass Rose Real Estate, "At the peak of the market there were about 230 houses for sale. There were lots of buyers and nothing to sell them. Now there are about 550 houses for sale, and not many buyers." YOU CAN OWN A PIECE OF THE LOCK Fractional ownership has trickled down to individual homeowners, who are giving keys to strangers, says the New York Times. Such owners are trying to trim the cost of mortgage payments, insurance, taxes and maintenance, all while tapping into the equity in the house by selling off multiple stakes in their property. It's not easy. For one thing, insurance can prove difficult to obtain from an existing provider, so sellers may have to shop around for a new policy. There also are local, state and, in the case of foreign countries, national laws to contend with. Homeowner association rules may affect the sale, while state laws covering timeshares can be a thorny obstacle. And fractional sellers who have taken their properties off the market often cite mortgages as a major roadblock to completing sales. Although fractional sellers may also find that they are competing with even less expensive local real estate these days, overseas developers are looking to fractional ownership to sell vacation homes. The Oceânico Group of Ireland, David Lloyd Resorts of Britain, Grupo Pinar in Spain, the Zorgvliet Group in South Africa and Vertuz Development in Thailand are a few of the developers preparing fractional programs. For much more on the subject, click here. DON'T EXPECT LOWER MORTGAGE RATES, SAYS FREDDIE MAC Mortgage rates are "probably as good as it's going to get" and the housing market is likely to rebound sooner than some forecasts, says Freddie Mac interim CEO John Koskinen, according to the New York Post. "Mortgage rates, if they go down at all further, it's going to be incremental," Koskinen told reporters in Washington after he met with President Barack Obama. "Interest rates are probably close to bottoming," the executive said. "This is more attractive than they've ever been and about as attractive as they're ever going to be. We are going to begin to see a lot of home purchases by people on the sidelines who are suddenly discovering 'hey I can afford a house.'" He predicted a return of confidence in the housing market "that we haven't had in the last couple years." EVEN HOPEFUL, NAR SEES POSITIVE OUTLOOK FOR SECOND HOMES Can You See It Now? "It" would, of course, be that elusive bottom of the market. As almost everyone knows, especially readers of this newsletter, you can see the bottom only after it has passed. That's not so great for buyers seeking the biggest bargain or sellers seeking the highest price. And it's terrible for the market. Today's market is a puzzle to buyers, sellers and, yes, brokers. Prices are all over the place, many stuck at historic highs, many having been reduced in the first quarter and still others going on the market at realistic prices. One phenomenon is the way that shrewd brokers and their sellers are assuming the necessity of negotiating down from their asking price in what is undeniably a buyers' market. There is no other explanation, except perhaps ignorance or intransigence, for prices that are above their true market value. Asking prices are commonly now 10-20 percent above the current value of listed properties, whether as a starting position or reduced from months ago. That's the case even when everyone knows the prices are too high. Some brokers are saying that the only way to market a property is to assume the amount at which it will go to contract and then add a percentage. Thereby arises a dilemma: Many buyers are accustomed to searching for real estate within their comfort zone, so their price range may well prove to eliminate the possibility of their actually knowing about those properties that only seem to be too expensive for them. An apartment or townhouse that, after negotiations, would be in their grasp is one they never see. All other considerations aside, overpriced properties languish as a consequence. Confusion reigns. Buyers viewing a number of more or less comparable apartments understandably have difficulty making sense of the varied asking prices above, below or occasionally on the market. They search with disparate views of whether the bottom may have passed, be near or arrive only in a year or more. Sellers also are trying to time the market and will do anything to avoid bringing money to the settlement table, never mind making their long-anticipated "profit." Worse, some sellers, buyers and brokers alike are allowing themselves to be sucked into a powerful whirlpool of denial. It is a veritable standoff. Levels of consumer confidence, fears about unemployment (whether of an individual buyer or the city's rising rate), concerns about the U.S. economy, and uncertainty about the effects of government intervention all enter into the buying/selling equation. Such factors contribute to the decision to buy or sell and at what price. In addition, they lure so-called "casual sellers," who are in no great hurry to move, to test the market at prices that are too high and to resist low offers, thereby inflating inventory. New figures for the first quarter prove the obvious: Sold prices and sales are down, way down even as the number of days on the market and discounts climb. Although everyone needs to face whatever actual facts are available, it also is imperative to put the statistics in perspective. Prices plummeted most steeply before statistics for the first quarter were compiled, though they couldn't be documented until after the homes finally changed hands and thus after calculations were made for the fourth quarter of 2008. Therefore, the first quarter statistics basically confirm the biggest declines, those that occurred after Sept. 15. The best news for buyers may, in fact, be the old news that the new reports validate. With inventory rising, buyers are going to be in the driver's seat for a while as many sellers elect to sit tight. Discerning the bottom of the market has become a waiting game that severely constricts sales. Which side will chicken out first? Yet who can say that obstinacy on either side is irrational? So, the market will be mired in indecision until there develops a widespread perception that the bottom has arrived. Can you see it now? Below a variety of recently seen properties that are listed by various brokers and that underscore the foregoing observations:
Some of Manhattan's Latest Listings Please click here to view a sampling of newly listed properties. To see more of them or to obtain more information, please don't hesitate to be in touch. Click Here to Sign Up For Your Free Issue of Realty Digest!
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for 11 consecutive months, the company said, adding that February preview data indicate the trend will continue. As of January 2009, more than 700, or nearly three-quarters, of all metropolitan markets were experiencing home price depreciation, up from 254 markets experiencing depreciation in December 2007 and 394 in June 2008. Nevada became the top ranked state for price depreciation, down 26.9 percent, displacing California (-26.7 percent), which had led the nation in price depreciation since May 2007. Arizona (-21.3 percent) remained the third ranked state in terms of price depreciation, but Rhode Island (-19.7 percent) edged out Florida (-19.5 percent) and now ranks fourth in the nation in terms of price declines. Since U.S. home prices peaked in July 2006, they have declined 21.2 percent on a cumulative basis and are currently back to the lowest price level since March 2004.
Defaults on home mortgages insured by the Federal Housing Administration (FHA) in February increased from a year earlier. A spokesman for the FHA told the Wall Street Journal that the number of "seriously delinquent" loans at the end of February was up from 6.2 percent a year earlier. Seriously delinquent includes loans that are 90 days or more overdue, in the foreclosure process or in bankruptcy. As of January, the cities with the highest FHA default rates in December were Punta Gorda, Fla., at 18 percent; Detroit, 15.6 percent; Flint, Mich., 15.1 percent; Fort Myers-Cape Coral, Fla., 15 percent; and Elkhart-Goshen, Ind., 12.1 percent. Foreclosed FHA homes owned by U.S. Department of Housing and Urban Development totaled 39,687 in January, up 22 percent from a year earlier.
Capital analyst Michael Levy in the Wall Street Journal. In recent weeks alone, the Trump Place buildings on the Upper West Side also saw prices slashed, by an average 15.5 percent, he said. Studios got a nearly 20 percent haircut. At the Riverside Boulevard address that boasts a round-the-clock concierge staff, a 421-square-foot studio starts at $1,920, excluding a free month of rent, according to Levy. In November of 2007, the asking price for a similar unit was $2,750, and the rent bonus wasn't offered. Landlords are working harder than ever to fill apartments in a post-bubble world, said Jamie LeFrak, whose family owns tens of thousands of rental units region-wide. "Unlike the sales market where sellers are holding out hope for a miracle that will never come . . . landlords will choose to rent at market rate immediately," he volunteered. An Equity Residential representative declined to comment, citing upcoming earnings results. The Chicago-based company has more than 20 buildings in the New York metro area, with about half of those units in Manhattan.
three years prior to the purchase; and the buyer must have a modified adjusted gross income (MAGI) less than $95,000 for single tax payers or $170,000 for married filers. The amount of credit qualified buyers can claim can be 10 percent of the purchase price of the home, up to a maximum of $8,000, but it is reduced for buyers with a MAGI between $75,000 for single taxpayers ($150,000 for married filers) and the upper income limit. Qualified buyers have several options for when to claim the tax credit, but they can claim it only after the purchase of the home is complete. Buyers who complete their purchase prior to this April 15 can claim the credit on their 2008 income tax return. If the qualifying home purchase will be completed shortly after April 15, buyers can file an extension for tax year 2008 and claim the credit when they do file their 2008 return. Or they can claim a qualified purchase on their 2009 income tax return.
