Items of Interest WITH PRICES DROPPING, EXISTING-HOME SALES BOOM Sales of previously owned single-family, townhomes, condominiums and co-ops jumped 6.5 percent during December, but the rate was 3.5 percent below the pace in December 2007, according to the National Association of Realtors. For all of 2008, the volume was 13.1 percent lower than in 2007. It was the least in 2008 since1997. Said NAR Chief Economist Lawrence Yun: "The market is still far from normal balanced conditions. Buyers will continue to have an edge over sellers for the foreseeable future." Total housing inventory at the end of December fell 11.7 percent to a 9.3-month supply at the current sales pace, down from an 11.2-month supply in November. "Encouragingly, the increased sales resulting from more realistic pricing has cut the nationwide inventory of unsold existing homes to a two-year low," commented David Resler of Nomura Securities. And Steven Wieting of Citigroup contended that the most substantial problem with the data is how many foreclosed properties are being sold through traditional realtor channels. "This will tend to boost both inventories and sales, leaving the impression of higher activity levels, an increasing upward bias in the series," he said. SINGLE-FAMILY HOME PRICES CONTINUED TO SLIDE IN 2008 The S&P/Case-Shiller Home Price Indices show continued broad-based declines in the prices of existing single family, with 11 of the 20 metro areas showing record rates of annual decline and 14 reporting declines in excess of 10 percent versus November 2007. The 10-city and 20-city indices have declined every month for 28 consecutive months. Phoenix and Las Vegas were the worst performers for the month and over the one-year period. As of last November 2008, average home prices were at similar levels to what they were in the first quarter of 2004. From their peak in mid-2006, the 10-city composite is down 26.6 percent and the 20-city composite, down 25.1 percent. All 20 metro areas and the two composites posted their third consecutive monthly decline. In addition, Atlanta, Boston, Charlotte, Chicago, Dallas, New York, Portland and Seattle had their largest monthly declines on record. The S&P/Case-Shiller National U.S. Home Price Index tracks the value of single-family housing within the United States. IT SEEMS BUYERS ARE TAKING ADVANTAGE OF LOWER PRICES Pending home sales surprisingly increased as more buyers took advantage of improved affordability conditions, according to the National Association of Realtors (NAR). The forward-looking indicator based on contracts signed in December rose 6.3 percent from November and 2.1 percent from one year earlier. NAR Chief Economist Lawrence Yun said the biggest gains were in areas with the biggest improvements in affordability. Other economists cautioned that December could prove to be nothing more than a bump in real estate's long slide. "They rebounded from an all-time low, so the level is still low," said Patrick Newport, United States economist at IHS Global Insight. RECORD PRICE DECLINE REPORTED FOR SINGLE-FAMILY HOMES New York City posted its largest monthly home price decline on record in November 2008, according to S&P/Case-Shiller Home Prices Index data, says the Real Deal monthly magazine. Home prices within a 50-mile radius of New York City fell 1.6 percent between October and November, the largest drop in more than 20 years, and 8.6 percent year-over-year, according to the index. Since the data do not include condo or co-op units, the report primarily reflects home prices in the outer boroughs, Connecticut, New Jersey and Westchester County. But the New York metropolitan area still has the highest index value of the 20 cities measured by the index, indicating that homes in the area have held their value better than homes in the other areas. Homes in the New York metropolitan area have appreciated 86.81 percent since 2000, according to the data. WALL STREET'S CASH BONUSES PLUNGED BY 44 PERCENT "A 44 percent decline in the bonus pool will ripple through the regional economy and the state and the city will lose major tax revenues," State Comptroller Thomas P. DiNapoli said in releasing his report on the 2008 payments. "It's painfully obvious that 2009 will probably be another difficult year for the industry." DiNapoli's office estimates that the bonus pool paid by the securities industry to its employees in New York City totaled $18.4 billion in 2008 based on personal income tax collections and other factors, including industry revenue and expense trends. In 2007, bonuses totaled $32.9 billion. The decline is the largest on record in absolute dollars and the largest percentage decline in more than 30 years, but the size of the bonus pool is still the sixth largest on record. The average bonus declined by 36.7 percent to $112,000 in 2008. The decline in the average bonus was smaller than the decline in the bonus pool because the pool was shared among fewer workers as the industry shed jobs. Employment in the securities industry in New York City declined from 187,800 in October 2007 to 168,600 in December 2008, a loss of 19,200 jobs, or 10.2 percent. THE TIMES NOTICES THAT RENTS SEEM TO BE FALLING Rents fell in almost every sector of the Manhattan market last year, reports the newspaper, which MOST AMERICANS DON'T WANT A BITE OF THE BIG APPLE They don't necessarily want to live in New York unless they're in their 20s and are seeking a fast-paced lifestyle, according to a new survey by the Pew Research Center as reported in the New York Times. New York was more likely to be preferred by women. And a majority of people 18 to 29, plus Americans who prefer a faster pace of life, said they would like to live in New York. People are more likely to want to live in New York if they already live in a city, in the East, are black, college educated, make more than $100,000, have never been married, have no children, are liberal and don't regularly attend religious services. Based on a poll of 2,260 adults, the survey seems to have been modeled on a job description tailored for the boss's mistress. IT'S GETTING TOUGHER FOR BORROWERS IN THE CITY Even if a prospective buyer has impeccable credit and reliable income, the New York Times reports, many banks are refusing to make loans if they don't like what they find when they review the finances and bylaws of the building where the purchaser hopes to live. Among the matters under scrutiny: the dollar amount and type of insurance a building has; the size of the building; the size of the apartment; and, in the case of new developments, the number of apartments sold and closed. Mortgage brokers, real estate lawyers and agents say that the roadblocks some banks have thrown up seem almost arbitrary. "Banks are asking questions that I've never heard anybody ask before," said Roberta Axelrod, the director of residential sales and rentals at Time Equities, a real estate developer and landlord. "They're looking in much more detail into specific aspects of the buildings." Mortgage brokers say that bank requirements seem to change week to week and vary greatly from bank to bank. Potential borrowers would do well to read the whole story by clicking here. PICASSO PAINTINGS AND PINOT NOIR WINES ARE PUT OUT Art collections and wine cellars that can no longer fit in newly downsized living quarters in Manhattan are most likely ending up in high-end self-storage facilities, says the Real Deal monthly magazine. According to Peter Lewis, the president of Cirker Hayes luxury self-storage companies, which has 200,000 feet of facilities in Manhattan, there has been a burst of activity in the high-end self-storage industry recently. "Half our business in the last four months has been a direct result of the changing environment," he said. "We see the Park Avenue folks downsizing." Lewis noted that he's also seeing more business from art collectors who have pulled consignment pieces out of galleries that they fear will go bankrupt; galleries that are closing and need to store art; and law firms with expensive furniture that they don't need because they are moving to smaller offices. STATEN ISLAND AND QUEENS LEAD IN FORECLOSURES The two boroughs continued to have the highest number of foreclosures in the city during January, but The Real Deal says New York still compares favorably with other parts of the country, according to the latest report by PropertyShark.com. As in previous months, Queens had the most foreclosures of any borough, with 170, up 26 percent from 135 in January 2008; one in every 4,559 homes is scheduled for foreclosure auction. Staten Island followed with 58 auctions, up 7 percent from a year ago, but had more foreclosures per capita, with one in every 2,845 homes scheduled for auction. While the Bronx had 33 foreclosures, up 38 percent from last year, Manhattan and Brooklyn recorded fewer than last year; the number in Manhattan plunged 44 percent to 5, while Brooklyn fell 73 percent to 12 foreclosures, down from 44. RATES HEAD UP AGAIN The 30-year fixed-rate mortgage (FRM) averaged 5.25 percent for the week, up from last week's 5.10 percent but lower than 5.67 percent last year at this time, reports Freddie Mac. The 15-year FRM this week was 4.92 percent in comparison with 4.80 percent the previous year 5.15 percent a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.26 percent this week; last week, they were 5.27 and last year, 5.21 percent. One-year Treasury-indexed ARMs were 4.92 percent, up from the previous week's 4.90 percent and off from 5.03 percent a year ago. "Interest rates for fixed-rate mortgages rose this week amid economic reports that were somewhat better than consensus forecasts had anticipated," said Frank Nothaft, Freddie Mac vice president and chief economist. "The economy slowed by 3.8 percent in the fourth quarter of 2008, less than the market consensus, with inflationary pressures held at bay. Meanwhile, personal incomes fell by only half as much as some market forecasters predicted." THOUSANDS OF EXPENSIVE HOMES MAY BE IN TROUBLE NEXT Rising defaults by affluent homeowners are raising the specter of another cloud over banks and investors, which could get stuck with thousands of expensive homes, according to the Wall Street Journal. About 6.9 percent of prime "jumbo" loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up from 2.6 percent a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1 percent from 0.8 percent in December 2007. Jumbo mortgages average about $750,000 and can run as high as $5 million or more. Nearly 25 percent of prime jumbo mortgages exceeded the value of the homes they backed in September, according to Credit Suisse. That figure would increase to 42 percent if home prices decline 15 percent over the next two years. "There is more pain to come," says Herb Blecher, vice president of analytics at LPS, who, which a name like that, must know a lot about pain. ACTIVITY REBOUNDS AFTER A SLOW WEEK The Mortgage Bankers Association (MBA) said mortgage loan application volume an increased 8.6 percent for the week ending Jan. 30 on a seasonally adjusted basis from one week earlier. Unadjusted, the gain was 28.1 percent, but activity was 26.9 percent below one year earlier. Refinancings went up 5.8 percent week to week, while purchase applications fell 11.2 percent. The refinance share of mortgage activity increased to 73.2 percent of total applications from 72.8 percent, and the adjustable-rate mortgage (ARM) share dipped to 2.1 percent from 2.4 percent. BUILDERS SEE NEW APPROACH TO KITCHENS At the International Builders' Show in Las Vegas, attendees told the Los Angeles Times that the time has come in kitchens to pull back, focus on function, eat better by cooking in and avoid going overboard. "Don't get appliances that are too big for the space," advised Connie Edwards, a Winchester, Va.-based kitchen and bath designer. "And think zones: baking, cleanup, storage." Kay Green, whose Orlando design firm focuses on model homes, is including more refrigerator drawers in her kitchens. With the resurgence of home cooking, "one refrigerator is not enough," she says. A preference for quieter appliances, contemporary styling and clean, simple lines to keep the kitchen a calm environment are other trends cited by Edwards. Green also is seeing a focus on stress reduction extended to color choices, with calming greens as well as botanical greens gaining favor in the kitchen. Cost-effective ways to update a room can include using small amounts of expensive tile on a backsplash or as an accent, installing splashy hardware, or mixing two types of countertops. Homeowners looking for kitchen design ideas can find tips and guidelines at the National Kitchen and Bath Association Web site, nkba.org. "You can always make a kitchen beautiful," Edwards says, "but you can't always make a beautiful kitchen work." YOU CAN GET IT FOR YOU WHOLESALE So says the New York Times in two and half pages devoted to bargaining for home furnishings. IT'S TIME TO HEED THAT NEW YEAR'S RESOLUTION If downsizing and selling your home are your goals, the Wall Street Journal's interview with Jim Henderson of the William C. Huff Companies moving concern provides some pointers. First, start early, at least three to six weeks before you put your old house on the market. Then use concentric circles since, when we acquire objects, we place them in our dwelling relative to their emotional value to us. Objects that are in the heart of the home, in the family room and kitchen, are those we value and use the most, so they can be packed up immediately (if you want to dine out for days). Those objects farthest away from these rooms may have lost their importance to us over time. That's where to begin the culling process. Also involve your spouse and children, and use your imagination. In addition, try to envision where every object will fit in your new house and decide whether you'll still be using it two or three years from now. If you can't use it, toss, sell or donate the item. You may also want to consider selling your home furnished; you'll drastically reduce moving costs and may make your home more valuable to buyers, especially if your home is in a resort area. Finally, digitize photographs. Allow yourself several days to go through your collection, throwing out duplicate and unflattering shots. Scan the remainder, and then make a CD, which you should keep in a fireproof safe or your safety deposit box. COOL IT AWREDDY A small segment of the green movement has come to regard the refrigerator as an unacceptable drain on energy and is choosing to live without it, reports the New York Times. These advocates say the refrigerator is unnecessary, as long as one is careful about shopping choices and food storage. Yet many environmentalists - even many who think nothing of using recycled toilet paper or cut the thermostat to near-arctic levels - see fridge-free living as an extreme choice or an impractical and excessive goal. Well, yeah. "The refrigerator was a smart advance for society," commented Gretchen Willis, 37, an environmentally conscious mother of four in Arlington, Tex. "I never would have thought of it," Willis said, explaining that although she's committed to recycling and using fluorescent bulbs, she draws the line at any environmental practice that will result in great expense or inconvenience. "It's silly not to have one," she added, "considering what the alternative is: drinking up a gallon of milk in one day so it doesn't spoil." Seeing things differently, if irrationally, the fridge-free folks trade tips on Web sites about food storage ("In the winter I put perishables like mayonnaise outside . . .") What, after all, could be tastier than a mayonnaise ice cube? Hard as this item is to believe, apparently it's true! 8 CUT-RATE WAYS TO SPUCE UP A COOKIE-CUTTER HOME Ondine Karady, a "Top Design" finalist but not winner who is a decorator of sets for "Sex and the City," tells readers of the Washington Post to start by getting rid of those Home Depot-generic overhead lights that the developer put in on the cheap. Then, wallpaper is a quick, inexpensive way to completely transform an otherwise generic room, she says. Other notions: Have a shade company make fabric shades to cover up your boring sconces; floor-to-ceiling drapes highlight ceiling heights, soften the room and are a great way to add pattern and color; in a loft setting, area rugs help to define spaces; when choosing table lamps, avoid generic styles from huge consumer stores since a thrift store find can look just right with a new linen drum shade; and, banish blank walls - even your kids' doodles could look like a Picasso in the right frame - clustering small frames together as a good way of making plain walls come to life. HOW ABOUT A HOT PINK 'RADIATOR' In recent years, the heating industry has begun offering a variety of stylish, compact options that hug the wall, according to the New York Times. For example, Runtal North America manufactures a hot-water radiator with vertical slats of powder-coated steel topped by a wood railing. It looks more like a balustrade - and can even double as one. The company also makes curved baseboards, wall panels and radiators in narrow floor-to-ceiling columns that can pass for wall sculpture - in a trailer perhaps? The units, which come in about 100 colors, start at a few hundred dollars, and are available at runtalnorthamerica.com. The Windy Ridge Corp. offers many well-designed choices, including epoxy-coated steel hot-water radiator panels from Belgium. The panels, which are $84-334 at shop.veha.com, extend from the wall about 3 inches for a single panel and 5 inches for a double. For heating systems that run on steam, a well-named outfit called Steam Radiators sells sleek steel wall models. Available at steamradiators.com, they range in price from $545 for a 24-inch-wide unit to $1,205 for a 72-inch one, and come in white or steel gray. Custom colors are $100-300 extra, thereby explaining the headline. STATE FARM WILL NO LONGER INSURE HOMES IN FLORIDA Rebuffed by regulators in its efforts to raise homeowner rates by 47.1 percent, Florida's largest private insurer of property announced that it would shutter all its property insurance business in the state, reports the New York Times. The decision affects more than a million policyholders. State Farm Florida, badly hurt by a record eight hurricanes in 2004-5, says that it has been unable to repay loans that those storms forced it to acquire from its parent company and that it continues losing money on its Florida property business. IF YOUR HOUSE IS AT THE BEACH, YOU CAN GET INSURANCE Privilege Underwriters Reciprocal Exchange (PURE), a company headquartered in Fort Lauderdale and White Plains, N.Y., recently received licenses to sell policies in New York, Connecticut, New Jersey and the District of Columbia, says the Wall Street Journal. The company also sells policies in Florida and South Carolina, and has applications pending with regulators in seven eastern states. The company says PURE is able to write competitively priced policies in high-risk areas because it specializes in large, well-built homes valued at $1 million or more, which, industry data suggest, have held up well in recent disasters. FRANCE IS RANKED LA CRÈME DE LA CRÈME Maybe it's the steak frites. International Living magazine, a retirement and relocation publication, compared some 200 countries in nine categories, including, cost of living, culture, economy, environment, freedom, health, infrastructure, safety and risk, and climate. Information was combined from official government sources, the World Health Organization and The Economist. Then editors asked for opinions from knowledgeable people around the world. France scored its high marks across the board, but its culture and leisure activities were the main appeal, said Managing Editor Laura Sheridan, according to Realtor magazine. In order, the others on the list were Switzerland, the U.S., Luxembourg, Australia, Belgium, Italy, Germany, New Zealand and Denmark. BUILDERS ARE ADDING NEW LURES The latest marketing efforts from home builders center on financing - with rock-bottom mortgage rates, delayed payments and mortgage insurance for job losses - says the Wall Street Journal. Builders know cash is essential to pay the bills and survive, so they're trying anything to make a sale, even if it further stresses margins as cash flow concerns mount. Lennar, Toll Brothers and Hovnanian Enterprises are offering interest rates as low as 3.25 percent. Hovnanian expects to offer insurance that covers payments for some laid-off homeowners, while Pulte Homes will foot the bill until 2010 in several markets. Builders also employ "buydowns," which make an upfront cash payment to an investor purchasing the mortgage. BRITAIN'S UPPER CLASS WILL NEED THAT STIFF UPPER LIP Luxury home prices in London fell 3.7 percent in a month as would-be buyers struggled in January to secure mortgages from banks hurt by the financial crisis, reports Bloomberg News. In the last 12 months, the average price of homes that cost more than £1 million ($1.4 million) has slumped 21 percent, according to the real estate firm Knight Frank. House prices across Britain fell 1.3 percent in January from the previous month and about 17 percent on an annual basis, said Nationwide Building Society. MANY RESPONDENTS WOULD RATHER LIVE ELSEWHERE A new national survey by the Pew Research Center finds that nearly half (46 percent) of the public would rather live in a different type of community from the one they're living in now - a sentiment that is most prevalent among city dwellers. When asked about specific metropolitan areas where they would like to live, respondents rank Denver, San Diego and Seattle at the top of a list of 30 cities, and Detroit, Cleveland and Cincinnati at the bottom. Still, more than eight-in-ten respondents rate their current communities as excellent, very good or good. People who have moved at least once (63 percent) and those who have lived in the same place all their lives (37 percent) are equally content with their current home. Pews latest report finds that most city dwellers think the grass would be greener in a suburb, small town or rural area - and, literally, wouldn't they be right? But more than four in ten residents of suburbs, small towns and rural areas also indicate they would prefer to live in a different type community. Seven of the public's 10 most popular big cities - Denver, San Diego, Seattle, San Francisco, Phoenix, Portland and Sacramento - are in the West, and the other three - Orlando, Tampa and San Antonio - are in the South. The five least popular big cities - Detroit, Cleveland, Cincinnati, Kansas City and Minneapolis - are each in the Midwest. These attitudes reflect what government data indicate about the nation's migration patterns: Americans are leaving the Northeast and the Midwest in favor of the South and the West. REPORT SAYS MIDDLE CLASS IS BEING DRIVEN FROM NYC New York City's middle class may be facing extinction if certain key economic factors don't soon change, according to a new report by the Center for an Urban Future, a think tank, reports the New York Observer. The 53-page report cites skyrocketing costs, stagnating wages, underfunded public education, housing costs and what it terms a disinterested city government. Consequently, many in the middle class are heading for areas such as Charlotte, N.C., where 1,893 New Yorkers went in 2006, and Philadelphia, where 3,635 settled in 2006. In fact, twice as many New York City residents relocated to Philadelphia and Charlotte in 2006 than in 2000, while the number relocating to Lehigh County, Pa. and a suburb of Atlanta more than tripled. "What drove people out of New York City in 1993 was basic quality of life issues - crime, safety, neighborhoods," concluded the authors of the study. "What is driving people out today is basically one issue - money and the cost of living." To wade through the entire report, click here for a PDF. SURVEY OF FENCE-SITTERS FINDS THAT RATES HOLD THEM BACK A study by a research subsidiary of the National Association of Home Builders has found that 44 REMODELING CONTINUES ITS SLIDE, TO RECORD LOWS The residential remodeling market declined further during the final quarter of 2008, according to the latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). The current market conditions indicator slid to 27.7, from 33.5 in the previous quarter. Future expectations of remodeling work plummeted to 19.6, from 27.7 in the third quarter. Both these indices have descended to historic lows since the start of the RMI in 2001. Any number over 50 indicates that the majority of remodelers view market conditions as improving. BASKETBALL COURT (WITH HOUSE) IS PUT ON THE MARKET Basketball's Tony Parker and his wife Eva Longoria Parker of "Desperate Housewives" have listed their home in San Antonio for roughly $900,000, says the Wall Street Journal. Wed in 2007, the couple has moved and is in the process of building a new house. In the Stone Oak master-planned community, their old place, a 1997 stucco residence on 0.65 acres, has five bedrooms, tile floors and a master bedroom suite with a double-sided fireplace. Parker, was drafted by the San Antonio Spurs in 2001 and subsequently bought the house for $782,040 at the age of 19. The French citizen added a pool and a half basketball court. SLOW TIMES AT L.A. HOUSE Nicolas Cage has cut the price on a Los Angeles house where singers Dean Martin and Tom Jones once lived says the Wall Street Journal. It's now $19.75 million, down from $25 million and 44 percent less than his original listing price in October 2006. (The house has been sporadically off the market.) What are you waiting for? INVESTMENT BANKER PROVES THAT HE KNOWS THE SCORE Dan Lufkin, a founder of Donaldson, Lufkin & Jenrette has cut by 20 percent the price of his New York apartment, which was converted from a chapel, $14 million, about a year after listing it for $17.5 million, according to the Wall Street Journal. The 10-room unit is in a landmarked 1880s building, a former cancer hospital and nursing home at 455 Central Park West, near the park's northern end. Lufkin and his wife Cynthia paid the building's developer $5.78 million for the chapel in 2005 and converted it. The sale includes a separate 500-square-foot staff apartment. HAVING HOPPED ACROSS THE RIVER, HE'S BACK Nine days before 9/11, hip-hop entrepreneur and philanthropist Russell Simmons and his family left their Liberty Street apartment and moved to Saddle River, NJ. , says the New York Post. Their condo was just steps from what would soon become known as Ground Zero, and the apartment was destroyed during the terrorist attack. Not one item inside remained intact. Now, he's returned to the same apartment on Liberty Street, a four-bedroom penthouse where he now meditates in his yoga room, listens to the area's construction noise and enjoys his extensive art collection. WAY MORE THAN THREE ROOMS, UNREPORTED VIEW A three-bedroom, two-and-half-bath home in Sag Harbor owned by Arlene Alda, wife of actor Alan Alda, has finally been sold, reports Newsday. Public records show that the Noyac Road Colonial sold for $550,000. The sale closed Jan. 6. The 0.57-acre property originally went on the market in the summer of 2007 for a reported $799,000. The Aldas still own plenty of property in the Hamptons, including more than 25 acres on Olivers Cove Lane and nearly eight acres on Blank Lane in Water Mill. The home they just sold reportedly was used to house the Alda family's domestic employees for years. ONETIME HOME OF A FORMER PRESIDENT HAS PRICE CUT The real-estate investor who bought and renovated the former Vail, Col. home of the late President Ford has cut his asking price 13 percent to $12.95 million, reports the Wall Street Journal. The investor, Kevin Hayes, initially wanted $14.9 million for the 10,000-square-foot house last August. The home is a seven-bedroom ski-in, ski-out house on 0.8 acres in the resort of Beaver Creek with an indoor lap pool. Hayes bought the house from the president's estate for $6.65 million in early 2007 and spent $4 million on renovations. And the former Phoenix home of Sen. John McCain and his wife Cindy is still for sale - now asking $10 million, reduced from the original $12 million. A real-estate investor gut-renovated the house after paying $3.2 million for it in 2006. She's been trying to sell it since last July, both conventionally and via an auction in October. THERE'S NO WAY PAST WILL BE PRECEDENT The Winans International Real Estate Index, which calculates that new home prices are down 23 percent since March 31, 2007, says new homes sales fell 71 percent and new property listings were down 34 percent. "This bear market will probably not end in 2009," says company founder Ken Winans in Realtor magazine. "Past real estate bear markets ended when the average time it took to sell a new house dropped to three and a half months. Currently, it is taking over nine months for transactions to close due to tight credit conditions." Sounds bad, but the worst decline of new home prices in the last 150 years was the 68 percent decline from 1929 to 1932. The longest housing bear market was from 1853 to 1858. UBS ISSUES GLOOMY REPORT ON THE BIG APPLE Home prices, which had declined 14 percent as of November since their peak, may fall another 20-25 percent "if not more," according to the bank. (It's the same bank among many other banks that failed to predict where the market would be now.) "With job losses accelerating in financial services and more spillover impact still to come, we believe unemployment may approach the previous peak for the tri-state area of 10.5 percent" reached in 1976, the report says. Does Size Matter? Since this newsletter is devoted to matters pertaining to real estate, you may be forgiven for thinking that the headline refers to square footage. Uh, uh. It refers to that other thing. Down there. As Lois Lane asked the caped man in blue and red, played by the late Christopher Reeve, "How bi— tall are you, Superman?" When it comes to offering prices and clinging to them, one of two or three primary explanations is that sellers and buyers alike are prone to want to prove something. And stubbornly, they'll refuse to budge until they can feel that the other side has given up enough ground so their own side can save face. So, a result that really should be considered for what it is - a business decision - amounts to a skirmish in which everyone loses. Instead of an antiseptic and (ideally) dispassionate negotiation, the parties (even, not infrequently, their broker representatives), becomes invested in side issues. Enmeshed in cultural and emotional distractions, they cloud the process. All too often, neither side relents from fixed positions in an ill-advised attempt to demonstrate who is more powerful, steadfast and intimidating. All too often, no one gives in and, in the end, a meeting of the minds is ultimately elusive. Even when the adversary is "the market," many of those who are selling or buying real estate refuse to surrender. Who wants to be that 90-pound weakling on the beach? (The forgoing metaphor is intended to propel waves of nostalgia over the cranial crevices of folks old enough to remember Charles Atlas.) Such an attitude helps no one. Buyers are intent on mining the bottom of the market, while sellers are equally determined to get the biggest return on what they view as an investment. "Investment," not "home." Understandably, sellers seek to maximize their "profit." In doing so, of course, many have a way of turning a blind eye to the market's realities, a recurring theme here. They fail to appreciate that it's one thing to lose money, as in receiving less than they actually paid years ago, and another thing to capture less of a profit. With all that everyone is hearing and reading about the market, could there be some other explanation for what perhaps could be termed sellers' cognitive dissonance? (For the blissfully uninformed, that means believing one thing while knowing it's not true - for example, continuing to puff cigarettes while thinking they can escape.) Maybe so. Not only are most buyers and sellers mesmerized by their own machismo, as it were. But another explanation for sticky prices now seems apparent in the amount of improvements that the boom years enabled and the plethora of post-war developments that celebrate the gleaming and the glossy. The number of pre-war apartments with granite countertops, stainless-steel Sub-Zero refrigerators, new flooring, opened up kitchens, baths tiled with tumbled marble, new recessed lighting, Bosch washer/dryers and other upgrades is perhaps beyond counting. In other words, renovation has proved to be the enemy of resale. Sellers want more than a profit. They want to get back the money they sank into their dwellings. In fact, they want it back in spades. It ain't gonna happen, much to their distress, and many have yet to integrate the truth. Consider the following examples:
There are literally thousands of other examples in New York City alone. Although the Big Apple is hardly representative of the U.S. market - what city is? - take with a grain of salt the unscientifically accumulated results of the 2008 annual survey on remodeling conducted for Realtor magazine. For instance, a major midrange kitchen remodel returned an average 76 percent of project costs on resale, and a midrange bathroom remodel was estimated to return 74.4 percent. Few consumers could quote these statistics, but many know that renovations rarely return the money invested in them. They just don't believe it. Cognitive dissonance. Statistical analysis is absent for these speculations. Yet how could it be otherwise? Size comparisons are well known to interfere with flexible negotiations. They are a h-u-g-e contributor to obstinacy on both sides. Still, the cost of renovation is an unexplored phenomenon that certainly underlies sticky prices. It is the fuel that lately has combusted too many sales. Below some recently seen properties that have been listed by various brokers: West Side
East Side
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!
©
2008 Service You Can Trust |
||
quoted a number of real estate brokers. The steepest drop was in one-bedrooms, down 5.7 percent in buildings with doormen and 6.53 percent in buildings without. The only category that rose: rents for two-bedroom apartments in doorman buildings, up 0.61 percent. But these numbers, like most available data, represent asking rents rather than the final price. Anecdotal evidence suggests that some people are negotiating rents as much as 20 percent lower than the original prices asked by landlords. These figures also leave out incentives such as a month of free rent or a landlord's paying the broker fee. Not everyone believes it is yet a trend. Said economist Gregory J. Heym of Terra Holdings: "People assume when sale slows down, rental will pick up, but that depends on what the source of this is. When you're losing jobs, the rental market is also going to suffer."
Observed Paula Rubenstein, who has her own antiques shop in SoHo: "I think there's a general willingness to be more flexible, although it's hard to sell for less when you're selling fewer things." Sabrina Schilcher, the owner of Property, also in SoHo, has noticed "more people than ever" asking for discounts recently, even on sale merchandise. If the item is on sale," she added, "perhaps I will give another 5 percent, if they ask." The most successful hagglers are the educated ones, who have a sense of what things sell for, Rubenstein noted. "It's not a fire sale out there yet," she added, "but reasonable offers will usually be considered."
percent said they're holding out for lower mortgage rates, 41 percent said they weren't sure they could qualify for financing, and 38 percent said they expect to see lower house prices. Researchers asked participants what individual enticements would motivate them most to get past their worries and buy. The mortgage that consumers said would be most effective in convincing them to buy now: a 30-year loan with a fixed 3 percent interest rate. A guarantee by builders that loan applications will be accepted if buyers verify their income and have a "fair" credit score was rated six times more effective than standard application procedures in which applicants can be rejected at the underwriting, appraisal review or other stages. Price concessions also are compelling to would-be buyers. Most effective of all: a 10 percent discount below true market value. Among other findings was that builders' traditional approach of offering incentive packages of free upgrades and amenities might not be all that effective. In addition, new houses that come with a green certification but cost $2,000 more than a standard model don't motivate shoppers to buy, researchers found. 
