Items of Interest THE FED'S 'BEIGE BOOK' RECORDS WEAK MARKETS Residential real estate activity continued to weaken in nearly all districts, the Fed's document noted. The Boston, Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, Kansas City and Dallas Fed districts reported that home sales were weak or had declined. San Francisco reported that, despite some pickup in recent months, home sales continued to be quite slow in most parts of the district. The market for new homes continued to weaken in New Jersey, and the higher-priced housing markets nearest to New York City were characterized as especially weak. While the Minneapolis District reported that late December saw an uptick in residential sale activity in the Minneapolis-St. Paul area, it was reportedly driven by foreclosures and short sales. Increased home sale cancellations were common in a few districts. Contacts in the Dallas District reported that home sale cancellations remained prevalent, in some cases outpacing sales. Elevated cancellation rates and weak showroom traffic in the Chicago District led developers to remain cautious about expanding inventory levels, and some building contractors in the Cleveland District reported increased inventories because of take-backs from home sales that fell through. Boston, Philadelphia, Atlanta, Kansas City and San Francisco reported that home prices continued to soften or fall. Median selling prices declined in and around New York City and were reported to have edged down in the Dallas District. Richmond, however, reported that home prices remained steady. NOW IT'S A RENTER'S MARKET TOO As the housing downturn deepens, rental rates are falling in many major U.S. cities, including New York and Los Angeles, and tenants are finding they have greater leeway to renegotiate their leases, reports the Wall Street Journal. Now, with more newly constructed condos being converted into rental units, landlords are struggling to keep buildings occupied. Apartment rents nationwide fell 0.4 percent in the fourth quarter from the third quarter - the first drop since 2003, according to Reis Inc., a real-estate research company. Apartment vacancies rose to 6.6 percent in the quarter from 5.7 percent a year earlier. In Miami, 60 percent of rents decreased in the fourth quarter, and 45 percent of rents in Los Angeles declined. Rents did buck the trend in a few cities. Some landlords and property managers say they have never encountered so many tenants looking to bargain. Mitchell Rattner, president of Home Equity Savers in Riverwoods, Ill., owns 50 condo complexes and homes around Chicago with a partner and says that requests by tenants to negotiate were almost unheard of until fairly recently. In the past 10 months, he's discounted two of his tenants' rents midlease to keep them from moving out. "If they're good payers, we will give them a discount," he says. STRONGEST MARKETS ARE IN TEXAS AND NEW YORK, SAYS FORBES In the magazine's list of its 25 strongest housing markets, Texas dominates with cities such as McAllen, El Paso, Houston, Dallas, Fort Worth, Austin and San Antonio. New York comes in second with Syracuse, Buffalo, Rochester and Albany, notes the New York Daily News. NEW-HOME CONSTRUCTION REACHES RECORD LOW Production of new single-family homes and permit issuance declined by double digits in December, falling to their lowest levels on record for the month, according to the U.S. Commerce Department. In addition, total starts and single-family starts fell to record annual lows in 2008. Total housing starts posted a 15.5 percent decline in December. Meanwhile, starts of new single-family homes posted their eighth straight monthly decline, down 13.5 percent from the previous monthly low in November. Multifamily starts fell 20.4 percent in December. Overall permit issuance, which can be an indicator of future building activity, plunged 10.7 percent. Single-family permits dropped 12.3 percent, while multifamily permits were off 7.5 percent to 186,000 units. WASHINGTON, D.C. TOPS LIST FOR REAL ESTATE INVESTMENT The nation's capital leapfrogged London this year as the world's best city for real estate investment, according to Forbes in Realtor magazine. New York City was third, after London, said Forbes, which turned to the Association of Foreign Investors in Real Estate for the list of where its member investors are finding the best opportunities around the world. With the federal government on a path to grow bigger and increase spending, the new programs will need offices and its employees will need homes. "There used to be a rivalry between New York and London," says Kenneth Patton, divisional dean of the New York University Schack Institute of Real Estate. "The subject has shifted to the fact that we're both in the same lifeboat, and maybe it's leaking." PRICES SAG 1.8 PERCENT FROM OCTOBER TO NOVEMBER That decrease was more than the 1.1 percent recorded in the prior month, according to the Federal Housing Finance Agency’s (FHFA) monthly House Price Index. For the 12 months ending in November, U.S. prices fell 8.7 percent. The decline since the April 2007 peak was 10.5 percent. The index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. 'DETERIORATION' DOCUMENTED BY THE FEDERAL RESERVE New York State Realtors report that home sales continued to weaken in November, falling nearly 24 percent from a year earlier, according to the Fed's "Beige Book." It also found that median selling prices posted double-digit percentage declines in and around New York City but were mixed across upstate New York. There appears to have been "substantial deterioration" in Manhattan's housing market, based on reports from both a major appraisal firm and a large real estate brokerage, the book went on. Co-op and condo sales fell roughly 9 percent from a year earlier in the fourth quarter, led by a 25 percent drop in sales of existing apartments (re-sales). In contrast, closings of newly-constructed units surged 35 percent from a year earlier, but these largely comprised contracts negotiated in late 2007 and early 2008. Based on current contracts, overall apartment prices fell by 20 percent or more from the third to the fourth quarter and the number of transactions fell sharply. Manhattan's apartment rental market has also weakened substantially, with asking rents reported to be down across the board in November, and 2-6 percent lower than in June; moreover, an industry report maintains that the reported decline in asking rents likely understates the true weakness in the market, with a growing number of landlords offering concessions. The inventory of available rental units reportedly increased 17 percent between September and November, with a particularly large rise in the number of high-end listings. So quoth the U.S. central bank. THE CITY AIMS TO REHAB FORECLOSED HOMES New York City will spend $24 million in federal financing to rehabilitate and resell 115 foreclosed homes, one of the most aggressive steps in recent years that city officials have taken to prevent the vacant properties from becoming a blight on neighborhoods, Mayor Bloomberg announced, according the Real Deal monthly magazine. The city will use the money to take control of so-called real estate-owned homes, or foreclosed properties owned by banks that have failed to be sold at auction. The city has already bought the first four homes - two on Staten Island, one in the Bronx and one in Queens. While the numbers of foreclosures in New York City have been relatively low compared with other cities, several New York neighborhoods have seen a wave of foreclosures that have threatened to reshape them, particularly parts of Queens, the Bronx and Staten Island. In 2007, there were 15,000 foreclosure filings in the city, an increase from 7,000 in 2005, city officials said. This year, the number of foreclosure filings is expected to reach 20,000 by the end of the year. NEW MONTHLY REPORT CLAIMS REAL-TIME DATA The report by Core Group Marketing, which uses contract data to monitor Manhattan's residential housing market, showed apartment prices shrinking by 19 percent from initial listing to contract in the final quarter of 2008, says the Real Deal. But appraisal executive Jonathan Miller, who issues his own differently derived report, questions its accuracy. "In principle it is current, but in practice it is much more subject to skew than other data," he contends. Observing that his report tracks contracts info, CEO Shaun Osher, says, "That's what reflects the marketplace and where we are currently, not closed information, which is actually a look back in history." The Core data is basically culled from the company database and its January figures showed a total of 542 units going into contract at 14 percent below the asking price in October, November and December. The strongest part of the market was one-bedroom apartments, where 208 new contracts were signed at an average of 88 percent of the asking price. The weakest part of the market was the luxury sector, where 10 apartments with five bedrooms or more saw signed contracts at 79 percent of the asking price. IF THE TIMES SAYS SO, MAYBE IT'S ACTUALLY TRUE MORE EVIDENCE THAT RENTS SEEM TO BE DROPPING In line with seasonal trends, the latest monthly report from the Real Estate Group records declines in asking rents and increases in vacancies during December. But year-over-year comparisons illustrate that that this downward pressure reflects more than simply a sluggish fourth quarter, according to the company, which opines that the market has turned in favor of the consumer. Still, concessions have helped to fill some of the vacancies in the market as consumers use these incentives to upgrade, downgrade or generally use them to their advantage. December marks the third straight month of increase in vacancies. Non-doorman and doorman combined vacancies were up 5 percent for the month and 20 percent for the quarter. For extensive detail, click here. REBNY DOCUMENTS 10 PERCENT SLIDE IN PRICES Average sales prices for New York City residences declined 10 percent in the fourth quarter of 2008 to $669,000 from the same period in 2007, according to the Real Estate Board of New York (REBNY). The organization's new report, compiled with a database that does not include some of the biggest brokerages, found that apartment prices alone declined 4 percent compared with $796,000. Manhattan was the only borough in which average home prices increased, but sales slumped 35 percent in the fourth quarter, largely the result of the decline in condominium unit sales. The average price of all Manhattan homes went up 5 percent, to $1,417,000. The sales price for Manhattan apartments was 6 percent higher in the fourth quarter, reaching $1,372,000. To see the entire PDF report, please click here. THE COST OF LAND PLUMMETS IN NORTHERN MANHATTAN Prices for development properties in the northern part of Manhattan may have fallen by about 50 percent as demand dries up because of the tight credit market and the loss of state tax incentives, some brokers say, according to the Real Deal. New condominium and market-rate rental construction has nearly halted, and the limited land sales that are occurring are mostly for affordable rental projects, said Shimon Shkury, a partner at Massey Knakal Realty Services. "There is really no construction financing. There is very little available for residential or anything, and then the 421-a tax abatement was taken away. Those two really affected the market," he observed. He added that the decline in land values is "about 50 percent, easy," but since so little has traded it is hard to get an accurate sense of pricing. ON LONG ISLAND, LISTINGS AND SALES ARE OFF For the second consecutive quarter, listing inventory has declined in addition to the contraction in the number of sales over the same period and the prior year quarter, according to a new report by the Miller Samuel appraisal firm. There were 20,730 properties listed for sale at the end of the current quarter, down 0.3 percent from the same period last year with 20,801 properties listed at that time. The number of sales slipped 3.4 percent over the same period to 4,427 sales, from 4,584 sales. The stabilization of inventory combined with the decline in number of sales suggests that there are fewer "casual sellers" with many opting to wait until housing market conditions improve before listing a property. "The contraction of credit and the current recession continue to limit the number of sales, placing downward pressure on price trends," the report said. Yet two homes in the Hamptons have sold for more than $25 million each recently, says the Wall Street Journal. In East Hampton, investment banker A. Robert Towbin and his wife Irene sold an oceanfront 2.5-acre property on West End Road for $26.5 million in November. And in Southampton, an oceanfront home on Meadow Lane has sold for $27 million. John J. Veronis, chairman and co-CEO of Veronis Suhler Stevenson, a private equity firm specializing in media, originally listed the 1.95-acre property more than a year ago for $45 million. MINI BOOMS ARE STRIKING SOME CITIES So says Forbes magazine, which notes that home sale prices from last year are down 28 percent in one of those cities, Las Vegas, where home sales are up 15 percent. Motivated buyers accounted for 64 percent of Las Vegas sales in October, the highest rate in the country. Phoenix and San Diego are reporting similar experiences. "We're clearing out the bad news," says Kiva Patten, a director at Merrill Lynch specializing in housing derivatives. Here are the cities where experts say it makes the most sense to buy now: Las Vegas, Sacramento, San Diego, Los Angeles, Detroit, Phoenix, San Francisco, Washington, D.C., San Jose and Atlanta. The question is whether these are the same experts who said two years ago that the market had nowhere to go but up. THIS TERRACE COMES WITH A ONE-BEDROOM APARTMENT On top of a prewar building on E. 72nd St. off Madison Ave. sits a one-bedroom penthouse that's on the market for $4.5 million, exclaims the New York Daily News. With 1,100 square feet of indoor space and 1,400 square feet of terrace overlooking Fifth Avenue and Central Park, the outdoor area seems to swallow the interior layout. The apartment has been occupied for the last 40 some years by a successful attorney who has always kept her name out of the press. She and her sky cottage apartment frequently played host to garden cocktail hours and dinner parties. "We would start with drinks on the side of the terrace by the living room and walk over to the side of the terrace outside the dining room for supper," says the still shy lawyer, a native of the South who came to New York to practice in the late 1960s. "I'd have two tables set up outside with candles and both sets of French doors open. They were just little gatherings for friends and colleagues. But they were often. How could I not take advantage of the outdoor space?" Indeed. RECALL THAT JOBS AND HOME PRICES ARE ALWAYS LINKED The city lost 49,100 jobs in 2008, as the deepening recession sparked the sharpest one-year employment downturn since 2003, the New York State Department of Labor said Thursday in a report cited by Crain's. The city's December unemployment rate shot up to 7.4 percent from 6.3 percent in November, hitting the highest level in nearly five years and climbing above the national rate of 7.2 percent. Statewide, the unemployment rate jumped to 7 percent, from 6 percent, the steepest one-month climb on record. The severe deterioration in the job market left private sector employment in the city 1.5 percent below 2007 levels. Weakness spread across just about every industry, with Wall Street, not surprisingly, leading the way. The city shed 17,500 securities jobs last year, or more than 9 percent of its December 2007 total. Professional and business services lost 8,900 positions. Construction was also a big loser, with 7,000 jobs disappearing. THE NAR'S ONETIME 'BAGHDAD DAVE' EXPRESSES REGRET David Lereah, former chief economist of the National Association, continued to make rosy statements amid growing signs of a housing downturn such as "it appears we have established a bottom" in January 2007, notes the Wall Street Journal. A few months later, NAR announced that existing-home sales fell 2.6 percent in April from a month earlier and 10.7 percent from a year earlier. Some critics pummeled Lereah for his optimism. Bloggers nicknamed him "Baghdad Dave," after the Iraqi information minister Mohammed al-Sahaf, called "Baghdad Bob," known for his pro-Iraq press briefings at the time of the U.S. invasion. Lereah, who says he left NAR voluntarily, maintains that he was pressured by executives to issue optimistic forecasts - then was left to shoulder the blame when things went sour. "I was there for seven years doing everything they wanted me to," he related. In late 2005, the market began to fall, and in the third quarter of 2006 existing-home sales sank 12.7 percent from a year earlier. Lereah remained publicly upbeat, saying the market is "likely to pick up a bit" and arguing it was experiencing a "soft landing." Soon, mainstream economists and the press were calling him out. "I thought it was criminal that he kept saying we'd reached bottom," says Ivy Zelman, former housing-market analyst at Credit Suisse and now head of her own housing-sector research firm. She says she dubbed Lereah "Mr. Liar-eah." Lereah admits to one mistake: believing there would be no national housing crash. "I have to take the blame for that," he says. "I never thought it would be as bad as this." Unsurprisingly, his successor at NAR, Lawrence Yun, says things might be looking up. With a "proper real-estate focused stimulus measure," he writes that home sales could rise more than expected, by more than 10 percent, to 5.5 million, in 2009. Yup. REIT RETURNS FELL 37.3 PERCENT LAST YEAR According to a report by the National Association of Real Estate Investment Trusts, the performance was in line with the broader indexes. Quoted in Realtor magazine, Investment News recalled that equity REITs had been on a tear for much of 2008, outperforming the broader market through September. But concerns about falling property values, rising unemployment and challenges facing REITs in refinancing debt in the seized-up credit markets caused a sell-off in October and November. New data from Deutsche Bank show that delinquencies on commercial mortgages packaged and sold as bonds, which represent nearly a third of the commercial real-estate debt market, nearly doubled during the past three months, to about 1.2 percent. IN THE FOURTH QUARTER ALONE, REITS LOST A BUNDLE Real-estate investments by pension funds and other big investors lost a record 11 percent of their value in the fourth quarter of 2008, preliminary data for a closely watched index show, says the Wall Street Journal. Market participants said that values are almost certain to fall further, highlighting a debate over how property investments should be appraised and how appraisal techniques affect the real-estate market. DUBAI TOWER HAS A SETBACK (IT ISN'T ARCHITECTURAL) Construction of a one-kilometer-tall tower slated to be the world's tallest has been delayed by its government-owned developer, says the Wall Street Journal. The developer, Nakheel, said it has postponed construction on the tower as the company readjusts its plans "to better reflect the current market trends and match supply with demand." In other words, it's running out of money. The Nakheel Tower is the centerpiece of what the company just three months ago billed as a $38 billion commercial and residential project. MANY SMALL BUILDERS ARE FACING INSOLVENCY After riding high on one of the greatest housing booms in American history, the nation's home builders today face a devastating reversal of fortune, says the New York Times. Although many banks had refrained from cracking down on small home builders, they are starting to do so; a wide swath of the industry could be forced out of business in the next few years. The trouble is concentrated especially in the Sun Belt, the scene of so much overbuilding. Not only have new-home sales stagnated, but builders confront a rising wave of foreclosed properties coming to market at prices below the cost of building a new home. To move houses, they have to mark them down to less than the cost of construction. The convergence of these problems is bringing many small and medium-size builders - who account for about 70 percent of new-home construction in the United States - to their knees. According to an estimate by the National Association of Home Builders, at least 20,000 builders - about a fifth of the total nationwide - have closed up shop in the last two years. With the industry still owing hundreds of billions of dollars in loans made at the market peak, many more face insolvency in the coming months and years. "Probably north of 50 percent will fail," predicts housing analyst Ivy Zelman. EXPERT LOOKS AT PROS/CONS OF VARIOUS LOANS Inman News columnist Jack Guttentag writes in the Washington Post about his comparisons for conforming loans of $400,000 and $800,000 (jumbo) loans. What he concludes is that: Borrowers can save a ton of money by shopping around among loan providers; there is no reason for a borrower to select a conforming ARM versus a 30-year, fixed-rate loan; on jumbos, ARMs continue to enjoy a significant rate advantage; there's no reason to avoid 15-year, fixed-rate loans, but on conforming loans the advantage is not what it was; borrowers should avoid the interest-only option on the 30-year, fixed-rate mortgage; on ARMs, however, the rate premium to get an interest-only option is still reasonable; and buying down the interest rate is a very good investment. Guttentag is professor of finance emeritus at Wharton. ONLY REFINANCE IF YOUR PAYBACK TIME IS RELATIVELY SHORT JPMORGAN CHASE CUTS OFF MORTGAGE BROKERS The lender said it will stop underwriting prime mortgages that are originated through third-party brokers, relying instead on its branch network to make home loans to creditworthy customers, says the Wall Street Journal. The move reflects a retreat by financial institutions that once leaned heavily on brokers to help fuel the mortgage business. FORECLOSURES HAVE RISEN 81 PERCENT SINCE 2007 A total of 3,157,806 foreclosure filings - default notices, auction sale notices and bank repossessions - were reported on 2,330,483 U.S. properties during the year, an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006. In a report by RealtyTrac.com, 1.84 percent of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03 percent in 2007. Foreclosure filings were reported on 303,410 U.S. properties in December, up 17 percent from the previous month and up nearly 41 percent from December 2007. Despite the spike in December, foreclosure activity for the fourth quarter was down nearly 4 percent from the previous quarter but still up nearly 40 percent from the fourth quarter of 2007. EVEN THE WELL-TO-DO FACE FORECLOSURES Many borrowers ensnared in the evolving mortgage mess do not fit neatly into the stereotypes that APPLICATION ACTIVITY SLOWS DOWN Loan application volume slipped by 9.8 percent on a seasonally adjusted basis for the week ending Jan. 16 from one week earlier, reports the Mortgage Bankers Association. Unadjusted, the decrease was 10.3 percent, but it was up 23.1 percent compared with the same week one year earlier. Refinancing went down 12.4 percent versus the previous week, purchase mortgage applications went up 2.5 percent. The refinance share of mortgage activity dipped to 83.3 percent of total applications from 85.3 percent the previous week, and the adjustable-rate mortgage (ARM) share rose to1.5 percent from 1.1 percent. IF ONLY THIS ONE BREED BECAME EXTINCT As home values across the country continue to plummet, the New York Times reports that the authorities say a new breed of swindler is preying on the tens of thousands of homeowners desperate to avoid foreclosure. Until recently, defrauders tried to bilk homeowners out of the equity in their homes. Now, with that equity often dried up, they are presenting themselves as "foreclosure rescue companies" that charge upfront fees to modify loans but often do nothing to stave off foreclosure. The Federal Trade Commission brought lawsuits last year against five companies representing 20,000 customers, and state and local prosecutors have brought dozens more. In Florida, Atty. Gen. Bill McCollum recently sued a company that he said had more than 600 victims. "There's no way for the consumer to sort out the legitimate companies," said McCollum. The companies under suspicion typically charge an upfront fee of up to $3,000 to help borrowers on the claim of getting lower rates on their mortgages from their lenders. RATES TICK UP, BUT SOME ARMS DIP TO 40-MONTH LOW The 30-year fixed-rate mortgage (FRM) averaged 5.12 percent for the week, up from last week’s 4.96 percent but lower than 5.48 percent last year at this time. The 15-year FRM this week was 4.80 percent versus 4.65 percent the previous week and 4.95 percent a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.24 percent this week, down from last week’s 5.25 percent and up from last year’s 5.13 percent. The five-year ARM has not been so low since the week ending Sept. 8, 2005, when it also averaged 5.24 percent. One-year Treasury-indexed ARMs were at 4.92 percent in comparison with 4.89 percent last week and 4.99 percent a year earlier. "Fixed-rate mortgages followed bond yields and edged up this holiday week," said Frank Nothaft, Freddie Mac vice president and chief economist. "However, over the first three weeks of 2009, 30-year fixed-rate mortgages averaged 0.25 percentage points below the monthly average for December 2008." MORTGAGE INSURER'S RISK INDEX SHOWS BIG RISE PMI's Risk Index increased substantially in the third quarter. Partially offsetting the recession, higher unemployment and rising foreclosure rates will be further growth in affordability, PMI said. Metropolitan Statistical Areas (MSAs) in Florida, California, Arizona and Nevada continue to lead the nation in risk, with a growing number of MSAs in the industrial Midwest and along the East Coast seeing marked increases in their probabilities of lower house prices in two years. During the third quarter of 2008, risk increased in all of the nation's 50 largest MSAs. Looking at all of the 381 MSAs, 369 (97 percent) of them saw an increase in risk. Across all 381 MSAs, 67 percent had negative rates of house price appreciation over the past twelve months - almost twice as high as the same quarter in 2008. A FASHION DESIGNER MOVES ELSEWHERE IN THE MARAIS Christian Lacroix is selling his Paris apartment for €2 million, or about $2.6 million. The roughly 2,150-sf apartment is in the chic Marais district, according to the Wall Street Journal. The house, in a late-17th-century building near the historic Place des Vosges and the Picasso Museum, has an upper floor with public rooms designed around an interior patio of roughly 200 square feet and a lower floor with four bedrooms. There's also a mezzanine library. The ceilings are 13 feet high and the apartment has many classic original details, including gilded moldings in the master bedrooms and French doors. The bathrooms and kitchen have been renovated. Lacroix has already purchased and moved to another apartment in the same neighborhood. AN ACTOR FINDS LOVE IN THE TIME OF RECESSION John Leguizamo and his wife Justine have finally unloaded their four-bedroom apartment at 45 Gramercy Park North, according to the Real Deal. The 11th-floor spread, which the couple purchased in 2004 and first listed last January for $5.85 million, was sold for $3.65 million. IT'S A DARK NIGHT IN THIS LATE ACTOR'S APARTMENT The SoHo apartment where Heath Ledger took his last breath is sealed like a virtual mausoleum by a building owner who, even a year after "The Dark Knight" actor's untimely death, can't bring himself to rent it to another person, reports the New York Post. "It's completely empty. Everything's been taken out," said a source familiar with the apartment at 421 Broome St. "Nobody is allowed up there." All the furniture is gone, the source said, including the bed where the handsome, 28-year-old star was found dead exactly a year ago. The three-bedroom loft had been on the market for a movie-star-sized rent of $26,000 per month before it was abruptly taken off early last month by the owner, millionaire philanthropist Donald Burns. DESIGNER TO THE STARS CATCHES THE OBAMAS' EYE Style watchers are buzzing about Michael Smith, the L.A. decorator to stars, models and fund managers, who is joining the Obamas in Washington to design the family quarters, reports the Wall Street Journal. He's a surprising pick, if only because he is associated with clients such as Cindy Crawford and Steven Spielberg, for whom the concept of a budget is impressionistic at best. The White House limit is $100,000 limit, though private donations will subsidize this project. The connection to Smith was made through incoming White House social secretary Desiree Rogers, a friend of one of the designer's important Chicago clients, realtor Katherine Chez and her companion Judd Malkin, a Democratic Party donor. Smith makes classic rooms that look as though their owners have inherited money and furnishings, and he mixes things up with tastefully hip pieces. BUT, ALAS, HE'S NOT SELLING THE FURNITURE TOO Vladimir Kagan - the czar of 20th century modern-furniture design - has put his 4,000-sf Park Avenue palace on the market for $8.75 million, the New York Post reports. The pre-war Carnegie Hill co-op - with three master suites, a library and four primary bathrooms, along with three staff rooms and a staff bath - has been home to Kagan, 81, and his wife, needlepoint expert Erica Wilson, for 40 years. But they now spend most of their time at homes in Nantucket and Palm Beach, when Kagan's not visiting clients such as Angelina Jolie and Brad Pitt. STILL MORE PROOF THAT FASHION PAYS OFF Marc Jacobs has a new place to crash when he jets in from Paris, says the New York Post. Inside the glitzy Andre Balazs-developed condo building at 40 Mercer St., the $30,000-a-month, 2,500-sf SoHo apartment provides three bedrooms and three and a half baths. The place is just down the street from the Marc Jacobs store at 163 Mercer St. and near his corporate office on Spring Street. The building, designed by starchitect Jean Nouvel, is also the Manhattan residence of Daniel Radcliffe, who presumably enjoys pottering around the neighborhood. HOW MUCH INTEREST CAN YOU DEDUCT First, you can deduct the interest only on the first $1 million in mortgage loans on your first and second homes combined. Also, if you have refinanced and obtained a larger loan than the original one, you can deduct only the interest you pay on the amount of the original loan. But you can add any of the money from refinancing used to make a substantial capital improvement. The third limitation involves home-equity loans. You can deduct interest on up to $100,000 of home equity mortgage indebtedness on top of your acquisition debt. For more details, check IRS Publication 936, "Home Mortgage Interest Deduction" at irs.gov. THE CAPITAL GAINS TAX EXCLUSION CAN BE EASY TO GET As long as either spouse meets the ownership test and both meet the use test, they are allowed to claim the full $500,000 exclusion even if only one name is on the title. However, says Benny L. Kass in the Washington Post, if one spouse has already claimed the benefit on another property within the past two years, the exclusion is limited to $250,000. This situation is common when people marry and then want to sell their respective houses and buy one together. If you are divorced when the house is sold, as long as both parties meet the use and occupancy tests, each has the right to claim their own up-to-$250,000 exclusion of gain. If one spouse moves out of the house pursuant to a divorce or separation agreement and the house is sold several years later, here's what the IRS states: "If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it." Got that? YOU CAN CHOOSE A GREENER MOVE Those reusable plastic crates that companies have long used for their relocation and in which pharmacies and supermarkets regularly ship merchandise are coming to the residential moving market, notes the Wall Street Journal. Coincidentally, the cost of cardboard boxes has remained high in many areas in spite of a recent collapse in the cost of the recycled cardboard from which most are partly made. Among the few companies engaged in renting and moving the crates is a seven-year-old outfit called Movers Not Shakers in Brooklyn. Prices for short-term bin rental are comparable to purchase prices for cardboard boxes: A large bin of about 4 cubic feet rents for $3 a week from Movers Not Shakers; U-Haul charges $3 for a 4.5-cubic-foot box. The reusable bins are less practical for interstate moves or moves to storage because of turnaround time. THE DOMINOS ARE FALLING The first one to go was House & Garden, observes the Washington Post. In November 2007, the 106-year-old magazine unexpectedly ceased publication. Soon after, Time Inc.'s In Style Home and Martha Stewart's Blueprint folded; late last summer, Hachette Filipacchi Media's Home shuttered. Since November, three more home design magazines announced their demise: Time Inc.'s Cottage Living, Hearst Magazines' O at Home and Meredith Corp.'s Country Living. Recently, media reports have said that Condé Nast's Domino is in trouble, too. Those looking to point a finger for the end of their favorite home design magazines can blame the over-saturation of them in the market and the 24-hour availability of design information on TV, radio and the Internet. Of course, the biggest contributor, experts say, is the economic downturn. WHAT'S THE LATEST IN TECHNOLOGY AT HOME At the International Builders Show in Las Vegas this week, alongside soy-based insulation, lithium-ion battery drills and mold-resistant sheetrock, manufacturers and speakers touted integrated lighting, security, media and HVAC systems that in the not-distant-future (and in some cases now) can be controlled from your iPhone or while you're on a plane. A Wall Street Journal blog quotes Utz Baldwin from the Custom Electronic Design & Installation Association as warning that builders and homeowners need to think well beyond insulation before the finished walls go up. For Baldwin's top 10 tech trends, click here. BUILDERS ARE MORE PESSIMISTIC THAN EVER Concerns about the faltering economy and reluctant home buyers pushed builder confidence in the market for newly built single-family homes down farther in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI edged down a single point to a new record low of 8 in January. "Builder views continue to track with historically low consumer confidence measures," commented NAHB Chief Economist David Crowe. The Far Side One of Manhattan's shorter avenues, East End Avenue is similar to Sutton Place, about a mile to the south, in that it boasts a block of nice townhouses, many spectacular river views and a mix of apartment buildings, some of which are among the best in the city. Situated along the East River between 79th and 90th streets, East End Avenue is surrounded on three sides by parks - John Jay Park to the south, Asphalt Green to the north and the centerpiece, Carl Schurz Park. Although there is bus service on 79th and 86th streets, as well as on York Avenue one block west, plus express bus service to Wall Street at 79th street, the closest subway line is five blocks to the west on Lexington Avenue. It is a long, long walk, seemingly more at the height of the summer and during most of the winter. "To some, East End Avenue may seem like the end of the world, one Matthew Warren has written, "but to its residents East End is a haven for quiet city living." As Patricia Peressutti, told him, "When you are home you almost feel like you're not in Manhattan." In a New York Times article that is heavily excerpted in this screed, resident Debra Little observed, ''It's like a suburb. The people are friendlier. Everything is more family-oriented.'' Little's dog frolics in Carl Schurz Park, which is named after the politician and newspaper editor and a quiet, woodsy enclave along the East River where people sit on benches and watch the boats go by. Its concrete promenade paralleling the river also is a favorite with joggers, sunbathers and moonlight strollers. There are playgrounds and fountains for children, a paved athletic area and chess tables. Gracie Mansion, built in 1799 and the official residence of New York's mayors, is at the park's northern end. It offers neighbors the entertainment of mayor watching (though not usually Mayor Bloomberg, who prefers his own residence on 79th Street), and the police stationed there provide an added measure of security. East End Avenue is part of Yorkville, a community settled in the late 18th century by German immigrants whose descendants gave the community its character well into the 20th century. The Gracie estate, built in 1799, was one of many belonging to some of New York's most prominent families - the Astors, Rhinelanders, Livingstons and Schermerhorns - that were divided in the mid-19th century to make way for the parks, town houses and eventually the grand apartment buildings such as 1 East Avenue, 120 East End Avenue and 10 Gracie Square, which were constructed around 1930. Henderson Place, a mid-block cul-de-sac with a group of Queen Anne-style town houses on the blockfront from 86th to 87th streets, was built in 1882. Now constituting the Henderson Place Historic District, 24 townhouses remain out of the original 32 that were designed by Lamb & Rich. Besides those and a few other buildings, the area remained largely undeveloped until the 1920's, when apartment houses appeared. Elisabeth Pell, who lived on 86th Street off East End in the 1920s, told the Times in 1980, "We would just sniff along - coffee, sugar, something that smelled like popcorn, all depending on the wind." Toward the end of 1920s, two private schools for girls opened on East End Avenue. Each is still there: Brearley at 83d Street and Chapin at 84th. Development, stalled in the Depression, resumed after World War II. The face of the whole Upper East Side was altered with the removal of the Third Avenue El in 1954. Construction has continued steadily since then, and East End Avenue has seen the tenements, which dominated the neighborhood for the first half of the century, replaced by tall apartment houses. The area's most intense effort to resist development involves the City and Suburban complex, a block of 14 tenements between 78th and 79th streets from York Avenue to the FDR Drive. Built as workers' housing between 1901 and 1913, the six-story tenements were bought in 1985 by Peter Kalikow, who intended to raze them and put up four luxury towers, setting off fierce community resistance that ultimately proved successful. Asphalt Green, a 4.5-acre park and community center at 90th Street and York Avenue, occupies the site of the old Municipal Asphalt Plant, which was abandoned in 1968 and marked for destruction. Residents, led by the late Dr. George E. Murphy, formed the Neighborhood Committee on the Asphalt Project to save it. After nine years of haggling with City Hall, the committee got permission to create a community center at the plant, and Asphalt Green was opened in 1984. Its features include an AstroTurf playing field, tennis courts, a playground and environmental study centers on Mill Rock Island and at a moored fireboat. Declared a landmark in 1976, the old asphalt factory contains a theater, photography studio, gymnasium and the city's only indoor Olympic-size swimming pool. Karen Goodell, her husband Tim and their three daughters embrace the calm of a neighborhood many people consider too isolated and too far east to be convenient. "It is the most noncrazy part of the city," Ms. Goodell, who has lived in the area for some 20 years told the Times. "Part of it is the water and the view and the peace of it all, but it's also about being able to push a stroller down the street and not worry about getting hit by a car every two minutes." The fact that people don't move away means they all sort of know one another and treat one another like good friends, if not family. Phil Philips, who lives in the same apartment he grew up in on the north side of East 86th Street ("the new-money side," he says), was so eager to give a party at his father's former coffee shop, the Mansion, on York Avenue, when he took back the lease in December, that he invited everyone for an enormous black-tie New Year's Eve bash. The champagne, cheeseburgers and cold salmon from Russ & Daughters were on him. "Is this a neighborhood, or what?" asked Gigi Zimmer, a retired pharmaceuticals sales representative and a 15-year resident of East End Avenue who was at the party. A neighborhood it is, indeed, if on the far side of the East Side. Below a sampling of some properties listed by various brokers and viewed over the last several weeks: East End Avenue
Upper West Side
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!
©
2008 Service You Can Trust |
||
An emerging group of buyers is brave enough to look the Cyclops of uncertainty in the eye, begin shopping and even sign purchase contracts. And now, brokers say, these mostly first-time homeowners are taking advantage of reduced apartment prices and interest rates that have fallen to the lowest levels in a generation. They're making deals - sometimes far below asking price - on apartments marketed for under $1 million, and especially under $500,000. But after months of uncertainty, when showrooms were all but empty and open houses largely ignored, would-be buyers have begun to emerge in the last few weeks, brokers said. Consumers are looking from East Harlem to downtown Brooklyn for what may turn out to be bargain-priced apartments. Some buyers are driven to buy in the current market because they feel rents have not fallen as fast as sale prices. Still, a great uncertainty for buyers in the current market is whether prices will fall further.
If you are planning to move or even pay off your loan within the next few years, the Wall Street Journal observes that refinancing probably makes little sense because you won't be paying monthly bills long enough for the savings to cover the costs. But, if you plan to stay in your home for years and you are currently in an adjustable-rate mortgage, you should strongly consider a refi. Refinancing also usually makes sense if you are currently paying a much higher rate, though few homeowners are any more. As a rule of thumb, Greg McBride, economist at Bankrate.com, looks for a payback period of a couple of years. "Generally, if you can earn the costs back within two to three years, and it's a home you're prepared to stay in for much longer than that, it's usually a good thing," he says. But if the savings are more marginal, you need to do the math.
surfaced by early 2007 when delinquency rates shot up, a lengthy Washington Post analysis concludes. They don't have subprime loans, of which delinquencies appear to have crested. But in October, for the first time, the number of prime mortgages in delinquency exceeded the subprime loans in danger of default, according to the Post's analysis. This trend shows up most acutely in California and other high-growth regions such as Arizona, Nevada, Florida and pockets of the Washington region, most notably in Prince William and Prince George's counties. The foreclosure crisis hasn't played itself out. The next wave looms in the form of a new batch of adjustable-rate mortgages scheduled to reset over the next two years. Unless the market comes back with a roar, which is unlikely, more borrowers will struggle to hang on to their homes. 
