Out and About - If it looks too good to be true . . .

Now here's a deal: In a new conversion a few blocks from the Convention Center and just off Massachusetts Avenue, a spic-and-span one-bedroom apartment with stainless appliances, under-mounted sinks, hardwood floors, granite countertops, recessed lighting and in-unit washer/dryer. The price with seller and lender inducements is a mere $301,500. If that's not a bargain, even in today's new market environment, what is?

Look again, starting with the kitchen. The new maple cabinetry is not only an outmoded design, but its quality is at best second rate. Those stainless appliances? They're an inferior brand. As for the drawers, they don't exist at all, not one of them. The dishwasher is not full size, and the refrigerator is small capacity. The electric cooktop has the appearance of four inexpensive hotplates grouped together. And don't even try to open the refrigerator and oven doors at the same time.

With regard to the rest of the apartment, the most glaring omission is closet space. There is but one place to hang clothes, and it's no bigger than an ordinary hall closet. Beyond that defect are the views: They are all but nonexistent, hemmed in by surrounding high-rise structures as this building is. As you might imagine, although the baths are tiled in marble and the tubs are extra deep, they fall far short of glamorous. And the washer/dryer is a combination unit by an unfamiliar manufacturer; it could not possibly handle a reasonable load of sheets and towels together.

Virtually all of the other one-bedroom units – 10 out of 84 of them sold after less than a month on the market - suffer from the developer having minimized everything in sight while undoubtedly hoping that prospective buyers will fail to notice the many cut corners. An inescapable problem with one unit, however, is the location of its bedroom, which is basically carved out of an end of the living room, separated only by a set of French doors.

Okay, so these condos are not even close to high end. Yet, no one would say they are outrageously priced. Their prices range from a low of $255,000 to no more than $465,000 (on the top floor). For renters with an informed eye seeking to enter the market, perhaps the tradeoffs in size and quality are reasonable for the opportunity to own at last. But the lesson is to look hard before leaping. To paraphrase what consumers hear over and again, if it looks to good to be true, look again. . . and again.

Some of the other properties listed by other agents and seen in the past week:

• In the gated Burleith of community Hillandale, a handsome 1981 four-level brick townhouse with elevator from the garage to the top floor, central vacuum system and extra parking. With views of a pretty manmade pond, cathedral ceiling in the living room and a table-space kitchen that could use modernizing, this home is dated but eminently livable. The master bedroom is on the second floor with an undistinguished bath and, overlooking the living room, a pleasant sitting area. Upstairs, two bedrooms share the single bath. The lower level also has a full bath plus a room that can be used flexibly; it opens to the patio. Given the location, space and community amenities such as swimming pool and tennis courts, the price of $1.25 million is not entirely unreasonable with a $370 monthly fee that includes painting of the trim every three years.
  
• A Dupont Circle two-bedroom condo with a sunny alcove, open modern kitchen, maple flooring, full-size washer/dryer and good closet space. In a pet friendly building converted in 2003, the apartment is listed too high based on a recent sale. In this market, the asking price of $575,000 with a $361 monthly fee that does not cover heating or cooling will not be easily met.
  
• In Shaw, a two-unit, 1880 brick home that has been sadly neglected for years inside and out. There is nothing this corner house doesn't need, starting with the shaky handrail up the carpeted stairs to the two bedrooms and hall bath on the second floor. The floors are seriously in need of refinishing, the kitchen is a travesty, and who knows what in the infrastructure requires attention. Because the bones are worthy, in no small part thanks to the double bay windows and the sunlight they admit, the nearly detached house has plenty of potential. But the $200,000-300,000 necessary to realize that potential makes the asking price of $700,000 far too high.
  
• A co-op in Cleveland Park with lots of character, two bedrooms, one and a half baths, a small formal dining room, a solarium and nine-and-a-half-foot ceilings. What this apartment doesn't have is central air conditioning and a washer/dryer in the unit. But the nicely improved kitchen is unusually spacious for this complex, there are 17 windows with views of tranquil parkland and gardens, and the charm of the unit is undeniable. At $615,000, with an $832 monthly fee that includes property taxes and heat, the co-op is priced according to recent sales in the complex.
  
• In SoFlo, just north of K Street, a totally renovated 3,500-SF home with three bedrooms and two baths upstairs and one of each in the lower level, which has the potential of becoming a rental unit. The work is not of the highest quality – if it were, the house would too easily outdistance the others on the block – but the renovation is quite decent. Some folks might object to the pistachio- and lemon-colored walls, which clash with the remaining original features such as the pocket doors and mantle, but the price reduced from $599,000 to $579,000 after a few weeks is appropriate. With landscaping, the owner could expect more.
  
• A tastefully renovated semi-detached rowhouse with many thoughtful details on a charming Dupont Circle block. With a total of four bedrooms and three and a half baths, this classic Victorian has a three-level owner's apartment and a legal rental unit that has been well improved, even with granite countertops in the small kitchen. The unit brings in $1,595 monthly. As for the rest of the house, the home has many assets, including an excellent kitchen, beautiful baths and high ceilings. Unfortunately, it has no parking or yard. The price of $1.075 million is lower than available comparables, but it may prove to be too high.
  
• In the U Street corridor north Logan Circle, a two-story bayfront Victorian with three bedrooms sharing one bath upstairs, plus one and a half more baths including the lower level. The newly remodeled kitchen with slate floor and room for a table opens to a new deck and garden, but no parking, though the garden could be sacrificed for that function. Among the features in this attached home are exposed brick walls, skylights, a fireplace in the living room and a basement that has been finished to include an odd open bath with a door where most needed. There is no central air conditioning. The price has been reduced from $799,000 to $759,000, which is getting there.
  
• A conventional American University Park colonial, all of which is (disconcertingly) being used for office space. Two blocks from the Metro on a triangular corner lot, this 1954 property with four bedrooms, two and a half baths and central air conditioning has little to commend it but its location. The price of $899,000 is surprisingly out of line because its condition is questionable and it shows so poorly.
  
• In Kalorama, a two-bedroom, two-bath first-floor apartment in a distinguished building. With a parking space, greenery noticeable from the living room, a poor kitchen that has had only its cabinets replaced, and the opportunity to be transformed into a dramatic space, this condo has an arresting set of heavily ornamented support columns throughout and gorgeous crown molding. The $739 monthly fee includes extra storage space, roof deck, heat, air conditioning and cable TV. Pets are allowed. But the place needs a lot – a lot – of work, and that makes the offering price of $769,000 seem excessive.
  
• An Eckington condo on a block of North Capitol that is beginning to shrug off its urban grittiness. In a newly renovated building, the 1,950-SF apartment features big, airy rooms, modern kitchen with the usual look, three bedrooms, a master bath with large whirlpool and Euro-style shower, one and a half additional baths, a den and, sorry to report, hollow-core doors. But other pluses are the high ceilings, maple hardwood floors, 42-inch plasma TV, crown molding and contemporary styling. The price: $585,000.
  
• In Logan Circle, an exceptionally renovated 1880s semi-detached rowhouse with 3,336 square feet, two rental efficiencies, a drop-dead open kitchen with stainless counters, a living room with slate flooring and a fireplace, second and third floors with white oak flooring, fireplace in the family room, three bedrooms and three deluxe baths. Listed at $1.495 last fall with the improvement incomplete, this home is a bargain at $1.395 million today.
  
• A lovely, well-located Georgetown rowhouse with original pine floors, period paint colors that are, therefore, noticeably unpopular today, first-rate kitchen, three bedrooms and two lovely baths on the second floor and a guest suite in the lower level. There is no parking, so the price of $1.479 million for this 1900 home seems somewhat excessive.
  
• In Dupont Circle, four remaining apartments in a new conversion just off 17th Street. Although prices were recently reduced slightly, they are not justified by the room sizes, the high ceilings, hardwood floors and so-called designer kitchens and baths. The closet space is abysmal – one small one in a bedroom, period. There is no parking. And the views are of brick walls a few feet from most windows. The most expensive of these condos has two bedrooms, two baths and a plasma TV. It is not even close to being worth the $599,000 asking price with a $296 monthly fee. No wonder these have sat on the market for months.
  
• A Logan Circle conversion into three sleek - and expensive – condos. The one for which bank robbery might be considered, though rashly, is the penthouse. It has three bedrooms, three baths, table-space chef's kitchen with top appliances, luxurious bath with limestone, separate shower and whirlpool tub, a balcony, a roof terrace and secure parking. Other features include a den, space to accommodate an elevator, floor-to-ceiling windows, a den and a laundry room. Despite the amount of drama dripping in this apartment, the price of $1.5 million with a $480 monthly fee that covers little is pretty aggressive.

Items of Interest - April 1, 2006

SALES OF NEWLY BUILT HOMES SINK: A 10.5 percent decline in sales of newly built single-family homes in February was reported by the U.S. Commerce Department. The reported decline primarily reflected a sharp shortfall in the West region and was the biggest in nine years. 'This is what the Fed wants; they want housing to slow,' Robert B. MacIntosh, chief economist at Eaton Vance Management in Boston told Reuters. 'That is the place where they can most affect wealth creation and spending. The Fed is that much closer to being done.' Added Chief Economist David Seiders of the National Association of Home Builders (NAHB), 'When looking at these numbers, you have to step back and focus more on trends than on month-to-month shifts to see meaningful patterns. This government report traditionally has lots of month-to-month volatility and is subject to substantial revision.' Referring to a 29.4 percent decline in new-home sales reported for the West region, he said, 'It would not be unusual for that number to be revised upward or to show some rebound in the next report.' Sales of new single-family homes remained above the million-unit mark, at a seasonally adjusted annual rate of 1.08 million in February. Sales improved in both the Northeast and Midwest (by 12.7 percent and 5.2 percent, respectively), but fell 6.4 percent in the South - in addition to the nearly 30 percent decline in the West. The inventory of unsold homes rose to 548,000 units in February, which is a 6.3-month supply at the current sales pace. This was the highest month's supply number since January of 1996. 'One factor in the inventory situation is the substantial housing starts activity that took place in the January-February period as builders took advantage of unseasonably warm weather to get a jump on production schedules,' noted Seiders. 'That month's supply number will most likely come down as housing starts taper off and if the sales pace picks up - as we expect it to.'

DON'T GIVE YOUR HYDRANGEAS A BREAK: Resist the temptation to prune ragged-looking hydrangeas in the garden. Most bloom on old wood – cut now and they won't. Check out hydrangeashydrangeas.com for more specific information.

YOU CAN BET ON IT: Investors who think there is a housing bubble about to burst will soon be able to bet not only on when it will happen, but where, reports the Wall Street Journal. Standard & Poor's is rolling out 10 indexes that will track housing prices in various regions of the U.S., as well as a composite index. The indexes, which are planned to launch this month, will serve as the basis for futures and options contracts that will trade on the Chicago Mercantile Exchange. The contracts will allow investors to go long or short on a specific housing market - that is, bet on it rising or falling in value. Dubbed the S&P/Case-Shiller Metro Area Home Price Indices, they will include the cities of Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and D.C. The composite index will be weighted, with New York, for instance, carrying more influence than Miami because the Big Apple has higher housing values and more homes. 'Obviously all this talk about housing bubbles is going to enhance interest in the product,' says David Blitzer, chairman of Standard & Poor's Index Committee. But he adds that the indexes are also meant to serve as a reliable source of information about what is many consumers' most valuable asset. Futures contracts obligate an investor to buy or sell an underlying asset on a certain expiration date at a fixed price, unless the investor makes an offsetting trade beforehand. Options grant the right, but not the obligation, to buy or sell an underlying asset at a fixed price anytime before expiration.

GO SOUTH, OLD MAN: Retiring baby boomers, hoping to avoid the high cost of living - and aging - at home, are going south, according to Time magazine in Realtor magazine. They are passing up Mexican retirement locales such as Playa del Carmen and Cancun in favor of spots deeper in Central America. Costa Rica alone, according to the foreign-retiree association Casa Canada in San Jose, plays host to 50,000 Americans. That migration has spawned a real estate boom in scenic coastal and mountain towns from Honduras to Panama. As emigration grows by North Americans grows, so do real estate prices. Ocean-view lots and houses in Costa Rica start at $200,000 today and range up to seven figures. To find cheaper properties, retirees are moving to Guatemala and Nicaragua, the latest frontier, where homes go for $20,000.

KATRINA IS GOING TO AFFECT YOUR OWN INSURANCE: The hurricanes that ravaged the Gulf Coast last summer are beginning to wreak havoc with homeowners' insurance coverage in states far removed from where the storms hit, says the Wall Street Journal. Major insurers are dropping policies or not writing new ones in coastal areas from Texas to Florida and up the Eastern Seaboard as far north as Massachusetts. They have left homeowners in a number of states scrambling to find new coverage, often at higher cost. Reinsurance companies, whose business it is to insure the insurers, have begun charging sharply higher prices in anticipation that hurricanes will become more frequent and more intense, and some primary insurers say they will try to recoup these added costs from consumers. Allstate, the nation's second biggest home insurer, after State Farm Insurance, says it plans to seek premium increases in a 'majority' of the 49 states in which it does business to help offset higher reinsurance costs. The company recently raised home-insurance premiums by 8.5 percent in New York State and says it plans soon to ask regulators in Connecticut and New Jersey to approve rate increases. Following the 2004 and 2005 hurricanes, the reinsurance industry, including such global players as Swiss Reinsurance Co. and Munich Re AG, drew up new projections of potential losses from future storms. The projections, citing natural weather cycles as well as global warming resulting from human activity, point to more frequent and more intense tropical storms and hurricanes over wider areas of the U.S. for the next 10-20 years. The financial cost of the potential disasters also was ratcheted sharply higher. As a result, reinsurers, which don't need regulatory approval to boost rates, are jacking up the prices they charge primary insurers by 30-125 percent nationwide, and more in some storm-hit areas. As premiums rise and insurers look to cut risk exposure, industry experts advise consumers to keep a low profile. Self-insure as much as possible by carrying as high a deductible as you can afford to keep premiums low and remain attractive to insurers, they say. Also, avoid filing small or petty claims. Never file a claim for maintenance-related damages such as a chronic water leak: Even one such claim could cause you to be dropped by your insurer. When purchasing home insurance, buy from a company with a high financial rating from such ratings firms as A.M. Best and Weiss Group to minimize the chance that your insurer will drop you because of its own financial problems or fail to pay a claim.

EVERYONE'S MOVING UP, EVEN THE CAT: The very latest in cat boxes, notes the current issue of Renovation Style, includes boxes hidden in potted palms or wooden trunks which match living room décor. But there's more – carpet-covered boxes that look like gifts and others pretending to be dollhouses, barns, and that potent symbol of early Americana, the log cabin. Low-tech solutions include a heavy-weight cardboard English Tudor house that fits over a standard litter box and includes a paw-cleaning doormat. Others are more complicated, including the Out of Sight white or maple Melamine units that disappear into a row of base cabinets. Postmodern Pets features sleek Italian designs. For these and other cat habitations, visit catcottages.com, hidnlitter.com, litterlofts.com and postmodernpets.com.

YOU'VE BEEN WARNED, AS HAVE WE: A central New Jersey real estate practitioner has been accused of stealing $50,000 worth of jewelry, a $2,000 camcorder and camera, and nearly $3,000 in cash and coins from four different houses, according to the Record in Realtor magazine. Susan Silok, who was formerly employed by Coldwell Banker Residential Brokerage in Mahwah, turned herself into the Mahwah police. She was accused after home owners in several communities complained that they were missing items after their open houses. Police from seven departments formed an ad hoc task force. Detectives followed Silok as she visited six open houses last Friday. Officers planted items such as a detective's Movado watch in several of the homes. Police said they later searched Silok's home and recovered most of the planted items, including the detective's watch. No watches for us!

COMPANIES ARE SHEDDING NEW LIGHT ON AN OLD PROBLEM: For the homeowner who has everything, a growing industry of boutique firms and architects is collecting, hoarding and taming the daylight that shines into your home, according to the Wall Street Journal. Called 'daylighting,' the practice involves gizmos from melon-shaped 'skylights' that capture and funnel sun through roofs to software programs that command shades to retract depending on the time of year. In January, Velux America, a skylight company in Greenwood, S.C., introduced technology that electrifies glass panels, clouding them up to block the sun. Each 2-foot by 4-foot panel costs $2,000. In the past two years, business has been so strong at one Seattle lighting lab that the backers launched three satellite offices in the region. MechoShade in New York has a new $25,000 software program for the home that adjusts lighting and shades depending on each room's location and exposures. The tagline: 'Integrate the sun.' Of course, there can be too much of a good thing. Pat Trowbridge recently paid $450 for a tubular skylight that bounces sun into his San Diego kitchen. But the 8-foot-long pipe floods in so much light, the retiree says he has to look away. 'I feel like I could get a suntan,' says Trowbridge. His solution: Maybe buying a shade to cover the skylight.

TO REDECORATE, LET YOUR COMPUTER DO THE WALKING: This month's House & Garden suggests that you have a look at the interactive Design-a-Room website (ndm.si.edu) created by MFA students from Parsons. Players decorate with wallpapers and furniture from the Cooper-Hewitt's historic design collection.

WHEN DO YOU NEED 'EXTENDED' TITLE INSURANCE: According to John Martin, general counsel of the All New York Title Insurance Agency in Manhattan told the New York Times that such a policy provides protection for contingencies that a standard policy does not cover - certain zoning problems, for example. Say someone buys a house that has an addition that was not approved by the municipality and later finds out that the addition must be torn down. An extended policy would cover that expense. In most cases, Martin said, extended policies cost 20 percent more than standard policies and carry deductibles of $1,500 to $4,000. He said that most people were adequately protected by a standard policy. But for those who are buying a newly built house, particularly in a new subdivision, he added, extra protection might be a good idea because there is a greater likelihood of title claims for any number of reasons. And those who want the most insurance money can buy might not mind spending the extra 10 or 20 percent for greater peace of mind.

MAYBE THEY'LL FIGURE OUT HOW TO REDUCE EATING TIME TOO: Lately, kitchenware manufacturers have started pushing customers to go high-tech, with mechanized vacuum marinators, says the Wall Street Journal. These gadgets, some big enough to hold a five-pound roast, come with an electric or hand-pump and create a vacuum seal. Makers say the seal cuts off air and opens up the food's fibers, allowing the flavors to absorb in less than 30 minutes. Traditional marinating can take hours, often requiring overnight soaking. Think of it! Retailer Williams-Sonoma introduced a hand-pump marinator in January for $70, and Netherlands-based Vacu Vin, manufacturer of wine pumps, is coming out with a similar product for $40 in June. Last year, Rival began selling the $20 Minute Marinating Canister, an attachment for its $70 Seal-a-Meal Vacuum Food Storage System. A $200 version from Eastman Outdoors: The Reveo MariVac Food Tumbler, which tosses food around so the marinade can penetrate more deeply, according to manufacturer. Some manufacturers may see the new marinators as a way to pump up the slowing home vacuum-sealer category. Since 2003, total sales for vacuum sealers dropped 10.4 percent, falling to $38.6 million last year, according to market researcher NPD Group. Other makers see the products as a way to capitalize on the popularity of grilling, both indoors and out. One caveat is that the meat can gain about one-fifth of its weight in liquid, so cooking times need to be adjusted, as do seasonings. When Jon Buckland mixed tilapia, oil and herbs in the device, the marinade overwhelmed the fish. 'I was overdoing it,' says the corporate-communications specialist in Chicago. 'The marinator works great, but it works too quickly.'

THAT WALL SMELLS GOOD ENOUGH TO EAT: It's one thing to banish the toxic VOCs (volatile organic compounds) in paints as a number of manufacturers are doing. But the April issue of This Old House features Anna Sova products; they can include essentials oils to mix with your paint to make your walls smell like cookies or orange and cloves. If you get tired of the fragrance, too bad: You'll have to wait a year for the scents to wear off.

THEY'RE LIVING LARGE: The number of American households with a net worth of $1 million or more, excluding their principal residence, grew to a record 8.9 million last year, the British market research firm TNS Financial Services said in a report. More than one in seven of the households were in just 13 of the nation's 3,140 counties, TNS said. The number of millionaire families rose to 7.1 million in 1999, and then, after the Internet bubble burst, dropped steadily to 5.5 million by 2002, said Jeanette Luhr, a TNS manager who directed the survey. The ranks of millionaire households rose to 6.2 million in 2003 and 8.2 million in 2004, she continued. The households had an average net worth, excluding principal residence, of nearly $2.2 million. Half of the heads of millionaire households were 58 or older, Luhr said, and 45 percent were retired. According to Inman News, the survey ranked Los Angeles County, Calif., the wealthiest county in the United States, based on the number of millionaire households. The survey found that Los Angeles County has 262,800 millionaire households. Second was Cook County, Ill. with 167,873 millionaire households, followed by Orange County, Calif., Maricopa County, Ariz., San Diego County, Calif., Harris County, Tex., Nassau County, N.Y., Santa Clara County, Calif., Palm Beach County, Fla., and Middlesex County, Mass.

REMODELING PASSES A BIG ROUND NUMBER FOR THE FIRST TIME: Americans spent an estimated $210 billion on residential remodeling in 2005, based on the National Association of Home Builders' (NAHB) analysis of recently released third-quarter remodeling spending from the U.S. Census Bureau. In addition, the NAHB Remodelors Council forecasts the largest increase in spending during 2006 in more than 10 years to a record $238 billion, a 13.2 percent jump. The record industry growth forecast for 2006 is more than double the pace of growth in 2005, when remodeling spending grew by 5.8 percent, in line with average annual growth of 5.3 percent from 1994 to 2004. The previous growth record was posted in 2004, when spending jumped 12.2 percent owing to a strong increase in the real estate market. The 2005 record was largely attributable to low refinancing and equity loan interest rates, as well the effects of Katrina and other storms.

DEMOGRAPHICS IN THE SUBURBS ARE CHANGING: First-ring suburbs used to be characterized by their uniformity and consistency, especially when compared with neighboring cities, notes Realtor magazine. Some even inspired the term 'cookie-cutter community.' Home to nearly 20 percent of the U.S. population, first-ring suburbs were developed before and during the post World War II expansion. 'First-ring suburbs have largely retained their position as home to some of the most highly educated and wealthy residents, the highest share of residents with white collar jobs, and the highest housing values,' according to a Brookings Institution report. Today, first-ring suburbs are a study in contrasts. The report describes those suburbs as 'unique in that overall poverty continues to grow as does the number of neighborhoods of high poverty.' Three-quarters of the first-ring suburbs saw an increase in the number of areas with at least a 20 percent poverty rate from 1970 to 2000, according to Brookings' analysis of U.S. Census Bureau data. Described as 'the front lines of a diversifying national population,' the first-ring suburbs are experiencing more population change than either metropolitan areas or newer suburbs. 'First-ring suburbs were once far less racially diverse than the nation, but rapid demographic changes over the last 20 years now make them more so, with racial and ethnic minority populations doubling between 1980 and 2000,' the report said.

LIVE AND LEARN: 'More and more colleges are getting interested in the 55-plus active-adult community,' Gerard Badler of Campus Continuum - a two-year-old company hoping to build such communities on or near college campuses - tells Inman News. 'As aging baby boomers come into the marketplace, you'll see the trend accelerating.' By 2020, there will be some 55 million people over 65 in the country, according to U.S. Census projections, providing a larger market for such communities. The rationale is simple: Living on a college campus affords seniors easy access to sporting and cultural events, not to mention classes. And there's a quid pro quo for the college kids, too: They get unofficial mentoring, a different perspective and, in many instances, home-cooked meals out of the deal. Approximately 20 formally linked communities exist nationwide, Badler said, including Penn State University and The Village at Penn State; the University of Florida, Gainesville, and Oak Hammock; The Forest at Duke in North Carolina; and Longview and Ithaca College in Ithaca, N.Y.

MORTGAGE APPLICATIONS EDGE UP: For the week ended March 24, volume increased by 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the increase was 1.0 percent compared with the previous week but was down 15.0 percent compared with the same week one year earlier. Purchase applications went up by 2.7 percent seasonally adjusted from the prior week, refinancings slipped by 1.0 percent. The refinance share of mortgage activity decreased to 37.3 percent of total applications from 38.1 percent the previous week, and the adjustable-rate mortgage (ARM) share swelled to 28.7 percent of total applications from 28.3.

HIGH APPRECIATION CAN LEAD TO A BIG TAX BILL: A growing number of homeowners, riding the crest of the real-estate boom, are getting hit by an unpleasant surprise when they sell: a hefty tax bill, the Wall Street Journal observes. This development stems from a 1997 law that Treasury Department officials said at the time would eliminate capital-gains taxes for nearly everyone selling their primary residence. Under that law, most married couples who file jointly can exclude as much as $500,000 of their gain. For most singles, the limit is $250,000. But as home prices have surged, more people have been selling their home for bigger gains than the exclusion amount - and thus are facing unexpectedly big tax bills. Besides getting hit by the top 15 percent rate on capital gains, some also are facing the loss of deductions, exemptions and credits. In some cases, they may even be drawn into the rapidly expanding web of the alternative minimum tax. Many sellers are startled to hear they owe any tax at all because they didn't realize the 1997 law erased a popular provision that had allowed them to avoid taxes. That provision generally allowed sellers to defer or eliminate capital-gains taxes by rolling over their proceeds within a specified time period into a new home costing as much or more than the old one. The law also deleted another provision that generally offered a once-in-a-lifetime $125,000 exclusion for people age 55 or older.

D.C. IS LOSING MONEY ON ILLEGAL TAX DEDUCTIONS: The city's Office of Tax and Revenue does not have adequate controls to catch residents ineligible for homestead deductions or senior citizen tax relief programs, according to D.C. Inspector General Charles J. Willoughby, reports the Washington Post. The result is the loss of as much as $3.4 million in taxes.

MORTGAGES RATES MOVE UP AGAIN: The 30-year fixed-rate mortgage (FRM) averaged 6.35 percent for the week, up from last week's of 6.32 percent and 6.04 percent last year, according to Freddie Mac. The 15-year FRM this week was 6.00 percent in comparison with 5.97 percent last week and 5.58 percent a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.02 percent this week, up from last week's 5.96 percent and last year's 5.43 percent. One-year Treasury-indexed ARMs averaged 5.51 percent this week versus 5.41 percent the week before. At this time last year, it was 4.33 percent. 'The Fed raised rates this week, as was expected, but the market was a little surprised at the Committee's comments, which implied more tightening in the future,' said Frank Nothaft, Freddie Mac vice president and chief economist. 'That raised the expectation that inflation may be more of a threat than was previously thought, and that kind of thinking promotes upward pressure on mortgage rates like we saw across the board this week.'

IT'S A FESTIVAL AND IT'S FREE: The Arlington Artists Alliance is mounting a week-long ArtFest at Fort C. F. Smith featuring art in all media for show and sale, plus workshops. The opening reception is March 31 6-8 p.m., and hours vary through April 7. Admission is free. More info: arlingtonartistalliance.org or 703-528-5740.

Out and About - It's almost like falling in love

Buyers always start the search process with a pretty clear set of requirements and wishes. In the end, the list almost always goes out the window when they walk into a property and, for reasons that can be difficult to articulate, fall in love. "Oh, well," they might say, "parking on the street doesn't look so difficult. " Or, "We'll just open up the kitchen some day." Or, "We can fix that." Why the instant adjustment? "This reminds me of the house my grandmother had," the response could be. "I just loved the times I spent visiting her." Or they might gush, "Those windows and the views - I'll manage without that third bedroom."

So it is that emotional reactions so often overwhelm rational desires. But don't mistake such a situation as necessarily a bad one. What buying an apartment or house on that basis suggests is that the purchase often can be more about finding place that makes the individual happy, provides a lifestyle that is satisfying and proves that knowing priorities in advance may not be the easiest thing to determine.

Some properties are far more likely to resonate with prospective buyers than others, just as some individuals are more likely to find Mr. or Mrs. Right than others. Perhaps an analog would be the person who is somehow physically challenged. Certainly there exists the perfect match, but chances are that the eligible population from whom that match will come is smaller than for other folks.

A penthouse in Ballston is a property that demonstrates the point. It is a two-level, 2,400-SF condo with spectacular views from all of the rooms, a 768-SF terrace, a garage parking space and a great location. It has three or four bedrooms, three and a half baths, library, sunroom, gallery, excellent layout, marble and ceramic tile galore, incomparable drama and extras such as an extraordinary system of electronics that will be included in the sale. The condo also has a glamorous but Lilliputian kitchen, which has high-end appliances such as a Miele built-in espresso maker and, strangely, only a 24-inch-wide refrigerator.

The agent describes the place as a "playroom for adults," and therein lies its analogous physical challenge. It is hard to see a couple of empty-nesters fitting themselves comfortably into this aggressively stylish space. It would make an exceptional bachelor pad, but a newly married couple contemplating their future with children may well be unable to envision themselves picking up toys in the sleek living room or preventing the kids from tumbling down the stairs or off the terrace.

The market for this apartment, however impressive, is limited, then. Maybe that's why it has lingered on the market for two months - that and the stubborn price of $1,079,900 with a $957 monthly fee, which does not cover the electrically generated heat and cooling. Yet somewhere out there is the condo buyer who moves in the fast lane. He or she will shoot up to the 27th floor of the unit's 1989 building, stride into the apartment and . . . fall in love.

Some of the properties listed by other agents and seen in the past week:

• In the University Park section of Hyattsville a medium-size 1936 red brick Colonial on a quiet tree-lined street within blocks of main roads and close to the Metro. There's nothing much wrong with this house except that it's listed as a four bedroom, three-bath home (which is legally correct), but the fourth bedroom is on the first floor, away from the main flow; it appears to be a disconnected family room rather than an in-law suite. Even the brand-new kitchen just misses – why skip the granite when you've come two-thirds of the way with cherry cabinets and stainless appliances? House map confusion (where am I and what am I supposed to do in this room?) and a too-high original price ($574,000) have doubtless contributed to its more than three-month sojourn on the market. Now at a more palatable $535,000, this one might move toward a happy conclusion with a bit of clever staging.
  
• A four-bedroom, four-and-a-half bath new home with two-car garage, unstinting finishing such as wainscoting, expensively outfitted center-island kitchen, dual-zone heating and cooling, intercom and stereo systems throughout, and 4,200 square feet on four levels with an eminently sensible layout. What this corner property in Falls Church doesn't have is a rear or side yard since the much smaller house originally intended for the lot was torn down. On a busy street, the house is optimistically priced at $1.225 million.
  
• In Brookland, within walking distance of Catholic University and the Metro, a four-bedroom, three-bath 1930s Cape. But the front door opens into a wall, and the stainless appliances cannot hide the fact that the kitchen has no counter space. A perfect example of the gap between older housing and the way people live today, this place has rooms that feel cramped and closed off from each other; none of these defects are fixable without a major, architect-driven renovation. Don't even bother asking about closets. Still, at just under $400,000 and in generally good condition, this home could prove to be a decent value with a little imagination.
  
• A Logan Circle landlocked narrow rowhouse in need of work, without a rear yard and, therefore, a place to park a car. Its biggest assets are the SubZero refrigerator and, for some, exposed brick walls. Its liabilities are numerous: ugly carpeting on the upper floors, a grim partial basement where the laundry is located, wrought iron handrails instead of wooden ones, electric baseboard heating and poor flow. This sad property is overpriced at $829,900, reduced too little from $849,900.
  
• In Hillcrest, a three-bedroom, two-and-a-half bath bungalow built in 1932. The inside of this cozy home has been considerately polished into a small gem with many thoughtful upgrades (including renovated kitchen) properly in scale and period. The master suite encompasses the entire second floor, complete with new bath, sitting area and walk-in closets. Details such as original wood doors and crystal door knobs glow. But the exterior needs some work on its curb appeal; shabby white stucco, old plantings and sod won't help sell this nice house, particularly since it is on a main thoroughfare. Priced at $547,000, this bungalow is likely to sit on the market a while longer.
  
• A two-bedroom, two-bath condo with gas fireplace, large balcony and indifferent eighth-floor views in Virginia Square. Among the features of this 919-SF apartment in a 1998 building are an in-unit washer/dryer, modern open kitchen and a garage parking space. Originally offered at $569,000 in early October and reduced twice since then, the apartment is well worth the new price of $519,900 with a $353 monthly fee, which includes gas and no other utilities.
  
• In Dupont Circle, an impressive but overpriced 1870 renovated rowhouse with huge rooms, though not many of them. The main floor is, in fact, one big room with an expensively modernized open kitchen with glass tiles that ought to look better than it does. Upstairs, there are two big bedrooms and but one bath. Downstairs, there is a bedroom, family room and another bath. Perhaps the best feature of the property is the old carriage house, which accommodates two vehicles and boasts an expansive second-floor studio. Unfortunately, the building pretty much occupies the rear yard. It is listed at $1.159 million.
  
• A three-bedroom, two-bath detached home with inviting porch across the whole front near Takoma Park, D.C. This house has a deep backyard with dilapidated garage, an older kitchen with, literally and figuratively, plenty of room for improvement, and a finished attic retreat. There is an undeniable charm to this property, which features oversize louvered windows in the living room, new flooring and an air of comfort, though its full potential has yet to be realized. The price of $575,000 is right on target.
  
• In Brightwood, a charming three-bedroom, two-and-a-half-bath semi-detached home filled with sunlight. It features a wood-burning fireplace, formal dining room, new windows, a nice older kitchen, garage parking, a bright sunroom overlooking the backyard and a small deck. The family room in the basement is not enhanced by the dark knotty-pine paneling, but, hey, the offering price of $550,000 for this 1932 Tudor is well within reason.
  
• A Logan Circle bi-level condo in a converted two-unit 1895 Victorian with ebony floors, Euro-style open kitchen, fancy baths, gas fireplace and generous closet space. Most of the drama comes from the circular end of the living area created by the turret-like shape of the building's corner. With two bedrooms and two and a half baths, the unit has its second level in what used to be the basement; while mostly above ground, that bedroom floor is nonetheless dim and depressing. For $749,000 with a $294 monthly fee, buyers might expect more.
• In Chevy Chase, D.C., an attached brick home astonishingly larger than is apparent from the outside. With capacious rooms, this 1918 house has three bedrooms plus a den, three and a half baths, very high ceilings, a lovely improved kitchen with breakfast room overlooking a flagstone patio, and a pleasant downstairs guest suite. It is very well priced at $925,000.

Items of Interest - March 25, 2006

SALES OF PREVIOUSLY OWNED HOMES REBOUND: Existing-home sales rose in February following five months of decline, according to the National Association of Realtors (NAR). Total existing-home sales - including single-family, town homes, condominiums and co-ops - increased 5.2 percent to a seasonally adjusted annual rate of 6.91 million units. But they were 0.3 percent below a 6.93 million-unit level in February 2005. "Weather conditions across much of the country were unseasonably mild in January and likely were a factor in higher levels of buyer activity, which boosted sales that closed in February," commented David Lereah, NAR's chief economist. "Higher interest rates had been tapping the breaks, notably in higher-cost housing markets since mortgage interest rates trended up last fall, but we're seeing signs of stabilization in the market now with the sales rebound. Home sales should level-out in the months ahead." The national median existing-home price for all housing types was $209,000 last month, up 10.6 percent from February 2005. Total housing inventory levels rose 5.2 percent at the end of the month, representing a 5.3-month supply at the current sales pace – the same as in January. Single-family home sales increased 4.7 percent to a seasonally adjusted annual rate of 6.06 million and were 0.2 percent below the pace in February 2005. The median existing single-family home price was $208,500 last month, up 11.6 percent from a year ago. Existing condominium and cooperative housing sales rose 8.8 percent to a seasonally adjusted annual rate of 850,000 units in February from January. Last month's sales pace was 1.5 percent below the 863,000-unit pace a year ago. The median existing condo price was $214,300 in February, up 3.5 percent from February 2005. RENTS ARE RISING: They went up 4.5 percent in the Washington-Baltimore area last year, the Washington Post reports, citing Labor Department statistics. That increase compares with 3 percent nationally. "Owners' equivalent rent," a related statistic that suggests what homeowners would pay in rent if they didn't own, was up 4.4 percent in comparison with 2.4 percent nationally. FOR THE KITCHEN THAT HAS EVERYTHING, THERE'S MORE: From a mold-detecting swab test to a marble dish that promises to keep butter fresh outside the refrigerator for five days straight, the most talked-about products at this year's International Home & Housewares Show offered to solve kitchen and cooking problems that some consumers may not know they have, according to the Wall Street Journal. A single-cup coffee maker did away with the need to wash filters, and a cheese grater with a memory-gel handle gave users a customized grip. Tired of sandwiches with stuffings that leak? A new sandwich-pocket maker sealed bread edges together. The reason for the gadget push: That's where the sales are for the $65 billion housewares industry. With so many Americans already stocked up on basics kitchen supplies like pots and pans, the cookware category last year grew only 3 percent, according to market researcher NPD Group in Port Washington, N.Y. In comparison, small kitchen appliances and gadgets rose 8 percent. "Everyone's seen a spatula and a strainer, but what encourages sales is an item that is colorful and catches their interest," says Judy Gripenstraw, a buyer for California chain Orchard Supply Hardware. Elsewhere in the annual show, a big theme was convenience. (Last year, in contrast, one manufacturer unveiled a refrigerator with a built-in digital pet.) The show offered dozens of products for sorting and storing, including polyethylene storage "pods" as large as 96 cubic feet for garages and basements and indoor bins made of such things as scented pink plastic and the more sophisticated woven banana leaf. HELP FROM SELLERS COULD PRESAGE PROBLEMS: Home buyers who get help from sellers - either directly or indirectly - are likely to have trouble paying the mortgage, according to a report from the Government Accountability Office (GAO), says Realtor magazine. Things go sour because sellers tend to raise the price to compensate for assisting with financing, so the mortgages are higher. And buyers have less of their own money in the transactions. Because buyers have little skin in the game, default doesn't seem like a bad option, the GAO found. As a result of its study, the GAO has asked the U.S. Department of Housing and Urban Development to limit seller contributions to Federal Housing Administration mortgages. HUD is balking because nearly 50 percent of all FHA loans involve seller assistance. This number has risen, observers say, because conventional lenders are cherry picking buyers who would otherwise choose an FHA loan, leaving behind those who are the worst risks. Some fear that if the GAO prevails, it will be significantly more difficult for buyers with limited means to become home owners. ADVERTISING RELATED TO REAL ESTATE TAKES OFF: It now makes up half of the local advertising on search engines, according to a report released this month, says Inman News. Paid search ads for individual local real estate agents account for 49.6 percent of listings on keyword searches for local business segments across 10 different cities, up from 17.5 percent of local search ads 18 months ago, according to Borrell Associates. Borrell's yearly report predicts that paid search advertising by local advertisers will more than double this year to $987 million and nearly double again in 2007. Although local paid search accounted for a relatively small $420 million last year, the report projects that local paid search will go from representing barely 10 percent of all local online advertising today to 47 percent in 2010, reaching over $4 billion. And, real estate agents dominate local paid search. Local agents' search ads jumped from 17.5 percent of all local search ads 18 months ago to 23.9 percent a year later, the report said. Search ads for the keyword "mortgage" made up 25.1 percent of listings on keyword searches. The highest bids in terms of amount paid per click were for DUI attorneys, mortgages and real estate. Great company. WHAT'S IN A NAME: Not much, reports the Wall Street Journal. Although retailers' signups of celebrity designers over the past decade have meant big money for both, lately some of the famous names being dropped are landing with a thud. Just a few months ago, Target rolled out its biggest-ever home-furnishings line, with 500 items designed by New York decorator Thomas O'Brien. But the brand, which includes everything from pleated curtains to a $500 sliding door chest, is already struggling. In September, retailer Linens 'n Things introduced 600 items by Chicago decorator Nate Berkus, and Oprah devoted an entire 10-minute segment to the event. Her view: "Love the frames, love the lamps, don't you love these?" Apparently, not enough buyers agree. According to several people close to the retailer, sales of the Berkus line have been mixed so far. At Target, entire aisles of O'Brien lamps and tables have been marked down as much as 75 percent. Even former fashion designer Todd Oldham, who loaned his hip moniker to La-Z-Boy chairs, hasn't been able to bolster sales in some areas. Many independent La-Z-Boy stores are showing only a few examples of his 300-item line on the sales floor. Part of the problem is designer overload. Is it possible that no designer could make the chairs look fashionable? A SHORTAGE OF RENTALS IS DEVELOPING NATIONWIDE: The federal government's recent emphasis on home ownership has been at the expense of rentals and the result is a rapidly developing shortage, according to a study by the Joint Center for Housing Studies at Harvard University, says Realtor magazine. The study found that although the low-income tax-credit program and other initiatives build 100,000 units of affordable housing annually, 200,000 rental apartments are demolished each year. "We are taking one step forward and two steps back as gentrification in some neighborhoods and continued deterioration in others leads to the removal of vitally needed, lower-cost rental housing," says center director Nicolas P. Retsinas. The John D. and Catherine T. MacArthur Foundation, which funded the study, plans to sponsor a $75 million nationwide initiative to promote preservation of affordable rental housing. "On average, it costs half as much to acquire and improve an existing rental apartment than to build a new one," the foundation asserts. HERE'S ANOTHER WAY TO GAMBLE ON REAL ESTATE: The CBOE Futures Exchange (CFE) has announced that it plans to launch futures contracts based upon median prices in the existing-home sales data of the National Association of Realtors (NAR). Through a licensing agreement with NAR, CFE has created five new futures contracts designed to track the median price of existing-home sales nationally and in four distinct regions within the United States. CFE plans to launch the new contracts in the next quarter of 2006, pending regulatory approval. "With the U.S. housing market valued at nearly $20 trillion, real estate is not only the hottest topic of conversation, it is an asset class unto itself that is arguably one of the most important segments of the U.S. economy," said CBOE Chairman and CEO William J. Brodsky. "CBOE gave careful consideration to the development of this contract to ensure that it had practical application for hedging as well as speculating, offering a chance to participate in the real estate market to a wide range of investors - whether your outlook is regional or national, bullish, or bearish." Aside from the futures contracts that will track and settle monthly the median sales prices in the United States overall and in the Northeast, South, Midwest and West, 10 more based on various metropolitan area markets also will be launched and settle quarterly. For more details and contract specifications, pay a visit to cfe.cboe.com/AboutCFE/ShowDocument.aspx?DIR=ACNews&FILE=20060317e.doc. ECONOMIST EXPLAINS HOW TO VIEW 'AVERAGE' PRICES: Understand that average home prices you may read about refer only to prices of those homes that were actually sold in a given month, counsels economist Irwin Kellner of Marketwatch in the Wall Street Journal. They do not represent prices of all homes in the country. Even more important, they are not the price of the same home measured from one month to the next. This notion is critical, says Kellner, since the way home prices are reported and analyzed, you'd think they were. The most common average price is the median price. If more higher-priced homes are selling than lower-priced units, the median or geographic midpoint will move up accordingly. The same thing is true for another type of average: the mean. Also, the prices that get recorded when the house is sold ignore whether the seller had to sweeten the deal by offering such amenities as upgraded appliances, furniture, carpeting and the like. Another reason to question what is reported as average home prices is that new homes are getting bigger, so part of these higher prices simply reflect more materials and a bigger piece of land, adds Kellner. ON YOUR TOWN: The first town ever auctioned on eBay soon will be back up for sale on the online auction site, according to an Associated Press story in the New York Times. Nearly two years after he bought the tiny town of Bridgeville, Orange County financial adviser Bruce Krall said he plans to re-auction the Humboldt County hamlet on eBay next month. ''Due to family reasons, I'm pretty much tied to Southern California for the foreseeable future,'' Krall said. ''We can't move up there. It only makes sense to pass it on to somebody else.'' Krall said the auction will open April 4 with a minimum bid of $1.75 million -more than twice what he paid for the 83-acre property about 40 miles southwest of Eureka. Bridgeville, a picturesque village with about 25 people on the Van Duzen River, sparked a bidding war in 2002 when it became the first town ever put up for sale on eBay. The buyer, who won the auction with a $1.78 million bid, never came to see the property and the deal fell through. The property was eventually posted on traditional real estate listings, and Krall bought it for about $700,000 in May 2004. Since then, Krall said he's invested ''multiple hundreds of thousands of dollars'' to restore old buildings, remove dilapidated structures and clean up mounds of garbage. He also found new tenants for the houses and received a conditional use permit for a riverfront resort. ''It's come full circle,'' Krall said. ''Now it's been fixed up, and I think it's actually ready to be sold on eBay.'' INCREASED D.C. DEED RECORDATION FEE IS IN THE WIND: Mayor Anthony Williams' proposed budget, which members of the D.C. Council have politely received for action, seeks to boost revenue by raising the fee from 1.1 percent back to 1.5 percent. That "tax" is paid by the purchaser and would amount to $7,500 in contrast to the current $5,500 for a $500,000 property. Do you know your Council member's address? MORE BARGAINS FOR BIG-TICKET ITEMS ARE ON THE WEB: Internet-only deals are increasingly turning the Web into a virtual bargain basement for big-ticket items from snowblowers to HDTVs, the Wall Street Journal observes. Overall, total revenue from online sales of large items, including furniture, appliances and other equipment rose 34 percent during the most recent pre-Christmas holiday period from a year earlier. Best Buy Co. says sales on its Web site in December grew more than 40 percent from December 2004, with appliances such as big-screen television sets selling particularly briskly. In fact, Best Buy found that TV sales on its Web site grew three times as fast as TV sales in its stores in 2005 from a year earlier. Companies such as Sears, sporting equipment retailer Cabela's and Wal-Mart now report selling hefty items like treadmills, log cabins and mattresses on their Web sites. Some retailers, eager to promote online sales of large items, offer more Internet-only specials related to big stuff. Target's Web site is offering free shipping on select furniture and patio furniture through Saturday. J.C. Penney Co. offers discounted beds, bedroom furniture sets, patio furniture, mattresses, tables and chairs on its Web site. Home Depot offers no shipping charges on its patio furniture bought online. Best Buy currently has two offers centered on sizable items that can be found exclusively on its Web site. In one offer, Best Buy says it will give away a free DVD recorder with any $999-or-higher TV purchase. In its other offer, Best Buy promises a free 20-inch television set with the purchase of any large appliance priced at $999 or more. MORTGAGE LOAN APPLICATIONS SLIP: For the week ended March 17, volume was off 1.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the decrease was 1.6 percent compared. For the same week a year earlier, applications were down 13.8 percent. Purchase applications fell by 2.3 percent from the previous week, and refinancings declined by 0.6 percent. The refinance share of mortgage activity increased to 38.1 percent of total applications from 37.7 percent, while the adjustable-rate mortgage (ARM) share went down to 28.3 percent from 28.8 percent week. HOME OWNERSHIP REMAINS OUT OF REACH FOR MANY IN U.S.: Low- to moderate-income working families with children are less likely to be homeowners now than they were in the late 1970s, according to a new study of U.S. homeownership trends over a quarter century from the Center for Housing Policy, the research affiliate of the National Housing Conference. The study also found that, despite expanded efforts to boost homeownership by the last three administrations, the homeownership gap between white and minority working families with children not only did not improve, but it worsened between 1978 and 2003; specifically, the disparity widened to 26 percentage points. Sponsored by the Chicago Dwellings Association, the study defines low- to moderate-income working families with children as those families that earn at least the equivalent of the full-time minimum wage of $10,712 annually up to 120 percent of local area median income. In 2003, the homeownership rate for upper-income families with children was 90.8 percent, while the rate for their low- to moderate-income counterparts was significantly lower at 59.6 percent. Yet in 1978, some 62.5 percent of low-to moderate-income working families with children owned their homes. In 2003, some 44.6 percent of minority working families with children were homeowners – virtually unchanged from the 44.8 percentage rate in 1978. Meanwhile, the homeownership rate among their white counterparts increased over the same period from 68.7 to 70.5 percent. The homeownership rate for minority categories in 2003 was 42.3 percent for Hispanics, 44.6 percent for blacks and 53.6 percent for a category comprised of Asians and other minority groups. The largest gains from 1978 to 2003 were among Asians/others, whose homeownership rate grew more than 10 percentage points. THEY'RE CALLED 'NATIVE' PLANTS, AND THEY CAN BE YOURS: Stop by the National Arboretum Saturday, March 25 and pick up some indigenous flora at the Native Plant Sale, a portion of which will support the facility's collection of – you guessed it – native plants. The address is 3501 New York Avenue NE, the time is 10 a.m. to 2 p.m., and the price of admission is free. Details: wsna.usda.gov. DON'T MOVE TO INDIANA OR COLORADO: A total of 117,259 properties nationwide entered some stage of foreclosure in February, a 13 percent increase from the previous month and a 68 percent increase from February 2005, according to RealtyTrac. A report by the online database company shows a February national foreclosure rate of one new foreclosure for every 986 U.S. households. "This is the third straight month the U.S. foreclosure rate has moved higher, and it's the second straight month new foreclosures have topped 100,000," said James J. Saccacio, chief executive officer of RealtyTrac. "However, several states, including California, Florida, Texas and New York, reported a dip in foreclosures in February. We'll see if the rest of the country follows that trend in March." Foreclosure rates in Indiana and Colorado were among the nation's five highest for the second month in a row. Indiana reported 5,909 properties entering some stage of foreclosure in February, a 34 percent increase from the previous month and nearly three times the number of new foreclosures reported in February 2005. Colorado reported 4,128 properties entering some stage of foreclosure, a 10 percent increase from the previous month and a 34 percent increase from February 2005. Texas recorded the most new foreclosures of any state for the third month in a row despite a month-to-month decrease of 7 percent. The state reported 13,616 properties entering some stage of foreclosure in February, a foreclosure rate of one new one for every 591 households. Although the state's foreclosure rate dropped out of the nation's five highest, it was still 1.7 times the national average. IF BREAKING UP IS HARD TO DO, REDECORATING AFTER ISN'T: As design consciousness has spread in the United States, so has the idea of interior design as a form of self expression, observes the New York Times. As a result, newly separated or divorced people - at least those who can afford it - have a heightened desire to radically remake their environments to suit their new lives, spite their new exes, or both. According to the Census Bureau, most Americans marry for the first time in their 20's, when many people have barely established a sense of self, let alone developed a clear sense of style. But by the time many of those marriages end 10 or 20 years later, the newly divorced people are eager to emerge from their former spouses' shadows and assert their own identities in paint, tile and fabric. "When you divorce, you are creating your own individuality all over again," said Dr. Bonnie Eaker Weil, a New York-based couples' therapist. Décor is emerging as a popular way to do it. Throwing off the vestiges of the past is a crucial first step, even if it sometimes leads to costly mistakes. Raoul Felder, a prominent divorce attorney in New York, said a client of his gave away a delicate antique desk that his wife had chosen for his home office because it symbolized the client's sense that his needs had been ignored for years. "The guy was 6'2" and couldn't get his legs under it," Felder said. Unfortunately for the lawyer's client, the desk turned out to have been worth $22,000. IF YOU'RE LOOKING FOR LOVE, THIS IS ONE PLACE TO FIND IT: The Humane Society will show cats and dogs available for adoption during a pet expo noon to 3 p.m. Wednesday at the Hotel Monaco, 700 F Street NW. Not only can you spend a king's ransom on cocktails at the Monaco, but the hotel will raffle off a free night's stay for a person with his or her pet. More info: 202-723-5730 Ext. 226. THAT THREE-WORD RUBRIC ABOUT LOCATION STILL APPLIES: A state appeals court declared that a New Jersey couple may sue a real estate agency that allegedly incorrectly assured them their newly built $740,000 house was in a particular community, says Inman News quoting the Associated Press. It turns out the home, while in New Jersey's Montville Township, was located not in the section also called Montville but in the neighboring community of Towaco, reports said. Montville Township, population 21,000, is about 30 miles west of New York City. Theodore and Frances Vagias contended that Towaco was less prestigious, with a lower-rated school system, and filed a lawsuit against Weichert Co. alleging a violation of the Consumer Fraud Act, according to the appeals court decision, reports said. But a judge in a lower court dismissed their claim, saying the real estate agent may have engaged in "puffery," but not fraud, according to the reports Wednesday's ruling by a three-judge appeals panel, however, says that while a jury may not agree with the couple's assertion, they do deserve their day in court. "Given the importance of location in the purchasing decision, buyers are entitled to expect that the Realtors who are assisting them in their housing search will know where the houses are actually located," the appeals panel wrote. "A Realtor's misrepresentation on that critical issue is a serious matter and violates the act." The panel remanded the case for trial. Inman said phone messages left with Weichert were not immediately returned. MORTGAGE RATES EDGE DOWN AGAIN: The 30-year fixed-rate mortgage (FRM) averaged 6.32 percent for the week, down from last week's average of 6.34 percent and up from 6.01 percent last year at this time, according to Freddie Mac. The 15-year FRM this week was 5.97 percent versus 5.98 percent last week and 5.56 percent last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.96 percent, up from last week's 5.93 percent. A year ago, it was 5.35 percent. One-year Treasury-indexed ARMs were 5.41 percent this week, up from 5.37 percent. At this time last year, the one-year ARM averaged 4.24 percent. "The most recent economic indicators released this week showed that inflation is, indeed, being held in check," said Frank Nothaft, Freddie Mac vice president and chief economist. "That news allowed long-term mortgage rates to drift a little lower for the second week in a row. Shorter-term rates, however, rose in reaction to a recent speech by Chairman Bernanke of the Federal Reserve Board that hinted at even further rate hikes this year." THE (BATH)ROOM WITH A VIEW (INSIDE): As attitudes toward privacy change, the American bathroom is shedding its old skin, notes the New York Times. Taking the place of the hidden-away box are translucent cubes dropped right in the middle of the action, their thin walls made of glass or new light-transmitting acrylics and resins. Joel Sanders, a Manhattan architect (and an associate professor of architecture at Yale), who has designed several bathrooms with see-through walls, did one for a couple with two young sons. Sheathed in translucent blue glass, the bathroom sits between the kitchen and the master bedroom of the loft apartment and reveals vague silhouettes. "It's not about sex and seduction; quite the opposite," Sanders maintained, explaining that the new bathroom makes open-plan living more fluid. (Really, "fluid," so the Times said.) Other homeowners want to take walls down completely. Some have been inspired by boutique hotels with risqué rooms. The Clinton Hotel in Miami Beach, advertising its accommodations as "intimate and sexy," has clear glass panels separating bed from bath. In Reykjavik, Iceland, the trendy Hotel 101 has curtainless showers and toilets in frosted-glass booths. To keep two windowless bathrooms in a Lower Manhattan loft from inducing a sense of claustrophobia, Katherine Chia, a principal at Desai/Chia Architecture in New York, gave them ash wood walls dotted with rows of portholes. Their acrylic panes are less than four inches across and thus not terribly risqué. But they do reveal movements in shadow. Chia, who has used translucent bathroom walls in other lofts, said: "Our clients fall in love with the quality of light that gets transmitted through the bathroom skin. I don't think they feel exposed, but instead see themselves as being bathed in a luminous interior." The New York architect Alexander Gorlin designed a shower with a clear glass wall open to the living room in a TriBeCa apartment for the architect Daniel Libeskind, his wife Nina and their teenage daughter. The glass brings morning sunlight into the bathroom and permits views (!), while showering, of the Lower Manhattan skyline. There is a privacy shade if needed, Mr. Gorlin said. If needed?

Items of Interest - March 18, 2006

NAR SINGS 'LOOK FOR THE SILVER LINING': A lower level of home sales now expected this year will create a more level playing field for buyers and sellers on the heels of a five-year sellers' market, according to the National Association of Realtors. In a revised forecast, Chief Economist David Lereah, commented: "The cooling from overheated sales conditions in recent months is helping to bring inventory levels up to the point where buyers have more choices than they've seen in the last five years. Annual price appreciation is still running at double-digit rates, but the cause of those sharp increases is going away. As the market readjusts, price appreciation should return to more normal rates of growth this year." He projects the national median existing-home price for all housing types to rise 5.8 percent in 2006 to $220,300 and the median new-home price, by 5.4 percent to $250,200. Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from the record 7.08 million last year. At the same time, new-home sales are forecast to decline 7.7 percent to 1.18 million from a record 1.28 million in 2005. Still, each sector would be at the third highest year following the tallies for 2005 and 2004.

HERE COMES THE CRUNCH: About one-quarter of all outstanding mortgages are adjustable rate mortgages that will reset in 2006 or 2007, according to the research firm of Moody's Economy.com. The Wall Street Journal reports in Realtor magazine that, for many American households, the reset will be a rude financial shock. First American Real Estate Solutions, a unit of title insurer First American Corp., projects that about one in eight households with adjustable-rate mortgages that originated in 2004 and 2005 will default on those loans. Others are more optimistic. Resets will "eat into discretionary spending" for many Americans, says Joshua Shapiro, chief U.S. economist at MFR Inc., an economic consulting firm in New York. He expects consumer spending to slow in the months ahead but says the job market remains strong enough to keep most people out of serious trouble.

EXPERIENCE CAN BE THE BEST, AND MOST EXPENSIVE, TEACHER: For the last few years, real estate transactions over the Internet - where buyers need never set eyes on the property they purchase - have become increasingly common, the New York Times observes. On eBay and dozens of other Web sites, sales involving tens of thousands of dollars can occur entirely online. EBay, for example, may have more than 1,800 residential properties listed on any given day - from multimillion-dollar vacation houses in Florida to thousand-dollar fixer-uppers in the rural Midwest. But now, with plenty of buyers eager to get in on the real estate boom, such online sites have become perfect places for unscrupulous sellers who have bought dilapidated houses at, say, foreclosure auctions, to resell, or flip, them quickly for inflated prices. Many of the deals sound too good to be true, but the gullible, to put it charitably, are lured by nice photos and a belief that online transactions on big Web sites are generally safe. Online flipping is happening in economically distressed cities in New York, Ohio, Michigan and Pennsylvania. The practice, local government leaders say, is destabilizing already weakened urban neighborhoods by displacing legitimate investment. Buffalo has been particularly hard hit by online flipping, as the city's persistent population decline and high foreclosure rates have created a glut of some 20,000 vacant houses. "Ninety-nine percent of these online ads have some kind of fraud or lies," said Tracy Krug, a building inspector in Buffalo. "They paint a nice rosy picture: 'on a bus line, near a nice market.' They don't tell you you're going to be across the street from a crack house." On the warpath is Sam Hoyt, a Democratic state assemblyman and co-chairman of the Buffalo mayor's task force on real estate flipping, who has asked eBay to inform sellers that they must comply with New York State disclosure laws and require a copy of written sales contracts. Responds eBay spokesman Hani Durzy: "The people responsible for house flipping are the people selling these houses and the people buying them sight unseen. How these sellers and buyers are connecting is not as important as the fact that the buyers are not doing the proper due diligence when buying a property."

HOUSING STARTS FALL OFF: Following the warmest January on record that helped spur a 16 percent jump in new-home construction, the housing market showed signs of cooling in February, with total housing starts down 7.9 percent for the month to a seasonally adjusted annual rate of 2.12 million, according to the National Association of Home Builders (NAHB). Single-family home construction dipped 2.3 percent to 1.8 million units. Multifamily starts fell 30.4 percent to 320,000 units after posting an unsustainably high level of 460,000 units in January. "So far this year, housing starts have received a boost from unusually mild winter weather, even in February, and we expect to see these numbers move further down in the months ahead," said NAHB Chief Economist David Seiders. "Indicators that measure housing demand - home sales, applications for home mortgages and our own survey of single-family builders - show that the cooling process has begun. Furthermore, single-family permits, which are less affected by weather than single-family starts, have been trailing down gradually from their highs last fall." As Seiders put it, "Last year's record-level of housing starts and double-digit price appreciation were unsustainable, and encouraged many investors and speculators to enter the market. With demand slowing, we expect to see price appreciation also falling back into the single-digit range, and that will discourage short-term speculators from jumping into the market."

YOUR 'MOUTH OF CHI' SPEAKS VOLUMES: Sellers with a belief in feng shui should pay special attention to the front door, says Realtor magazine. It is considered the "mouth of chi," the "life force" of all things. Abundance, blessings, opportunities and good fortune are said to enter through the front door. It's also the first impression have of how well the sellers have taken care of the rest of the property. So, it is a good idea to be certain the area around the front door is swept clean and free of cobwebs and clutter. Make sure all lighting is straight and properly hung as well. Also, owners of single-family homes should consider lighting the path to the front door to create an inviting atmosphere.

WITH SUCH ENERGY SAVINGS, YOU COULD BUY NEW T-SHIRTS: While the average price of a laptop computer dropped 23 percent in just one year and big-screen television prices have been falling at an average rate of 30 percent a year, the average price of a dishwasher rose 10 percent in the last decade, reports the New York Times. Market analysts at the NPD Group calculate that the average price of a washing machine went up 16 percent in the last two years. Take Whirlpool's Duet, the country's top-selling front-loaded washing machine. It is one of the more energy-efficient machines, using about 227 kilowatt hours of electricity a year. You can find one at Sears or other appliance stores for about $1,400, and it would cost about $78 a year to operate compared with $161 a year for Whirlpool's $549 Ultimate Care top-loader, according to a downloadable calculator on the Department of Energy Web site (energystar.gov/index.cfm?fuseaction=find_a_product.) But because the Duet costs so much to buy, the total cost of the front loader over seven years is $1,946, or $269 more than the Whirlpool classic top loader. Yet it makes economic sense to buy the more expensive machine because a dollar today is more valuable than a dollar in seven years. Theoretically, you should be willing to pay $318 more for something that saves you $546 over seven years. Consider two conventional-looking top loaders from the same manufacturer. One of Whirlpool's lowest-priced Energy Star-rated machines is a $479 3.2-cubic-foot capacity top loader. A less energy-efficient machine of the same size goes for $449. Over the next seven years, the total cost of the energy-efficient machine will be $1,256 compared with $1,450 for the seemingly cheaper machine, a real savings of $194. Though NPD estimates that 35 percent of refrigerators and washers carry the Energy Star rating, which means they use even less energy than the average machine on the market, it said 85 percent of dishwashers won the designation. GE alone sells 365 models of consumer and commercial refrigerators, dishwashers and washing machines that carry the rating.

TAX TIP: Although the law is nine years old, many taxpayers are confused about the exclusion from a capital gains tax when selling a principal residence. In fact, home sellers are permitted to exclude $250,000 in gain if single and $500,000 if married; they must have lived their home for any two of the preceding five years. The exclusion can be claimed many times, but not more often than every two years. What's a principal residence? According to the charming folks at the IRS, the following indicators are telling: Place of employment; mailing address for bills and correspondence; address, as listed on federal and state tax returns, driver's license, car registration and voter-registration card; bank used and its location; memberships in recreational clubs and religious organizations; and location of family members' main home.

CONSUMERS PUT THE BRAKES ON HOME EQUITY LOANS: Consumers are backing away from home equity credit lines as interest rates rise and the housing market slows, according to the Wall Street Journal in Realtor magazine. From 2002 to 2005, home equity credit lines from commercial banks grew at an annual rate of 30-40 percent. But since last August, Federal Reserve data show that the growth rate has plateaued, rising just 5 percent. Economists differ on how much a pullback in home-equity borrowing will hurt U.S. economic growth. Some believe it will depress growth in consumer spending by as much as one-third. Others think it won't make a significant difference because people will find other ways to pay for what they want.

TO SELL WELL, STAGE WELL: Staging a home well as both savvy sellers and buyers know, is likely to boost the price, notes the Christian Science Monitor in Realtor magazine. Peggy Selinger-Eaton, who has recently published a book and DVD on the subject, suggests that homeowners remove clutter except for a few wisely chosen accessories (candles, fresh flowers, crystal). She believes bedrooms should have beds and, lacking them, they can be fashioned from an inflatable mattress and some boxes. To maximize light, Selinger-Eaton advises sellers to raise window blinds and remove screens from windows to let in as much natural light as possible. Other of her none-too-original recommendations: modernize fixtures, replacing boring or tarnished one, trading in old lampshades for new ones, and replacing sink and tub fixtures with modern, shiny ones; deep-six shabby furniture, even if it means buying cheap-chic replacements at Target, for example; and create life (no, not that way) but by setting the table, leaving on the big-screen TV and playing background music.

AGENCIES ADOPT NEW CREDIT SCORING SYSTEM: The nation's three consumer credit reporting companies - Equifax, Experian and TransUnion - have jointly announced the introduction of a new credit score designed to simplify and enhance the credit process for both consumers and credit grantors. In their announcement, the companies said the new "VantageScore" is a direct result of market demand for a more consistent and objective approach to credit scoring methodology across all three national credit reporting companies. It is said to leverage the collective experience of the industry's leading experts on credit data, scoring and analytics. Under the new scoring system, credit score variance between credit reporting companies will be attributed to data differences within each of the three consumer credit files and not to the structure of the scoring model or data interpretation. "By combining cutting-edge, patent-pending analytic techniques with a highly intuitive scale for scoring, VantageScore will provide consumers and businesses with a highly predictive, consistent score that is easy to understand and apply." VantageScore uses score ranges from 501 to 990. Although the new mathematical formula used to come up with the score is intended to reduce the variation, the Washington Post notes that there will still be differences because each company collects data differently. Since some accounts may be listed at one bureau but not the other, a consumer may still get different scores from each firm. "It doesn't address the larger issue of how accurate are the files," Gail Hillebrand, a senior attorney with Consumers Union told the Post. VantageScore represents an attempt by the credit bureaus "to develop a better mousetrap, to put more money in their pocket and prevent more from going out of it," to rival FICO, said Greg McBride, senior financial analyst for Bankrate, whose Web site Bankrate.com aggregates financial rate information. Ron Totaro, vice president of Fair Isaac's Global Scoring Solutions, said the 17-year-old FICO score is "pretty ingrained and encoded in computer systems" of lenders, which will make it hard for financial institutions to switch. "It's very difficult to come up with a better mousetrap," he added.

THE THEATER, MUSEUMS, RESTAURANTS, WHO CARES: Many new retirees don't seem to: They are eschewing traditional havens such as Florida and Arizona (where real estate prices have gone through the roof, the author fails to mention) in favor of small communities with good health care and moderately priced housing, says William Frey, a Brookings Institution demographer, according to U.S. News & World Report in Realtor magazine. He has studied U.S. Census Bureau data from 2000 to 2004 to identify small-town communities with the greatest growth rate of people older than 55. And, in order of the most popular first, the answer is: Gillette, Wyo.; Silverthorne, Colo.; Juneau, Alaska; Edwards, Colo.; Jackson, Wyo.; Bozeman, Mont.; St. Marys, Ga.; Rock Springs, Wyo.; Taos, N.M. Evanston, Wyo. But what do those retirees have to talk about after they move there?

FORECLOSURES UP SINCE A YEAR AGO, BUT DOWN SINCE JANUARY: The number of new foreclosed residential properties available for sale nationwide increased 9 percent from February 2005 to February 2006, according to data released by foreclosure.com, says Inman News, while the total number dropped 7 percent from January. February marks the second consecutive month of declining new foreclosures in the United States. Some 88,093 foreclosed residential properties were available for sale in the United States in February, of which 21,402 were new foreclosures - a 10.8 percent drop from the prior month. "Foreclosure inventory numbers in February are often low, partially because legal filings in December usually drop off around the holidays and reduce foreclosures in January and February," said Brad Geisen, president and CEO of Foreclosure.com. "The year-to-year comparison, however, tells a different story. If new foreclosures in 2006 continue to track 9 percent higher than in 2005, the country will reach higher inventory levels than it has in recent years." While most areas of the country experienced a decrease in new and active foreclosure listings, inventory increased in parts of the West. In California, which has historically had few foreclosures, there was a 150 percent increase in the number of new foreclosure listings in February compared with January.

SOME RULES ARE NOT MADE TO BE BROKEN: If they are in an apartment building or community with a homeowners association (HOA), Realty Times columnist Richard Thompson suggests that it's up to the manager to process complaints. However, it's up to the Board to adopt policies and procedures so the manager knows how to respond. If those policies are in place, the manager simply executes them (the policies, not the rule violators). Neither the Board nor manager should automatically accept a complaint. If this is a first time complaint about a neighbor, the complainer should be required first to take the matter directly to that neighbor both in person and in writing, rather than expect the HOA to do the dirty work. That way, the manager knows that reasonable action was taken to resolve the issue before it was presented for resolution to the HOA. If this complainant follows that advice, the manager then should accept the complaint in writing with precise details including the time and events together with copies of correspondence between the neighbors. That way, the manager knows that the complainer took personal action to resolve the issue. If the complainer is not willing to put the matter in writing to both the offender and the manager, the manager can assume it's not important enough for the HOA to deal with. Of course, there can be extenuating circumstances such as an aggressive or violent neighbor. The manager can make the judgment whether to intercede or not. And carefully.

BUILDERS CONFIDENCE REMAINS AT A LOW LEVEL: A one-point decline in the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for March indicates that housing demand and sales are gradually returning to a sustainable pace that is" right in line with our forecasts," boasts the National Association of Home Builders (NAHB). Noting that the confidence gauge has remained within a narrow two-point range for four consecutive months following a retreat from its peak in mid-2005, NAHB Chief Economist David Seiders attributed March's slight downshift to eroding affordability conditions as well as a gradual withdrawal of investor demand income areas. "Rising interest rates and high rates of home-price appreciation have raised the bar for homeownership to beyond what some families can reach," he commented. "Meanwhile, a retreat of short-term investors from certain markets is helping restore equilibrium between supply and demand." March's HMI, at 55, represented a one-point decline from February's downwardly revised 56 reading, which followed two consecutive months at 57. There was slight erosion of the index's three components in the latest report, with single-point declines in the gauges for current single-family sales and traffic of prospective buyers and a two-point decline in sales expectations for the next six months. Both the current and expected sales components remained well in the positive range, at 60 and 62, respectively.

OWNING SUCH A HOME IS A MIRACULOUS ACHIEVEMENT: Smokey Robinson and his wife Frances have put theirs on the market for $10.5 million in the gated community of Chatsworth in Los Angeles, according to the Los Angeles Times in the CRS Residential Specialist magazine. Well, it does have seven bedrooms, six and a half baths, three family rooms, three kitchen, 10 fireplaces, a wine cellar, gym and sauna in its 9,000 square feet. Occupying 2.5 acres, the place also has a pool, spa, waterfall, detached guesthouse and outdoor living room. The couple will live in their Las Vegas home until they build a smaller one in Chatsworth. If he gets his price, there doubtless will be no tear tracks on ol' Smokey's cheeks.

LOAN APPLICATION VOLUME IS LITTLE CHANGED FROM LAST WEEK: For the week ended March 10, it decreased 0.2 percent on a seasonally adjusted basis from one week earlier, says the Mortgage Bankers Association. On an unadjusted basis, volume went up 0.2 percent, but it was down 20.4 percent versus the same week one year earlier. Seasonally-adjusted, purchase applications increased by 1.0 percent from the previous week as refinancings were off by 1.9 percent. The refinance share of mortgage activity declined to 37.7 percent of total applications from 38.5 percent the previous week, and the adjustable-rate mortgage (ARM) share rose to 28.8 percent.

THE AUCTIONEER BUSINESS IS BOOMING: The National Auctioneers Association reports that it's raking in the dough from residential properties, reports the Boston Globe in Realtor magazine. In 2005, association members auctioned off $14.2 billion worth of residential property in live auctions, a 24 percent increase over 2003 sales. The growing surplus of homes on the market is expected to encourage more owners to give auctions a try. Maine-based J.J. Manning, which typically holds one-house auctions, says this month it held its first auction of properties owned by multiple owners since the early 1990s downturn. The firm plans more this year. Sheldon Good & Co., a national auctioneer in Chicago, also reports doing more auctions, including more on behalf of developers selling the unsold units in large hotel-condo projects, particularly in resort areas. "We think there's a very high likelihood that trend is going to rise based on overbuilding in Boston, New York, Chicago, Houston, Orlando and Jacksonville," said Steve Good, chief executive. "The slowdown is just beginning."

GO ON A TEAR: You can securely dispose of up to five boxes of personal papers professionally at no charge on Saturday, March 18, 8-11 a.m., at the Washington Convention Center, 11th and H street NW, thanks to Mercantile Potomac Bank, WRC Channel 4 and Shred-It. Info: 202-626-9100.

IS THIS A RACE THAT NO ONE WINS: Flagler County in Florida, situated along the Atlantic Coast between Daytona Beach and Jacksonville, was the fastest-growing county for the second year in a row, with a 10.7 percent population increase from July 1, 2004, to July 1, 2005, according to estimates released by the U.S. Census Bureau. Flagler, with 76,410 residents, also led the nation with a 53 percent population increase since Census 2000. According to the estimates, all but one of the top-10 fastest-growing counties between 2004 and 2005 are located in either the South or the West. Among them were three Virginia counties - Loudoun in eighth place, following by King George and Caroline.

IF YOU HAVE AN ARM, IT'S WISE TO KNOW ITS REACH: Many Americans are confused about the terms of their adjustable-rate home mortgages and underestimate the amount by which their loan payments could jump, according to a new study by Federal Reserve Board economists, reports the Wall Street Journal. The study found that about 35 percent of people with adjustable-rate mortgages didn't know how much the rate could increase at one time, and 41 percent weren't sure of the maximum rate they could face. About 28 percent didn't know which index of interest rates would be used to determine their adjustments; many others gave incorrect answers, such as the consumer price index or "the going rate." The economists based their study on surveys of consumers and lenders by the Fed and the U.S. Census Bureau, plus other data on loans and home prices. They found that many consumers believed their interest rate could increase by a maximum of fewer than five percentage points over the life of the loan, while lenders reported that bigger jumps often were possible. High-income borrowers are better informed, the study says. For those with annual incomes above $150,000, only 13 percent were unaware of the maximum amount by which their rate could increase at one time. For those with incomes below $50,000, 40 percent didn't know what the cap was on those increases.

RISE IN MORTGAGE RATES FINALLY STALLS: The 30-year fixed-rate mortgage (FRM) averaged 6.34 percent for the week, down from last week's average of 6.37 percent and up from last year's 5.95 percent. The average for the 15-year FRM this week was 5.98 percent; it was below 6.00 percent a week ago and above 5.47 a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.93 percent versus 6.03 percent last week and 5.31 percent in 2005. One-year Treasury-indexed ARMs were 5.37 percent this week, down from last week when it averaged 5.45 percent. At this time last year, the one-year ARM was 4.20 percent. "Financial markets, hedging against the potential build up in inflation, pushed mortgage rates higher last week," said Frank Nothaft, Freddie Mac vice president and chief economist. "However, market indicators this week seemed to point to less of a threat of inflation, and that allowed rates to drift a little lower. Housing starts fell in February as expected, but were still stronger than had been forecast, while January figures were revised upward. This is a good sign that housing activity, although slowing from record levels set in the past few years, will continue to remain healthy this year."

AMERICANS ARE DREAMING OF A DIFFERENT SORT OF HOME: A two-bedroom condo in the city is pushing aside the four-bedroom colonial in the suburbs as the traditional American dream home, says the New York Times in Realtor magazine. Some of the biggest names in home building are selling more city condos than suburban single-family houses. For instance, five years ago, condos were 5 percent of K. Hovnanian Homes' business; today they are 30 percent. WCI Communities says condos are 40 percent of its business in Florida. And in California, Pulte Homes, the nation's second largest homebuilder, finds condos have become fully half of its sales. ''The suburbs are overbuilt, crowded and continuing to spread, and the commutes are getting longer,'' says John K. McIlwain, a senior resident fellow for housing at the Urban Land Institute, a nonprofit research group. Meanwhile, he notes that ''cities are actually much cleaner, healthier and better run than they were 20 years ago.'' Some argue that the demand for condos is short term, fed by young buyers who will shun city living once they have a family. But others point to baby boomers as the 800-pound gorilla that continues to drive demand. ''Those of us who are 60 are thinking of cashing out, moving into the Ritz tower and getting our meals brought to us,'' says Karl Case, a professor of economics at Wellesley College. The home builders ''are looking at the numbers and seeing what's fairly obvious. It doesn't strike me as crazy," he adds.

D.C. COUNCIL COMMITTEE VOTES TO OVERHAUL RENT CONTROL: Its action would change the current "rent ceiling" approach to one calculated more in relation to comparable market values, the Washington Post reports. Rental increases for vacant units would be kept below market rate by a formula based on the highest comparable unit in the building. But the maximum increase for an existing tenant would be 10 percent. Covering about 100,000 units, the rent control law exempts federally funded public housing, buildings constructed after 1975 and apartments owned by landlords who have no more than four apartments.

Market Update - The market is speaking out, and loudly

Condos and co-ops

New listings in February swelled 47.1 percent higher than in the same month one year earlier, and there were 174.3 percent more listings of apartments still available by the end of the month than at the same time in 2005. The supply of condos and co-ops put on the market during the month rose in the strong double digits at all levels between $150,000 and $1 million, above which the numbers were too small to be meaningful. Of the 525 new listings, 108 were at $200,000-300,000 – 92.9 percent more than in February, 2005 – and 139 were at $300,000-400,000 – 63.5 percent more. At $600,000-700,000, a 75 percent increase accounted for 35 units newly offered.

By the end of the month, 1,141 apartments remained on the market, with gains in the high double digits at most levels. Especially notable were increases in inventory of 85.6 percent, from 36 to 250, in unsold units at $200,000-300,000; 75 percent, from 65 to 260, at $300,000-400,000; and 71.5 percent, from 37 to 130, at $400,000-500,000. A decline of 200 percent, from 36 to 12, in the supply of apartments listed above $1.5 million also is worth mentioning. Although inventory had started to fall from September's 12-month high, it began rebounding in January to a new high last month.

Meantime, sales activity dropped 9.6 percent from February to February, owing to declines as high as 66.7 percent at price levels between $300,000 and $900,000. Volume was in the double digits between $150,000 and $300,000, with 108 condos and co-ops going under contract during a month in which 310 of them found buyers. Year-to-date sales were down 10.7 percent, yet higher than they have been since October. Activity was slightly higher than in 2005 at the same time of year at levels below $400,000 but lower in double digits above that price point. The 585 ratified contracts so far this year compares with 655 in 2005.

Approximately one out of five units on the market went to contract during February. The absorption rate was 21.5 percent, hardly better than January's weak 21.4 percent and below December's 23.2 percent. By contrast, it was 53 percent in April, followed by lower rates in successive months, dropping to 43.5 percent in July and 38.7 percent in August.

Yet prices, which show distinct signs of tapering off, remain higher than they were last year. The average is now at $437,195 versus $426,159 in 2005, $338,618 in 2004 and $263,131 in 2003. At the same time, the median is almost at a plateau, departing farther than any time in the past five years from the average. It has reached $373,450 in comparison with $371,000 in 2005 and $293,000 in 2004.

Single-family homes

The supply of new listings was 12.9 percent greater than in February last year, 507 of them as opposed to 449, with the lion's share of the growth in homes offered between $300,000 and $800,000. Above $1.5 million, such inventory went up 25 percent to 30 properties. The biggest category was $400,000-500,000 homes, which rose 21.3 percent to 97, but the biggest gainers were at $500,000-600,000 (up 69.2 percent to 66) and $700,000-800,000 (up 81 percent to 62). Properties offered between $1 million and $1.25 million climbed 21.4 percent to just 17. Otherwise, inventory slipped.

With sales falling, the number of listings still active at the end of the month was about twice the amount a year earlier. The increase was 99.4 percent, to 989 from 496. Every single price level between $200,000 and $1.25 million experienced strong triple-digit gains – the biggest being 250 percent, to 28, at $1 million-$1.25 million. Only below $200,000 were there any losses in supply, from 71 a year ago to 13 now. Inventory has been edging up again since December, but it is below the peaks of earlier in the fall.

The volume of sales slumped by 22.7 percent, to 343, growing atypically at the highest price levels as much as 70 percent ($1 million-$1.25 million). Activity dropped at all other price levels but those between $400,000 and $600,000, which had insignificant changes. The number of homes that went to contract varied from 444 in February of 2005 to 343 last month; still, the month was busier than January and December, in which the 12-month lows were recorded. For the year to date, the decline in sales was 18 percent, and decreases occurred at every single price level but $500,000-600,000, which rose a mere 1.5 percent, to 66 homes sold.

The market absorbed about a quarter of the homes in the Multiple Listing Service (MLS) during February. The 25.8 percent absorption rate was below January's 26.1 percent, though higher than December's 21 percent, which was significantly lower than it had been during all of 2005. For example, in November, it was 24.9 percent. It was 26 percent in October, 28.1 percent in September, 35.8 percent in August and 35.5 percent in July. Earlier in 2005, the rates were far higher.

The average price of a single-family home has moved only to $546,080 from $531,880 last year and $414,140 in 2004, a noticeable abatement in acceleration. So, too, with the median, which is at $435,000 versus $414,980 in 2005 and $310,000 in 2004.

What it all means

The market these days is nothing if not hesitant. Or perhaps “resistant” is a better description. Buyers are sending a clear message that they are uncertain about the direction prices will take or worried about where interest rates are going. More important, they are demanding – and, because of rising inventory, commanding – value for the real estate they are seeking. With price acceleration ebbing, sellers obviously are beginning to believe that buyer resistance is here and that it is not going away any time soon. Although the market is now replete with contingencies such as home inspections, multiple offers for exciting and well-priced properties persist, albeit with less frequency. It is a new day. The times, they are not changing. The change is here.