Items of Interest - March 11, 2006
MORTGAGE RATES HIT 2 ½-YEAR PEAK: The 30-year fixed-rate mortgage (FRM) averaged 6.37 percent for the week, up from last week's 6.24 percent and higher than it has been since September 2003, when it was 6.44 percent, according to Freddie Mac. Last year at this time, the 30-year FRM was 5.85 percent. The 15-year FRM was 6.00 percent this week in comparison with 5.89 percent last week and 5.38 percent a year ago. The 15-year FRM has not been higher since July 5, 2002, when it averaged 6.03 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were 6.03 percent this week, up from last week's 5.97 percent and 5.22 percent last year. One-year Treasury-indexed ARMs averaged 5.45 percent this week, up from 5.34 percent a week ago and 4.24 percent a year ago. The one-year ARM has not been higher since Sept. 21, 2001, when it was 5.58 percent. "Stronger than expected gains in the manufacturing and service industries - coupled with higher labor costs - ignited inflation concerns, which led to the rise in mortgage rates this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Financial markets are beginning to think that the Fed will hike rates three more times this year, instead of two, putting upward pressure on mortgage rates."
HOME PRICES CONCERN CONSUMERS: Consumer confidence fell in February as home-buying attitudes dropped to their lowest level in 15 years, according to the University of Michigan's Survey of Consumers, says Inman News. "The latest survey indicates that consumers have adopted a less favorable outlook for economic growth, expressed heightened concerns about potential increases in unemployment, and no longer anticipate any additional declines in the inflation rate," according to Richard Curtin, the director of the University of Michigan's Surveys of Consumers. The Index of Consumer Sentiment was 86.7 in the February 2006 survey, down from 91.2 in January and 94.1 in February 2005. The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, fell to 74.5 in February, from 78.9 in January and 84.4 in the February 2005 survey. The Current Economic Conditions Index was 105.6 in February, down from 110.3 in January and 109.2 in the February 2005. Favorable home-buying attitudes fell to their lowest level in 15 years in February because of increased resistance to high home prices and rising mortgage rates. "Complaints about high home prices were voiced by more consumers in February than any other time during the past quarter century," Curtin added.
FREDDIE MAC ECONOMISTS SAY MARKET SIGNS ARE UNCLEAR: The statistics refuse to indicate the direction of the market definitively, say Frank Nothaft, Amy Crews Cutts and Michael Schoenbeck in their monthly report. The Conventional Mortgage Home Price Index for the fourth quarter of 2005, released March 2, showed that annual growth in home values hit 13 percent nationally. Housing starts in January hit 2.28 million units, the highest pace since 1973. "No signals of a cooling housing market here," they write. "But sales of both new and existing homes fell in January and the inventories of existing single-family homes and condominiums for-sale rose to their highest levels since 1999. These contradictory statistics are signs of a slow down." As they put it, "It may be some time before we see definite trends in the national housing market, especially as measured by changes in home prices. Prices tend to be 'sticky' on the way down as sellers will leave a home on the market longer or offer non-price concessions to buyers.' The prevalence and types of seller concessions are difficult to measure. Nonetheless, we believe the housing market crested during the third quarter of 2005 and that single-digit growth in home values will occur nationally in 2006."
NIMBY RULES: Residents who say Not In My Back Yard, or NIMBY, are in the majority and one in five of them are mad enough to fight, according to a survey conducted by the Center for Economic and Civic Opinion at the University of Massachusetts/Lowell for the Saint Consulting Group, reports Realtor magazine. The survey concluded that 83 percent of suburban Americans don't want new development in their communities and 20 percent have actively opposed growth by joining a neighborhood group, contacting an elected official or signing a petition. Only 40 percent believe their local government does a good job of urban planning, and 70 percent believe the relationships between elected officials and developers render the process unfair.
LENDERS SOMETIMES EMPLOY REPO MEN: Business generally has been slow for the 10,000-odd members in what is known as mortgage field services, the Wall Street Journal observes. Until recently, home prices were rising so fast in much of the U.S. that most people who fell behind on their payments could easily sell their homes for more than they owed the lender and thus avoid foreclosure. That has meant fewer foreclosures and less business for field-services operations, independent contractors hired by lenders to clean up the sometimes horrific messes left by people who lose their houses. But now the people in this little-known trade hope that a cooler housing market will create more work. Kevin McFalls, the owner of JKM Mortgage Field Services, Baltimore, says he already has noticed an uptick in business in the Washington and Baltimore areas and expects a surge in assignments from lenders over the next few years. Rick Taggard, the owner of a field-services company in Porterville, Calif., agrees: "All of us are just waiting, and when it turns around, it's rags to riches again." Preservation is one part of their mission - for example, by turning off water, taking photos to document conditions, fixing a broken door frame or installing a new lock. The total charge for about an hour's work, excluding travel time, might be around $125. Another service would be inspection. When borrowers fall more than a month or two behind on payments, lenders hire field-services companies to check whether the home is still occupied and to note any major damage. Field-service businesses also provide labor to clear out debris after evictions by sheriffs or other law-enforcement people. Usually the people who lived in the house are long gone by the time the foreclosure occurs. When they're not, however, the situation can get, let's say, more interesting.
HOLD EVERYTHING: There's no need to wait until summer to plant containers, notes Washington Post columnist Joel Lerner. You can't plant annuals until after the last frost date, but you can put perennials, trees and shrubs in pots, urns or basins to use outside. Use containers large enough to accommodate several plants; 30 inches in diameter and 16 inches deep is a good size for one woody plant (Japanese maple, false cypress, juniper or any of the many dwarf conifers available at garden centers and nurseries) and three or four small perennials (creeping woolly thyme, lavender, or lily-turf ( Liriope). You can still add a few annuals in May. Plants in pots require careful watering, fertilization, pest control and good drainage.
BUYER REMORSE CAN MAKE OTHER BUYERS REJOICE: So observes the Wall Street Journal with regard to the increasing number of folks who are backing out of their agreements to buy new homes – even if they likely lose their deposits. Last month, KB Home said cancellations rose in December and January, and luxury-home builder Toll Brothers told analysts that its cancellation rate had increased in the fourth quarter. Other builders are also seeing more deals falling through. A recent survey by the National Association of Home Builders found that 20 percent of builders were seeing cancellation rates somewhat or significantly higher than six months earlier. It is particularly noticeable in many California markets and in D.C., Phoenix and Chicago, according to an analysis of 16 major markets prepared for the Journal by Hanley Wood Market Intelligence. In Virginia, Brookfield Homes Corp. is running a "FastMove" special with discounts on roughly 60 homes that are completed or will be ready in 30 days. Among the recent offers: a reduction of nearly $100,000 on a five-bedroom, four-and-a-half-bath home in Lansdowne, originally priced at $997,925. "A lot of those properties were originally sold to someone else," notes Gregg Hughes, a general sales manager in Virginia for Brookfield.
A DECLINE IN PENDING SALES SHOWS SIGNS OF TAPERING OFF: A slide in pending home sales is beginning to level out, an indication of a more sustainable level of home sales in the months ahead, according to the National Association of Realtors (NAR). The Pending Home Sales Index, based on contracts signed in January, slipped 1.1 percent to a level of 116.3 from December; it was 4.8 percent below the previous January. But after hitting a record of 128.2 last August, the index declined at a more rapid pace through December, averaging nearly 3 percentage points per month. The index is derived from pending sales of existing homes, and a score of 100 is equal to the average level of contract activity during 2001, the first year to be examined. The year 2001 also was the first of five consecutive record years for existing-home sales. David Lereah, NAR's chief economist, maintains that the results suggest "we're touching down for the soft landing we've been expecting." Said he: "We are at a much more sustainable level of home sales now – a welcome cooling from the super-heated conditions that were driving exceptional price gains. This will give people the time to be more thoughtful about a process that is the biggest single investment most of us make in our lifetime."
WHAT'S BEIGE AND GREEN AND SEEN ALL OVER: Why, bamboo! Both high-end furniture designers and mass retailers, including Crate and Barrel and La-Z-Boy, are latching onto the stuff in record numbers, says the Wall Street Journal. The new interest in bamboo is yet another plus for China (but undoubtedly a minus for panda bears), the world's No. 1 furniture exporter, according to the Department of Commerce, and that country is the major producer of bamboo plywood. Last year, China exported to the U.S. $33 million of furniture made from bamboo, cane and similar material, a 12.5 percent jump over 2004. Driving the trend is consumers' increasing appetite for all things green and furniture makers' need to find substitutes for ever scarcer hardwoods. Bamboo, which grows rapidly - some kinds can shoot up as many as three or four feet a day - can be split and laminated into boards up to 5 inches thick, fits. "Two years ago, no one knew what bamboo plywood was. Now everyone's making furniture with it," says Bart Bettencourt of Bettencourt Green Building Supplies in Brooklyn, N.Y., who designs $600 bamboo chairs and $3,000 dining tables. For some designers, the switch to bamboo is a quality-control issue. "Because there are now so few old-growth hardwoods, the trees you get are younger and younger, smaller and smaller. The grain pattern looks rough and unruly," says William Lee, owner of Modernlink in New York. "A bamboo collection is consistent every year."
CONNECTICUT COURT SAYS BUYER CAN CANCEL CONDO CONTRACT: A decision in January by a Superior Court judge found that condominium buyers have the right to void a contract without penalty within the review period for assessing condo documents even for a reason not based on that resale package. The case concerned a buyer who put a $10,000 deposit on a property, signed a purchase agreement and had an inspection conducted on the home. During the inspection, the buyer was dissatisfied with the condition of the appliances, but failed to notify the sellers within the inspection contingency period stated in the sales contract. Once she received the condo documents (budget, meeting minutes, bylaws, rules, etc.), the buyer had her attorney notify the seller that she wanted her deposit back. But the seller's attorney argued that, since the buyer hadn't negotiated any credit or replacement of the appliances during the timeframe related to the home inspection, her ability to cancel the contract had lapsed. In its ruling, the Court noted that Connecticut law allows a buyer to cancel so long as it's done within the stated timeframe for reviewing the condo documents. In Connecticut, that period is five business days from receipt of the resale certificate and documents.
RENT INCREASES ARE PRESSURING LOWER-INCOME FOLKS: Affordable apartments are getting harder and harder to find, says a new report from the Harvard University's Joint Center for Housing Studies, according to Realtor magazine. That puts pressure on lower-income families; 70 percent of the seven million lowest-income renters pay more than half of their income for housing, leaving little for other expenses. Median rent rose to $974 in 2004, up 33 percent from $734 10 years earlier, the study found. But median monthly renter income rose only 3 percent during the period, to $2,348. Hardest hit are minority and immigrant renter households. The number of such households will grow and trigger demand for more than 1.8 million rental units between 2005 and 2015, the study concluded. If it were not for foreign-born households, the number of renters would have fallen by more than 2 million, or 5 percent, from 1993 to 2003, instead of rising by 118,000.
HSBC SAYS RENTING MAY BE BETTER THAN BUYING: In a piece too involved to summarize properly, Financial Times quotes an "exhaustive" survey of the U.S. housing market and HSBC economist Ian Morris as saying, "There is not much difference between paying rent to a landlord or interest to a bank." Even removing principal payments from mortgages, new home owners in many areas will be left paying a large premium, according to the research. It finds that annual ownerships in San Francisco or Honolulu – each hardly typical – are 68 and 73 percent greater than renting. Taking into account the added risks of home ownership, HSBC has calculated that prices would need to rise 8.5 percent a year in D.C. over the next seven years to make property ownership worthwhile – "far more than the 20-year average." In this region, HSBC says it would take 12 years before the costs of ownership equaled those of renting. "The chance of falling real home prices is less outlandish than most assume," the FT contends. "Those buying a house in Washington, D.C. in 1989, when prices start to slide in real terms, would have had to wait until 2001 to see a capital gain."
ARMS CONCERN BORROWERS: More than a quarter of American homeowners with adjustable rate mortgages are concerned that they won't be able to make monthly payments if interest rates rise, according to a new poll by the Los Angeles Times and Bloomberg, says Realtor magazine. The poll shows that 21 percent are "not too confident" that they will be able to make monthly payments if their interest rate rise, and 5 percent said they were "not at all confident." Rising housing costs have prompting more home buyers to take out ARMs, which accounted for 13 percent of all prime mortgages in 2005. Despite their concerns over sharply higher payments as their rates re-set, Americans remain upbeat about home values even in the face of waning sales and dropping prices. Nearly 50 percent of those polled said they expect the value of their primary residence to climb by 5 percent to 15 percent over the next three years, with about a quarter of respondents anticipating appreciation of 16 percent or more.
MORTGAGE APPLICATIONS HOLD STEADY: Loan application volume for the week ended March 3 rose 0.7 percent on a seasonally adjusted basis over the previous week. On an unadjusted basis, the increase was 12.9 percent, but it was down 17.8 percent compared with one year earlier. Purchase mortgages slipped by 0.4 percent from the previous week, and refinancings went up by 2.6 percent from the previous week.
THE DEPARTMENT OF UGLY ACRONYMS: Although it's not part of mainstream vocabulary yet, thankfully, the acronym NORC is popping up more and more in discussions about senior housing, reports Realtor magazine. A NORC, or "naturally occurring retirement community," can be any community, neighborhood, apartment complex or even building in which a majority of residents are 60 years of age or older. The term can refer to a movement, which Fredda Vladeck, director of the United Hospital Fund of New York's Aging in Place Initiative and the NORC Action Blueprint Project, describes as "pioneering old age for those who pioneered the first suburbs." Says she: "We're beginning to establish new roles for the elderly and new ways for communities to respond to them," she says. She describes NORC programs as having hundreds of volunteers, including many seniors, who render services and offer activities, such as courses, transportation, meals, home repair and even dog walking so that seniors can remain in their homes. Initiatives from grassroots, community and religious groups are beginning to emerge – for example, Boston has a much publicized NORC, Beacon Hill Village, founded by a group of local residents. In Atlanta, a regional commission is focused on aging in place. In New York, where Vladeck founded the country's first formalized NORC program in 1986 for resident's of Manhattan's Penn South Houses, the city and state have passed legislation to fund NORC programs.
THOSE NORCS (ABOVE) ARE ARRIVING JUST IN TIME: About 6 percent of new housing units in 2003 were built specifically for older adults, and baby boomers are likely to fuel the demand for age-specific housing for years to come, according to home-building experts quoted by Inman News. David Seiders, chief economist of the National Association of Realtors, said 3.2 percent of all housing starts in 2003 were built in 55-and-over age-restricted communities, while about 2.7 percent of all U.S. housing starts that year were designed and marketed to buyers in that same age group. Approximately 42,326 of the age-restricted units, or 75 percent, were single-family units, while the remainder was composed of multifamily units, Seiders observed. There is a "virtual flood of people" approaching the 55-64 age group of the Baby Boom generation, Seiders added.
WHAT DO BUYERS WANT ANYWAY: Conducted by Maritz Research, a new survey by Canadian real estate franchiser Royal LePage has found that renovations often boost a home's value but that too much of a unique style can be detrimental. Thirty-six percent of potential buyers said that they would be willing to pay a premium for a home with updated décor. More men than women viewed décor as a necessity, with 41 per cent of men versus 30 per cent of women acknowledging that they were willing to pay a premium for this feature. When asked which home improvement would be worth a premium, 79 per cent of buyers indicated that they would be willing to pay more for a home with a renovated kitchen. However, when asked whether they would still pay a premium for a renovated kitchen if it was done in a style that was not to their taste, fewer than half of those (42 percent) who originally said they would pay a premium responded favorably. Also according to the poll, 53 per cent of buyers believed strong odors such as pet and cigarette smells had a stronger impact on their impression of a home over overall tidiness and cleanliness, strong wall colors, outdated façade and landscaping. The poll showed that 63 per cent of buyers preferred a higher priced home that does not require any renovations over a lower priced fixer-upper. In addition, while 65 percent of buyers thought that one should have to spend over $5,000 on updating a newly purchased home, 57 percent were willing to spend up to six months updating a newly purchased home and 9 percent of buyers would consider buying a home only if did not require changes. When asked which room of the house had the most significant impact on their purchasing decision, 52 percent said the kitchen and 25 per cent said the living room.
CAN YOU SEE ME NOW? CAN YOU SEE ME NOW?: Electronics companies have started coming out with videophone products geared toward consumers instead of business executives, offering a new range of options for making face-to-face calls, according to the Wall Street Journal. But the market for stand-alone videophones is still small in the U.S., industry analysts say, mainly because many customers don't feel comfortable talking in front of a camera. Viseon Inc., a Dallas-based maker of video telephones, has recently given its traditional-looking VisiFone a makeover, recasting the device as a smart phone that can also give movie trailers and display news headlines. The phone can be hooked up to a television set to allow users to videoconference with more than one person at once. If bundled with a two-year telephone contract, the phone will go for $99 when it becomes available later this month. "The target market is really everybody with broadband," says John Harris, chief executive of Viseon. Other consumer-electronics companies have also made special offerings. 8X8 Inc. of Santa Clara, Calif., is selling its Packet8 DV326 videophone for $149. The broadband phone was selling for $499 two years ago. With the Packet8 broadband videophone, consumers can make unlimited video calling world-wide and unlimited audio calling to anywhere in the U.S. and Canada for a monthly flat rate of $20. The company said it has about 10,000 videophone subscribers today, up from 1,000 at the end of 2004. That is mainly because the technology has improved and the prices for the device and the service have dropped. The video-subscription fee for the Packet8 service is $20, down from $30 in 2004.
MONTGOMERY LENDING LAW IS PUT ON HOLD: A state judge temporarily has enjoined enforcement of a law aimed at discouraging discriminatory lending and set to go into effect this week, reports the Washington Post. Causing more than two dozen of 600 lenders to withdraw from or cease doing business in the county, the legislation raises from $5,000 to $500,000 the maximum damages to which violators would be subjected. The new law sought to protect minority borrowers from having to pay higher interest rates than whites, but lenders contend that the law is too vague and that they have to charge some borrowers more because of credit risk. Aside from the ruling by Circuit Court Judge Michael D. Mason, another blow to backers of the legislation against predatory lending face a legal opinion by the federal Office of Thrift Supervision that the law usurps federal authority illegally. The judge is to hear more on the case in July.
HERE'S SOMETHING OLD UNDER SUN: Traditional Neighborhood Development (TND) communities such as Baldwin Park are luring growing numbers of American home buyers to their quaint, narrow streets, says the Wall Street Journal. And unlike the first wave of these developments - such as Celebration near Orlando and Seaside in the Florida Panhandle, which tended to be built in the suburbs or beyond - the new communities are being heavily concentrated in cities and on former industrial sites. Driving their growth: the combination of plummeting land availability around many cities, along with a growing backlash by home buyers against cookie-cutter suburbs and their often grueling commutes. Built to look like charming villages, with old architecture and homes clustered within walking distance of a town center, only a handful of TND communities were built from the 1980s to mid-1990s. But now, roughly 500 of the communities comprising tens of thousands of homes have now sprouted up across the U.S., according to estimates by New Urban News, an industry trade publication in Ithaca, N.Y. Even big homebuilders are turning to these kinds of developments, which had mainly been the domain of smaller companies. Orlando-based Unicorp National Developments is building about 8,000 homes in 10 separate TND communities, including in Virginia, New York and Arizona. WCI Communities Inc., a builder in Bonita Springs, Fla., says it plans a 1,185-home TND in Danbury, Conn., a 261-home community in East Fishkill, N.Y. and a 537-home project in Tampa, Fla. TNDs typically cost 10-20 percent more to build than a conventional subdivision, building industry officials say. That is because developers of these communities generally include costly touches to the sites, including costly fully-grown trees rather than saplings and old-fashioned streetlamps to give the neighborhood a lived-in look.
SIGN PERMITS ARE NOW LIMITED IN MONTGOMERY COUNTY: A fee-based permit is no longer needed by homeowners to place a For Sale sign on their property under a new law recently approved by the county government, reports Realtor magazine. The Greater Capital Area Association of Realtors says the new law means that a For Sale sign could sit on private property for any length of time so long as it meets the size and placement restrictions in the zoning ordinance. For residential zones, the total sign area must not exceed 10 square feet. Signs advertising a home for sale or an open house that are located in a right-of-way still must have permits.
HOME PRICES CONCERN CONSUMERS: Consumer confidence fell in February as home-buying attitudes dropped to their lowest level in 15 years, according to the University of Michigan's Survey of Consumers, says Inman News. "The latest survey indicates that consumers have adopted a less favorable outlook for economic growth, expressed heightened concerns about potential increases in unemployment, and no longer anticipate any additional declines in the inflation rate," according to Richard Curtin, the director of the University of Michigan's Surveys of Consumers. The Index of Consumer Sentiment was 86.7 in the February 2006 survey, down from 91.2 in January and 94.1 in February 2005. The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, fell to 74.5 in February, from 78.9 in January and 84.4 in the February 2005 survey. The Current Economic Conditions Index was 105.6 in February, down from 110.3 in January and 109.2 in the February 2005. Favorable home-buying attitudes fell to their lowest level in 15 years in February because of increased resistance to high home prices and rising mortgage rates. "Complaints about high home prices were voiced by more consumers in February than any other time during the past quarter century," Curtin added.
FREDDIE MAC ECONOMISTS SAY MARKET SIGNS ARE UNCLEAR: The statistics refuse to indicate the direction of the market definitively, say Frank Nothaft, Amy Crews Cutts and Michael Schoenbeck in their monthly report. The Conventional Mortgage Home Price Index for the fourth quarter of 2005, released March 2, showed that annual growth in home values hit 13 percent nationally. Housing starts in January hit 2.28 million units, the highest pace since 1973. "No signals of a cooling housing market here," they write. "But sales of both new and existing homes fell in January and the inventories of existing single-family homes and condominiums for-sale rose to their highest levels since 1999. These contradictory statistics are signs of a slow down." As they put it, "It may be some time before we see definite trends in the national housing market, especially as measured by changes in home prices. Prices tend to be 'sticky' on the way down as sellers will leave a home on the market longer or offer non-price concessions to buyers.' The prevalence and types of seller concessions are difficult to measure. Nonetheless, we believe the housing market crested during the third quarter of 2005 and that single-digit growth in home values will occur nationally in 2006."
NIMBY RULES: Residents who say Not In My Back Yard, or NIMBY, are in the majority and one in five of them are mad enough to fight, according to a survey conducted by the Center for Economic and Civic Opinion at the University of Massachusetts/Lowell for the Saint Consulting Group, reports Realtor magazine. The survey concluded that 83 percent of suburban Americans don't want new development in their communities and 20 percent have actively opposed growth by joining a neighborhood group, contacting an elected official or signing a petition. Only 40 percent believe their local government does a good job of urban planning, and 70 percent believe the relationships between elected officials and developers render the process unfair.
LENDERS SOMETIMES EMPLOY REPO MEN: Business generally has been slow for the 10,000-odd members in what is known as mortgage field services, the Wall Street Journal observes. Until recently, home prices were rising so fast in much of the U.S. that most people who fell behind on their payments could easily sell their homes for more than they owed the lender and thus avoid foreclosure. That has meant fewer foreclosures and less business for field-services operations, independent contractors hired by lenders to clean up the sometimes horrific messes left by people who lose their houses. But now the people in this little-known trade hope that a cooler housing market will create more work. Kevin McFalls, the owner of JKM Mortgage Field Services, Baltimore, says he already has noticed an uptick in business in the Washington and Baltimore areas and expects a surge in assignments from lenders over the next few years. Rick Taggard, the owner of a field-services company in Porterville, Calif., agrees: "All of us are just waiting, and when it turns around, it's rags to riches again." Preservation is one part of their mission - for example, by turning off water, taking photos to document conditions, fixing a broken door frame or installing a new lock. The total charge for about an hour's work, excluding travel time, might be around $125. Another service would be inspection. When borrowers fall more than a month or two behind on payments, lenders hire field-services companies to check whether the home is still occupied and to note any major damage. Field-service businesses also provide labor to clear out debris after evictions by sheriffs or other law-enforcement people. Usually the people who lived in the house are long gone by the time the foreclosure occurs. When they're not, however, the situation can get, let's say, more interesting.
HOLD EVERYTHING: There's no need to wait until summer to plant containers, notes Washington Post columnist Joel Lerner. You can't plant annuals until after the last frost date, but you can put perennials, trees and shrubs in pots, urns or basins to use outside. Use containers large enough to accommodate several plants; 30 inches in diameter and 16 inches deep is a good size for one woody plant (Japanese maple, false cypress, juniper or any of the many dwarf conifers available at garden centers and nurseries) and three or four small perennials (creeping woolly thyme, lavender, or lily-turf ( Liriope). You can still add a few annuals in May. Plants in pots require careful watering, fertilization, pest control and good drainage.
BUYER REMORSE CAN MAKE OTHER BUYERS REJOICE: So observes the Wall Street Journal with regard to the increasing number of folks who are backing out of their agreements to buy new homes – even if they likely lose their deposits. Last month, KB Home said cancellations rose in December and January, and luxury-home builder Toll Brothers told analysts that its cancellation rate had increased in the fourth quarter. Other builders are also seeing more deals falling through. A recent survey by the National Association of Home Builders found that 20 percent of builders were seeing cancellation rates somewhat or significantly higher than six months earlier. It is particularly noticeable in many California markets and in D.C., Phoenix and Chicago, according to an analysis of 16 major markets prepared for the Journal by Hanley Wood Market Intelligence. In Virginia, Brookfield Homes Corp. is running a "FastMove" special with discounts on roughly 60 homes that are completed or will be ready in 30 days. Among the recent offers: a reduction of nearly $100,000 on a five-bedroom, four-and-a-half-bath home in Lansdowne, originally priced at $997,925. "A lot of those properties were originally sold to someone else," notes Gregg Hughes, a general sales manager in Virginia for Brookfield.
A DECLINE IN PENDING SALES SHOWS SIGNS OF TAPERING OFF: A slide in pending home sales is beginning to level out, an indication of a more sustainable level of home sales in the months ahead, according to the National Association of Realtors (NAR). The Pending Home Sales Index, based on contracts signed in January, slipped 1.1 percent to a level of 116.3 from December; it was 4.8 percent below the previous January. But after hitting a record of 128.2 last August, the index declined at a more rapid pace through December, averaging nearly 3 percentage points per month. The index is derived from pending sales of existing homes, and a score of 100 is equal to the average level of contract activity during 2001, the first year to be examined. The year 2001 also was the first of five consecutive record years for existing-home sales. David Lereah, NAR's chief economist, maintains that the results suggest "we're touching down for the soft landing we've been expecting." Said he: "We are at a much more sustainable level of home sales now – a welcome cooling from the super-heated conditions that were driving exceptional price gains. This will give people the time to be more thoughtful about a process that is the biggest single investment most of us make in our lifetime."
WHAT'S BEIGE AND GREEN AND SEEN ALL OVER: Why, bamboo! Both high-end furniture designers and mass retailers, including Crate and Barrel and La-Z-Boy, are latching onto the stuff in record numbers, says the Wall Street Journal. The new interest in bamboo is yet another plus for China (but undoubtedly a minus for panda bears), the world's No. 1 furniture exporter, according to the Department of Commerce, and that country is the major producer of bamboo plywood. Last year, China exported to the U.S. $33 million of furniture made from bamboo, cane and similar material, a 12.5 percent jump over 2004. Driving the trend is consumers' increasing appetite for all things green and furniture makers' need to find substitutes for ever scarcer hardwoods. Bamboo, which grows rapidly - some kinds can shoot up as many as three or four feet a day - can be split and laminated into boards up to 5 inches thick, fits. "Two years ago, no one knew what bamboo plywood was. Now everyone's making furniture with it," says Bart Bettencourt of Bettencourt Green Building Supplies in Brooklyn, N.Y., who designs $600 bamboo chairs and $3,000 dining tables. For some designers, the switch to bamboo is a quality-control issue. "Because there are now so few old-growth hardwoods, the trees you get are younger and younger, smaller and smaller. The grain pattern looks rough and unruly," says William Lee, owner of Modernlink in New York. "A bamboo collection is consistent every year."
CONNECTICUT COURT SAYS BUYER CAN CANCEL CONDO CONTRACT: A decision in January by a Superior Court judge found that condominium buyers have the right to void a contract without penalty within the review period for assessing condo documents even for a reason not based on that resale package. The case concerned a buyer who put a $10,000 deposit on a property, signed a purchase agreement and had an inspection conducted on the home. During the inspection, the buyer was dissatisfied with the condition of the appliances, but failed to notify the sellers within the inspection contingency period stated in the sales contract. Once she received the condo documents (budget, meeting minutes, bylaws, rules, etc.), the buyer had her attorney notify the seller that she wanted her deposit back. But the seller's attorney argued that, since the buyer hadn't negotiated any credit or replacement of the appliances during the timeframe related to the home inspection, her ability to cancel the contract had lapsed. In its ruling, the Court noted that Connecticut law allows a buyer to cancel so long as it's done within the stated timeframe for reviewing the condo documents. In Connecticut, that period is five business days from receipt of the resale certificate and documents.
RENT INCREASES ARE PRESSURING LOWER-INCOME FOLKS: Affordable apartments are getting harder and harder to find, says a new report from the Harvard University's Joint Center for Housing Studies, according to Realtor magazine. That puts pressure on lower-income families; 70 percent of the seven million lowest-income renters pay more than half of their income for housing, leaving little for other expenses. Median rent rose to $974 in 2004, up 33 percent from $734 10 years earlier, the study found. But median monthly renter income rose only 3 percent during the period, to $2,348. Hardest hit are minority and immigrant renter households. The number of such households will grow and trigger demand for more than 1.8 million rental units between 2005 and 2015, the study concluded. If it were not for foreign-born households, the number of renters would have fallen by more than 2 million, or 5 percent, from 1993 to 2003, instead of rising by 118,000.
HSBC SAYS RENTING MAY BE BETTER THAN BUYING: In a piece too involved to summarize properly, Financial Times quotes an "exhaustive" survey of the U.S. housing market and HSBC economist Ian Morris as saying, "There is not much difference between paying rent to a landlord or interest to a bank." Even removing principal payments from mortgages, new home owners in many areas will be left paying a large premium, according to the research. It finds that annual ownerships in San Francisco or Honolulu – each hardly typical – are 68 and 73 percent greater than renting. Taking into account the added risks of home ownership, HSBC has calculated that prices would need to rise 8.5 percent a year in D.C. over the next seven years to make property ownership worthwhile – "far more than the 20-year average." In this region, HSBC says it would take 12 years before the costs of ownership equaled those of renting. "The chance of falling real home prices is less outlandish than most assume," the FT contends. "Those buying a house in Washington, D.C. in 1989, when prices start to slide in real terms, would have had to wait until 2001 to see a capital gain."
ARMS CONCERN BORROWERS: More than a quarter of American homeowners with adjustable rate mortgages are concerned that they won't be able to make monthly payments if interest rates rise, according to a new poll by the Los Angeles Times and Bloomberg, says Realtor magazine. The poll shows that 21 percent are "not too confident" that they will be able to make monthly payments if their interest rate rise, and 5 percent said they were "not at all confident." Rising housing costs have prompting more home buyers to take out ARMs, which accounted for 13 percent of all prime mortgages in 2005. Despite their concerns over sharply higher payments as their rates re-set, Americans remain upbeat about home values even in the face of waning sales and dropping prices. Nearly 50 percent of those polled said they expect the value of their primary residence to climb by 5 percent to 15 percent over the next three years, with about a quarter of respondents anticipating appreciation of 16 percent or more.
MORTGAGE APPLICATIONS HOLD STEADY: Loan application volume for the week ended March 3 rose 0.7 percent on a seasonally adjusted basis over the previous week. On an unadjusted basis, the increase was 12.9 percent, but it was down 17.8 percent compared with one year earlier. Purchase mortgages slipped by 0.4 percent from the previous week, and refinancings went up by 2.6 percent from the previous week.
THE DEPARTMENT OF UGLY ACRONYMS: Although it's not part of mainstream vocabulary yet, thankfully, the acronym NORC is popping up more and more in discussions about senior housing, reports Realtor magazine. A NORC, or "naturally occurring retirement community," can be any community, neighborhood, apartment complex or even building in which a majority of residents are 60 years of age or older. The term can refer to a movement, which Fredda Vladeck, director of the United Hospital Fund of New York's Aging in Place Initiative and the NORC Action Blueprint Project, describes as "pioneering old age for those who pioneered the first suburbs." Says she: "We're beginning to establish new roles for the elderly and new ways for communities to respond to them," she says. She describes NORC programs as having hundreds of volunteers, including many seniors, who render services and offer activities, such as courses, transportation, meals, home repair and even dog walking so that seniors can remain in their homes. Initiatives from grassroots, community and religious groups are beginning to emerge – for example, Boston has a much publicized NORC, Beacon Hill Village, founded by a group of local residents. In Atlanta, a regional commission is focused on aging in place. In New York, where Vladeck founded the country's first formalized NORC program in 1986 for resident's of Manhattan's Penn South Houses, the city and state have passed legislation to fund NORC programs.
THOSE NORCS (ABOVE) ARE ARRIVING JUST IN TIME: About 6 percent of new housing units in 2003 were built specifically for older adults, and baby boomers are likely to fuel the demand for age-specific housing for years to come, according to home-building experts quoted by Inman News. David Seiders, chief economist of the National Association of Realtors, said 3.2 percent of all housing starts in 2003 were built in 55-and-over age-restricted communities, while about 2.7 percent of all U.S. housing starts that year were designed and marketed to buyers in that same age group. Approximately 42,326 of the age-restricted units, or 75 percent, were single-family units, while the remainder was composed of multifamily units, Seiders observed. There is a "virtual flood of people" approaching the 55-64 age group of the Baby Boom generation, Seiders added.
WHAT DO BUYERS WANT ANYWAY: Conducted by Maritz Research, a new survey by Canadian real estate franchiser Royal LePage has found that renovations often boost a home's value but that too much of a unique style can be detrimental. Thirty-six percent of potential buyers said that they would be willing to pay a premium for a home with updated décor. More men than women viewed décor as a necessity, with 41 per cent of men versus 30 per cent of women acknowledging that they were willing to pay a premium for this feature. When asked which home improvement would be worth a premium, 79 per cent of buyers indicated that they would be willing to pay more for a home with a renovated kitchen. However, when asked whether they would still pay a premium for a renovated kitchen if it was done in a style that was not to their taste, fewer than half of those (42 percent) who originally said they would pay a premium responded favorably. Also according to the poll, 53 per cent of buyers believed strong odors such as pet and cigarette smells had a stronger impact on their impression of a home over overall tidiness and cleanliness, strong wall colors, outdated façade and landscaping. The poll showed that 63 per cent of buyers preferred a higher priced home that does not require any renovations over a lower priced fixer-upper. In addition, while 65 percent of buyers thought that one should have to spend over $5,000 on updating a newly purchased home, 57 percent were willing to spend up to six months updating a newly purchased home and 9 percent of buyers would consider buying a home only if did not require changes. When asked which room of the house had the most significant impact on their purchasing decision, 52 percent said the kitchen and 25 per cent said the living room.
CAN YOU SEE ME NOW? CAN YOU SEE ME NOW?: Electronics companies have started coming out with videophone products geared toward consumers instead of business executives, offering a new range of options for making face-to-face calls, according to the Wall Street Journal. But the market for stand-alone videophones is still small in the U.S., industry analysts say, mainly because many customers don't feel comfortable talking in front of a camera. Viseon Inc., a Dallas-based maker of video telephones, has recently given its traditional-looking VisiFone a makeover, recasting the device as a smart phone that can also give movie trailers and display news headlines. The phone can be hooked up to a television set to allow users to videoconference with more than one person at once. If bundled with a two-year telephone contract, the phone will go for $99 when it becomes available later this month. "The target market is really everybody with broadband," says John Harris, chief executive of Viseon. Other consumer-electronics companies have also made special offerings. 8X8 Inc. of Santa Clara, Calif., is selling its Packet8 DV326 videophone for $149. The broadband phone was selling for $499 two years ago. With the Packet8 broadband videophone, consumers can make unlimited video calling world-wide and unlimited audio calling to anywhere in the U.S. and Canada for a monthly flat rate of $20. The company said it has about 10,000 videophone subscribers today, up from 1,000 at the end of 2004. That is mainly because the technology has improved and the prices for the device and the service have dropped. The video-subscription fee for the Packet8 service is $20, down from $30 in 2004.
MONTGOMERY LENDING LAW IS PUT ON HOLD: A state judge temporarily has enjoined enforcement of a law aimed at discouraging discriminatory lending and set to go into effect this week, reports the Washington Post. Causing more than two dozen of 600 lenders to withdraw from or cease doing business in the county, the legislation raises from $5,000 to $500,000 the maximum damages to which violators would be subjected. The new law sought to protect minority borrowers from having to pay higher interest rates than whites, but lenders contend that the law is too vague and that they have to charge some borrowers more because of credit risk. Aside from the ruling by Circuit Court Judge Michael D. Mason, another blow to backers of the legislation against predatory lending face a legal opinion by the federal Office of Thrift Supervision that the law usurps federal authority illegally. The judge is to hear more on the case in July.
HERE'S SOMETHING OLD UNDER SUN: Traditional Neighborhood Development (TND) communities such as Baldwin Park are luring growing numbers of American home buyers to their quaint, narrow streets, says the Wall Street Journal. And unlike the first wave of these developments - such as Celebration near Orlando and Seaside in the Florida Panhandle, which tended to be built in the suburbs or beyond - the new communities are being heavily concentrated in cities and on former industrial sites. Driving their growth: the combination of plummeting land availability around many cities, along with a growing backlash by home buyers against cookie-cutter suburbs and their often grueling commutes. Built to look like charming villages, with old architecture and homes clustered within walking distance of a town center, only a handful of TND communities were built from the 1980s to mid-1990s. But now, roughly 500 of the communities comprising tens of thousands of homes have now sprouted up across the U.S., according to estimates by New Urban News, an industry trade publication in Ithaca, N.Y. Even big homebuilders are turning to these kinds of developments, which had mainly been the domain of smaller companies. Orlando-based Unicorp National Developments is building about 8,000 homes in 10 separate TND communities, including in Virginia, New York and Arizona. WCI Communities Inc., a builder in Bonita Springs, Fla., says it plans a 1,185-home TND in Danbury, Conn., a 261-home community in East Fishkill, N.Y. and a 537-home project in Tampa, Fla. TNDs typically cost 10-20 percent more to build than a conventional subdivision, building industry officials say. That is because developers of these communities generally include costly touches to the sites, including costly fully-grown trees rather than saplings and old-fashioned streetlamps to give the neighborhood a lived-in look.
SIGN PERMITS ARE NOW LIMITED IN MONTGOMERY COUNTY: A fee-based permit is no longer needed by homeowners to place a For Sale sign on their property under a new law recently approved by the county government, reports Realtor magazine. The Greater Capital Area Association of Realtors says the new law means that a For Sale sign could sit on private property for any length of time so long as it meets the size and placement restrictions in the zoning ordinance. For residential zones, the total sign area must not exceed 10 square feet. Signs advertising a home for sale or an open house that are located in a right-of-way still must have permits.
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