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?