Items of Interest - April 22, 2006
TITLE ISSUES ARE CROPPING UP MORE OFTEN: According to a 2005 member survey by the self-interested American Land Title Association (ALTA), title problems were found in 36 percent of all residential real estate transactions (new and resale homes, and refinances), up from 25 percent in 2000. "The most frequent curative action taken last year was obtaining releases and/or obtaining pay-offs for discovered liens such as prior or existing first or second mortgages, unpaid child and spousal support, outstanding taxes and other judgments against the property. The next most common curative action was obtaining releases for assignment on deeds of trust/and or mortgages, followed closely by recording errors of names, addresses, or legal descriptions of the property. "The booming real estate market over the last several years has increased the number of transactions significantly, which means more title problems are found," said ALTA President Rande Yeager. According to ALTA, homebuyers and regulators alike have recently questioned the value and cost of title insurance. Title insurance is required by lenders prior to the issuance of a loan, even on a refinance, to assure that the title is clear. Before a policy is issued, an extensive search is conducted to locate problems so they can be rectified and the transfer of property and/or loan can proceed. Unlike other forms of insurance that focus on possible future events and charge an annual premium, title insurance is purchased for a one-time fee at closing and protects against loss arising from title hazards and defects that already exist. Title companies often search back 50 years through manual records to find and clear up problems, usually without involving the homebuyer or borrower. Not surprisingly, ALTA advises home buyers to purchase an owner's policy of title insurance in addition to their loan policy.
D.C. EXPANDS ITS FAIR HOUSING ACT: The Office of Human Rights says the 17th and 18th categories have been added to the Human Rights Act of 1977: protection of "genetic information" and "gender identity and expression." In legislation enacted by the District Council amending the Human Rights Act and approved by Congress, employers and health insurers are now prohibited from discriminating against an individual on the basis of genetic information (i.e. DNA that may indicate a person's susceptibility to certain diseases or conditions). For employers, the measure means, among other things, that they cannot request, require or administer a genetic test to employees or applicants for employment. In another amendment to the Act, individuals in the transgender or transsexual community are protected from discrimination in employment, housing, educational institutions and public accommodations based on their gender identity or expression. The effect of this amendment is to require that entities and individuals respect a person's gender identity or expression by treating that individual on the basis of how he or she wants to appear rather than the presumed gender or sex of that individual. Anyone who believes that he or she has encountered discrimination on the basis of gender identity or expression can file a complaint with the Office of Human Rights if the alleged act occurred on or after March 8, 2006.
CUT IT OUT: In a long and informative article about cutting gardens, Joel M. Lerner notes they should include at least three types of plant forms: spires such as liatris, gladiolus and salvia; round such as roses, peonies and marigolds; and lacy such as ferns, baby's breath and dill. Some vegetables such as artichokes can look great in big bouquet, as will branches of flowering trees and trailing vines such as vinca and ivy. You can add texture to an arrangement with foliage and ornamental grasses, and Lerner says planting a cutting garden doesn't have to be a big deal or occupy a big space. But a dogwood would, wouldn't it?
BUYERS CONTINUE TO EXPECT APPRECIATION: In a survey returned to Stewart Title by 1,125 first-time and repeat home buyers, U.S. home buyers expect their home values to increase in value by a median10 percent over the next year. The single-page survey was distributed to home buyers following closings in the last eight business days of March 2006. No home buyers anticipated that that their property would decline in value. The respondents' estimates were in line with the national average as reported by the Office of Federal Housing Enterprise Oversight (OFHEO), which found a one-year 12.95 percent average increase in housing values for 2005. Asked what one facet of the home buying process needs most improvement, they sounded two distinct notes: The amount of paper involved, and the amount (or lack of) communication in the transaction. "In this day and age of technology, buyers expect much greater use of technology and less paper - and they expect better communication from the parties in the transaction," said Dr. Ted C. Jones, senior vice president and chief economist, who formulated the survey and analyzed the results. "These findings validate the title industry's push towards a paperless process with electronic signatures and transaction management via the Internet."
OR NOT (SEE ABOVE): Seventy-one percent of consumers say it is likely that a housing bubble could occur in the U.S. within the next year, according to the latest survey for the Experian credit-rating agency by the Gallup Organization. Twenty-four percent say such a housing bubble is not likely. In contrast, a much smaller number of consumers, 32 percent, expect the collapse of a housing bubble within their own area in the next year, and 65 percent say it is not likely. When the time period is extended to three years, 42 percent say such a situation is likely in their area, and 56 percent say it is not. In May 2005, a similar question found a slightly less pessimistic view, with 37 percent of consumers expecting a housing bubble to burst within the next three years and 61 percent saying that was not likely. This year, about half of all Americans (53 percent) recognize the term "housing bubble" without explanation - up from 35 percent a year ago. Has a bubble burst anywhere? Not yet. When it comes to predicting changes in housing prices in their own areas, 38 percent of consumers say they expect housing prices to stay the same (27 percent) or decline (11 percent) over the next year- up from 29 percent a year ago. Sixty percent expect an increase. Among all consumers, 41 percent expect housing prices to rise by at least 5 percent, including 20 percent who expect increases of at least 10 percent. At the other end of the spectrum, only 7 percent of all consumers expect housing prices to fall by at least 5 percent, including 4 percent who expect prices to fall by at least 10 percent.
KEVIN COSTNER IS DANCING WITH DOLLARS: He paid $28.5 million for a 17-acre oceanfront property in Santa Barbara County last month, reports the Wall Street Journal. In the town of Carpinteria about 12 miles south of the city of Santa Barbara, the ranch-style property has almost 950 feet of ocean frontage; two dwellings that contain a total of five bedrooms and three bathrooms; equestrian facilities; and a polo practice field. He's hanging onto another home in the community after listing it for $24 million, apparently until work is finished on the new purchase. Costner also owns a ranch in Aspen and last month sold for $11.5 million a house in Hollywood Hills. Those wolves don't seem to be scratching at his door, but he'd better watch out for those California coyotes.
WHERE TO MARRY A MILLIONAIRE: Imagine where the nation's millionaires reside, and you may first think of fast-paced New York City, glamorous Los Angeles, or innovative San Francisco, notes Kiplinger's. But while these areas boast some of the largest numbers of wealthy residents, you actually have a greater chance of meeting a millionaire in less obvious locales - say, Los Alamos, N.M. or Sarasota, Fla. It comes down to simple arithmetic. The Big Apple, for example, has by far the most millionaire households - 700,195. But with more than 6.8 million households in the New York metropolitan area, only one in ten boast a net worth of $1 million or more. On the other hand, in Los Alamos, you double your chance of meeting a millionaire. The town may have fewer than 8,000 households, but one in five is worth at least a million bucks. The reason: The main industry in town is the famed Los Alamos National Laboratory, a magnet for well-paid government scientists. As a whole, about 8 percent of the nation's households are millionaires. The top cities tend to fall in one of three categories: They are popular with wealthy retirees, are home to innovators and gifted talent pools, and have a high concentration of corporations and highly paid executives. Also, the wealthy also seem to gather near the country's coasts. Nine of the top ten cities on Kiplinger's list are on the Atlantic, Pacific or Gulf coasts. And Florida seems to be one of the most popular states among millionaires - three of the places with the highest concentration of über-wealthy are in the Sunshine State, which has no estate tax.
BUILDER CONFIDENCE TEETERS ON THE BRINK OF PESSIMISM: Rising mortgage rates, continued affordability issues and subsiding demand from investors/speculators are prompting single-family home builders to adjust their perspectives on the new-home market, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for April. The HMI declined four points from a downwardly revised reading in the previous month to hit 50 for the latest report. The HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. All three component indexes slipped this month, with the largest decline registered for current single-family sales. That component declined five points to 54 in April, while the component for sales expectations in the next six months was down four points to 58 and the component gauging traffic of prospective buyers declined a single point to 39.
PROBABLY HIS THEATER TICKETS WOULD SELL HIGHER: The Bel Air, Md., boyhood home of Abraham Lincoln assassin John Wilkes Booth has failed to sell at auction, according to the Baltimore Sun in Realtor magazine. Only 25 people showed up and only two were registered bidders. The auctioneers started the bidding at $875,000, but it dropped quickly until it hit $805,000, then was withdrawn. The seller Robert Baker and his wife Beth, who own a landscaping business, bought the house at auction in 1999 for $415,000.
FORECLOSURES ARE PICKING UP, ESPECIALLY IN THE MIDWEST: As home-price appreciation has tapered off and mortgage rates have risen, foreclosure rates are rising, according to the Wall Street Journal. The rate of foreclosure - the process by which lenders can ultimately take back the properties that secure mortgages - is a key indicator that real-estate analysts and investors use as a signal of market distress. In the past several years, foreclosures across the U.S. have been hovering around historically low levels, as home prices have risen nearly 50 percent in five years. Now, a survey of the latest data confirms, that is starting to change, with an uptick across the U.S. in foreclosure rates and mortgage delinquencies (or late mortgage payments). But even the new higher rates of foreclosure and delinquencies are still low in historic terms. Nationally, the number of mortgage loans that entered some stage of foreclosure rose to 117,259 in February, up 68 percent from the same month a year earlier, according to the online foreclosure-data service RealtyTrac. Delinquencies are up as well. Data provider LoanPerformance reported that 3 percent of the most vulnerable loans - those made to borrowers with less than a stellar credit history - were 90 days delinquent in February. That is up from 2.84 percent in February 2005. Meanwhile, 90-day delinquencies for loans made to borrowers with better credit were up to 0.76 percent in February, from 0.67 percent a year earlier. The data show that three states in the Midwest consistently have among the highest rates of loan foreclosures and delinquencies: Indiana, Ohio and Michigan. Behind the change are two primary drivers, said Lou Barnes, a partner with mortgage banking firm Boulder West Financial Services in Boulder, Colo. One is family economic distress, often related to job loss or divorce. Another is a slowing pace of home-price gains.
PLEASE PASS THE BUTTERMILK: Old fieldstone walls built in the 18th century still can be found from Maine to Pennsylvania, but many are being taken down to meet demand for salvaged-stone fireplaces and front walkways, according to This Old House in Realtor magazine. Some are dismantled and sold to stoneyards by property owners; others are broken down by thieves looking to capitalize on their increased value. A palette of lichen-encrusted fieldstone currently is priced at about $210, marking a 45-percent gain from $145 four years ago. Stone Wall Initiative founder Dr. Robert Thorson calls fieldstone "the signature for the rural New England landscape." Thorson, a University of Connecticut geology professor, is encouraging the preservation of the 150,000 miles of historic walls that remain standing, underscoring their importance in guarding against erosion and providing homes for numerous animals. Thorson says consumers who want to duplicate the historic look can give new stone an aged appearance with a folklore recipe of buttermilk and moss. He didn't specify quantities.
HOW'S THIS FOR SPIN: The pace of new-home construction continued what the National Association of Home Builders (NAHB) termed "its orderly cooldown" in March, dipping 7.8 percent for the month. The results followed a brief surge earlier this year caused in part by unseasonably pleasant winter weather across the nation. Total housing starts dropped to a seasonally adjusted annual rate of 1.960 million units in March, the Commerce Department reported. The rate of construction for the first quarter of 2006 was 2.131 million units, the strongest pace for any quarter of the current economic expansion. Single-family housing starts were down 12.0 percent for the month. "The sizeable declines in housing starts for March partly reflected a return to more normal weather patterns, but it's clear that builders are adjusting their production levels to the lower levels of demand evident in the market," commented NAHB Chief Economist David Seiders. "We should see some further declines in starts as the year progresses, but we're expecting an orderly transition to more sustainable levels rather than an abrupt housing contraction. NAHB expects housing starts to decline by about 6 percent for 2006 as a whole, mainly because of a reduced role for investors/speculators." Significantly, issuance of total building permits decreased 5.5 percent in March. Single-family permit issuance was down 6.9 percent.
BUT YOU STILL CAN COUNT ON OLD BLOOD: Although the number of real estate licensees in the United States has surged in recent years, a new survey shows that real estate is far from a popular career option among college students who are nearing graduation, according to Realtor magazine. Of more than 2,700 students from 500 colleges and universities, only 131 - about 5 percent - said real estate is their top field of interest, according to the fourth-annual College Graduate Career Survey conducted by Boston-based Experience, a recruiting and career services firm. The most popular career choices for soon-to-be college grads are education, communications and media, entertainment and the arts, financial services, and nonprofit work.
IS THE GRASS ALWAYS GREENER: A recent survey from the National Gardening Association (NGA) and Organic Gardening magazine found that, while only 5 percent of U.S. households now use all-organic methods in their yards, the Wall Street Journal notes that some 21 percent said they would definitely or probably do so in the future. "It says to me that it's going mainstream," says Bruce Butterfield, the NGA's research director. The health effects of treating lawns with pesticides are hotly debated, but a growing body of research suggests that some commonly used synthetic pesticides may pose health risks, particularly to children and pets. And environmentalists are concerned about chemical runoff into streams and rivers. Nearly two dozen states, including New York and Wisconsin, now require public notification when pesticides are being applied by professionals, according to Beyond Pesticides, an advocacy group. At least 13 U.S. towns, including Lawrence, Kan. and Chatham, N.J., have pesticide-free parks, and 33 states and several hundred school districts have laws or policies designed to minimize kids' exposure to pesticides. Just last year, New York City passed legislation requiring the city to phase out acutely toxic pesticides on city-owned or leased property and make commercial landscapers give neighbors notice before spraying certain pesticides. But champions of organic lawns concede that taking the organic route may be more work and more pricey: A 3,000-square-foot lawn that costs $200 a year to maintain with synthetics might cost twice as much using organic substitutes. As with food, there's debate about how beneficial the all-natural approach truly is. Some turf experts say plants thrive equally well with synthetic and organic nutrients. Frank Rossi, a professor of turfgrass science at Cornell University, adds that organics give users a false sense of security. For instance, he says, runoff of certain organic fertilizers with high concentrations of phosphorus can harm streams and rivers. "Some people think because it's organic, there's absolutely no harm you can do with it," Rossi says. "That's a lie."
ARCHITECTS REPORT SLIGHTLY LESS BUSINESS: Although the American Institute of Architects (AIA) says billings at member firms slipped in March, results remained in positive territory for the eighteenth consecutive month according to Inman News. The Architecture Billings Index, a leading economic indicator of nonresidential construction activity, had a March rating of 50.5 (with any score above 50 indicating an increase), down from 55.5 in February. "While the index has leveled off a bit compared to previous scores, there are enough nonresidential projects slated to begin construction over the next several months that this month's numbers should not be cause for concern," said AIA Chief Economist Kermit Baker. "In terms of the nonresidential construction market, the retail, education and health-care sectors have all increased at a double-digit rate in February compared to year-ago levels."
REMODELING ACTIVITY EASES: Estimated recent growth of homeowner remodeling spending has eased substantially but still remains near its long term rate of 5 percent. According to the Remodeling Activity Indicator (RAI) devised by Harvard's Joint Center for Housing Studies, homeowners spent over an estimated $155 billion on home improvements and repairs over the past four quarters, representing a 4.5 percent increase. Said Center Director Nicolas P. Retsinas: "Rising interest rates and a cooling housing market have started to impact spending on home improvements. Delays in initiating major improvement projects are likely to moderate spending over the next year." Kermit Baker, director of the Remodeling Futures Program of the Joint Center, foresees that remodeling will follow home building "into a period of slower growth in the months ahead."
NEW FIXED-RATE MORTGAGES ARE GAINING GROUND: As rising mortgage rates drive up the costs of buying a home, the Wall Street Journal observes that consumer demand has soared for a recently introduced type of mortgage that offers the security of a fixed interest rate but with relatively low monthly payments in the loan's early years. So-called fixed-rate interest-only mortgages allow borrowers to lock in an interest rate for the life of the loan, while reducing their monthly outlays by paying interest and no principal, typically for the first 10 or 15 years. These loans, which barely existed two years ago, now account for roughly 8 percent of all new residential mortgages taken out, says UBS, a financial services firm. Borrowers took out roughly $39 billion of these mortgages last year, up from just $7.9 billion in 2004, according to UBS, which analyzed loans that are packaged into mortgage-backed securities. But these mortgages have significant drawbacks. Borrowers who make interest-only payments on a regular basis don't build up any equity in their homes, apart from any increase resulting from rising property values. And homeowners can be hit with sharply higher monthly payments once the interest-only period ends and the borrower is then obliged to repay the balance of the mortgage over the rest of the loan's term. Payments in the loan's later years include both interest and principal. What's more, the savings aren't as great as borrowers might imagine. That's partly because fixed-rate interest-only mortgages typically carry a rate that is one-eighth to three-eighths of a percentage point higher than the rate on a traditional 30-year fixed-rate mortgage.
HOUSINGS COSTS ARE PUSHING MANY FROM THE CITIES: They are driving the middle class into the suburbs and even further, according to U.S. Census data, reports the New York Times in Realtor magazine. Smaller, wealthier households are replacing larger families in many big metropolitan areas. That drives up housing prices even as the population shrinks, chasing away even more members of the middle class. Nearly every large metropolitan area had more people move out than move in from 2000 to 2004, with a few exceptions in the South and Southwest. The states that attracted the most new residents were Florida, Arizona and Nevada. The states that lost the most were New York, California and Illinois. Metropolitan areas that attracted the most new residents were Phoenix, Tampa-St. Petersburg, Fla., Atlanta and Dallas-Fort Worth.
MORTGAGE VOLUME DECLINES: The Mortgage Bankers Association (MBA) says the decrease for the week ended April 14 was 1.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the decline was 1.4 percent. Compared with a year earlier, loan applications went down 14.9 percent. Seasonally adjusted, purchase applications decreased by 2.5 percent from the previous week, and refinancings decreased by 0.4 percent. The refinance share of mortgage activity increased to 36.4 percent of total applications from 36.0 percent the previous week, and the adjustable-rate mortgage (ARM) share increased to 28.9 percent.
THE QUESTION ISN'T WHY, BUT HOW: The Riverside County Sheriff's Department is investigating fraud allegations against Haydee Jerez Verdugo, a Palm Desert real estate agent, according to news reports cited by Inman News. Several former clients have said that Verdugo sold all of them the same vacant lot in North Palm Springs. They have filed legal complaints charging that she took thousands of dollars from them, the Desert Sun newspaper reported. Sheriff's deputies searched Verdugo's former business and residential addresses last month, the newspaper said. And lawyers for many of Verdugo's former clients said this week that Verdugo failed to file paperwork in time to meet a court deadline in a civil case filed against her. One lawyer is representing 21 buyers who allege they have learned that Verdugo was selling them the same piece of property, and another lawyer is representing 18 others who say they also lost money to Verdugo, according to an online report by news station KESQ. The civil lawsuit was filed in February at Riverside County Superior Court in Indio. No criminal charges have yet been filed against Verdugo, according to the reports, which carried no response from the agent.
WEALTHY CONSUMERS ARE TURNING TO MARGIN ACCOUNTS: As borrowing costs rise, wealthy consumers are taking another look at margin loans - borrowing against securities to buy houses and boats and meet obligations, says the Wall Street Journal in Realtor magazine. These loans come with unique risk. If the value of the investor's portfolio declines by 30 percent to 50 percent, the brokerage firm can call the loan, demanding additional cash to restore the account. But rates and terms are so attractive - less than 4 percent in many cases - that borrowers are willing to give margin loans a try. On a margin account, investors can typically borrow 90 percent or more of the value of U.S. Treasurys but just 50 percent of the value of large-company stocks. The loan is tax deductible only if it is used to buy additional investments.
MORTGAGE RATES ARE LOOKING UP, AGAIN, TO FOUR-YEAR HIGH: The 30-year fixed-rate mortgage (FRM) averaged 6.53 percent this week, up from 6.49 percent, reports Freddie Mac. Last year at this time, it was 5.80 percent. The 30-year FRM has not been higher since the week ending July 12, 2002, when it averaged 6.54 percent. The average for the 15-year FRM was 6.17 percent this week, up from last week's 6.14 percent and last year's 5.36 percent. The 15-year FRM has not been higher since the week ending June 13, 2002, when it averaged 6.17 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were 6.16 percent this week compared with 6.13 percent last week and 5.22 percent one year earlier. One-year Treasury-indexed ARMs averaged 5.63 percent this week, up from 5.61 percent last week and 4.26 percent last year. "Mortgage rates drifted upward this week following the release of the Consumer and Producer Price Indexes for March, which came in at the upper end of market expectations for inflation," said Frank Nothaft, Freddie Mac vice president and chief economist. "Even though lenders are offering greater interest rate discounts on ARMs, the interest rate savings has declined relative to fixed-rate mortgages. . . If the Fed continues to raise short-term rates, the ARM share will likely decline further."
YOU CAN RECYCLE RESPONSIBLY FOR EARTH DAY: The District's spring e-cycling program offers residents a safe way to dispose of hazardous household waste and electronic equipment on Saturday, April 22 from 9 a.m. to 3 p.m. at the Carter Barron Amphitheatre. More info: dpw.dc.gov.
D.C. EXPANDS ITS FAIR HOUSING ACT: The Office of Human Rights says the 17th and 18th categories have been added to the Human Rights Act of 1977: protection of "genetic information" and "gender identity and expression." In legislation enacted by the District Council amending the Human Rights Act and approved by Congress, employers and health insurers are now prohibited from discriminating against an individual on the basis of genetic information (i.e. DNA that may indicate a person's susceptibility to certain diseases or conditions). For employers, the measure means, among other things, that they cannot request, require or administer a genetic test to employees or applicants for employment. In another amendment to the Act, individuals in the transgender or transsexual community are protected from discrimination in employment, housing, educational institutions and public accommodations based on their gender identity or expression. The effect of this amendment is to require that entities and individuals respect a person's gender identity or expression by treating that individual on the basis of how he or she wants to appear rather than the presumed gender or sex of that individual. Anyone who believes that he or she has encountered discrimination on the basis of gender identity or expression can file a complaint with the Office of Human Rights if the alleged act occurred on or after March 8, 2006.
CUT IT OUT: In a long and informative article about cutting gardens, Joel M. Lerner notes they should include at least three types of plant forms: spires such as liatris, gladiolus and salvia; round such as roses, peonies and marigolds; and lacy such as ferns, baby's breath and dill. Some vegetables such as artichokes can look great in big bouquet, as will branches of flowering trees and trailing vines such as vinca and ivy. You can add texture to an arrangement with foliage and ornamental grasses, and Lerner says planting a cutting garden doesn't have to be a big deal or occupy a big space. But a dogwood would, wouldn't it?
BUYERS CONTINUE TO EXPECT APPRECIATION: In a survey returned to Stewart Title by 1,125 first-time and repeat home buyers, U.S. home buyers expect their home values to increase in value by a median10 percent over the next year. The single-page survey was distributed to home buyers following closings in the last eight business days of March 2006. No home buyers anticipated that that their property would decline in value. The respondents' estimates were in line with the national average as reported by the Office of Federal Housing Enterprise Oversight (OFHEO), which found a one-year 12.95 percent average increase in housing values for 2005. Asked what one facet of the home buying process needs most improvement, they sounded two distinct notes: The amount of paper involved, and the amount (or lack of) communication in the transaction. "In this day and age of technology, buyers expect much greater use of technology and less paper - and they expect better communication from the parties in the transaction," said Dr. Ted C. Jones, senior vice president and chief economist, who formulated the survey and analyzed the results. "These findings validate the title industry's push towards a paperless process with electronic signatures and transaction management via the Internet."
OR NOT (SEE ABOVE): Seventy-one percent of consumers say it is likely that a housing bubble could occur in the U.S. within the next year, according to the latest survey for the Experian credit-rating agency by the Gallup Organization. Twenty-four percent say such a housing bubble is not likely. In contrast, a much smaller number of consumers, 32 percent, expect the collapse of a housing bubble within their own area in the next year, and 65 percent say it is not likely. When the time period is extended to three years, 42 percent say such a situation is likely in their area, and 56 percent say it is not. In May 2005, a similar question found a slightly less pessimistic view, with 37 percent of consumers expecting a housing bubble to burst within the next three years and 61 percent saying that was not likely. This year, about half of all Americans (53 percent) recognize the term "housing bubble" without explanation - up from 35 percent a year ago. Has a bubble burst anywhere? Not yet. When it comes to predicting changes in housing prices in their own areas, 38 percent of consumers say they expect housing prices to stay the same (27 percent) or decline (11 percent) over the next year- up from 29 percent a year ago. Sixty percent expect an increase. Among all consumers, 41 percent expect housing prices to rise by at least 5 percent, including 20 percent who expect increases of at least 10 percent. At the other end of the spectrum, only 7 percent of all consumers expect housing prices to fall by at least 5 percent, including 4 percent who expect prices to fall by at least 10 percent.
KEVIN COSTNER IS DANCING WITH DOLLARS: He paid $28.5 million for a 17-acre oceanfront property in Santa Barbara County last month, reports the Wall Street Journal. In the town of Carpinteria about 12 miles south of the city of Santa Barbara, the ranch-style property has almost 950 feet of ocean frontage; two dwellings that contain a total of five bedrooms and three bathrooms; equestrian facilities; and a polo practice field. He's hanging onto another home in the community after listing it for $24 million, apparently until work is finished on the new purchase. Costner also owns a ranch in Aspen and last month sold for $11.5 million a house in Hollywood Hills. Those wolves don't seem to be scratching at his door, but he'd better watch out for those California coyotes.
WHERE TO MARRY A MILLIONAIRE: Imagine where the nation's millionaires reside, and you may first think of fast-paced New York City, glamorous Los Angeles, or innovative San Francisco, notes Kiplinger's. But while these areas boast some of the largest numbers of wealthy residents, you actually have a greater chance of meeting a millionaire in less obvious locales - say, Los Alamos, N.M. or Sarasota, Fla. It comes down to simple arithmetic. The Big Apple, for example, has by far the most millionaire households - 700,195. But with more than 6.8 million households in the New York metropolitan area, only one in ten boast a net worth of $1 million or more. On the other hand, in Los Alamos, you double your chance of meeting a millionaire. The town may have fewer than 8,000 households, but one in five is worth at least a million bucks. The reason: The main industry in town is the famed Los Alamos National Laboratory, a magnet for well-paid government scientists. As a whole, about 8 percent of the nation's households are millionaires. The top cities tend to fall in one of three categories: They are popular with wealthy retirees, are home to innovators and gifted talent pools, and have a high concentration of corporations and highly paid executives. Also, the wealthy also seem to gather near the country's coasts. Nine of the top ten cities on Kiplinger's list are on the Atlantic, Pacific or Gulf coasts. And Florida seems to be one of the most popular states among millionaires - three of the places with the highest concentration of über-wealthy are in the Sunshine State, which has no estate tax.
BUILDER CONFIDENCE TEETERS ON THE BRINK OF PESSIMISM: Rising mortgage rates, continued affordability issues and subsiding demand from investors/speculators are prompting single-family home builders to adjust their perspectives on the new-home market, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for April. The HMI declined four points from a downwardly revised reading in the previous month to hit 50 for the latest report. The HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. All three component indexes slipped this month, with the largest decline registered for current single-family sales. That component declined five points to 54 in April, while the component for sales expectations in the next six months was down four points to 58 and the component gauging traffic of prospective buyers declined a single point to 39.
PROBABLY HIS THEATER TICKETS WOULD SELL HIGHER: The Bel Air, Md., boyhood home of Abraham Lincoln assassin John Wilkes Booth has failed to sell at auction, according to the Baltimore Sun in Realtor magazine. Only 25 people showed up and only two were registered bidders. The auctioneers started the bidding at $875,000, but it dropped quickly until it hit $805,000, then was withdrawn. The seller Robert Baker and his wife Beth, who own a landscaping business, bought the house at auction in 1999 for $415,000.
FORECLOSURES ARE PICKING UP, ESPECIALLY IN THE MIDWEST: As home-price appreciation has tapered off and mortgage rates have risen, foreclosure rates are rising, according to the Wall Street Journal. The rate of foreclosure - the process by which lenders can ultimately take back the properties that secure mortgages - is a key indicator that real-estate analysts and investors use as a signal of market distress. In the past several years, foreclosures across the U.S. have been hovering around historically low levels, as home prices have risen nearly 50 percent in five years. Now, a survey of the latest data confirms, that is starting to change, with an uptick across the U.S. in foreclosure rates and mortgage delinquencies (or late mortgage payments). But even the new higher rates of foreclosure and delinquencies are still low in historic terms. Nationally, the number of mortgage loans that entered some stage of foreclosure rose to 117,259 in February, up 68 percent from the same month a year earlier, according to the online foreclosure-data service RealtyTrac. Delinquencies are up as well. Data provider LoanPerformance reported that 3 percent of the most vulnerable loans - those made to borrowers with less than a stellar credit history - were 90 days delinquent in February. That is up from 2.84 percent in February 2005. Meanwhile, 90-day delinquencies for loans made to borrowers with better credit were up to 0.76 percent in February, from 0.67 percent a year earlier. The data show that three states in the Midwest consistently have among the highest rates of loan foreclosures and delinquencies: Indiana, Ohio and Michigan. Behind the change are two primary drivers, said Lou Barnes, a partner with mortgage banking firm Boulder West Financial Services in Boulder, Colo. One is family economic distress, often related to job loss or divorce. Another is a slowing pace of home-price gains.
PLEASE PASS THE BUTTERMILK: Old fieldstone walls built in the 18th century still can be found from Maine to Pennsylvania, but many are being taken down to meet demand for salvaged-stone fireplaces and front walkways, according to This Old House in Realtor magazine. Some are dismantled and sold to stoneyards by property owners; others are broken down by thieves looking to capitalize on their increased value. A palette of lichen-encrusted fieldstone currently is priced at about $210, marking a 45-percent gain from $145 four years ago. Stone Wall Initiative founder Dr. Robert Thorson calls fieldstone "the signature for the rural New England landscape." Thorson, a University of Connecticut geology professor, is encouraging the preservation of the 150,000 miles of historic walls that remain standing, underscoring their importance in guarding against erosion and providing homes for numerous animals. Thorson says consumers who want to duplicate the historic look can give new stone an aged appearance with a folklore recipe of buttermilk and moss. He didn't specify quantities.
HOW'S THIS FOR SPIN: The pace of new-home construction continued what the National Association of Home Builders (NAHB) termed "its orderly cooldown" in March, dipping 7.8 percent for the month. The results followed a brief surge earlier this year caused in part by unseasonably pleasant winter weather across the nation. Total housing starts dropped to a seasonally adjusted annual rate of 1.960 million units in March, the Commerce Department reported. The rate of construction for the first quarter of 2006 was 2.131 million units, the strongest pace for any quarter of the current economic expansion. Single-family housing starts were down 12.0 percent for the month. "The sizeable declines in housing starts for March partly reflected a return to more normal weather patterns, but it's clear that builders are adjusting their production levels to the lower levels of demand evident in the market," commented NAHB Chief Economist David Seiders. "We should see some further declines in starts as the year progresses, but we're expecting an orderly transition to more sustainable levels rather than an abrupt housing contraction. NAHB expects housing starts to decline by about 6 percent for 2006 as a whole, mainly because of a reduced role for investors/speculators." Significantly, issuance of total building permits decreased 5.5 percent in March. Single-family permit issuance was down 6.9 percent.
BUT YOU STILL CAN COUNT ON OLD BLOOD: Although the number of real estate licensees in the United States has surged in recent years, a new survey shows that real estate is far from a popular career option among college students who are nearing graduation, according to Realtor magazine. Of more than 2,700 students from 500 colleges and universities, only 131 - about 5 percent - said real estate is their top field of interest, according to the fourth-annual College Graduate Career Survey conducted by Boston-based Experience, a recruiting and career services firm. The most popular career choices for soon-to-be college grads are education, communications and media, entertainment and the arts, financial services, and nonprofit work.
IS THE GRASS ALWAYS GREENER: A recent survey from the National Gardening Association (NGA) and Organic Gardening magazine found that, while only 5 percent of U.S. households now use all-organic methods in their yards, the Wall Street Journal notes that some 21 percent said they would definitely or probably do so in the future. "It says to me that it's going mainstream," says Bruce Butterfield, the NGA's research director. The health effects of treating lawns with pesticides are hotly debated, but a growing body of research suggests that some commonly used synthetic pesticides may pose health risks, particularly to children and pets. And environmentalists are concerned about chemical runoff into streams and rivers. Nearly two dozen states, including New York and Wisconsin, now require public notification when pesticides are being applied by professionals, according to Beyond Pesticides, an advocacy group. At least 13 U.S. towns, including Lawrence, Kan. and Chatham, N.J., have pesticide-free parks, and 33 states and several hundred school districts have laws or policies designed to minimize kids' exposure to pesticides. Just last year, New York City passed legislation requiring the city to phase out acutely toxic pesticides on city-owned or leased property and make commercial landscapers give neighbors notice before spraying certain pesticides. But champions of organic lawns concede that taking the organic route may be more work and more pricey: A 3,000-square-foot lawn that costs $200 a year to maintain with synthetics might cost twice as much using organic substitutes. As with food, there's debate about how beneficial the all-natural approach truly is. Some turf experts say plants thrive equally well with synthetic and organic nutrients. Frank Rossi, a professor of turfgrass science at Cornell University, adds that organics give users a false sense of security. For instance, he says, runoff of certain organic fertilizers with high concentrations of phosphorus can harm streams and rivers. "Some people think because it's organic, there's absolutely no harm you can do with it," Rossi says. "That's a lie."
ARCHITECTS REPORT SLIGHTLY LESS BUSINESS: Although the American Institute of Architects (AIA) says billings at member firms slipped in March, results remained in positive territory for the eighteenth consecutive month according to Inman News. The Architecture Billings Index, a leading economic indicator of nonresidential construction activity, had a March rating of 50.5 (with any score above 50 indicating an increase), down from 55.5 in February. "While the index has leveled off a bit compared to previous scores, there are enough nonresidential projects slated to begin construction over the next several months that this month's numbers should not be cause for concern," said AIA Chief Economist Kermit Baker. "In terms of the nonresidential construction market, the retail, education and health-care sectors have all increased at a double-digit rate in February compared to year-ago levels."
REMODELING ACTIVITY EASES: Estimated recent growth of homeowner remodeling spending has eased substantially but still remains near its long term rate of 5 percent. According to the Remodeling Activity Indicator (RAI) devised by Harvard's Joint Center for Housing Studies, homeowners spent over an estimated $155 billion on home improvements and repairs over the past four quarters, representing a 4.5 percent increase. Said Center Director Nicolas P. Retsinas: "Rising interest rates and a cooling housing market have started to impact spending on home improvements. Delays in initiating major improvement projects are likely to moderate spending over the next year." Kermit Baker, director of the Remodeling Futures Program of the Joint Center, foresees that remodeling will follow home building "into a period of slower growth in the months ahead."
NEW FIXED-RATE MORTGAGES ARE GAINING GROUND: As rising mortgage rates drive up the costs of buying a home, the Wall Street Journal observes that consumer demand has soared for a recently introduced type of mortgage that offers the security of a fixed interest rate but with relatively low monthly payments in the loan's early years. So-called fixed-rate interest-only mortgages allow borrowers to lock in an interest rate for the life of the loan, while reducing their monthly outlays by paying interest and no principal, typically for the first 10 or 15 years. These loans, which barely existed two years ago, now account for roughly 8 percent of all new residential mortgages taken out, says UBS, a financial services firm. Borrowers took out roughly $39 billion of these mortgages last year, up from just $7.9 billion in 2004, according to UBS, which analyzed loans that are packaged into mortgage-backed securities. But these mortgages have significant drawbacks. Borrowers who make interest-only payments on a regular basis don't build up any equity in their homes, apart from any increase resulting from rising property values. And homeowners can be hit with sharply higher monthly payments once the interest-only period ends and the borrower is then obliged to repay the balance of the mortgage over the rest of the loan's term. Payments in the loan's later years include both interest and principal. What's more, the savings aren't as great as borrowers might imagine. That's partly because fixed-rate interest-only mortgages typically carry a rate that is one-eighth to three-eighths of a percentage point higher than the rate on a traditional 30-year fixed-rate mortgage.
HOUSINGS COSTS ARE PUSHING MANY FROM THE CITIES: They are driving the middle class into the suburbs and even further, according to U.S. Census data, reports the New York Times in Realtor magazine. Smaller, wealthier households are replacing larger families in many big metropolitan areas. That drives up housing prices even as the population shrinks, chasing away even more members of the middle class. Nearly every large metropolitan area had more people move out than move in from 2000 to 2004, with a few exceptions in the South and Southwest. The states that attracted the most new residents were Florida, Arizona and Nevada. The states that lost the most were New York, California and Illinois. Metropolitan areas that attracted the most new residents were Phoenix, Tampa-St. Petersburg, Fla., Atlanta and Dallas-Fort Worth.
MORTGAGE VOLUME DECLINES: The Mortgage Bankers Association (MBA) says the decrease for the week ended April 14 was 1.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the decline was 1.4 percent. Compared with a year earlier, loan applications went down 14.9 percent. Seasonally adjusted, purchase applications decreased by 2.5 percent from the previous week, and refinancings decreased by 0.4 percent. The refinance share of mortgage activity increased to 36.4 percent of total applications from 36.0 percent the previous week, and the adjustable-rate mortgage (ARM) share increased to 28.9 percent.
THE QUESTION ISN'T WHY, BUT HOW: The Riverside County Sheriff's Department is investigating fraud allegations against Haydee Jerez Verdugo, a Palm Desert real estate agent, according to news reports cited by Inman News. Several former clients have said that Verdugo sold all of them the same vacant lot in North Palm Springs. They have filed legal complaints charging that she took thousands of dollars from them, the Desert Sun newspaper reported. Sheriff's deputies searched Verdugo's former business and residential addresses last month, the newspaper said. And lawyers for many of Verdugo's former clients said this week that Verdugo failed to file paperwork in time to meet a court deadline in a civil case filed against her. One lawyer is representing 21 buyers who allege they have learned that Verdugo was selling them the same piece of property, and another lawyer is representing 18 others who say they also lost money to Verdugo, according to an online report by news station KESQ. The civil lawsuit was filed in February at Riverside County Superior Court in Indio. No criminal charges have yet been filed against Verdugo, according to the reports, which carried no response from the agent.
WEALTHY CONSUMERS ARE TURNING TO MARGIN ACCOUNTS: As borrowing costs rise, wealthy consumers are taking another look at margin loans - borrowing against securities to buy houses and boats and meet obligations, says the Wall Street Journal in Realtor magazine. These loans come with unique risk. If the value of the investor's portfolio declines by 30 percent to 50 percent, the brokerage firm can call the loan, demanding additional cash to restore the account. But rates and terms are so attractive - less than 4 percent in many cases - that borrowers are willing to give margin loans a try. On a margin account, investors can typically borrow 90 percent or more of the value of U.S. Treasurys but just 50 percent of the value of large-company stocks. The loan is tax deductible only if it is used to buy additional investments.
MORTGAGE RATES ARE LOOKING UP, AGAIN, TO FOUR-YEAR HIGH: The 30-year fixed-rate mortgage (FRM) averaged 6.53 percent this week, up from 6.49 percent, reports Freddie Mac. Last year at this time, it was 5.80 percent. The 30-year FRM has not been higher since the week ending July 12, 2002, when it averaged 6.54 percent. The average for the 15-year FRM was 6.17 percent this week, up from last week's 6.14 percent and last year's 5.36 percent. The 15-year FRM has not been higher since the week ending June 13, 2002, when it averaged 6.17 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were 6.16 percent this week compared with 6.13 percent last week and 5.22 percent one year earlier. One-year Treasury-indexed ARMs averaged 5.63 percent this week, up from 5.61 percent last week and 4.26 percent last year. "Mortgage rates drifted upward this week following the release of the Consumer and Producer Price Indexes for March, which came in at the upper end of market expectations for inflation," said Frank Nothaft, Freddie Mac vice president and chief economist. "Even though lenders are offering greater interest rate discounts on ARMs, the interest rate savings has declined relative to fixed-rate mortgages. . . If the Fed continues to raise short-term rates, the ARM share will likely decline further."
YOU CAN RECYCLE RESPONSIBLY FOR EARTH DAY: The District's spring e-cycling program offers residents a safe way to dispose of hazardous household waste and electronic equipment on Saturday, April 22 from 9 a.m. to 3 p.m. at the Carter Barron Amphitheatre. More info: dpw.dc.gov.
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