Items of Interest - June 17, 2006
ONLINE VOLUME OF EXISTING HOMES FOR SALE IS BOOMING: The number of previously owned homes listed online for sale in the largest 100 metro areas in the nation grew 60 percent from May 2005 to May 2006, according to an analysis of homes listed online at the Realtor.com property-search site, says Inman News. A survey, conducted by Corzen, a real estate research firm based in New York City, found that the inventory of homes listed in these metro areas grew from 1.3 million 2.3 million. Median list prices were up 8.4 percent, while "in some parts of the country ... median asking prices showed steep declines, a clear sign of softening with the real estate market," Corzen said. Asking prices for existing homes dropped most in Florida, California, Massachusetts and in Northern Virginia. The company's monthly survey is based on a ZIP-code-by-ZIP-code analysis of homes listed on Realtor.com - but, caveat emptor, only there.
IT'S NO LONGER A RENTER'S MARKET: So proclaims the Wall Street Journal in a piece that finds landlords liberated in many markets to raise rents at the fastest pace in years. They're also cutting back on the goodies that previously helped lure tenants such as a free month's rent or a free DVD player. Average effective rents - or what tenants pay after taking concessions into account - are expected to rise 3 percent this year, according to Reis Inc., a real-estate research firm. Rents began picking up last year after several years of softness. As recently as 2002, rents fell 1 percent. The pace of change varies greatly from market to market. In its survey of 69 metro areas, Reis found 60 markets with rising rents, with Florida's Fort Lauderdale, Palm Beach, Miami and Tampa-St. Petersburg and California's San Jose topping the list. It also found nine markets in which rents are flat or falling, including Buffalo, N.Y.; Charlotte, N.C.; Denver, and Omaha, Neb. It's partly a supply-and-demand issue. Years of soaring house prices (and recent increases in mortgage rates) have simply priced many people out of the home-buying market. Indeed, the portion of U.S. households owning their own home slipped to 68.5 percent in the first quarter from 69.1 percent a year earlier, according to the Census Bureau. The higher costs for rentals come as strong job growth in recent years has boosted demand for apartments. At the same time, many apartments have been converted to condos, reducing the availability of rentals. Tenants forced out of units being converted to condos often have trouble finding another apartment with a similar rent. The squeeze comes as average vacancy rates dropped to 6 percent in the first quarter from as much as 7.4 percent at the end of 2003, according to Property & Portfolio Research Inc., giving landlords more power to boost rents than they've had since the beginning of the decade.
SENIORS SAY THE DARNDEST THINGS: If you're old enough to remember what Art Linkletter used to say, then you'll appreciate the misstep by San Diego's Downtown Residential Marketing Alliance, which found that 56 percent of downtown's 30,000 resident were 50 or older. Hoping to boost the population there, billboards emerged urging folks to "simplify your life ... live downtown," reports the AARP Bulletin. No more big yard, three-car garage or other trappings of suburban life, went the implied message. "We didn't come downtown to simplify our lives," respondents told Lake Research Partners. "We came downtown to enliven our lives, to be where the action is." Said Bob Meadow, the firm's partner: "The things people are interested in at 30 to 35 aren't really much different from what they're interested in from 60 to 65." Well, gee.
THE HOUSING BOOM IS COMING UNDER PRESSURE: That is the unsurprising conclusion of this year's State of the Nation's Housing report by Harvard's Joint Center for Housing Studies. As long as the economy continues to create jobs and builders trim production to match slowing demand, house prices will keep climbing and the housing sector will likely achieve a soft landing, according to the report. Although house price growth will likely moderate in many areas, sharp drops in house prices are unlikely anytime soon. Major house price declines seldom occur in the absence of severe overbuilding, major job loss, or a combination of heavy overbuilding and modest job loss. "Fortunately, these preconditions are nowhere in evidence across the nation's metropolitan areas," say the report's authors. One in 10 homeowners faces higher mortgage payments this year, said Nicolas P. Retsinas, director of Harvard's Joint Center for Housing Studies, adding that eight in 10 owners have no mortgage or have a fixed-rate mortgage. And most owners with adjustable loans have an initial fixed-rate period of three or more years. Similarly, most interest-only loans extend for at least five years, leaving ample time to move, refinance, or incomes to grow before principal payments start coming due. Still, from 2001 to 2004 alone, the number of households spending more than half their incomes on housing increased by 14-15.8 million. "The paradox of today's housing market is that while more people are building home equity than ever before, slow growth in wages for households in the bottom three-quarters of the income distribution is not keeping pace with escalating housing costs," the report maintained. "Amidst a housing boom, it is now impossible to build housing at prices anywhere near what low-income households can afford without subsidies." This year's report also highlights the significant contribution that the foreign-born and minorities will make to overall household growth. New household projections incorporating higher but more realistic immigrant assumptions suggest household growth will accelerate to 14.6 million over the next 10 years from 12.6 million over the last 10. "Strong household growth, combined with record incomes and wealth, will lift housing investments to new highs next decade," allowed Eric Belsky, executive director of the Joint Center. "Each generation is achieving higher homeownership rates, incomes, and wealth than the one ahead of it, with the leading edge of the echo baby boom now in their 20s and the baby bust now in their 30s starting off on especially high paths. This is despite the fact that each younger generation has successively higher shares of foreign-born and minority household heads with lower average incomes than same-age native-born whites."
POOR HILARY (SWANK): The Greenwich Village town house of the actress Hilary Swank and her husband, the actor-director Chad Lowe, has come on the market with an asking price of $8.25 million, according to the New York Times. The couple bought the four-story, 17-foot-wide town house on Charles Street for $3.9 million in 2002. The house, which they renovated, has six fireplaces, two full bathrooms and two half baths, in about 4,000 square feet. The listing comes after the couple announced plans to divorce.
LENDERS ARE MODIFYING OPTION MORTGAGES: In a bid to lessen the impact of higher interest rates, mortgage lenders are starting to tweak the features of popular "option adjustable-rate" mortgages, which allow borrowers to lower their monthly payments in the early years of the loan, according to the Wall Street Journal. The retooled mortgages such as those rolled out recently by IndyMac Bancorp and American Home Mortgage Investment feature an extended fixed-rate period before interest charges reset and, in some cases, an option to defer repayment of principal for a longer period of time. Lenders say the new products allow borrowers more breathing room before the bigger payments come due. Some analysts, however, doubt that the new bells and whistles can actually help lenders reduce potential defaults among consumers pinched by rising interest rates and softening home prices. Often, the minimum payment remains fixed for 12 months, and each year thereafter it changes to reflect the prevailing rate to which the loans are pegged. With the new option mortgage offered by IndyMac, a borrower can opt to have the minimum monthly payment fixed for three years, five years or seven years, or until the principal due reaches 110 percent of the original balance. Once that "negative amortization" balance cap is reached, the monthly payment has to be adjusted higher. The new option mortgage from American Home Mortgage offers a fixed rate for five years, enabling borrowers to defer repayment of principal for as many as 10 years, even after the loan balance hits the 110 percent trigger for recasting.
JOYCE KILMER WOULD NO DOUBT AGREE: Money spent sprucing up the yard with trees, shrubs, lighting and patios is well spent - especially when it comes time to sell the home, a new study says, according to Realtor magazine. The report by Arbor National Mortgage found that 84 percent of real estate professionals believe a house on a treed lot would fetch at least 20 percent more than one on a lot without trees. Another of the company's surveys suggested that shelling out for top-of-the line landscaping may bring a 4-5 percent higher sale price and that below-average expenditures will cost the home seller. The magazine offers these tips: If you can't afford to hire a landscape architect, check out the services offered by nurseries and big-box home improvement retailers such as Home Depot; you can save about half the cost of landscaping if you do the work yourself, but keep in mind that large trees are often killed when carried uncovered in the back of the buyer's SUV from the nursery to the house, not because they are planted poorly; remember that a few larger plants will have a greater visual impact than many small ones; before planting trees, determine how large they will become, what leaf pattern will develop, and what room damage could occur if placed too close to a house foundation, sidewalk or driveway.
MEGAN'S LAW AFFECTS PROPERTY VALUES: Federal law requires states to register convicted sex offenders and make their names and addresses publicly available, notes the Washington Post. At Columbia University, economists Leight L. Linden and Jonah E. Rockoff used the list of registered offenders in Mecklenburg County, N.C. to study home values before and after an offender moved in. "Houses within a one-tenth-mile area around the home of a sex offender fall by 4 percent on average (about $5,500), while those farther away show no decline," they reported in a working paper published by the National Bureau of Economic Research.
GOLIATH, LOOK OUT FOR DAVID: Here come microhomes - typically, houses spanning from a few hundred to a little more than a thousand square feet, reports the Wall Street Journal. These houses, far smaller than the average 2,400 square-foot home built in the U.S. last year, contain most of the amenities of larger dwellings, including kitchens and bathrooms. Many occupy just two rooms, or sometimes two rooms plus a living area. Some microhomes compensate for the small layout by capitalizing on vertical space, custom-designing cabinets and furniture, raising ceilings to build in sleeping lofts, or even using flat-roof space as a deck or patio area. While the market for tiny houses is still tiny itself, architects say they have seen interest from buyers jump significantly in the past five years. In 2002, Greg Johnson, an information-technology consultant in Iowa City, co-founded the Small House Society, a group that champions extra-small homes. He says he initially sent his newsletter to seven people; today, he has about 260 individuals and architectural firms on the list. For architects who are weary of designing large-scale or cookie-cutter houses, building a minihome offers the challenge of figuring out how to make every nook and cranny count. Rocio Romero, who heads an architectural firm in Perryville, Missouri, says she finds it rewarding to make every space purposeful. A recent design for a 625-square-foot guest house uses a loft sleeping area and built-in beds to create more room below. She added windows in the loft and alcoves at the head of each bed with recessed lighting fixtures to facilitate reading in bed. Architects and buyers say two of their biggest challenges they face with tiny houses are creating enough storage space and finding furniture small enough to be squeezed into compact rooms. Sleeping lofts, raised beds and underbed storage are staples. V2World uses small European appliances, including a Miele 24-inch convection oven and combination washer-dryer units, in its 450-square-foot, one-room units. In-house designers at V2World build cabinets to fit the units. Large windows make a little house seem less boxy. Living in a tiny home, as opposed to doing yoga in it or using it for vacations, often appeals to people who want simpler lives that leave less of an ecological "footprint." Small houses require less fuel for heating and cooling, fewer building resources and are much easier to clean.
LOAN APPLICATION VOLUME GROWS: For the week ended June 9, mortgage activity increased 7 percent on a seasonally adjusted basis from one week earlier, reports the Mortgage Bankers Association. On an unadjusted basis, the rise was 17.9 percent compared with the previous week but was down 34.3 percent compared with the same week of 2005. Seasonally-adjusted, purchase mortgage applications grew by 4.8 percent from the prior week, and refinancings increased by 10.6 percent. The refinance share of mortgage activity increased to 35.7 percent of total applications from 34.2 percent, and the adjustable-rate mortgage (ARM) share went up to 30.7 percent from 29.4 percent.
WHY CAN'T EVERYBODY JUST GET ALONG: When Kimberly-Clark financed a couple of surveys by Opinion Research to try to gauge what contractors and consumers really think about one another, the picture that emerged was not pretty, notes Realty Times. For homeowners who have used a contractor in the last few years, the worst fear is shoddy workmanship. Four of 10 respondents who had work done in their homes in the last few years chose this issue over other unpleasant possibilities such as contractors who make romantic advances, break things, talk all day or even use the bathroom without flushing. By contrast, a contractor's worst nightmare was the customer who continually asks for work to be changed or redone. This situation was followed by customers who don't pay on time. Lower down on the contractor's nightmare meter were customers who talk too much, who ask for work that doesn't conform to building codes and even who threaten to sue. What were the top three complaints that contractors and customers had about each other? For customers: Work isn't started on time, when the price of the job is increased after it's been started or completed, and contractors who leave a mess and don't clean up. For contractors: Customers who try to get them to do more work without additional compensation, customers who don't pay on time, and customers who try to renegotiate the price after the job is completed.
IF YOU WANT TO SAVE ON HOUSING COSTS, TRY ILLINOIS: Factory closures, a loss of industrial jobs and falling incomes have resulted in dramatic home-price reductions in Illinois's Vermilion County, 100 miles south of Chicago, says the Chicago Tribune, according to the Wall Street Journal. While bad news for area homeowners, the market's weakness is seen as a boon by Chicagoans, some of whom have been purchasing vacation or retirement homes there, the Tribune says. Among the buyers are retired Chicago police officers and Ameritech (a telephone firm) retirees, the article says. One of the most affordable locations in the county is the Hoopeston/Danville area, which in 2005 had a drop in housing prices of 12 percent, the biggest decline for any U.S. metro area. In the first quarter of 2006, the median home price in Hoopeston/Danville was $52,500, the lowest in the country, according to the Tribune.
ONLINE LENDING SITES ATTRACT FEW ACTUAL APPLICANTS: Borrowers who applied online for home loans were more likely to have used search and product select tools than those who didn't ultimately apply, a recent study suggests, according to Inman News. But very few online mortgage sites are successful at getting visitors to apply online. Nearly one in five online mortgage applicants used search, compared with only 7 percent of those who visited online mortgage-related sites but did not apply, the study by Compete and Forrester Research found. It observed navigational behavior from Compete's panel of more than 2 million consumers between June and November 2005. Of the three most successful sites at converting prospects to applicants - LendingTree, Quicken Loans and Countrywide - only 10 percent of visitors to LendingTree, which had the most success, filled out applications online. Consumers were found to use Web sites to educate themselves on the process, but the majority wants human assistance to complete the decision, Forrester none too shockingly concluded. Also, online fulfillment processes are "substandard," with discontented consumers mentioning problems such as having difficulty getting questions answered and confusion on how far along they were in the process. Gen Xers, usually defined as those born in the 1960s to the early 1980s, and Baby Boomers are most likely to research and apply for mortgages online, the study indicated. For traditional lenders with a number of online prospects are existing customers – 75 percent for Wells Fargo and 65 percent for Bank of America.
THE GRASS CAN ALWAYS SEEM GREENER: Individual real-estate investors are seeking out profits by snapping up rental properties far from their home markets, observes the Wall Street Journal. Rents are rising in metropolitan areas such as Orlando, Fla.; New York and Phoenix, according to research firm Reis Inc., and vacancy rates are falling in many cities. "These guys used to be local," says Dan Fasulo, director of market analysis at Real Capital Analytics, a research firm in New York. "They used to buy what they could drive to. Now state lines don't matter anymore." Landlords in California, for instance, are moving torrents of money into Arizona, Nevada, Texas and other states. Many Californians believe property values in their own market are peaking. So they want to take profits there and invest in less-expensive areas with better long-term prospects. Some of their favorite markets are Phoenix, Dallas, Las Vegas, Atlanta and Seattle. Individual investors and partnerships based in California acquired about $7.6 billion of apartment buildings in other states in the first quarter, up from $2.4 billion in the first quarter of 2004, according to Real Capital Analytics. (The data include only transactions of $5 million or more and exclude investments by institutions, hedge funds and national real-estate companies.) In New York State, the figure for out-of-state purchases rose to $5.3 billion from $1.4 billion in the same period.
MORTGAGE RATES SUFFER A CASE OF FLUCTUATIONS: The 30-year fixed-rate mortgage (FRM) averaged 6.63 percent for the week, up a notch from last week's 6.62 percent and only one point above last year's 5.63 percent, according to Freddie Mac. The average for the 15-year FRM was 6.25 percent, up slightly from 6.23 percent. A year ago, it was 5.22 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.23 percent compared with 6.20 percent the prior week and 5.10 percent the previous year. One-year Treasury-indexed ARMs were 5.66 percent this week, also up from last week, when it averaged 5.63 percent. At this time last year, it was 4.25 percent. "Mixed economic indicators are causing some volatility in financial markets. This invariably leads to the fluctuations in mortgage rates like what we have seen recently," commented Frank Nothaft, Freddie Mac vice president and chief economist. "Still, there has been no drastic movement in mortgage rates and we see nothing on the horizon that would bring about any extreme rise or fall in rates going forward. Our economic forecast still indicates strongly that, even with gradually rising rates, 2006 may well be the third strongest year on record for housing."
IT'S NO LONGER A RENTER'S MARKET: So proclaims the Wall Street Journal in a piece that finds landlords liberated in many markets to raise rents at the fastest pace in years. They're also cutting back on the goodies that previously helped lure tenants such as a free month's rent or a free DVD player. Average effective rents - or what tenants pay after taking concessions into account - are expected to rise 3 percent this year, according to Reis Inc., a real-estate research firm. Rents began picking up last year after several years of softness. As recently as 2002, rents fell 1 percent. The pace of change varies greatly from market to market. In its survey of 69 metro areas, Reis found 60 markets with rising rents, with Florida's Fort Lauderdale, Palm Beach, Miami and Tampa-St. Petersburg and California's San Jose topping the list. It also found nine markets in which rents are flat or falling, including Buffalo, N.Y.; Charlotte, N.C.; Denver, and Omaha, Neb. It's partly a supply-and-demand issue. Years of soaring house prices (and recent increases in mortgage rates) have simply priced many people out of the home-buying market. Indeed, the portion of U.S. households owning their own home slipped to 68.5 percent in the first quarter from 69.1 percent a year earlier, according to the Census Bureau. The higher costs for rentals come as strong job growth in recent years has boosted demand for apartments. At the same time, many apartments have been converted to condos, reducing the availability of rentals. Tenants forced out of units being converted to condos often have trouble finding another apartment with a similar rent. The squeeze comes as average vacancy rates dropped to 6 percent in the first quarter from as much as 7.4 percent at the end of 2003, according to Property & Portfolio Research Inc., giving landlords more power to boost rents than they've had since the beginning of the decade.
SENIORS SAY THE DARNDEST THINGS: If you're old enough to remember what Art Linkletter used to say, then you'll appreciate the misstep by San Diego's Downtown Residential Marketing Alliance, which found that 56 percent of downtown's 30,000 resident were 50 or older. Hoping to boost the population there, billboards emerged urging folks to "simplify your life ... live downtown," reports the AARP Bulletin. No more big yard, three-car garage or other trappings of suburban life, went the implied message. "We didn't come downtown to simplify our lives," respondents told Lake Research Partners. "We came downtown to enliven our lives, to be where the action is." Said Bob Meadow, the firm's partner: "The things people are interested in at 30 to 35 aren't really much different from what they're interested in from 60 to 65." Well, gee.
THE HOUSING BOOM IS COMING UNDER PRESSURE: That is the unsurprising conclusion of this year's State of the Nation's Housing report by Harvard's Joint Center for Housing Studies. As long as the economy continues to create jobs and builders trim production to match slowing demand, house prices will keep climbing and the housing sector will likely achieve a soft landing, according to the report. Although house price growth will likely moderate in many areas, sharp drops in house prices are unlikely anytime soon. Major house price declines seldom occur in the absence of severe overbuilding, major job loss, or a combination of heavy overbuilding and modest job loss. "Fortunately, these preconditions are nowhere in evidence across the nation's metropolitan areas," say the report's authors. One in 10 homeowners faces higher mortgage payments this year, said Nicolas P. Retsinas, director of Harvard's Joint Center for Housing Studies, adding that eight in 10 owners have no mortgage or have a fixed-rate mortgage. And most owners with adjustable loans have an initial fixed-rate period of three or more years. Similarly, most interest-only loans extend for at least five years, leaving ample time to move, refinance, or incomes to grow before principal payments start coming due. Still, from 2001 to 2004 alone, the number of households spending more than half their incomes on housing increased by 14-15.8 million. "The paradox of today's housing market is that while more people are building home equity than ever before, slow growth in wages for households in the bottom three-quarters of the income distribution is not keeping pace with escalating housing costs," the report maintained. "Amidst a housing boom, it is now impossible to build housing at prices anywhere near what low-income households can afford without subsidies." This year's report also highlights the significant contribution that the foreign-born and minorities will make to overall household growth. New household projections incorporating higher but more realistic immigrant assumptions suggest household growth will accelerate to 14.6 million over the next 10 years from 12.6 million over the last 10. "Strong household growth, combined with record incomes and wealth, will lift housing investments to new highs next decade," allowed Eric Belsky, executive director of the Joint Center. "Each generation is achieving higher homeownership rates, incomes, and wealth than the one ahead of it, with the leading edge of the echo baby boom now in their 20s and the baby bust now in their 30s starting off on especially high paths. This is despite the fact that each younger generation has successively higher shares of foreign-born and minority household heads with lower average incomes than same-age native-born whites."
POOR HILARY (SWANK): The Greenwich Village town house of the actress Hilary Swank and her husband, the actor-director Chad Lowe, has come on the market with an asking price of $8.25 million, according to the New York Times. The couple bought the four-story, 17-foot-wide town house on Charles Street for $3.9 million in 2002. The house, which they renovated, has six fireplaces, two full bathrooms and two half baths, in about 4,000 square feet. The listing comes after the couple announced plans to divorce.
LENDERS ARE MODIFYING OPTION MORTGAGES: In a bid to lessen the impact of higher interest rates, mortgage lenders are starting to tweak the features of popular "option adjustable-rate" mortgages, which allow borrowers to lower their monthly payments in the early years of the loan, according to the Wall Street Journal. The retooled mortgages such as those rolled out recently by IndyMac Bancorp and American Home Mortgage Investment feature an extended fixed-rate period before interest charges reset and, in some cases, an option to defer repayment of principal for a longer period of time. Lenders say the new products allow borrowers more breathing room before the bigger payments come due. Some analysts, however, doubt that the new bells and whistles can actually help lenders reduce potential defaults among consumers pinched by rising interest rates and softening home prices. Often, the minimum payment remains fixed for 12 months, and each year thereafter it changes to reflect the prevailing rate to which the loans are pegged. With the new option mortgage offered by IndyMac, a borrower can opt to have the minimum monthly payment fixed for three years, five years or seven years, or until the principal due reaches 110 percent of the original balance. Once that "negative amortization" balance cap is reached, the monthly payment has to be adjusted higher. The new option mortgage from American Home Mortgage offers a fixed rate for five years, enabling borrowers to defer repayment of principal for as many as 10 years, even after the loan balance hits the 110 percent trigger for recasting.
JOYCE KILMER WOULD NO DOUBT AGREE: Money spent sprucing up the yard with trees, shrubs, lighting and patios is well spent - especially when it comes time to sell the home, a new study says, according to Realtor magazine. The report by Arbor National Mortgage found that 84 percent of real estate professionals believe a house on a treed lot would fetch at least 20 percent more than one on a lot without trees. Another of the company's surveys suggested that shelling out for top-of-the line landscaping may bring a 4-5 percent higher sale price and that below-average expenditures will cost the home seller. The magazine offers these tips: If you can't afford to hire a landscape architect, check out the services offered by nurseries and big-box home improvement retailers such as Home Depot; you can save about half the cost of landscaping if you do the work yourself, but keep in mind that large trees are often killed when carried uncovered in the back of the buyer's SUV from the nursery to the house, not because they are planted poorly; remember that a few larger plants will have a greater visual impact than many small ones; before planting trees, determine how large they will become, what leaf pattern will develop, and what room damage could occur if placed too close to a house foundation, sidewalk or driveway.
MEGAN'S LAW AFFECTS PROPERTY VALUES: Federal law requires states to register convicted sex offenders and make their names and addresses publicly available, notes the Washington Post. At Columbia University, economists Leight L. Linden and Jonah E. Rockoff used the list of registered offenders in Mecklenburg County, N.C. to study home values before and after an offender moved in. "Houses within a one-tenth-mile area around the home of a sex offender fall by 4 percent on average (about $5,500), while those farther away show no decline," they reported in a working paper published by the National Bureau of Economic Research.
GOLIATH, LOOK OUT FOR DAVID: Here come microhomes - typically, houses spanning from a few hundred to a little more than a thousand square feet, reports the Wall Street Journal. These houses, far smaller than the average 2,400 square-foot home built in the U.S. last year, contain most of the amenities of larger dwellings, including kitchens and bathrooms. Many occupy just two rooms, or sometimes two rooms plus a living area. Some microhomes compensate for the small layout by capitalizing on vertical space, custom-designing cabinets and furniture, raising ceilings to build in sleeping lofts, or even using flat-roof space as a deck or patio area. While the market for tiny houses is still tiny itself, architects say they have seen interest from buyers jump significantly in the past five years. In 2002, Greg Johnson, an information-technology consultant in Iowa City, co-founded the Small House Society, a group that champions extra-small homes. He says he initially sent his newsletter to seven people; today, he has about 260 individuals and architectural firms on the list. For architects who are weary of designing large-scale or cookie-cutter houses, building a minihome offers the challenge of figuring out how to make every nook and cranny count. Rocio Romero, who heads an architectural firm in Perryville, Missouri, says she finds it rewarding to make every space purposeful. A recent design for a 625-square-foot guest house uses a loft sleeping area and built-in beds to create more room below. She added windows in the loft and alcoves at the head of each bed with recessed lighting fixtures to facilitate reading in bed. Architects and buyers say two of their biggest challenges they face with tiny houses are creating enough storage space and finding furniture small enough to be squeezed into compact rooms. Sleeping lofts, raised beds and underbed storage are staples. V2World uses small European appliances, including a Miele 24-inch convection oven and combination washer-dryer units, in its 450-square-foot, one-room units. In-house designers at V2World build cabinets to fit the units. Large windows make a little house seem less boxy. Living in a tiny home, as opposed to doing yoga in it or using it for vacations, often appeals to people who want simpler lives that leave less of an ecological "footprint." Small houses require less fuel for heating and cooling, fewer building resources and are much easier to clean.
LOAN APPLICATION VOLUME GROWS: For the week ended June 9, mortgage activity increased 7 percent on a seasonally adjusted basis from one week earlier, reports the Mortgage Bankers Association. On an unadjusted basis, the rise was 17.9 percent compared with the previous week but was down 34.3 percent compared with the same week of 2005. Seasonally-adjusted, purchase mortgage applications grew by 4.8 percent from the prior week, and refinancings increased by 10.6 percent. The refinance share of mortgage activity increased to 35.7 percent of total applications from 34.2 percent, and the adjustable-rate mortgage (ARM) share went up to 30.7 percent from 29.4 percent.
WHY CAN'T EVERYBODY JUST GET ALONG: When Kimberly-Clark financed a couple of surveys by Opinion Research to try to gauge what contractors and consumers really think about one another, the picture that emerged was not pretty, notes Realty Times. For homeowners who have used a contractor in the last few years, the worst fear is shoddy workmanship. Four of 10 respondents who had work done in their homes in the last few years chose this issue over other unpleasant possibilities such as contractors who make romantic advances, break things, talk all day or even use the bathroom without flushing. By contrast, a contractor's worst nightmare was the customer who continually asks for work to be changed or redone. This situation was followed by customers who don't pay on time. Lower down on the contractor's nightmare meter were customers who talk too much, who ask for work that doesn't conform to building codes and even who threaten to sue. What were the top three complaints that contractors and customers had about each other? For customers: Work isn't started on time, when the price of the job is increased after it's been started or completed, and contractors who leave a mess and don't clean up. For contractors: Customers who try to get them to do more work without additional compensation, customers who don't pay on time, and customers who try to renegotiate the price after the job is completed.
IF YOU WANT TO SAVE ON HOUSING COSTS, TRY ILLINOIS: Factory closures, a loss of industrial jobs and falling incomes have resulted in dramatic home-price reductions in Illinois's Vermilion County, 100 miles south of Chicago, says the Chicago Tribune, according to the Wall Street Journal. While bad news for area homeowners, the market's weakness is seen as a boon by Chicagoans, some of whom have been purchasing vacation or retirement homes there, the Tribune says. Among the buyers are retired Chicago police officers and Ameritech (a telephone firm) retirees, the article says. One of the most affordable locations in the county is the Hoopeston/Danville area, which in 2005 had a drop in housing prices of 12 percent, the biggest decline for any U.S. metro area. In the first quarter of 2006, the median home price in Hoopeston/Danville was $52,500, the lowest in the country, according to the Tribune.
ONLINE LENDING SITES ATTRACT FEW ACTUAL APPLICANTS: Borrowers who applied online for home loans were more likely to have used search and product select tools than those who didn't ultimately apply, a recent study suggests, according to Inman News. But very few online mortgage sites are successful at getting visitors to apply online. Nearly one in five online mortgage applicants used search, compared with only 7 percent of those who visited online mortgage-related sites but did not apply, the study by Compete and Forrester Research found. It observed navigational behavior from Compete's panel of more than 2 million consumers between June and November 2005. Of the three most successful sites at converting prospects to applicants - LendingTree, Quicken Loans and Countrywide - only 10 percent of visitors to LendingTree, which had the most success, filled out applications online. Consumers were found to use Web sites to educate themselves on the process, but the majority wants human assistance to complete the decision, Forrester none too shockingly concluded. Also, online fulfillment processes are "substandard," with discontented consumers mentioning problems such as having difficulty getting questions answered and confusion on how far along they were in the process. Gen Xers, usually defined as those born in the 1960s to the early 1980s, and Baby Boomers are most likely to research and apply for mortgages online, the study indicated. For traditional lenders with a number of online prospects are existing customers – 75 percent for Wells Fargo and 65 percent for Bank of America.
THE GRASS CAN ALWAYS SEEM GREENER: Individual real-estate investors are seeking out profits by snapping up rental properties far from their home markets, observes the Wall Street Journal. Rents are rising in metropolitan areas such as Orlando, Fla.; New York and Phoenix, according to research firm Reis Inc., and vacancy rates are falling in many cities. "These guys used to be local," says Dan Fasulo, director of market analysis at Real Capital Analytics, a research firm in New York. "They used to buy what they could drive to. Now state lines don't matter anymore." Landlords in California, for instance, are moving torrents of money into Arizona, Nevada, Texas and other states. Many Californians believe property values in their own market are peaking. So they want to take profits there and invest in less-expensive areas with better long-term prospects. Some of their favorite markets are Phoenix, Dallas, Las Vegas, Atlanta and Seattle. Individual investors and partnerships based in California acquired about $7.6 billion of apartment buildings in other states in the first quarter, up from $2.4 billion in the first quarter of 2004, according to Real Capital Analytics. (The data include only transactions of $5 million or more and exclude investments by institutions, hedge funds and national real-estate companies.) In New York State, the figure for out-of-state purchases rose to $5.3 billion from $1.4 billion in the same period.
MORTGAGE RATES SUFFER A CASE OF FLUCTUATIONS: The 30-year fixed-rate mortgage (FRM) averaged 6.63 percent for the week, up a notch from last week's 6.62 percent and only one point above last year's 5.63 percent, according to Freddie Mac. The average for the 15-year FRM was 6.25 percent, up slightly from 6.23 percent. A year ago, it was 5.22 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.23 percent compared with 6.20 percent the prior week and 5.10 percent the previous year. One-year Treasury-indexed ARMs were 5.66 percent this week, also up from last week, when it averaged 5.63 percent. At this time last year, it was 4.25 percent. "Mixed economic indicators are causing some volatility in financial markets. This invariably leads to the fluctuations in mortgage rates like what we have seen recently," commented Frank Nothaft, Freddie Mac vice president and chief economist. "Still, there has been no drastic movement in mortgage rates and we see nothing on the horizon that would bring about any extreme rise or fall in rates going forward. Our economic forecast still indicates strongly that, even with gradually rising rates, 2006 may well be the third strongest year on record for housing."
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