Items of Interest - September 23, 2006

COSTLY LOANS HAVE GAINED IN POPULARITY: In another indication of increasing consumer debt, a new federal report has found that the percentage of borrowers who turned to high-cost loans to buy or refinance their houses rose last year, reports the Washington Post. Such loans accounted for 26.2 percent of mortgages in 2005, up from 15.5 percent in 2004, an increase of nearly 70 percent, according to home-loan data. In 1994, only 5 percent of borrowers had high-cost loans. Federal regulators define high-cost loans as those with interest rates 3 percentage points higher than a benchmark rate for first mortgages and 5 percentage points higher for second mortgages. There is wide racial and ethnic disparity in who gets such loans, according to the numbers. About half of blacks and Hispanics received high-price mortgages, compared with less than a fifth of whites. In 2005, 54.7 percent of blacks got higher-price loans, up from 32.4 percent in 2004. The increase was even sharper among Hispanics, of whom 46.1 percent got high-cost loans, up from 20.3 percent in 2004. In 2005, 17.2 percent of whites got such loans, compared with 8.7 percent the previous year. Part of the explanation for the 2005 increase, according to the Federal Reserve, which released an analysis of the statistics, is that the 2004 numbers were understated because of interest rate aberrations. About 57 percent more buyers in 2005 than in 2004 took out two mortgages to buy houses, according to the new federal statistics. Such an arrangement, known as a piggyback loan, allows smaller down payments without requiring mortgage insurance. The second mortgage is usually at a higher rate than the first. The increase in costly mortgages is partly because more people are getting loans, even if they have bad credit and would not have qualified in the past. "Although affording many consumers greater access to credit, this growth also has led to concerns about the appropriateness of loan term and lending practices and the potential for unequal treatment of borrowers," officials of the Federal Financial Institutions Examination Council, the group that released the data, stated.

AND THE MORTGAGE INDUSTRY IS PRESSED TO REFORM: At a Senate Banking Committee hearing, legislators and consumer advocates prodded federal banking regulators to move more quickly to put restrictions on non-traditional mortgage lending, because, they said, the new kinds of mortgages may place borrowers and lenders at financial risk, reports the Washington Post. "It seems to me there's been a race to the bottom" in lending standards, said Sen. Jim Bunning (R-Ky.). He said that consumers don't seem to understand the new products, and that if real estate values continue to fall, the market "pullback" could become "a prelude to a crash." Added Sen. Charles E. Schumer (D- N.Y.), "There's a plethora of new products that are destroying the lives of a whole lot of people. These were intended for rich, sophisticated buyers but they have been sold to the least sophisticated and most vulnerable." The lending industry has defended non-traditional loans as a key reason that homeownership has reached a near-record high despite steep home prices. They say the loans can be tailored to meet individual needs, rather than the one-size-fits-all loans of past decades.

MORTGAGE RATES CONTINUE TO SLIDE: The 30-year fixed-rate mortgage (FRM) averaged 6.40 percent for the week, down from last week's 6.43 percent, according to Freddie Mac. Last year at this time, the 30-year FRM averaged 5.80 percent. The 15-year FRM this week was 6.06 percent compared with 6.11 percent last week and 5.37 percent last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.08 percent, down from last week's 6.10 percent. It was 5.31 percent in 2005. One-year Treasury-indexed ARMs were 5.54 percent this week versus 5.60 percent last week. At this time last year, it averaged 4.48 percent. "A slowing housing market and signs that inflation is leveling off have helped to lower mortgage rates lately and keep them more affordable," said Frank Nothaft, Freddie Mac vice president and chief economist. "For example, housing starts dropped to a three-year low in August and the Producer Price Index (PPI) fell below market expectations. Going forward, the economy is expected to expand at a somewhat slower rate than it did in the first half of the year. This should continue to keep inflation in check, and therefore, mortgage rates low."

BRITISH BANK SEES SOFT LANDING FOR HOUSING: An economic report by the American Express Bank concludes that a crash in U.S. house prices and an economic recession are unlikely, though the housing market "is particularly weak," says Inman News. "U.S. house prices will probably be flat or down for awhile, although price falls in former hotspots will be compensated by continuing catch-up in other regions," according to the "Economics for Investment" report by the bank, an international subsidiary of American Express. "The authors acknowledge that weakness in the U.S. housing market and a moderate economic slowdown does make the risk of a U.S. recession greater in 2007 but argue that a 'soft landing' is the most likely outcome," the report says. "Moreover, any signs of a harder-than-needed landing will likely be offset by lower interest rates and bond yields." The report notes that the run-up in house prices was "significantly smaller" in the United States than it was in the United Kingdom and Australia. A cause for concern, according to the report, is the slump in the construction of new homes: U.S. housing starts are down 10-15 percent and building permits are down 20 percent, and they fell the same amount after the market peaked in Australia. Adjustable-rate mortgages do pose "particular concern" in the United States real estate market because "short-term rates have risen far more in the U.S. than in the other countries and continued to rise after housing peaked last year," the report says, adding that interest rates are still relatively low compared with historical levels and "the majority of mortgages outstanding are still at long-term fixed rates."

HIS GUITAR IS NOT INCLUDED: Nick Hexum, the lead singer for the band 311, is asking $10 million for a private island in the Florida Keys that he bought for $2.8 million three years ago, reports the Wall Street Journal. Yes, three years ago. The roughly six-acre island lies a half mile off Summerland Key, about midway between Marathon and Key West. A 3,500-square-foot house features three en-suite bedrooms, a third-floor great room with a 300-gallon aquarium, and a crow's nest balcony on the roof where young Nick says he likes to play guitar. The island also has a pool, barbecue deck, cement pier and its own propane-powered generator. Previous owner Cris Lesick says the lights stayed on even during Hurricane George in 1998, when most of the area lost power. Hexum, whose rock/alternative/reggae band 311 had two platinum-selling albums in the 1990s, renamed the island Melody Key from Money Key, and says he spent several million dollars renovating it, only to have to redo much of the work after the home and island were damaged during last year's hurricanes. The singer, who has written several songs on the island, says he has too high a percentage of his assets tied up in the property, which he acknowledges is "mortgaged to the hilt." Nonetheless, he maintains that he won't accept an offer under $10 million. "Do not waste my time with $9,999,999," he proclaims. Right!

IS WASHINGTON'S POWER CENTER ON THE MOVE: Those who have been denouncing elitist "Georgetown dinner parties" all these years may not have noticed that a new elite has taken over - and it lives across the river, in McLean, Va., according to the Washington Post, which quotes the cover story in the newest New Republic. "So long Georgetown, McLean is the new home of America's ruling class," the magazine says. Over the past decade, McLean, formerly a sleepy little burg, has been overrun by hordes of Republican pols, pundits and lobbyists. McLean has become "the psychic center of the Washington Republican establishment," writes Michael Crowley. "It is packed with the people who impeached Bill Clinton, elected George W. Bush, launched the Iraq war, and have now learned to make millions from their association with government." McLean's 40,000 residents include GOP bigwigs such as Newt Gingrich, Scooter Libby, Colin Powell, Andrew Card, Liz Cheney, Bill Kristol, Clarence Thomas, Antonin Scalia - and scads of obscure Republicans who were Hill staffers in the Gingrich revolution. The average house there sells for $905,000, so don't expect much in the way of garage sales. "The migration of power from Georgetown to McLean represents the shift in American politics in microcosm," Crowley writes. "The Northeastern liberal elite drawn to the urbane sophistication of Georgetown has receded. In its place has risen a new conservative striver class . . . that has set itself up as landed gentry across the Potomac in McLean."

BUYING AND SELLING PROPERTY IN D.C.IS ABOUT TO COST MORE: Starting Oct. 1, the transfer and recordation tax will change in DC for all properties priced at $400,000 and above and closing after that date. Buyer and seller each have to pay 1.45 percent of the sales price at closing. For sales below $400,000, the transfer and recordation tax remains at 1.1 percent.

THE LEHMANS' FIFTH AVENUE HOME IS GOING ON THE MARKET: The longtime cooperative apartment of the late Lee Anz Lehman, widow of investment banker and philanthropist Robert Lehman, is about to go on the market for more than $30 million, reports the New York Times. The six-bedroom apartment measures more than 6,000 square feet and takes up the entire ninth floor of 2 East 67th St., a 1928 apartment building designed by Rosario Candela. It is one of the few Fifth Avenue apartments to retain most of its original floor plan and detailing, including 12-foot ceilings, five fireplaces, and a dining room, library and living room that overlook Central Park. Ms. Lehman, who died in June, bought the co-op in 1978 following the death of her husband, who ran Lehman Brothers for more than 40 years. The Metropolitan Museum of Art's Lehman Wing, which houses Mr. Lehman's nearly 3,000-work art collection, is visible from the apartment's living room. "It was a way of maintaining that bond [with her husband]," Ms. Lehman's grandson, Christopher Daniels, says of the apartment's view.

FORECLOSURES ARE ON THE RISE NATIONALLY, OR NOT: Property foreclosures nationwide increased 24 percent in August from the previous month and 53 percent from a year ago, marking the highest rate so far this year, according to a foreclosure service, says Inman News. A total of 115,292 properties entered some stage of foreclosure during the month, according to a report from RealtyTrac. The report also shows a national foreclosure rate of one new foreclosure filing for every 1,003 U.S. households, the second-highest monthly foreclosure rate reported year to date. This report is much bleaker than statistics reported by the Mortgage Bankers Association (MBA). In a survey of more than 42.5 million loans nationwide, homeowners appeared to be keeping up with their mortgage payments. MBA's survey found that foreclosures nationwide are stable. The percentage of home loans in the process of foreclosure nationwide at the end the second quarter was 0.99 percent, up 1 basis point from the last quarter, but down 1 basis point from the same quarter last year. Foreclosure.com also weighed in with its own statistics, says the Wall Street Journal. According to the company, which tracks foreclosures nationwide, new residential foreclosures fell by 6.7 percent in August from July to 26,255 nationwide. The company's figures, however, show that foreclosures are up 7.3 percent compared with August 2005. The divergent results can be explained by the way foreclosed properties are counted. RealtyTrac data includes properties in the early stages of a foreclosure proceeding, even before the bank actually owns those properties. About 60 percent of these get remedied or the properties are sold before they get to the auction stage, said Rick Sharga, vice president of marketing for RealtyTrac. If you've read this much, forget it.

IT'S ALL ABOUT YOU: Under the provisions of federal consumer law, if you want to obtain a free credit report from one or all of the big three credit reporting companies, all you have to do is visit AnnualCreditReport.com.

BLACK IS THE NEW BLACK: After years of favoring pale woods, bleached floors and taupe color schemes, furniture and decor companies are getting back to black as well as brown and grey, says the Wall Street Journal. The new interior hues come as the fashion industry is making its own shift toward somber shades, but some homeowners credit another influence: At a time of economic and political uncertainty, they say, darker colors reflect the mood and help to create a comforting retreat. Home decorators are embracing the new look, putting black-flocked wallpaper in the bedroom, deep-bronze faucets in the bathroom and shiny brown countertops in the kitchen. Kraftmaid has just introduced Venica, a line of black kitchen cabinetry, and Hunter Douglas has rolled out new window shades in colors such as Fossil, Granite and Henna. Pottery Barn's new ebony and mahogany furniture collection includes $1,600 wine bars, $800 bookcases and $700 pedestal tables, while Storehouse has introduced its "smoky charcoal" dining room, where everything from buffets to side chairs is done up in dusky hues. The look has even trickled down to sinks and faucets. Kohler is now selling sinks for the kitchen in "black black" and for the bath in "igneous black." Moen says sales of its Glacier white kitchen bar and sink faucets dropped 20 percent in 2005 from the year before and bright polished brass was down 75 percent, while dark oil-rubbed bronze finishes more than tripled and wrought-iron finishes were up 18 percent. The company released a new pewter faucet last month, which it showcases on its Web site in a black sink. Time to redecorate, trend spotters? Again!

BUYERS OF NEW HOMES SAYS TWO BUILDERS ARE TOPS: They are Pulte Homes and Centex Homes, which led the rankings in J.D. Power and Associates' annual New-Home Builder Customer Satisfaction Study, says Realtor magazine. The study includes satisfaction ratings of builders in 34 of the largest U.S. home-building markets. Pulte, including its Del Webb and DiVosta brands, ranks highest in 14 of the markets and Centex, in 13 markets. The study is based on responses from 60,927 buyers of newly built single-family homes who provided feedback after living in their homes from four to 18 months, on average.

BOARDWALK IS GONE, SO HOW ABOUT TIMES SQUARE: Monopoly is getting revamped for the 21st century, notes Business Week. Seventy-one years after the hugely popular board game made its debut, its familiar Atlantic City boardwalk, railroads, currency and old-fashioned die-cast tokens are making room for Times Square, airplane, and enough tie-ins with big popular brands to make even the most brazen Hollywood producer green with envy. If Monopoly constitutes a reflection of contemporary U.S. culture, here's the world we now live in. Most of the game's famous tokens are reemerging as branded products. They include a Toyota Prius, a New Balance sneaker, McDonald's French Fries, a Motorola RAZR, and a Starbucks coffee mug. The three nonbranded tokens are a laptop computer, an airplane, and a Labradoodle. Among other changes on the board: The old powerful railroads become the nation's busiest airports. Prices have gone up, too: It'll cost $4 million to buy Times Square, opposed to $400 for the old Atlantic City boardwalk.

YOURS CAN BE THE GRASS THAT'S GREENER: The lowest you should mow any cool-season turf is 2 1/2 inches, Washington Post columnist Joel M. Lerner advises homeowners. Growth of healthy lawn and germination of grass seed are most important when you remove thatch and aerate. Mowing higher retains more leaf surface on existing turf, which also shades the seed, holding moisture and helping with germination. Water lightly every other day to keep seed moist. A deep watering once a week will get established lawn growing quickly during this cool season. Plant a named, compact, turf-type tall fescue. There are disease-resistant and drought-tolerant varieties. Plant a blend of three varieties, based on the theory that even if one is lost the other two will succeed. Over-seed at a rate of three to four pounds per 1,000 square feet.

NEW YORK CITY EYES HOME-IMPROVEMENT CONTRACTORS: The Department of Consumer Affairs has filed complaints against 135 of them who are unlicensed, reports the New York Times. But the contractors can have their fines lowered if they obtain the required license and resolve all outstanding customer disputes. Punishment can include $100 fines for each day of unlicensed activity and seizure of vehicle and tools. To get a license, a contractor must have a background check, pass a written exam on knowledge of business law and contracts, and post a bond or pay into the Home Improvement Contractor Trust Fund. "Every year, home-improvement contracting complaints are at the top of our list of complaints," said Commissioner Jonathan Mintz of the Department of Consumer Affaires.

AT LEAST THE EARTH REMAINS ROUND: Eager to squeeze in more square-footage - and increase property values - while adhering to community height restrictions, a growing number of builders and homeowners are building homes with flat roofs, observes the Wall Street Journal. But these box-like structures and their party-friendly roof decks are sparking a backlash among neighbors who think the houses are homely, detracting from neighborhood character and blocking views and sunlight. Now, a number of communities are slapping new rules on builders that require sloping roofs. Communities everywhere from Delaware to Washington are addressing roof pitch. The trend is being driven in part by people seeking the best return on their investment amid soaring property values in recent years. It also demonstrates how zoning restrictions communities passed in recent years have backfired. In response to runaway development, many municipalities tried to prevent oversized homes on small lots. But in some cases, the unintended result was flat-roofed, boxy homes seen as out of character with surrounding styles. By using a flat roof, builders can sometimes squeeze in a second or third floor, adding square footage while staying under neighborhood height restrictions.

ENOUGH ALREADY: The number of real estate agents with active licenses now stands at an all-time high in the Washington area, says the Washington Post. More than 100,000 licensed real estate agents are working in Maryland, Virginia and the District, almost doubled since 2002. In the past year, an additional 4,000 real estate agents have gotten licensed in Virginia alone. But if history repeats itself, there is reason to believe that some agents will drop out soon. For instance, when the real estate business boomed in the mid-1980s, the number of agents in Maryland jumped, rising to 45,342 in 1987 from 33,642 in 1986, up 35 percent in one year, and then rose again in 1989 to 51,997 agents. Agents trailed out of the business during the slump of the mid-1990s, and by 2001, there were 28,856 active agents in the state. Now, however, there are 54,037 agents working in Maryland, an all-time high.

'KIDS' DO THE DARNDEST THINGS: Consumers in their 20s are more likely to become home owners at a younger age than their baby boomer parents, notes Realtor magazine. They're not necessarily waiting for marriage, or even a long-term relationship, before buying a home. The percentage of first-time home buyers under age 25 has been increasing in response to historically low interest rates and continued confidence in the long-term housing market, from 11 percent in 2001 to 14 percent in 2005, according to the 2005 Profile of Home Buyers and Sellers by the National Association of Realtors (NAR), which publishes the magazine. While married couples are still the norm, they represent a smaller share of the home buying public than they did just 10 years ago, from 70 percent of home buyers in 1995 to 61 percent today, says the NAR. During that same time, the proportion of single women buying homes has increased, from 14 percent in 1995 to 21 percent today.

BUILDERS' MOOD SINKS TO 15-YEAR LOW: Reflecting increasing builder concerns about conditions in the market for new single-family homes, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) declined for an eighth consecutive month to a level of 30 in September. In August, index was 33 reading in August, and the latest reading was at the lowest level since February of 1991. Any number over 50 indicates that more builders view sales conditions as good than poor. "Builders are adopting an increasingly cautious attitude in their near-term outlook for new-home sales," said Chief Economist David Seiders of the National Association of Home Builders (NAHB). "They're experiencing falling sales, rising sales cancellations and increasing inventories of unsold units. And although many builders are offering substantial incentives to bolster sales and limit cancellations, many potential buyers now are waiting on the sidelines to see how the market shakes out before proceeding with a home purchase." Saying the nation was "in the midst of an anticipated adjustment period," he added that the NAHB is forecasting the numbers flattening out around the middle of next year and gradually moving back up towards trend in 2008. "In fact, the housing market that emerges from this correction will have better balance between supply and demand and will be able to ride on excellent underlying fundamentals for years to come," Seiders declared.

AND HERE'S THE PROOF: Total housing starts dropped 6.0 percent in August to a seasonally adjusted annual rate of 1.665 million units, according to the Commerce Department. The pace of new-home construction was down 19.8 percent from 2005, which was a record-breaking year. In addition, issuance of total building permits decreased 2.3 percent - 21.9 percent below the rate of a year ago. Single-family permit issuance was down 3.5 percent on a national basis, and multifamily permit issuance was up 1.1 percent - 11.2 percent below August 2005. Builders slowed the pace of single-family home construction by 5.9 percent, a 20.6 percent drop from a year earlier.

TIGHT NEW YORK RENTAL MARKET SPURS CHANGE IN CONDO MARKET: A cooling condo market and a dwindling number of available rental properties are prompting developers and owners of newly built apartments to rent out their units, says the Real Deal monthly magazine. In the burgeoning rental market in which demand exceeds supply, condo buyers are finding a good source of income in renting their apartments. And the competition for those apartments has become tight. Still, rental income in most cases is not yet covering the expenditures required to own a condo. Many developers have converted rentals to condos, then found it is more profitable to rent them out once again. Some developers are selling enough of the building to pay off the financing, then renting out the remaining units.

SHE'S A HOT DESIGNER. . . AND RIGHT ON TARGET: You'll find Victoria Hagan's stylish designs in the homes of late-night talk showman Conan O'Brien and Revlon chairman Ron Perelman, says the Washington Post. And now, they're just past the scrapbooking aisle at Target. The New York decorator is the latest label to land at Target, with a cheap-but-chic line of $7.99 vases and $179.99 buff-colored nesting tables, among other items. Known for her architectural interiors that blend periods, materials and finishes, Hagan, 45, says, "I believe in the mix. This collection . . . shows it's nice to be able to find beautifully designed things that are affordable."

BUILDERS ARE PULLING OUT THE STOPS: Faced with falling sales, some builders are helping would-be buyers spruce up their current home by bringing in professionals who advise them on what furniture to get rid of and tell them whether they should rip off the wallpaper, reports the Wall Street Journal. Others are offering to make payments on the buyer's old mortgage (or the new one) in an effort to close the deal. There is also renewed interest in so-called buyback programs: The builder, or a broker, agrees to buy your current home, for a preset price, if it turns out that you can't sell it. The offers are coming both from local builders and national firms. For instance, Pulte Homes Inc. recently started pairing its customers with professional "stagers" who sweep in and do things like remove window coverings and touch up the paint, and covering up to $2,000 of the cost of the service. The program is available in about a dozen markets, including Detroit, Indianapolis, Sacramento, Calif., Tampa, Fla., and Washington, D.C. For builders, the housing downturn has translated into slower sales and higher cancellation rates among prospective buyers who get cold feet. This month, Beazer Homes USA said that in July and August, orders fell 49 percent from the previous year's levels, and cancellations climbed to 50 percent from 26 percent in the same period in 2005. KB Homes said this month that orders for new homes fell 43 percent in its fiscal third quarter. The kinds of help builders are offering vary from market to market, and even from project to project. The best deals are typically offered on homes that are already completed, or near completion.

SLOWDOWN SEEN ON THE JERSEY SHORE: The housing market in New Jersey's coastal Monmouth and Ocean counties is slowing, but the bottom is not falling out, according to an article by the Asbury Park Press, notes the Wall Street Journal. The number of houses for sale has risen dramatically and real-estate agents are seeing "pages and pages of price reductions," the newspaper reports. However, some local real-estate professionals describe the market as "stable." Says one agent, "Prices may not be accelerating, but I do not see drastic reductions in prices at all." According to the article, 6,884 homes remained unsold in Monmouth County in the second quarter of this year, an increase of 57 percent from the second quarter of 2005. In Ocean County, there was an increase of 68 percent to 6,728 unsold properties, the article says.

AT THIS PRICE, IT BETTER LAST: Pantone is escalating the paint wars – the ones without foreign correspondents - with the introduction of its first retail paint line selling for what comes out to an astonishing $133 a gallon, notes the Washington Post. Pantone, which provides color systems for a variety of industries, is hardly a household name in the consumer world. But within the design community, the company is known for professional color standards and assuring color accuracy and consistency in graphic, auto, fashion and interior design businesses. While most American paints sell for $19 to $45 a gallon, Pantone's Dutch-made 2.5-liter Euro gallon (a smaller can than the American gallon) made by manufacturer Fine Paints of Europe costs $85 to $95. A fan deck of 3,000 colors is $165. Pantone touts the durability of its "filler-free" product, saying a proper Pantone paint job could last 12 to 15 years. Let's hope. Lisa Herbert, executive vice president of Pantone, says the paints are aimed at the high-end homeowner. Duh. "They are for someone who really wants high quality. The finish is very luxurious. It would take six coats of an American paint to achieve the brilliance and saturation of Pantone paint."

LOWER INTEREST RATES BOOST REFINANCINGS: For the week ended Sept. 15, mortgage loan application volume went up 2 percent on a seasonally adjusted basis from one week earlier, according to the Mortgage Bankers Association. On an unadjusted basis, the increase was 12.3 percent, but the volume was down 22.5 percent compared with the same week one year earlier. The previous week was shortened by the Labor Day holiday. Seasonally-adjusted, purchase applications decreased by 3 percent from the prior week, and refinancings rose by 9.5 percent. The refinance share of mortgage activity grew to 43.7 percent of total applications from 40.3 percent the previous week, and the adjustable-rate mortgage (ARM) share swelled to 27 percent of total applications from 25.5.

HE'S JUMPING INTO THE REAL ESTATE WITH BOTH FEET: Basketball star Shaquille O'Neal has started a real estate development company that already has bought more than $50 million in properties, according to Bloomberg News in Realtor magazine. The properties are primarily in California, Florida, New Jersey and Texas. The new company, O'Neal Group, will be based in Miami, where O'Neal plays for the Miami Heat basketball team. O'Neal Group's first development project will be Metropolitan Miami, also known as the Met, which will have 1,100 residential units, including the 866-foot Met 3, the tallest residential tower south of New York, as well as an office tower, a hotel and the area's first Whole Foods Market store. O'Neal plans to open a 24-Hour Fitness/Shaq Ultra Sport gym at the Met. "I've been in real estate now for 10 to 12 years," O'Neal told Bloomberg News in a telephone interview. "This right here furthers my interest and lets people know I'm in the game and in the game for good."

CUT IN D.C. PROPERTY TAX IS PLANNED: District homeowners will receive a tax break in less than two weeks based on a law approved by the D.C. Council last year, reports the Washington Post. The real estate tax rate will fall Oct. 1 to 88 cents, from 92 cents, per $100 assessed value, said Natwar M. Gandhi, the D.C. chief financial officer. The decrease is the result of a law that automatically lowers the property tax rate if tax revenue surpasses projections. For a property owner with a house worth $400,000, the savings will be $160 for the year, said Martin Skolnik, director of real property tax administration. But the tax rate reduction also means that the city will not collect more than $17 million that it would have amassed under the old rate.

THINK TANK SAYS TAX BURDEN IS LOWER FOR D.C. RESIDENTS: The D.C. Fiscal Policy Institute, a think tank that analyzes city tax and budget issues, has released a study showing that middle-income District residents earning $50,000 to $150,000 annually are paying lower taxes than do their neighbors in the Maryland suburbs and in most communities in Northern Virginia, reports the Washington Post. The conclusion is based on a study of income, property and vehicle taxes - levies that directly affect households, said Ed Lazere, the Institute's executive director. He added that the result contradicts the popular belief that D.C. residents pay more taxes than their suburban peers do. Comparing married couples with two children and earning $100,000 annually, the study found that District families pay an average of $4,619 in income and property taxes a year, families in Prince George's County pay $6,509 and those in Fairfax County pay $5,883.