Condos Priced at Record $14 Million

Fifield Cos. is pushing ahead with what it says will be the priciest condo project ever to hit the market in Los Angeles County – $2,000 a square foot on average.
By: DANIEL MILLER: Los Angeles Business Journal on the web
The real estate market is crash landing, right?

Not according to the Fifield Cos.

While other residential developers are scaling back or canceling projects amid a pronounced market slowdown, the Chicago-based firm is pushing ahead with what it says will be the priciest condo project ever to hit the market in Los Angeles County – $9 million per unit, on average, and up to $14 million.

Of course, in an industry where location is everything, the proposed 21-story 1200 Club View tower can’t be beat. The half-acre Wilshire Boulevard parcel at the corner of Comstock Avenue is adjacent to Beverly Hills and next to the Los Angeles County Club.

The high rise condos on the Wilshire Corridor condo strip generally sell for about $1,000 a square foot, while Fifield is maintaining that its project of no more than 35 units will go for about $2,000 a foot. Some will be less but those at and toward the top will go for more.

“It’s a very unique site in terms of the Wilshire corridor. You are looking into Holmby Hills and Beverly Hills and what is unique is, it gave us an opportunity to target a very exclusive home owner,” said Tim O’Brien, senior vice president and principal at Fifield. “Based on preliminary interest – which is very much a word of mouth campaign – we don’t see any limitations on value.”

Fifield was founded in 1977 by Steven Fifield and focuses on building high-end condo and office towers. The company has done over $4 billion in development and built about 50 buildings. In July it finished up another condo project on Wilshire Boulevard closer to Westwood Village, the 23-story Californian on Wilshire, with all of its 74 units pre-sold.

The Club View project was approved by the Los Angeles City Council on August 8, and the company said it has secured $200 million in financing from Lehman Brothers Inc. and Fremont Savings and Loan. The plan is to break ground this fall with the building open in 2008.

Still, with the housing market slowing down, developers of condo projects elsewhere in Los Angeles are rethinking their plans. Earlier this month, Irvine-based Standard Pacific Corp. backed out of deal to buy a condo project near downtown’s Union Station. The 272-unit project, at Alameda Street and Cesar Chavez Avenue, has been converted to a rental property by owner Lincoln Property Co. after failing to attract enough condo buyers. The condo units had been priced near $600,000.

And for the last several months, there’s been about a one-third drop in home and condo sales countywide as interest rates rise and buyers await what could be a substantial correction in prices after a boom that has lasted for well over five years.

In Westwood, 21 condos were sold in August – a 22 percent drop in volume with the median price down 8 percent to $540,000, according to data provided to the Business Journal by HomeData Corp., a Melville, N.Y. company that tracks housing prices nationwide.

However, Kurt Rappaport, president of the high-end real estate agency Westside Estate Agency Inc., said that the typical buyer at Club View will be the “super wealthy client just coming out of a large estate.” Rappaport characterized this sort of client as one who is unaffected by the fluctuations in the market and is buying a condo as a lifestyle choice.

Fifield purchased the half-acre Club View parcel – formerly a pumpkin patch – three years ago. It is close to Beverly Hills at the extreme easterly end of the condo strip in Westwood.

Club View units will start at around $4 million and max out at around $14 million on the upper floors, pricey even for a corridor where buyers regularly shell out several million dollars for a unit.
Wilshire Realty, a high-end property firm, has been tapped by Fifield to sell units at Club View. Lynn Borland, president of Wilshire Realty, said that there is high demand for the condos already. “I think it corroborates that the ultra luxury end of the market is alive and well,” he said.

Each floor of the tower will have no more than two condo units, and between five and seven of the floors will feature a single, penthouse-style unit. Designed by the Keating/Khang Architecture firm, the 163,000-square-foot building will feature heavy use of glass and granite, and a motor court with a floating metal ceiling and a “dignified Parthenon-like space with columns done in a modern architecture style,” said principal Richard Keating.

It also will include 24-hour concierge service modeled after a luxury hotel. “It’s like being at the Peninsula Beverly Hills hotel in terms of being catered to,” O’Brien said.

But in the world of high-end condos, the Club View project, even if it meets all its sales expectations, may not hold its title of the city’s most expensive condo project for long.

The planned Montage Hotel in Beverly Hills has been designed with 25 condos at the top of the hotel. Opening in 2009, Rappaport said he expects the condos could sell for $3,000 per square foot, which would set another record.

“I peg the Montage condos above Club View,” Rappaport said. “It’s unique to have 25 condos on top of the finest hotel in Beverly Hills.”
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AmEx Makes Room on Its Cards For Down Payments on Condos

Coming up with the money for a down payment on a new condominium may soon be as easy as charging it: American Express Co. is expected to announce today that it will allow some customers to use its cards to make condominium down payments.
By: Jane J. Kim: The Wall Street Journal Online
For now, the service appears to be limited to a select few: luxury-condo buyers in Manhattan. American Express is rolling out the program with New York real-estate firm Moinian Group, for one of its properties currently under construction - the Atelier condominium in Midtown Manhattan. Both companies say they plan to expand the service to other properties and partners.

For condo buyers, the deal will allow them to earn reward points or frequent-flier miles on big transactions, while extending the amount of time they have to meet the down-payment requirements and eliminating the hassle of getting certified checks. Buyers will earn one point for every dollar charged.

Joseph Moinian, Moinian's chief executive, says the company is offering the service as an amenity to attract high-end condo buyers.

Bill Glenn, American Express's head of merchant business, says the move is part of the company's efforts to expand the ways its clients can use its cards. The companies didn't disclose the terms of the agreement, although Moinian will pay American Express a fee on each transaction. The condo buyer won't be charged an additional fee.

American Express says the program is available across all of its cards, including its bank-issued cards. Since AmEx charge cards - Green, Gold, Platinum, and Centurion - don't have preset spending limits, cardholders will be able to charge the large amounts required for down payments.

Customers may run into a snag in some cases. If the amount charged is "widely out-of-pattern" for the customer, then the transaction may be flagged until the company gets more information, a spokeswoman notes. Customers who hold AmEx credit cards - such as Blue - may be limited by their card's credit limits, which are based on their spending patterns and credit-worthiness - although a spokeswoman says the company, in some cases, may extend the credit limit for the down payment.

Siva Tayi, a potential Manhattan condo buyer from Houston, plans to charge the 10% down payment on a $1.2 million two-bedroom unit in Moinian's Atelier condo on his Platinum card. "I thought it was a good idea to use the [card] and gain the points," says Mr. Tayi, who runs an information-technology staffing and outsourcing company. Not only does it eliminate the hassle of writing a check or having to wire money, he says, but with the 120,000 points he expects to get -- combined with the 300,000 points he has already accumulated - "I can probably make a trip to India."

The program expands American Express's partnerships with real-estate merchants. The firm currently works with over a dozen property-management companies in 34 states to allow their tenants to pay rent with an AmEx card.

The move comes at a time when more landlords are allowing tenants to pay their rent with plastic. About 15% of the rental apartments in the U.S. accept credit-card payments, estimates Matt Golis, chief executive of YapStone Inc.'s RentPayment, a San Francisco processing firm that works with apartment owners and managers to enable acceptance of credit cards. Most of its new customers this year are offering to pay the costs incurred by offering credit cards as a payment alternative in order to have a competitive advantage over other properties, he says.
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Is now a good time to remodel?

Several factors determine remodeling project profitability
By: Dian Hymer: Inman News
Many people think that fixing a house is a sure way to make money. Yet, homeowners are often disappointed when they discover that their renovations didn't add as much to the market value of their home as they thought they would.

There are several factors that determine whether a remodeling project will be profitable. One is that renovation costs and the market value of those renovations vary from one part of the country to the next.

For example, it costs less to replace windows with new, high-end, dual pane windows in the Midwest than it does in the West. But, the homeowner who lives in the West is likely to recoup more than 100 percent of what he invested, while the Midwesterner will probably only recoup about 84 percent, according to the annual 2005 Cost Versus Value Report published each year by the National Association of Realtors in conjunction with Remodeling Magazine.

Another variable is the current rate of appreciation, which also varies over time and from place to place. Generally, the past five years was a good time to remodel. For example, if you had bought a fixer-upper in the San Francisco Bay Area in 2000 and enhanced it with cost-effective improvements, you probably would have realized a healthy profit when you sold in 2005.

Let's say you pay $300,000 for the fixer. According to the Cost Versus Value Report, improving curb appeal (such as adding new siding and windows) and kitchen and bathroom projects have been consistent high-return investments in most markets. So you concentrate your efforts on these high-performing improvements and invest $50,000 in the property.

After the renovations, the house is worth about $350,000. The market appreciates at a rapid clip - let's say 10 percent per year from 2000 until 2005. So, your property is now worth $563,678. If you had not done the renovations, your property would only be worth $483,153, or $80,525 less.

By making the improvements, you not only enhanced your enjoyment of the property while you lived there, you received an added bonus of more than $80,000 because you received appreciation on a more valuable asset. This assumes that the appreciation rate is constant across different price ranges.

Now that the resale housing market is slowing, does it still make sense to invest in home improvements? Not if you live in an area where the appreciation rate is waning and you're planning on moving again soon. Depending on where you live, you might only recoup 70 percent to 90 percent of the money you invested on renovations at the time of sale if you don't stay long enough to benefit from appreciation.

HOUSE HUNTING TIP: Before embarking on a large renovation, consider whether it makes more sense financially to move to a house that better suits your needs. In a runaway seller's market, it's difficult for many homeowners to find a suitable home to buy due to low inventory. And, even if you find a home, there's no guarantee that you'll be successful in buying it due to competition from other buyers.

Now inventories are rising in most areas of the country, making it easier to find a house to buy. In some markets, homeowners whose listings have been on the market for a while might be receptive to offers made contingent on the sale of the buyers' home. This rarely happened last year in tight inventory areas.

THE CLOSING: If you buy a new home rather than remodel your existing home, you won't have to live through the construction nightmare. There's also no need to worry about overimproving your home for the neighborhood - a mistake made by many homeowners who remodel.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.
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Market Moves Forward with Motivated Buyers, Sellers

A recent conference spreads light on the current state of the market and what it really means.
By: M. Anthony Carr: Realty Times
I just returned from a conference of top agents from the Washington, D.C., metropolitan area, and while they are working harder this year than last year to turn a deal, they are moving forward with their businesses by working with motivated sellers and buyers.

"The market is the market," one told me. "You have to sell and buy real estate in this market, not last year's market, and not the market you wish it would be."

One thing all top producers had in common was that they "get it" about what kind of market in which they find themselves, which is more than what they could say about most of the buyers and sellers who are trying to move from one property to another. Here are a few of the excuses seller's are using to justify the price of their houses.

What sellers say: "I need X-number of dollars from the sale of my house."

The truth is: With all due respect, it doesn't matter how much you "need." The market determines the sales price of a house. I just saw a home that has now been on the market for 328 days in Loudoun County, Virginia - the sales price has dropped $150,000. That seller understands it doesn't matter how much he "needs," however, he would probably have sold it earlier if he would have dropped the price quicker.

What sellers say: "I have a bigger lot."

The truth is: You can't live on the lot. While the size of your lot will make the property more desirable (for some buyers), it doesn't necessarily mean it adds more value in a buyers market. Price according to other houses like yours, not other lots. This is particularly true in a subdivision where the lots are mostly created exactly alike.

What sellers say: "There's one special buyer out there … ."

The truth is: While this may be true in some instances, for most properties, there are several buyers - if you have the house in the right condition and price. Overpricing a property and waiting for a stupid buyer is a waste of everyone's time.

What sellers say: "Advertise more."

The truth is: A property priced right is the best advertising you can use. The best property with the worst price still won't sell. The best property will at least bring about some offers, but not necessarily the asking price.

What sellers say: "If I don't get X-number dollars, then I just won't sell."

The truth is: Most sellers using this line mean they have their house overpriced and will die in it rather than drop the asking price.

There are three determining factors of the salability of a house: location, price, condition.

In areas where commuting is a daily battle, location definitely makes the property more desirable than a house miles and miles away. Location may also mean the location in the desirable community. The former model home facing the four-lane highway may be in great condition and be in the right community, but the location on a busy road could adversely affect the salability of the house.

Price is what most homeowners are battling in today's market. If a house looks great and is over priced it will not sell. Even some "fixer uppers" I've seen these days are overpriced. They may be asking for less than other homes in the community (which are also overpriced), but they're still not moving because there's a great looking house in the neighboring community that sold for the fixer upper price a week earlier.

When a house has more amenities than the competition, this doesn't automatically mean it's worth $50,000 more. In today's market, it may mean it's just going to sell faster.

Finally, the condition of a property is vital to the salability factor. Many of these top producers are challenging sellers to drive around with them to compare the seller's house with those that are already on the market. Those that tour other houses, usually end up pricing the house appropriately, to make their house a "good deal" against all the other comparable homes in the area.

Remember, if someone can remodel a kitchen for $30,000 - then why would they pay $50,000 more because you have one that was remodeled last year. Sellers and buyers who understand the market are cashing in and getting good deals. Sellers need to focus more on equity gain over the last several years, while buyers need to get off the fence and get a good deal.
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The Weekend Guide! September 14 - September 17, 2006

The Weekend Guide for September 14 - September 17, 2006.
Full Article:
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Don't Like the Market? Look Again.

There are a few clouds on the real estate market, but savvy consumers can turn even a slowing market to their advantage.
By: Al Heavens: Realty Times
It's never easy to be the messenger of not-so-good news, but it apparently has fallen upon "the media" to bear the bad tidings of the slowing market and all that it entails.

A business writer I know produced an exceptionally even-handed piece on the most recent Office of Federal Housing Enterprise Oversight report showing home prices increasing in the second quarter at a 4.7 percent annual rate, "the slowest since the fourth quarter of 1999."

The next day, a Realtor accused the writer of filling the newspaper with negativity and threatened to pull advertising - an idle threat, since brokerages and builders tend to increase advertising in markets in which houses aren't selling themselves.

Advertising, in fact, is one of the methods sellers use to gauge whether the listing agent is doing his or her job. But that is a topic for another time.

Considering that most of this bad news is based on statistics compiled by the National Association of Realtors, Commerce Department, National Association of Home Builders, Fannie and Freddie and a host of governmental numbers-crunchers, maybe brokers and builders should complain directly to them.

A builder I know recently suggested that the more often economists and government analysts went on TV to announce that it was now a "buyers' market," the faster it would become a seller's market again.

Look. Because it is a buyer's market, the Realtor's other mantra, "Now is the time to buy," doesn't sound as much like hyperbole.

Now is the time to buy, because there's a lot on the market, fixed interest rates Sept. 7 were 6.47 percent and one-year Treasury-indexed ARMs just 5.63 percent, and when you consider that fixed rates when I bought my first house were at 18 percent, you'd be foolish not to.

In addition, there are a lot of mortgage products that will provide the first-time buyer with even lower rates and costs, if they shop around. Even in the 18 percent days, I was able to find a 13.5 percent fixed rate. With more houses on the market and less competition, buyers can take a little more time.

The media focusing attention on higher rates and slower sales surely frightens those easily spooked by a few negative numbers, but most aren't complaining about the media's attention.

I take my show on the road on occasion, and at a seminar in Orlando a few weeks ago, I asked the audience of builders if they had any complaints about the media.

One builder's hand shot up.

"A reporter from my local newspaper called and asked how new-home sales were, and I told her that they were slower than last year, but still brisk," he said. "The headline and the article the next day made it sound as if I was headed into bankruptcy."

Again, not everyone involved the production of that real estate article knows the intricacies of the business so there is margin for error. You should try explaining annualized rates or why we compare year to year rather than month to month sales and price statistics to the uninitiated.

I don't know how long what is euphemistically referred to as the "normal" market will last. Personal and professional experience tell me that it will change eventually; I remember the late 1980s and the mid-1990s and the surprise bump-up in interest rates in 1999 because of the Thai bat and the post-9/11 fears that never materialized - so we just need to hang in and not panic.

What you should expect from the media is a blend of statistically based news and information on how to deal with the market those numbers are reflecting.

For example, if it is a buyer's market, tell buyers how to take advantage of it - negotiate, take your time, get an inspection, shop around for the best mortgage rate.

Then let sellers in on the information they need to cope - get a pre-inspection to anticipate problems, look at your neighbors' houses and try to make yours better, or offer reasonable incentives or allowances to attract interest.

If you want to invest in real estate, forgo flipping and consider the long-term, such as REITs that are consistent income producers (some did better than stocks at the height of the market).

If you want property, buy a condo that is lingering on the market and rent it until median prices return to their dizzying climb. The focus on condo construction and conversions have reduced inventory of rental property in many urban markets, and that's the situation you want to take advantage of until circumstances change.

They always do.
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Home Prices to Keep Falling in '06, NAR Testifies

After years of record growth, the seller's market is transitioning to a buyer's market, NAR President Thomas M. Stevens told a Senate committee.
REALTOR® Magazine Online
Home prices are expected to continue on a modest decline for the remainder of the year the seller’s market transitions to a buyer’s market, the NATIONAL ASSOCIATION OF REALTORS® testified today at a Senate committee hearing.

Yet, contrary to some news reports, there is no housing bubble, and the slowdown is actually a good thing for many local economies, NAR president Thomas M. Stevens said at the hearing, titled “The Housing Bubble and Its Implications for the Economy.”

“After five years of outstanding growth, the housing market is undergoing a period of adjustment and becoming more and more of a balanced market between buyers and sellers,” he said.

Many Local Markets Still Going Strong

Even with falling demand and increased supply, home prices are still appreciating — although at no where near the double-digit rates of the past few years. “While recent developments raise concern, it is important to remember that the housing market varies significantly across the country,” Stevens said.

One-third of the country (by population) is still seeing rising home prices, including Alaska, New Mexico, Vermont, and many states in the South, excluding Florida. States that experienced the greatest increases in home prices in recent years are experiencing significantly lower sales. These states include Arizona, California, Florida, Nevada, and Virginia.

Also contributing to the cooling housing market is a nearly one-point increase in mortgage rates, speculative investors pulling back, and first-time buyers being priced out of the market.
“Pressure is being felt in the housing market due to rising mortgage rates,” Stevens said. “Home buyers have become exhausted financially, which explains why sales have tumbled in higher-priced regions of the country.”

Sales to Fall 8% This Year

NAR forecasts a drop in home sales of around 8 percent in 2006, followed by another 2 percent decline in 2007. The forecast takes into account stabilizing mortgage rates and a modest economic expansion. However, a significant shift in interest rates or a change in the economy would alter the forecast.

Slow home-price growth — of less than 3 percent in 2006 and 2007 — also is predicted.

NAR notes that a soft landing is possible under the right circumstances and affordable mortgage financing is an important component in achieving this.

“Because the housing market strongly supports the economy and drives consumer spending, it is imperative that the Congress adopt policies that encourage home ownership and make purchasing a home obtainable for the millions of families who desire to own a home,” Stevens said. “NAR stands ready to work with Congress to continue to open the door to the American dream of home ownership.”
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Buyers Discover What It Takes To Sell as Inventories Mount

As the number of residential properties on the market swells and prices in some locations fall, homeowners discover that homes in better locations or with sought-after amenities are selling the fastest.
By: Lauren Baier Kim: The Wall Street Journal Online
Inventories rise; home sales plunge

In August, home sales took a dive in many large cities across the U.S., according to a The Wall Street Journal Online article. Among the places showing the biggest drops in the number of homes sold were California, Florida, Arizona, Massachusetts and the Washington, D.C., area, the article says. Nationally, the number of homes on the market rose 4.7%, according to the Web site. As a result of the market downturn, buyers may take their properties off the market, and home builders are offering incentives to spur sales, the article says. Prices in some U.S. locations for newly built homes are down 10% to 15% from a year ago, the article says. "We believe that the housing market is still in the early innings of a hard landing that will likely take several years to develop," one housing analyst is quoted as saying. Use an interactive tool to track inventories of homes for sale in 15 large metro areas across the U.S.

Prices falling in Los Angeles

Patience may be a money-saving virtue for Los Angeles-area home buyers, according to an article published by the Los Angeles Times. Home buyers who wait out the market could stand to profit, with home prices forecasted by one real-estate professional to drop 2% to 3% yearly for the next three to five years, the newspaper reports. "Prices are going to be a little weaker a year from now, and there'll be more listings and more choices," one real-estate professional is quoted as saying. The median home price dropped from $493,000 in June to $492,000 in July, and the number of residential properties sold was down 27% in July from the year before, the article says. Yet, the Times cautions that timing the market for when it hits rock-bottom could be tricky, and could result in missed-out real-estate deals. "If the timing is right and you've seen a home you like that has gone down in price, why not get in the ballpark?" the paper quotes one local real-estate agent as saying.

A crop of 'lemons' in New York market

Some New York apartment owners who purchased during the housing boom are learning that they own real-estate "lemons," or homes that are difficult to sell, says an article published by the New York Times. Which is a shocker to homeowners who have come to believe that "a 20% increase in your value of real estate was like a constitutional guarantee, kind of like life, liberty and happiness," the newspaper quotes a real-estate professional as saying. Sellers are finding that buyers, thanks to the slowing real-estate market, are less likely to purchase flawed properties, or homes with negatives like blocked views; "walk-up" access only; a lack of interior light; an extensive need of repair or renovation; and high maintenance or other fees, the article says. Soaring construction costs are also turning buyers away from apartments requiring renovation, the Times notes.

Chicago sales slow; placing blame for cooling market

Following a national trend, the housing market has cooled in the Chicago area, according to a Chicago Tribune article. In July, sales of single-family homes dropped 18.6% from July 2005, while condo sales fell 8.4%, the article says. There are 40% more homes on the market than a year ago, yet home prices increased 4.3% and condo prices rose 6.1% over the year period, the newspaper says. So what is behind the cool down - both nationally and regionally? Several suspects have been blamed, from a "bubble-obsessed" news media, to lenient lending policies to real-estate speculators who bid up real-estate values too high, the Tribune says. "A lot of realtors are angry at the media," the paper quotes David Lereah, the chief economist of the National Association of Realtors, as saying.

What it takes to sell in Denver

With the Denver-area housing market facing the worst resale market since the early 1990s, local sellers are discovering that a home's location and quality figure prominently into how quickly it will sell, says a Denver Post article. Selling the fastest are residences within the city or within a short commute of the metro, well-maintained properties, luxury homes, and residences in popular school districts, the newspaper says. Harder sells are residential properties further out from the city, those in mountain and "fringe" developments, and homes that lack sought-after amenities like hardwood floors, granite countertops and fully finished basements, the Post says. Baby boomers are fueling sales for low-upkeep lofts and town homes, as well as for properties with main-floor master bedrooms, the article says.
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Rising Inventory of Unsold Homes Is Likely to Put Pressure on Prices

Home inventories increased 4.7% in August from July in 18 metropolitan areas, likely putting more downward pressure on prices. The biggest increases - 16% in the Dallas area and 13% in Seattle - came in markets that have been relatively strong recently.
By: James R. Hagerty: The Wall Street Journal Online
A continued rise in inventories of unsold homes in August is likely to put more downward pressure on home prices in parts of the U.S.

Inventories of homes in 18 large metropolitan areas across the country expanded by 4.7% in August from a month earlier, according to data compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The data are based on single-family homes and condos included in local multiple-listing services of homes for sale.

The biggest increases - 16% in the Dallas area and 13% in Seattle - came in markets that have been relatively strong recently. A sharp rise in inventories in those areas is likely to help restrain price increases. Other sizable increases came in Orlando, Fla. (8%), San Francisco (6.1%) and Miami (5.6%).

Of the 18 metro areas, only two showed lower inventories. Boston was down 1.5% and Washington, D.C., 1.6%. Prices have declined modestly in both areas over the past year. For instance, the median home price in the northern Virginia suburbs of Washington was $459,000 in August, down 8% from a year earlier, according to Metropolitan Regional Information Systems Inc., a data-tracking firm in Rockville, Md. Such price declines are likely causing some people who can't get the price they want to take their homes off the market and wait for a recovery.

Home sales have plunged over the past year in many areas where prices had soared over the preceding five years, notably in California, Florida, Arizona, Massachusetts and the Washington, D.C., area. Many potential buyers are waiting for prices to come down further. The persistent weakness in these markets has prompted many housing experts to say prices will have to decline more to revive sales.

Sellers gradually seem to be realizing that they will have to lower prices, says Patrick Lashinsky, a senior vice president at ZipRealty. "There's finally some realism getting into the picture."

Ivy Zelman, a housing analyst at Credit Suisse Group in Cleveland, estimates that prices of newly built homes in San Diego, Sacramento, Calif., Phoenix, northern Virginia and southwest Florida already are down as much as 10% to 15% from a year ago. That estimate includes "concessions" from builders, such as upgraded kitchens or help with closing costs, which are disguised price cuts. But Ms. Zelman still sees more price declines ahead. "We believe that the housing market is still in the early innings of a hard landing that will likely take several years to develop," she says.

Even the National Association of Realtors, normally very bullish on home prices, now predicts a drop in median prices for the nation as a whole. David Lereah, chief economist for the Realtors, forecasts that prices will decline modestly in the next few months. After that dip, he says, prices are likely to resume rising, but at a slower-than-normal rate.
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Smart Real Estate Investments Still Out There

The housing market is returning to normalcy in most parts of the country. Does that mean real estate investment opportunities are over? Not quite.
By: Robyn A. Friedman: REALTOR® Magazine Online
"There are more opportunities now than there have been in years," says David Dweck, a real estate agent with Re/Max Professionals in Coral Springs, Fla., and an active investor the past 14 years. "With the market shifting, sellers are becoming more realistic and motivated. A motivated seller can mean a buying opportunity for an investor."

Here are some ideas for spending real estate dollars now:

    • Commercial properties. Investors can’t count on short-term appreciation and a
      quick sale, but a good income stream is likely. Focus on properties with long-
      term value like medical office buildings.


    • Foreclosures. 80 percent of the part-time weekend investors who dabbled in
      real estate have folded,” says Michael Perlmutter, who specializes in buying
      and selling foreclosures. “There’s never been a better time because of the
      supply.”


    • Preconstruction condos. Many of the amateur speculators who snapped up units
      in 2003 or 2004 just want their money back, says Mark Zilbert, president of
      Zilbert Realty Group Inc. In Miami Beach. Zilbert said that the investor has
      to be prepared to settle on the unit and hold it for a year or so. After that,
      he says, they should be able to resell the condo at a profit. "They'll
      probably see a 50 to 60 percent return on their money, which is a far cry from
      the 200 to 300 percent we used to see," he says.


    • Retirement and vacation locales. Many popular places all over the country are
      still enjoying a boom. “"If you're a small investor, you should never invest
      in anything that you can't visit in one day," says Michael Y. Cannon, managing
      director of Integra Realty Resources South Florida. "Stick to the neighborhood
      that you know.”


    • Vulture funds. Scoop up bargains when you think the market has hit bottom.
      Real estate analyst Jack McCabe, who has formed McCabe Acquisitions LLC, says
      accredited investors of high net worth, institutional investors and other
      entities can participate in his acquisition firm as nonmanaging members. A
      minimum investment of $5 million is required. He plans to acquire blocks of
      condos in multifamily developments — or entire projects — in many markets in
      the country. He hopes to purchase these properties from anxious sellers at a
      discount. Be prepared to hold for up to 10 years.

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Overnight real estate rates drop

30-year fixed rate at 5.93%; 10-year Treasury yield at 4.77%
Inman News
Long-term mortgage interest rates were lower Friday, and the benchmark 10-year Treasury bond yield sank to 4.77 percent.

The 30-year fixed-rate average dipped to 5.93 percent, and the 15-year fixed-rate sank to 5.64 percent. The 1-year adjustable was down at 5.31 percent.

The 30-year Treasury bond yield decreased to 4.92 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average gained 60.67 points, or 0.54 percent, finishing at 11,392.11. The Nasdaq was up 10.5 points, or 0.49 percent, closing at 2,165.79.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.
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Full Disclosure Is the Best Policy When Selling Your Home

Just how much should you reveal to potential home buyers when showing them your property? June Fletcher on why being as truthful as possible is the right thing to do - both ethically and legally.
By: June Fletcher: The Wall Street Journal Online
Question: I am selling my home myself. Am I required to disclose to the buyer that our new neighbors are considering adding an addition to their home and are relocating their driveway closer to our property line? The neighbors recently moved in and we only have spoken with them once about their plans. They have not begun any building, nor should there be any boundary dispute because they recently had a survey completed on the property.

- Lisa, Boardman, Ohio (Last name withheld upon request.)

Lisa: There are two rules to consider when it comes to disclosure.

The first is the seller's legal obligation to disclose any known defects. Requirements vary from state to state, but in general, laws no longer uphold the "buyer beware" standard that prevailed a generation ago. Rather, the burden is on sellers to convey a property that isn't necessarily perfect, but which has, as the old Holiday Inn commercial put it, "no surprises."

In Ohio, the Real Estate and Licensing Division of the state's Department of Commerce provides a four-page disclosure form on its Web site. It's pretty straightforward and spells out the condition of all the systems that are likely to concern a buyer, from the roof to the lawn sprinklers, as well as the presence of mold and hazardous materials like asbestos and radon. It also details whether the property is in a flood plain or has historic status. By filling out the form, you're not warranting the condition of your home; you are simply letting the buyer know what's wrong with it and what you have repaired.

The form also lists any boundary encroachments, shared driveways and zoning violations that affect your property - but not your neighbor's. So you're under no obligation to disclose your neighbor's plans.

But there's another rule I believe in following, even though it's not mandated by law: the Golden Rule. In other words, if you were buying your own home again today, what would you want to know about it? Wouldn't you want to know about a possible addition and rerouted driveway next door? (I say possible, because even though your neighbors have told you about their plans, it doesn't mean they'll necessarily go ahead with them.)

Some people aren't bothered by the prospect of construction on the other side of the fence. On the contrary, they see remodeling as adding to the overall value of the neighborhood. There's nothing wrong with pointing this out. So you might say as you show buyers around your house, "The neighbors here really care about their homes and like to improve them. In fact, my next-door neighbor John Smith told me he's thinking about putting on an addition." If the buyers want more information, suggest that they speak directly with Mr. Smith.

But even put in such a positive light, some buyers might find the prospect intolerable. Perhaps they can't stand the thought of living next door to bulldozers, air hammers and circular saws for weeks on end because they have a new baby or an elderly parent living with them. Or they may worry about the neighbor's house growing too big, or fret about the placement of the new driveway. If so, your house really isn't right for them.

In the long run, being empathetic to the concerns of buyers serves your interest as well as theirs. For instance, what if a leak shows up in an out-of-the-way area a month or so after the buyer has moved in - something you never noticed? If you haven't been totally upfront with buyers, they're more likely to think that you hid an old leak with primer and paint - and thus more apt to sue you for damages. But if you've leveled with them all along on everything else, buyers are more inclined to believe your explanation. Decency begets decency, especially when it goes beyond what the law requires.

- June Fletcher is a staff reporter at The Wall Street Journal and the author of "House Poor" (Harper Collins, 2005). Her "House Talk" column appears most Mondays on RealEstateJournal.com. Email your questions about the residential real-estate market. Please include your name, city and state. If you don't want your name used in our column, please indicate that. Due to volume of mail received, we regret that we cannot answer every question.
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Discount broker may be shortchanging home seller

Withholding listing from MLS, Web sites impacts bottom line
By: Robert J. Bruss: Inman News
DEAR BOB: I don't expect you to print this letter because I am a nontraditional Realtor who charges my home sellers a low $9,950 set fee, which is not commission based on the home's final sales price. But I still make a profit while doing the exact same things traditional Realtors do for their sellers. My client's best interest and net savings always come first. It is unfortunate some Realtors claim to be ethical while practicing their self-serving interests. Instead of a taking seminar courses on how to defend your commission they should take courses on true ethics to look out for their client's best interest -Luis T.

DEAR LUIS: That chip on your shoulder must be very heavy. Lighten up. Real estate agents are in business to earn profits, as you are. If your brokerage office can survive on $9,950 per home sale, good for you.

However, I question if you are really looking out for the best interests of your home sellers to get top price for their residences.

You conveniently neglected to say if all your listings are immediately placed in the local MLS (multiple listing service) and on the Internet at www.Realtor.com to give your home sellers maximum exposure to the market of prospective buyers represented by other agents, and how those buyer agents are compensated.

BORROWING AT 10 PERCENT TO BUY RENTAL ISN'T SENSIBLE

DEAR BOB: I am considering buying rental property near Austin, Texas, which is a very good rental market. Our real estate broker recommends a 10 percent first mortgage to buy this property. My wife and I both have excellent credit. Does this make sense? -Byron T.

DEAR BYRON: You will be making two huge mistakes. The first is buying rental property out-of-state where you are not able to manage your own property. Nobody has as great an interest in your investment property as you.

The second mistake is paying 10 percent mortgage interest for a rental property in today's market.

You should be able to obtain a much lower interest rate on investment property. Borrowing at 10 percent interest to buy a rental property makes it extremely difficult to create a positive cash flow.

NO WAY TO FORCE ADJOINING NEIGHBOR TO BE NEAT

DEAR BOB: I own a townhome condo that is adjacent to a neighbor who has a garage full of junk. We share a common wall. His two-car garage doesn't have enough room for even one car. Last year, a condo in the next block caught fire and the place next door was ruined with smoke. I offered to pay for a Dumpster for my neighbor and to help him clean his garage, but he refuses. The homeowner's association is also concerned. Any suggestions? -Ruth F.

DEAR RUTH: Your visit to the local fire prevention department might produce results. Even if they have no authority to force the neighbor to clean his garage, a visit from a uniformed fire department officer can work wonders.

To illustrate, several years ago my neighbor had a dead tree on his property, which I politely asked him to remove. No results.

Then a friend suggested I phone the local fire prevention department. Within a few days one of their officers paid a friendly visit to myneighbor, explaining the fire hazard of his dead tree. Within a week, he had that dead tree removed. Hopefully, you will have similar successful results.

The new Robert Bruss special report, "Five Easy Ways to Buy Your Home and Investment Property for Nothing Down," is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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Forecast: Slower-than-expected home sales in '06

National median existing-home price projected to rise 2.8%
Inman News
The National Association of Realtors trade group has lowered its expectations for annual home sales in 2006.

Existing-home sales are forecast to fall 7.6 percent this year to 6.54 million, while new-home sales are forecast to drop 16.1 percent to 1.08 million compared to the previous year.

In the group's previous annual forecast, released Aug. 8, existing-home sales were expected to fall 6.5 percent this year while new-home sales were projected to fall 12.8 percent.

If the latest forecast rings true, it would be the third-highest existing-home sales record on total and the fourth-highest total for new-home sales.

Housing starts are projected to decline 9.6 percent to 1.87 million in 2006, compared to the August projection of a 9.1 percent decline.

The market is experiencing "an inventory and price imbalance," the Realtor group reported.

David Lereah, NAR's chief economist, said in a statement, "A year ago we had record home sales and tight supply with buyers bidding over the asking price. This year sales are slowing, homes are plentiful and sellers are negotiating. Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a buildup in housing inventory."

He added, "Home prices should return to positive territory within a few months and annual appreciation will be slower than historic norms. "Over time, home prices rise at the rate of inflation plus 1 to 2 percentage points -- buyers in most of the country who plan to stay in their home for a normal period of home ownership can pretty well bank on those historic averages, but people who purchased last year with the intent of flipping are likely to get burned."

The national median existing-home price for all housing types is expected to grow 2.8 percent this year to $225,900, with the median new-home price rising 0.2 percent to $241,400. "New-home appreciation is dampened by builders offering incentives to reduce inventory," according to the forecast announcement.

Thomas M. Stevens, NAR president, said in a statement that higher interest rates slowed home sales during the first half of the year. "The slowdown occurred mostly in higher-cost markets, while other areas continued to expand," Stevens said. "The shift we've seen lately results from psychological factors with buyers on the sidelines trying to time the market. Both buyers and sellers need to understand what's going on within their local market areas."

The 30-year fixed-rate mortgage is expected to rise to 6.7 percent in the fourth quarter, according to the forecast.

The unemployment rate is expected to average 4.8 percent for 2006, while annual inflation, as measured by the Consumer Price Index, is forecast at 3.5 percent. Growth in the U.S. gross domestic product is expected to be 3.4 percent this year. Inflation-adjusted disposable personal income is projected to grow 3.5 percent in 2006.
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