What can home buyers expect sellers to fix?

Successful negotiation involves give and take
By: Dian Hymer: Inman News
Negotiating a purchase contract isn't easy when home sellers cling to expectations based on last year's real estate market, and buyers refuse to overpay. Equally challenging are the renegotiations that can occur after buyers do inspections.

How do you successfully navigate the second round of negotiations? The goal is to come away from the bargaining table feeling that you've struck a good deal, ideally without alienating the sellers. After all, you may need to impose on the sellers for return visits to the property before closing. And, you hope the sellers will leave the place clean and tidy.

Before you begin a dialogue with the seller about who is to fix what, you should have a clear understanding of your purchase agreement. For example, does the seller warrant the condition of the property, or are you buying the property in its present condition?

Let's say the contract states that the seller warrants the roof is free of leaks. You ask a roofing contractor to inspect the roof. He says there is evidence of past leaks and recommends replacing the roof before the next rainy season.

In this case, it's reasonable to expect the seller to provide a leak-free roof at closing; it's in the contract. However, this may not mean that you're entitled to a new roof. Most sellers would seek a second opinion. Another roofer might recommend patching rather than replacing.

Transactions can break down over differences of opinion about the extent of a problem and the appropriate remedy. It helps if both parties have open minds and a willingness to cooperate on reaching a mutually satisfactory solution.

In many cases, a seller warranty is not a part of the contract. Instead, the buyer agrees to purchase the property in its present condition subject to inspections.

Depending on how the inspection contingency is written, the buyer may have the unilateral right to withdraw from the contract and have his deposit returned, without even giving the seller the opportunity to repair defects. Likewise, the sellers may be under no obligation to make repairs. If a good faith effort is not made to work out a solution to property problems, the deal is off and the buyer's deposit will probably have to be returned.

Negotiations over inspection issues often fall apart because one party feels that the other is taking unfair advantage. A successful negotiation involves give and take.

Many people think it's acceptable to ask home sellers to repair health and safety issues. Even so, some sellers refuse to pay if they have lived comfortably with these issues for years with no problems.

Sellers may feel a buyer is negotiating in bad faith is they ask sellers to pay to correct a defect that they were aware of before they made their offer.

Suppose you are buying "as is." You signed a seller disclosure that said the roof needed to be replaced. An estimate to replace the roof was included with the disclosure. When you removed your inspection contingency, you made it conditioned on the sellers replacing the roof.

This kind of a request would enflame some sellers. Emotions can run high during a residential home purchase transaction, particularly if the sellers are still occupying the property.

Sellers are often offended when buyers lose sight of the big picture and insist that the seller take care of minor defects. It's best to focus on the major issues.

Make sure you understand what happens if the sellers turn down your requests to repair defects, particularly if you don't want to lose the house. In a popular purchase contract used in California, the seller can't simply cancel the contract if he has a beef with the buyer.

THE CLOSING: He must issue a 24-hour notice to give the buyer a chance to perform.

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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UCLA Group Predicts Flat Home Prices

The Anderson Forecast backs away from its dire projections last year but says things could worsen based on recent data.
By: Lisa Girion: Los Angeles Times Online
With home sales slumping faster than predicted by even the most pessimistic prognosticators, the question is: How low will prices go?

The UCLA economic group that was among the first to declare the housing market a bubble now is saying that prices, at least in California, probably won't decline significantly anytime soon.

In its widely watched quarterly outlook to be released today, the UCLA Anderson Forecast reiterates earlier projections that the deteriorating housing sector will slow state and national economic output and job growth through 2008. Although it doesn't rule out a recession, it doesn't expect one.

Absent a recession, it reasons, homeowners would rather hold than sell into a deteriorating market. Unless a job loss forces a sale, many homeowners would rather stay put than sell for less than the high they recall some neighbor getting last year.

"Expect home prices five years from now to be about the same as they are today, though lower in real [inflation-adjusted] terms by 15%-20%," the forecast said.

Although the statewide average price might not decline, a few areas where about 40% of the housing stock is new construction — such as in Yolo and Placer counties — are expected to see drops as builders cut prices to move inventory, UCLA economist Ryan Ratcliff said. In contrast, during the last housing market decline, which was accompanied by recessionary job losses, prices fell more than 10% statewide from their 1989 highs.

"We're not going to see anything like the '90s again," Ratcliff said.

Although that might sound like good news to homeowners, the lack of a significant price correction is bad for the economy overall because it will lead to further job and productivity losses in the housing sector, said Edward Leamer, director of the UCLA Anderson Forecast.

"So while your happy homeowner is pleased by the fact that home prices are not going down," Leamer said, "the unhappy home builder is not going to have anything to do."

Leamer cautioned that the outlook was based on data trumped by recent reports showing that housing sales and starts were sliding more rapidly than the group had projected.

If the trend accelerates, he said, "then our forecast is too optimistic."

The latest UCLA housing forecast, at least for California, is less bearish than its outlooks issued last year. Christopher Thornberg, the UCLA economist whose California forecasts last year called for the housing bubble to burst with dire consequences, recently left the school's forecast group to form his own consulting firm. He said last month that his expectations were growing more gloomy.

UCLA's national outlook forecasts turbulence through 2008, including mild stagflation — that dreaded 1970s phenomenon marked by rising prices and, at best, slowing growth.

It expects inflation-adjusted economic growth to slow to an average annualized rate of 1.8% through the first half of 2007 and unemployment, now at 4.7%, to rise to 5.1% by the end of next year. At the same time, core inflation, which excludes energy and food prices, is expected to increase to an average rate of 3.2%.

"While not a recession, it is hardly a pretty picture," the UCLA report said. "The combination of sluggish growth and rising prices will have the look and feel of a low-level stagflation."

But it won't be anywhere near as bad as the stagflation of the 1970s, when output declined and broad price increases pushed inflation to 8%, said David Shulman, a UCLA senior economist and author of the national forecast.

"What we had in the 1970s you could call pneumonia," Shulman said. "You could call this a low-grade cold. It's some of the symptoms, but you are still walking around."

The group's outlook for California's economy is much the same as the national picture and past projections: a continued slowdown in growth caused by the slumping housing sector.

In a separate report, the University of the Pacific's Business Forecasting Center projected that payroll employment in California would grow at a rate of 1.2% to 1.4% through 2008, slightly higher than the UCLA group's projection of about 1% over the same period.
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Survey: Homeowners still expect prices to go up

Only 13% polled have interest-only, ARM loans
Inman News
Homeowners may have overly optimistic expectations that their homes will continue to appreciate as the housing market cools, according to a survey by investment bank RBC Capital Markets.

Nearly half of those polled expect their homes will continue to appreciate by at least 5 percent a year for several years - down from 60 percent of those polled last year.

But only 13 percent of those surveyed have potentially risky adjustable-rate and interest-only mortgages, and 25 percent said they'd already paid off their mortgages. That suggests most homeowners will be able to weather a slowdown or reversal in the record rate of home-price appreciation during the boom years.

More than 80 percent of the 1,003 homeowners surveyed nationwide in the second week of September said they had at least $50,0000 in equity built up in their homes. Nearly 60 percent said they have at least $100,000 in equity.

Of the homeowners with adjustable-rate and interest-only loans, less than half are concerned with their ability to meet higher payments, and 13 percent haven't even considered whether they will be at risk when their mortgages "reset" at higher rates and their monthly payments go up.

"While this is a fairly small segment of the overall survey (approximately 6 percent), it suggests material risk to this segment of the population," RBC Capital said in a press release announcing the survey.

One of the goals of the survey was to determine how a slowdown in the housing market might affect consumer spending.

"While real estate expectations are lower than they were last year, consumers still seem optimistic despite what we are seeing in the marketplace," said Scot Ciccarelli, managing director and equity research analysts for RBC Capital Markets. "Declining real estate values could eventually impact consumer spending as people don't feel as wealthy as they used to and become less likely to borrow against the equity they have built up in their homes."
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Capitol Records Tower Sold

The Capitol Records Tower, one of Hollywood’s most enduring landmarks, has been sold, but it also will retain its original use as an office building.
By: DANIEL MILLER: Los Angeles Business Journal Online
Capitol Records Inc.’s parent, EMI Group PLC, has agreed to sell the 13-story building and adjacent property to Argent Ventures LLC for $50 million. As part of the deal, the famed circular building will not be converted to condominiums as had been speculated but will be leased back to EMI so Capitol’s operations can remain there.

However, New York-based Argent Ventures, a commercial developer and property owner, will develop the remaining land on the two-acre parcel at Vine Street and Yucca Street, and a mixed-use development with a residential component is one possibility. The sale also includes a parking lot on Argyle Avenue.

Capitol Records and Capitol Studios will continue to occupy the tower at 1750 Vine St. as well as the Gogerty Building. EMI has agreed to a long-term lease with Argent, though terms of that deal have not been disclosed, said Chris Bonbright, chief executive at Ramsey-Shilling Commercial Real Estate Services Inc.

“One of the strong qualities of the buyer is that they are historically sensitive,” said Bonbright, who represented Argent in the deal.

Jeanne Meyer, EMI spokeswoman, said that the company did not actively seek a sale, but looked over several offers. “We made it very clear to several interested parties that we were only interested in the sale with an opportunity to remain in the building for many years to come,” she said.

The tower was built in 1956 and is meant to look like a stack of vinyl records. Musicians like Frank Sinatra and The Beach Boys recorded there.
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The Weekend Guide! September 28 - October 1, 2006

The Weekend Guide for September 28 - October 1, 2006.
Full Article:
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Rates fall sharply, borrowers fail to take advantage

Home purchase index nears 3-year low
Inman News
Despite a sharp decline in interest rates, overall mortgage applications were down 4.9 percent last week on a seasonally adjusted basis from the week before, the Mortgage Bankers Association reported today.

The seasonally adjusted purchase index decreased by 5.5 percent to 375.9 from 397.9 the previous week, and is now at its lowest level since November 2003. The refinance index decreased by 4.1 percent to 1,677.5 from 1,748.7 one week earlier.

The refinance share of mortgage activity, however, increased to 44.3 percent of total applications from 43.7 percent the previous week. This is the highest that the refinance share has been since September 2005. The adjustable-rate mortgage (ARM) share of activity decreased to 26.4 percent of total applications from 27 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.18 percent from 6.36 percent, with points including the origination fee decreasing to 1.06 from 1.11 for 80 percent loan-to-value ratio loans.

Points, which are fees charged by lenders for loan processing, are expressed as a percent of the total loan amount.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.81 percent from 6.04 percent. Points including the origination fee increased to 1.12 from 1.06 for 80 percent loan-to-value ratio loans.

The average contract interest rate for one-year ARMs decreased to 5.9 percent from 5.95 percent, with points including the origination fee rising to 0.79 from 0.77 for 80 percent loan-to-value ratio loans.

Washington, D.C.-based Mortgage Bankers Association is a national association representing the real estate finance industry. The survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
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Consumer Confidence Improves in September

The confidence level of U.S. consumers improved this month, buoyed by a more favorable assessment of current economic conditions, according to a recent report by The Conference Board.
CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)
Following a sharp decline in August, the Board's Consumer Confidence Index increased to 104.5 in September, up from 100.2 in August. The Present Situation and Expectations indexes also improved, rising to 127.7 and 89, respectively. Despite the gain in consumer confidence, "there is little to suggest a significant change in economic activity as we enter the final quarter of 2006," said Lynn Franco, director of The Conference Board Consumer Research Center.

According to the report, more Americans are optimistic about jobs and incomes in the months ahead. The proportion of consumers anticipating more jobs to open up increased from 14.2 percent to 14.4 percent in September, and the percentage of consumers anticipating their incomes to increase in the near-term edged up to 19.7 percent from 17.9 percent in August.

More Below:

The Conference Board Consumer Confidence Index Posted a Gain in September

The Conference Board Consumer Confidence Index, which decreased sharply in August, posted a gain in September. The Index now stands at 104.5 (1985=100), up from 100.2 in August. The Present Situation Index increased to 127.7 from 123.9. The Expectations Index rose to 89.0 from 84.4 last month.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world's largest custom research company. The cutoff date for September's preliminary results was September 19th.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "A more favorable assessment of current conditions coupled with a less pessimistic short-term outlook boosted consumer confidence this month. However, even though consumers' concerns have eased, there is little to suggest a significant change in economic activity as we enter the final quarter of 2006."

Consumers' appraisal of ongoing conditions improved in September. Those claiming conditions are "good" increased to 27.4 percent from 26.2 percent. Those claiming conditions are "bad" eased to 15.4 percent from 16.6 percent. Labor market conditions were mixed. Consumers saying jobs are "plentiful" improved to 25.9 percent from 24.5 percent. Those claiming jobs are "hard to get," however, edged up to 21.3 percent from 21.1 percent in August.

Consumers' outlook for the next six months was less pessimistic in September than in August. Those anticipating business conditions to worsen decreased to 10.6 percent from 12.9 percent. Those expecting business conditions to improve, however, remained virtually unchanged at 16.3 percent.

The outlook for the labor market improved moderately. Those expecting more jobs to become available in the coming months edged up to 14.4 percent from 14.2 percent in August. Those expecting fewer jobs decreased to 17.1 percent from 18.1 percent. The proportion of consumers anticipating their incomes to increase in the months ahead rose to 19.7 percent from 17.9 percent.
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Overnight real estate rates: Down further

30-year fixed rate at 5.75%; 10-year Treasury yield at 4.58%
Inman News
Long-term mortgage interest rates continued lower Tuesday, and the benchmark 10-year Treasury bond yield rose to 4.58 percent.

The 30-year fixed-rate average sank to 5.75 percent, and the 15-year fixed-rate declined to 5.47 percent. The 1-year adjustable was down at 5.26 percent.

The 30-year Treasury bond yield increased to 4.72 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 93.58 points, or 0.81 percent, finishing at 11,669.39. The Nasdaq was up 12.27 points, or 0.55 percent, closing at 2,261.34.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.
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City, Developer Reach Deal on W Hotel

A deal has been reached between a group of local officials and Hollywood business owner Robert Blue to incorporate his Bernard’s Luggage Co. store into the planned Hollywood Boulevard and Vine Street development that will feature a W Hotel.
By: DANIEL MILLER: Los Angeles Business Journal Online
City officials said Blue was the last holdout fighting the development.

Blue worked out the deal with Los Angeles City Councilman Eric Garcetti, the Community Redevelopment Agency of Los Angeles, and project developers Legacy Partners Inc. and Gatehouse Capital Corp., said Josh Kamensky, spokesman for Garcetti.

“This agreement is the result of a lot of late night meetings,” Kamensky said.

Details of the deal are to be released at a press conference in Hollywood this morning.

The mixed-use project, which will be located south of Hollywood Boulevard between Vine Street and Argyle Avenue, includes the hotel, condos, apartments, and retail space. The price of the project has been estimated at $400 million.

The deal takes place against the backdrop of Proposition 90, which would limit eminent domain to public uses, such as parks, roads and schools. Blue received attention last year when he fought the CRA’s use of eminent domain to clear property for a private developer. Blue’s case has been cited as an example for boosters of the proposition, which is on the November ballot.
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NAR: Home Sales, Prices Decline in August

"We expect an adjustment in home prices to last several months as we work through a build-up in inventory," says NAR Chief Economist David Lereah.
REALTOR® Magazine Online
Existing-home sales and prices slipped slightly in August to a sustainable pace, as was expected, the NATIONAL ASSOCIATION OF REALTORS® reports.

Total existing-home sales — including single-family, townhomes, condominiums and co-ops — slipped 0.5 percent in August to a seasonally adjusted annual rate of 6.30 million units from a level of 6.33 million July. Sales were 12.6 percent lower than the 7.21 million-unit pace in August 2005, which was the second highest on record.

“After a stronger-than-expected drop in July, the fairly even sales numbers in August tell us the market is at a more sustainable pace,” says NAR Chief Economist David Lereah. “It keeps us on track to see the third highest sales year on record, but we do expect an adjustment in home prices to last several months as we work through a build up in the inventory of homes on the market.”

The national median existing-home price for all housing types was $225,000 in August, down 1.7 percent from August 2005 when the median was $229,000. The median is a typical market price where half of the homes sold for more and half sold for less.

“This is the price correction we’ve been expecting. With sales stabilizing, we should go back to positive price growth early next year,” Lereah says.

Total housing inventory levels rose 1.5 percent at the end of August to 3.92 million existing homes available for sale, which represents a 7.5-month supply at the current sales pace — the highest supply since April 1993.

Assess Market When Setting Price

Sellers need to price to current market conditions if they want to sell within a reasonable amount of time, says NAR President Thomas M. Stevens from Vienna, Va.

“In some areas, home sellers are not making sufficient adjustments in their listing price, so their homes are staying on the market and contributing to the build up in inventory,” says Stevens, senior vice president of NRT Inc.

“Sellers are starting to become more realistic, and that could provide some lift to home sales because there is a healthy underlying demand from household growth and job creation,” he says. “At the same time interest rates have moderated, so there are good opportunities for buyers in today’s market.”

30-Year Rates Decline in August

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.52 percent in August, down from 6.76 percent in July; the rate was 5.82 percent in August 2005. Last week, the 30-year fixed dropped to 6.40 percent.

Single-family home sales held at a seasonally adjusted annual rate of 5.51 million in August, unchanged from July, but were 12.3 percent lower than the 6.28 million-unit pace in August 2005. The median existing single-family home price was $225,700 in August, down 1.7 percent from a year ago.

Existing condominium and cooperative housing sales fell 3.5 percent to a seasonally adjusted annual rate of 793,000 units in August from an upwardly revised 822,000 in August, and were 14.5 percent lower than the 928,000-unit pace in August 2005. The median existing condo price3 was $223,200 in August, down 2.4 percent from a year earlier.

Regional Sales Data

Regionally, existing-home sales in the Northeast rose 1.9 percent to a pace of 1.07 million in August, but were 11.6 percent below August 2005. The median existing-home price in the Northeast was $271,000, down 3.9 percent from a year earlier.

Existing-home sales in the Midwest rose 0.7 percent in August to a level of 1.44 million, but were 11.1 percent lower than a year ago. The median price in the Midwest was $176,000, which is 1.1 percent below August 2005.

Existing-home sales in the South slipped 0.8 percent to an annual sales rate of 2.51 million units in August, and were 7.4 percent below August 2005. The median price in the South was $184,000, down 2.6 percent from a year ago.

Existing-home sales in the West dropped 2.3 percent to an annual pace of 1.29 million in August, and were 22.8 percent lower than a year earlier. The median price in the West was $345,000, up 0.3 percent from August 2005.
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Overnight real estate rates fall sharply

30-year fixed rate at 5.8%; 10-year Treasury yield at 4.59%
Inman News
Long-term mortgage interest rates were down further Friday, and the benchmark 10-year Treasury bond yield fell to 4.59 percent.

The 30-year fixed-rate average sank to 5.8 percent, and the 15-year fixed-rate declined to 5.52 percent. The 1-year adjustable was down at 5.32 percent.

The 30-year Treasury bond yield dropped to 4.74 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 lost 25.13 points, or 0.22 percent, finishing at 11,508.1. The Nasdaq was down 18.82 points, or 0.84 percent, closing at 2,218.93.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.
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Office Building Is A Hollywood Hit

Ground is about to be broken for the first office building in Hollywood in years.
By: DANIEL MILLER: Los Angeles Business Journal Online
A two-decade drought is over: Hollywood is getting a new office building.

Next month, Sunset Gower Studios, an independent production facility, will break ground on a six-story, 97,000-square-foot building for Technicolor Inc. at Sunset Boulevard and North Gower Street.

Redevelopment and real estate industry professionals have supported the project, noting that Hollywood needs more office space to support the growth of the area’s housing market, which has ballooned in recent years.

Though Technicolor, a division of France-based Thomson, signed a lease to occupy the entire building several months ago, an appeal made to the Los Angeles Central Area Planning Commission by a neighboring business owner threatened to derail the $40 million project.

That appeal, made by East-West Studios LLC owner Doug Rogers, was rejected 3-0 by the commission at its Sept. 12 meeting; the project is now moving forward, with construction slated to begin in October, said Robert Papazian, Sunset Gower Studios’ chief executive.

“A real renaissance could take place in Hollywood,” Papazian said. “Hopefully this will kick off other developers to refurbish existing structures or take old ones down and build new office buildings. It would be good for the community and great for businesses that participate.”

The office project has received the support of L.A.’s Community Redevelopment Agency and the Los Angeles Mayor’s Office business team, among other groups that cite the long drought in office construction.

The last Class A office building erected in Hollywood was the Mercedes-Benz tower, which was built in 1984 at 6353 Sunset Blvd. Klasky Csupo Inc., an animation production company, currently occupies that building.

According to John Perfitt, senior real estate development agent for the CRA, the construction of the Mercedes-Benz tower also followed several years during which there had been no office construction.

Balance issue
“We are very concerned about the jobs and housing balance in Hollywood,” Perfitt said. “We would like to see more Class A office space in Hollywood specifically targeted at the entertainment industry.”

The new Technicolor facility at 6040 Sunset Blvd. will be built on the northeast corner of the 11-acre Sunset Gower Studios lot, between North Gower Street and Gordon Street. The building area is currently a surface-level parking lot.

Technicolor is already a tenant on the Sunset Gower Studios lot and has outgrown its current space, where it does sound production work. As part of the new Technicolor building construction, other upgrades will be made to the studios’ lot, including a new entrance and landscaping.

“With a big company like Technicolor placing its mark on Sunset, it’s a bona fide statement that says we believe in this area,” Papazian said.

In recent years, through Los Angeles’ Adaptive Reuse Ordinance, large chunks of Hollywood’s office space – often in antiquated buildings – have been converted to condos and lofts.
“If you look at construction and land costs and rent, the for-sale residential properties still pencil better in terms of other land uses,” Perfitt said. “The equity money follows that.”

The new Technicolor building is slated to open by the end of 2007 and will house some of the company’s post-production, editing, and dubbing operations.

“We are thrilled,” said Bob Hoffman, vice president of marketing for Technicolor. “Technicolor has a long history of involvement in the Hollywood neighborhood and we are thrilled that there is a re-emergence of that neighborhood.”

Technicolor also operates a post-production facility across the street from Sunset Gower Studios at 6087 Sunset Blvd.

In its appeal to the Planning Commission, East-West Studios, a recording studio, argued that operational and construction noise created by the building would be a detriment to the studio’s recording operations, according to Planning Commission documents.

“The Sunset Gower folks went out and did testing on noise levels and presented it to commission,” said Tim McOsker, attorney with Christensen Glaser Fink Jacobs Weil & Shapiro LLP, who handled the appeal for Sunset Gower Studios. “The area Planning Commission agreed with Sunset Gower’s findings.”

Papazian said that Sunset Gower Studios is working with other area landowners to make sure they are comfortable with the construction. “We are doing anything possible to mitigate sound problems so they can continue in their business,” he said.

East-West Studios did not return calls seeking comment.

With the Technicolor project now moving forward, those in redevelopment say that it could jump-start other projects.

Perfitt said that among potential office projects in Hollywood, the CRA is working with a group of entertainment industry real estate professionals – including Dana Arnold, chief executive of Culver Studios – on a 100,000-square-foot project at 1601 N. Vine St. The environmental documents for the project are currently being written, and construction could begin in fall 2007.

Linda Dishman, executive director of the Los Angeles Conservancy, said that the goal in Hollywood is to create a community that is more than just a thriving residential neighborhood.

“It is about a balance,” she said. “We don’t want Hollywood to simply be a residential neighborhood. Since Hollywood is the entertainment capital of the world I think the office space essential.”
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When a Walk-Through Reveals Problems an Inspector Missed

Learn the steps you can take when the home you're buying isn't what you bargained for. June Fletcher offers a cautionary tale for sellers in a slowing market.
By: June Fletcher: The Wall Street Journal Online
Question: I recently an offer on a vacation home in the Catskills, with a $10,000 earnest-money deposit. It was occupied by tenants when we saw it. The offer was accepted, we had the home inspected, and the tenants left. But this morning we did our final walk-through before settlement, and discovered damage that wasn't visible when the tenants were living there. We're very upset, and aren't sure that we want to settle now. What should we do?

Answer: If you're not sure what to do, the best advice often is to do nothing.

So put that pen down. Until you sign those final settlement papers, you still have the upper hand in negotiations.

Of course, everyone else involved in the deal, from the seller to the lender to the brokers, is probably pressuring you to settle right now. But that's because they don't get paid until you sign. That isn't to say that decent people who value their professional reputations won't return your calls once the ink is dry on your deal, but the urgency will be gone. If you're really worried, ask to delay settlement for a few days. You'll feel like Madonna, because you'll instantly have everyone's undivided attention.

Your next step is to figure out exactly what is wrong with the house, and what it will cost to fix it. For that, you should call the inspector who examined the house. Ask why the defect wasn't listed in the inspection report, bearing in mind that there could be a good reason. The damage could have arisen after the inspection took place: for instance, a tree branch could have hit the roof during a storm. It could have been caused either deliberately or unintentionally when the tenant moved out - say, when a mover dinged the drywall with the dining-room table, or the tenant decided to rip out all the light fixtures. Or it could have been there all along, but hidden by the tenant's stuff (which is why it's smart to pay particular attention to anything in a home inspector's report that begins "Couldn't gain access to...").

No matter what caused the damage, you shouldn't have to pay for it now. If, after a re-inspection of the property, it turns out that the damage is easily fixed - and even some scary-looking problems liked cracked support beams and roof leaks can often be patched quickly and inexpensively - ask the seller to escrow funds for the repair. Request a generous figure that's sure to cover the cost. Escrow agents generally pay the contractor doing the repair directly, and return the balance to the seller.

But if the problem is so significant and daunting that you're sure you don't want to go through with the deal, consult your attorney. Depending on the contract's language and conditions, and the nature of the damage, you may be able to recover your full deposit.

And sellers, please heed this cautionary tale. In today's slowing real-estate market, buyers are much fussier about defects - even superficial ones - than they were just a year ago. Robert Deily, a real-estate attorney in Catskill, N.Y., suggests that landlords inspect their properties carefully between the time the tenant moves out and the buyer makes a final walkthrough. "Tenants are notorious about leaving places a mess," he says. "Fix any problems before the buyer ever sees them, and you'll avoid a lot of trouble."


- 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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Cool Market Keeps Mortgage Rates Affordable

The national average interest rate on a 30-year, fixed-rate mortgage was 6.4 percent this week, down from last week's 6.43 percent.
REALTOR® Magazine Online
The national average interest rate on a 30-year, fixed-rate mortgage was 6.4 percent for this week, down from the previous week’s 6.43 percent, according to Freddie Mac. Last year, the average rate for 30-year, fixed mortgages was 5.8 percent.

“A slowing housing market and signs that inflation is leveling off have helped to lower mortgage rates lately and keep them more affordable,” says 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.”

The average rate for 15-year, fixed mortgages was 6.06 percent, compared with 6.11 percent the previous week and 5.37 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.08 percent, down from the previous week’s 6.1 percent. A year ago, the five-year ARM averaged 5.31 percent.

The average rate for one-year ARMs was 5.54 percent, compared with 5.6 percent a week earlier and 4.48 percent a year ago.

“Going forward, the economy is expected to expand at a somewhat slower rate than it did in the first half of the year," Nothaft says. "This should continue to keep inflation in check, and therefore, mortgage rates low.”
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Five steps for selling home in a buyer's market

Good agent, inspection among keys to pricing right
By: Robert J. Bruss: Inman News
Just in case you haven't been paying attention, most cities are now in a "buyer's market" for home sales. That means there are more houses and condos listed for sale than there are qualified home buyers actively in the market. Nationally, home sales volume is down about 10 percent compared to 2005.

The best way to tell if your area is in a buyer's or seller's market is to check the average number of days homes are on the market before selling. When this number rises above 60 days, it's definitely a buyer's market. That means it's a great time to be a buyer, but not such a great time to be a home seller.

Another method is to look at the number of months' supply of homes for sale at the current sales pace. Just divide the number of local homes sold during the last 30 days into the number of homes listed for sale. If the result is more than a six-month supply of homes, the oversupply of listed homes shows it's a buyer's market.

Fall is usually the second-best season to sell a home (spring is the best because that is when the largest number of prospective home buyers are in the market). But 2006 is proving to be unusual.

The number of homes listed for sale in most cities is at or near an all-time record high. The result is prospective buyers know they can negotiate hard over price and terms.

For example, a few days ago a Realtor told me about his $1 million house listing where a buyer offered $800,000. Normally, the seller would be insulted. Instead, his seller counteroffered at $950,000, a $50,000 price reduction. But, according to the Realtor, the buyer wants a bigger price reduction.

THE FIRST STEP TO A SUCCESSFUL HOME SALE. If you seriously need to sell your house or condo, and are not just "testing" to see what price you might get, the first step is to get your home into tip-top, near-model-home condition. Most buyers don't want to buy a fixer-upper; they prefer to turn the key in the door and move in.

Cleaning, repairing and painting are the most profitable actions to take. Install new light fixtures and new carpets or flooring if needed. But don't waste money on major renovation, which you won't get to enjoy and buyer prospects might not like.

If you have lots of unneeded "junk" you don't want to move, September and October are ideal times to hold weekend garage sales. Better yet, call it an "estate sale."

THE SECOND STEP IS HIRING THE BEST LISTING AGENT. Today's home-sale market is not a good time to be a do-it-yourself "for sale by owner" home seller. The reason is there is so much competition from serious home sellers whose listings are professionally marketed through the local MLS (multiple listing service).

Most MLS agents also put their listings on the Internet at www.Realtor.com and other Web sites where more than 70 percent of today's home buyers begin their searches, according to the National Association of Realtors.

Before selecting the best listing agent, smart sellers interview three or more successful agents who sell homes in their vicinity. Successful home sellers should understand they are hiring an individual listing agent, not the impersonal brokerage with the well-known name on the agent's door or the fancy franchise name with expensive image advertising.

Smart home sellers ask the agents interviewed lots of questions. Ten examples include (1) what are the names, addresses and phone numbers of your five most recent home sellers? (2) if I list my home with you, what price will you get for it in today's market? (3) what is your minimum listing term? (4) how long have you been selling homes in this area? (5) do you sell homes full time? (6) what professional courses and designations have you completed? (7) how many listings do you have now? (8) what is your written marketing plan for my home? (9) what sales commission do you suggest? and (10) do you recommend "staging" my home?

As part of their listing presentations, each of the three or more agents interviewed should anticipate these questions. The best agents will present you with a written CMA (comparative market analysis) form showing recent nearby comparable home sales prices to justify their estimate of your home's market value.

Sharp agents will suggest a 90-day listing. If the agent asks for a longer term, be sure it includes an unconditional cancellation clause after 90 days just in case you chose a bad agent.

As for the sales commission, although 5.1 percent is the national average according to Real Trends, in today's market it often pays to raise the commission to get buyer's agents to show and sell your home first. Low commissions to buyer's agents often result in no sales.

Although agents being interviewed will be reluctant to criticize your house or condo, be sure to ask if the agent recommends "staging" the home to make it appear more attractive. Staging a home means bringing in a professional "stager" to make the home more marketable.

Stagers often suggest removing old-fashioned furniture clutter during the sales period and renting more contemporary furnishings. An excellent new book on this topic is "Home Staging" by Barb Schwarz, available in stock or by special order at local bookstores, libraries and www.Amazon.com.

THE THIRD STEP IS TO HAVE YOUR HOME PROFESSIONALLY INSPECTED. After selecting the best listing agent, but before exposing your home to the market, be sure to obtain all the customary local inspections, such as for termites, energy efficiency and building-code compliance. Your listing agent will know what's required.

Although not required, a professional home inspection avoids surprises later. I recommend hiring a member of the American Society of Home Inspectors (ASHI). The cost is around $300 and takes two to three hours.

Be sure to attend the inspection to discuss any defects discovered. Then you can decide if you want to repair them or merely disclose them to buyers and let the buyer make the repairs.

If the repair cost is minor, it's usually best to have repairs completed before listing the home, thus removing possible buyer objections. Local ASHI members can be found at www.ashi.com or 1-800-743-2744.

THE FOURTH STEP IS TO SET A REALISTIC ASKING PRICE. After getting your home ready to sell, hiring the best listing agent and having all professional inspections completed so you can disclose your home's defects, it's time to set a realistic asking price.

With the help of your listing agent, study those CMAs prepared by all the agents you interviewed. Consider whether the local market for homes in your price range is rising or falling. In most markets, prices have leveled off from what was attainable a year or two ago. If you really want your home to get sold quickly, don't get greedy.

Asking a few thousand dollars less than your closest competitor homes can mean your home sells while the others don't. Holding your home an extra month or two often costs far more than setting a realistic asking price.

Here's another asking price secret: set your asking price $1,000 below threshold amounts. For example, if your home is worth around $300,000, set the asking price at $299,000 rather than $300,000 or higher. The reason is buyers who tell their agents they will pay up to $300,000 will then see your home on their MLS computer search. But if you set the asking price at $300,000 or above, those buyers might not learn about your home.

THE FIFTH STEP IS TO CONSIDER ALL PURCHASE OFFERS. Many home sellers are insulted if they receive a written purchase offer substantially below their asking price. Some sellers and their listing agents won't even make counteroffers.

That is a major negotiation mistake. Always make a counteroffer to keep communications open with that prospective buyer. Negotiations often take several weeks, back and forth, before determining either a sale will result or the parties are too far apart in price or terms. But unless the seller counteroffers every purchase offer, even a "low ball" offer, you will never know if a sale can result.

After both buyer and seller sign a firm purchase contract, the sale isn't over. This can be the most difficult time period. You and your listing agent must keep on top of deadlines, especially to be certain the buyer follows though on obtaining the mortgage appraisal and other essentials.

Sellers should be aware the buyer might be encountering the dread "buyer's remorse" disease. For this reason, it is essential for sellers and their listing agents to keep in touch with buyers and their buyer's agent to be certain the sale closes on schedule successfully.

More details are in my special report, "How to Sell Your House or Condo for Top Dollar With or Without a Real Estate Agent," 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.
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Flip the IQ Switch

The house of the future is a reality today. It's high-tech everything, and best of all, some of the gizmos are becoming standard. Jane Jetson would feel at home.
By: Diane Wedner: Los Angele Times Staff
Whole-house audio, remote-control cooking, carwash-style showers. Some of the coolest custom-home gizmos are trickling into the mainsteam as standard features.

"Our home food dispenser broke and I had to wait 20 seconds at the checkout counter. Such inefficiency!"

WE'RE not quite living in the Jetsons' Orbit City, where the posted speed limit is 500 mph and parking meters pound fists on the hoods of cars whose time limits have expired.

But today's new high-tech homes, with ovens that can keep a raw roast cold until instructed — remotely — to cook it and dishwashers that both wash and dry in 120 seconds, would surely bring a smile to Jane's face. Not to mention remote controls for window blinds, iPod docking stations and under-cupboard computer screens in the kitchen for writing e-mail while braising the brisket.

"Today's home technology is what electricity and running water were in yesterday's homes," said Sean Fields, head of Laguna Niguel-based Audio/Video Entertainment, a leading in-home technology company. It's revolutionary. And, Fields added, "We've seen a huge change in just two years."

High technology has entered Southland homes, and we're not just talking custom ones. Mainstream home builders are offering 21st-century technology options to buyers in all price ranges who no longer want to see octopus wiring and tech components stacked up on shelves like encyclopedias.

"Buyers want to choose their granite and carpet colors," said Ron Zimmer, president of the Continental Automated Buildings Assn., an industry information and education group. "But they also want wiring options. Builders are finally getting that."

In many KB Home developments, for example, Internet connections now come as a standard feature in some rooms, with the option to add more outlets in other areas, said Jacob Atalla, director of business development for the builder.

Chateau Interiors & Design, which oversees showrooms for Warmington Homes California and William Lyon Homes, has introduced optional iPod stations — outlets into which the portable devices can be plugged so music can be piped throughout the house — as well as whole-house audio systems even in entry-level homes in the $400,000-to-$500,000 range.

The more expensive the development, the greater the number of standard and optional amenities, said Nancy Giangeruso, Chateau's president. Items such as surround sound, with pre-wiring and speaker options, can add at least $2,000 per room to the home's price tag.

Truly wired

Laing Luxury Homes, a division of John Laing Homes, made several high-tech features standard in the company's upscale SeaCrest at Crystal Cove development in Newport Coast. They include Lutron lighting systems, which control mood settings, outdoor security and garage lighting with a remote; category-five wiring to allow computers, cable, phones and home electronics in every room; surround sound; programmable touch pads for security; and whole-home audio systems, said Joan Marcus-Colvin, vice president of sales and marketing. Those homes sell for $5 million to $8 million.

Some Laing Luxury buyers also may choose the optional TMIO cooking system, which is a refrigerator and oven all in one. The system can be operated via the Internet and cellphone and allows the user to refrigerate cookie dough in the morning, for example, then, from the office, switch the unit from refrigeration to bake at 3 p.m. so the kids can enjoy fresh, warm cookies straight from the oven when they get home. The system costs about $8,000.

Randy Scott Wong, an attorney, recently bought a Laing Luxury home in a gated Irvine community, where he spent his extra dollars on audio technology. The music buff opted for wireless touch-screen audio controls — one hand-held and one affixed to a wall. He chose surround sound and a home theater with a plasma television — there's an additional flat-screen TV and music speakers in the garage — and security cameras outside and inside the house, the latter to monitor the baby in the nursery.

"I'm not a techno-geek," Wong insisted, but added, "It's made our lives better."

Lou Werbe, a consultant and custom-home builder, recently put the finishing touches on his Malibu monument to high-tech living. The contemporary, tan-colored stucco-and-glass house he's listed for just under $5 million atop Las Flores Canyon appears to be a standard-issue modern home with a view. Not on the inside, however.

From his dining room, Werbe can use a remote control to turn on the backyard pool's waterfalls, jets and lighting.

The master bathroom features a 10-head shower that sprays from all sides, like a carwash. It also has an electric, push button toilet and an infinity tub that fills with water that cascades from a no-splash, no-faucet outlet in the ceiling. Yes, the ceiling.

There are miles of wiring hidden in the house, for speakers, cable and other items. Music streams into every room. Wall-mounted keypads throughout the house control selective lighting.

The "smart house" is wired so that features can be accessed from anywhere: Werbe can turn on the lights, TV and stereo through his computer. A utility room houses the cable outlet for "a zillion channels," Werbe said, and is the command center for much of the technology.

The kitchen, with a medical-examiner-room/stainless-steel décor, is a chef's dream: a commercial refrigerator and freezer, an eight-burner stove with a built-in griddle, a deep fryer, two commercial dishwashers that wash and dry in 120 seconds, and three compartment sinks that come with everything but someone to scrub the pots and pans.

"It's for larger-than-life people who like to entertain," Werbe said.

So what's next? The Continental Automated Buildings Assn.'s Internet Home Alliance Research Council and a consortium of companies recently tested an experimental laundry system designed to appeal to the ultra-busy family on a budget.

Even the laundry

The pilot program began in July in an Atlanta suburb, where families signed on to test appliance technology for eight weeks. Laundry Time, the brainchild of the Whirlpool Corp., Hewlett-Packard, Panasonic and Procter & Gamble, with Microsoft software, is an "intelligent" system that allows users to receive pop-up alerts — from transceivers attached to the laundry machines — on their PCs, cellphones and television screens informing them that they forgot to start the washer or dryer, that it's time to add fabric softener or that the cycles are over.

The Hafford family was among participants in the experiment. The Snellville, Ga., family of four generates six loads of laundry a week. Michelle Hafford, a human-resources consultant, doctoral student and mother of two, said what she wants most is high-tech devices that make her life easier.

"I'm not looking for bells and whistles," said Hafford, who said she would like to see the system simplified.

In the San Diego area, KB Home is testing an integrated entertainment system in which owners use one remote-control device to access TVs, DVD players, the lighting system and the fireplace starter.

Homeowners living in older houses also can join the high-tech revolution, said Fields, the audio-visual expert. Experienced electricians can retrofit homes without destroying walls. The self-described electronic architect recently rewired a Wallace Neff-designed home in Pasadena, a process that he said was as delicate as "taking scissors to a Picasso."

After mapping the structure of the house and using special tools, he and his team were able to install hidden wiring — through just nine small holes in the plaster — providing music to every room in the home and creating two theaters with plasma TVs and speakers. The rewiring cost $4,000; the entertainment equipment, $75,000.

Now, if transportation planners could only figure out how to get freeways moving at 500 mph.
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Buyers Flock to Homes with Designer Brands

You've heard of designer jeans and designer handbags, but designer homes? That's the newest trend among discerning buyers.
By: Noelle Knox: REALTOR® Magazine Online
Martha Stewart was first, designing homes in North Carolina and other Southern states. Giorgio Armani’s Wall Street condos also sold well. Then Mick Jagger's daughter Jade Jagger stepped in with a 57-unit building in the Chelsea section of Manhattan, and plans for more buildings.

Designer homes are "quite simply a creative way to distinguish your products from competitors'," says Bruce Karatz, CEO of KB Home, which teamed up with Martha Stewart. In addition to Stewart communities in North Carolina and Atlanta, KB Home will build Stewart-styled homes near Houston and Los Angeles. Next month, it will announce one new such community in Daytona Beach, Fla.

Karatz says the Martha Stewart homes are selling faster than anything KB Home is building in the Southeast. Though still a small portion of the company's total sales, they could increase to 10 percent to 20 percent of KB Home's production, he says.

The homes, which are inspired by Stewart's personal residences in Maine, Connecticut, and New York, are priced from the low $200,000s to mid- $500,000, depending on the neighborhood. They attract a "huge amount" of buyers, Karatz says.
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How to Keep Your Vacation Home Rented, Even in Off-Peak Seasons

Some property owners report so little rental interest in the off season, they don't even try to rent out their houses. Others, however, find ways to keep the renters coming year-round - even when their task is made harder, as it is now, by a weakening housing market.
By: Daisy Maxey: The Wall Street Journal Online
There's a reason why it's called the off-season. Some vacation-home owners report so little rental interest during off-peak months, they don't even try to rent out their properties.

Others, however, find ways to keep the renters coming during high, low and in-between seasons - even when their task is made harder, as it is now, by a weakening housing market.

Maureen Regan, who runs Seaside Vacation Rentals, which helps owners rent their vacation homes on southern Maine's coast, among other places, says there's more competition in the market as sales and prices of vacation homes have softened, causing owners to postpone sale plans and rent out their properties in the meantime. Rising monthly payments due to adjustable-rate mortgages also are leading owners to try to rent out their second homes more.

Ms. Regan says she only expects the market to get worse in the short term. So, her York, Maine, business is advising homeowners with rentals to "price aggressively" and to maintain and offer their properties as much as possible.

What follows are some steps vacation-home owners have taken to make the rental season last well beyond the peaks, increasing their income and lightening their mortgage loads.

Drop Your Price, But Not Too Far

Let's start with the most obvious: lower rates.

Typically, owners should knock 30% off their peak rates for so-called shoulder-season rentals -- those that fall between their high and low seasons -- and as much as 50% off peak rates for low-season rentals, says Christine Hrib Karpinski, director of the owner community for HomeAway.com, based in Austin, Texas, an online marketplace of vacation rental properties.

Just before Christmas, inquiries slowed to a trickle for Amy Greener's "Swaying Pines Chalet," an 1,180-square-foot cabin she owns in the Great Smoky Mountains in Gatlinburg, Tenn. Ms. Greener, who advertises on six Web sites for the two cabins she owns, responded by cutting her price and posting the deal as a "Holiday Shopping Special." That move yielded several renters.

"You just have to be creative in the off-season," Ms. Greener says.

In Cape Cod, owners generally slash their off-season prices to the point where a month costs about the same as a week does during summer, says Jeff Talmadge, who with his wife, Joan, created WeNeedaVacation.com, a Web listing of vacation rentals in Cape Cod, Martha's Vineyard, Nantucket and Florida. In the shoulder seasons -- which in Cape Cod would include the first two or three weeks of September, for example - he advises prices should be half what they were at the peak in August.

"That's a big drop in a very short period of time," he says, "but it crosses that Maginot line with Labor Day and the schools firing up. It's painful, but something's better than nothing."

Up to a point, other experts say. It may seem counterintuitive, but Ms. Karpinski, for one, advises owners not to lower their rates too far. That could lead potential renters to think that a home is somehow inferior to others, she says.

Owners sometimes slash their prices early just to get a property booked, when they could have waited and commanded higher rates, says Brian Sharples, chief executive of HomeAway.com.

"There are as many people who are underpricing as are overpricing," Mr. Sharples says. "It's always been fascinating to me how the best properties are always booked a year in advance. In the summertime or at Christmas, if those people held out a bit longer and increased their prices a bit, would they increase their revenue? I'm sure they would. We always get calls from people who want to know if they can find more properties."

Package It

Package deals represent a way to attract interest without appearing too inexpensive, says Ms. Karpinski. When prospective guests inquire about summer bookings, offer to throw in a winter special, too - like half-price for a weekend stay, she suggests.

If business is slow, owners might also consider calling or emailing repeat guests with discounted "VIP" off-season stays, she says. These could be customized as celebratory weekend specials if an owner knows the regulars have a birthday or anniversary coming up.

Go Long

Pinpointing and marketing to specific groups of renters who stay in the area during the off-season can help keep properties booked.

For example, while owners of bayfront and oceanfront real estate in San Diego can find renters year-round with no problem, properties a block or so off the waterfront are a bit more of a challenge, says Greg Flaherty, chief executive of Penny Realty in San Diego. Owners of such properties have found a solution, however: They offer school-year rentals to college students from September to May, at which point they revert to regular weekly vacation rentals. Renting to college students isn't for everyone, but those who do are much more likely to remain occupied, Mr. Flaherty says.

Similarly, owners who can rent by the week during July and August in Cape Cod may have to consider six- to eight-month rentals in the off-season, says Ms. Talmadge. Scientists or students spending time at nearby Woods Hole Oceanographic Institution in Woods Hole, Mass., or relocating families seeking temporary housing often present good opportunities, she says.

But it's important to be very careful with longer-term rentals in general, which offer a much greater risk of damage or other problems, the Talmadges warn.

"It's very different from having an individual or family in your home for one week," Ms. Talmadge says. "We advise [owners] to do the necessary background checks to be sure that someone in their home for any number of months is going to be a good tenant and take care of the home."

Welcome, Little Creatures

Owners should also consider dropping restrictions against children and pets during the off-season, and making their homes baby- and toddler-friendly, says Ms. Karpinski.

"People with very young children are more likely to travel off-season, because they're not constrained by school schedules," she says. A high chair or a portable crib aren't expensive additions, but can drastically increase off-season bookings, she says.

Vacation properties that accept pets can increase their occupancy by 10% to 50%, Ms. Karpinski says. A woman she spoke with, for example, had a nice cabin in the mountains in Colorado, but rentals were slow. Though the cabin was within driving distance of three ski resorts, it was not close enough to advertise that fact, Ms. Karpinski says. Once the woman began accepting pets, though, the bookings flowed in.

An added bonus: Charge an additional $20 to $25 a night for pets, as most owners would have to spend that much or more on pet-boarding fees.

Be Amenable To Amenities

Improving your house with creative amenities that help visitors wile away the time in the quiet off-season can make the difference between a cranky, bored guest and a satisfied one, experts say.

Off-season in Maine, fireplaces are a big draw, and visitors will choose a house that has a washer and dryer over a comparable house that doesn't, says Seaside Vacation's Ms. Regan.

In hot, sunny markets, those who can add a pool to their property should, says Mr. Sharples in Austin.

Nor should owners underestimate the importance of Internet access, he adds. "For many people, if the home doesn't have it, they're not going to rent it," he says. "It's not just a swing factor."

At the lower end of the price range for adding amenities, it doesn't have to cost much to "winterize" your home, Ms. Karpinski says. She suggests adding thick, warm comforters, fleece throws on the sofa, spice-scented candles on tables or countertops and winter treats like cocoa mix and marshmallows, spiced apple cider or ginger cookies in the kitchen. Put up a Christmas tree in November, set out a collection of seasonal DVDs, such as "Rudolph the Red-Nosed Reindeer" or "It's a Wonderful Life," and place a toboggan in the closet, she suggests.

Extra Pairs Of Eyes - And Hands

Whether to manage a vacation property yourself or hire a management company is one of the biggest decisions an owner faces. Vacation-home owners live an average of 220 miles from their property, and 34% live more than 500 miles away, according to a survey by the National Association of Realtors. That can make maintaining a home and responding to emergencies difficult, if not impossible, especially in the off-season when travel can be dangerous in some areas.

And no matter whether they're managing the property themselves or paying a management company, for some owners, renting in the off-season may be more trouble than it's worth, Ms. Karpinski warns.

"In upstate New York, in the Adirondacks, some of those roads are barely passable, and there are worries of pipes freezing," she says. "But you have the positive side, too, because you do have eyes and ears on your property during those seasons. If a pipe freezes and breaks, do you want to hear about it right away or discover it months later?"


- Ms. Maxey is a special writer for Dow Jones Newswires in Jersey City, N.J.
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Federal Reserve Cites Declines In Housing For Holding Rates

The Fed left rates unchanged at 5.25% and warned that it remains concerned about inflation, making it more likely to raise than lower rates in the future.
By: Greg Ip: The Wall Street Journal Online
What started out as a pause in rate increases last month began to look more like a full halt yesterday.

The Federal Reserve left its short-term interest rate target at 5.25% for a second consecutive meeting. It also warned that it remains concerned about inflation, and thus if it changes rates soon, it is more likely to raise them than lower them.

The statement accompanying yesterday's decision suggested that, since pausing in its two-year string of rate increases last month, the Fed has become more confident that standing pat is justified. In explaining yesterday's decision, it cited the quickening decline in housing activity and easing inflation pressure from energy.

Investors, however, increasingly expect the Fed not just to remain on hold, but to cut rates at least once by next June and again by December 2007. Ten-year Treasury bond yields have fallen, ending yesterday at 4.73%, down from 5.25% in late June. Those expectations may not match the Fed's, at least for now. Indeed, its statement did little to hint a rate cut would be on the table in the near term and financial markets pulled back slightly in their anticipation of one.

Stocks, meanwhile, which have been rallying because of falling oil prices and on hopes the Fed is finished raising rates and the economy escapes recession, extended their winning streak. The Dow Jones Industrial Average rose 72.28 points yesterday to 11613.19, just 110 points short of its January 2000 record.

In its statement, the Fed said growth is moderating, "partly reflecting a cooling of the housing market." By discarding last month's characterization of housing as "gradually cooling," the Fed acknowledged the slide in home construction, sales and, in some regions, prices has picked up speed.

It said that while the "core" measure of inflation, which excludes food and energy, remains "elevated," it was likely to moderate in part because of "reduced impetus from energy prices."

Oil and gasoline prices have fallen sharply in recent months. Oil futures on the New York Mercantile Exchange fell $1.20 yesterday, or nearly 2%, to settle at $60.46 a barrel -- their lowest level in six months and down 22% from the nominal high reached July 14. In theory, such a decline has mixed implications for the Fed. Lower energy prices reduce inflationary pressure, which would call for the Fed to lower rates. They also boost consumer purchasing power, which can improve growth prospects and would call for an increase in rates. The Fed statement suggests it considers the former effect as more important.

While economists differed on what the Fed's next action is likely to be, they agreed that the small changes in its statement signaled greater comfort with leaving rates where they are, despite its stated bias toward raising rates.

"We see these wording changes (and absence of other potential changes) as a step in the direction of a neutral balance of risks," Peter Hooper, chief economist at Deutsche Bank Securities, wrote in a note to clients. He predicted the Fed would drop its bias to higher rates either at its next meeting, on Oct. 24-25, or in December, and would cut rates by March.

The Fed's statement conveys "more of a sense of comfort of being on hold," agreed Bruce Kasman, head of economic research at J.P. Morgan Chase. He noted that inflation remains the Fed's paramount concern. He also expects another rate increase by March.

Ten of the 11 voting members of the Federal Open Market Committee agreed to yesterday's decision not the change the federal-funds rate, which is charged on overnight loans between banks. The Fed had increased that rate at 17 consecutive meetings before pausing last month. As in August, Federal Reserve Bank of Richmond President Jeffrey Lacker dissented, preferring a quarter-point increase. It was the first time in eight years an FOMC member dissented at two consecutive meetings in favor of higher rates, said David Resler of Nomura Securities. The last time, he said, the Fed's next move was to lower rates.

The Fed remains focused on inflation risks in large part because core inflation is above the 1% to 2% "comfort zone" of many Fed officials, including Chairman Ben Bernanke. In the 12 months through August, core inflation was 2.8%, up from 2.7% in the 12 months through July. Using a lesser-known price index that the Fed prefers, core inflation was 2.4% in the 12 months through July.

Fed officials expect core inflation to move back below 2% over the next two to three years as energy prices stop boosting the prices of other goods and services and the economy cools. If that forecast doesn't unfold, it could pose a threat to the Fed's credibility that would require higher interest rates.

The Fed's continuing concern about inflation seems at odds with investor expectations of rate cuts. Thomas Joseph Marta, fixed income strategist at RBC Capital Markets, says that while the Fed and his own firm's economists are optimistic the housing slump won't significantly hurt the rest of the economy, market participants are far more pessimistic. "I've heard traders say, 'Look, the Fed's wrong,'" he said. "Traders are reacting viscerally to housing. Housing is something you see when you're driving home from the train station; it's very obvious, very visible."

Mr. Marta added, "In terms of inflation, I keep whispering in the traders' ears, 'Look, core [prices], hourly wages, unit labor costs, they're all at dangerous levels.' They don't care."

Still, some economists say the bond market will be proven right. Paul Ashworth, senior U.S. economist at Capital Economics of London, said if housing construction's share of economic output falls to the same level it hit in the early 1990s, after the last housing boom, "you'll get a substantial drag on growth." He expects growth to slow to 1.5% next year from a projected 3.3% this year, and the Fed cutting its rate target to 3.5% by mid-2008.

Another reason for the disconnect could be anticipation of easier credit conditions globally. The U.S. bond market is increasingly linked to its foreign counterparts, and there have been signs of slowing growth in Germany, Japan and China in recent weeks.
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California Home Prices Inch Upward

Prices of homes in California increased in August at the lowest annual rate in nine years, reported DataQuick Information Systems.
By: Alex Veiga: REALTOR® Magazine Online
The statewide median price was $472,000 in August, a 3.5 percent increase over the year-ago period. It was the smallest increase since June 1997, when statewide home prices rose just 2.8 percent.

In four counties, prices declined. The steepest drop was 6.7 percent in San Mateo County. Other decreases were seen in Marin County, 2.3 percent; San Diego County, 2.2 percent; and Alameda County, 1.5 percent.

Appreciation in Sonoma, Santa Clara, San Francisco, and Contra Costa counties was essentially flat.

A total of 49,800 new and resale houses and condominiums were sold statewide last month, a 25.1 percent decline from a year ago but a 12.5 percent increase from July.

“More and more, sellers are reaching the conclusion, ‘Maybe now is the time to settle, because we may not gain much more by waiting,’” says John Karevoll, an analyst with DataQuick.
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The Weekend Guide! September 21 - September 24, 2006

The Weekend Guide for September 21 - September 24, 2006.
Full Article:
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Twentysomething on fast track to real estate wealth

Why home equity products aren't wise for property investing
By: Ilyce R. Glink: Inman News
Q: I'm 20 years old. Last year my father passed away, leaving me with some life insurance money. I purchased a condo for $163,000 in cash in October 2005, and now it is valued at $217,000.

I want to rent the condo that I own and buy another property. My real estate agent figures I can get about $1,200 dollars per month for the condo. I plan to rent out a room in my new townhouse for $400 to $500 per month.

I've found the townhouse I want, and it will cost $270,000. I am thinking of borrowing $54,000 on a home equity line of credit from my condo and then getting an interest-only loan with a 5/1 adjustable-rate mortgage. I plan to sell the house before the five years are up.

After I purchase the townhouse, I'll still have about $30,000 left over in cash plus $72,000 in an IRA. Taking the money out of the IRA would mean I'd have to pay federal and state income tax, which I don't think is a good option.

Do you think this is too risky? I already gave the sellers my earnest money but I have six more days to change my mind. Please let me know what you think.

A: First, let me offer you my condolences on losing your father at such a young age. But he must have done a lot that's right in raising you because you are making some very smart long-term investments in real estate that should help you grow the nest egg he left for you.

Now, let's look at what you're planning to do with your real estate. If you rent out your condo for $1,200 per month, you're getting about an 8 percent return on your investment.

However, you will also have monthly maintenance fees plus real estate taxes. While you didn't tell me how much those were, I'm guessing your taxes, insurance and maintenance fees will run about $350 per month, bringing your net income to about $850 per month. That's about a 5 percent return on your money, excluding your fantastic appreciation.

The $850 per month income plus the $400 per month you're getting from renting a room in your townhouse means you've got $1,200 in income to help support your townhouse mortgage, taxes and insurance.

Borrowing against your condo is a good idea, but don't use a home equity line of credit (HELOC). Those loans tend to be variable, and they're quite high now, at prime or a point over prime.

You'd be better off taking out a regular mortgage on the house. Not only will you free up a lot of cash for your next purchase, but you'll be able to write off the income you're receiving from rent against the expenses of the property. Then, you'll be able to minimize any taxes you pay on the amount of income you get from the rental.

Since you're going to live in the townhome, you'll reduce your overhead by putting more down on the property. I don't have a problem with taking out an interest-only loan, especially if you put so much down on the property.

If something happens, you can always sell the condo and pocket the proceeds. Or, you can sell the townhome and move back into the condo as your primary residence.

One final thought: You're only 20. While it sounds like you're doing very well in real estate, please use qualified professionals, like a trusted accountant and good real estate attorney, to be sure you're protected.

Good luck.
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Tips for Purchasing a House With a Pal to Save on Rent

Many twentysomethings who are tired of renting are joining up with friends to buy homes. But the risks and complications of buying property are heightened in an arrangement where two individuals are linked by nothing more than a deed and a mortgage.
By: Diana Ransom: The Wall Street Journal Online
Kelly Furlong is fed up with renting. After sending a sizable chunk of her pay to her landlord each month, the 25-year-old sales professional in Springfield, Va., has decided she is "making someone else rich."

But she doesn't have the financial resources to swing a big down payment and hefty mortgage payments on her own. So she and a longtime friend are now looking for a house that they could buy together, Ms. Furlong says, "because it's way too expensive to do on my own."

Like most home buyers - even in this dicey market - Ms. Furlong and her friend are banking on the home appreciating in value over time.

They also seek tax benefits in being owners rather than renters: People who itemize their tax deductions can deduct payments of mortgage interest and property tax.

But buying a home is risky - in part because it's a large investment that can take a lot of time and expense to sell. And in an arrangement where two individuals are linked by nothing more than a deed and a mortgage, the risks and complications are heightened.

So Many Questions

Say your co-owner gets a job transfer to another state. Do you sell the home? Do you buy your partner out or bring in a new co-owner? And what if you don't even like a prospective replacement housemate?

If you're the one who decides to move on, meanwhile, getting your cash out of the deal may be more complicated than if you owned a home on your own and immediately put it up for sale.

If you and a friend buy a home together, real-estate brokers and attorneys generally recommend you do so as "tenants in common." In that way of holding property, you can each sell your interest individually and choose who will inherit your interest if you die. Depending on how much you each have to invest, the split could be 50-50 or whatever you decide.

But there is something else to consider on a joint purchase: Tenancy loans are typically shared, meaning that if one owner balks at paying, the other one is liable.

Plan to accompany any such purchase with a legal agreement between the two investors, typically called a tenancy-in-common or TIC agreement, that spells out how you will handle various contingencies. Figure about $1,000 in legal fees for that agreement.

Among key points, the agreement should spell out how expenses including the mortgage and tax payments will be split. The agreement should also cover how you will proceed if and when one of you wants out.

Get an 'Exit Strategy'

You need "an exit strategy," says Andy Sirkin, a real-estate attorney in San Francisco.

Typically, the agreement provides that when one owner wants to leave, either the house will be put up for sale or the remaining owner must buy the other out at a price based on the property's appraised value.

Another option would be for the departing individual to sell his or her share to someone else.

Typically, the remaining owner would have the "right of first refusal," or first dibs at buying the other's share. In case you don't want to buy your co-investor out, and you want the ability to approve a new co-investor, put that in the agreement.

Consider jointly funding a reserve account, with enough cash to cover one or two mortgage payments along with a little extra for emergencies.

Not That Color!

Property usage rules are also key to the agreement and your sanity. If you don't like orange paint, here's your chance to say so.

Spell out a method for resolving disputes. To avoid expensive court proceedings, co-owners typically choose either mediation or arbitration.

"You absolutely have to have an agreement," says Clifford A. Hockley, a real-estate broker in Portland, Ore.
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Fed Expected to Hold Line on Rates

Observers predict the Federal Reserve Board will again hold the federal-funds rate steady at 5.25 percent at this week's Federal Open Market Committee meeting.
By: Deborah Lynn Blumberg: REALTOR® Magazine Online
This week's meeting of the Federal Open Market Committee is generating much attention as observers predict the central bank will once again hold the federal-funds rate steady at 5.25 percent.

Last month was the first time in about two years that the Federal Reserve Board did not increase the benchmark rate.

Thomas Girard of Weiss, Peck & Greer predicts investors will not flock to Treasury bonds until incoming data shows "fresh signs of the economy slowing even more dramatically."

If minutes from the meeting indicate policymakers are still concerned about rising inflation, Greg Bartoli, HSBC senior Treasury trader, thinks the 10-year yield could jump as high as 4.85 percent.
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Young Buyers Exert Influence on Housing Market

Consumers in their 20s are more likely to become home owners at a younger age than their baby boomer parents. They’re not necessarily waiting for marriage, or even a long-term relationship, before becoming buying a home.
REALTOR® Magazine Online
“The next generation of home owners is beginning to exert its influence on the housing market,” said Thomas M. Stevens, president of the NATIONAL ASSOCIATION OF REALTORS® and senior vice president of NRT Inc. “Many younger buyers have seen the wealth-building effects of home ownership in their parents and understand the value of housing as a good long-term investment.”

The motivations, interests, and homebuying approach of some younger buyers are chronicled in “Tomorrow’s Buyers: Who They Are and What They Want,” a report in the September issue of REALTOR® Magazine.

The article puts a human face on statistical trends, integrating NAR research with the experiences and attitudes of real-life buyers who represent different demographic groups.

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 NAR Profile of Home Buyers and Sellers.

“Owning a home is no more burdensome than renting, and in the long term, it’s the better investment,” said Kristen Carreira, a 26-year-old homeowner in Pittsburgh.

Carreira is also part of a trend in single female home buyers. 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 NAR. During that same time, the proportion of single women buying homes has increased, from 14 percent in 1995 to 21 percent today.

Younger buyers are also likely to use technology and the Internet in their home buying search. In 2005, according to NAR research, the median age of buyers who used the Internet to search for homes was 11 years younger than those who did not, at 38 and 49, respectively.

“REALTORS® have adapted to meet the needs of this growing population,” Stevens says. “A commitment to understanding the demands of this changing marketplace is just one more way REALTORS® add value to the real estate transaction.”

More than one-third of NAR’s 1.3 million members have had special training and lots of experience in buyer representation and technology. That expertise is reflected in special designations and certifications, such as the Accredited Buyer Representative (ABR®) designation and e-PRO certification.
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You got a permit for that addition, right?

If a converted garage or attic hasn't been approved, it may mean fines - or hold up a sale.
By: Gayle Pollard-Terry: Los Angeles Times
It's a crime that literally is in the closet. Or, if not the closet, in the converted garage or the room addition.

While most homeowners play by the book, there are many who, either through ignorance or negligence, alter their homes without securing the proper permits.

They not only could have a harder time selling, they also risk being fined and having to demolish the unapproved work. And, though it's unlikely, they could even go to jail.

It's a common problem, said real estate author Robert Irwin — one that often surfaces during a sale. "Sellers will say, 'Everything is up to code, but I just didn't want the hassles of the inspections, and I didn't want to pay the fees. If you want a permit, just go to the city.' "

It's not that easy.

Room additions are inspected at various points during construction, Irwin said, to make sure that they are within the proper boundaries, that the foundation is deep enough and the concrete is strong enough. Framing, electrical, plumbing, heating and cooling systems also must be approved before the work is completed.

Building without the proper permits, he said, begs trouble.

The Building and Safety Department for the city of L.A. issued nearly 29,000 addition and alteration permits for single-family-homes and duplexes in the fiscal year that ended June 30. There is no way of knowing how many homeowners skipped that part of the process.

"We don't have the staff to go out and survey for illegal additions, but we know there are thousands of them out there because we get complaints about them all year long," said David Keim, chief of code enforcement for the department. "People think they are saving money without getting a permit. It usually costs them more in the long run to legalize them."

The city sometimes learns of illegal construction when the owner tries to sell or refinance the property and the lender declines to close the deal because an appraiser found work that was done without a permit. The present owner is responsible no matter when the work was done.

In the city of Los Angeles, violations are punishable by a maximum fine of $1,000 or six months in jail, although Keim knows of no one in his jurisdiction who has been jailed. Most homeowners are cooperative, he said, and try to remedy the situation.

But that isn't always easy. In Newport Beach, for example, a typical violation is an attic that has been illegally converted into a bedroom. To make sure such a conversion is up to code, inspectors would have to make holes in the wall to inspect the electrical systems and verify the support and the framing, said Jay Elbettar, that city's Building Department director. If there is a bathroom, the plumbing must be approved.

When violations are found, Newport Beach homeowners are given a chance to correct them. Those who refuse to comply face fines of $100 the first day after the deadline, $200 the second day and $500 the third day, Elbettar said. If the fines fail to persuade the owner, the city also can cut off the electricity and gas at the property to prevent a safety hazard.

Work done without a permit also is discovered when real estate agents compare listings or walk-throughs with public records.

"It's always best to disclose as much as you can," said Hugo Flores, an agent with Realteam Real Estate Center in San Bernardino. "When the appraisal is done, more than likely if there is an extra bedroom or a converted garage, the appraiser is going to know and he is going to let the lender know."

Garages, he said, are often turned into playrooms, personal gyms, home offices and rental apartments to help owners make the mortgage payment or aid elderly parents and other family members. These units also appeal to tenants who want to live in an area that is generally beyond their means or those who either can't find or afford anything else.

Because of the high cost of housing, garage conversions are popular but they're illegal 90% of the time in the city of Los Angeles, Keim said.

However, some homeowners get the proper permits and build another garage on the property to satisfy the requirement for off-street parking for two vehicles in the form of a garage or carport.

In Santa Monica, homeowners must maintain the parking required when the house was built. The oldest homes require none, and some require only one space, said Tim McCormick, the city's building officer.

Garages are often converted into family rooms, he said. If illegal, the owners must change them back, or they could face fines ranging from $100 a day to a very steep $25,000 a day.

"It is extremely rare that we actually need to impose the penalties," McCormick said. "We get voluntary compliance simply with the knowledge that fines can be imposed. It does help with those people who need a little more inspiration."

Bootleg garage apartments can be deathtraps, he said, and are taken very seriously. "They usually don't have proper access in and out of the space. And, they don't have the proper heating. A renter will plug in a heater and it causes a fire. A water heater improperly installed could explode."

Because garage apartments can change the quality of life on a street by bringing more people, noise, cars and trash, neighbors often report them, code enforcement officers say. Names need not be given.

Still, thousands of violations are missed unless a property is about to change hands.

In those instances, a buyer should tell the seller, "Yes, I'll buy it if you go get a permit for it," said real estate author Irwin.

If the seller can't or won't, "it can become a negotiating point on the price because suddenly the advantage of having that extra room becomes a disadvantage."

According to Irwin, a buyer can also insist that the seller tear down the illegal addition, return the garage to its original purpose or buy it as is "and then hope when you sell, you find a buyer as gullible as you are."

There are also owners who are willing to take that chance.

"In the area I specialize in, Topanga, I would probably say that 90% of the homes have something that was done without permits. It could be anything from a deck to a three-bedroom addition to the house," said Karen Dannenbaum, manager of Coast & Canyon Realtors. "This went on more in the '70s and '80s. Today, people are more likely to get permits.

"They're more likely to get caught these days," she said, especially if an annoying tenant is renting a converted garage.

A Dumpster in front of the house that is filled with construction material is also sometimes a giveaway.

"If Building and Safety happen to be driving by going to another location," she said, "that's kind of a red flag."


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gayle.pollard-terry@latimes.com

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(INFOBOX BELOW)

Complaints about illegal remodels

Inspectors routinely find out about illegal room additions or remodels through reports from neighbors. Complaints generally can be made to local building departments in person, by phone or online.

• For the city of Los Angeles: Call (888) LA4-BUILD and press "2"; or go to http://www.ladbs.org , click on "Report a Property Violation," then click on "next" to get to the code enforcement complaint form. Five district Building and Safety offices also take complaints.

• For Santa Monica: Call (310) 458-4984 and press "0"; or go to santa-monica.org/planning, click on "Building and Safety, Code Enforcement Forms" and "Submit a Report Online." A report may also be made in person at City Hall, Room 111.

• For Newport Beach: Call (949) 644-3275 and press "0." Complaints also can be made in person at City Hall, Building C, second floor.

• For the city of San Bernardino: Call (909) 384-5205; or go to http://www.sbcity.org , click on "Departments, Code Enforcement" and then "Code Complaint," or visit 201-B North E. St., Suite 201.

• For Topanga: Call (818) 880-4150 or visit the Los Angeles County Building and Safety Office in Calabasas.

• For other areas overseen by Los Angeles County, visit any of the 11 district Building and Safety offices, or dial 211, press "1," then press "4."
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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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