Adjustable Real Estate Loan Activity Soars Adjustable-rate mortgages and interest-only loans accounted for 63% of mortgage originations in the second half of last year, according to the Mortgage Bankers Association’s Single-Family Mortgage Activity Survey. Although the dollar volume of first-mortgage originations declined 9% from the first part of the year, the purchase share of originations increased from 41% to 51% as the dollar volume of refinancings fell. Consumers customarily shift to ARMs when interest rates are rising, according to Doug Duncan, the association’s chief economist. However, the current shift to ARMs has occurred with a much smaller increase in rates than in past cycles, he said, partly because appreciation in house prices has been much stronger than in previous cycles, creating affordability constraints that have a led a number of buyers to seek lower payments with ARMs. The survey also found that non-prime loans accounted for one-third of the market in the second and third quarters of 2004. (www.inman.com)
Inman News (5/5/05) [Return to top]
Most Families in the State Outside of Market Only 18% of families in California have the $115,910 income needed to afford the state’s median-priced $495,400 home with a 5.81%, 30-year mortgage and a 20% downpayment. And the state’s median family income of $55,000 is only sufficient to buy a $245,000 home with that financing. One of the reasons that there is still momentum in the market is an increase of two families who are combining incomes to buy a house together, said Steve Johnson, director of Metrostudy, a real-estate think tank in Riverside. That’s a practice that might sound scary to some people, Johnson says, but for ethnic groups with extended families that live together longer, it’s a way to build wealth. Some lenders have also begun offering 40-year mortgages, which has been helpful for some prospective buyers. (www.dailybulletin.com)
Inland Valley Daily Bulletin (5/5/05); Michael Rappaport [Return to top]
Will Housing Bubble Burst? Knowing that he could be coming into the housing market at the peak of a bubble, Jeff Cyr, a 31-year-old grocery clerk, decided anyway to buy a $329,000 condominium in San Jose, Calif., with an interest-only loan rather than to continue to watch prices climb ever higher. Interest-only loans, which become adjustable after five years, accounted for just 1.43% of all new mortgage loans in California in 2001 but more than 47% last year, according to LoanPerformance, a mortgage data and analytical company. PMI Mortgage Insurance’s Risk Index, which weighs incomes, mortgage payments and changes in employment, rates the chance of price depreciation in the next two years in Santa Clara County, Calif., at 48.1%, the fourth highest in the nation. East Bay has a rating of 48.7%, third highest in the nation, and San Francisco, San Mateo and Redwood City have a 10th-place rating of 39.5%. PMI has not predicted how much housing prices might drop, but Leslie Appleton-Young, chief economist for the California Association of Realtors®, says any decline will be much smaller than the 20%-30% drop that constitutes a true bubble. In Santa Clara County, the median home price hit a peak of $510,000 in November of 2000 and eventually dropped to $435,000 by a year later. The price then fluctuated before it resumed a continual climb in the spring of 2003. (www.mercurynews.com)
San Jose Mercury News (5/06/05); John Bourdreau [Return to top]
Take a Seat, a Beer, a Bath? Americans will spend $2.5 billion this year for garage remodels, up from about $2 billion in 2004, according to NAHB, and in many of those jobs the garage will be turned into a finished, heated and furnished space. “We’re seeing more people who are using the garage like a front porch used to be,” said Troy Gordon, a spokesman for the Home Builders Association of Sioux Empire in South Dakota. “After improving kitchens, bathrooms and basements, the garage often is the final frontier for improvement by home owners.” Products accompanying the growing popularity of finished garages include refrigerators that handle more heat and cold, wall organizers and custom cabinets, floor sealants and track lighting. Another popular item is a giant screen garage door. The screens, which keep out insects and sun, can range in price from $90 to $3,000 and the most popular models are motorized with tracking built into the architecture of the house. A finished garage can help a home sell but won’t necessarily add to its value, according to a broker in Sioux Falls. (www.argusleader.com)
Sioux Falls Argus Leader (5/3/05); Jay Kirschenmann [Return to top]
End of an Era for an American Icon Business interest in building tall headquarters to demonstrate corporate prominence and power is shifting away from the U.S. to countries in the Middle East and Asia. At 1,450 feet high, the Sears Tower was the world’s tallest building when it was completed in 1974. Since 1998 it has been surpassed by the 1,483-foot Petronas Towers in Kuala Lumpur, Malaysia, and the 1,670-foot Taipei 101 building in Taiwan. When it is completed in 2008, the Freedom Tower being built on the devastated World Trade Center site in New York will be the highest building in North America. Amid safety concerns following the 9/11 terrorist attacks and a new emphasis on environmental sustainability, many U.S. companies are choosing low-key campus-style headquarters at a fraction of the cost of building a skyscraper, but that can create an insular environment that can damage a company’s ability to compete, said Jeffrey McCarthy, a partner at Skidmore Owings and Merrill. Giles Worsley, architecture critic for the Daily Telegraph in Great Britain, believes that a compromise between the campus and skyscraper offers businesses the best of both worlds. “If you want to build efficient offices, you build what are called ‘groundscrapers’ — perhaps eight or 10 stories high — they’re the more practical, efficient way of using space,” Worsley said. (www.cnn.com)
CNN World News (5/4/05) [Return to top]
Developers See Condo Potential in Harlem, N.Y. Developers have pegged Harlem as the next hot spot for luxury condominium construction. Well-heeled home buyers have bid up the prices of the brownstones in the Manhattan uptown neighborhood, which go for $1 million to $2 million. New two-bedroom apartments sell fast in the $665,000-$855,000 range. Even though prices are climbing as developers push hard to find viable locations, the sites in Harlem are cheaper than in other parts of Manhattan, so builders can charge around $600 per square foot for condos and still make money. On the upper West Side, just a few blocks south, comparable apartments are selling for $1,000 to $1,400 per square foot. Some existing residents are concerned that they will be driven out of their neighborhood, but developers expect the upscale condos to become no more than 5%-10% of Harlem’s housing stock as the market primarily continues to serve low- and moderate-income households. (www.nydailynews.com)
New York Daily News (5/2/05); Lore Croghan [Return to top]
Developers Responding to Demand for Open Space Earl McLeod, executive director of the Home Builders Association of Greater Columbia in South Carolina, notes that he is seeing a lot more open space, sidewalks and other amenities such as a community pool in this year’s Tour of Homes, which is sponsored by the HBA. The tour is showcasing homes in the $105,000-$400,000 range that are the work of 41 area builders in 14 communities. “Buyers want to feel that sense of community and going back to nature,” says Tommy Stallings, chairman of the event. “Walking trails are big, and virtually everything I’m doing has green space.” Stallings says that high land and development costs can make it more difficult for those building lower-priced homes to provide green space, but even communities on small sites can find ways to include it. Surveys conducted by NAHB in recent years find that most buyers looking at homes in the $150,000-$350,000 price range want their neighborhood to be in a suburban or outlying area that includes a park, playground, trails for walking and jogging and open space. (www.thestate.com)
The State, Columbia, S.C. (5/6/05); Tanya Fogg Young [Return to top]
Federal Housing Suit Filed Over Utah Housing Options The National Association for the Advancement of Colored People and several minority advocacy groups in Utah have filed suit against the state’s Summit County and are asking for a change in a zoning restriction in unincorporated areas that limits density to one unit per 20 acres. That low density makes it nearly impossible for developers to build affordable apartments for low-income households and the disabled, Michael Hutchings, the group’s attorney, argues. Summit County Commissioner Bob Richer said that the plaintiffs do not understand the county’s zoning code and that there are many developments in the county that include a substantial percentage of low-income housing at much higher densities than the base of one unit per 20 acres. Hutchings, however, does not believe that county leaders have taken low-income housing seriously; Summit County leaders are still working on establishing an affordable housing plan as required under a 1996 state statute. “They have something they’re calling a moderate-income housing plan that’s not quacking like a duck or walking like a duck,” he said. (www.deseretnews.com)
Deseret Morning News, Salt Lake City (4/26/05); Erin Stewart [Return to top]
Study Rebuts Affordable Housing Fears A new study by the Center for Real Estate at the Massachusetts Institute of Technology examined seven mixed-income rental developments in the Boston suburbs dating to the mid-1980s and found that in each case the price appreciation of single-family houses in the surrounding area was virtually the same as house-price gains community-wide. All of the developments were permitted under a law that allows the construction of condominiums or apartments in any city where less than 10% of the housing is considered affordable by state standards. The law requires 25% of the units to be affordable and targeted to individuals who earn 80% or less of the median income in that area. (www.boston.com)
Boston Globe (4/27/05); Kimberly Blanton [Return to top]
Paper Heavyweight A maverick among modern architects, Shigeru Ban has won the annual Thomas Jefferson Medal in Architecture from the University of Virginia in Charlottesville for his innovations in refugee housing constructed with paper tubes. His designs provided temporary housing and a community center after the 1995 earthquake in Kobe, Japan, and his “Paper Log House” was adapted successfully in Turkey and India after earthquakes in those countries in 1999 and 2001, respectively. On his own, he established the Voluntary Architects’ Network to focus on shelter needs in poor countries. Ban views paper tubes as a kind of engineered wood that is cheap, recyclable, reusable, biodegradable, nontoxic, widely available and ascetically pleasing. Ban is now working on a mud brick structure that will replace 100 dwellings in a fishing village in Sri Lanka devastated by December’s tsunami. The material was chosen because brick construction provides jobs. To speed construction, the bricks will be supplemented with sustainable wood from rubber trees, which he discovered in a lumberyard. The size of the houses has been fixed by the government at 600 square feet. Because the community is largely Muslim, Ban has given considerable thought to arranging the interior to accommodate separate areas for women. (www.washingtonpost.com)
Washington Post (4/13/05); Linda Hales [Return to top] |
