Seasonality

Don't let the idea of seasonality in the market hold you back.

Now is a GREAT time to sell!

In Chicago's Gold Coast the fourth quarter boasts the highest median price, the 2nd highest number of units sold, and the 2nd highest price per square foot.

*Average over past 3 years

Home Affordability is the best it has been in decades!

Daniel Kelley is the lead real estate analyst and portfolio manager of the Fidelity Select Construction and Housing Portfolio.

"Having just gone through a potentially once-in-a-lifetime down market, there is a bright light. Home affordability is the best in decades. In fact, on average, today's homebuyers have the lowest mortgage payments as a percentage of income in 30 years," wrote Kelley in a recent research report.

Real Estate Outlook: Strong Sales Predicted

By Kenneth R. Harney, Realty Times

Will housing outperform the overall economy in 2010 as we pull out of the Great Recession?

Nothing is absolute in the predictions business, but there are solid indications that, yes, housing is likely to rebound more energetically than the overall economy.

Here's why: Even the most bearish Wall Street analysts now concede that home sales are up in many areas from year-earlier levels -- sometimes by extraordinary percentages.

For example, MDA DataQuick reports that sales in the greater Phoenix market in November were 62 percent higher than the year before.

Prices either have bottomed out in dozens of these markets or are close to it. That's because the distressed sales component of local volume - short sales, REOs and foreclosures - has been declining slowly but steadily.

In his latest forecast, Jay Brinkmann, chief economist for the Mortgage Bankers Association, says both existing and new home sales will be higher in 2010 than in 2009 - and 2009 was better than 2008.

No question that a key part of the energy in housing will be the direct result of stimulus efforts by the federal government - especially the two tax credit programs -- that will push sales and even pricing through mid year.

The overall economy, on the other hand, according to Brinkmann, is likely only to grow slowly in the first half of 2010, and not really warm up until the second half.

The heavy anchor dragging on national economic growth -- and on housing demand -- will continue to be unemployment. Brinkmann says that "the time of job destruction is over" in this cycle - that is, the number of new layoffs and new unemployment insurance claims filings are trending down.

But we haven't yet moved into the next phase nationwide - that of "job creation," which may not begin until later in the year, he says, and may be a long, slow process.

The National Association of Realtors' chief economist, Lawrence Yun, sees a strong sales year ahead - up 20 percent over 2009. In some markets, he also expects to see a return to modest and sustained price increases - anywhere from two to five percent on average.

Will higher interest rates put a big dent in these projections? Many economists are forecasting 30 year rates in the upper 5 percent range later in the year.

Those higher rates won't help - but last week they headed in the opposite direction. Thirty year fixed rates averaged 5.1 percent and 15 year rates were half a point below that - both down slightly from the week before, according to the Mortgage Bankers' national survey.

Published: January 19, 2010

Home Value Loss Now but Increased Pricing Expected in 2010

By Phoebe Chongchua, Realty Times
There’s bad news and good news coming out of the housing market. Forbes Magazine released study results by Local Market Monitor that showed the cities that lost the most value are concentrated in some areas of California, Florida, Nevada, and the Northeast.

These cities were impacted by local and national factors such as increased unemployment and the rising cost of housing which resulted in homebuyers gambling on the odds of whether they could afford long-term housing.

West Coast housing markets fared the worst, losing the most value—21.6 percent since their peak. Florida housing lost 31 percent, the Northeast lost an average of 8.6 percent, and the Midwest lost, on average, 5.6 percent. The top five cities to lose value in the West (most in California): in California--Merced, (-62.11 percent), Stockton (-54.29), Modesto (-52.42), Vallejo-Fairfield (-47.62), and in Nevada—Las Vegas-Paradise (-47.53) In the South, the top five cities to lose the most value are located in Florida: Port St. Lucie (-46.43), Cape Coral-Fort-Myers (-46.38), Naples-Marco Island (-43.63), Bradenton-Sarasota-Venice (-41.52), and Fort Lauderdale-Pompano Beach-Deerfield Beach (-39.93).

In the Northeast, the top five cities to lose value are: Providence-New Bedford, R.I. (-17.30), Worcester, Mass. (-16.17), Atlantic City, N.J. (-16.15), Poughkeepsie-Newburgh, N.Y. (-14.60), and Barnstable Town, Mass. (-14.48).

Moving to the Midwest, the top five cities to lose value are in Michigan: Detroit-Livonia (-30.66), Warren-Troy-Farmington Hills (-27.95), Flint (-27.47), Ann Arbor (-20.37), and Jackson (-17.30). Source: Forbes, Francesca, Levy (12/21/2009).

According to First American CoreLogic’s LoanPerformance Home Price Index, home prices are expected to fall another 4.2 percent in 45 of the largest housing markets before hitting bottom. The Press Release states that, “The declines will be driven primarily by the large levels of foreclosures in these areas. However, improvement in both levels of inventories and unemployment are projected to prevail in the spring of next year, resulting in an average year-over-year appreciation of just under one percent by October of 2010 for these metropolitan markets.

The report also stated that, “In August 2010, the index is projecting that 12-month appreciation for national home prices will be 4.6 percent and that home prices in two of the most depressed markets, California and Florida, will show gains in excess of 7 percent.” Cities that are projected to experience the strongest recovery in 2010 are primarily concentrated in the large urban areas of California: San Francisco (+5.7 percent), Los Angeles (+5 percent), San Diego (+4.7 percent) and Sacramento (+4.6 percent).

The report cautions that a large inventory of homes owned by banks but not yet on the market could affect the increased pricing progress. Mark Fleming, chief economist for First American CoreLogic stated in a December Press Release, "We are continuing to see improvements in the year-over-year home price change as prices have remained relatively stable since April. The additional government support for the housing market has stimulated demand and restricted supply in 2009.” However, Fleming, added, “How these government supports are removed in 2010 and the moderation of pending inventory and negative equity will be critical to the continued stability of the housing market.”

You've Got 15 More Days To Use The First-Time Home Buyer Tax Credit

The government’s First-Time Home Buyer Tax Credit program expires November 30, 2009 — a scant 60 days from today.

Considering it can take up to 60 days to close on a home, first-time buyers have 2 weeks at most to find a home.

Buyers not under contract by October 15 have little chance of meeting the November 30 deadline and, therefore, little chance of claiming the tax credit.

This is especially true for purchases involving short sales and foreclosures.

Congress passed the First-Time Homebuyer Tax Credit program as part of the 2009 economic stimulus plan. IRS Form 5405 outlines the program criteria which include the following stipulations:

• Buyer may not have owned a “main home” in the past 36 months
• The home may not be purchased from a parent, spouse, or child
• Adjusted gross income for the household must be below $95,000 for single tax filers and $170,000 for joint tax filers

The credit is capped at $8,000 or 10% of the purchase price, whichever is less. And don’t forget — the First-Time Home Buyer Tax Credit is a true tax credit. It’s not a deduction.

This means that a tax filer who claims the full $8,000 and whose “normal” tax liability is $5,000 would receive $3,000 cash from the US Treasury when their tax return is processed by the IRS.

If you can’t close by November 30, 2009, though, you can’t claim the credit.

The clock is ticking. If you’re planning to use the First-Time Home Buyer Tax Credit, the time to act is now.

Posted: Thursday, October 1, 2009
www.brokeragentsocial.com

Savvy Buyers use Self-Directed IRA to Buy Homes

Nathan Foran used his self-directed IRA to buy a dilapidated foreclosed house in Richmond for $25,000 cash. Another $25,000 to $35,000 from the retirement account will go toward fixing up the property. He then hopes to rent it out for about $1,000 a month, money that will go straight into his retirement account.

Foran, 40, a San Anselmo real estate broker and investor, sees a lot of advantages in investing in real estate through his individual retirement account.
"The net rental income goes into the IRA, so its generating money tax deferred," he said. "Once I sell, the money also goes directly into the IRA without capital gains tax. If I hold onto it for five to seven years, it probably will be worth in the low $200,000s, so I'll get a sizable gain. If I find another property I think will appreciate faster, I can sell this and use the funds to invest in that one. The IRA is a good long-term investment tool."

With many properties at bargain-basement prices, more people have been turning to their self-directed IRAs as a ready source of capital to make real estate investments. Companies that manage self-directed IRAs say real estate investments by their clients are up as much as 30 percent over the past year.
But experts caution there are a range of potential issues and gotchas -including ones that could even disqualify the entire IRA.

Self-directed IRAs account for just 2 percent of the $4.2 trillion IRA market, but are among its fastest- growing segments. They allow access to a variety of investment vehicles beyond just stocks and bonds. The IRS closely regulates them, and any real estate investments must be handled by IRA custodian firms that hold the property inside the IRA. Can't live in property IRA owners can invest in any kind of real estate - raw land, commercial properties or residential rental properties. They cannot invest in a property they already own or plan to live in, however. The retirement funds "represent a large amount of untapped capital for investors that they can more actively manage," said Brad Hemstreet, vice president of sales and marketing for Equity Trust Co., a Cleveland company with $8 billion of IRA funds under management.

After the recent stock market downturn, "people are pulling out of Wall Street and want investments they understand and are comfortable with," he said. "Many people look at owning a property as a far better investment than owning a stock or bond." Mary Kay Foss, a CPA and director of the Danville office for accounting firm Greenstein, Rogoff, Olsen and Co., said using IRAs to buy real estate can negate many tax advantages. "Real estate is already one of the best investments you can have, tax-wise, because you can deduct all of your expenses, and when you sell it, you pay long-term capital gains (at 15 percent, much lower than income tax)," she said. "But if you have it in an IRA, none of the expenses are deductible. When it's sold, any profit is taxed when you take it out (of the IRA) as ordinary income."
Investing in real estate with a Roth IRA has fewer drawbacks, she said, because distributions are tax-free once the account has been in place for at least five years, although "you still have the downside that you can't deduct any expenses."

Must follow IRS rules. People who invest in real estate through an IRA have to make sure they adhere to IRS rules or they risk disqualifying the account, which carries heavy tax penalties. Neither they nor their relatives can live in the property. They cannot pay any expenses directly; everything from repairs to property taxes must be funded from the IRA. That means they must make sure their IRA has enough liquidity to handle expenses. If they have to add money, they pay a penalty.
"At this price point, I'm able to do the entire transaction with my IRA," Foran said about his $25,000 property. "I wanted to be very safe and make sure I have plenty of buffer in there so I won't have to do a capital contribution to keep that property afloat."

Companies that manage self-directed IRAs said they fully disclose all rules and recommend that investors educate themselves and consult their own accountants.
"Generally people in the real estate IRA business are very savvy about the market and investment properties," said Hugh Bromma, CEO of Oakland's Entrust Group, which has $4 billion in IRA funds under management. "They're picking up selected properties in areas that will be conducive to long-term appreciation."
About 30 percent of Entrust's clients invest in real estate, he said. Foran is among them. Entrust charges $250 a year to manage a single property, plus fees for purchasing the property.

Most IRA real estate investors buy properties with all cash, the simplest approach. If they don't have enough funds to do that, they can partner with other IRA account owners, or even partner with themselves, for instance paying half from their IRA and half from their personal savings. 30% down required a handful of banks offer mortgages to IRA investors, but they must put down at least 30 percent, and they pay a higher interest rate because the loans must be nonrecourse, meaning the banks cannot go after other assets.

Once IRA account holders reach age 70 1/2, they must start taking minimum required distributions from their account. What if they have a house held in the account and can't sell it? "You can take a portion of it and transfer it to yourself," said Kathy Holcomb, business development officer at Pensco Trust Corp., a San Francisco IRA management company.

Suzanne Gregg, an agent with Paragon Real Estate Group in San Francisco, has bought and flipped a couple of properties through her IRA and said she tripled her money.
"It's not like you just buy a stock online and forget about it; it's a little more hands on," she said. "It's a tangible asset you can see and manage."

Tuesday, September 1, 2009 (SF Chronicle)
Carolyn Said, Chronicle Staff Writer

LuxuryHomes Blog from MegaCamp 2009

Existing Homes Selling Fast - Record Fast

The volume of home re-sales has been on the upswing for four consecutive months.

NEW YORK (CNNMoney.com) -- Sales of existing homes rose in July for the fourth consecutive month, lending support to economists who argue a recovery is near.

Sales of previously owned single-family homes were up 7.2% compared with June and 5% from July 2008, The National Association of Realtors (NAR) reported Friday. The monthly gain was the largest on record for existing-home sales, which NAR has tracked since 1999.

"The housing market has decisively turned for the better," said Lawrence Yun, NAR's chief economist. "A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales."

July home sales hit an annualized rate of 5.24 million proprieties, marking the first breach of the 5 million annualized rate mark since last September, when they hit 5.1 million. Since then, they have stayed in a very narrow range, bouncing between between January's low of 4.49 million and October's high of 4.94 million.

The July performance far exceeded expectations: A consensus of real estate experts had forecast sales of 5 million.
Low prices

Of course, homes should be selling. Prices have fallen more than 32% from their peaks, set in the summer of 2006. Plus, mortgage rates near historic lows makes the cost of purchasing a home lower than they've been in nearly 20 years.
0:00 /3:11Home Depot sees housing recovery

"In some recovering markets like San Diego, Las Vegas, Phoenix and Orlando, the demand for foreclosed and lower priced homes has spiked, and a lack of inventory is becoming a common complaint," Yun said.

Overall though, the national inventory rose by more than 7% to 4.09 million units. That will continue to keep prices low, according to Mike Larson, a housing analyst with Weiss Research.

"There's a bifurcation of the market," he said. "There's excess supply putting downward pressure on prices and people respond to the lower prices by buying homes."

Housing is its most affordable in many years, he pointed out. "Falling prices is not part of the problem, they're part of the solution," he said.

Hurting home sales have been stubborn increases in job losses. More than 6.7 million jobs have been lost since the beginning of 2008.

That's one reason why Robert Dye, a senior economist for PNC Financial Services (PNC, Fortune 500), is keeping his optimism in check.

"I wouldn't go overboard on this number," he said. "The economy is still healing and will continue to run into some bumps. But it does bode very well for the future and shows buyer confidence is increasing."

There is one potential bump, however: The looming end of the first-time homebuyers credit. The credit gave first-time homebuyers an up to $8,000 refund on their taxes if they close on a deal before Dec. 1. That credit has been motivating buyers, and when it expires, demand could dry up.

"Just like with the cash-for-clunkers program, we run the risk of a letdown as the program runs its course," Dye said.
Where homes are selling

Regionally, the strongest market was the Northeast, where sales soared by 13.4% to an annualized rate of 930,000. That was 3.3% higher than last July. The median price of homes sold during the month was $236,700, off 15% from last year.

Midwest sales rose 10.9% to a 1.22 million rate, 8% higher year-over-year. Prices there have sunk 5.9% over the past 12 months to a median of $157,200.

In the South, sales were up 7.1% from June and 5.4% from last July to a rate of 1.95 million. Price have dropped 7.1% to $164,500 over the past 12 months.

The only region reporting a slip in sales was the West, where they fell 1.7% to a rate of 1.13 million. That was ahead of last July, however, by 1.8%. The median price there was $202,300, a whopping 28% below what is was a year ago.

First Published: August 21, 2009: 10:19 AM ET
Money.cnn.com

Y-O-Y Condo Home Sales Rise For First Time Since 2005

Washington, D.C.--For the first time in five years, existing-home sales have increased for four months in a row, according to the National Association of Realtors (NAR). It is also the first time since November 2005 that sales are higher that the previous year.

Existing condominium and co-op sales jumped 12.5 percent to 630,000 units in July from 560,000 in June, and are 5.9 percent above the 595,000-unit level a year ago.

Overall existing-home sales, including single-family, townhomes, condominiums and co-ops, rose 7.2 percent to 5.24 million units in July from a level of 4.89 million in June, and are 5.0 percent above the 4.99 million-unit pace in July 2008. The last time sales rose for four consecutive months was in June 2004, and the last time sales were higher than a year earlier was November 2005.

Lawrence Yun, NAR chief economist is encouraged. “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” he says.

The median existing condo price for example was $178,800 in July, down 18.9 percent from July 2008.

The monthly sales gain was the largest on record for the total existing-home sales series dating back to 1999. “Because price-to-income ratios have fallen below historical trends, there are more all-cash offers. In some recovering markets like San Diego, Las Vegas, Phoenix, and Orlando, the demand for foreclosed and lower priced homes has spiked, and a lack of inventory is becoming a common complaint,” Yun says.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.22 percent in July from 5.42 percent in June; the rate was 6.43 percent in July 2008.

An NAR practitioner survey showed first-time buyers purchased 30 percent of homes in July, and that distressed homes accounted for 31 percent of transactions.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the first-time buyer tax credit is working. “In addition to first-time buyers, we’re also seeing increased activity by repeat buyers. While many entry-level buyers are focused on the discounted prices of distressed homes, they’re also freeing some existing owners to sell and make a move,” he says.

Total housing inventory at the end of July rose 7.3 percent to 4.09 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, which was unchanged from June because of the strong sales gain.

The national median existing-home price for all housing types was $178,400 in July, which is 15.1 percent lower than July 2008. Distressed properties continue to weigh down the median price because they typically sell for 15 to 20 percent less than traditional homes.

Published: August 21, 2009

By Anuradha Kher, Online News Editor

www.multihousingnews.com

Florida Withstands the Real Estate Hurricane

"The New York Times" has an interesting piece today on Florida real estate, a market in which Chicagoans too have a stake!

Chicago-area home prices rise: report

From the Crain's Chicago Business Newsroom August 31 11:15:00, 2007 By Alby Gallun

(Crain’s) — Prices of homes in the Chicago area continued to rise through the first half of the year, albeit at a slower rate, according to a government report released Thursday.

An index of single-family home prices here rose 3.7% in the 12 months ending June 30, after rising 9.1% in the year-earlier period, according to the report from the Office of Federal Housing Enterprise Oversight (OFHEO). Chicago’s rate of appreciation ranks it 139 among 287 U.S. metropolitan areas that OFHEO tracks.

Home prices in the past year have flattened out or fallen in some areas amid rising mortgage rates, tighter lending standards and growing pessimism among buyers. OFHEO’s national price index rose 3.2% in the 12 months ending June 30, the lowest annual price increase in a decade. The index rose just 0.1% in the quarter.

“House prices were basically flat in the second quarter despite tightening credit policies, rising foreclosure rates, and weakening buyer sentiment,” OFHEO Director James B. Lockhart said in a news release. “Significant price declines appear localized in areas with weak economies or where price increases were particularly dramatic during the housing boom.”
Ofheo tracks average prices based on repeat purchases or refinancings of the same single-family homes. Because Ofheo analyzes data from Fannie Mae and Freddie Mac, the data covers only properties that have mortgages up to $417,000, the limit on loans the government-chartered firms will buy.

Wenatchee, Wash., had the highest annual rate of appreciation in the country, 23.6%, followed by Provo-Orem, Utah, at 18.2%.

Merced, Calif., led price decliners, with an 8.7% year-over-year drop, followed by the Santa Barbara, Calif., area, with an 8.1% decrease.

Chicago-area home prices edged up 0.3% in the second quarter, and rose 45.0% in the five years ended June 30, according to the Ofheo report.

Fourth Quarter Metro Home Prices & State Sales Likely Have Hit Bottom

WASHINGTON, February 15, 2007 -

Existing-home sales in most states were down from year-ago levels in the fourth quarter, marking the likely bottom for the current housing cycle, while prices in many areas corrected as a result of sellers’ willingness to negotiate, according to the latest quarterly surveys by the National Association of Realtors®.

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate (1) of 6.24 million units in the fourth quarter, down 10.1 percent from a 6.94 million-unit level in the fourth quarter of 2005. Even with the general decline, six states showed increases in the sales pace from a year ago and one was unchanged. Complete data for three states were not available.

In the fourth-quarter, metro area single-family home prices, examining changes in 149 metropolitan statistical areas, (2) show 71 areas had price gains from a year earlier, including 14 metros with double-digit annual increases, and 73 areas had price declines; five were unchanged.

David Lereah, NAR’s chief economist, said it appears the fourth quarter was the bottom for the current housing cycle. “This information confirms 2006 was the year of contraction, and hopefully the fourth quarter was the bottom of this current business cycle,” he said. “Home sales are leveling at historically high levels, and examination of data within the quarter shows home prices stabilizing toward the end. When we get the figures for this spring, I expect to see a discernable improvement in both sales and prices.”

The national median existing single-family home price was $219,300 in the fourth quarter, down 2.7 percent from a year earlier when the median price was $225,300. The median is a typical market price where half of the homes sold for more and half sold for less. For all of 2006, the median price rose 1.4 percent to $222,000.

A new comparison of annual single-family home prices in metropolitan areas shows that typical sellers experienced healthy gains on the value of their home over the last five years in almost all 131 available areas, even in areas with recent price declines.

NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said a broader view of home prices is necessary because housing is a long-term investment. “Since the typical owner stays in a home for six years, it’s more useful to look at the five-year comparison for metro area home prices – most of them are seeing strong gains,” she said. The median five-year price gain is 41.8 percent.

Combs said there’s a lag in measuring market conditions. “The fourth quarter data is showing us recent history, but right now, buyers are responding to seller pricing and incentives, and there’s a bit of a pent-up demand as a result of buyer hesitation during the second half of 2006. We’re not looking for big changes, but a gradual rise in sales and home prices is projected – that will be good for the overall housing market and related industries.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.25 percent in the fourth quarter, down from 6.56 percent in the third quarter; the rate was 6.22 percent in the fourth quarter of 2005.

The biggest total sales increase was in Indiana, where existing-home sales rose 13.7 percent from the fourth quarter of 2005. In Arkansas the fourth-quarter resale pace rose 11.1 percent from a year earlier, while Texas experienced the third strongest gain, up 6.2 percent.

Over the last five years, metro areas with the largest single-family price gains include the California areas of Riverside-San Bernardino-Ontario, up 155.3 percent, and Los Angeles-Long Beach-Santa Ana, up 142.3 percent, followed by the Miami-Fort Lauderdale-Miami Beach area of Florida, up 135.4 percent.

In the fourth quarter, the largest single-family home price increase was in the Atlantic City, N.J., area, where the median price of $339,800 was 25.9 percent higher than a year ago. Next was the Salt Lake City area, at $223,600, up 22.7 percent from the fourth quarter of 2005. The Trenton-Ewing area of New Jersey, with a fourth quarter median price of $289,000, increased 18.9 percent in the last year.

Median fourth-quarter metro area single-family prices ranged from a very affordable $78,400 in Elmira, N.Y., to nearly 10 times that amount in the San Jose-Sunnyvale-Santa Clara area of California where the median price was $760,000. The second most expensive area was San Francisco-Oakland-Fremont, at $733,400, followed by the Anaheim-Santa Ana-Irvine area (Orange Co., Calif.), at $690,700.

In addition to Elmira, N.Y., other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, with a fourth-quarter median price of $80,000, and Decatur, Ill., at $89,200.

In the condo sector, metro area condominium and cooperative prices – covering changes in 58 markets – show the national median existing condo price was $220,900 in the fourth quarter, down 2.1 percent from the same period in 2005. Thirty-one metros showed annual increases in the median condo price, including seven areas with double-digit gains; 27 metros had price declines.

The strongest condo price gains were in the Austin-Round Rock area of Texas, where the fourth quarter price of $160,000 rose 16.5 percent from a year ago, followed by the Newark-Union area of New Jersey and Pennsylvania, where the median condo price of $352,600 rose 16.4 percent from the fourth quarter of 2005, and Springfield, Mass., at $160,400, an increase of 14.6 percent.

Metro area median existing condo prices in the fourth quarter ranged from $102,600 in Wichita, Kan., to $580,300 in the San Francisco-Oakland-Fremont area. The second most expensive reported condo market was Los Angeles-Long Beach-Santa Ana, at $402,000, followed by the San Diego-Carlsbad-San Marcos area of California at $358,200.

Other affordable condo markets include Bismarck, N.D., at $103,500, and Greensboro-High Point, N.C., at $119,100.

Regionally, the Northeast saw an existing-home sales pace of 1.04 million units in the fourth quarter, which was 6.6 percent below a year ago. The median Northeastern resale single-family home price was $274,600 in the fourth quarter, which is 2.5 percent below the same period in 2005.

After the Atlantic City and Trenton-Ewing areas, the strongest price increase in the Northeast was in Pittsfield, Mass., with a median price of $220,600, up 4.7 percent from the fourth quarter of last year, followed by the Albany-Schenectady-Troy area of New York with a median price of $198,700, up 4.1 percent.

Total existing-home sales in the South were at an annual rate of 2.49 million units in the fourth quarter, down 8.5 percent from the fourth quarter of 2005. After the gains in Arkansas and Texas, the next strongest increase in the South was in Kentucky, up 5.6 percent from a year ago, while Mississippi rose 2.0 percent.

The median existing single-family home price in the South was $181,700 in the fourth quarter, which is 3.7 percent below a year earlier. The strongest increase in the South was in the Beaumont-Port Arthur area of Texas, where the median price of $120,000 was 15.1 percent above the fourth quarter of 2005. Next was Raleigh-Cary, N.C., at $226,300, up 14.5 percent from a year ago, followed by the Cumberland area of Maryland and West Virginia, with a 14.4 percent gain to $98,000.

In the Midwest, total existing-home sales declined 8.6 percent to a 1.43 million-unit annual level in the fourth quarter compared with a year earlier. The median existing single-family home price in the Midwest was $161,800, down 4.2 percent from the fourth quarter of 2005.

The strongest metro price increase in the Midwest was in the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price of $116,400 was 6.6 percent higher than a year ago. Next was Dayton, Ohio, at $119,500, up 5.9 percent from the fourth quarter of 2005, and Rockford, Ill., at $121,500, up 5.7 percent in the last year.

In the West, the existing-home sales pace of 1.28 million units was 17.8 percent lower than the fourth quarter of 2005. The best performance in the region was in Alaska where existing-home sales rose 0.4 percent from a year earlier.

The median existing single-family home price in the West slipped 0.4 percent to $355,100 during the fourth quarter. After Salt Lake City, the strongest increase in the West was in the Salem, Ore., area, at $223,100, up 14.9 percent from fourth quarter of 2005, followed by Farmington, N.M., at $183,000, up 14.0 percent, and Spokane, Wash., at $189,200, up 12.2 percent from a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
# # #

(1)The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing. NAR began tracking the state sales

© Copyright NATIONAL ASSOCIATION of REALTORS®

Luxury Home Index

- Courtesy of the Wall Street Journal Online

Price Your Home RightTo Help Speed a Sale

By Marshall Loeb From Marketwatch

With home sales slumping and inventories on the rise, experts say getting your home sold depends a lot on pricing it correctly. One tool sellers can fall back on when the market is shifting is a home appraisal.

You can have an appraisal done before you contact a broker or if you're just curious what your home would be worth. They cost, on average, from $250 to $400 for a single-family home, slightly more for multiple-family dwellings.

An appraiser will physically inspect your house for shoddy workmanship or needed repairs, measure its dimensions and takes notes on the floor plan, utilities and other factors that affect pricing.

He or she should also look at three or four "comps" -- comparable homes in your neighborhood that have sold within the past six months -- and analyze how homes currently on the market are faring, says William J. Doka, owner and president of Erickson Appraisal Company in Fair Lawn, NJ.

That's a more comprehensive assessment of market conditions than the free comparative market analysis, or CMA, that a broker will give you, says Doka.

He cautions that brokers want to earn your listing and can be tempted to paint an overly rosy picture of how your home will sell while appraisers, although sometimes subject to similar pressure from mortgage brokers, strive to be objective.

The results of the appraisal will be presented to you in a report that can run from five pages, for a simple summary that suits most lenders and homeowners, to 50 pages or more for a "narrative" that banks might demand before financing the purchase of a multimillion-dollar home.

Homes are typically listed for sale at a price several percent above the appraised value.
Predictably, most of Doka's business comes from lenders, who typically require an outside appraisal before making a loan. But homeowners are also hiring him before contacting a broker. He charges from $350 to $400 to appraise a single-family home.

Some things to remember when looking for an appraiser:

Make sure the appraiser is licensed by your state.

Ask how long the business has been around, what professional education the appraiser has had and what organizations -- like the Appraisal Institute or the American Society of Appraisers -- the appraiser belongs to.

Copyright © 2005 Dow Jones & Company, Inc.

'Hotel Condos'

Hotel condos' value hard to figure at ground floor

Projects with rental options are all around, but future is uncertain

By Kathy BergenTribune staff reporter

Published November 27, 2005

Luxury hotel proposals are popping up in Chicago like so many desert flowers after a long drought, and it seems almost every developer is betting on the same virtually untested concept: hotel condominiums.At least 12 downtown projects will include hotel condominiums, which are rooms or suites sold to individuals, who have the option of placing them in rental pools when they aren't using them.More than 2,100 of these pricey dens will be marketed here over the next five years, mostly to affluent Baby Boomers looking for a second or third home.None of the units have come to market yet, so there is no test case. And looking elsewhere in the nation doesn't help much, either.

"There is very little track record," said Pat Ford, president of Lodging Econometrics in Portsmouth, N.H.And so a grand gamble is getting under way.

For the trend to succeed long-term, there will need to be a winnowing out of the weaker contenders, a deep and renewable pool of well-heeled buyers, as opposed to short-term speculators, and a sustained recovery in downtown luxury-hotel business.Other factors could derail the vision as well, among them rising interest rates or a pullback of tax deductions allowed on second homes.

"I have my doubts that all the projects will be built or that all will be successful," said Arthur L. Buser Jr., managing director at Jones Lang LaSalle Hotels. "There will be some that are winners, and some that are last-to-the-party, or not as well done, or only half sold out. ... There will be some failures."The proliferation of proposals stems from hotel developers' continuing difficulties in obtaining more traditional financing."Occupancy and room rates have not recovered sufficiently," noted Ford.With a condo-hotel project, the developer "gets an opportunity to use other people's money," he said.And those other people, namely the hotel condominium purchasers, generally don't have the same expectations for return on investment as would a typical financier, noted Buser."An individual owner would like a profit, but doesn't necessarily need one," he said. "But he does want a place."Willing to be patientIt's certainly true that some buyers are willing to take the long view on investment return.

Attorney James M. Duggan is buying a one-bedroom suite at the proposed Elysian Hotel, primarily as a weekend getaway spot to share with his wife and secondarily as an investment.

"Up front, I'll be in the red, but I'll be having a great time downtown," said Duggan, a Lake Forest resident who is a principal at Handler Thayer & Duggan LLC. "I think I'll be cash-flow positive within five years."And he expects the value of the unit to appreciate over time.

Other prospective buyers in the Chicago market view the transactions strictly as moneymaking opportunities.Real estate broker Viju Patel is paying $389,550 for a one-bedroom unit at Hotel 71 at 71 E. Wacker, which is being redeveloped as the Solis Chicago Hotel Condominiums.Because she is an early buyer, she hopes to see substantial appreciation in the value of her unit, enabling her to sell within three years or so.She likes the proximity of two luxury hotel-condominium projects: the Trump International Hotel & Tower, under construction across the river, and the Shangri-La Hotel, proposed for 111 W. Wacker.Those properties will add cachet to the Solis, whose room rates will be a little less stratospheric, said Patel, a South Barrington resident who is a partner with Keller Williams Success Realty.

"Some of the Trump units have doubled in value over the last two years," she noted."I think the Solis property will appreciate a lot initially, once the facelift is done," she said, adding that a high-end, brand-name spa may be among the amenities.

The companies selling hotel condominiums generally steer clear of touting their investment potential, said attorney David Neff, co-chairman of the lodging and time-share practice at Piper Rudnick Gray Cary.

"If they are viewed as investments, then you have to register the offerings as securities," he said.

Most companies prefer to avoid this extra layer of administration and expense.Still, many hotel condo buyers have dual financial goals: to recoup most, if not all, of their mortgage and maintenance costs from rental income, and to see price appreciation whenever they choose to sell their units.Realizing the first goal may be difficult, some observers say, given hefty monthly condo assessments and fees layered atop mortgage payments and real estate taxes.Monthly assessments and fees could run as high as $2,000 at the Trump project, at the ultra-luxurious end of the spectrum.

Hotel condominium operators "will need to get pretty aggressive on room rental rates and occupancy levels in order for buyers to come out whole on these deals," said Gail Lissner, vice president with Appraisal Research Counselors."With the more expensive units, it will take a while until Chicago reaches room rates high enough to provide a return on the investment," said Ted Mandigo, a hotel consultant based in Elmhurst.

The greater potential, Lissner believes, lies in price appreciation on the units over time.Two have seen growthIn fact, prices for units at the Trump or the Elysian have appreciated significantly in the two years since these early-bird projects were announced.At the Trump, units are priced between $815,000 and $3 million-plus, compared with $559,000 to $1 million-plus two years ago. At the Elysian, asking prices top out at $925,000, compared with $700,000 in 2003.Whether prices remain on an upward trajectory in Chicago remains to be seen.Consumer choices will be expanding, as more newly announced projects begin marketing. So far, only six of 12 downtown projects have been actively selling.And some of the existing upward momentum is likely attributable to speculators, who typically comprise an estimated 25 percent of hotel condo buyers.

"When they feel the party is over and stop buying, 25 percent of the buyers disappear, and it's a much thinner market," Buser said.

Other experiencesOne of the few cities with any extended history in this niche is Vancouver, which saw overbuilding in the 1990s."People bought on projections that properties would continue to ramp up, and it didn't happen," said Buser, of Jones Lang LaSalle.

Prices fell, leaving unit owners in limbo until the market recovers.In contrast, Miami has seen torrid price appreciation lately, so much so that some developers have broken contracts with potential buyers in order to resell units at higher prices, leaving some irate former customers on the sidelines, noted Mandigo.

"To me, the units in Chicago are not quite as strong an investment," he said, citing weaker room rates, the bitter winters and a substantial supply of hotel rooms in the suburban market.

"The hotel condominium flurry really has been at the luxury end of the market," said Scott Steilen, principal at Warnick & Co., a hotel advisory firm. "And I think there is a legitimate question of whether this market is deep enough to absorb all that luxury lodging supply,"That said, some projects will pan out better than others."This is still location-driven," Steilen noted.And investors should remember they are buying a piece of a hotel.

"Look at how the chain is doing, find out about the management company and its track record," said attorney Neff.For Patel, who is buying a unit at the Solis, this was key.

She likes the fact that West Paces Hotel Group LLC, which will manage the hotel condominiums, is headed by Horst Schulze, a Ritz-Carlton veteran.And buyers should keep in mind that ownership and management companies can change, and that new regimes can institute new ways of operating.In 2003, the Grand Traverse Band of Ottawa and Chippewa Indians purchased the 660-unit Grand Traverse Resort and Spa in Acme, Mich., and later that year announced plans for an extensive renovation program.For the first time, owners of the resort's 234 hotel condominiums were asked to participate in a uniform refurbishment plan, with costs ranging as high as $40,000, a hefty sum given that many units are valued at around $100,000.

"There was a complete owner revolt in October 2003," recalls David Boyer, a Chicago attorney who owns one of the units.Two years and many hard feelings later, the two sides appear to be approaching the possibility of detente.

The owners have "agreed the initial plan was too ambitious and are allowing the condo board to be part of the think tank," said Michael Mysliwiec, a Michigan lawyer who is president of one of the condo associations."Rather than a divorce between the owners and the condo association, I'm working to patch things up," he said. "I don't know if I'll succeed, but I'm trying."

----------kbergen@tribune.com
Copyright © 2005, Chicago Tribune