"Existing-Home Sales Near Record, Group Says"
American Banker (12/01/98) P. 11

Sales of existing homes in October rose 2.1 percent to an annual rate of 4.79 million units, according to the National Association of Realtors (NAR). Currently, sales are ahead of last year's pace by 9.4 percent. And if the pace of sales continues at about this rate, it will surpass the 1998 projection of the NAR of 4.75 million units. According to Sharon A. Millet, president of the NAR, low mortgage rates, higher limits on loans backed by the Federal Housing Administration, and a wider array of mortgage products will encourage more first-time buyers to enter the market.

"Applications Down, but Refis Keep Market Strong"
American Banker (12/01/98) P. 13; Fields-White, Monee

Despite the falling number of mortgage applications, and a drop in the Mortgage Bankers Association of America (MBA) purchase index of demand for new houses, the market remained strong as the number of applications to refinance rose as rates fell. Market analysts think that some concerns of layoffs may be dampening the market on the coasts. U.S. home resales were up 2.1 percent in November to a yearly rate of 4.79 million, according to the National Association of Realtors. October sales rose in the South and the Midwest. The Commerce Department attributed October's jump in housing starts--the largest in 13 months--to low mortgage rates and improved weather. Permits for new construction nearly hit a nine-year high, and a survey by the National Association of Home Builders (NAHB) shows industry expectations are high. NAHB's housing market index rose to a new high also in November, peaking at 73. Low mortgage rates are keeping the market healthy; the MBA's average contract rate for a 30-year fixed-rate mortgage and a 20 percent downpayment is now 6.73 percent, down 13 basis points. For 24 continuous weeks, the 30-year fixed mortgage rate remained below 7 percent.

"Promise of On-Line Banking Grows With Internet Boom"
American Banker (11/30/98) P. 8; Kutler, Jeffrey

Market observers continue to tout the Internet because of its potential customer base. Web monitoring firm Media Matrix has found that 40 million people are going online each week. Of particular interest, new reports by Nielsen Media Research and CommerceNet indicate that 20 million people in North America have bought something over the Internet during the first six months of 1998. "This is a perfect opportunity for financial institutions to take advantage of the high level of anxiety by emphasizing the security of their systems," said Elliot Savitzky, senior vice president of Opinion Research. According to an Opinion Research study, 82 percent of consumers are concerned about how their confidentiality is protected online.

"Fannie Mae Says Reverse Mortgage Funds Should be Paid to Borrower"
Business Wire (11/30/98)

Fannie Mae recently introduced a new brochure explaining to seniors who are borrowing reverse mortgages how to protect themselves. The brochure includes five safety steps emphasizing that seniors should make sure their loan proceeds are sent directly to them. Reverse mortgages are available to seniors over 62 and allow them to borrow against the equity of their home through a lump sum or monthly payments. The brochure educates consumers on how to protect themselves from lenders who may try to take advantage of them. The five safety steps in the brochure advise reverse mortgage borrowers to learn how the mortgage works, identify if it is right for them, decide how to use the funds, and make sure the funds are paid directly to them. Consumers with questions can contact Fannie Mae. The brochure comes at a crucial time, as over a million seniors will be able to take advantage of reverse mortgages in the next five years, stated Mercy Jiminez, vice president of senior products at Fannie Mae.

"HUD Starts Inspection Plan Intended to Repair Housing"
New York Times (11/26/98) P. A24; Janofsky, Michael

Department of Housing and Urban Development Secretary Andrew Cuomo is beginning a survey of all 372,800 HUD properties in a new $24 million enforcement initiative to maintain government contracts. After 30 years in the housing industry, HUD is still not certain how many of its 12 million residents are threatened with conditions affecting health and safety. The new procedures will require owners of the property to fulfill all the terms of their contracts by fixing problems, or face action by the U.S. Department of Justice. The new survey would result in the first computerized inventory of housing across the country, as well as provide the most extensive catalogue of troubled housing projects. Furthermore, it would guarantee Federal action against landlords and property managers. The data gathered at each site will be sent to the Real Estate Assessment Center for processing, but officials at the Public Housing Authorities Directors' Association have questioned the objectivity of the observers. Nonetheless, they support the idea of inspections, and other public officials are waiting to see what HUD does with the data. The inspections are expected to take years to complete, and any forced action would take even longer. Cuomo says, "All we're asking for is what we have already paid for ... this is the problem American taxpayers have with HUD. They have paid for a product, and we haven't delivered."

"Dow Jones Real Estate Index: Starter Home Prices"
Wall Street Journal (11/27/98) P. W6

Miami has had one of the most affordable starter home markets in the country in recent weeks. According to Claritas and First American RES, young, upwardly mobile professionals and executives are buying starter homes for an average of $112,515 in Miami. The only other market that the market researchers found that had less expensive starter homes for young business professionals than Miami was a Philadelphia neighborhood where residences are selling for an average of $108,686. In other markets in the Southeast, Claritas and First American RES found that starter homes are selling on average of $146,272 in Bellevue, Tenn.; $156,902 in Decatur, Ga.; $183,532 in Tampa, Fla.; $207,470 in Raleigh, N.C.; and $270,928 in Atlanta. In comparison, Boston; Newton, Mass.; Washington, D.C.; and San Francisco were among the least affordable markets, when one considers that starter homes have been selling for more than $300,000 in each city. New York was found to be the only market where starter homes are selling for more than $400,000.

"Shhh: Keeping Home Sales Quiet"
Wall Street Journal (11/27/98) P. W6; Paik, Felicia

A growing number of home sellers are taking a new approach when selling their homes in order to avoid publicizing the sale. These sellers place the title of their home into a trust or corporation, rather than in their own name, and sell it to a buyer through the trust. Most of these sellers are wealthy or famous individuals trying to keep the sale private in order to protect themselves and the buyer. If the name of the seller is revealed, the buyer may be forced to pay a higher price for the home. This method of home selling may improve privacy, but it isn't always effective, as sometimes the agent or broker will be anxious to talk about the sale. Movie director Steven Spielberg and billionaire Paul Allen have both used this approach, but their names were eventually revealed. Aside from privacy, there are also tax benefits from selling the home through a trust, especially if the sellers have over $3 million in assets. One option is to put the home's title into a qualified personal-residence trust (QPRT), which allows the owner to pass the home on to heirs after a certain time. Under this alternative, tax payments are also minimized for heirs.

"Home Office: Putting It All Together"
Wall Street Journal (11/27/98) P. W7A; Paul, Donna

When planning for an office at home, consumers may wish to purchase an "office system," modular pieces designed specifically for home-office use. Some of the most innovative and attractive new office systems include furniture pieces that feature compatible designs which may be easily incorporated in other rooms. Home-office components included in the TJ Collection are popular because they are specifically scaled for home use. Ranging in price from $195 to $1,150, these pieces are interchangeable and feature a fine veneer of African Obechee wood. The Cerise Collection is another attractive home-office system. This line includes a storage cabinet, a butcher-block style desk, a grid unit, and mobile cart. Ranging in price from $49 to $1,123, furniture in this system has been designed with aluminum shelves and a cherry veneer. For a more distinctive style consider the Charrette collection of home-office furniture, created by architect Margaret McCurry. Offering a blend of contemporary and classic designs, items in this collection include a $12,500 secretaire capable of holding a computer, telephone and even a fax machine. Other pieces in the Charrette collection range in price from $1,950 to 7,900.

"On the Right Road to the American Dream"
Washington Times (11/27/98) P. F17; Lerner, Michele

First-time home buyers just beginning the process of purchasing real estate are advised to seek out the assistance of a Realtor or other industry professional. Although some consumers may be tempted to complete the transaction on their own, the expertise and guidance Realtors can provide is considerable. Buyers should actively collect as much information on the process as possible. They should attend seminars designed for first-time buyers and make use of available industry resources. Before searching for listings, buyers should collect the funds needed for closing costs and down payments. They also need to choose a lender that offers first-time home-buyer programs and who can pre-approve them for a mortgage. Buyers should then select a broker and identify preferences for the home and surrounding community, checking listings of available homes and after completing an offer, attending a home inspection of the property. Finally, buyers should select an attorney or settlement company to assist in the final stages of the transaction.

"NAR Study Gauges Remodeling Costs"
National Mortgage News (11/16/98) Vol. 23, No. 9; P. 18

A recent report from the National Association of Realtors indicated that home offices have the least potential to recover costs when they are constructed, with a recoup rate of 64 percent. Home offices were followed by window replacements and deck additions. In contrast, minor kitchen renovations have the greatest potential for cost recovery. A minor kitchen renovation will likely return 94 percent of the improvement cost at resale, followed by an 87 percent return for a major kitchen remodel.

"Housing Sales Bound for New Plateau"
National Mortgage News (11/16/98) Vol. 23, No. 9; P. 31; Sichelman, Lew

Existing home sales are expected to reach record levels over the next 20 years, according to a long-term report from the National Association of Realtors. The report also forecast that housing prices will grow significantly, said NAR executive vice president Terry McDermott. Prices will average between $153,400 and $178,300 in the first decade of the next century and between $210,000 and $253,000 in the next decade. New housing starts will fluctuate over the next 20 years, but new home prices should rise at a fast pace. Aside from housing, the report also suggested that the number of households in the United States will grow by over a million. Three different age groups will shape the future of housing, according to the NAR. Baby boomers are the largest segment of the population, and their numbers will grow to 45 million households by 2010. This group will also be the main market for luxury and vacation homes. Generation Xers currently number about 20 million, but their households will also increase, and many of them will focus on buying trade-up homes. The final age group is the millennium group, the children of baby boomers. This group will represent a large portion of the market for first-time homebuyers by 2010. The NAR also says that any decline in the number of traditional households will be offset by a rise in immigrant and minority households.

"Refinancers Prefer 30-Year Fixed-Rate Mortgage"
Dow Jones News (11/25/98)

Most borrowers with 30-year fixed-rate mortgages do not refinance their home loans. According to the quarterly refinancing study of Freddie Mac, 65 percent of homeowners holding 30-year fixed-rate mortgages kept their original loans during the third quarter. That's down from the second quarter, when the number of homeowners refinancing their 30-year loans for 15 year loans rose to 30 percent.

"Putting Your Money Where It Pays"
Realtor Magazine (11/98) Vol. 31, No. 11; P. 47

Of all renovation projects, minor kitchen remodels allow homeowners to recoup the most money within one year of completion. According to the "1998-99 Cost vs. Value Report" of Realtor Magazine and Remodeling magazine, homeowners will recoup on average of 94 percent on a minor kitchen remodel. The next best renovation investment appears to be a bathroom addition, with homeowners recouping on average of 89 percent of the cost of the project. Homeowners can also expect to recoup about 87 percent for a major kitchen remodel, and about 84 percent each for a family room addition and a two-story addition. Rounding out the top ten renovations for cost recouped is an attic bedroom on average of 83 percent, a master suit at about 82 percent, a bathroom remodel at 73 percent, siding replacement at 71 percent, and a deck addition at 70 percent. Also, homeowners are recouping 68 percent for window replacement, and 64 percent for a home office.

"Island Living"
Today's Homeowner (11/98) Vol. 94, No. 830; P. 42; Clagett, Leslie Plummer

About 80 percent of home buyers consider a kitchen island an important element in their home, according to a survey by the National Association of Home Builders. Not only do islands serve practical purposes, but they can also provide a unique focal point to the kitchen. The type, location, and size of the island will vary depending on how it will be used most effectively. The price of a kitchen island can start as low as $600 and move into the thousands depending on the accessories. Usually the best spot for an island is in the middle of the kitchen, where it will allow for the best organization and use of space to limiting overcrowding. Determining the size of the island can be more difficult, because a large island can be an obstacle, while a small island may not provide enough use. The best length per side is usually about four feet or less, depending on the shape and the features of the island. Another function of an island is the use of the overhead space, where shelves, plants, or lights can be installed.

Published: December 1, 1998

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