Published: December 2, 1998

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"U.S. Economy: Construction Spending Rose 0.3 Percent"
Investor's Business Daily (12/02/98) P. A2

The Commerce Department reports that spending on construction was up 0.3 percent in October from September, and its up 6.3 percent from a year ago. For the month of October, homebuilding remained steady with an 0.8 percent increase from the previous month. In September, homebuilding rose 1.4 percent from August. And for the year ended October 1998, residential construction is up 14.2 percent. Market observers were said to be expecting a larger gain in construction spending for October.

"HUD Program to Spur Urban Business Draws Questions From Regional Official"
Wall Street Journal (12/02/98) P. B8; Hamilton, Josh P.; Gasparino, Charles

HUD's Seattle-based inspector general for audits in the Northwest/Alaska District, Robert Woodard, has questioned HUD's massive low-interest loans that are intended to attract business and jobs to areas of urban blight. Woodard filed a draft report with HUD in Washington recommending they rethink this $1.26 billion a fiscal year loan program, known as Section 108, part of HUD's $5 billion Community Development Block Grant Program. Opponents to retail projects in Spokane and Seattle have recently argued that the program only supports already profitable companies at the taxpayers' expense. Nordstrom recently received $24 million in Seattle under Section 108, because they followed the rules: eliminate blight, create jobs for low- and moderate-income people, and meet urgent community needs. Woodard claims though that under the current implementation, communities can do almost anything--as long as they call it "economic development." In Spokane, activists are protesting the building of a high-end mall called River Park Square, which is being developed by the powerful Cowles family. River Park Square exemplifies the potential weaknesses in the program, and Woodard questions whether or not taxpayers should have a role in giving out Section 108 funds, and whether well-off developers should continue to benefit from HUD loan guarantees. Another question is whether Section 108 allows cities to risk money on development when it is intended for low-income housing rehabilitation and senior-citizen centers. If the private developer defaults, the city's block grants are pledged for the loan payments.

"Pact Will Provide Minority Housing"
New York Times (12/02/98) P. A25; Berger, Joseph

In a landmark decision for the community of Yonkers, the State of New York has agreed to pay $16.4 million for the construction of new homes and the purchase of existing homes for minorities in areas throughout the city. The agreement by the state follows a ruling last February that maintained the state and the city of Yonkers had intentionally built housing in the 1960s and 1970s that confined minorities to the southwestern area of the city. This resulted not only in housing segregation, but also in segregated schools. Under the new program, in which the state and the city will split the cost, black and Hispanics families will be able to purchase homes in white neighborhoods. The state will pay $7.5 million to help minorities purchase existing homes, and it will also pay $6.4 million for the construction of 118 new houses in three areas of the city. The final part of the program is a commitment by the State of New York Mortgage Agency to make $100 million in low-interest mortgage funds available for minority families. An agreement for the program had previously been reached two years ago between Yonkers and the NAACP, but it was clear the city would need the state's help in implementing the program.

"Protecting His Home and Family Is the Sensible Thing to Do"
Business Wire (12/01/98) ; Burgard, Matt

The new Designation of Homestead law in Texas allows homeowners in the state to protect their homes from creditors in situations of sudden financial problems. This allows homeowners to keep their homes if they fall into debt or get sick and as a result, are unable to keep up the payments on their homes. While the Designation of Homestead law differs from the Homestead Tax Exemption, homeowners who file for the exemption may be able to automatically receive Designation of Homestead. However, eligible homeowners may still wait as long as a year to receive this protection. To solve this problem, homeowners should take advantage of instant Homestead protection, which takes effect immediately after filing for Homestead tax exemption. Many homeowners aren't aware of this option, but the Homestead Recording Service has started an education drive to inform property owners of their Homestead rights.

"Fannie Mae Projects Slower Economy, Strong House Market..."
Dow Jones News (12/01/98) ; Corbett Dooren, Jennifer

The U.S. economy is expected to slow down somewhat in 1999, but the housing market should remain strong, falling only slightly from record figures this year, stated David Berson, vice president and chief economist for Fannie Mae. The overall economy is expected to drop off next year, and it could even enter into a recession, said Berson. But the housing market should experience only a slight decline, as mortgage rates remain at or below 7 percent. New and existing home sales as well as mortgage originations are expected to reach record levels this year, and next year's figures will be lower, but not by much.

"Consider Consequences Before Taking Out Second Mortgage"
Cleveland Plain Dealer (11/29/98) P. 8F; Reeves, Pamela

Homeowners have undoubtedly seen many television ads advertising mortgages worth up to 125 percent of the value of the home. These lenders will offer a number of reasons for applying for the loans, but before applying for such a loan, homeowners should consider the consequences. The monthly payments will probably be higher, and the homeowner won't get a tax deduction for any amount they borrow over the equity of the home. When it comes to selling the home, the homeowner will likely have difficulty coming up with funds to pay off the mortgage. In addition, 10 percent is about the minimum interest rate for the loan. The homeowner may end up with additional cash, but the debt level might be too high to overcome.

"Townhouses Stand Out in Flexibility and Price"
Philadelphia Inquirer (11/29/98) P. R1; Dyan, Sheila

Located in Camden County, Penn., the Village of Little Mill has attracted praise from many new buyers, impressed with its available options, quality, and affordability of townhouses. Both the Stoneybrook and Cascade homes include layouts with the option of a one-car garage and partial basement or a full, walkout basement. Most models offer two-bedrooms and 1.5 baths, but an additional bedroom may be included along with a second full bath for an additional cost. A breakfast bar and second vanity in the master bedroom are features exclusively offered in the Stoneybrook models. All townhouses are constructed with gables, covered entranceways, and between 1,200 square feet to 1,360 square feet of space. Standard models in the community are priced between $79,900 and $99,900, depending upon the selected options, and an additional homeowners' association fee covers the maintenance of all townhouse lawns and common areas.

"How to Buy a Bargain Home During the Best Time of the Year"
Chicago Tribune (11/28/98) P. 4-2C; Bruss, Robert

Most real estate agents say that the worst time to sell a home is during the winter. Conversely, this means that winter, specifically late November through early January, is the best time to buy a home. There are only a few people selling their homes at this time of year, but those who are selling are likely anxious to sell the home quickly and will therefore be more flexible in accepting an offer. There are six steps a home buyer must take at this time in order to get the best deal on a home. The first thing they should do is get preapproved for a mortgage. This will help the buyer know the price they can afford. Buyers should also inspect at least 20 homes before making an offer. When working with agents, buyers need to understand that, unless they have made a special arrangement, the real estate agent represents the seller. Before making an offer, the buyer should ask for a comparative market analysis of the prices of other homes in the neighborhood, and they should also insist that all known defects in the home are written down. When making an offer, the buyer should make the contract contingent on financing and a professional inspection.

"President Announces $696 Million in Housing Aid"
U.S. Newswire (11/28/98)

The Department of Housing and Urban Development (HUD) has set aside $696 million to subsidize apartments for poor senior citizens and people with disabilities. HUD has set aside $82.8 million for New York, while California will receive $78.9 million, Pennsylvania will receive $34.6 million, Ohio will receive $30.2 million, and Texas will receive $28.5 million. Among other states, New Jersey will receive $28.2 million, Illinois and Missouri will each receive $24.2 million, Massachusetts will receive $22.1 million, and Washington will receive $21.5 million. The aid will create and subsidize 6,583 apartment units for the elderly and 1,650 rental units for disabled people.

"Strategies for Buying More, Giving Up Less"
Washington Times (11/27/98) P. F1; Berg, Stacie Zoe

When faced with the need to compromise, most buyers opt for a longer commute and less access to mass transit in order to purchase a more spacious home in the suburbs, according to a recent survey by the National Association of Home Builders. Buyers planning to purchase a home in the city on a limited budget often must compromise on access to parking, available outside space, and other attractive amenities such as fireplaces and extra bedrooms. Suburban buyers are more likely to sacrifice style and extra space in order to obtain a home in a select community. In contrast, buyers in urban and suburban markets rarely compromise on factors such as a quality school district, a community's crime rate or the acceptance of pets. Home buyers who prefer to sacrifice less are advised to minimize their present debt by combining student loans and paying off car loans. Debt can significantly reduce a consumer's buying power and eligibility for larger mortgage loans. Home buyers are also encouraged to save for a down payment and prepare a wish list of home preferences, should a compromise be necessary.

"Bulletin: Century 21 Reports Luxury Home Sales Up"
Washington Times--Home Guide (11/27/98) P. F9

The Washington, D.C., metropolitan area has become a strong luxury home market for Century 21. The real estate company has seen Century 21 Stevens, Realtors, double its sales of luxury homes in the Century 21 Fine Homes and Estates Program, which lists homes starting at $500,000.

"Tax Angles: Home Sales, Corrected"
Kiplinger's Personal Finance Magazine (11/98) Vol. 52, No. 11; P. 70

Congress has clarified the wording of the new capital gains tax law for those who have not lived in a home for at least two of the five years leading up to the sale. For singles who sell their home after living in it for one year, a profit of up to $125,000 will not be taxed. And a gain of up to $250,000 will be tax-free for couples. This change is retroactive to May 1997, which is when the new law went into effect. The way the capital gains tax law was worded, it gave the impression that only a portion of the profit would be tax-free if home sellers failed the two-year test. For instance, one would think that half of the gain would be tax-free if the home seller lived in the home for one year instead of two years.

"Noisy Neighbors Kill Home Sale"
Today's Buyer Rep (11/98) Vol. 7, No. 11; P. 3

Home sellers who fail to disclose information about a noise problem in the neighborhood could be in trouble if potential buyers back out of the sale. In the case of Shapiro v. Sutherland, the Florida Court of Appeals ruled that the homebuyers could back out of a contract if the seller did not disclose information about noise. In this case, the sellers failed to mention noise problems even though they had reportedly contacted the police several times about loud music. Other nuisances that must be disclosed include barking dogs, a vacant lot, and drug dealing in the neighborhood.

"Pros & Contractors: The Inside Word on Cabinets"
Today's Homeowner (11/98) Vol. 94, No. 830; P. 16; Lipford, Danny

Home cabinets used to be designed and built on site, but now they are mostly made in factories where the quality can be controlled. Homeowners choosing cabinets have three different options. Stock cabinets cost the least but have less options, semicustom cabinets are made by local manufacturers and are often sold in showrooms, and custom cabinets allow homeowners to decide every detail. Usually homeowners spend their time working with the contractors rather than the cabinet makers, so they should choose a contractor that has a relationship with the showroom. Working with a sales representative, homeowners will choose wood type, sizes, and optional add-on features. The contractor will help the homeowner establish a budget allowance, and if the cost of the cabinets exceeds the budget, the homeowner must either make changes or be willing to pay the difference. The price of custom cabinets is usually about 20 percent higher than the price of semicustom cabinets. Once these decision are reached, the homeowner and contractor will go to the showroom, where the cabinet plans will be designed. All important decisions should be finalized at this point to avoid driving up the price. After visiting the home, the manufacturer will make the cabinets, and they will be installed by the contractor. The cabinets should be inspected carefully before they are installed.

"NAR Third Quarter Index Shows Affordability Gains"
Realtor Magazine (12/98) Vol. 31, No. 12; P. 16

The typical home became more affordable for Americans during the third quarter. According to the composite Housing Affordability Index of the National Association of Realtors, half of the households in the country had at least 132.5 percent of the income needed to purchase the existing home that sold for the median resale price for the third quarter. The median resale price was $132,700. The index of 132.5 is up 1.2 percent from the second quarter. Fred Flick, vice president of economic research for the National Association of Realtors, said that "a healthy drop in mortgage interest rates, coupled with growth in family income" contributed to the increase in the affordability of homes. Compared to a year ago, the index is up 6.2 percent.