Casa Del Mar Converts to Hoter-Condo In $40M Sell-Out

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Casa Del Mar Converts to Hotel-Condo in $40M Sell-out
March 28, 2006
By Hortense Leon, Southeast Correspondent

In one of the first hotel-condo moves in the area, Casa Del Mar (pictured), a Clarion Collection hotel in Vilano Beach, Fla., is headed for conversion. The sell-out price for the five-year-old luxury property is estimated at $40 million and prices for individual units are between $329,000 and $1.8 million.

Vilano Beach is in the midst of a redevelopment jumpstarted by a 2004 change in the county's comprehensive plan for the Vilano Beach Town Center. As the land-use designations for the town center changed from commercial and residential to mixed-use, allowing condos to be built on top of commercial development, the area started becoming an upscale tourist destination, explained Laurie McIntosh, a principal at Casa del Mar broker Condo Hotel Sales and Marketing.

Robert Buckmaster, a commercial real estate broker with Premier Properties Realty Group, noted to CPN today that a condo-hotel project should do well in St. Augustine because income-generating properties allow buyers to defray the cost of a second home.

"But the question is, will you make enough revenue to cover the debt service and other expenses," he added, noting that it weighs heavily on the split between the condominium unit owner and who runs the rental operation.

It's A Deal! Boise Tower Will Rise From The Pit

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It's a deal! Boise Tower will rise from the pit

$80 million, 25-story building will get a new name, to boot

The tallest building in Idaho still will be built at 8th and Main in Boise, with construction beginning possibly later this year on an $80 million, 25-story retail/condominium project that will have 150 hotel rooms.

It just won't be called the Boise Tower.

The developer who took over the project Tuesday said his company will change the name to put some distance between the new building and the negative memories conjured up by repeated failures to get the Boise Tower built. Developer Gary D. Rogers declined to say what names are being considered.
Capital City Development Corp.'s board voted unanimously Tuesday to name Charterhouse Boise Downtown Properties LLC of McCall as the new builder of a redesigned project on the lone remaining undeveloped parcel of land in Boise's downtown core district.

The vote also ended Washington state developer Rick Peterson's decade-long struggle to get the $63 million Boise Tower off the ground.
After Monday's vote, Rogers said the cost of the soon-to-be-renamed project has risen in recent years.

"We all know what's happening with construction costs," said Rogers, the Charterhouse founder. "I wish it was still going to cost $63 million, but it's not."

Rogers said Charterhouse will help finance the project by bringing in an unnamed financial fund as a partner.
News that the long-stalled redevelopment project is moving forward comes as downtown Boise is experiencing a condo-construction boom. At least 286 units in nine other projects are planned or in progress. Last month, developer Scott Kimball said he was building The Aspen, a 17-story, 70-unit condo project on Front Street just two blocks away from the 8th-and-Main site.

The new structure would be Charterhouse's first Idaho project. Rogers' partner, James T. Knighton, predicted it will take at least six months to redesign the project and up to 24 months to build. That would set a completion date no earlier than mid-2008.
The first two floors will be for retail space and support facilities. Four floors will be devoted to parking, and six floors to the hotel. The top 12 floors will be condos. The condominiums - as many as 86 - will sell for between $400,000 and $1.5 million, Rogers said.

Several hotel chains have expressed interest in owning the new hotel space, he said.

The addition of 150 hotel rooms in the unnamed structure will give the city more than 1,300 rooms within a mile of the convention center, said Pat Rice, general manager of the Boise Centre on The Grove.
"It certainly can't hurt. And it will give some of the dated hotel properties downtown a reason to upgrade in order to compete," Rice said.

Rogers said the attractiveness of the site was evident by the fact that a joint venture between Boise's two largest downtown landlords said at the 11th hour Monday that it was still interested in pursuing the project.
"There isn't a developer in America that doesn't want to do this deal," he said. "It just needed somebody that would step up and get it done."

The original Boise Tower has been on hold almost since ground was broken in 2001. Its open pit and partially finished foundation was a constant sore spot for frustrated downtown business owners who complained that it hurt the city's image and drove away customers.

"This will be a blessing for Boise," said Gino Vuolo, owner of Gino's Italian Ristorante across 8th street from the undeveloped Boise Tower. "We've got people coming here looking to buy land and property, and this hole looked bad for us."
The naming of a new developer was the result of a three-way deal negotiated between Charterhouse, CCDC and Peterson.

Under the terms of the agreement, CCDC will receive $950,000 to cover damages, legal fees and costs associated with a 2004 lawsuit it filed to try and oust Peterson as developer. CCDC, Boise's urban renewal agency, sold Peterson the land.
Peterson will receive an undisclosed sum to release a $12 million deed of trust he holds on the property. The deed protected what Peterson said was his investment in the project.

CCDC attorney Rick Boardman told the agency's board that the agreement would allow the three parties to avoid an April 10 court date.

"One of the significant benefits of this transaction would be to avoid years of additional litigation," Boardman said.
CCDC Executive Director Phil Kushlan said the motivation for reaching an out-court-agreement was the January decision by District Judge Kathryn Sticklen that ordered Peterson to turn over title to the property. She ruled that Peterson had violated a 1997 development agreement requiring that he complete the project by the agreed deadline.

Peterson could have tried to force a sale of the Boise Tower property, but would have had to demonstrate how much money he had tied up in the project.
"Industry estimates are that maybe he has $2.5 million in it," CCDC commissioner David Eberle said. "But at least now we're one step closer to getting this built and can get some money out of it instead of spending money on it."

Apartment Boom Buoys Market

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Article Launched: 3/28/2006 12:00 AM

Apartment boom buoys market

While single-family construction stalls, multifamily units up 64%

Gregory J. Wilcox, Staff writer LA Daily News

A 64 percent annual surge in condominium and apartment construction, most of it in Southern California, helped drive a rebound in residential construction across the state in February, a trade group said Monday. The spike also helped the entire residential construction sector grow from year-ago levels, said the California Building Industry Association. This could be the foundation for another solid year for home and apartment building, said Alan Nevin, the Sacramento-based association's chief economist. "I keep talking to builders and they tell me things are decent out there," he said. Last month, housing starts measured by building permits issued totaled 15,571 in February, up almost 8 percent from February 2005. Single-family starts totaled 8,978, down almost 14 percent from February 2005 but down just 1.4 percent from January 2006. Multifamily production, which includes condominiums and apartments, totaled 6,593 units, more than double the production levels in January. "I just think it's spring. Basically, there are people who have property and want to start (work) knowing they have a full year of good weather," Nevin said of the surge in apartment and condo construction. Nevin said that permit totals for January and February are down just 1.4 percent from the like period in 2005. "The key difference is that the number of multifamily units permitted is well ahead of last year, while single-family starts are down," he said. Most of the multifamily gain is in the Los Angeles area and is a result of numerous new rental and condominium projects in downtown Los Angeles. Builders pulled permits for 2,390 condos and apartments in the county last month, up from 818 in the year ago period and 791 in January 2006. So far this year multifamily starts in the county total 3,181 units, up almost 66 percent from the first two months of 2005 and nearly one-third of all the multifamily construction statewide, the association said. Nevin believes that the dip in single-family housing results from builders continuing to clear out their standing inventory. He expects that construction will pick up in the second quarter of the year. For the rest of this year he predicts that activity will fall slightly from last year's strong level, with builders pulling permits for between 185,000 to 205,000 homes, apartment units and condos. Layne Marceau, 2006 CBIA Chairman and a Bay Area homebuilder, said in a statement that lower production levels this year will make it harder to get ahead of still-strong housing demand, generated in large part by the fact that the state's population is growing by nearly 600,000 people a year. Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said that a continued strong home building sector will be a boon for the region's economy. "It looks good but a lot of people think as the market moves into the year things will slow down," Kyser said. But some of those jobs will simply shift to office and industrial projects because those markets have low vacancy rates and there is strong demand for product, Kyser said.

Apartment Boom Buoys Market

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Article Launched: 3/28/2006 12:00 AM

Apartment boom buoys market

While single-family construction stalls, multifamily units up 64%

Gregory J. Wilcox, Staff writer LA Daily News

A 64 percent annual surge in condominium and apartment construction, most of it in Southern California, helped drive a rebound in residential construction across the state in February, a trade group said Monday. The spike also helped the entire residential construction sector grow from year-ago levels, said the California Building Industry Association. This could be the foundation for another solid year for home and apartment building, said Alan Nevin, the Sacramento-based association's chief economist. "I keep talking to builders and they tell me things are decent out there," he said. Last month, housing starts measured by building permits issued totaled 15,571 in February, up almost 8 percent from February 2005. Single-family starts totaled 8,978, down almost 14 percent from February 2005 but down just 1.4 percent from January 2006. Multifamily production, which includes condominiums and apartments, totaled 6,593 units, more than double the production levels in January. "I just think it's spring. Basically, there are people who have property and want to start (work) knowing they have a full year of good weather," Nevin said of the surge in apartment and condo construction. Nevin said that permit totals for January and February are down just 1.4 percent from the like period in 2005. "The key difference is that the number of multifamily units permitted is well ahead of last year, while single-family starts are down," he said. Most of the multifamily gain is in the Los Angeles area and is a result of numerous new rental and condominium projects in downtown Los Angeles. Builders pulled permits for 2,390 condos and apartments in the county last month, up from 818 in the year ago period and 791 in January 2006. So far this year multifamily starts in the county total 3,181 units, up almost 66 percent from the first two months of 2005 and nearly one-third of all the multifamily construction statewide, the association said. Nevin believes that the dip in single-family housing results from builders continuing to clear out their standing inventory. He expects that construction will pick up in the second quarter of the year. For the rest of this year he predicts that activity will fall slightly from last year's strong level, with builders pulling permits for between 185,000 to 205,000 homes, apartment units and condos. Layne Marceau, 2006 CBIA Chairman and a Bay Area homebuilder, said in a statement that lower production levels this year will make it harder to get ahead of still-strong housing demand, generated in large part by the fact that the state's population is growing by nearly 600,000 people a year. Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said that a continued strong home building sector will be a boon for the region's economy. "It looks good but a lot of people think as the market moves into the year things will slow down," Kyser said. But some of those jobs will simply shift to office and industrial projects because those markets have low vacancy rates and there is strong demand for product, Kyser said.

Metro West Development Is Approved In Fairfax

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MetroWest Development Is Approved In Fairfax

By Lisa Rein
Washington Post Staff Writer
Tuesday, March 28, 2006; A01

Fairfax County agreed last night to let a developer replace a neighborhood of 65 single-family homes at the Vienna Metro station with a massive complex of mid- and high-rise towers that could transform the way people live, commute and work in Washington's largest suburb.

The Board of Supervisors' approval of Pulte Homes' MetroWest project, after three hours of public comment, ended a contentious three-year debate over how the county should find homes for its ever-growing population.

Instead of sprawling cul-de-sacs, MetroWest will cluster offices, stores and 2,250 townhouses, condominiums and apartments south of the Vienna Station, making the project the centerpiece of an effort to concentrate development in dense, urban settings.

It's a vision that's sweeping land-use decisions from Largo to Tysons Corner, where planners and politicians -- to the chagrin of many neighbors -- are accommodating the region's demand for housing with densely packed homes on slivers of land near public transit with the goal of coaxing people from their cars.

MetroWest's many critics have argued that the mini-city will bring too many cars to the congested roads off Interstate 66 and too many riders to the crowded Orange Line. But county leaders said the cluster of 13 buildings on 56 acres will concentrate growth in the only space left in Fairfax, the Metro station's back yard.

The buildings closest to the station will feature retail stores on the ground level, with condominiums, apartments and offices above, tapering to townhouses farther from the station. The complex will be linked by narrow streets designed for pedestrians.

"We've seen people who think this [project] represents runaway growth," said Linda Q. Smyth (D-Providence), whose district includes the site. "In fact, it is just the opposite. This is growth that has been constrained. There is not density creep here."

Smyth criticized what she called a "politicization of the land-use process" during the debate on the project.

The vote late last night was 8 to 1, with Supervisor Michael R. Frey (R-Sully) opposing. Supervisor Gerald W. Hyland (D-Mount Vernon) was absent.

Frey said he could not support the project because too many MetroWest residents will compete with his constituents for space on the county's roads.

"We seem to act as if the people who don't use transit will disappear when they get off the site," he said. "They won't. The people I represent today can't find a parking space at the Metro."

The planning commission backed the project, which will be one of the county's densest developments, earlier this month.

But disappointed civic activists who fought the project's scale said their elected leaders betrayed them.

"I think there's been a breach of trust with the community," said Will Elliott, a neighboring homeowner and founder of FairGrowth, which formed largely to fight for fewer homes in MetroWest. "This is a project that has very little acceptance in the community. This isn't transit-oriented development."

At last night's hearing, critics alternated with supporters, including business leaders and environmental groups. Others said new shops will be a boon to the residential neighborhoods around the Vienna Station, the last at that end of the Orange Line.

"The inescapable and inevitable fact is that we will continue to grow," said William Lecos, president of the Fairfax County Chamber of Commerce. "But the county must grow differently than it has." He called MetroWest "the right project in the right place at the right time, built to the right scale."

But other speakers argued that MetroWest will lack sufficient incentives to encourage its residents to use Metro because the Orange Line cannot ferry them to every job, soccer game or errand. They questioned whether Pulte will build and open enough stores and offices as quickly as homes to discourage residents from driving. And they called on the supervisors to demand more open space from the developer for athletic fields and parks.

Pulte will address some of those concerns with an unusual agreement that it can be fined up to $500,000 if it cannot reduce car use by about half the number of new trips MetroWest is expected to generate.

The builder also agreed to construct more of the up to 300,000 square feet of office space and 100,000 square feet of retail space earlier in the construction process. Pulte pledged $750,000 to lay turf on an athletic field and to improve roads leading in and out of the Metro station. The development also will include 400 condominiums for retirees who, in theory, use their cars less.

But opponents said last night that the efforts fall short.

"You're ignoring the public's pleas for caution," Mark Tipton, a neighboring homeowner, told the supervisors. He called Pulte's pledge to accept fines "an excuse to grant the outrageous density in MetroWest. . . . It's like buying the right to create traffic congestion."

The MetroWest proposal, by its sheer size, generated fierce opposition from neighbors in leafy subdivisions. Town of Vienna officials down the street opposed it from the start.

The debate turned partisan last year, when Rep. Thomas M. Davis III (R-Va.), who lives in Vienna with his wife, state Sen. Jeannemarie Devolites Davis (R-Fairfax), threatened to hold up federal Metro funding if the project was not scaled down.

Condos Planned on Henderson St.

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Tue, Mar. 28, 2006
Condos planned on Henderson St. By SANDRA BAKER STAR-TELEGRAM STAFF WRITER FORT WORTH -- CityHomes, the division of Dallas-based Centex Homes that builds urban town houses, including the popular Addison Circle in Addison, has bought a small tract on Henderson Street just west of downtown where it plans a 50-unit condo development called Fronterra. Fronterra will have 50 units in a "stacked flat" configuration. The single-floor condominiums will range in size from 1,000 square feet to 1,300 square feet and in price from $200,000 to $300,000, he said. This is CityHomes' first Fort Worth project, but it won't be the company's last, said Steve Magee, vice president of land for Centex Homes' DFW division. CityHomes is looking at a few other sites in and around downtown, including a possible location in the Trinity Bluff development on the north end of downtown, Magee said. CityHomes closed the deal last week to buy the land in Fort Worth from the Moorman Meador Estate. Meador sold Oldsmobile and Chrysler cars in Fort Worth beginning in 1957 and once operated a car lot at the site. Meador died in 2003. The land is on the west side of Henderson Street bounded by Lexington, 10th and Texas streets. It includes a small parcel on the west side of Lexington Street, but not the corner of 10th and Henderson, where there is a Domino's pizza shop. Magee declined to disclose a sales price. The asking price was $1.5 million. The land is between Firestone and AMLI Upper West Side, two large apartment communities on Henderson Street developed in the 1990s to begin meeting demand for downtown residences. Magee said he expects to draw potential buyers from those complexes. Magee said CityHomes views the site as unique because of its close proximity to jobs in downtown and the medical district, as well as to entertainment in the Cultural District and Sundance Square downtown. "We haven't had a negative comment on the site yet," Magee said. Magee described the three-story building as urban and cool, with an elevation that fits the streetscape. "It's a new product for our CityHomes brand," he said. "We've been methodically moving this brand into urban settings." Fronterra will have garages that give residents internal access to their units, and the third-floor condos will have extra ceiling height, among other features, he said. The site, slightly more than an acre, will be cleared, and after infrastructure is completed, construction on the condos will begin in about eight to 10 months, he said. A vacant former Meador body shop at the corner of 10th and Lexington streets will be demolished. In addition to CityHomes' District A project in Addison Circle, the company has four projects in Dallas and one in Irving.

The New Rules of Real Estate For a Cooling Housing Market

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The New Rules of Real Estate
For a Cooling Housing Market

By Ruth Simon
From The Wall Street Journal 

As the spring selling season moves into high gear, the cooling housing market is upending the conventional wisdom that guided buyers and sellers during the housing boom.

Click Here to Read More

A Former New York Bank Building Brands Itself as a Luxury Good

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A Former New York Bank Building
Brands Itself as a Luxury Good

By Brian M. Carney
From The Wall Street Journal Online

Hotel Rate Keep Rising

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Hotel rates keep rising

BY DOUGLAS HANKS
dhanks@MiamiHerald.com

South Florida hotels boosted rates with gusto last month as the region continued its evolution into a pricier vacation destination.

The average hotel guest paid $169 per night last month in Miami-Dade County, up $14 from February 2005, according to the latest survey by Smith Travel Research. In Broward, the average rate grew 15 percent to $147. The higher rates did not seem to turn off travelers: occupancy remained steady at 81 percent in Miami-Dade and 88 percent in Broward.

''Weekends, we're solid sold out,'' said Henny Schaeffer, general manager of South Beach's Astor Hotel.

But softness continued in the Florida Keys, were occupancy dropped 15 points from a year ago to 74 percent. Hoteliers there blame the slowdown on continued fallout from Hurricane Wilma, which battered hotels there, swamped roads and attracted national media attention.

And the continuing upgrade of Keys hotels and the conversion of many to condo-hotels has added another hurdle to would-be Conch Republic vacations: price. The average Keys room rented for $216 a night in February, up 9 percent from a year ago.

''I think we scared some people away with our rates,'' Chris Majchrowicz, general manager of Key West's Fairfield Inn.

The Miami boat show traditionally boosts rates in February, and Miami Beach hotels expect a lift from this week's Winter Music Conference. The dance-music fest generally packs rooms with music-industry executives and partyers.

In February, Miami-area hotels posted the second-highest average daily rates among the country's Top 25 hotel markets, second only to New York's $190 rate. Fort Lauderdale area or the Florida Keys are not Top 25 markets.

Revenue-per-room, a key industry barometer, grew in two of the three markets: up 10 percent in Miami-Dade to $151, up 15 percent in Broward to $147. But it dropped 8 percent in the Keys to $160.

February's high-season growth for the Miami area was boosted by a slight loss in room inventory as more hotels close down for renovations or convert to condominiums. Smith Travel reported 1.5 percent fewer rooms were available last month than a year ago.

The increase also follows a January that some hoteliers said was slow, possibly due to a milder winter in the Northeast.

Buying a Home Can Make You Rich Slowly

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Buying a home can make you rich slowly

By Kerry Hannon, Special for USA TODAY

To say that David Bach's latest book, The Automatic Millionaire Homeowner, eighth in his FinishRich Series, is a quick read is an understatement.

He means for it to be read in just an hour or two, so you can get cracking.

Yes, the ubiquitous best-selling author is back with his cheery, can-do message. This time he is talking directly to home buyers. Buying a home is the smartest investment you can make during your lifetime, according to Bach.

"According to the National Association of Realtors, the median home price in America hit $220,000 in August 2005 - a more than 55% increase in less than five years," he writes.

And while experts warn that the real estate market might be overheated, he dismisses naysayers. It doesn't matter if prices are up or down right now. Over time, they will likely go up steadily, he says.

U.S. real estate values have been going up steadily for nearly four decades - an average of 6.3% a year since 1968, according to the National Association of Realtors.

But let's be clear: There's nothing "automatic" about becoming a millionaire by purchasing a home. Bach does not fantasize about getting rich overnight in real estate. Neither should you.

This is about investing in real estate over the long haul. In Bach's scenario, you live in the house or rent it out for a period of time, possibly years. You're not buying a house just to flip it and make a quick buck.

"Being an Automatic Millionaire homeowner isn't about timing the market. It's about time in the market," he writes.

"It's when you're NOT trying to get rich quick that you get rich slowly."

Investing in real estate has been Bach's mantra. In Start Late, Finish Rich, he said one-third of your assets should be in real estate, one-third in stocks and one-third in bonds.

In his newest book, his formulaic, action-oriented approach cuts through the intimidating challenge of buying a house for the first-timer.

He covers all the bases, including the tax advantages of homeownership, ways to save for a down payment, figuring out what type of house to buy, finding a real estate agent and a mortgage broker, shopping for a mortgage, understanding and negotiating closing fees and costs.

For those who have gone through the Byzantine process of buying a home, much of Bach's guidance is old hat, but for a newcomer, it's fundamental reading, albeit generic.

You'll find sources for additional information on where to get your credit report, government lending programs, websites for mortgage shopping and sites that allow you to compare what properties are selling for in your local market, such as HomeSmartReports, which charges $25.

Bach is adamant about paying down the principal of your mortgage as quickly as possible. He advises making automatic payments, adding 10% to your regular mortgage check each month applied to principal, or making one extra payment at the end of the year, again applied to principal.

But his true love is the biweekly mortgage, when you pay off your mortgage years early and save tens of thousands of dollars in interest.

Here's what might be a little confusing for readers. In the beginning, Bach explains the Philosophy Behind the Automatic Millionaire Homeowner: You can't get rich renting; you don't need a lot of money for a down payment on a home; you don't need good credit to buy a home; you should buy a home even if you have credit card debt; you can build a fortune by buying just a few homes over the course of a lifetime.

That opening message might get potential homeowners hepped up about buying, even if they think they don't have a chance in the world of ever having enough for a down payment, or being able to qualify for a mortgage. He gleefully explains all the ways in which lenders are willing to lend money to risky borrowers these days and urges readers to take advantage of that opportunity.

But later, he seems to backpedal. He devotes a chapter to discussing the downside of real estate and the danger of downturns in the market for those who buy above their means.

To protect yourself from a real estate meltdown: "Make sure you can afford your mortgage," he writes.

Other tips to "bubble-proof" your real estate plan include locking into a fixed-rate mortgage for 30 or 15 years, tapping into home equity only for home improvements and other housing-related investments and not to pay down credit card bills, pay for a vacation or buy a new car.

"Be realistic about your situation," Bach advises. "Don't pretend you're in better shape than you really are. Don't borrow more than you can handle."

After all, if your financial situation takes a turn for the worse and/or your local real estate market takes a dive, you might not be able to afford your home if you put nothing down or took out an interest-only mortgage.

Slowing Home Market to Ripple Through Job Market

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Slowing home market to ripple through job market

By Barbara Hagenbaugh and Noelle Knox, USA TODAY

With the allure of easy money, thousands of Americans flocked to jobs in the real estate industry during the boom years.
"You saw it - there were dollar signs in their eyes," recalls Nick Vayonis, a former real estate agent in Los Angeles, where median home prices rose 145% in four years.

He left the business a year ago, just in time, he says. Home sales have declined nationwide for the past five months, and sales in Southern California fell to their lowest level in five years in February, DataQuick reported Tuesday.

"I could see the ebb and flow. It wasn't going to be like that forever," says Vayonis, 40, who just opened a coffee shop in Canton, Ga., near Atlanta with his wife Ann-Marie, also a former agent.

As the housing market slows, there will likely be a lot of stories of people who are bailing out of their real estate jobs and other professions related to housing - appraisers, mortgage brokers and home construction workers - and many not by choice. This could send shock waves through the job market and the economy.

That's because housing helped drive the economy out of the last recession. Almost four out of every 10 jobs created in the past four years were in housing-related fields. At the end of last year, a record 9.8% of U.S. workers were employed in the real estate industry, up from 8.2% a decade ago, according to Moody's Economy.com. Only the health care industry added more jobs.

"Job growth is the main engine for consumer spending," says Scott Anderson, senior economist at Wells Fargo in Minneapolis.

"If we don't get the job creation that we need to sustain spending, the economy could be in trouble as we get into '07," he says. "If we don't get any help from these other (non-housing) sectors, longer-term the implications are slower job growth, which means slower consumer spending, which would eventually discourage businesses from spending. You'd have this downward spiral in growth."

Belt-tightening starts

While it's too early to tell how deeply the housing industry will contract, many companies are already seeing some business evaporate.

Last month, Washington Mutual said it would close 10 mortgage processing centers and fire 2,500 employees. In November, mortgage company Ameriquest handed out 1,500 pink slips. The housing industry is braced for more belt-tightening.

"At best, people should prepare for no pay increase and no bonus, something they have been getting a lot of. At worst, they should be thinking they may need to change occupations," says Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pa.

While it's painful for those involved, Zandi calls the slowing in housing "a necessary adjustment." The economy had gotten so dependent on housing that it needed to come down a bit to make the economy more evenly balanced.

"Housing has been flying high, and it's now coming back down to earth," he says.

Existing home sales fell in January for the fifth month in a row, and home builders Toll Bros. and KB Home say more buyers are canceling their orders. In all, home sales are expected to fall 8% from last year's record, according to a group of economists surveyed by USA TODAY in January.

That's going to make it harder, for example, for the nation's 2.6 million real estate agents to make a living. In a "normal" real estate market, the median income for an agent in business for two years or less is $12,852, according to the National Association of Realtors. (However, it picks up rapidly after that, with agents making about $47,187, after three to five years.)

Your income "is very unpredictable," says Janice Hofferber, who left her job as a Wall Street stock analyst in 2003 and tried her hand as an agent in Bay Head, N.J. She quit last September and became an investment adviser for Smith Barney. "You're not really building a business, you're building a reputation," explains Hofferber, 41. "There's no recurring revenue. Every year, you start at zero again. That wasn't really attractive."

It was no easier in the mortgage loan business, says Toney Goucher, who closed his restaurant in Arkansas and became a mortgage broker in 2002. When he joined Leader One Financial in Kansas, home sales were hot, interest rates were low, and anyone who wasn't buying was refinancing. Last summer, the market started drying up.

"It seemed like every month, we had another interest rate hike, and it got harder and harder to find clients," recalls Goucher, 55. "I joined organizations and networking groups to find more business. I called on Realtors every day - cold calling - I just didn't enjoy what I was doing anymore."

Goucher threw in the towel and put on an apron. After traveling to St. Louis for a conference, he opened Fat Toney's barbecue restaurant there in January.

Picking up the slack

So far, the economic impact of the downturn in housing has been soft. Other sectors of the economy are adding jobs. In February, employers added workers in a broad number of industries, such as retail, health care, restaurants and bars and state and local government. If that continues, those jobs will help take up some slack if people in housing-related fields find themselves out of work.

Plus, many economists expect housing to slow, but not to slide dramatically.

"We don't expect housing to completely collapse," says Anthony Chan, chief economist at JPMorgan Private Client Services, adding that the housing market might regain some momentum in 2007.

There are also a few trends that could reduce the blow to the economy:

.Construction. Although residential construction is weakening, commercial building is picking up, thanks to demand for new roads, government office buildings and retail shops. More than 768,000 people had jobs in the non-residential construction industry in February, the most in more than three years.

"The commercial market now seems to be on a pretty good upswing, and if housing loses ground, which I think is very likely, we will see some of those workers move into the non-residential side," says Dave Seiders, chief economist for the National Association of Home Builders.

Many of the skills used in home construction are transferable to commercial building.

"A carpenter can just as easily work in a non-residential building as ... a residential building," says Michael Montgomery, an economist at Global Insight in Lexington, Mass.

.Hurricanes. Hurricanes last year damaged or destroyed 700,000 homes on the Gulf Coast, according to the Federal Emergency Management Agency, based on the number of families receiving federal housing aid.

Although it's unclear how many of those homes will be rebuilt, the process of rebuilding homes, businesses, roads and other infrastructure will likely create jobs for years to come.

.Refinancing. About 25% of outstanding mortgages in the fourth quarter were adjustable-rate mortgages, according to the Mortgage Bankers Association.

For those who got into the mortgage brokerage business, that's good news. Many homeowners will likely want to refinance their mortgages in the months and years ahead to lock in a fixed rate as interest rates are expected to rise, but not by a lot.

"That will kind of prop things (up) for awhile in terms of activity," Montgomery says

And plenty of people who got into the real estate market are determined to ride out any downturn.

One of them is Steve Wydler, 37, who left his job as a lawyer at AOL's headquarters in Virginia in December 2002 to join his brother, Hans, an entrepreneur with a Harvard MBA who is a real estate agent.

The two are getting their brokers' licenses in Virginia and Maryland so they can operate throughout the Washington, D.C., area. They now employ three people and work with four other agents as a team. He makes more money now than he did at AOL.

"Personally, I'm not scared," he says. "We're not in it for the next sale. We're in it for the long haul."

But back in St. Louis, at Fat Toney's, Goucher says he has already gotten a couple of calls from mortgage brokers he knew in Kansas asking about possible franchise opportunities for his barbecue restaurant.

"They say, 'You're lucky you got out.' "

California Rank Low as Homeowners

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Californians rank low as homeowners

Gregory J. Wilcox, Staff writer LA Daily News

Beset by high prices and and a tough regulatory climate, California continued to wallow at the bottom of the nation's homeownership ranks last year, according to a study released Wednesday. Last year 57 percent of the state's residents owned their own home, the second-lowest total in the nation and 13.3 percentage points under the national average, said the analysis by the California Building Industry Association. Only New York had a lower ownership rate, 54.8 percent. Boosting the ownership rate to close to the nation's would boost property tax revenue by more than $4 billion a year, money that could help the state pay for infrastructure improvements, officials said. Ownership rates in most of California have been flat since the beginning of the decade, said Alan Nevin, the association's chief economist. At 47.4 percent, the Los Angeles metro area has the lowest homeownership rate in the state, down 1.5 percentage points since 1994. The highest rate, 67.2 percent, is in the Inland Empire. California has not been on a par with the nation in regard to homeownership since the 1960s, Nevin's analysis showed. "Homeownership rates go hand in hand with the strength and prosperity of a community," Nevin said during a conference call. High prices are one barrier, especially for entry-level buyers. Supply is an issue, too. Builders would have to deliver about 240,000 housing units a year in California to meet demand but have been falling well short of that number for years, the association said. Lately about 200,000 units a year have come on the market, about 150,000 of them single-family homes. The 1960s was the last time builders met supply, Nevin said. "Our state is a leader in many ways but we are failing in one big way," said Robert Rivinius, the association's president and chief executive officer. The association said that during the 1970s, a series of state and local government regulations were adopted that erected difficult and costly barriers for builders to overcome. The association is now pushing a series of bills that would ensure that a sufficient supply of land is zoned to meet the housing needs of communities, support long-term bond financing of infrastructure repairs and overhaul some provisions of the California Environmental Quality Act. The CBIA study showed that in the past 10 years California's homeownership rate increased 1.6 percentage points while the nation's rose 5.2 percentage points. Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said homeownership is important to the community. Owning a home helps people bond with their community and they become concerned with such things as public services and schools. Ownership could also translate into more money for public agencies. "Meeting the demand for affordable housing would be very positive and it would have an economic impact, maybe different from what these people are saying, but a significant economic impact," Kyser said.

Cooling Real Estate Market Presents Challenge for Sellers

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Cooling real estate market presents challenge for sellers What choices are there for homes that aren't selling? Monday, March 20, 2006 By Dian Hymer Inman News

The housing market has changed. There are fewer multiple offers. Negotiation is back in vogue. Listings, in general, are taking longer to sell. And some listings are not selling at all. What are your options if your home is less desirable in the current marketplace than you'd hoped it would be? One option is reduce your price. Another is to hold out for a while, hoping that the market improves to meet your price. In most cases, however, the latter option is unlikely to yield results. The robust housing market of the last several years appears to be taking a break. No one knows how long it will be before we see double-digit price appreciation again. Many experts believe it will be years. A third option, if there's no urgency to sell, is to rent the property for a time and sell at a later date. This might be worth considering. However, as with any scheme, there are pros and cons that should be evaluated carefully before making a decision. On the positive side, a property that is, or will soon be, sitting empty will generate income. This income can help offset mortgage and property tax obligations and homeowner association dues for condo owners. Another plus is that you can buy time until the market improves. On the other side, consider that the market in most places is still good. 2006 isn't expected to be as strong a year for homes sales as was 2005, which was the best year ever. However, David Lereah, chief economist for the National Association of Realtors, predicts that the 2006 home sales volume will be the third best ever. A risk in renting now and selling in 2007 or later is that the home sale market might not be as good then as it is now. If interest rates rise considerably in the interim, it most certainly won't be better. A downturn in the general economy also wouldn't bode well for the housing market, particularly if accompanied by higher interest rates and oil prices. HOME SELLER TIP: An important factor to consider is the tax implications of renting rather than selling. If you have owned and occupied the property as your primary residence for two of the last five years, you are entitled to a capital gain tax exemption. For a single individual, $250,000 of capital gain is tax-free. The exemption is $500,000 for a married couple who files jointly. If you wait over three years to sell because of market conditions, you would lose this valuable exemption unless you move back in to the property, which might not be convenient or possible at that time. You could forgo the exemption and turn the property into a permanent rental for tax purposes. At some later date, you might do a 1031 exchange and trade this investment property for another, thereby deferring tax on the gain. However, deferring gain on an investment property may not be as advantageous as taking the tax-free gain you can realize when you sell a personal residence. Be sure to consult with a knowledgeable tax adviser about the consequences of turning your single-family residence into a temporary or permanent rental. Even if you do sell in time to preserve your capital gain tax exemption, you're likely to face additional expenses preparing your home for sale. Tenants usually don't care for a property as an owner would, so you should anticipate that repairs and renovations will be necessary. THE CLOSING: When you take into account the cost of future renovations and staging, and the uncertainty of a future market, you might be better off lowering your asking price and selling now.

Standard and Poor's to Launch New Real-Estate Product

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Standard and Poor's to Launch New Real-Estate Product

By Karen Talley
From The Wall Street Journal Online

Investors who think the housing bubble is about to burst will soon be able to bet not only on when it will happen, but where.

Standard & Poor's, a unit of McGraw-Hill Cos., is rolling out 10 indexes that will track housing prices in various regions of the U.S., as well as a composite index. The indexes, which plan to launch in April, will serve as the basis for futures and options contracts that will trade on the Chicago Mercantile Exchange.

The contracts will allow investors to go long or short on a specific housing market -- that is, bet on it rising or falling in value.

Dubbed the S&P/Case-Shiller Metro Area Home Price Indices, the 10 cities comprise Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington, D.C.

The composite index will be weighted, with New York, for instance, carrying more influence than Miami because the Big Apple has higher housing values and more homes.

"Obviously all this talk about housing bubbles is going to enhance interest in the product," says David Blitzer, chairman of Standard & Poor's Index Committee. But he adds the indexes are also meant to serve as a reliable source of information about what is many consumers' most valuable asset.

The indexes will use calculation techniques developed by economics professors Karl Case and Robert Shiller, such as repeat-sales calculations and a database comprised of home sales from a variety of sources, including lenders, multiple-listing services and public records. Data will be gathered continuously, and the indexes will be updated and published monthly, Standard & Poor's said.

Futures contracts obligate an investor to buy or sell an underlying asset on a certain expiration date at a fixed price, unless the investor makes an offsetting trade beforehand. Options grant the right, but not the obligation, to buy or sell an underlying asset at a fixed price anytime before expiration

Real Estate Purchases Slide

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Real estate purchases slide Falling interest rates fail to inspire borrowers Wednesday, March 22, 2006 Inman News

Despite a drop in interest rates last week, overall mortgage applications fell 1.6 percent on a seasonally adjusted basis from the week before, the Mortgage Bankers Association reported today. The seasonally adjusted purchase index decreased by 2.3 percent to 393.6 from 403 the previous week, whereas the refinance index decreased by 0.6 percent to 1,574.5 from 1,583.6 one week earlier. The refinance share of mortgage activity increased to 38.1 percent of total applications from 37.7 percent the previous week. The adjustable-rate-mortgage share of activity decreased to 28.3 percent of total applications from 28.8 percent the previous week.  The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.31 percent from 6.42 percent. Points including the origination fee decreased to 1.13 from 1.14 for 80 percent loan-to-value ratio loans.  The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.99 percent from 6.06 percent. Points including the origination fee decreased to 1.09 from 1.19 for 80 percent loan-to-value ratio loans.  The average contract interest rate for one-year ARMs increased to 5.68 percent from 5.64 percent. Points including the origination fee decreased to 0.86 at 0.96 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.

Commentary: Don't Judge Housing Market By the Numbers

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Commentary: Don't Judge
Housing Market By the Numbers

By Dr. Irwin Kellner
From Marketwatch

If the housing market is weakening, why are home prices still rising?

To answer this question, let us return to those thrilling days of yesteryear, when we first learned math. It was then we discovered that figures may not lie, but liars do figure.

Click here to read more

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MARCH 20, 2006
Technology
By Steve Rosenbush

Newspapers: From Print to Pixels

Some Old Media outfits, including soon-to-be-sold Knight Ridder, have embraced the Web. In the Digital Age, their grasp of its potential must be a lot firmer

Over the last decade, the Internet has disrupted one industry after another. Travel, music, retail, and telecommunications are just a few of the sectors that have been forced to adapt to the new reality of the Web. Now, the newspaper business is starting to feel the full force of fundamental technological change.

It's a traumatic transition. The latest ripple was felt Mar. 13, as newspaper giant Knight-Ridder (KRI ), publisher of The Miami Herald, The Philadelphia Inquirer, and 30 other dailies, announced that it would sell itself to McClatchy (MNI). The smaller chain agreed to pay $4.5 billion and assume $2 billion in debt.

MINIMAL GROWTH.  The price reflects the slump in industry revenue and market valuations. McClatchy agreed to pay the equivalent of 9.4 times 2005 earnings, according to Merrill Lynch analyst Lauren Rich Fine. She says that newspapers historically have fetched a multiple of 12 to 13 times earnings in acquisitions.

The Internet has been putting pressure on newspapers for years, but there are signs it's now forcing real changes in the way paper owners do business. Newspapers no longer own a monopoly on disseminating basic information, such as stock prices and classified ads. The New York Times (NYT ) said March 13 it would cut back on stock tables in its print edition because readers now routinely go to the Web for that information.

The loss of market power is felt across the industry. Revenue from newspaper ads is growing in the 3% range, underperforming the GDP, according to media-and-communications investment firm Veronis Suhler Stevenson.

NET VALUE.  Online advertising is on a tear, though. Consumer Internet advertising is expected to grow 25% this year, to $16 billion. And the compound annual growth rate is expected to remain above 20% for the next three years, creating a market worth $28 billion in 2009, according to Veronis Suhler.

Knight-Ridder's plight underscores the challenges facing even newspapers that embrace the Web aggressively. The company used The San Jose Mercury News, located in the heart of Silicon Valley, to get an early start in online journalism. Knight-Ridder Digital, based in San Jose, runs the Web sites for the Knight-Ridder chain. It also built Real Cities, a network of local and regional Web sites. And it invested in a number of online joint ventures in the classified and shopping arena, including CareerBuilder.com, Cars.com, and Apartments.com.

It's a significant operation, with strong growth. Knight-Ridder Digital's ad revenue jumped 54.5%, to $164.5 million, last year from 2004. It had 9.7 million average monthly visitors at the end of 2005, a 9% increase. With overall growth rate in the low single digits, online revenue is just a fraction of the total, which was $3 billion in 2005. It would have been many years before online operations became a major feature in the company's financial profile.

THE WEB, LIKE IT OR NOT.  While Knight-Ridder Digital leaves the online operations of some print and broadcast news rivals in the dust, it lacks scale in the larger world of the Web. It is dwarfed by Internet rivals such as Google (GOOG ), Craigslist, eBay (EBAY ), and others by almost any online measure. Yahoo News (YHOO ) had more than 27 million unique monthly visitors at the end of 2005, according to market researcher comScore Networks.

Google, the Internet's current behemoth, has a market cap of $101.7 billion. That's more than 20 times the value of Knight-Ridder. And when it comes to growth, there's News Corp.'s (NWS ) MySpace, which has 37.3 million unique visitors and adding 60,000 users a day, according to analyst Rich Greenfield, of Pali Research.

Newspaper companies are going to have to shift more resources to the Web, making it a much bigger part of their business models and identity. Most newspapers are just beginning to change. "Online editions have largely been an afterthought," says Richard Fetyko, an Internet services and applications analyst with investment bank Merriman Curhan Ford & Co.

PICK OF THE BUNCH.  Until recently, the newspaper industry has bet its future on the belief that its high-quality news gathering operations and brands would help it beat back rivals on the Web. Unfair as it may seem, Web sites that aggregate other providers' news reports have built up much bigger audiences than traditional news organizations offering unique high-quality reporting and analysis, much of it co-published online and in print editions.

Why visit one paper's site, when My Yahoo lets users sample feeds from an array of providers, from the Associated Press to The New York Times, CNN (TWX), and the BBC. It also incorporates features such as Yahoo! Mail, instant messaging, weather reports, stock prices, sports scores, digital maps, and more.

To catch their larger Web rivals, newspapers and other traditional news media must incorporate many of the features that the portals offer, without sacrificing the quality of their own branded content. "Newspaper companies have the major online asset that they need, which is content," Fetyko says. "Now they need to create online destinations, and it's not as easy as just putting their content on the Web site. They have got to offer people new kinds of features and ways to find content, and perhaps ways to communicate and share ideas with other readers".

LONDON CALLING -- AND LISTENING.  Newspaper sites need to incorporate tools such as Web-page tagging. That allows users to organize libraries of links to favorite news stories by subject matter, and share those lists with friends or the public if they choose. And tagging is faster and easier than traditional ways of creating book marks and links, which require many more steps. They might even have to let their readers create their own home pages, where they could blog about the news and share lists of their favorite stories.

Most newspaper companies are still reticent about letting users access a full rang of basic blogging tools, such as the ability to share comments, says Susan Mernit, a blogger and former newspaper consultant. She says the BBC Web site is a notable exception when it comes to opening up the news to reader comment.

Mernit adds that The Washington Post Co. has been perhaps the most aggressive newspaper company when it comes to using new tools. The Post has hired Adrian Holovaty, the creator of chicagocrime.org, to develop "mashups" combining two or more Web services, in the manner of Chicago Crime. That site combines the city's crime stats with Google maps, allowing users to plot patterns.

BLOOMBERG'S EXAMPLE.  Now, Holovaty's Post Remix center invites independent developers to create new services using Post content. Jeroen Wijering used Post stories and other content to create What's up?, which allows readers to plot stories on a global map.

If they want huge audiences that stay with them all day long, newspaper Web sites must learn a lot more about how to incorporate the sorts of communications tools and basic information that keep users of Yahoo and Google engaged for hours a day. Readers always appreciate well written and thoughtful analysis, too. Bloomberg, one of the few truly successful news startups of the last few decades, has incorporated news stories into a foundation of financial data and analytic tools. In the future, news organizations that can't do both will essentially invite their readers to go elsewhere for important sources of information.

News companies need to get the hang of community building, too. The traditional newspaper was more of a one-way conversation. Few readers bothered to write letters to the editor on a regular basis, and those who did were often viewed as local cranks. That's not true on the Web. Upstarts like Newsvine invite readers to comment on every single story, without editors placing limits on the conversation.

MISSING LINK.  Newspaper companies have started to go beyond the "online newspaper" approach to the Web. Last year, The New York Times bought information portal About.com for $410 million. Dow Jones, owner of The Wall Street Journal, acquired financial news site MarketWatch for $519 million in late 2004. Both deals help the companies expand their online audiences, increase their access to online advertising, and create additional outlets for existing content.

But newspapers remain too focused on print. As broadband proliferates, the Web is increasingly about all forms of media, not just the written word. Dow Jones already has taken steps in this direction by using MarketWatch as a platform for TV and radio distribution to other partners, says investment banker Ken Marlin, managing partner of Marlin & Associates, a tech- and Internet-focused firm.

The hardest step of all may be learning to share credit. Newspaper people are a competitive and feisty lot. But the culture of the Web is built around the idea of people sharing links from a variety of sources. "Newspapers need to accept that other people write about the stories that they write about, and they need to link to those other stories," Marlin says. He says The New York Times online M&A digest, Dealbook, is an example of how even the Times is referring its readers to other sources.

BEHIND THE CURVE.  The pace of innovation must pick up as well. Many newspapers are still struggling to catch up with ideas such as aggregation and personalization, which have been part of Internet culture for years. But the Internet is changing. A new generation of technologies called Web 2.0 is infusing sites with the power and features of sophisticated desktop applications.

Web 2.0 technology allows a Web page to save new bits of data without saving the entire page. That means a user can drag an e-mail from one Web mail folder to another without waiting for a page to reload. The newspaper industry has barely acknowledged the existence of such changes, let alone incorporated them into its own business plans.

The newspaper business faces life-altering changes, but it can survive them. People still want and need news. But before that can happen, newspapers will have to think of online operations as more than just ancillary services.

Santorini Condo Costs Adjusted Upward

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Santorini condo costs adjusted upward

By Alexandra Clough
Palm Beach Post Staff Writer

Sunday, March 19, 2006

When is a deal not a deal? When it's a condo.

Yes, another condo project has been repriced. This time it's Santorini, part of the massive mixed-use Renaissance Commons in Boynton Beach, near the Boynton Beach Mall.

The new, higher prices require buyers to pay more for the same condos they reserved last year.

The price hike is being made to offset higher labor and materials costs.

In an Oct. 14 letter, developer James Comparato first warned buyers to expect a 15 percent price hike.

He said the hike was unavoidable in the wake of higher construction costs following Hurricane Katrina.

And Comparato's letter was sent 10 days before Hurricane Wilma.

One buyer saw the price of her two-bedroom condo rise to nearly $400,000 from $309,900.

The buyer, who asked not to be named, decided against buying at the higher price during a special "priority" sales period in January. She received a refund of her $15,000 deposit.

Price increases are understandable, the buyer said. But $90,000?

Unfortunately, that's not so unusual these days.

Many South Florida developers are scrambling to salvage their projects in the wake of rising construction costs that have outstripped revenues received from condo sales.

Some developers are getting creative by increasing density or redesigning their projects. Santorini, for instance, was redrawn from one big building into two buildings.

That splits the weight the buildings' supports must carry. The move saved money but delayed the project.

Santorini is the second Boynton Beach project to be repriced. Late last year, the Promenade condo in downtown Boynton Beach returned reservation deposits and then offered buyers the chance to buy their unit again - for thousands of dollars more.

Some buyers were shocked by the increase. (Comparato said he disclosed potential price increases in documents for Santorini reservation agreements.)

The good news is that Santorini is going forward. Half of its 348 units are sold, and construction is set to start by July, with a finish date set for 2007.

Santorini's sister communities, 242-unit San Rafael and 328-unit Villa Lago, already are sold and under construction.

Now, Comparato is looking ahead to the next part of the project: Building on the former Winchester land next door. Three projects, each with 210 condo units, are planned for the property.

But Comparato says he's going to go slowly with that one and will delay sales until after next year.

By that time, "hopefully some of this insanity will slow down in the market" and will limit price increases for materials, Comparato said.

One thing's for sure: Santorini is the first, and last, condo that Comparato wants to reprice. "Doing it twice is no fun for anybody," he said.

The ex-Marine in Floyd Johnson talked tough last week about Riviera Beach's redevelopment plan. The plan is being threatened by efforts in Tallahassee to limit government power to seize private property.

Johnson is Riviera Beach's CRA director. Last week, he spoke on the topic of private property rights at a luncheon of the PGA Corridor Association, a north Palm Beach County biz group.

The U.S. Supreme Court recently ruled local governments could use eminent domain powers to seize private property - and then transfer the land to other private owners for redevelopment.

Eminent domain powers typically have been used for traditional public purposes, such as roads or schools.

Alarmed by the public outcry over the ruling, legislators in Tallahassee are drafting bills to rein in the eminent domain power held by community redevelopment agencies.

That's bad timing for Riviera Beach.

The city is on the verge of commencing a redevelopment more than 20 years in the making. Part of the redevelopment involves displacing more than 1,000 residents to make way for a private developer's massive commercial and residential project.

"We followed the rules, and now that we're five yards from the goal line, they want to change the rules," Johnson said. But he vowed not to be deterred: "Riviera Beach is going to cross the goal line and be a model for the judicious use of eminent domain."

Johnson's rousing presentation soon had cold water thrown on it. Lawyer John Little III was so agitated he jumped up and spoke at the podium, rather than lecture from his seat.

Little, an attorney at Brigham Moore, specializes in representing property owners fighting eminent domain.

While complimenting Johnson's personal approach to government seizure, Little told the audience not to be swayed.

"Government has power. People have rights," Little said. "You're looking at competing interests."

Ten Signs Of A Real Estate Apocalypse

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Home Improvement
Ten Signs Of A Real Estate Apocalypse
Sara Clemence, 03.17.06, 12:30 AM ET

New York -

If California slid into the sea, would it take the U.S. housing market with it?

After a few years of real estate boom, which spread dramatically higher prices to many (though not all) parts of the U.S., the market has recently seemed to change course. On Thursday, the U.S. Census Bureau reported that housing starts were down 7.9% from January to February and had declined 4.8% from February 2005, indicating less demand for new construction. That came three days after the National Association of Realtors predicted that this year would bring "a more level playing field for buyers and sellers on the heels of a five-year sellers market."

This won't be a crash, but a soft landing for the real estate market, it appears. But that made us wonder: What would it take to make things really go off the rails?

War, pestilence and natural disaster have always been bad news for human civilization; that would seem to suggest that they are bad for home sales as well. While conflagrations like World War II and economic declines like the Depression are rare, they do happen--as do lesser versions of conflict and crisis.

We talked to a number of experts about hypothetical events that could send the U.S. real estate market into a skid, from highly unlikely scenarios such as a military confrontation with China, to the types of predicaments we have faced in recent years, like natural disasters and terrorist attacks.

Turns out, there are lots of ways to hit the housing market.

"Prices will certainly plummet if we have significant loss of house buying power," says James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

Higher interest rates that make mortgages more expensive, an employment decline that results in loss of income, or an increase in the costs of other goods (think oil) can all divert money from real estate.

"Anything that throws the economy into recession will throw the real estate market into recession," says Susan M. Wachter, professor of real estate, finance and city and regional planning at the Wharton School of the University of Pennsylvania.

A truly dramatic plunge in the real estate market could be precipitated by a crisis, whether economic, natural or, as in the case of war, man-made, that lasted.

"It's the long-term impact stuff we have to worry about," says Delores Conway, director of the Casden Real Estate Economics Forecast at the University of Southern California Lusk Center for Real Estate. An earthquake may be devastating, but if it only lasts a day the market can recover. A prolonged economic crisis can have a far more profound effect.

What about wars abroad, or concerns like bird flu, nuclear ambitions in Iran or conflict in Israel? In some cases, such as with Hurricane Katrina, what can be devastating to one region will have no impact--if not even a positive effect--on other areas.

"SARS in Asia is very negative for the Asian market and real estate in the markets where it occurs," she points out. "But it has no negative impact on the U.S. A beneficial impact is that it might, if anything, draw capital to the U.S. and lower interest rates." An increase in the threat of war could have the same result, as investors seek a safe harbor for their money.

On the other hand, a meaningful outbreak of avian flu in the U.S. would probably have a strongly adverse impact on the housing market, especially if it struck a major population center. Robert J. Shiller, an economist at Yale University and author of the book Irrational Exuberance, which predicted the 2001 stock market bust and was recently updated to include real estate bubbles, notes that housing prices in the U.S. were on the decline in 1916. But a serious drop took place at the same time as the 1918 flu epidemic. "World War I and the flu were kind of coincided," he says. "It looks like that had a huge hit on housing prices--they were down 40% in real terms from 1912 to 1920."

But Shiller believes that the biggest potential market shifter is far less tangible than a tsunami, interest rate spike or other newsworthy event. "I think that most likely what would cause a big drop in real estate would be a change in public thinking," he says.

In October 1987, when the Dow Jones Industrial Index fell more than 22% in one day, nothing in particular seemed to be happening, he says. But investors had been adopting a new strategy called portfolio insurance, which meant there were large and sudden sell-offs when the market dipped. "It got everyone really primed to sell," he says.

The real estate boom in Florida in the 1920s collapsed partly because of the 1926 hurricane, which killed scores of people--but also because newspapers around the country started describing people who were buying land they had never seen, or that was under water.

Despite potential nightmare scenarios, though, for the most part, the economists and experts we spoke with seemed convinced of the overall resiliency of the U.S. housing market. As Wharton's Wachter points out: "Natural disasters are bad news, but not necessarily for real estate."

 

Let The Good Times Average Out Nicely

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LET THE GOOD TIMES AVERAGE OUT NICELY

Friday, March 17, 2006

On average, things are looking good.

Just ask Larry Kudlow, the pundit who thinks the economy is so good that he wondered if the Vice President of the United States agreed with him. So Mr. Kudlow fired this question at the V.P.:

"Isn't the economy kind of an underrated story?"

That's the sort of hard-hitting question that a famous supply-side television personality is paid to ask. Never one to be caught off guard, the V.P. admitted that, in his view, the economy did just fine last year. ". I think any objective observer will say that 2005 was a very good year for the economy, in spite of things like Katrina," the V.P. said.

Last year was a very good year indeed.

Take home prices, the engine behind our New Era economy. In fact, take California home prices, the turbo charger on the newfangled engine. In fact, take the number of homes in California that sold for more than $1 million last year, and this is what you get: You get 48,666 million dollar homes. That's 47% more million dollar homes sold in 2005 than in 2004, according to the Los Angeles Times.

For the record, 48,666 million dollar transactions comes to 1 in 13 California home sales achieving status as a million dollar deal. That's a nice ratio. And that ratio compares to "just" 1 in 20 in 2004. And that compares to 1 in 2, which is the ratio of Californians who want to quit their jobs to become real estate agents once they do the math on the commission involved in a million dollar transaction.

A multitude of million dollar home sales is an amazing thing. The only thing more amazing than the number of million dollar homes in California is what you get for that kind of money. According to DataQuick's numbers quoted in the article, a million dollars in California will get you four bedrooms and 2,480 square feet, assuming you spring for the median million dollar home. Now 2,480 square feet is a fine sized home, but it wasn't that long ago that for a million bucks you could get another couple of thousand feet and a butler.

Not only that, in California a million dollars won't always get you a yard and a garage for your surf board. The LA Times notes that there were 2,902 condo sales in the $1 million or more category last year, up a smart 73% from 2004.

Sure, California real estate is hot, but homes are hot nationwide. Apparently there are one million homes around the country now worth at least $1 million. That compares to only 350,000 as recently as 2000.

But even if a million dollars won't get you the mansion it used to, it's a darn dynamic economy that can conjure up so many million dollar homeowners so quickly.

And it is just that kind of financial dynamism that has created the payday lending industry. Unlike mortgage lenders, who loan out hundreds of thousands of dollars, payday lending involves small advances to the cash-pinched until payday. Because it usually costs the borrower about $15 to borrow $100 for two weeks, the interest rate on these things can top 300%.

Despite a long string of positive GDP numbers, and the record number of million dollar homes, the demand for payday loans is booming. Ace Cash Express, one the industry's biggest players, saw its loan fees and interest jump 19% in fiscal '05. In December the company opened its 1,500th store, up from 1,230 as of June '04.

For the record, cash squeezed Americans can find 25,000 payday lending locations across the country (up 3,000 since 2002). The number of stores continues to sprout like ear hair on a middle-aged man.

But payday loans aren't made to just anyone. You can't just be desperate--you also need a checkbook. That's because the borrower gets the loan in exchange for a post-dated check that includes the fee. Because payday borrowers must have checking accounts, they fall into a higher income bracket than might be expected. Ace Cash Express says that 47% of its borrowers make between $24,000 and $50,000. Another 13% make more than $50,000.

Whatever the income bracket, lots of people are taking out payday loans. According to a University of Massachusetts at Amherst study last year, the payday loan industry dispersed $40 billion in short-term loans in 2004. Although much of it may have been paid back during the year, that's an impress slug of desperation borrowing, particularly compared to the $29 billion increase in revolving credit that year.

With all those desperate borrowers, is the economy really as underrated a story as Kudlow believes? The President thinks so.

In last Saturday's radio address, the President agreed with Kudlow and the V.P., declaring that "Thanks to tax relief, spending restraint and the hard work of America's entrepreneurs and workers, our economy today is strong."

While the use of such words as "spending restraint" in the wake of a budget cycle that gave us the "Alaskan Bridge To Nowhere" is interesting at best, it appears that three very important people all agree the economy is doing just fine.

On average, who wouldn't?

High-end Condo Projects Approved

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Posted on Thu, Mar. 23, 2006
High-end condo projects approved City signs off, but use of tax breaks still generating debate BY JASON HOPPIN Pioneer Press Anyone looking for high-end condos in St. Paul may soon have a lot more options to consider. The city's Housing and Redevelopment Authority approved two projects Wednesday that would bring 420 luxury apartments and $185 million in construction - some of it taxpayer funded - to downtown and the West Side. The $64 million WestSide Flats project would feature 116 condos in four buildings of five to six stories near the foot of the Wabasha Street Bridge. The condos, intended to spearhead a new riverside neighborhood, would sell for as much as $1 million. The other project, dubbed The Penfield, would create more than 300 upscale residences in a $121 million project at the site of the city's former police headquarters. The facade of the city's former Public Safety Building, at 10th and Minnesota streets, would be preserved. The project would include a 40-story tower and low-rise town houses. "They're exemplary projects that show how well a developer and a community can work together," said City Council Member Dave Thune, whose ward includes both projects. Although the HRA approved the projects, the debate has not ended. Each development would use tax breaks in the form of tax-increment financing, which use anticipated increases in property values to help fund development. Together the projects are expected to receive nearly $12 million in property tax breaks, spread out over many years, to help pay environmental cleanup, new roads and other infrastructure. Yet neither would provide affordable housing, commonly a requirement for tax-increment financing in St. Paul. WestSide Flats homes, for example, would start at $276,000. Even though a small portion of the WestSide Flats tax district funds would be set aside in an affordable housing trust fund, Community Stabilization Project director Caty Royce, an advocate of affordable housing, said there should be more of a public benefit. "These guys wouldn't be at the table unless we had leverage. We have leverage. Use it for the public good," Royce said. "Don't sell the store for nothing, for crumbs." Although she voted in favor of both projects, Council President Kathy Lantry said she was concerned that the city hasn't figured out how to pay for services for hundreds of new residents while their property taxes are being diverted away from city coffers to help fund development. "If doesn't pay for cops. It doesn't pay for firefighters, parks or libraries," Lantry said. WestSide Flats developer George Sherman said the project wouldn't be feasible without city help, explaining that too much land cleanup is needed. Crews are expected to start erecting the first building in July, with an opening of September 2007, Sherman said. The final building is expected to be finished by the end of 2010. Construction on The Penfield, built by developers Alatus Partners and Rutzick & Associates, could begin as early as November. Project manager Peter Brown said he was excited to move forward. "Our sense is that there's a real demand for this kind of project in St. Paul," he said. Both projects are highly anticipated by neighborhood groups. The WestSide Flats has been a decade in the making, and the final, scaled-down version (the original vision called for 12-story buildings) has earned the endorsement of the West Side Citizens Organization. The fate of its would-be neighbor, the colossal Bridges of Saint Paul project, is less certain. "Development is healthy for the West Side if it's done within the right parameters," said Jeff Bauer, the West Side neighborhood group's vice president. "They (developer Lander Group) did the community work they needed to do to make their plan a reality." St. Paul Riverfront Corp. executive director Patrick Seeb was also excited about the project. "We're very pleased with how it's going to fit into the river valley," Seeb said. "It's going to be the first olive out of the jar in getting the West Side Flats going."

Condo Owners Confused over lack of IRS Guidelines on Hurricane Losses

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Condo owners confused over lack of IRS guidelines on hurricane losses

By Harriet Johnson Brackey
South Florida Sun-Sentinel

March 25, 2006

A tax break that was supposed to help hurricane victims has left South Florida's condominium owners wondering what to do.

Their question is: Can I deduct my association's assessment for repairs because of Hurricane Wilma's damage?

Some accountants are saying yes. But the IRS offers no specific guidance on condo assessments in its rules, regulations or publications about casualty losses.

That leaves South Florida's many condo owners with a dicey choice -- take the deduction and hope it's accepted or miss out on a possibly significant tax break.

The way many condo owners see it, "they own every square inch of the swimming pool or that tree," said Myrna Yudenfreund, who is a certified public accountant and whose husband David is a CPA as well. Condo owners who ask the Boca Raton couple to prepare their taxes want to deduct losses just like single-family homeowners. "But there isn't one word [in the tax law for hurricane victims] about condo assessments," she said.

"One accountant told me to take it as a line item on my personal tax return," said Jules Levine, a condo owner from Miami-Dade. "Then we'll see what happens. The IRS could deny the deduction." (If that happened, a taxpayer would owe additional tax plus interest and possibly a penalty.)

Normally, casualty losses would not spark a widespread debate. That's because they depend upon individual circumstances. And, a taxpayer usually has to have a substantial loss before taking a deduction.

By law, a casualty loss has to equal at least 10 percent of the taxpayer's adjusted gross income plus $100 to qualify for a deduction. The taxpayer then subtracts any insurance reimbursement and the result may be an itemized deduction.

But during the current tax season, even small amounts might be deductible. That's because Congress passed a law in late 2005 that said victims of Hurricanes Katrina, Wilma and Rita don't have to meet that 10 percent limit for hurricane damages. They might be able to deduct every penny of their loss after insurance is subtracted. And damages in South Florida due to Hurricane Wilma were widespread. Local accountants are saying plenty of homeowners are claiming losses.

The sticky question for condo owners is whether their special assessments, usually for repairs to the common areas of their buildings and grounds, fit the definition of a casualty loss. The same question faces taxpayers who paid damage assessments for single-family homeowner associations.

The tax law appears to make no mention of it.

There also is no regulation, publication or ruling that discusses condo assessments, says IRS South Florida spokesman Michael Dobzinski.

Dobzinski initially responded in a recent South Florida Sun-Sentinel online tax discussion to questions on this issue by saying that the definition of a casualty loss is for "personal-use" property. Nor are condo assessments a tax, which might qualify for an itemized deduction.

But anyone who wants to ask for a private letter ruling to clarify the issue could write to the IRS and cite "his particular facts and circumstances and the condo documents that pertain to the individual situation," Dobzinski said.

However, that process would likely not produce an answer before federal individual income taxes are due April 17. And the IRS charges big fees to issue letter rulings.

The fee schedule starts at $625 for an individual taxpayer whose income is less than $250,000 and goes up from there.

Attorney Gary Poliakoff, managing shareholder of Becker & Poliakoff, a Fort Lauderdale law firm that represents many local condominium associations, says historically, assessments for maintenance and special assessments have not been tax deductible. He doesn't think hurricane loss assessments are either.

"I think it would take a specific act of Congress to permit this because they don't stop to contemplate items such as this in a multifamily and common ownership setting," Poliakoff said.

On the other side of the debate are Monte Kane, head of Kane & Co., a Miami and Boca Raton CPA firm that often advises condominium associations, and Scott Berger, a tax principal at the South Florida accounting firm Kaufman Rossin & Co. Kane says owners should deduct the assessment as a casualty loss for damage that wasn't covered by insurance.

Berger says you could use the assessment as a way to estimate a decline in the fair market value of your unit. He'd also suggest doing the same with homeowner association damage assessments.

Greg Rosica, a tax partner at Ernst & Young in its Tampa office, says the decline in value is where condo owners should focus their deduction.

As an example, he said if your $500,000 unit pre-Wilma today would sell for $300,000, then you had a $200,000 decline. "It's not necessarily tied to the assessment amount," he said.

Other accountants have suggested that the condo owner get an appraisal to prove that their unit's value has declined due to the hurricane.

And still others are holding back, waiting for official guidance.

"There are accountants who are very aggressive. There are others who are conservative like we are who want to see in the law where it says, `I can deduct that.' I want to see it in writing," David Yudenfreund said. "But we can't get an answer."