W-S explains its potential contribution for Civic Plaza project

Durham developer Niemann Capital has released details of its planned Civic Plaza project in downtown Winston-Salem. They include a 15-story building with 120 apartments, 20,000 square feet of retail space and 50,000 square feet of office space, all built at a cost of about $49 million.
A 1-acre park would also be part of the project. The Civic Plaza development, previously also called the “Superblock,” would be on the south side of Fourth Street and stretch for about a block and a half.
Niemann Capital’s plans come after about a year of studying the site and judging market demand and potential costs, and would also include a 280-space underground parking garage. It would involve the razing of several downtown buildings, including the Pepper building.
Civic Plaza would also be adjacent to the One Park Vista luxury condominium project currently under construction on Fourth Street.
Niemann Capital is asking the city of Winston-Salem and Forsyth County to chip in on the project.
Derwick Paige, assistant city manager in Winston-Salem, said the scope of the public contribution was still being negotiated, but he expected it to be “less than 15 percent” of the total project cost.
Paige said the city has been working with Niemann over the past year as the development firm worked through potential plans for Civic Plaza. At one point, he said, the development firm wanted the city to chip in 30 percent of a $70 million total cost, Paige said.
“At that point, we told them we didn’t think we’d be able to participate at that level,” Paige said. “We pointed them in a direction we felt we could participate at, and they listened.”
Paige said a financing proposal could go before elected officials in January or February.
The public money likely would not take the form of tax-increment financing as approved by Amendment One a few years ago, Paige said, although increased tax revenue to the city and county would help offset the public contribution to the project. The parking component will be privately owned, he said, so revenue from that would not go to the city.
Jason Thiel, president of the Downtown Winston-Salem Partnership, said Niemann Capital would like to get the project started by next spring, and that the next step was for the development firm to negotiate for the property with its current owners, which include the Downtown Winston-Salem Partnership Foundation, Piedmont Federal and Forsyth County.
He said the choice of apartments rather than for-sale condos as the residential component should work well for downtown Winston-Salem. The Nissen building makes up the bulk of rental units in downtown, and those units are nearly fully occupied, Thiel said.
“That will help us have a more well-rounded offering of downtown residential units,” he said.
Granite Development of Mount Airy will lead the design and construction of Civic Plaza, while Atlantic Coast Commercial, which is based in Winston-Salem, will handle leasing and management services.

Add comment December 4th, 2006

Despite slowing demand, Jurney Homes pursues growth strategy

Wade Jurney Homes Inc. plans to build more than 600 homes in seven Greensboro projects during the next few years, including three subdivisions it will take over from other builders.
This is a major shift in strategy for the company, which closed on only 84 homes in 2005.
Despite slowing new-home sales around the Triad for much of the past year, and flat sales during the third quarter, company President Wade Jurney Jr. said the builder was on track to close on 130 homes in 2006 and a projected 200 homes in 2007.
“It might look like we’re being a little optimistic in a market that’s expected to be flat. But we’ve got all these new communities coming online,” Jurney said.
As part of its growth plan, Wade Jurney Homes is finishing subdivisions originally started by John Kavanagh Co., K. Hovnanian Homes of N.C. and Ryland Homes. All three of the projects are priced in the low- to mid-$100,000s.
Calls to John Kavanagh Co. and K. Hovnanian were not returned, but Jurney said he didn’t think the companies were pleased with the pace at which homes in the developments were selling. As a smaller builder, Jurney said he doesn’t have the same expectation for monthly home sales as many of his larger competitors.
Green Crest, a 60-home development, is the project Wade Jurney Homes is assuming from John Kavanagh Co. Kavanagh sold about 15 homes in the development before selling the remainder of the lots. Jurney took over the lots in June and has sold 10 homes in the subdivision since then. The company is also assuming the remaining 54 lots of Riverdale Ridge, a 101-home subdivision begun by K. Hovnanian.
And Wade Jurney Homes will build the final 81 homes in Manchester, a 170-home subdivision started by Ryland Homes.
Joe Nottoli, Triad division manager for Ryland Homes, said his company was offered the final 81 lots in Manchester by Builders Land, which is developing the project. Because lot prices were higher in that phase of the project, Nottoli said Ryland Homes decided to pass on the option.
In addition to taking over those projects, Jurney expects to begin four of his own within the next six months.
The largest project of those is Chapel Ridge, a 250-home subdivision off Lees Chapel Road. Homes in the development will start around $110,000. Jurney expects to sell between 60 and 80 homes in the subdivision each year for the next four years.
Even with slowing new-home sales, Jurney’s expectations for the Chapel Ridge project are not unreasonable, especially given the price range, said Bernard Helm, president of Market Opportunity Research Enterprises, a Rocky Mount firm that tracks the local housing market.
Wade Jurney Homes is also planning two smaller subdivisions, Holden Crossing and Edison Village, and its first town home project, near the intersection of Pisgah Church Road and Elm Street, also in Greensboro.

Add comment December 2nd, 2006

Mortgage rates

Mortgage rates fall again
Twist my ARM: Interest hikes yield delayed jump in refis
The Business Journal Serving the Greater Triad Area 

The steady increase in interest rates during the past two years is starting to have a real impact on those whose adjustable-rate mortgages had a two- or three-year lock before rates could rise. 

The number of mortgage applications nationwide fell 1.5 percent during the last month, according to the Mortgage Bankers Association. But, the number of refinancings remained steady during the past month, and even saw a 2.3 percent increase during the last week of July. 

While Triad figures are not available, several local mortgage brokers say they have seen similar activity here and attribute most of it to adjustable-rate mortgages. 

Kate Crawford, branch manager of the Burlington office of Corporate Investors Mortgage Group and the secretary of the National Association of Mortgage Brokers, estimates her office has seen a 15 percent increase in refinances because of adjustable-rate mortgages within the last few months. 

While most other brokers say their increases haven’t been that dramatic, they are seeing interested clients. 

“We’ve got repeat customers who came in two or three years ago and got an adjustable-rate mortgage and now want to refinance and lock in” their rates, said Melinda Pressly, vice president for Omega Mortgage in Greensboro. 

Adjustable-rate mortgages gained popularity a few years ago, especially among first-time home buyers. The mortgages begin with a low introductory rate, often for two or three years. The rate is then increased or decreased at designated time intervals, usually annually, based upon the interest rates on a designated index. 

Over the past two years, the Federal Reserve has raised interest rates 17 times. During that same time, the prime interest rate, to which most adjustable-rate mortgages are tied, has risen from 4.25 percent on Aug. 1, 2003, to 8.25 percent to Aug. 1, 2006. 

Brokers say that many people who took out adjustable-rate mortgages three years ago are now seeing their introductory rate — often in the 3 percent to 4 percent range — expire and are seeing the interest rates now rise as much as 5 percentage points. 

These borrowers could see higher rate increases if the Federal Reserve continues to raise interest rates. 

However, the average 30-year mortgage interest rate has risen only from 6.06 percent in July 2004 to 6.69 percent last week, according to the Mortgage Bankers Association. By refinancing now, borrowers with adjustable-rate mortgages are often able to get a lower interest rate — and monthly payment — and can prevent their rate from rising further. 

A surge to come 

Several brokers believe that this recent surge in adjustable-rate mortgage refinancings is only the beginning of the trend. 

Like other mortgage brokers, David Macaione, senior vice president with Alpha Mortgage Co. in Winston-Salem, is getting calls from people with adjustable-rate mortgages looking to refinance to a fixed rate. While he agrees that refinancing is likely the best long-term solution, he is advising his clients to wait a few more months. 

With 17 straight interest rate hikes from the Federal Reserve and inflation slowing, Macaione says it’s likely interest rates will begin to fall again within the next few months. If borrowers with adjustable-rate mortgages can hold on a few more months, it’s likely they can refinance at a lower interest rate than is available now, he said. 

And, for many borrowers with adjustable-rate mortgages, it is still several months away before their first rate adjustment, said Lester Jones, owner of First Forsyth Mortgage in Winston-Salem. 

“Most borrowers won’t react until they see that adjustment,” he said. 

Washington Business Journal - 12:05 PM EDT Thursday 

Mortgage rates are still considerably higher than a year ago but have fall for the third straight week. 

Freddie Mac’s weekly report puts the average 30-year fixed-rate mortgage at 6.55 percent, down from 6.63 percent last week. A year ago, 30-year mortgages averaged 5.89 percent. 

One-year adjustable-rate mortgages were unchanged this week, at 5.69 percent, more than 1 percentage point higher than a year ago. 

“The weaker than expected jobs report combined with the Fed’s decision to pass on raising rates at its last meeting led directly to lower rates this week,” says Freddie Mac (NYSE: FRE) chief economist Frank Nothaft. “Interest rates for fixed-rate mortgages have dropped to levels last seen in the spring of this year.” 

Rates are still high enough to continue putting the brakes on home-buying activity. 

The most recent evidence came this week from luxury-home builder Toll Bros. (NYSE: TOL), which cut its forecast for sales this year after saying the value of contracts last quarter fell 45 percent from year-ago levels. 

Add comment August 14th, 2006

Michelle Cater Rash

Charlotte home builder eyes Triad for expansion
The Business Journal of the Greater Triad Area - August 4, 2006
by Michelle Cater Rash
The Business Journal Serving the Greater Triad Area
One of the Charlotte area’s largest home builders is trying to enter the Triad. 

Regent Homes Inc. is negotiating on three pieces of property in the Triad; two of the sites are in Winston-Salem and the third is in Graham. 

Ken Anson, president of Regent Homes, said the company hopes to close on the land within a few weeks and be ready to begin home construction by next summer. He did not want to discuss details of the projects until the land sales were complete. 

A few months before home construction begins, Anson said the company likely will open a Triad office. Preliminary plans call for the office to have three employees, and he said Regent plans to hire locally. 

Regent, which debuted in 2003, specializes in homes for first-time and move-up buyers. The company’s Charlotte homes range in size from 1,300 square feet to 3,000 square feet with prices ranging from $110,000 to $200,000. Anson said they plan on using similar floor plans and pricing in the Triad. 

This will be the company’s first move out of Charlotte. Anson said they felt the Triad was a logical first step for expansion because the buyer demographics are similar to those in Charlotte and because of the market’s proximity. 

Anson also has experience in the Triad market; he oversaw MDC Homes’ (now McCar Homes) movement into the market in 2003 while serving as that company’s Charlotte division manager. 

Regent’s Triad expansion comes at a time when growth in the new-home market is slowing. During the first six months of the year, there was a 6.6 percent increase in the number of residential building permits issued in Alamance, Guilford and Forsyth counties, according to data from MarketGraphics, a Tennessee firm that tracks the Triad housing market. However, the first six months of 2005 saw a 16.9 percent increase in the number of building permits, and 2004 saw a 14.6 percent increase. 

The slowing market actually has some benefits for Regent, said Bernard Helm, president of Market Opportunity Research Enterprises, a Rocky Mount firm that tracks the local housing market. 

The slower market will likely mean land prices will decrease, making it a more affordable time for builders to enter the market or expand their presence. And with other builders cutting back on construction, it creates an opening for Regent to get some homes on the ground and gain market share, Helm said. 

“It gives them an opportunity while others are holding back,” he said. 

Regent Homes was the 15th-busiest home builder in Mecklenburg County in 2005, taking out 209 building permits, according to research by the Charlotte Business Journal, a sister publication..

Add comment August 14th, 2006

Home Insurance

Ways to Avoid Getting Dropped
By Your Home Insurance Provider

By Marshall Loeb
From Marketwatch

Just as with auto insurance, homeowners have to worry that making a claim will get them dropped by their insurer. And that can mean higher premiums with another insurance company or, if you’re deemed troublesome, with your state’s high-risk pool. It might even mean no coverage at all. You’ll also lose any loyalty or claims-free discounts you earned under your present coverage.
There’s no firm rule for when or why an insurer will drop coverage but even one or two small claims can do the trick. That’s especially true if the claim is water-related, which could mean mold in the future, writes Kimberly Lankford, a Kiplinger’s magazine columnist, in her recent book “The Insurance Maze.”
“What an underwriter gets concerned about is claim frequency,” says Chris Heidrick, vice president for personal insurance with Firemen’s Fund. “It starts to raise questions.”
Consider raising your deductible as much as you can afford. You’ll save money on premiums (as much as 25% if you raise a $250 deductible to $1,000). You can use your savings to increase your coverage and you’ll be less tempted to make minor claims.
Even inquiring about whether to make a claim can hurt your reputation, says Lankford. Some companies will count such inquiries against you in a central database that other insurers can access.
You can check the industry’s database, known as the Comprehensive Loss Underwriting Exchange, once a year for free, rather like getting a credit report for your home. The database will list your current and former addresses and any claims you’ve made. Go to www.choicetrust.com and enter your personal information to receive your free report instantly. But remember, you can get only one a year. Visit the site.
If you are dropped, there are some steps you can take.
The longer you’ve been with an insurer, the more they’ll want to retain your business. Start by asking your agent or the insurance company what you can do to get back in their good graces, by replacing a leaky roof or aging boiler or by raising the deductible substantially. The money you save by not switching insurers could be well worth it.
If they refuse, shop around or try an independent insurance agent who can tell you your options. A last resort may be your state’s high-risk insurance pool, usually called a FAIR plan, but you could face high premiums and low damage caps.

Add comment August 14th, 2006

Swimming Pools

Do They Increase
Or Decrease a Home’s Value?
By Amy Hoak
From Marketwatch
Maybe the sweltering days of summer have you wishing for a pool as a backyard oasis.
Like Clark Griswold in “National Lampoon’s Christmas Vacation,” who fantasizes about buying an in-ground pool with his holiday bonus, you can see it already: The crystal clear water, the poolside deck, the floating raft just waiting for you to climb on and sunbathe.
You’re not alone.
Some real estate professionals caution that a swimming pool can be a deterrent to some buyers when the home goes back on the market; having an in-ground pool in the backyard has the potential to dissuade an interested buyer with no desire for the feature or the maintenance it demands.
Still, Americans apparently can’t stay away from buying personal water wonderlands, according to statistics compiled by the Association of Pool & Spa Professionals. It isn’t just the pool itself, either; many times the backyard investment continues poolside with the installation of homey decks and outdoor kitchens.
In 2005, 176,500 in-ground pools were sold and installed, bringing the total number of those pools in the country up to 4.7 million, according to the association’s statistics. About 4.3 million pools were sparkling throughout the country in 2002.
Also in 2005, 219,000 above-ground pools were sold, bringing the total number of them in the country to 3.6 million, the association found. About 3.4 million above ground pools were scattered throughout the country in 2002.
And in some areas of the country, a house’s pool is more of a necessity than a flaw.
Smart swimming
In places where pools are common, “a house without a pool would be harder to sell,” said Brian Van Bower, president of Aquatic Consultants Inc., a pool-design firm based in Florida.
Seven in 10 Arizona homes have pools, said Roger Soares II, president of Hydroscapes LLC, a pool-design and construction company based in Arizona. “In a lot of areas it’s not a need, but here it’s a necessity because it’s so hot.”
Often times, homeowners would rather buy a home with a pool than have to install it themselves, Soares said. If you do buy a home that already has a pool, make sure to get it looked at by a qualified pool inspector, said Suzanne Barrows, spokeswoman for the Association of Pool & Spa Professionals.
“We recommend that you have the pool inspected by a pool person, but in some cases home inspectors have taken education courses so they know what to do,” Barrows said. “If the home inspector is a reputable inspector and he or she doesn’t know how to inspect a pool, they’ll say so, and the good ones will have names of people in the area who could do it.”
But if you’re already settled and are contemplating buying a pool for your home, it’s best to think before you dive.
Above-ground pools traditionally don’t add any value to a home come resale time, according to research from the National Association of Realtors. They also aren’t much of a deterrent to buyers because they can be easily removed, said Wallace Perry, Coldwell Banker United, Realtors’ president and chief operating officer for the Carolinas region.
“It’s not enough of an economic factor to influence it (the sale) either way,” he said. A seller might even take the pool down and bring it to their new home.
In-ground pools have a different story.
They do tend to add value to a home — about 7.7%, according to National Association of Realtors statistics. Regionally, in-ground pools will add about 5% to the value of a home in the Northeast part of the country, about 6% in the Midwest and 7.5% in the Southeast and West. In the Southwest, a swimming pool will add nearly 11% to the home’s value.
But because they’re permanent, buyers who aren’t interested in the upkeep or the energy costs of in-ground pools may turn away from a home with one, Perry said. Heated pools especially can run up a power bill, he said.
The feature seems to interfere more often in the sale of lower-priced homes — homes with selling prices of less than $200,000, Perry said. On the higher end of the market, a pool doesn’t seem to be a factor and will probably even enhance a home’s appeal, he said.
In general, in-ground pools will usually return 50% of their original cost when the home is sold, Perry said. Depending on location, the age of the pool and maintenance given throughout its lifetime, the return could be even less, said Carolyn Helmlinger, president of Coldwell Banker Mid-America Group, Realtors in Des Moines.
Your own enjoyment, therefore, should be the primary reason for installing a pool.
“If you’re going to put in a pool, you need to be comfortable that you’re going to be there more than five years,” Perry said.
Deep pockets
Another reason to tread carefully before buying a swimming pool: It’s a big investment of money and time.
Again, above-ground pools aren’t as permanent or as pricey, with many of them available for a couple thousand dollars or less.
Although there are still companies advertising in-ground pools around $16,000, the average price is more like $30,000 to $35,000, which would get its owner a water feature and possibly a spa, Soares said. Landscaping around the pool could cost anywhere from $3,000 to more than $100,000.
Then there’s the maintenance once it’s installed.
Running the filter — assuming you have an efficient pump — will cost an average of $20 a month if it’s run all day, every day, Soares said. Chemicals could cost between $5 and $20 a month in the winter and anywhere from $20 to $100 a month during the summer. Pay someone to take care of the pool instead and the going rate is around $65 a month, he said.
Easier chemical distribution through automated dispensing has helped save time and eliminate some of the hassles of pool care, said Ed Kahn, editor of pool magazines including “Pool & Spa Living.” Also popular: salt chlorination systems, which covert regular salt to chlorine and prevent pool owners from ever having to buy a chemical.
Emerging pool styles are tailoring to customers’ needs as well. New, smaller pools, for example, are configured in a way to provide some of the benefits of hot tubs, Kahn said.
“It looks like a small pool, it has the propulsion system that creates a current in the water so you can literally swim in place as if you’re swimming in a large pool,” he said. On resting days, owners can use the pool for hydrotherapy.
Aquatic fitness centers produced by Vista, Calif.-based Dimension One Spas allow for vertical and horizontal exercises with less impact, said Bob Hallam, the company’s president. They also take up less space.
The pools are so popular, the company is doubling production this year to meet demand, he said. Models run from $25,000 to $35,000, he said.
Why the surge of popularity for the product? “We’re all aging, and a lot of people my age — which is a baby boomer — still want to keep in good shape,” Hallam said. The warm water lessens impact on the joints.
Pool envy?
If the memory of a fun Fourth of July pool party at the neighbor’s house still has you desiring your own aqua retreat, Barrows offers these questions to consider before heading to the show room or calling a builder:

  • What do you want to use the pool for? Is it for exercise or to splash around in? Look around online for styles and prices. The Association of Pool & Spa Professionals’ consumer site, www.poolpeopleusa.com, is a place to start.
  • Who is going to use the pool? Adults? Children? The association also maintains a site for kids, www.splashzoneusa.com, that emphasizes pool safety.
  • Do you want the design of the pool to mesh with the rest of the yard? Landscaping can be as simple as a small deck and as elaborate as an outdoor kitchen with fire pits and pizza ovens.
  • What kind of pool do you want? In-ground? Above-ground? A swim spa? Consider what kinds of pools are in your neighborhood or talk with a local real estate professional if you have any concerns about what installing a pool will do to your resale value.

Above all, talk to pool owners before jumping into a purchase, Soares said. Ask them how they liked their builder. Do additional homework by checking a builder’s references and finding out how long they’ve been in business.
“It’s amazing how many people will not do that,” he said.

Add comment August 14th, 2006

Mortgages That Offer Relief

From Soaring Utility Bills
By Stephanie I. Cohen
From Marketwatch
As home energy bills soar, government agencies and private lenders are offering homeowners thousands of dollars in financing to seal off drafty windows and purchase energy-saving appliances.
These long-term, low-interest mortgages and loans are aimed at efficiency-minded homeowners who want to cut their utility bills. Borrowers can often arrange 30-year loan periods and interest rates below 10%.
Home buyers that find the perfect house with ancient heating and cooling systems and 20-year old appliances can add an additional $35,000 to their mortgage to improve the energy efficiency of the property using a Federal Housing Authority program.
While the program is aimed at allowing home buyers to tackle a broad array of home improvement projects, such as adding a new roof and replacing the plumbing, the funds can be used to upgrade a heating or air conditioning system, add insulation, weatherize doors and windows and purchase high-efficiency appliances, according to the agency.
The Federal Housing Authority’s Streamline K loan program was unveiled in April, 2005 and offers a 30-year mortgage with a fixed or adjustable interest rate set at current market rates. It is a new take on an older FHA loan program that homeowners often found too cumbersome to complete. Check the HUD Web site for more information.
The average loan for the updated program is between $18,000 and $20,000. A couple hundred loans have been administered since the program launched last year but FHA sees interest among lenders ramping up.
The program offers a way to “bring today’s energy technology to yesterday’s houses,” said Doris Ikle, president of CMC Energy Services, in Bethesda, Md. CMC performs audits and energy upgrades for residential customers. Ikle said she has received calls from consumers interested in the new FHA program.
“When people are buying a house particularly if it is an older house…they want at this point to reduce their bills,” Ikle said. Yet buyers often have no money left for improvements once they close on a mortgage, she added.
Slowdown should aid idea
The process for receiving funds still adds several steps to a home closing, which can make sellers resistant. Once a bid on a home is accepted it can take 60 days to complete the FHA process and reach closing, so finding a patient seller is helpful.
But a softening housing market is likely to boost the program’s prospects. In the absence of bidding wars and with houses sitting on the market longer, sellers — especially those whose houses may not be up to modern standards — may be more willing to entertain less traditional offers.
Homeowners must have a professional home energy auditor do an inspection to pinpoint improvements, find a FHA-approved lender (there are about 2,500 in the U.S., although not all participate in this program) and receive contractor estimates.
FHA also offers smaller “energy efficient” mortgages that let homeowners purchase or refinance a home and tuck the cost of efficiency upgrades into a mortgage. Borrowers can add between $4,000 and $8,000 to a 30- or 15-year mortgage to pay for energy improvements. See more about the program.
The upside is that a borrower does not have to make a down payment on the additional financing. In order to have improvements approved a homeowner must show that the value of the energy saved over the life of the upgrade is more than the total cost of the upgrade.
Energy-efficient mortgages aren’t exactly new. In 1992 Congress authorized the creation of an energy-efficient mortgage program. FHA insured 26,600 in fiscal year 2003.
But Ikle thinks interest in home energy efficiency is growing. “I think people are really taking the environmental crisis to heart and energy prices have helped too,” she said.
State programs
As states plug energy efficiency to help ease residents’ energy-bill woes, private unsecured loans offer homeowners focused on the thermostat another financing option with a little less bureaucracy.
Pennsylvania homeowners short on cash can buy energy-efficient heating and cooling systems, ceiling fans, or doors using a low-interest loan from AFC First Financial Corp. in Allentown.
In January, Pennsylvania officials gave $20 million to the Keystone Home Energy Loan Program. AFC, which spearheads the program and has been marketing energy loans since 1999, offers a 10-year loan with a 7.99% interest rate to help finance the purchase of energy-efficient appliances and systems. The interest rate drops to 5.99% for qualified borrowers with low income levels. Read more about the program.
These loans are for consumers who need between $1,000 and $10,000 for home energy upgrades. Peter Krajsa, president of AFC, calls this range of investment the “finance twilight zone” for many homeowners — an amount often too big to put on a credit card and too small for an equity line of credit. AFC began offering energy loans back in 1999.
These fixed, low-interest loans provide more palatable financing than standard credit-card interest rates, Krajsa said. The company has a 70% approval rating for the loans and has issued $2.5 million in loans through the Keystone program over the past seven months.
Maryland officials grappling with a reported 72% increase for homes served by Baltimore Gas & Electric have contacted AFC to inquire about starting a similar program, Krajsa said.
For homeowners outside of Pennsylvania, AFC offers energy improvement loans in nearly a dozen other states through a Fannie Mae program, although the interest rates on these loans are typically between 10% and 13%. AFC completes about 500 energy loans a month, Krajsa said.

2 comments August 14th, 2006

Will Your Condo Retain Its Value?

Five Tips for Edgy Buyers
By Lauren Baier Kim

The U.S. condominium market has been good to real-estate investors. In 2004, the median sales price of an existing condominium surpassed that of a single-family home for the first time, according to the National Association of Realtors. This trend has held steady so far through 2005: The median sale price of a condo was $213,600 in September, compared with a median price of $212,200 for a single-family home, NAR reports.
The market for condos remains strong — condo-sales activity in September was 10.2% higher than the same month last year. But some question whether it will last. “There’s a lot of supply, and the demand has been significantly supported by speculative buyers rather than occupants,” says Chip Brown, senior vice president and co-director of production of CWCapital, a national multifamily and commercial real-estate lender based in Needham, Mass. Speaking of his firm, he says, “We’ve gone from being selective to extraordinarily selective in thinking about financing condo projects.”

Leader in Real Estate Technology Solutions

The following five tips may help buyers concerned about resale values when buying in a market where prices have risen sharply.

1. Location is still the key factor.
The old mantra prevails: Location, location, location. It’s likely to be the biggest factor in whether you smile or frown when you check your condo’s resale value.
Rob Gross, a senior vice president at Prudential Douglas Elliman in New York, says the location of his condo — in Manhattan’s Flatiron District — is a big reason why he was able to sell his three-bedroom unit with an office loft this year for more than double what he paid for it in 2000. Among the plusses of the neighborhood, located on lower Fifth Avenue, he says, is that it’s between Union Square and Madison Square parks and home to such trendy stores as Armani and Coach.
Buying in an already popular neighborhood will help assure a property maintains its value, although sellers might not always reap such big gains. Buyers seeking large payoffs are likely to be better off purchasing in a new or emerging hot market, though that strategy is a bit riskier.
In New York, Mr. Gross says, areas that will see a “fairly rapid transformation” include the Lower East Side, the Financial District, Hell’s Kitchen and Brooklyn’s Williamsburg neighborhood. “The waterfront in Williamsburg along the East River is going to be completely rezoned to be targeted as a major residential neighborhood,” he says. “It is the same thing with the West Side in Manhattan in the 20s, 30s and 40’s.”
Buying on a waterfront is usually a good bet for retaining value, says Robin Rommell, a Realtor with RE/MAX All Star in Madeira Beach, Fla., on Florida’s Gulf coast.
“Equity is going to escalate more quickly for a condominium on the water than for a condo that doesn’t have waterfront,” says Ms. Rommell.
Even on the water, not all locations are created equal. “End units are generally more preferred, because they tend to have more windows,” says Gisela DuVigneau, a Realtor associate with Coldwell Banker Riviera Realty in the beach town of Point Pleasant, N.J.
2. Avoid the ‘white vanilla box.’
Distinguishing features help an owner when it comes time to sell. Your condo should have at least one unique quality that will pique interest, agents say. This something special could be a bit of private outdoor space, a view, a garden or celebrity resident, says Mr. Gross. “Whatever gives it a bit of cachet,” he says.
Luxury is part of the formula. “Everyone likes the newest and greatest,” says Toni Haber, also a senior vice president with Prudential Douglas Elliman in New York. Among the high-end accoutrements on condo buyers’ wish lists are granite countertops and Sub-Zero, Bosch and Viking kitchen appliances. Stand-alone refrigerator drawers are also popular, says Florence Shapiro, a broker sales associate with Prudential Americana Group, Realtors in Las Vegas. These can be installed in the kitchen to store veggies, or in the master-bedroom for refreshments, she says.
Other in-demand features include hardwood and bamboo floors, large windows and high ceilings. “High ceilings make the rooms feel bigger than they are, and that’s what people are gravitating toward,” Ms. Haber says. You may feel like you’re pampering yourself when selecting a condo with such luxuries, but these little extras can stir up attention for your unit when you want to resell, she says.
That extra amenity can also make the difference to a sale, says Ms. Haber. Popular amenities include a 24-hour doorman, a live-in superintendent, bike-storage rooms and an off-lobby refrigerator for grocery deliveries. Some new buildings also are installing wine rooms in their basements, Ms. Haber says. “People like having additional storage rooms,” she says. Some buildings offer pools and recreational centers; in Florida, it’s common for condo complexes to have boat docks and marinas. In some cities, the big draw is parking space, Ms. Haber says.
3. Look for name recognition.
Long before Donald Trump said “You’re fired,” on NBC’s “The Apprentice,” he was well-known in real-estate circles. Because of his brand, his residential projects, such as Trump International Hotel & Tower — hotel-condominium buildings in Chicago, New York and Las Vegas, tend to generate more buyer interest, Mr. Gross says.
“There are investors, especially foreign investors, who will follow certain developers,” says Mr. Gross. “You look at someone like Trump, who, like him or not, in the foreign market, has a great reputation with investors.” Foreign investors like to buy condos in Trump buildings, which helps build value for other condo owners in those buildings, he says.
Recently, more high-end projects are being built by well-known designers or architects. For example, French interior and product designer Philippe Starck is teaming up with developer Jorge Perez to create Icon Brickell, a condominium complex in Miami. In Manhattan, Downtown by Philippe Starck, across the street from the New York Stock Exchange, is a residential development with interiors designed by Mr. Starck. Other well-known names who have gotten into the condo act include Richard Meier, the architect for the Getty Center in Los Angeles, home of the J. Paul Getty Museum, and Michael Graves, the post-modern architect who designed, among other buildings, the Swan and Dolphin hotels at Walt Disney World in Orlando, Fla. Both architects have condo projects in the works in Miami and Manhattan.
If your builder is not a household name — and most aren’t — try to make sure that the builder is at least reputable. “You don’t want to buy into a building with a developer who has a reputation of doing a poor job and having problems,” says Mr. Gross.
4. Weigh old versus new.
Whether an older complex or a new one will be a better investment depends on the building’s condition and maintenance, the market and your handyman skills. If you are buying in an older condo complex, make sure that the building and its grounds have been kept in good condition. Just as a beautiful home in a so-so neighborhood will sell for less than a similar home in a better locale, if your building is not kept up properly, your unit will be less attractive to buyers.
New condos — which should be in good condition and are more likely to have the latest amenities and features — will have wide appeal. When buying a condo as a short-term investment and banking on quick price appreciation, the better bet is to buy a new condo, preferably in a complex’s initial offering, Ms. Shapiro says. “A new condo, if you can get it, will always increase, with the price of construction going up,” she explains.
If you are willing to invest some elbow grease, purchasing a condo that needs TLC might be the way to go, says Nick Patterson, a real-estate agent with Coldwell Banker Residential Brokerage in Chicago, who works with many first-time condo buyers. In a market such as Chicago, where the yearly condo price appreciation is about 4%, he says, “to make money off new construction is harder, because you are banking on appreciation.” He suggests buying a condo that needs work and then putting in about $10,000 to $20,000 into the kitchen and baths to push the unit’s value up by about $60,000.
5. Buy in a building with a good condo association.
A good condo association is crucial to maintaining your condo’s value. A condo owner owns the space between the unit’s walls; the building itself and any common space are held by the condo homeowners’ association. As an owner in a complex, you will belong to its association and pay a homeowner’s fee. The association will cover expenses to insure and maintain the property, so it is important that it is professionally managed and has the funds to make needed repairs. The type of fixes can vary widely, from fresh interior paint in the common areas to a new roof, so a condo association’s reserve funds are important.
“If you don’t have good management on-site or adequate [financial reserves], the probability is, if something small happens, they will overlook it. It might be landscaping or a small crack, but if you overlook those things, greater problems will tend to occur,” says Maurice Veissi, a regional vice president for the National Association of Realtors and the president of Veissi & Associates in Miami. “That will detract from your condo’s value.”
Take a good look at the association’s budget, because this will help determine the services you will receive, and the assessments you will be charged. Assessments are generally mandatory and collected monthly, quarterly or annually. If you don’t pay these fees, a lien may be placed against your property. Find out what the assessments cover and don’t cover (for example, maintenance of common areas and trash collection), and see how these assessments compare with similar condo associations in your area. The budget should have a reserve fund for major expenditures. If not, condo owners may be hit with special assessments for major repairs.
Look for any “simmering issues” between residents and the elected board, says Frank Rathbun, vice president of communications for the Community Associations Institute in Alexandra,Va. Speaking to current residents also may yield telling insights. “Talk to the people and ask them if the association is well-managed and if they like living there,” he suggests.

Add comment August 14th, 2006

Home Builders Expect Slowdown For the U.S. Real-Estate Market

By John Spence
From The Wall Street Journal Online 
The housing market will continue to cool down after the multiyear boom, with slower price increases and fewer housing starts as interest rates move up, according to a report by the National Association of Home Builders. 

“We are coming off a very strong couple of years for the housing industry, and markets are now starting to cool to more sustainable levels,” wrote David Seiders, chief economist of the Washington trade association representing home-construction companies. “Each market has different factors that affect its local economy and housing market, but overall we are forecasting an orderly slowdown in housing starts,” he said. The average price of a home increased 13.2% last year and 10.8% in 2004, driven by coastal markets, according to the Office of Federal Housing Enterprise Oversight. But that pace is expected to cool in 2006 and 2007. 

“Higher house prices together with higher interest rates have dampened housing demand throughout most of the country, bringing demand more in line with supply,” according to the home builders report. “Already there are reports of downward pressure, or at least reduced upward pressure, on housing prices around the country.” Higher mortgage rates have helped take some of the steam out of housing. The 30-year, fixed-rate mortgage averaged 6.79% for the week ended July 6, according to mortgage lender Freddie Mac. 

The report also examines the housing market on a state-by-state basis. While housing starts are expected to fall nationally after hitting their highest level in more than 30 years in 2005, states such as Idaho, North Carolina, Oklahoma, Washington and Wyoming are expected to see home construction increase this year, the report said.  The economic forecast for California isn’t as positive because the state already has expensive home prices and an overall high cost of living, the report added. 

1 comment July 24th, 2006

Bridging the Gap Between Selling Your Home and Buying a New One

By Kirsti McCabe
From The Wall Street Journal Online 
Selling a home while trying to close on a new one may be among the most-daunting parts of homeownership. If you buy before selling, you run the risk of owning two homes. If you sell before buying, you could end up homeless. It’s a puzzle that comes with stress from all corners, from making sure your children get enrolled in school on time to avoiding spousal warfare over whether to accept an offer. “Right along with marriage, death and divorce, moving can be one of the most stressful things in people’s lives, especially when you’re trying to buy a house and sell your old place at the same time,” says Kim Soule, a senior associate with the Corcoran Group in Brooklyn, N.Y. 

When the housing market is hot and houses are going quickly, some people pounce on a new home before they’ve sealed a deal to sell their old home, confident a strong market will work in their favor. To be sure, the chance of ending up with two homes — and two mortgages — increases in a cooling market as it becomes tougher to sell in a hurry. “Usually no more than 10% [of home buyers] get caught sitting on two mortgages even when the cycle is turning,” says Norm Miller, director of the Real Estate Center at the University of Cincinnati. “But when the market is starting to slow, you’ll certainly see more people caught in that circumstance. It may have been 5% before, now it may be 10% but even more in hyperactive markets” like California and Florida. There were 2.8 million existing houses and condominiums on the market at year end, up 26% from a year earlier, according to the National Association of Realtors. While existing-home sales were still strong in the fourth quarter, rising at the third-highest pace on record, the association said it expects sales of existing homes to fall by 4.7% this year and median home prices to rise an average of 5%. “Sellers were calling the shots” six months ago, says Mike Mahfouz senior vice president and divisional manager at GMAC Mortgage in Paramus, N.J. He says fewer people were looking for bridge loans, or interim financing arrangements between buying and selling, to cover mortgages on two homes. But the tide is changing. “Now it’s become more of a buyer’s market, or a balanced market shifting in the buyer’s favor” making bridge loans among potenial buyers more popular. 

So what do you do if you want to sell and buy at the same time in a cooling market? Numbers Game Too often homeowners neglect to consider recent sales in their own neighborhoods. Before listing your home, research sales prices of homes comparable to yours and talk to brokers in your area to check how long homes sat on the market before selling. Also, investigate the latest market forecasts. The National Association of Realtors Web site provides forecasts for national trends, while regional realtor associations offer guidance on local markets. If you’ve bought a new home but can’t sell your current home, holding out for your initial asking price can backfire in the long run. While a disappointment, cutting your price sooner rather than later can significantly stem the cost of maintaining two homes. “If have you have the financial resources to carry two houses maybe you can wait, but sometimes your first loss is your best loss,” says Kenneth Haber, general counsel at Prudential Douglas Elliman Real Estate in New York. Timing on when to accept an offer depends on whether you’re under the gun to come up with cash to cover both houses, says Scott Gutterson, a New York real-estate attorney. But, he says, “if there’s ever going to be a bargain in the market, it’s going to be [a house owned by] somebody who bought before they sold.” 

Careful Contingency Plans From a buyer’s point of view, a home-sale contingency contract is the only bulletproof way to ensure you don’t have to close on a house if you can’t sell your current home, says Mr. Haber. Contingencies are written clauses in your contract, giving you time to secure financing or evaluate some aspect of the property before you proceed to closing. If contingencies aren’t met, the wording should allow you to back out of the contract at no penalty. Some sellers will agree to a contingency in the contract that says the sale is dependent on the buyer selling his current home. But a potential buyer’s home-sale contingency can make a bid unattractive, as sellers generally want to avoid agreeing to this contingency at all costs. Sellers are only likely to agree to this type of contingency if the market is slow and offers are below par. Some sellers may compromise and suggest a contingency clause allowing them to keep their house on the market but giving the buyer right of first refusal if another offer comes through before the buyer has sold his house. 

Take On Tenants If you’ve purchased a new home but haven’t sold your old one, consider renting your home temporarily while you keep it on the market, even if it means offering a deal to renters in exchange for permission to show the place. You will at least get income to cover your mortgage or other costs. With mortgage rates rising, the rental market is expected to get stronger in many areas of the country, and it may be a lucrative move if you can’t close on a sale. Pay Rent to the Buyer If you’ve sold your home but haven’t yet found a new one, consider a rent-back situation, paying rent to the new owners, to extend your moving date. You may want to offer to cut the price if the buyer is flexible on the occupancy date and will allow you to stay in your house for a certain period of time. 

Throw In Super Bowl Tickets It might work to offer enticements to get one party to extend the closing date: One broker said she has heard of people offering to throw in the garden furniture or even a pair of Super Bowl tickets to get some flexibility on the closing date. Let the Brokers Deal Brokers may step in to offer perks to make the deal go through. If a seller is trying to extend the closing date but the buyer needs to get into the new place, brokers sometimes offer to cover the costs of temporary quarters for their client just to seal the deal. One broker said she offered to pay for hotel accommodations when a deal was about to collapse. “I’m not going to let a deal fall apart over one week when we’re talking about $4 million worth of real estate,” she said. 

Play the Sympathy Card, With Care  Developing a rapport between buyers and sellers may help when working out details if one party doesn’t yet have a new house to move into. But it can also backfire. “In some instances, creating a rapport between the buyer and seller can be beneficial,” says Ms. Soule of Corcoran. “It can create some empathy but some sellers don’t want to hear that you have four kids and can’t move until school’s out in June.” But some sellers want nothing to do with the buyers if they’re very attached to their home or it’s been a contentious situation, she says.  

 

Add comment July 24th, 2006

   

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