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Growing Scarcity of Land Alters Home Economics
The expanding population, immigration and readily available credit have sparked record demand for homes; but builders are facing a critical shortage of developable land. Land costs have soared to excessive heights as builders engage in bidding wars and local governments preserve land for conservation, lengthen the permit approval process and impose moratoriums on residential development to minimize the impact of rapid growth. As a result, families are paying more for shelter, cities are getting denser and more expensive as living spaces shrink, and large suburban homes are appealing only to wealthy buyers or those willing to commute long distances to the city. In fact, Fisher Center for Real Estate and Urban Economics Chairman Kenneth Rosen says the median home price in California jumped 20% last year; and three-fourths of that increase can be attributed to land-use regulations. There is cause for concern, considering that falling home prices generally follow declines in land supply, notes New York-based housing analyst Barbara Allen. Home buyers have been forced to shoulder much of the costs associated with land constraints that have been passed on by builders during the housing boom, but Las Vegas-based home-building consultant Dennis Smith predicts they will be willing to do so only for as long as interest rates remain low. The land crisis has prompted 71 Las Vegas builders to close or sell to KB Home, Centex Corp. and other national builders over the past seven years. (www.wsj.com)
Wall Street Journal (04/15/03) P. A1; Barta, Patrick
Cities Making New Pitches to Reverse Decades of Population Loss
While many of the older industrial cities in the U.S. Northeast and Midwest registered population declines in the second half of the 1900s, as some residents relocated to the suburbs and others headed South and West in search of employment, most recovered when an immigration boom flooded the nation with Hispanics and Asians. In some places, however, the influx of new residents was not enough to offset the loss of people; now, those cities still struggling to turn around population drops are launching new campaigns to bring people back. Philadelphia, for instance, has kicked off a $295 million effort to rehabilitate blighted communities, attract new residents and construct new housing; Baltimore is using a Hispanic liaison in an attempt to draw Hispanics to the city; the District of Columbia is hoping to add 100,000 more people by building more affordable housing, improving schools and expanding job training opportunities; and Schenectady, NY, is courting the Guyanese population of New York City to move there and fix up abandoned properties. Schenectady's plan underscores the fact that even poorer new residents are welcome since they generate tax revenue by occupying vacant homes and reversing neighborhood blight and since a growing city is more apt to attract new investment than one that is shrinking. (www.ap.org)
Associated Press (04/15/03) Armas, Genaro C.
Property Tax Tops List of Least Favorite Taxes
While a 1994 Gallup Poll showed that the U.S. public equally despised property taxes and federal income taxes nearly a decade ago, the latest survey finds the former pulling ahead of the latter as the country's 'least fair' levy. The share of poll participants who named local property taxes as the most-hated hit 38%, with federal income taxes coming in a distant second with 21% of the responses. All income brackets cited property taxes as the worst, but the dislike was especially high among households making $75,000 or more per year as well as among those living in the eastern United States. Larry Naake, executive director of the National Association of Counties, speculates that the survey's results may reflect the trend of rising property taxes throughout the states. Local governments have hiked the taxes, he noted, as state and federal governments have required more without simultaneously increasing assistance. Census data confirms that the typical U.S. home owner paid $885 in property taxes in 2000 — twice the average 15 years earlier. Moreover, the financial pressure on local governments is unlikely to ease up in the foreseeable future. (www.usatoday.com)
USA Today (04/15/03) P. 1B; Fogarty, Thomas A.
Retaining Generation Y: Housing Policies Could Run Group Off
Growth controls in Richmond, VA, could ultimately force young workers to live elsewhere by limiting new development and driving up costs, warns Richmond Association of Realtors® President Ned Massie. However, Virginia Municipal League legal services director Mark Flynn believes development must be controlled to eliminate sprawl. Flynn notes that "the market drives the cost of housing much more than any costs resulting from local land-use control." Meanwhile, Massie views higher-density development as a better alternative to curb sprawl and provide plenty of homes for the younger population. In fact, Massie visited two such developments in Florida and South Carolina. The projects feature as many as nine houses per acre in the "neo-traditional" style, homes and businesses within walking distance, and open space. (www.timesdispatch.com)
Richmond Times-Dispatch (04/15/03) P. C1; McCance, McGregor
Zero Inflation in March After Excluding Energy
The Labor Department reports that inflation held steady in March — failing to ratchet up for the first time since February 1999 — which analysts believe will keep interest rates at record lows and fuel the housing market until the overall economy rebounds. Commerzbank Securities global head of fixed income research Bob Gay, who formerly served as an economist at the Federal Reserve, believes zero inflation will drive up real incomes and make it less costly for consumers to purchase new homes. "Anybody who ever wanted to buy a home is looking at whether they can finance one right now," Gay notes. Though recent reports reveal a drop in housing permits, Gay does not anticipate a major slowdown in the market. (www.investors.com)
Investor's Business Daily (04/17/03) P. A1; Graham, Jed
Including Women in the Mix
Research shows that women play a significant role in how money is spent, and more single women than men are home owners. In response, builders are looking for ways to influence female buyers. Gainesville, GA-based consultant Charles Clark, who has worked with most of the top residential builders in the country, formulated four behavioral categories to describe people: assertive and non-emotional bulls, assertive and emotional tigers, non-assertive and non-emotional owls, and non-assertive and emotional lambs. In general, Clark says bulls make quick decisions, take risks and look for the lowest prices; owls want all the answers before proceeding and are highly organized; tigers are impulsive buyers; and lambs usually consider the opinions of others and tend to suffer from buyers' remorse. As for preferences, Clark says bulls want "striking, impressive" homes, while owls look for efficient dwellings with separate kitchens and dining rooms. Lambs put comfort first and prefer fireplaces; while tigers want unique, exciting homes with master baths. According to Orlando-based designer Kay Green, other features that may draw female home buyers include granite countertops with slate backsplashes, "pasta" faucets next to the stove to minimize spills, spas, wet bars, bathroom islands, warming drawers in the kitchen and bathrooms and drying closets for handwashed clothes. (www.philly.com)
Philadelphia Inquirer (04/13/03) P. J1; Heavens, Alan J.
Condo Comeback in Sacramento
In Sacramento, CA, rising home and land prices have sparked a shift among developers from single-family homes to condominiums, a strategy that allows them to offer lower-cost housing because of the higher-density nature of the projects. The Gregory Group reports that the median single-family home price in the Sacramento area jumped 15.3% from January to March to an all-time high of $339,900. The 1,700 or so units in the eight condo projects in the works in West Sacramento, North Natomas, Elk Grove, Roseville and Folsom, meanwhile, are expected to fetch $200,000 or less. According to Gregory Group President Greg Paquin, a number of builders have submitted rezoning requests in a quest to acquire developable land. Though condo construction surged 47% from 2001 to almost 8,000 units last year, defect lawsuits have made it difficult for builders to obtain the insurance necessary to build attached dwellings. However, a new state law is expected to minimize litigation and cut the cost of liability coverage by allowing builders to repair flaws before a lawsuit can be filed and also by requiring mediation before litigation. (www.sacbee.com)
Sacramento Bee (04/14/03) P. D1; LePage, Andrew
Home Improvers to Spend More, But Follow Budget
According to the 2003 American Express Home Improvement Index, U.S. households are projected to spend a record amount on residential upgrades this spring; however, they will be more budget-conscious than in previous years about how that work is accomplished. The index, which polled heads of households planning improvement work in 2003, forecasts that remodeling budgets will increase to an average of $3,796 this year. Nearly 90% of the respondents planning home improvements expect the end result of such projects to be an increase in their property's value, with about 80% expecting to recoup the cost when they eventually sell the residence. Today's home owners, though, are more and more concerned with price and convenience, with 75% of those queried stating that they will scout around and compare prices to stay within budget. (www.wsj.com)
Wall Street Journal (04/15/03) P. D2
Lenders Invited to Think Outside the Box
California real estate consultant John Burns believes a "transferable" mortgage would prop up the housing market if interest rates rose substantially in the future, allowing home owners to keep their low rates when moving into a more costly residence. Higher interest rates might make buyers think twice about new, more expensive dwellings, says Burns, but home builders could entice them into the move-up market if their low-rate mortgages went with them. In addition, transferable mortgages would reduce the paperwork involved in the transaction because the only requirements would be requalification, an inspection and an appraisal; and lenders additionally would benefit from transfer fees and lower prepayment risks. However, Burns says that mortgage brokers will oppose portable home loans because their livelihood depends on the points and fees associated with new mortgages; and the industry is not likely to adopt such loans unless Fannie Mae and Freddie Mac agree to purchase them. (www.inman.com)
Inman News Features Online (04/14/03) Swesey, Jessica
Small Businesses Can Dial Into Call-Center Technology
Interactive voice recognition (IVR) is one of the newer technologies small businesses can use to expand their customer service capabilities. IVR strives to take advantage of the telephone for driving sales, answering common questions and receiving orders by voice instead of through touch-tone commands, and Doug Shore of Time ICR says many customers are responsive to it. In fact, he notes, people take more time to consider options within IVR systems because they do not feel as if they are imposing on a person's time. Though IVR systems can greatly benefit small businesses, these enterprises need to consider scalability, upgrade potential and manageability when choosing. Additionally, the cost of an IVR system may be prohibitive to a business that does not receive many phone calls. (www.seattletimes.com)
Seattle Times Online (04/14/03) Bermant, Charles
SpamKiller for Small Businesses
McAfee Security's soon-to-be-released SpamKiller for Microsoft Exchange Small Business will protect as many as 250 mailboxes per server from unwanted e-mail through content filtering, which blocks spam based on a list of words and phrases; heuristics, which scans mail for characteristics of spam; integrity analysis, which tracks headers and layouts; black lists and white lists; and self-tuning, which factors in the users' preferences. The technology sparks productivity gains by reducing the time employees spend sifting through spam. Network Management Group President Steve Harper says anti-spam technology can cut the number of unwanted messages by as much as half. McAfee SpamKiller will cost small businesses $20.38 every two years for between 101 and 250 nodes. (www.crn.com)
Computer Reseller News (04/14/03) P. 26; Savage, Marcia
Wireless Data Capabilities May Bring a Major Change in the Way Businesses Use PCs
Personal computers have seen few changes in form factor in the past two decades, but chipmakers and computer manufacturers are pouring money into research, development and marketing to persuade business people to adopt new types of machines that let them work in new ways. For example, Intel's prototype Newport — which combines the functions of a notebook computer, PDA, cell phone and tablet PC, with radio technologies for reaching company networks and attractive styling — includes a leather flap that holds together the detachable screen and keyboard. However, though vendors are spending a great deal of money on such ideas, tight IT budgets mean that companies are paying attention to return on investment and business cases rather than simply looking at new technology. Companies are still spending a great deal of money on PCs, and they continue to buy new PCs for the purposes of upgrading to Windows XP, optimize business processes and improve productivity, but the important question for vendors is whether new technologies will allow people to change how they work. Intel is betting that built-in wireless connections for portable computers will change business computing as surely as LANs and the Internet changed business computing in the 1990s — "Laptops are more than a convenience for businesses; they're a way for companies to squeeze more productivity out of their employees," according to Anand Chandrasekher, VP and co-general manager of the mobile platforms group at Intel. Dell, Gateway, Hewlett-Packard (HP) and IBM are all using Centrino technology to cut down on power use in laptops and improve their wireless connectivity and processor performance, but sales are likely to be held down by high prices. The law firm Drinker Biddle & Reath says laptops make its attorneys more productive, and it has been leasing its notebooks and PCs this year, switching between Dell, HP and IBM machines whenever the leases run out. It has given its business to HP this time because HP was more responsive to the pricing demands and more flexible in meeting the law firm's technology needs. (www.informationweek.com)
InformationWeek (04/07/03) P. 36; Greenemeier, Larry
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