Remember This: In a Slowing Market, Lavish Features Help Builders Make a Strong Impression

In a market crowded with unsold homes, some developers and builders say that hard-to-forget elements such as outdoor kitchens and motion-activated entertainment centers can go a long way toward making a particular house or condo stand out from the rest. “People walk in to the master bath and they’re just wowed,” said Matt Lefler, director of operations for Bethesda, Md.-based Camberley Homes, which installed the ceiling faucet that fills an overflow tub underneath it in a model home in a Falls Church, Va. subdivision. Although none of the buyers in the 100-house Stockwell Manor community have asked for the $8,000 upgrade option, Lefler said the bathroom has been “absolutely effective” as a memory point. Mid-Atlantic builders in Rockville, Md. installed an oversize shower as a model-unit showpiece, featuring two entrances and shower heads, a bench, curved walls and recessed lighting enclosed in translucent glass blocks. But the showers proved so popular that they are now standard features in many of the houses the company sells, said John Lavery, its director of sales and marketing. “We were doing it more to be a memory point, thinking it would be probably a little price prohibitive for most of our purchasers,” he said, with the cost ranging from $8,900 to $28,750. Lavery thinks that more than two memory points in a home can overwhelm potential buyers. For Toll Brothers Inc., the number of memory points is less important than where they are, and it is important to catch buyers’ attention at the outset, according to Lee Golanoski, director of design for Toll Architecture. Shoppers in Toll houses are greeted with two-story foyers, with a curved staircase, and some houses have two staircases leading to the upper floor. (www.washingtonpost.com)
Washington Post (10/28/06); Tomoeh Murakami Tse

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Baby Boomers Change Senior Housing Trends

The 76 million baby boomers born between 1946 and 1964 are hardly contemplating entering old-age homes or assisted living facilities as they face retirement and empty-nesting, sending developers scrambling to find a housing type that fits the needs of this less than stereotypical graying market — from downtown condos to active adult communities to age-targeted apartments. Older buyers want a home with all the goodies but none of the maintenance, says Gopal Ahluwalia, NAHB’s staff vice president of research. They are looking for places with less lawn to mow and less floor space to carpet and clean. “The boomer — who can travel, see the world and play golf or tennis when he so chooses — is seeking to cut down on the amount of time and energy they have to expend on upkeep of their castles,” Ahluwalia says. “This is a step between single-family and senior housing.” Lifestyle changes are the main reasons people over 55 decide to move into a new home, says Norman Cohen, chairman of NAHB’s 50+ Housing Council. “Because they are choosing to move based on creature comforts or changing circumstances,” he says, “the older buyer is often less affected by the ups and downs of the housing market.” People aren’t waiting until retirement to acquire a second — or even a third — home, he adds. “Sometimes the additional home will be located in a favorite vacation spot; oftentimes the intention is to retire there eventually.” (www.sddt.com)
San Diego Daily Transcript (10/26/06); Jill Esterbrooks

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Nontraditional Mortgages Don’t Wane Under Warnings

Despite concerns by federal regulators about the growth of nontraditional mortgages, about 26% of mortgage loan originations by dollar volume in the first six months of this year were interest-only loans, according to the Mortgage Bankers Association. Another 13% were “option” adjustable-rate loans that allow customers to pick their payment amount, including a low-cost choice that covers neither the full interest nor the principal. For the same period of last year, those shares stood at 25% and 8%, respectively. Until 2000, less than 2% of consumers had interest-only or similar loans. The regulators have said they worry that consumers don’t understand that payments on the loans can double or even triple, and that if they pay less than full payment toward principal and interest, they run the risk of seeing their mortgage balance rise, even after years of payments. Most home owners are making only the minimum payments, according to banking data. Doug Duncan, chief economist for the Mortgage Bankers Association, attributed the growth of the loans to consumer demand. “As expected,” he said, “consumers respond to changing opportunities in the marketplace, but it looks like these products serve an important need.” Last month, the banking regulators issued a warning to federally regulated lenders, including banks, thrifts and credit unions, that the loans could pose risks for lending institutions because consumers can be unprepared for the sudden jumps in payments, and the Mortgage Bankers called this “regulatory overreach.” Last week, the Federal Reserve Board took the warning to consumers by issuing a pamphlet about the dangers of nontraditional loans; it is available through their Web site. (www.washingtonpost.com)
Washington Post (10/24/06); Kirstin Downey

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Smelly Carpets, Meet Silver Ions; Products for an Odor-Free Home

Textile manufacturers lately have taken some of the home’s most odor-absorbent materials, re-engineered them and created a host of new products that promise to neutralize bad smells. In July, National Council of the Housing Industry member Home Depot introduced a new line of carpeting with salts chemically bonded to its fibers to trap and destroy odors. While the $4.4 billion air-care industry is languishing, with a less than 5% increase in sales last year, the use of so-called specialty biocides that promise to kill odor-causing microbes in the home is rising. The fastest growth segment is biocides that use electrically charged silver ions that interfere with a microbe’s respiration, destroy its cell wall and squelch the smell. Silver has been used as a bactericide for centuries; Egyptians threw silver coins into wooden water barrels to keep them clean. Getting into silver ions in a big way, Spartanburg, S.C.-based Milliken started 18 months ago putting a combination of its silver-ion biocide into everything it produces, including more than 50 lines of carpeting and 10 lines of fabric and upholstery. Although declining to give sales statistics, company director William Gregory says the company decided to go all out for the biocides when in-house customer research showed that getting rid of smells was a priority. (www.realestatejournal.com)
RealEstateJournal.com (10/24/06); June Fletcher, Wall Street Journal Online

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Tax Panel Backs More IRS Clout

Two proposals from the congressional Joint Committee on Taxation to increase tax collections from home owners are likely to surface next year in proposed tax legislation. The first is aimed at tightening up on home owners’ growing write-offs of local and state property taxes, which are about $20 billion a year. Although local real estate taxes on homes are generally deductible, tax payments covering commonplace special assessments designed to pay for improvements that directly benefit home owners’ real estate are not. Examples include local “user fees” for water mains, sewer lines, sidewalks, trees and trash collections. In a 1993 study by the General Accounting Office (now the Government Accountability Office), an estimated $400 million of that year’s $11 billion in property tax write-offs were improper, and with the deductions this year running nearly double that amount, wrongly claimed write-offs could be in the $700 million range or more. The committee would solve the problem by requiring local governments to provide copies of home owner tax statements to the IRS with breakouts distinguishing between regular and special-benefit assessments, or require mortgage lenders and loan servicers to report details of home owners’ property tax escrows with similar breakouts. The second target is non-deductible mortgage interest, such as points taken by owners in the year they refinance, which would be corrected by requiring notification of all home owner refinacings and whenever a refinancing leads to a new loan amount $100,000 larger than the previous balance. Though many taxpayers believe that all mortgage interest is deductible up to $1 million in mortgage debt and an additional $100,000 in home equity debt, that is not the law. For example, the interest on the $200,000 amount from a $700,000 “cash out” refinancing on a $500,000 mortgage might not be entirely tax-deductible if substantial sums were spent on new cars or vacations instead of capital improvements. (www.washingtonpost.com)
Washington Post (10/28/06); Kenneth R. Harney

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When Dream Kitchens Meet Real-World Budgets

The average cost of a kitchen remodel has hit $20,000, according to NAHB, but many home owners spend far more once they’ve installed new cabinets, high-end appliances and multiple equipment such as two sinks or dishwashers, granite countertops, handcrafted tile backsplashes and a wine cooler. Designer Sarit Catz, founder of the design firm Refuge in Short Hills, N.J., has had clients who’ve spent as much as $250,000. To hold the line on the budget, Mick De Giulio, who has kitchen showrooms in Chicago and Wilmette, Ill., advises putting in the best quality equipment you can afford, but not necessarily a manufacturer’s top item. For example, a basic Miele dishwasher still sports a stainless steel front and has six wash programs. It isn’t as quiet as the top model, which makes no noise, but it costs only $1,199, significantly less than the top model’s $2,000 price. De Giulio also suggests buying “all-in-one” equipment such as a range with cook-top above and oven below rather than separate products, which add up. He also recommends a basic microwave rather than convection design. Catz doesn’t think that home owners need to invest in professional-grade appliances if they’re not super cooks or have limited budgets, and a stainless steel, high-end look can be achieved without them. Cabinets can gobble up as much as 40% of a remodeling budget, so cutting back here can make a project more affordable. De Giulio recommends a simple maple instead of unusual wood, such as a Honduras mahogany. He also advises against using particleboard. (www.oswegodailynews.com)
Oswego Daily News (10/27/06); Barbara Ballinger

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