First Time Home Buyers … Celebrate!
Builders such as Ivory Homes are trumpeting the $7,500 tax credit for first-time home buyers as one of the great reasons to buy a home today — others being reduced prices and historically low interest rates. “This is a huge help to someone who is struggling to afford a home,” said Clark Ivory, CEO of the Utah-based company. Ivory said he’s finding that “90% of the people out there haven’t heard about this. That’s why we’re really advertising this. We’re going to make a big deal out of this.” Ivory is part of an effort by the Salt Lake Chamber and the Utah Association of Realtors® to get the word out about the tax credit and how it could provide a big boost to the housing market locally. Radio advertisements touting the tax credit are part of the group’s campaign to increase awareness of the incentive. Ivory acknowledges that his company and others will benefit from increased sales. Several buyers who have recently purchased homes pointed to the credit as the motivating factor, he said. “This could mean an extra 100 sales that we will get before July 1 of next year that we otherwise may hot have had,” he said. Ivory expects to close 750 homes in the state this year. (www.sltrib.com)
Salt Lake City Tribune (9/7/08); Lesley Mitchell
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A Housing Flip-Flop; Local Market Now Most ‘Undervalued’ in State, Study Finds
San Diego, which three years ago had one of the most overvalued housing markets in the country, is now the most undervalued in California, according to the economic and financial analysis company Global Insight. The market has improved because housing prices have fallen about 32% from their peak, while incomes have continued to increase. “A metro area like San Diego has, in a sense, fallen too much,” said James Diffley, who directs Global Insight’s regional services group. But he cautioned that prices could drop an additional 10% over the next year before they level out and start climbing again in 2010. He cited the continued influx of foreclosures on the market, the weak economy and tougher lending standards that will make it difficult for buyers to get mortgages. Drawing on data from National City Corp. in Cleveland, Global Insight said San Diego single-family resale housing, which had a median price of $349,300 in the second quarter, was 17.2% undervalued, based on household income and prices. In the second quarter of 2005, single-family housing, then with a median price of $505,900, was 39.1% overvalued, it estimated. In national terms, San Diego ranked as the 29th most-overvalued market in 2005 and, most recently, the 33rd most-undervalued in the ranking of 330 metro areas. (www.signonsandiego.com)
San Diego Union-Tribune (9/5/08); Roger Showley
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250 Square Feet Condos Target Young First-Time Buyers
Starting at a price of $279,000, a San Francisco design and development firm has begun marketing 98 tiny condominiums — ranging from 250 to 350 square feet — at the Cubix Yerba Buena building in SoMa. Architect George Hauser is the first to say the studios are too small for many people, families in particular. He and local planning groups, however, believe the so-called micro units represent one means of providing more first-time home-buying opportunities in a city where most prices outstrip most incomes. The kitchen area includes a mini sink, two-burner electric cooktop, half fridge and microwave-convection oven. The appliances are stainless steel; the countertop synthetic brown stone. There isn’t room for a bed and a sofa, so each studio is staged with a sofa-bed. They come with a wardrobe, but no closets. The concrete-floored rooms have windows the height of the nearly 9-foot ceilings, and all but two have small balconies. The bathroom is fairly large, squared off with translucent glass walls and adorned with slate or quartz tile. The median price for all homes in San Francisco was $749,000 in July, according to MDA DataQuick of San Diego. Given the generally high cost, only 39.3% of city residents own their homes, the lowest level among the state’s counties. (www.sfgate.com)
San Francisco Chronicle (8/24/08); James Temple
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Student’s Novel Idea for Housing Is Tiny House
Estimating $14,000 in living expenses for two years in New Haven, Conn., while a graduate student at Yale University, Elizabeth Turnbull decided to live in an 8-foot by 18-foot “Tiny House” that was built atop a flatbed trailer. It has a tiny sleeping loft, a storage loft, a study nook, a kitchen area, a living area and a bathroom. The house is so compact, she expects to light it and power her cell phone and laptop computer with the energy generated from three solar panels that total about 18 square feet of surface. She’ll cook her meals and heat the house with propane, at an estimated maximum of $200 yearly. The house has a recyclable aluminum roof, uses recycled boat sails for ceilings, features insulation from a waste soy product and environmentally friendly paints. Many fixtures and building materials were donated by people who had lumber or hardware left over from a household renovation or expansion. Assuming it meshes with local regulations, she’ll have a composting toilet that recycles human waste. The bathroom — toilet and shower stall combined — measures 3 feet by 3-1/2 feet. She expects the house to cost about $11,000 when finished and furnished. (www.courant.com)
Hartford Courant (9/6/08); Steve Grant
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A New Way to Tap Home Equity
Three companies with sophisticated capital market backers — REX, EquityKey and Grander Financial — are offering cash to owners who agree to cut them into some of the future appreciation of their properties. For example, REX offers $70,000 cash to the owner of a $900,000 house who is willing to share 30% of future appreciation. That rises to $117,000 in exchange for a 50% share. Existing equity in the home — and future value growth attributable to capital improvements — are not affected. There are no interest rates or monthly payments, and the timing of the end of the agreement usually is up to the property owner, although it’s generally tied to a sale. Unlike a reverse mortgage, where interest charges accrue and are added to the debt that must eventually be repaid, all of REX’s receivables are tied to the future growth — or decline — in the value of the real estate. REX makes its profit or takes its loss when the house is sold or the agreement otherwise ends. At that point, the owner repays the cash he was advanced. If values remain flat, the home owner repays that amount, without interest, out of the sales proceeds. If values go down, REX takes a loss equal to the value change it shared in the agreement, thus reducing but not eliminating the home owner’s loss. (www.washingtonpost.com)
Washington Post (9/6/08); Kenneth R. Harney
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Boom Times for Job Site Thieves
According to professional home builders, law enforcement officials and insurers, larceny at residential construction sites across the country has increased significantly in the last two years because of soaring prices of building materials like copper, lumber and cement. NAHB estimates that the annual cost of theft to the industry has reached $5 billion. The problem has meant higher material and insurance costs for builders, who pass them along to buyers, sometimes to the tune of tens of thousands of dollars. In the end, that can add as much as 10% to the cost of a home, builders and developers said. A cottage industry of guard services, surveillance devises and private investigators has emerged to prevent theft as well as catch thieves in the act. Larceny is an issue at commercial sites, but residential projects are particular targets because they are often easier to access. The situation is worse in regions where home building remains relatively strong, like in parts of Texas, North Carolina, New York and Louisiana, and remains a problem in states where home construction has slackened, like Florida, Nevada, Michigan and Arizona. “Builders in Chapter 11 and lenders foreclosing on properties still under construction aren’t as diligent about security,” said Mark Ouimette, managing director at Beecher Carlson, an insurance company based in Atlanta that underwrites policies for home builders. Police from Tucson to Miami report that thieves often peruse foreclosure filings to find idle and unsupervised projects. Insurers like Beecher Carlson said that theft has forced them to increase home builders’ insurance rates by 10% to 15% in the last two years. But even builders who erect fences and install surveillance cameras are losing materials as thieves become bolder in a weakened economy. “They’ll take anything that’s not nailed down, and even stuff that is nailed down,” said Jeff Stokley, a developer who builds houses in the Wilmington and Cape Fear areas in North Carolina for $175,000 to $225,000. “They’ll rip copper wiring out from behind the Sheetrock.” (www.nytimes.com)
New York Times (8/28/08); Kate Murphy
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