As sales of new homes tumbled in July to levels not seen in more than 40 years, luxury-home builder Toll Bros. Inc. reported on Aug. 25 that it had returned to profitability in the third quarter. However, the volume was still 65% below sales at the peak of the housing boom, and the lion’s share of the builder’s positive results was attributable to $26.5 million in tax benefits. Toll chief executive officer Douglas C. Yearley, Jr. said the company was “pursuing growth,” looking for distressed-land and debt-acquisition opportunities through its wholly owned subsidiary, Gibraltar Capital & Asset Management Corp., which was formed during the third quarter. “We continue to find opportunities in most of our markets and this quarter spent $104 million on land acquisitions, bringing our nine-month total to approximately $340 million,” he said. Yearley said the company’s sales benefited little from the tax credit because the $6,500 available to move-up buyers — Tolls’ typical audience — was not enough to influence decision-making. Another indication, he said, was that “sales didn’t drop off dramatically in May,” after the deadline to sign sales contracts expired. (www.philly.com)
Philadelphia Inquirer (8/26/10); Alan J. Heavens

The apartment industry isn’t supposed to be doing very well, but these days increasing numbers of renters appear to be signing on the dotted line. The number of occupied apartments increased by 215,000 in 64 major U.S. markets in the first half of the year, according to analytic firm MFP Research. That’s about double the additional occupancies seen in all of 2009. “What’s happened is that the rent levels haven’t advanced much over the last two or three years,” said Tracy Cross, a housing analyst based in Schaumburg, Ill. “And now there are shifts in ‘tenure’; things are going toward rental from people who have been foreclosed or who are selling their distressed homes and moving into the rental market.” Stir into that mix a broad case of the jitters: Many consumers just aren’t sure they want to plunge into an uncertain for-sale market or have doubts that sales prices have bottomed out, Cross said. Then there’s the supply issue. In Chicago, the number of new rental units has increased only slightly in the past couple of years, and in the city’s suburbs virtually no new apartments have been constructed, he said. Also, people have to live somewhere: Reports that the economy is killing so-called household formations have been exaggerated, Cross said. “Even though you have negative employment numbers, you’re still having household formation. It’s shifting downward, but it’s not negative,” he said. “They’re out there.” (www.chicagotribune.com)
Chicago Tribune (8/13/10); Mary Umberger

With the commercial market in New York still soft, Michael Rudder, a broker at Time Equities, said prices for some of the buildings he sells declined 40% in the last few years and almost all of his recent sales of office condominiums had been to foreign buyers, especially those based in Asia, where the economy is booming. “They have this huge appetite for office condos,” he said, adding that “they want to own real estate very badly. They do not want to pay rent.” John Lim, a vice president in the business and commercial banking group at Citibank, also said that Asian businesses were buying New York property that they perceive to be undervalued. As someone who provides owner-occupied commercial mortgages to many Asian-owned businesses, including some of Rudder’s clients, Lim has made it a point to understand feng shui. According to Lim, numbers associated with a building and suite are significant: In Chinese, Japanese and Korean, the pronunciation of the number four sounds the same as the word for death — which is why many buildings in Asia do not have a fourth floor, the way American buildings often skip the 13th. And in Chinese, the number eight is a homophone for the word for getting rich. The eighth floor, and building numbers with eights in them, often sell at a premium. The concern over numbers extends to the timing of a closing, too. Not only should the day end in an eight, but certain times of day are more auspicious than others. Feng Shui dictates more than just numbers and times; it is probably best known for its guiding principles for the design and orientation of homes and offices. There should be ample natural light, for example, entering through the windows and no open air shafts in the middle of the unit. Also, space should not abut fire-escape stairs. For Indian clients who follow the Hindu system of design called Vastu, the shape and orientation of a building and rooms affect a space’s desirability. Parag Mehta, the principal of PM Architecture, said that square and rectangular rooms were good but that L-shaped rooms were not. The entrance to the office, as well as the principal of the business, should face north or east. “You never face south,” Mehta said. “It’s totally a no-no.” (www.nytimes.com)
New York Times (8/24/10); Jonathan Vatner

The contemporary kitchen is a huge leap forward in making the home more casual and meals more sociable. But it papers over a century of attempts by designers, engineers and home economists to make life easier for the cook. The narrow galley kitchen, the horror of today’s host-cum-chef, is in fact a paragon of efficiency, saving steps by putting ingredients and gadgets within easy reach. And although some architects and their clients look askance at their cramped spaces and out-of-the-way location, they were actually a vast improvement on the kitchens of the Victorian era, which were large, unplanned and inefficient. Not that efficiency in kitchen design hasn’t trickled down to the present. The emphasis on time-saving consumer technology brought us the microwave, the fridge-freezer combo, the automatic coffee maker and a thousand other gadgets. The barrier between the workplace of the kitchen and the social space of the living room broke down; we could invite the rest of the family in. By the 1970s men were doing more cooking. The kitchen island became less a work station than a coffee counter where anyone could pull up a stool. The kitchen cabinets got tricked out with moldings and white paint to match the furniture. The pass-through, one of the few modernist domestic innovations to be adopted at a large scale, got bigger and bigger until the whole wall between kitchen and living room disappeared. With dishwashers, insulated stoves and powerful vents, there was no need for anyone to take the heat or look at a pile of dirty pots. The opening of the kitchen is not just for suburbs, either; even small-scale New York apartment renovations typically remove the traditional wall. No one wants to be in the back of the house. (www.nytimes.com)
New York Times (8/27/10); Alexandra Lange

In a high-rent borough like Manhattan with plenty of rent-regulated apartments ripe for exploitation, real estate investigation has long been a big business. Private detectives say it has picked up in the past year as some New Yorkers have tried to find extra money by moving out of their apartments and subletting to other renters for more than they are paying, which is not allowed. And, of course, there are landlords pressed for cash, trying to root out people who are using rent-controlled or rent-stabilized apartments illegally. This would allow the landlords to find new tenants and raise the rent by 20% or more under state housing law. Landlords who root out illegal sublets and absentee renters — a rent-regulated tenant must occupy the unit for at least 183 days a year — crow about how profitable these investigations can be. Craig Charie, a lawyer and landlord who has hired private investigators for such cases since 1994, described a tenant at one Chelsea building who held onto her $433-a-month apartment while living primarily in New Jersey. An investigator tracked her commuting patterns, and Charie kicked her out, combined the apartment with another to make a duplex and raised the rent. (www.nytimes.com)
New York Times ( 8/30/10); Christine Haughney

America’s baby boomers face a problem that could weigh on the economy for years to come: The longer it takes for the economy to recover, the less money they’ll have to spend in retirement. Policy makers have long worried that Americans aren’t saving enough for old age. And lately, current and prospective retirees have been hit on many fronts at once: They have less money, they earn less on what they have, their houses aren’t rising in value and the prospect of working longer to make up the shortfall has dimmed significantly in a lousy job market. Despite the market’s rebound from the lows of 2009, nest eggs remain severely impaired. As of the first quarter of 2010, net household assets — homes, 401(k) plans, pension assets and other investments minus debts — stood at $54.6 million, down 18% from the end of 2007. That’s an average of about $171,000 per person, much of which is concentrated in the hands of the wealthiest. At the same time, the return people can hope to earn on their assets has fallen, particularly for those who switch into bonds or annuities to guarantee a fixed income. Before the recession hit, many economists assumed people would solve their retirement problems simply by staying in the work force longer. Now, “the recession has blown that idea out of the water,” says Alicia Munnell, director of the Center for Retirement Research at Boston College. Older workers, who typically fared better than their younger counterparts in recessions, have been hit just as hard by layoffs this time around. As a result, the fraction of people 65 or older who are working has leveled off after a long period of growth. As of July, it stood at 15.9%, down from 16.3% in mid-2008. The diminishing work prospects will require many older folks to make do with less — a discouraging outlook for firms hoping to sell them things. As of 2008, the latest data available, people aged 65 to 74 were spending 12.3% less than they did 10 years earlier, in inflation-adjusted terms. They cut spending on cars and trucks by 46%, household furnishings by 35% and dining out by 27%. At the same time, they spent 75% more on health care and 131% more on health insurance. (www.wsj.com)
Wall Street Journal (8/16/10); Mark Whitehouse