America’s Most Overpriced Home Markets
A slumping housing market, where only 5% of residents could afford to buy the median-priced home according to the NAHB/Wells Fargo Housing Opportunity Index, and a high housing price-to-earnings ratio have made San Diego the nation’s most overpriced real-estate market, according to Forbes magazine. “Had weather been included as a statistical measurement, there’s no doubt that San Diego would have avoided our list of top 10 most overpriced cities, but we didn’t factor in sunshine,” Forbes said. Forbes derived its list from data for the 40 largest metro areas and took each market’s median home price and divided it by annual rents minus taxes and insurance for those properties to obtain a price-earnings ratio. The average P/E ratio was 28. Detroit was the only city out of the largest 40 to have lost jobs since 2005, and while it was not one of the 10 most overpriced home markets, it was also not considered a good place to invest in housing. Almost 88% of the homes in Detroit were affordable to those there with a median income and its 17.5 P/E ratio was relatively low, but already stagnant home prices there have decreased at a rate of 1% over the past year. Miami was second on the list, followed by Sacramento, Calif.; San Francisco; Washington, D.C.; Honolulu; New York; Los Angeles; Boston; and San Jose., Calif. (www.forbes.com)
Forbes.com (5/4/07); Matt Woolsey
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Mortgage Demand Up, But It’s ‘Nothing to Get Excited About’
For the week ending on May 18, mortgage applications rose for the fourth time in five weeks, according to the Mortgage Bankers Association. But many lenders have tightened their standards as defaults and foreclosures mount on subprime loans. While applications were up for both home purchases and refinancing, “borrowers are having a tougher time getting mortgages and lenders have tightened up underwriting criteria, particularly on credit scores and downpayments,” said Bob Moulton, president of Americana Mortgage Group. “The small upward blip in mortgage applications quite honestly is nothing to get excited about,” he said. “The whole overall trend is down. The number of sales is going to be down this year, the median home price is going to be down this year.” UBS said that mortgage applications were probably being boosted by the tighter lending standards, with applicants reapplying after they were rejected for loans. “One possibility, we think, is that marginal home buyers, that is, people who think they may not get a mortgage at all or at least a mortgage on acceptable terms, are making multiple applications in order to boost their chances,” added Ian Shepherdson, chief U.S. economist at High Frequency Economics. (www.usatoday)
USA Today (5/23/07); Reuters
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Utah Leads Nation in Supersized Homes
In Utah, nearly 40% of homes in the U.S. Census Bureau’s American Community Survey in 2005 had at least four bedrooms, making it the top state in the country for big homes. According to the survey, 20% of occupied homes in the U.S. had four or more bedrooms, up from 17.7% in 2000. “Utah as a whole has always had a high number of people per household,” said Barry Burton, Davis County, Utah’s assistant director of community and economic development. According to the Census Bureau survey, Utah has an average of 3.07 people per household, the only state above the three-person mark. California trails Utah with an average of 2.92 people per household. “In this country, bigger is better,” said Gopal Ahluwalia, vice president of economic research at NAHB. “This is true for houses, and this is true for automobiles.” Among states with the biggest percentage of large homes, Utah was followed by Maryland, Virginia, Colorado and Minnesota. Arkansas had the smallest share, with 12.6% of its homes with four or more bedrooms. In much of the country, the growth in big houses is fueled by suburban home buyers seeking luxury, rather than big families needing space, Ahluwalia said. (www.desertnews.com)
Desert Morning News (5/23/07); Joseph M. Dougherty and the Associated Press
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For Sale: Condo With Chicken Coop
Catering to Americans’ desire to live “green,” developers around the country are creating communities on or adjoining farms, pitching views of sorghum fields, grazing livestock and local food, such as eggs residents collect from the property’s henhouse, and some are in suburbs or in near cities. Bondoran Farm, a community under development in Albermarle County, Va., is offering 100 home sites on a working cattle farm and apple orchard at the foot of the Blue Ridge Mountains. South Village, a project in suburban South Burlington, Vt., was recently approved for 334 homes surrounding a 40-acre farm that will grow corn and other organic produce. Babcock Ranch, in southwestern Florida, is building nearly 20,000 homes surrounded by 73,000 acres that include a cattle ranch and a vegetable farm. The projects make financial sense for developers. Buying farmland and having farmers work it — a common set-up of such developers — is an inexpensive way to manage open space. Ed McMahon, senior resident fellow for sustainable development at the Urban Land Institute, points out that many residents of golf communities don’t even play the sport but will pay a premium for the protected views. Home and house-site prices in different communities vary greatly, from around $200,000 to more than $1 million. The projects are also appealing to farmers, ensuring protection of their operation and creating a ready-made market for their goods among local home owners. (www.realestatejournal.com)
RealEstateJournal.com (5/18/07); Sara Schaefer Munoz, Wall Street Journal Online
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Mesa Targets Multifamily Pools to Cut Child Drownings
Terri Gazda is one of about 13 code inspectors in Mesa, Ariz. who check pools, among other tasks, at apartments, condominiums and houses to make sure gates and latches meet city requirements and will keep children out. While the number of Valley children who fall into apartment or condominium complex swimming pools makes up only about 16% of the total incidents, the numbers still concern officials — especially since multifamily pools are easier to enforce than enclosed backyard pools. From 2001 to 2006, four out of eight apartment or condominium complex drownings of children up to four years old were caused by an inadequate pool fence or a failed gate or latch, according to Arizona Department of Health Services data. Although there were only eight drownings in Valley apartment and condo complex pools from 2000 to 2006, Tiffaney Issacson, water safety coordinator at Phoenix Children’s Hospital, wants residents to remember that an additional 48 children fell into pools and some of those likely suffered brain damage. About 82% of Valley pool incidents are linked to supervision-related problems. Code violations that inspectors look for include: pool fencing and gates that are not at least 54 inches tall, spaces below pool fences that are more than 2 inches high, bars on fences that are too far apart or broken off, garbage cans and furniture close to the fence that children can use to climb over and gates that do not self-close or self-latch. (www.eastvalleytribune.com)
East Valley Tribune (5/18/07); Katie McDevitt
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Maryland Panel Blocks Project Near Bay
The Maryland Board of Public Works rejected a wetlands permit for Four Seasons at Kent Island, a development of 1,350 homes just east of the Chesapeake Bay Bridge in Maryland and a project that Gov. Martin O’Malley said would be so damaging to the bay it would not be in the state’s best interest. The governor, who serves on the public works board, noted that developer K. Hovnanian had followed the rules and acquired every other necessary permit from local and state government. “They have jumped through every hoop,” he said. “But this is not a canine hurdle exercise. Given the lack of assurance that this will not do further damage to wetlands in critical areas…I’m voting no.” It was unclear whether Hovnanian would abandon the project, scale it back without building on the wetlands portion of the 562-acre property or seek to overturn the board’s decision with a legal challenge. Hovnanian had sought permission to build a pile-supported bridge, a small marina, a clubhouse and utility lines on less than an acre of wetlands. The permit was the final hurdle before construction and critical to the project. Officials at Hovnanian said that their community of condominium towers and single-family homes would generate tax revenue and jobs for Queen Anne’s County. And they said runoff from the project would add less pollution to the bay than runoff from the farm now on the property. (www.washingtonpost.com)
Washington Post (5/24/07); Lisa Rein
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