Car Dealer Tactics on the New-Home Lot
Won-Ki Choi and his wife Janice had their eye on a townhouse in Fairfax County, Va. for some time, but the $536,449 price tag was too high for them. Then they saw a Ryland Homes newspaper ad: for two hours the builder would sell 140 homes in the Washington, D.C. area at a discount, through a silent auction. The minimum bid for the home was $429,999. Faced with a glut of unsold homes and canceled contracts, builders are now turning to tactics typical of car dealerships and department stores. What’s even more unusual is that the deals are often accompanied by deep price cuts, which builders have been reluctant to do until now. “It’s a little odd homes being sold that way,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. If it all seems a bit desperate, there’s good reason. Sales of new homes dropped nationally in August and the tightening of credit from a rise in foreclosures, especially among risky borrowers with adjustable-rate mortgages, are expected to push even more potential buyers out of the market. “We were trying to figure out how do we break through all the clutter that’s out there with home builders,” said Ryland’s Mark Disler. “I think people understand that it’s totally beyond our control and all the builders are reacting to market conditions.” (www.washingtonpost.com)
Washington Post (10/8/07); Nancy Trejos
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Chasm Grows Between Home Lenders and Self-Employed
Millions of Americans who are self-employed have become a kind of drive-by victim of the mortgage industry crisis. Some lenders that specialized in home loans to self-employed workers and small-business owners have gone out of business. And many lenders that still offer such loans have tightened their standards, making it harder for self-employed borrowers to qualify for a loan. Self-employed people can usually still get a mortgage, says Bill McNamee, president of Pinnacle Home Mortgage in Lombard, Ill. But, “The rates they’re paying a lot of times are higher, because (lenders) have decided the risk is higher.” Most self-employed people can’t provide the types of documents that lenders typically rely on for proof of income, such as W-2s and pay stubs. To address that problem, the mortgage industry created “stated-income” loans, which don’t require as much documentation. However, during the real estate boom, some borrowers used those loans to inflate their incomes and qualify for mortgages they otherwise couldn’t afford, says March Savitt, president of the National Association of Mortgage Brokers. The increased scrutiny of these loans, Savitt says, “is part of the shakeout” of the subprime collapse. (www.usatoday.com)
USA Today (10/1/07); Sandra Block
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Housing Slump Spurs Rentals and Complaints
In another manifestation of the housing slump, thousands of property owners across the country are now renting out homes they cannot sell. As a result, developments and condos that once were largely owner-occupied are filling up with renters who some neighbors say are less engaged in their communities and less concerned about maintenance. Fearful of declining property values, some home owner associations are fighting back — targeting lax landlords and renters with “good neighbor” letters, limiting the number of units that can be rented at any one time, and, in some cases, banning investors from buying altogether. Also, after years of existing apartment buildings being converted into condominiums, the trend is reversing. According to Real Capital Analytics, a New York-based research company, “reversions” — condo buildings that were turned back into rentals — outstripped condo conversions in the second quarter of 2007, the first time that has happened since the 1980s. In Baltimore, for example, there have been 1,430 reversions since January, 2006, while only 430 rental units have been converted to condos. (www.online.wsj.com)
Wall Street Journal Online (9/26/07); Ben Casselman
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Retirees Attracted by the College Lifestyle
Housing developments for the 55-and-older population are sprouting up near colleges all over the country to satisfy those who don’t already own a home near a college campus. Older Americans drawn to campus life include alumni, retired faculty as well as seniors just looking for a university environment. “We do have more and more of that kind of housing,” says AARP’s Elinor Ginzler. “There are more people aging in this demographic and a lot more living options.” Just minutes away from the University of Virginia in Charlottesville is the Colonnades, a senior housing community that gives residents an opportunity to participate in campus life by taking classes and attending sporting and cultural events. In addition to putting its name on the project, the university donated the land and provided alumni lists for marketing purposes when the Colonnades opened in 1991. NAHB is aware of this trend. Jeffrey Jenkins of the NAHB 50-plus Housing Council says he knows of several communities being built near college campuses. Warren Bland, a nationally recognized expert on retirement towns, released a “Top Ten College Towns for Retirement” list this year using criteria such as the quality of life, cost of living, transportation, retail services, health care, cultural and volunteer activities and crime. His list: Boulder, Colo.; Chapel Hill, N.C.; Madison, Wis.; Gainesville, Fla.; Oxford, Miss.; Charlottesville, Va.; Eugene, Ore.; Fayetteville, Ark.; Ithaca, N.Y.; and Bloomington, Ind. (www.washingtontimes.com)
Washington Times (10/5/07); Carisa Chappell
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Family’s Custodial Approach Is Green
Three siblings converting 170 acres of family land into a 290-unit subdivision have decided to build a sustainable project that complements the land. That meant not only building green houses but making sure the entire development process, from site preparation to construction, was environmentally friendly. All of the homes in their Rock Hill Trails project will be built using green principles, said Matt Belcher, president of Belcher Homes, who is also president of the Home Builders Association of St. Louis and Eastern Missouri. The focus will be on using sustainable and recycled material and greater energy efficiency. A project like Rock Hill Trails has the advantage of scale, said Calli Schmidt, director of environmental communications for NAHB. Schmidt, who is familiar with the project, said planning a large development to be green has the potential for greater benefits. “You are having a better positive impact on a larger swath of land because you are starting from scratch,” she said. “You are taking a community that would perhaps have a much greater impact on the environment, and making it much smaller.” (www.stltoday.com)
St. Louis Post-Dispatch (10/5/08); Riddhi Trivedi
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