This May Be the Golden Age for First-Time Home Buyers
Five or ten years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers. Then, everyone who sat on their downpayment savings accounts for a few years too long will kick themselves for not taking advantage of what may turn out to be the buying opportunity of a lifetime for those who can qualify for a mortgage. Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will arrive when everyone is feeling the most pessimistic. That moment is certainly getting closer. Housing prices have fallen drastically from their peak levels in many areas of the country, and mortgage interest rates have been declining. Meanwhile, first-time home buyers have the same advantage they have always had, which is that they do not have to sell their old place before buying a new one. That is an added advantage in areas where many available houses simply are not moving, because the people trying to sell them will not be bidding against the first-timer. (www.seattletimes.com)
Seattle Times (12/13/08); Ron Lieber, New York Times News Service
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Builders See Growth in Attached Housing
In a troubled new-home market in which price is now an object, a growing number of suburban builders see attached products — townhouses — as an increasing part of their sales. Townhouses and, in smaller numbers, condos, are attracting suburban buyers at a higher rate than single-family houses in the seven-county Philadelphia suburban market — 49% in this year’s third quarter. At the height of the boom in 2005, townhouses garnered just 34.8%. The chief reason for the change is affordability. Such “entry-level” housing is the most active market because buyers can jump right in without having to sell their existing home, said Wayne Norris, regional sales manager for Hanley Wood Market Intelligence, which tracks new-home sales in this region and across the U.S. These buyers might be priced out of most single-family homes, but they can get into a townhouse or condo at an affordable monthly payment, Norris said. In the third quarter of 2008, with sales of all new homes in the region down more than 40%, the average sale price of a single-family house was about $459,000, compared with $307,000 for a townhouse. Builders have been adjusting to the demand by introducing attached homes in the mid-$100,000 range. Norris said the number of communities offering entry-level townhouses below $200,000 has increased 20% since 2006. In addition, almost 60% of 39,059 housing units for which suburban developers are seeking planning and zoning approvals fall into the attached category, Norris said. Of the 21,094 new homes for sale in the suburbs, slightly under half are attached. Gopal Ahluwalia, NAHB’s vice president of research, says that his surveys confirm that those who buy attached housing are looking to avoid outdoor maintenance, not less indoor space. That, and not affordability, he suggests, may be a major reason for the continued growth in the percentage of attached housing. (www.philly.com)
Philadelphia Inquirer (12/15/08); Alan J. Heavens
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The Divorced Find a Housing Niche
Developers in New Jersey are creating a new type of niche housing that appeals to divorced parents who are looking for a place where their children will feel at home on weekends and that don’t require the maintenance of a single-family house. Six AVE complexes, all close to mass transit centers, differ from extended-stay residences in that they offer both luxury hotel-style services and rental units, furnished and unfurnished, with condo-style amenities. A luxury tenant can sign a lease for any time period 30 days or longer, and move in within 49 hours. Furnished units at the midrise AVE complexes are leased on a monthly basis, for daily rates starting at $145. Most takers are corporate travelers and business people, either working on long-term projects or being relocated, said Lea Anne Welsh, who developed the AVE brand for Korman Communities. But it is the unfurnished units — leased for a minimum of six months, and ordinarily a year — that are emerging as a “hybrid” housing alternative, she said. Set off in separate wings, and offering weekly social events for residents, in addition to the AVE concierge services, free café breakfast and fitness center access, they are evolving into small “neighborhoods,” she said. “That alternative seems to appeal really strongly to the divorced-dad/executive group,” Welsh said, “and some divorced moms, too.” Dozens of no-longer-married adults, many of them with children, have signed leases for a year’s term or longer at each of the complexes, she said; divorced fathers account for about 25% of all tenants at the 785 units in New Jersey, and 508 in Pennsylvania. (www.nytimes.com)
New York Times (12/14/08); Antoinette Martin
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Vigorous Boomers Snap Up Easier Life
NAHB says that 75% of remodeling contractors have seen an increase in requests for aging-in-place work, which most often means adding grab bars to bathrooms, installing higher toilets and a curbless shower, widening doors or adding a ramp or lower threshold. NAHB says that in order to “age in place,” residents need a first-floor master bedroom and bath, a low- or no-threshold entrance to the home, lever-style door handles, no change in levels on the main floor, bright lighting, a low-maintenance exterior, nonslipping flooring in the entryway, and open floor plan and handrails at all steps. Michael Owings, president and general manager of Owings Bros. Contracting in Eldersburg, Md., says that most of the aging-in-place work his company does involves adding a first-floor bedroom suite. “A lot of baby boomers are asking us to do a first-floor master addition for their in-laws or parents, planning to use it themselves in future years,” says Owings. “Baby boomers have taken better care of themselves, and they want to think they are invincible, so they don’t want to do too much universal design now. They are just planning for the future at this point. Owings says that the extensive availability of newly constructed homes with first-floor master suites and other universal design elements may encourage more people to move rather than to modify their homes to age in place. (www.washingtontimes.com)
Washington Times (12/12/08); Michele Lerner
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Grand Island Population Outpacing Housing Growth
Grand Island, Neb. needs 181 new housing units — houses or apartments — each year for the next five years and needs to replace 33 deteriorated housing units in the same time frame. “Your population is outgrowing your housing unit growth — which is a bad thing,” said planning consultant Chris Solberg of Schemmer Architects, Engineers, Planners of Lincoln. Although specifics about the needed units are yet to come, Schemmer project manager Bruce Fountain said homes in the $110,000 to $150,000 range are one of the most apparent needs. The median home price in Grand Island is $93,000, he said, but the median household income is $43,840, which is enough income to afford an $88,430 home. Reducing that gap will take an increase in monthly household incomes, an increase in downpayments, a reduction in home costs or interest rates or a reduction in the amount of the first mortgage through affordable housing programs. Grand Island’s population — which is projected to be an estimated 47,621 in 2010 and 52,812 in 2020 — is increasing by about 1.01% a year, but its growth in housing units is just 0.97% a year. That means there’s a cumulative need of 1,267 housing units by 2013, including replacement and new housing needs, plus extras to account for choice, vacancies and turnover time to allow for families to move in and out of housing. “It’s pretty significant,” Solberg said. (www.theindependent.com)
Grand Island Independent (12/11/08); Tracy Overstreet
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Reverse Mortgages Getting More Popular in Tough Economy
Retirees who have been watching in dismay as the value of both their home and investments slide southward while everyday costs aren’t falling correspondingly, received an unexpected windfall of good news last month: Loan amounts on reverse mortgages have been increased, and the fees decreased. A reverse mortgage allows home owners 62 or older to borrow up to $417,000 of their home’s equity to use any way they wish; the old limit was $352,790. They don’t have to repay it as long as they stay in the home. As the economy unwinds, reverse-mortgage officer Jerry Dawson of Frontier Bank says he’s increasingly been hearing from older home owners who are anxious about their finances and looking for cash. “I’ve taken five applications in the last two weeks for that very reason,” said Dawson. “A lot of people rely on liquidating their portfolios over their lifetime to supplement their income. Now they’re asking if there’s a way to use the equity in their home instead of selling their portfolio in a bad time.” Reverse mortgages have been growing in popularity for some years now, with more than 100,000 home owners nationally taking them out so far this year. Following the turmoil in the mortgage industry, both private-lender and Fannie Mae reverse mortgages have either ceased or been cut back substantially, says Darryl Hicks, associate director of the National Reverse Mortgage Lenders Association in Washington, D.C. That leaves the FHA as the biggest player. It announced the new across-the-board national $417,000 limit for its reverse loan, called Home Equity Conversion Mortgage, or HECM for short. (www.seattletimes.com)
Seattle Times 912/8/08); Elizabeth Rhodes
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