New York Times, May 9, 2006
By Damon Darlin and Vikas Bajaj
Many Americans who planned on real estate as their path to wealth are beginning to find that there are limits to how high is up.
Blame market forces. As higher interest rates dampen demand in cities and suburbs that only a year ago were battlegrounds for fierce bidding wars among numerous buyers, sellers are grudgingly lowering their prices to drum up interest.
A house at 57 Marina Boulevard in San Rafael, across the bay from San Francisco, was originally listed at $1.45 million. The owner recently dropped the price to $949,000 when a competing house on the same street lowered its price to $959,000, from $989,000. In Marin County, the prices of about a quarter of all listings have been reduced. County records show that 57 Marina Boulevard was sold in February for $700,000, so the owner, Dan Marr, is unlikely to lose money even at the lower price, though he may not make as much as he had hoped. "I don't want to talk about it," he said.
It is getting tough out there for sellers. What is happening in Marin County is being repeated in cities and suburbs across the United States. Nearly a year after the sales of homes peaked, buyers are wresting control from sellers in many areas as inventories of unsold homes have grown, in some markets doubling. Few people are losing money after the run-up in housing prices in the last 10 years, but the air is coming out of the market.
It is a slow leak, to be sure. The most widely used statistic to measure home values, the median home price, shows that once-hot markets like San Mateo, Calif., and Mercer County, N.J., are now registering year-over-year declines. In general, prices are still climbing, but they are doing so far more slowly in cities like Las Vegas and San Diego, which had been lucrative markets for speculators.
"It's going from a seller's market to a buyer's market," said David Lereah, the chief economist for the National Association of Realtors. In March, "price appreciation went down to 7.4 percent, from over 10 percent," he added. "That most probably reflects that sellers are bringing their prices down."
As always, real estate remains intensely local and sellers have retained, or regained, control in some markets, because there are fewer properties to be had and demand is being bolstered by stronger job markets. Even in markets with growing inventories like Chicago, the situation is not uniformly weak in all neighborhoods.
ZipRealty, the discount real estate broker, has found widespread price reductions in the multiple listing services used by all agents to advertise homes. Prices have been trimmed on 35.7 percent of all homes currently listed for sale in the Boston area, for example. The same is true for homes in San Diego, Sacramento, Los Angeles and Miami. And prices have been snipped on a quarter of the homes in Chicago, Washington and Baltimore.
In Silicon Valley, where jobs are coming back after the collapse of the technology bubble, Richard Calhoun, a real estate agent, said that the number of homes sold was now 85 percent of the 25-year average. A year ago, it was 30 percent above that average. In Santa Cruz, inventories have tripled to 124 days, from 42 days.
A result is that the median price of homes in San Mateo County dropped 2.7 percent, to $875,000, in March, from $899,000 a year earlier.
"It's clearly a slowdown," Mr. Calhoun, the Silicon Valley agent, said. "But how can you complain when more than 50 percent of sellers are getting more than their asking price and when you have only two months of inventory when in other places four to six months is considered normal?"
Elsewhere, for the first time in nearly a decade, you can smell the anxiety. The listing agent for a four-bedroom home on Scripps Trail in San Diego informed other agents in the multiple-listing service that a "very, very motivated seller will entertain all reasonable offers" and "will help with closing costs." The house was listed in September at $810,000. After a previous price cut, the seller is now willing to entertain offers as low as $685,000.
The seller bought the house for $730,000 in 2005, according to county property records, for what the listing agent said were investment purposes.
Taking a loss is still rare for sellers, because homes appreciated so much in the 1990's and 2000's. Stephen and Brenda Abelkop bought their four-bedroom house in La Jolla, Calif., for around $850,000 about 15 years ago.
When they put it up for sale right after Thanksgiving, they followed their agent's advice to ask for $2.75 million. "You price it for the market," Mr. Abelkop said.
But they didn't attract much interest. Inventories in the San Diego area have risen 25 percent in the last year, to more than 19,000 unsold homes, a record. So there is a lot more competition, even for a high-end property like the Abelkops' house, which has sweeping views of San Diego Bay. They recently dropped the price to a range of $2.5 million to $2.7 million and said the drop had resulted in more buyer visits.
Some agents say setting price ranges attracts buyers who would otherwise walk away thinking the home was too expensive. Others say it is simply a sign of a wavering owner.
Because sellers are not panicking, it appears unlikely that the real estate market will fall abruptly. "Sellers remain optimistic," said Edward Leamer, an economist at the University of California, Los Angeles.
Mr. Leamer sees some evidence that the bubble is deflating slowly, but says he finds it striking that it has taken so long. For example, sales volume peaked in the San Diego area in the summer of 2003. Only in January did inventories begin to swell, hitting an eight-month supply of homes that month, and sellers began to get nervous enough to bring the prices down.
Inventories have since moved closer to a six-month supply of homes, which balances the volume between buyer and seller.
PMI, a company that tracks risk in the real estate market for mortgage lenders, said the chances were increasing that prices in San Diego would decline in the next two years. The company said the city had a 60 percent chance of a decline, up from 52.8 percent last summer.
Prices in most of California and the Boston-to-New York corridor could also fall, said Mark Milner, the company's chief risk officer. Its statistics, which lag the current market by about two months, show homes continuing to appreciate, but at a slower rate.
After open houses for their four-bedroom, two-story ranch house in Lawrenceville, N.J., brought in no offers, Mary Ellen and Anthony Pierrard are telling potential buyers they are willing to negotiate their $420,000 asking price and are even considering enlisting a real estate agent to help them market their home. That's a far cry from the couple's experience selling two houses on their own in Rockland County, N.Y., a few years ago.
"During the first open house for both, we received a minimum two to three offers," Mrs. Pierrard, a corporate employee relations manager, said. "We sold them on the first day. Now, no one is even making an offer, period."
Robin L. McCarthy, a real estate agent who works in nearby Princeton, N.J., said homes were sitting on the market three to four months, when houses sold in as little as a few days a year ago. Houses that would have been the subject of intense bidding wars now sell for slightly less than asking price.
"Buyers are afraid that real estate prices are going to go down, so they are very careful," Ms. McCarthy said. "They don't want to pay too much."
Thus far, prices have not fallen in any of the 375 largest American cities tracked by the PMI Group. But many are showing a sharp deceleration in price increases, among them Las Vegas, San Diego, Elmira, N.Y., and Lebanon, Pa.
Still, those cities are outnumbered by cities where prices are drastically accelerating — like St. George, Utah; Binghamton, N.Y.; Boise, Idaho; Naples, Fla.; and most cities in Arizona.
"We'd expect a soft landing in prices because, naturally, the economy is strong," Mr. Milner said. Unless a recession hits and people begin to lose jobs, house prices will fall slowly, most economists say.
In the new home business, large builders like Toll Brothers and Hovnanian Enterprises report that orders have fallen 4 percent to 29 percent but that average selling prices are still rising, albeit more slowly than six months ago. Nationally, however, the Commerce Department reported that median new-home prices — half the homes sold for more, half for less — fell 2.2 percent, to $224,200, in March from a year ago. It was the first year-over-year price decline since February 2003.
Inventories are not high in every city. For a variety of reasons, mostly stronger job markets, sales and prices are picking up in markets like Houston, Boise and Dallas, which did not see a boom in recent years, experts say.
In Seattle, for instance, some buyers are enmeshed in bidding wars that push prices far beyond the asking price — a phenomenon that was common in San Diego, Las Vegas and Washington only a year ago. Glenn Kelman, chief executive of Redfin, a new online real estate service based in Seattle, has hired a champion video gamer, with great thumb-twitching skill, to speed data entry during the multioffer auctions. "Polite, soggy Seattleites have become blood-thirsty cannibals," he said.
Houston appears to be benefiting from strength in the energy industry, robust hiring and transplants from Louisiana. More than 100,000 hurricane evacuees are living in the city and its suburbs. Clint Simpson of Greenwood King Properties said that in the last month he had represented four home buyers who were relocating to Houston because their companies were scaling back operations in New Orleans.
"Houses are getting multiple offers the first week on the market and many of them are going over list," he said.
In March, sales of existing homes were up 22 percent from a year earlier and median prices rose 5.4 percent, to $143,310, according to the Houston Association of Realtors. Inventories fell by nearly 3 percent in the month.
Formerly hot coastal markets and previously flat markets in the middle of the country have reversed their roles, said Mr. Lereah, from the Realtors association.
In Chicago, real estate agents say each neighborhood is different. A high-rise building boom has created a glut of condos downtown and buyers can often negotiate free parking spaces, which previously would have cost $35,000. But the pickings are so slim in the popular Lakeview area north of the central business district that an agent, Brad Lipitz, recently found only three listings there. "Chicago is comprised of many markets," he noted.
In Southern Florida, agents and sellers say sales have slackened as inventories have ballooned, but they note that prices are not falling.
Donna L. Lanzon sold her late mother's two-bedroom condo in Deerfield Beach in Broward County in March. The condo was initially priced at $250,000, but Ms. Lanzon reduced the asking price to $235,000 and sold the 1,260-square-foot, two-bedroom unit for $225,000 after three months on the market.
Her agent, Cathleen Flanagan, who works for ZipRealty, said the growing inventory — the Fort Lauderdale area had more than 20,000 homes for sale at the end of April, more than four times the level a year ago — had forced sellers to rethink their asking prices and offer incentives, like increasing the commission of the buyer's agent to 4 percent, instead of following the usual practice of splitting a 6 percent commission between buyer's and seller's agents. One seller recently offered a free five-night Caribbean cruise for two.
Do the tactics work? "Absolutely; it makes sense," Ms. Flanagan said. "A lot of buyers' agents will go out there to see the home."
Correction: May 11, 2006
An article in Business Day on Tuesday about a slowing in the market for home sellers misstated the original list price of a house owned by Dan Marr in San Rafael, Calif. It was $1.045 million, not $1.45 million.
11 May 2006
The Nitpicking Nation
New York Times, May 7, 2006
By Stephanie Rosenbloom
They are single, gay, straight, biracial, conservative, liberal and tattooed — and they have as many preferences for a potential roommate as an online dater has for a potential lover. They are bankers, fetishists, self-declared nerds and drug users. They have old wounds and new hopes, and are willing to barter their cooking and sexual expertise for free or discounted rent.
They are all seeking and selling housing on Craigslist.org, the electronic listing service with sites in all 50 states and more than 200 worldwide. And because users pay nothing (for now) and are able to go on at length about who they are and what they want, their postings provide a sociological window into housing trends and desires across the country, from the neon cityscape of the Las Vegas Strip to the wheat fields of Wichita, Kan.
Myriad other sites provide roommate-matching services, but in the last decade Craigslist has emerged as the gold standard. It is easy to navigate, has an extensive number of listings and does not require people to complete an online sign-up sheet to view postings in their entirety. And the intimate and sometimes politically incorrect nature of Craigslist postings can make them fun to read — amusing, frank and even kinky.
Perhaps the most eyebrow-raising thing about the housing listings is the abundance of users — even young, savvy residents of anything-goes metropolises like Los Angeles and Miami — who want mellow, nonpartying roommates. Las Vegas sounds more like Snore City if you judge it by its housing listings. And New Yorkers can come off sounding square. "No parties" and "no drama" are common refrains.
There are exceptions, but even club-hopping Paris Hilton hopefuls seem to have their limits. As four women (ages 19 to 22) seeking a fifth roommate in Boston wrote, "We want a partier, not a puker."
People in their 20's often list their alma maters and request a roommate in their own age group. Cleanliness is a must, or at least "clean-ish," "decently clean" or "clean in public spaces." And spending life with a "professional" appears to be just as important to users of Craigslist's housing listings as it is to users of Match.com.
Some listings have stirred up trouble, however, and the Chicago Lawyers' Committee for Civil Rights Under Law, a nonprofit group, has filed a lawsuit in federal court against Craigslist for "publishing housing advertisements which exclude prospective tenants on the basis of race, gender, family status, marital status, national origin and religion."
A news release issued by the organization said that the Craigslist postings contained such language as "no minorities," "African-Americans and Arabians tend to clash with me so that won't work out," "ladies, please rent from me," "requirements: clean godly Christian male," "will allow only single occupancy," and "no children."
The suit is addressed on Craigslist: "Although in all likelihood this suit will be dismissed on the grounds that Internet sites cannot legally be held liable for content posted by users, Craigslist has no need to hide behind this well-established immunity."
The statement also says that Craigslist respects constitutionally protected free speech rights and that "discriminatory postings are exceedingly uncommon, and those few that do reach the site are typically removed quickly by our users through the flagging system that accompanies each ad."
Craig Newmark, the founder of Craigslist, said that its "culture of trust" inspires users to be straightforward. In fact, some users do not even feel compelled to embellish the descriptions of their spaces, as housing advertisements commonly do. Rather, they take a certain pride in the gritty crudeness of their offerings. A small room for rent in the East Village is described as "definitely a young person's apartment" with "two small junky TV's that we have cheap antennas on, but we get the normal channels, and that is enough for us."
"There is no window," the listing says, "but you have a full-sized door."
And where else do you find housing listings that include candid photographs of the owner or leaseholder instead of the property they are advertising? (A man in Fort Lauderdale, Fla., compromised and included images of his bare room and his bare chest.)
Indeed, Craigslist is where sex and real estate can truly merge. Near Dallas, a married couple are looking for a female roommate "with benefits." A listing for Astoria, Queens, reads: "I am offering a free room for up to three months for any females who are ticklish." A single man in Los Angeles is offering foot massages and free rent to women with comely feet.
Those are some of the tamer overtures, though the majority of roommate listings are not suggestive.
But just who are the most desirable roommates?
Many people prefer women to men. There are women who feel more comfortable sharing a home with someone of the same sex, men who say they get along better with female housemates, and a few cyberspace Casanovas who want to take a shot at turning a roommate into a bedmate. Interns are also desirable, apparently because they are thought to be hard-working, responsible and willing to pay good money for cramped rooms.
But couples are sometimes lumped into a list of the unacceptable, like cigarette smoking. Over all, Democrats are more vocal than Republicans in expressing a desire not to live with the opposing party, though two "hip professional guys" found elusive harmony on Capitol Hill: "One guy is straight, and one is gay. One is a Republican, and the other is a Democrat," they wrote in a listing for a third roommate. "We appreciate and welcome diversity."
Users in the San Francisco Bay Area appear to be among the least interested in rooming with a pet. This area had the highest percentage of "no pets" listings during a key-word search last Thursday (slightly more than 16 percent of 32,295 housing listings). In Boston, about 14 percent of 45,880 listings said "no pets."
Dallas, Wyoming and Birmingham, Ala., seemed quite pet-friendly by comparison: only about 1 percent of the housing listings in each location said "no pets." But Wichita, Kan., emerged as one of the most accepting places, with less than 1 percent of the listings snubbing pets.
In some parts of the country Craigslist housing postings are an essential part of the real estate biosphere. New York is by far the leader in this regard (it had some 180,245 housing listings last Thursday).
Mr. Newmark said there were two reasons for that. "New York real estate is kind of a blood sport," he said, "and also, because our site is free, brokers tend to post a lot of redundant ads."
He said he hoped to address that problem in a matter of weeks by beginning to charge a fee.
Although Mr. Newmark has not studied how the number of housing listings fluctuates day to day, he believes they remain fairly steady on weekdays and drop off on weekends.
Boston had 45,880 housing listings last Thursday, and the San Francisco Bay Area had 32,295. In other places like Montana and Louisville, Ky., there were just a few hundred postings, and North Dakota had fewer than 100.
The New York listings include some of the most expensive, precarious sleeping arrangements in the country. A sofa bed in the living room/kitchen of a one-bedroom apartment on 55th Street between Eighth and Ninth Avenues is $683 a month. You could get a 780-square-foot one-bedroom cottage in Savannah, Ga., for $665 a month. A couch on the West Coast, in a Los Angeles apartment belonging to three actors, is merely $400 a month and includes utilities, cable, Netflix membership, Starbucks wireless membership and wireless Internet, as well as household staples like toothpaste and shampoo.
New Yorkers are also adept at constructing what the military calls a zone of separation. A woman with an apartment at Union Square posted a photograph, not of the bedroom she wanted to rent out for $1,150 a month, but of a large divider she planned to use to create the bedroom from part of her living room.
Near Columbus Circle, a "very small, but cozy space enclosed by tall bookshelves and bamboo screens" is listed for $1,700 a month. Potential occupants are advised that they must be older than 30 and cannot wear shoes inside the apartment, smoke, consume alcohol, invite guests over or have "sleepovers."
A plethora of "no smokers" statements in the New York housing listings make it appear that the public smoking ban has infiltrated private spaces, too.
But while cigarettes are a deal breaker for some, a number of Craigslist users across the country (Denver and Boulder, Colo.; San Francisco; Boston; and Portland, Ore., to name but a few) say that they are "420 friendly," slang for marijuana use. References to 420 were nonexistent in other cities, including Little Rock, Ark.; Santa Fe, N.M.; and Boise, Idaho.
There are also myriad references to amenities, everything from the use of old record collections and video games to a trapeze suspended in a Brooklyn loft. A posting for a room for rent in Detroit lacks images of the property, though there is a photograph of the L.C.D. television.
And if nothing else, Craigslist housing postings in the United States confirm the zaniness of the hunt and provide a taste of the free-spirited, random connections that have always been part of the experience.
A posting in Asheville, N.C., says that two 21-year-old women are planning to drive almost 20 hours to Austin, Tex., this summer, where they will rent a two-bedroom apartment for $550 a month. "We are looking for one or two (yeah, you can bring a buddy) cool people to ride out there and split an apartment with us," the listing reads. "Are you up for being spontaneous?"
Would-be Jack Kerouacs, take note: they hit the road at the end of the month.
By Stephanie Rosenbloom
They are single, gay, straight, biracial, conservative, liberal and tattooed — and they have as many preferences for a potential roommate as an online dater has for a potential lover. They are bankers, fetishists, self-declared nerds and drug users. They have old wounds and new hopes, and are willing to barter their cooking and sexual expertise for free or discounted rent.
They are all seeking and selling housing on Craigslist.org, the electronic listing service with sites in all 50 states and more than 200 worldwide. And because users pay nothing (for now) and are able to go on at length about who they are and what they want, their postings provide a sociological window into housing trends and desires across the country, from the neon cityscape of the Las Vegas Strip to the wheat fields of Wichita, Kan.
Myriad other sites provide roommate-matching services, but in the last decade Craigslist has emerged as the gold standard. It is easy to navigate, has an extensive number of listings and does not require people to complete an online sign-up sheet to view postings in their entirety. And the intimate and sometimes politically incorrect nature of Craigslist postings can make them fun to read — amusing, frank and even kinky.
Perhaps the most eyebrow-raising thing about the housing listings is the abundance of users — even young, savvy residents of anything-goes metropolises like Los Angeles and Miami — who want mellow, nonpartying roommates. Las Vegas sounds more like Snore City if you judge it by its housing listings. And New Yorkers can come off sounding square. "No parties" and "no drama" are common refrains.
There are exceptions, but even club-hopping Paris Hilton hopefuls seem to have their limits. As four women (ages 19 to 22) seeking a fifth roommate in Boston wrote, "We want a partier, not a puker."
People in their 20's often list their alma maters and request a roommate in their own age group. Cleanliness is a must, or at least "clean-ish," "decently clean" or "clean in public spaces." And spending life with a "professional" appears to be just as important to users of Craigslist's housing listings as it is to users of Match.com.
Some listings have stirred up trouble, however, and the Chicago Lawyers' Committee for Civil Rights Under Law, a nonprofit group, has filed a lawsuit in federal court against Craigslist for "publishing housing advertisements which exclude prospective tenants on the basis of race, gender, family status, marital status, national origin and religion."
A news release issued by the organization said that the Craigslist postings contained such language as "no minorities," "African-Americans and Arabians tend to clash with me so that won't work out," "ladies, please rent from me," "requirements: clean godly Christian male," "will allow only single occupancy," and "no children."
The suit is addressed on Craigslist: "Although in all likelihood this suit will be dismissed on the grounds that Internet sites cannot legally be held liable for content posted by users, Craigslist has no need to hide behind this well-established immunity."
The statement also says that Craigslist respects constitutionally protected free speech rights and that "discriminatory postings are exceedingly uncommon, and those few that do reach the site are typically removed quickly by our users through the flagging system that accompanies each ad."
Craig Newmark, the founder of Craigslist, said that its "culture of trust" inspires users to be straightforward. In fact, some users do not even feel compelled to embellish the descriptions of their spaces, as housing advertisements commonly do. Rather, they take a certain pride in the gritty crudeness of their offerings. A small room for rent in the East Village is described as "definitely a young person's apartment" with "two small junky TV's that we have cheap antennas on, but we get the normal channels, and that is enough for us."
"There is no window," the listing says, "but you have a full-sized door."
And where else do you find housing listings that include candid photographs of the owner or leaseholder instead of the property they are advertising? (A man in Fort Lauderdale, Fla., compromised and included images of his bare room and his bare chest.)
Indeed, Craigslist is where sex and real estate can truly merge. Near Dallas, a married couple are looking for a female roommate "with benefits." A listing for Astoria, Queens, reads: "I am offering a free room for up to three months for any females who are ticklish." A single man in Los Angeles is offering foot massages and free rent to women with comely feet.
Those are some of the tamer overtures, though the majority of roommate listings are not suggestive.
But just who are the most desirable roommates?
Many people prefer women to men. There are women who feel more comfortable sharing a home with someone of the same sex, men who say they get along better with female housemates, and a few cyberspace Casanovas who want to take a shot at turning a roommate into a bedmate. Interns are also desirable, apparently because they are thought to be hard-working, responsible and willing to pay good money for cramped rooms.
But couples are sometimes lumped into a list of the unacceptable, like cigarette smoking. Over all, Democrats are more vocal than Republicans in expressing a desire not to live with the opposing party, though two "hip professional guys" found elusive harmony on Capitol Hill: "One guy is straight, and one is gay. One is a Republican, and the other is a Democrat," they wrote in a listing for a third roommate. "We appreciate and welcome diversity."
Users in the San Francisco Bay Area appear to be among the least interested in rooming with a pet. This area had the highest percentage of "no pets" listings during a key-word search last Thursday (slightly more than 16 percent of 32,295 housing listings). In Boston, about 14 percent of 45,880 listings said "no pets."
Dallas, Wyoming and Birmingham, Ala., seemed quite pet-friendly by comparison: only about 1 percent of the housing listings in each location said "no pets." But Wichita, Kan., emerged as one of the most accepting places, with less than 1 percent of the listings snubbing pets.
In some parts of the country Craigslist housing postings are an essential part of the real estate biosphere. New York is by far the leader in this regard (it had some 180,245 housing listings last Thursday).
Mr. Newmark said there were two reasons for that. "New York real estate is kind of a blood sport," he said, "and also, because our site is free, brokers tend to post a lot of redundant ads."
He said he hoped to address that problem in a matter of weeks by beginning to charge a fee.
Although Mr. Newmark has not studied how the number of housing listings fluctuates day to day, he believes they remain fairly steady on weekdays and drop off on weekends.
Boston had 45,880 housing listings last Thursday, and the San Francisco Bay Area had 32,295. In other places like Montana and Louisville, Ky., there were just a few hundred postings, and North Dakota had fewer than 100.
The New York listings include some of the most expensive, precarious sleeping arrangements in the country. A sofa bed in the living room/kitchen of a one-bedroom apartment on 55th Street between Eighth and Ninth Avenues is $683 a month. You could get a 780-square-foot one-bedroom cottage in Savannah, Ga., for $665 a month. A couch on the West Coast, in a Los Angeles apartment belonging to three actors, is merely $400 a month and includes utilities, cable, Netflix membership, Starbucks wireless membership and wireless Internet, as well as household staples like toothpaste and shampoo.
New Yorkers are also adept at constructing what the military calls a zone of separation. A woman with an apartment at Union Square posted a photograph, not of the bedroom she wanted to rent out for $1,150 a month, but of a large divider she planned to use to create the bedroom from part of her living room.
Near Columbus Circle, a "very small, but cozy space enclosed by tall bookshelves and bamboo screens" is listed for $1,700 a month. Potential occupants are advised that they must be older than 30 and cannot wear shoes inside the apartment, smoke, consume alcohol, invite guests over or have "sleepovers."
A plethora of "no smokers" statements in the New York housing listings make it appear that the public smoking ban has infiltrated private spaces, too.
But while cigarettes are a deal breaker for some, a number of Craigslist users across the country (Denver and Boulder, Colo.; San Francisco; Boston; and Portland, Ore., to name but a few) say that they are "420 friendly," slang for marijuana use. References to 420 were nonexistent in other cities, including Little Rock, Ark.; Santa Fe, N.M.; and Boise, Idaho.
There are also myriad references to amenities, everything from the use of old record collections and video games to a trapeze suspended in a Brooklyn loft. A posting for a room for rent in Detroit lacks images of the property, though there is a photograph of the L.C.D. television.
And if nothing else, Craigslist housing postings in the United States confirm the zaniness of the hunt and provide a taste of the free-spirited, random connections that have always been part of the experience.
A posting in Asheville, N.C., says that two 21-year-old women are planning to drive almost 20 hours to Austin, Tex., this summer, where they will rent a two-bedroom apartment for $550 a month. "We are looking for one or two (yeah, you can bring a buddy) cool people to ride out there and split an apartment with us," the listing reads. "Are you up for being spontaneous?"
Would-be Jack Kerouacs, take note: they hit the road at the end of the month.
How to Improve Your Credit Score
New York Times, May 7, 2006
By Jay Romano
DO you know your credit score? If you do — and if you don't, you should — you may be able to improve it in just a few months.
"The credit score is a significant factor used by lenders to determine both the interest rate and type of loan program a borrower is eligible for," said Oded Ben-Ami, a senior loan officer for Sterling National Mortgage in Great Neck, N.Y. "And there are circumstances in which even one point either way can make a difference."
The credit score, which ranges from 300 to 850, is basically a quantification of an individual's creditworthiness. Generally, people with scores below 620 are considered poor risks, and those with scores above 680 are considered acceptable risks. The median score in the United States is 723; typically, the higher the score, the lower the mortgage rate a consumer will pay.
The Fair Isaac Corporation, a Minneapolis data management company, developed the formula that is applied to raw data in consumer credit files of the three large credit-reporting bureaus: Equifax, TransUnion and Experian. The result is known as the FICO score.
Craig Watts, the public affairs manager for Fair Isaac, said the factors considered include whether debts are paid on time, what type of credit has been granted in the past, how much of the available credit has been used, and whether there are any judgments, foreclosures, bankruptcies or liens.
While a FICO score is based upon several years of credit history, consumers may be able to raise their scores fairly quickly. Gerri Detweiler, a spokeswoman for an online consumer financial service called EverydayWealth.com, said the first step is to get a current credit report from each of the three bureaus. "If there are mistakes that are damaging your credit, you have a right to get them off" by writing to the company that issued the report, she said.
For example, Ms. Detweiler said, late-payment information more than seven years old should not be included. (Bankruptcies, tax liens and court judgments are not subject to the seven-year limit.)
Another way to improve a score is to reduce the balance on credit cards that are near their limit. And while the most improvement will result if the balance is actually paid down, it may be possible to improve your score by transferring some charges to a card with a low balance.
Those considering taking out a mortgage in the next few months should avoid making substantial charges to credit cards, even if they plan to pay the full balance.
"What the report shows is a snapshot of a specific moment in time," Ms. Detweiler said. If the report is issued before the balance is paid, it could make you appear less creditworthy than you actually are.
Another strategy that may increase a credit score is "piggybacking." Consumers who do not have much of a credit history will not have a good credit score, Ms. Detweiler explained, even if the history they do have is good. But if they are added as an authorized user on a card issued to someone else — a parent, perhaps — the credit history of that card may be reflected on the user's credit report as well.
Mr. Watts of Fair Isaac said that one thing consumers should avoid in trying to improve their scores is to close old accounts. Since the FICO formula takes into consideration how long a consumer has had a particular credit account, closing a longstanding account could damage the score. And since the formula factors in the ratio of used credit to available credit, closing an account will increase that ratio and could reduce the score.
Once a year, consumers can obtain a free copy of their credit report from each bureau by going to annualcreditreport.com. The FICO score based on a specific credit report, along with a copy of that report, is available for $14.95 from myfico.com, a Fair Isaac Web site.
By Jay Romano
DO you know your credit score? If you do — and if you don't, you should — you may be able to improve it in just a few months.
"The credit score is a significant factor used by lenders to determine both the interest rate and type of loan program a borrower is eligible for," said Oded Ben-Ami, a senior loan officer for Sterling National Mortgage in Great Neck, N.Y. "And there are circumstances in which even one point either way can make a difference."
The credit score, which ranges from 300 to 850, is basically a quantification of an individual's creditworthiness. Generally, people with scores below 620 are considered poor risks, and those with scores above 680 are considered acceptable risks. The median score in the United States is 723; typically, the higher the score, the lower the mortgage rate a consumer will pay.
The Fair Isaac Corporation, a Minneapolis data management company, developed the formula that is applied to raw data in consumer credit files of the three large credit-reporting bureaus: Equifax, TransUnion and Experian. The result is known as the FICO score.
Craig Watts, the public affairs manager for Fair Isaac, said the factors considered include whether debts are paid on time, what type of credit has been granted in the past, how much of the available credit has been used, and whether there are any judgments, foreclosures, bankruptcies or liens.
While a FICO score is based upon several years of credit history, consumers may be able to raise their scores fairly quickly. Gerri Detweiler, a spokeswoman for an online consumer financial service called EverydayWealth.com, said the first step is to get a current credit report from each of the three bureaus. "If there are mistakes that are damaging your credit, you have a right to get them off" by writing to the company that issued the report, she said.
For example, Ms. Detweiler said, late-payment information more than seven years old should not be included. (Bankruptcies, tax liens and court judgments are not subject to the seven-year limit.)
Another way to improve a score is to reduce the balance on credit cards that are near their limit. And while the most improvement will result if the balance is actually paid down, it may be possible to improve your score by transferring some charges to a card with a low balance.
Those considering taking out a mortgage in the next few months should avoid making substantial charges to credit cards, even if they plan to pay the full balance.
"What the report shows is a snapshot of a specific moment in time," Ms. Detweiler said. If the report is issued before the balance is paid, it could make you appear less creditworthy than you actually are.
Another strategy that may increase a credit score is "piggybacking." Consumers who do not have much of a credit history will not have a good credit score, Ms. Detweiler explained, even if the history they do have is good. But if they are added as an authorized user on a card issued to someone else — a parent, perhaps — the credit history of that card may be reflected on the user's credit report as well.
Mr. Watts of Fair Isaac said that one thing consumers should avoid in trying to improve their scores is to close old accounts. Since the FICO formula takes into consideration how long a consumer has had a particular credit account, closing a longstanding account could damage the score. And since the formula factors in the ratio of used credit to available credit, closing an account will increase that ratio and could reduce the score.
Once a year, consumers can obtain a free copy of their credit report from each bureau by going to annualcreditreport.com. The FICO score based on a specific credit report, along with a copy of that report, is available for $14.95 from myfico.com, a Fair Isaac Web site.
Buyer's market trips quick-flip investors
Washington Times, May 5, 2006
By M. Anthony Carr
I have received several e-mails lately with tales of woe. Seems that would-be investors bought pre-construction dwellings a few months ago in hopes of grabbing a quick buck by flipping the house when they went to settlement.
In the heated market last year, many a novice investor made a lot of money this way. Few, however, heeded the warning given at that time that a turn toward a buyer's market could cause them much pain and financial suffering. Now they're paying for it.
Today's market is less-fevered, but still healthy in some areas. Many would-be investors are now homeowners without two things: Cash to go to settlement or a renter to make their monthly payment for them.
They gambled that they would never have to go to settlement, with dreams of walking away with a lot of cash in return for simply being in line with deposit money a few months before.
So, when people ask me about a good place to invest, I do not point to the markets that have been moving upward for long periods of time and where they cannot cover their monthly payment with fair-market rent.
If you want to build cash flow, seeking more money coming in each month than is going out, then look for the long-haul principle of buy and wait.
Investors look for two ways to grow wealth: Asset growth and cash flow. In good times, you get both in the same property. Sometimes, though, you have to settle for one or the other.
Eventually, a market will appreciate so much that the going rents won't pay the monthly payment for the come-lately investor. The investment creates a cash shortage each month. This isn't necessarily bad. For instance, if your rent is $1,000 per month, but the mortgage is $1,200, the $200 monthly shortfall might be affordable and provide a good return on the investment in the long haul if the asset is growing at a healthy rate.
If the property is appreciating at 10 percent and its value surpasses the $2,400 per year in payments you have to make beyond the rental income through the year, the asset growth builds your wealth. The renter makes the majority of the investment per month for you.
If you're looking to invest in short-term real estate -- a fixer-upper to flip --then mortgage programs designed for a low monthly payment might be the tool to use. These would be various adjustable rate mortgages, Cost of Funds Index (COFI) or Option ARMS, and interest-only mortgages.
Some of these programs enable the investor/buyer to qualify for more property, control cash flow and wait for property values to rise before selling or exchanging for a larger, more profitable investment.
For instance, the 2/1 buy-down is making its way back into the marketplace. This is a mortgage that begins its interest rate 2 points lower than the fixed rate, then moves up another percentage point the next year and then finally to a fixed-rate on the third to 30th years.
This type of loan was what I used on my very first mortgage. I was so excited to get a starting rate of 10 percent. By the time it increased to the 12 percent mark, fixed-rate mortgages were headed downward and I refinanced to 7.5 percent, a rate that I found even more exciting at the time.
Another popular loan with investors is the Option ARM. Mortgage-X.com defines an Option ARM as a loan program with an adjustable rate mortgage "with added flexibility of making one of several possible payments on your mortgage every month, in order to better manage your monthly cash flow."
This type loan provides very low monthly payments -- lower than those mortgages with fixed-rate mortgages.
The primary concern for any ARM, especially the Option ARM, is the changing payment year by year. With an Option ARM, you could find that while you're experiencing the false security of having positive cash flow each month, your mortgage is increasing because you pay the lowest allowed payment, which doesn't even pay enough interest to keep up with the mortgage. You would be in a negative amortization situation, owing more than you originally borrowed.
Before trying these mortgages, get advice -- plenty of advice -- from a qualified, experienced mortgage professional who can explain all the benefits and liabilities of these programs.
By M. Anthony Carr
I have received several e-mails lately with tales of woe. Seems that would-be investors bought pre-construction dwellings a few months ago in hopes of grabbing a quick buck by flipping the house when they went to settlement.
In the heated market last year, many a novice investor made a lot of money this way. Few, however, heeded the warning given at that time that a turn toward a buyer's market could cause them much pain and financial suffering. Now they're paying for it.
Today's market is less-fevered, but still healthy in some areas. Many would-be investors are now homeowners without two things: Cash to go to settlement or a renter to make their monthly payment for them.
They gambled that they would never have to go to settlement, with dreams of walking away with a lot of cash in return for simply being in line with deposit money a few months before.
So, when people ask me about a good place to invest, I do not point to the markets that have been moving upward for long periods of time and where they cannot cover their monthly payment with fair-market rent.
If you want to build cash flow, seeking more money coming in each month than is going out, then look for the long-haul principle of buy and wait.
Investors look for two ways to grow wealth: Asset growth and cash flow. In good times, you get both in the same property. Sometimes, though, you have to settle for one or the other.
Eventually, a market will appreciate so much that the going rents won't pay the monthly payment for the come-lately investor. The investment creates a cash shortage each month. This isn't necessarily bad. For instance, if your rent is $1,000 per month, but the mortgage is $1,200, the $200 monthly shortfall might be affordable and provide a good return on the investment in the long haul if the asset is growing at a healthy rate.
If the property is appreciating at 10 percent and its value surpasses the $2,400 per year in payments you have to make beyond the rental income through the year, the asset growth builds your wealth. The renter makes the majority of the investment per month for you.
If you're looking to invest in short-term real estate -- a fixer-upper to flip --then mortgage programs designed for a low monthly payment might be the tool to use. These would be various adjustable rate mortgages, Cost of Funds Index (COFI) or Option ARMS, and interest-only mortgages.
Some of these programs enable the investor/buyer to qualify for more property, control cash flow and wait for property values to rise before selling or exchanging for a larger, more profitable investment.
For instance, the 2/1 buy-down is making its way back into the marketplace. This is a mortgage that begins its interest rate 2 points lower than the fixed rate, then moves up another percentage point the next year and then finally to a fixed-rate on the third to 30th years.
This type of loan was what I used on my very first mortgage. I was so excited to get a starting rate of 10 percent. By the time it increased to the 12 percent mark, fixed-rate mortgages were headed downward and I refinanced to 7.5 percent, a rate that I found even more exciting at the time.
Another popular loan with investors is the Option ARM. Mortgage-X.com defines an Option ARM as a loan program with an adjustable rate mortgage "with added flexibility of making one of several possible payments on your mortgage every month, in order to better manage your monthly cash flow."
This type loan provides very low monthly payments -- lower than those mortgages with fixed-rate mortgages.
The primary concern for any ARM, especially the Option ARM, is the changing payment year by year. With an Option ARM, you could find that while you're experiencing the false security of having positive cash flow each month, your mortgage is increasing because you pay the lowest allowed payment, which doesn't even pay enough interest to keep up with the mortgage. You would be in a negative amortization situation, owing more than you originally borrowed.
Before trying these mortgages, get advice -- plenty of advice -- from a qualified, experienced mortgage professional who can explain all the benefits and liabilities of these programs.
Blink and They're Still There -
Houses and Condos Are Staying on the Market Longer
Washington Post, May 2, 2006
By Tomoeh Murakami Tse
Misty and Steven DiPietro have had a for-sale sign in front of their house for 83 days now. A neighbor's has been there seven months. Down the street, there are two more houses for sale, and around the corner, four more.
If it seems as if a lot of people are trying to sell houses in the DiPietros' suburban Leesburg neighborhood these days, that's because they are. The 20176 Zip code area, where their two-year-old house stands, has the highest number of homes for sale in the region, according to a Washington Post analysis of statistics from Metropolitan Regional Information Systems Inc., the region's multiple listing service. More than 600 houses, townhouses and condos are on the market in that Zip code, which includes the northern portion of Leesburg and extends to the northern edge of Loudoun County.
What's happening in 20176 reflects a dynamic at play throughout the region. Homes on average are sitting on the market longer -- in many neighborhoods, much longer than they did a year ago. Those who study local real estate markets say the homes are lingering for two main reasons: because of a housing glut in areas where builders put up large developments during the housing boom of the past five years and because of buyers who are counting on better prices as the market cools.
The neighborhoods with the most single-family houses and townhouses for sale are concentrated in Loudoun and Prince William counties. The Zip codes with the most condos on the market are closer in, most notably in Northwest Washington, the southwest portion of Alexandria, northern Reston and Aspen Hill.
The MRIS statistics generally undercount the number of homes for sale because they don't capture people who are selling without an agent or builders who sell directly to buyers.
People are still shopping for homes, but with so many more to look at, that translates to less foot traffic for each listing, said Ian Moffett, a real estate agent with Realty Direct in Sterling who mostly works in Loudoun and Fairfax counties.
"If you have 35 houses to choose from, you are going to choose five or six and look at those homes," Moffett said. "You are not going to see the most expensive house of the 35 homes."
That has meant sellers such as the DiPietros and their neighbors have had to scale back their expectations -- both for how long it will take to sell and how much money they will get.
"If I'm a buyer, I would probably come in and try to lowball me," said Steven DiPietro, 36, an Internet service program manager and father of three. "I think you have to be patient."
There are many variables to consider when evaluating sales by Zip codes. Zip codes differ in size and population density. So those with the most listings may not necessarily be the areas with the highest levels of inventory per capita. Nevertheless, experts and real estate agents say The Post's analysis, based on active listings from April 7, provides a detailed snapshot of the market at a time when the mounting number of unsold homes is perhaps the most visible sign that the housing boom is indeed over.
Potomac Crossing, where the DiPietros live, is a sprawling development with more than 900 single-family houses and townhouses. Forget "Desperate Housewives." Here, people talk about the latest adventures of sometimes-desperate home sellers, with neighbors trading tales about how much the asking price was reduced, friends keeping track of each other's foot traffic and always -- always -- trying to maximize curb appeal.
But making a house stand out can be tough when three others of similar style, size and age are up for sale on the same block. When her real estate agent made follow-up phone calls to potential buyers, Misty DiPietro said, they could only vaguely recall her house.
"It's a little discouraging," she said. The DiPietros are moving to a larger house in Hamilton, to be completed in December, and have shaved $20,500 off their original $650,000 asking price after watching neighbors across the street reduce theirs and get a contract for that amount.
Archie Harders, a veteran real estate agent with McEnearney Associates, is resorting to sales tactics that would have been unnecessary a year ago. A key, he said, is to get homes viewed by as many buyers' agents as possible; to that end, he frequently updates listings in the database of homes that agent use.
"If you change a comma, or a period, your listing pops up as having been edited," he said. "It's another way of keeping it in front of their face."
A few blocks away from the DiPietros, Ken Wasserman sat one recent evening in his tidy, if bare, dining room, lamenting just how quickly the real estate landscape has changed. The house next door, he said, sold in a week last summer for $700,000.
Wasserman and his wife, both scientists with two children, put their house on the market in November for $716,000. They waited. And waited. Aware of developers offering tens of thousands of dollars in incentives on new homes in the area, the couple recently reduced the asking price to $680,000.
Any nibbles?
"Nothing. No offer," Wasserman said.
In an adjacent subdivision, also in the 20176 Zip code, Chris Downs, 25, a potential buyer, was flipping through townhouse listing fliers that he and his mother had collected from brochure boxes on signposts.
Downs, 25, a computer programmer, is considering buying his second townhouse and renting out the first, which he bought in 2004. Back then, Downs recalled, he made up his mind to buy within 15 minutes of setting foot in the home; he and the seller drew up the contract as a line of people waited outside to see the Leesburg townhouse.
But that was two years ago. This time around, Downs plans on negotiating hard.
"There are a lot of choices," he said. "When you look at these brochures, they're just slashing prices."
The same way that many houses were built in the outer suburbs during the boom years, thousands of condos were constructed in more urban areas. And those neighborhoods now are seeing an explosion of condos for sale, both new and used.
Alicia and Jeff Hennie, whose Columbia Heights condo hit the market Thursday with a $399,000 price tag, say they are prepared to wait it out, at least for a few months. Their one-bedroom unit is in the 20009 Zip code, which has the highest inventory of condos in the region. In their 64-unit building alone, two other similar condos are for sale, including an investor-owned, fully renovated unit. The couple is looking at a May 20 move-in date for a brand new condo downtown in the 20001 Zip code, another area with high condo inventory.
"We don't have to have it sold right away," said Alicia Hennie, 28, a manager at a nonprofit teen pregnancy prevention group. "But we don't want to carry two mortgages. . . . We'll see what happens."
Michael Soto, another condo seller in 20009, thought that he and his wife, Felicia, had priced their two-bedroom unit well when they put it on the market at $750,000 a month ago. A unit with the same layout sold for that much in November.
After four open houses, which drew about 100 visitors, it remains unsold. On Wednesday, the couple reduced their asking price to $725,000.
Sure, they're disappointed, Soto said. But he's sure they will make a good profit on the condo, because in the four years they have owned it, values have soared. And the less-frenzied market means they may be able to get a good deal as they look to move up to a single-family house.
"It may not be the peak price, but it's still going to be a good offer," he said of the condo. "It's all relative."
Washington Post, May 2, 2006
By Tomoeh Murakami Tse
Misty and Steven DiPietro have had a for-sale sign in front of their house for 83 days now. A neighbor's has been there seven months. Down the street, there are two more houses for sale, and around the corner, four more.
If it seems as if a lot of people are trying to sell houses in the DiPietros' suburban Leesburg neighborhood these days, that's because they are. The 20176 Zip code area, where their two-year-old house stands, has the highest number of homes for sale in the region, according to a Washington Post analysis of statistics from Metropolitan Regional Information Systems Inc., the region's multiple listing service. More than 600 houses, townhouses and condos are on the market in that Zip code, which includes the northern portion of Leesburg and extends to the northern edge of Loudoun County.
What's happening in 20176 reflects a dynamic at play throughout the region. Homes on average are sitting on the market longer -- in many neighborhoods, much longer than they did a year ago. Those who study local real estate markets say the homes are lingering for two main reasons: because of a housing glut in areas where builders put up large developments during the housing boom of the past five years and because of buyers who are counting on better prices as the market cools.
The neighborhoods with the most single-family houses and townhouses for sale are concentrated in Loudoun and Prince William counties. The Zip codes with the most condos on the market are closer in, most notably in Northwest Washington, the southwest portion of Alexandria, northern Reston and Aspen Hill.
The MRIS statistics generally undercount the number of homes for sale because they don't capture people who are selling without an agent or builders who sell directly to buyers.
People are still shopping for homes, but with so many more to look at, that translates to less foot traffic for each listing, said Ian Moffett, a real estate agent with Realty Direct in Sterling who mostly works in Loudoun and Fairfax counties.
"If you have 35 houses to choose from, you are going to choose five or six and look at those homes," Moffett said. "You are not going to see the most expensive house of the 35 homes."
That has meant sellers such as the DiPietros and their neighbors have had to scale back their expectations -- both for how long it will take to sell and how much money they will get.
"If I'm a buyer, I would probably come in and try to lowball me," said Steven DiPietro, 36, an Internet service program manager and father of three. "I think you have to be patient."
There are many variables to consider when evaluating sales by Zip codes. Zip codes differ in size and population density. So those with the most listings may not necessarily be the areas with the highest levels of inventory per capita. Nevertheless, experts and real estate agents say The Post's analysis, based on active listings from April 7, provides a detailed snapshot of the market at a time when the mounting number of unsold homes is perhaps the most visible sign that the housing boom is indeed over.
Potomac Crossing, where the DiPietros live, is a sprawling development with more than 900 single-family houses and townhouses. Forget "Desperate Housewives." Here, people talk about the latest adventures of sometimes-desperate home sellers, with neighbors trading tales about how much the asking price was reduced, friends keeping track of each other's foot traffic and always -- always -- trying to maximize curb appeal.
But making a house stand out can be tough when three others of similar style, size and age are up for sale on the same block. When her real estate agent made follow-up phone calls to potential buyers, Misty DiPietro said, they could only vaguely recall her house.
"It's a little discouraging," she said. The DiPietros are moving to a larger house in Hamilton, to be completed in December, and have shaved $20,500 off their original $650,000 asking price after watching neighbors across the street reduce theirs and get a contract for that amount.
Archie Harders, a veteran real estate agent with McEnearney Associates, is resorting to sales tactics that would have been unnecessary a year ago. A key, he said, is to get homes viewed by as many buyers' agents as possible; to that end, he frequently updates listings in the database of homes that agent use.
"If you change a comma, or a period, your listing pops up as having been edited," he said. "It's another way of keeping it in front of their face."
A few blocks away from the DiPietros, Ken Wasserman sat one recent evening in his tidy, if bare, dining room, lamenting just how quickly the real estate landscape has changed. The house next door, he said, sold in a week last summer for $700,000.
Wasserman and his wife, both scientists with two children, put their house on the market in November for $716,000. They waited. And waited. Aware of developers offering tens of thousands of dollars in incentives on new homes in the area, the couple recently reduced the asking price to $680,000.
Any nibbles?
"Nothing. No offer," Wasserman said.
In an adjacent subdivision, also in the 20176 Zip code, Chris Downs, 25, a potential buyer, was flipping through townhouse listing fliers that he and his mother had collected from brochure boxes on signposts.
Downs, 25, a computer programmer, is considering buying his second townhouse and renting out the first, which he bought in 2004. Back then, Downs recalled, he made up his mind to buy within 15 minutes of setting foot in the home; he and the seller drew up the contract as a line of people waited outside to see the Leesburg townhouse.
But that was two years ago. This time around, Downs plans on negotiating hard.
"There are a lot of choices," he said. "When you look at these brochures, they're just slashing prices."
The same way that many houses were built in the outer suburbs during the boom years, thousands of condos were constructed in more urban areas. And those neighborhoods now are seeing an explosion of condos for sale, both new and used.
Alicia and Jeff Hennie, whose Columbia Heights condo hit the market Thursday with a $399,000 price tag, say they are prepared to wait it out, at least for a few months. Their one-bedroom unit is in the 20009 Zip code, which has the highest inventory of condos in the region. In their 64-unit building alone, two other similar condos are for sale, including an investor-owned, fully renovated unit. The couple is looking at a May 20 move-in date for a brand new condo downtown in the 20001 Zip code, another area with high condo inventory.
"We don't have to have it sold right away," said Alicia Hennie, 28, a manager at a nonprofit teen pregnancy prevention group. "But we don't want to carry two mortgages. . . . We'll see what happens."
Michael Soto, another condo seller in 20009, thought that he and his wife, Felicia, had priced their two-bedroom unit well when they put it on the market at $750,000 a month ago. A unit with the same layout sold for that much in November.
After four open houses, which drew about 100 visitors, it remains unsold. On Wednesday, the couple reduced their asking price to $725,000.
Sure, they're disappointed, Soto said. But he's sure they will make a good profit on the condo, because in the four years they have owned it, values have soared. And the less-frenzied market means they may be able to get a good deal as they look to move up to a single-family house.
"It may not be the peak price, but it's still going to be a good offer," he said of the condo. "It's all relative."
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