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Existing-Home Sales to Trend up in 2008
National Realty News

     Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors®. However, a recovery for new-home sales is unlikely before 2009.
     Lawrence Yun, NAR chief economist, said the worst part of the credit crunch has already worked its way through the data. “The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming,” he said. “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”
     The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September. It was the second consecutive monthly gain, but remained 18.4 percent below the October 2006 index of 106.8. “The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007,” Yun said
     The PHSI in the Northeast jumped 16.0 percent in October to 80.6 but is 11.1 percent below a year ago. In the West, the index rose 8.4 percent to 87.3 but is 16.9 percent lower than October 2006. The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago. In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.
     “The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans,” Yun said. “Lawmakers need to understand that raising the loan limits on FHA and GSE-backed conventional loans will markedly improve mortgage availability.”

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Remodeling Activity Rises
National Realty News

     Remodeling activity held up well during the third quarter of 2007, according to the National Association of Home Builder’s Remodeling Market Index (RMI). The current market conditions indicator increased slightly to 46.2 from 44.8 in the second quarter. And the future expectations measure comes in at 43.3, down just slightly from 44.6. Comparisons to third quarter 2006 (current market conditions: 47.8; future expectations: 45.4) show only a slight decline.
      “Buoyed by continuing strong demand for minor additions and alterations, the remodeling market is expected to end the year in pretty good shape,” said NAHB Remodelers Chairman Mike Nagel, CGR, CAPS, a remodeler from Chicago.

“Though down a bit from the previous quarter, the remodeling market is not experiencing the dip in production and sales being seen by the new home building sector of the industry.”
     The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view the market conditions as improving. The RMI has been running slightly below 50 since the final quarter of 2005.
     Nationally, minor additions and alterations increased significantly during the third quarter to 47.07 (from 43.27), while major additions and alterations remained stable at 46.89 (from 46.36). Regionally, minor additions and alterations increased significantly in the northeast to 56.68 (from 50.43) and Midwest to 57.44 (from 45.06).

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It's What's Outside that Matters Most
National Realty News

Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report. Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades.
     The most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale. Wood deck additions and wood window replacements also returned more than 80 percent of costs, at 85 percent and 81 percent, respectively. On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.
      “The results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “Realtors® know what attracts buyers in their local markets and can help your house put its best façade forward, so to speak – it’s another way Realtors® add value to the real estate transaction.”
     The 2007 Remodeling Cost vs. Value Report compares construction costs with resale values for 29 midrange and upscale remodeling projects comprising additions, remodels and replacements in 60 markets across the country. Data are provided for nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 10th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as Realtors® provided their insight into local markets and buyer home preferences within those markets.

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It's not the best time to be selling a house in much of the country. But increasingly, it's a good time to build or renovate one.
     The housing slump has pushed down prices on everything from lumber and drywall to labor and design fees. Legions of carpenters, tile layers and landscapers are idle. Architects are taking on small renovation projects they once would have sniffed at and contractors are offering their services at a discount. Some people in the building trades are even posting fliers at construction sites to drum up business.
     It's a striking contrast from the heady days of the real-estate boom, when builders and contractors could hardly keep pace with demand, prices of materials soared and a six-month wait to start a kitchen renovation was commonplace.
     Now, some homeowners are moving forward on renovation or building projects they've put off for years. Others are exacting substantial price cuts from contractors desperate for work.
     A few months ago, Mike Bowes remodeled the bathroom and guest bedroom of his $200,000 condo in Las Vegas.

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     Getting a good deal on a flat-panel television set during the holidays last year was a cinch. This year, not so much.
     An oversupply of plasma and liquid-crystal-display panels last year knocked down average sale prices roughly 30% or more in the fourth quarter from a year earlier for models in the 30- to 50-inch range. Home Depot Inc. and some other retailers jumped into the flat-panel TV business, also helping to send prices lower. Electronics executives still talk of a 42-inch plasma set from Panasonic, a unit of Matsushita Electric Industrial Co., which last year sold for a day at Best Buy Co. stores for $999, down 33% from its original price.
     This year, it's a different picture. Home Depot no longer sells TV sets in its stores. There is also less of a glut in flat panels used to build big-screen, high-definition sets. And TV makers, such as Sony Corp. and Sharp Corp., are focused on building larger, more expensive high-definition sets that will be less subject to discounting.
     Bargains are still out there, but you'll have to work harder to find them. Overall, the average price of flat-panel LCD sets 32 inches and larger is expected to drop 17% in the U.S. to $1,018 this quarter from a year earlier, compared with an average 34% price plunge last holiday season, according to DisplaySearch, a unit of NPD Group Inc. The average price of plasma TV sets is forecast to fall 23% to $1,272, compared with a 28% decline last season.
     "I think [pricing] will definitely be more stable," says Tom Crowell, vice president and merchandise manager for televisions at Circuit City Stores Inc. "We're already seeing that."
     Such trends have put consumers like Billy Church of Bangor, Maine, in something of a bind. The 18-year-old college student says he recently struggled to find a good deal on a flat-panel TV set. For weeks, he checked ads from Circuit City and Best Buy and visited stores, hunting for bargains. He also regularly logged on to Web sites that sell electronics, like Newegg.com and Amazon.com.
     Finally, a week before Thanksgiving, Mr. Church was in a Circuit City store and came across a 32-inch Sharp flat-panel LCD television set on sale for $650, down from around $1,000. Figuring the price was "a fluke," Mr. Church snapped it up. He says the set makes the games he plays with his Xbox 360 more vivid.

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     This sprawling metropolis has welcomed developers since 1836 when land speculators Augustus and John Allen founded the city by carving a 6,000-acre swath of coastal prairie into home sites sold for $1 per acre.
     Now, that wide-open approach has come back to haunt Houston, the nation's fourth-largest city and the only major U.S. city without zoning laws to control development. Plans to build a 23-story condominium tower among the million-dollar homes of two stately neighborhoods here has appalled affluent residents and put local politicians in the hot seat.
     Angry residents have hired a lawyer to fight their cause. Houston Mayor Bill White has pledged to use "any appropriate power under law" to scale back or cancel the development. The problem is, without zoning laws to regulate land use, the city can do little to thwart the project other than apply traffic restrictions and write sternly worded letters.
     The project's developers, two Houston natives who grew up just blocks from the site, vow to push forward. They've already received many of the approvals required under the city's current guidelines.
     "We expect to be treated equitably and in a nondiscriminatory fashion" by the city, said Matthew Morgan, president of Buckhead Investment Partners Inc., who is developing the $100 million-plus project with longtime business partner Kevin Kurtin, CEO of the company.
     The condo-tower dustup is just the latest in a string of odd situations allowed by Houston's lenient land-use rules. Rowdy cantinas, rock-crushing operations and commercial dumps sometimes pop up in residential neighborhoods. Condo towers sprout next to schools. A pay-by-the-hour motel operates less than a block from a Baptist church.

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