Hornung: Real estate not down for the count

Editor’s Note:This is the first of a monthly question and answer session with Lane Hornung, founder of 8Z Real Estate, a sponsor of InsideRealEstateNews. Lane listens to the the heart-beat of the real estate market through CoHomeFinders.com, a sister company of 8Z, where many prospective home buyers launch their search on the Web.

 

InsideRealEstateNews: Lane, you make the case that the Denver-area real estate market  is more like a boxer that is woozy from taking blows, but isn’t flat on his back. What makes you think that housing isn’t down for the count?

Hornung: No doubt, the expiration of the federal tax credits (that required a house to be placed under contract by April 30), dealt a serious body blow to the real estate market and July’s data fell off a cliff. However, the market has quietly been stabilizing, if not gathering strength in a few pockets, since mid-July. Why? Crazy low interest rates are attracting buyers to the market.

IREN: So low interest rates, hovering around 4.3 percent for a 30-year-fixed loan, trump the tax credits?

Hornung: People are realizing that rates can have a bigger effect on their purchasing power and monthly payment than home prices. They’re thinking seems to be, if we are not at the bottom, we’re probably pretty close, say plus or minus 5 percent as far as homes prices. However, they know that interest rates could jump a full percentage point in a matter of days. For a buyer putting 20 percent down and taking a mortgage out on the remainder, prices would need to drop 10 percent to offset a 1 percentage point rise in interest rates in order for their monthly payment to stay the same.

If prices don’t fall and rate rise, the buyer who one day was looking at homes in the $300,000 price range, will need to start looking at homes for $270,000.

So, despite all the doom-and-gloom in the media, buyers have determined that a 10 percent drop in home prices in less likely than a 1 percent hike in interest rates. They know that they may not time the bottom perfectly, which by the way is very hard to do, even for professional investors, but they need a home now and are there are deals to be had.

IREN: Lane, so given the case you make – that an increase in mortgage rates is much more likely than a big drop in prices – why are so many prospective buyers still on the fence?

Hornung: The reason the market is only stabilizing and not taking off – low interest rates only get you so far. The other pieces of the puzzle are not there yet. In particular, the job market remains weak, and the supply of listing inventory has swelled from 6 months of inventory to 8 months since the tax credit’s expiration. As long as jobs growth remains anemic, the real estate market will stumble around the ring with an occasional flurry of punches to stay in the fight. Of course, this is preferable to laying flat on your back, down for the count.

IREN: In the early 1990s, in the wake of the worst housing crisis in the Denver-area until this latest round, many Californians cashed out of their equity and moved to Colorado for a chance to buy a much bigger house and a shot at a better qualify of life. Given that we are experiencing the first nationwide housing downturn since the Great Depression, can we expect Californians or anyone else to come to our rescue this time?

Hornung:Low interest rates aren’t the only thing keeping the market in the fight. Relocators, who had become an endangered species in the last few years, have returned to our market. Relatively small in numbers now, but the wave is growing. Home prices in California and on the East Coast are up – 14 percent in San Diego, 11 percent in San Francisco, 10 percent in LA, 7 percent in DC, 4 percent in Boston.

Relocating gaining steam

Colorado, with its outdoor lifestyle and relatively affordable home prices, never lost its attraction for these relocators during the crash; they just simply could not make the move because they couldn’t sell their home. Now, they can actually sell their homes and head to Colorado. However, what we are seeing is that the California transplant who 10 years ago maxed out their mortgage and stretched for a 1 million dollar home, is now buying a $500,000 home, all cash.

IREN:Much has been written about New Urbanism and people returning to the city. But as you recently mentioned, far more people live and buy homes in the suburbs than in the city. Do you think suburban living gets the respect it deserves?

Hornung: Unfortunately, it really doesn’t. There seems to be a persistent view that surfaces every decade or so that people have had it with suburban sprawl and are moving back in droves to the city to enjoy the amenities of urban living. Only problem is that the market data has never really backed up these assertions. Now don’t get me wrong, I am not advocating for one or the other, urban living vs. suburban living. I am simply saying that both offer attractive amenities, but they appeal to different people, and the group of people who prefer suburban living has consistently been much larger than those who prefer urban living. Based on a quick Google search, opinion survey after survey indicates that people prefer suburban living over urban living. According to a poll sponsored by Smart Growth America, 13 percent of Americans prefer to live in an urban environment, compared to 33 percent who prefer the suburbs and another 18 percent who like to go even further out to the exurbs (think Castle Rock now, Elizabeth soon).

Suburbs still rule

These results are not all that surprising to people like myself in the business of helping folks buy and sell homes. We know that suburbs like Rock Creek in Superior along the Boulder turnpike, and Highlands Ranch, once featured as the poster child of suburban sprawl in a National Geographic article, are highly desired by home buyers. Residents of these suburban communities like them so much that it is very common for them to move within the community as their life situations change. Now that doesn’t mean that an urbanite in Highland or downtown Boulder is going to love Rock Creek or Highlands Ranch, but the folks who live there really do love them, and given the chance to move into a hip happening urban loft for the same cost, they would stay right where they are.

IREN: Still, at the same time, homes in the suburbs, where there is little limit to the supply of competing homes that can be constructed, have been hammered worse than areas such as Boulder or many downtown Denver neighborhoods, where there are constraints on supply. Yet, many people are priced out of areas that appreciate. So what should be some of the things that should be at the top of the list of a typical home buyer shopping for a suburban home?

Hornung: The No. 1 thing to consider is what does the future supply of homes look like in the area. What is the best way to determine future supply? Take a close look at the land surrounding your neighborhood. When you stand in the drive way of your new home or on the edge of the development, do you see homes or land, and if you see land, do you see tractors or trails?

If you see homes, there may not be any developable land around your community. That will limit future supply and help your home hold its value.

If you see land instead of homes, is the land covered by tractors or trails? Tractors indicate land that could be developed when market conditions turn favorable again. That means you will be competing with an increasing supply of new construction homes if and when you go to sell your home in the future. Basic economics tells us that an increasing supply will exert downward pressure on prices.

If you see trails, this indicates that the land is protected in some way and not open to development. This limit on supply in the area bodes well for the future value of your home.

IREN: And perhaps it is a disservice to speak of the suburbs as if they were one giant monolithic community.

Hornung: Remember, not all suburbs are created equal. Suburbs like Rock Creek and Highlands Ranch are surrounded by land that already has homes on it, or by land that is protected as open space. These communities are at, or close to, complete build out. As a result, supply is limited. Not surprisingly, Highlands Ranch and Rock Creek home values have held up quite well, even in this challenging real estate market.

Thanks, Lane.

Contact John Rebchook at JRCHOOK@gmail.com.

Five Points development plans finding footing

Community groups focused on the development of a master plan to give Five Points an economic jump-start are hoping a series of community meetings will help create a vision for the historic Denver neighborhood's future.

Impetus for the action on the Welton Street Marketplace — a 10-block corridor between 20th and Downing streets — gained traction in April when Gov. Bill Ritter signed an executive order that named Five Points as a pilot community for the new Sustainable Main Streets Initiative.

The process is not without disagreement and debate. Some black elders fear that newcomers to the neighborhood will disrespect the historic character of the legendary African-American neighborhood, once called the Harlem of the West.

Even the phrase Welton Street Corridor can raise hackles because Five Points — and the cultural associations that go with that name — appears to have been overlooked.

One of the hottest issues, however, is dog parks, said Lisa Calderon at a recent community meeting.

"Some of the black elders don't want to have your dog come up and sniff them, because (once) dogs were sicced on them," she said. "There is cultural consideration involved."

At the Sept. 1 meeting, which was peaceful and productive, people broke into small groups to discuss what should — and shouldn't — be changed.

Keeping the "historical jazz nature" of the corridor was a necessity named by all groups.

The biggest problem was that only a few African-Americans attended, said Wil Alston, executive director of the Five Points Business District.

Only about five of an estimated 50 people were African-American, and Alston is working with community leaders on getting more African-Americans involved.

Meanwhile, about 11,000 community surveys have been distributed to gain more community input. That survey will close on Sept. 30.

Colleen O'Connor: 303-954-1083 orcoconnor@denverpost.com

 

---

 

Neighborhood plans

To fill out an online survey, go tobalancedcommunity.com/welton-five-points-survey.

The cultural amenities roundtable, open to the community, will be from 6 p.m. to 8 p.m. Wednesday at the Five Points Business District Office at 2444 Washington St.

The business roundtable will be held Sept. 22, same time and place.

The meetings on Oct. 21 and Nov. 18 will focus on shaping the goals of the vision plan, and reviewing preliminary and preferred alternatives.

For more information, call 303-832-5000.

Read more:Five Points development plans finding footing - The Denver Posthttp://www.denverpost.com/news/ci_16068204#ixzz0zWG3xUno

5 things you must know about homeowners insurance

By Sarah Max, contributing writerSeptember 2, 2010: 3:14 PM ET

MONEY Magazine) -- 1. Loyalty is overrated

Many insurers have been raising rates to make up for losses they suffered during the financial crisis, industry experts say. At the same time, insurers are competing hard for new customers, which means some of them are cutting better deals for new policy holders than for existing ones, says Deeia Beck, executive director of the Office of Public Insurance Counsel, a state consumer agency in Texas. When your annual renewal statement lands in your mailbox, check InsWeb.com and NetQuote.com to see if you can snag a better deal elsewhere. Consider moving your auto policy too; bundling home and auto coverage with the same insurer can cut your total premiums by 5% to 15%.

2. You may have too much coverage

It's common for policies to contain inflation-protection provisions that automatically increase your coverage amount. "In most years, that's a good thing," says Scott Richardson, director of the South Carolina Department of Insurance. Now that construction costs have fallen? Not so much.

For now, pass on inflation protection and adjust your coverage amount to a more realistic figure. Lowering replacement value from, say, $300,000 to $250,000 might shave 10% off your premium.

3. A bad rep can cost you

Just as lenders check your credit history before figuring out what rate to charge you, insurers tap into national databases such as the Comprehensive Loss Underwriting Exchange (CLUE) to see what claims you've filed in the past. Those records can be full of errors, warns Doug Heller, executive director of Consumer Watchdog, an insurance advocacy group.

Check your insurance report for mistakes at choicetrust.com; it's free if you've been denied coverage ($19.50 otherwise).

4. Small claims can cost you, too

Go with the highest deductible you can afford and bank the savings to cover the cost of minor repairs. Filing a claim for every broken window or leaky pipe can drive up your premiums by 10% to 15%, says Don Griffin, a vice president at Property Casualty Insurers Association of America. (Some experts say that even inquiring about making a claim can raise a red flag.)

Increasing your deductible from, say, $500 to $1,000 can lower your annual premium by as much as 25%, according to the Insurance Information Institute.

5. A home's history matters

In the market for a new house? It may seem unfair, but claims associated with the property before you buy it can result in your paying more than you would otherwise. "Certain locations [such as those vulnerable to flooding] may be more prone to claims," explains Kiran Rasaretnam, CFO of InsWeb.

To get info on past claims, ask for a copy of the seller's CLUE disclosure report (see No. 3). Yes, you're stuck with the history of the house you buy, but you can use what you find to negotiate a lower price with the seller

Original Link

Paying Off the House in 15 Years

 

By AMY HOAK

 

A growing number of homeowners are choosing to pay down their mortgages at a faster rate--even if it means a substantial jump in their monthly payments.

Between January and June, 26% of homeowners who refinanced chose a 15-year fixed-rate mortgage, according to data from CoreLogic, a provider of financial, property and consumer information. During all of 2009, 18.5% of borrowers who refinanced opted for a 15-year term.

 

What's prompting the shift to shorter loans? Historically low interest rates for fixed-rate mortgages.

Homeowners are doing the math and realizing that rates have fallen enough so the increase in payment between a new 15-year mortgage and their current loan is no longer unbearable for their budgets, says Bob Walters, chief economist at online lender Quicken Loans.

The average rate on a 15-year fixed-rate mortgage was 3.86% for the week ending Aug. 26, according to Freddie Mac's weekly survey of conforming mortgage rates.

A Change in Thinking
The financial situation of those capable of refinancing today is a factor in the shift, Mr. Walters says. These people typically are homeowners with the best credit and the most equity -- and, therefore, most suited for a shorter-term loan.

But there might be some other psychology at work. "We're seeing a different view on debt than maybe we've seen in the past," he says. Today, homeowners are saying, "I really want to pay this off. I'm going to bite the bullet and take the payment and work toward paying this down."

A 15-year mortgage also acts as somewhat of a forced savings account for homeowners, says Leif Thomsen, chief executive of Mortgage Master, a privately owned lender, given that the higher payments help a borrower pay down the principal at a quicker clip.

This is a huge shift in borrower thinking. "There was a drive a couple of years ago to take out the biggest mortgage that you could and use all of the money you would have otherwise had in the house and put it into stocks and bonds--to think of your house and mortgage as part of your entire investment portfolio," says Amy Crews Cutts, deputy chief economist for Freddie Mac.

"That worked for people who do investment finance for a living and are good at managing accounts," she says. "But for the average person, debt is a drag on their psyche as well as their overall budget." Many Americans have reverted to the goal of paying off their house and getting rid of their mortgage, Ms. Cutts adds.

Doing the Math
Refinancing into a shorter-term mortgage isn't a strategy for everyone, however.

Choosing a shorter term usually means you'll get a better rate--and you'll pay much less interest over the life of the loan--but a shorter time frame ramps up monthly mortgage payments.

For example, with a 4.5% interest rate on a 30-year fixed-rate mortgage of $200,000, you would have a monthly payment of $1,015, including principal and interest, Ms. Cutts says. The monthly payment jumps to about $1,480 with a 4% interest rate on a 15-year fixed-rate loan.

Of course, if the refinancing borrower's current 30-year loan has a higher rate, the difference between the monthly payments could be lower. Still, you should count on some increase in monthly payments.

In general, Mr. Walters says, those who choose 15-year fixed-rate mortgages are older and have more equity and less debt than other folks. They also earn higher incomes and don't have some of the added expenses that younger homeowners typically do.

"People who are taking these loans are financially stable and can afford the payments, but at the same time are planning on staying in their home for an extended period of time," Mr. Thomsen says.

Mr. Walters says you shouldn't take on a 15-year fixed-rate mortgage unless you have substantial savings, including at least a year's worth of living expenses in liquid accounts.

Also, he recommends having a debt-to-income ratio below 35%. So if you have a gross salary of $5,700 per month, for instance, your monthly debt--including any mortgage payments, taxes, insurance, homeowners-association dues as well as auto and student loans and credit-card debt--would have to be a max of $1,995 to get a 35% ratio.

Make That Extra Payment
Borrowers who don't meet those standards, or are worried about future loss of income, might be better served taking a longer-term mortgage but making extra payments on the principal to pay off the loan faster, says Mr. Walters.

 

For instance, if you refinance a $200,000 mortgage into a 30-year loan with a 4.5% rate, and then apply $100 of the savings to the principal payment each month, you'd save $31,700 in interest over the life of the loan, Ms. Cutts says. And you would pay off the mortgage in 25 years, instead of 30, she adds.

What's more, you would have the flexibility of not paying that $100 in months when money gets tight. "Maybe today you're feeling flush with money. Maybe you're worried in the future that income might change," Ms. Cutts says. With a 30-year mortgage, you have more flexibility. "Shortening to 15 years is a pretty big bump in payment."

—Read more at marketwatch.com.

Write to Amy Hoak at amy.hoak@dowjones.com

 

 

 

 

Taking Colorado to Washington, D.C.

The board of the Denver Regional Council of Governments recently voted unanimously to award Aurora $16.32 million for the completion of the Interstate 225 and Colfax Avenue/17th Place interchange — a project crucial for accommodating increased traffic flow into and out of the expanding Anschutz Medical Campus and the Fitzsimons Life Science District. Gaining the necessary funding for this project and sustaining more than $6 billion of investment into other projects around the state may not have been possible without the efforts of an organization called Accelerate Colorado.

Beginning in 2006, the Aurora Economic Development Council developed a program to give Colorado's business and political community a greater voice at the federal level. The focal point of the program was an annual business mission to Washington, D.C., during which about 100 of Colorado's business and political leaders would advocate on behalf of the state's economic-development interests. In 2009, the program was formally established as a distinct organization and was titled Accelerate Colorado. The organization is a partnership between business and local governments that works to build consensus on issues key to the state's economic development, and then to present a unified agenda to the members of Colorado's congressional delegation and other key federal leaders. In addition to the annual business mission, Accelerate Colorado also works with a full-time federal lobbyist to give the state's economic- development interests year-round representation in Washington.

 

Accelerate Colorado has served as an important medium for communication between Colorado's local leadership and Congress. Prior to the program's initiation, there was no organization that advocated on a statewide basis to ensure that our federal leadership properly addressed the economic development and business needs of the state. On May 10-12, Accelerate Colorado hosted its fifth annual business mission to Washington. The 100 constituents in attendance represented a large number of local Colorado governments and top industries. Several mayors, city council members and county commissioners from around the state were present, as well as executives from many of Colorado's largest and most influential companies. While in Washington, the group held meetings with Colorado's congressional delegation as well as House Majority Leader Steny Hoyer, D-Md., Sen. John Barrasso, R-Wyo., and other key federal officials. The group was able to lobby for pro-business public policy and for federal funding to support Colorado's economic development in the fields of aerospace and defense, bioscience, energy, transportation, veterans affairs and water.

Accelerate Colorado's 2009 and 2010 efforts in Washington have contributed to a number of successes. For example, Lockheed Martin's Orion Program, which employs more than 1,000 workers in Jefferson County, was saved after nearly being canceled. Also, an $886 million contract was funded and awarded to Raytheon and Boeing in Colorado to develop the ground-control segment of a new, more accurate Global Positioning System. Also, $800 million was granted to the Department of Veterans Affairs for the construction of a new, much-needed VA Medical Center to be located at the Fitzsimons Life Science District.

As Accelerate Colorado looks ahead to 2011 and beyond, it will continue to build a strong, unified consensus on a diverse body of statewide issues. The organization now offers memberships to help increase participation from farther outside of the Front Range and to help facilitate communication among participants 365 days a year. The annual business mission will continue to be the focal point of Accelerate Colorado's efforts, and the expanded year-round membership program will reinforce the strength of the organization's influence at the federal level.

Wendy Mitchell (mitchell@auroraedc.com) is president and CEO of the Aurora Economic Development Council. Bryan Blakely (blakely@acceleratecolorado.com) is president of Accelerate Colorado.

Read more:Taking Colorado to Washington, D.C. - The Denver Posthttp://www.denverpost.com/business/ci_15920209#ixzz0yCOpi9AZ

Administration undecided on housing credit

First-time deal for buyers had spurred sales, which have since crashed

By Paul Simao

WASHINGTON — The Obama administration has not decided whether it should resurrect a popular tax credit for first-time homebuyers, Housing and Urban Development Secretary Shaun Donovan said on Sunday.

"It's too early to say whether the tax credit will be revived," Donovan said in an interview on CNN's "State of the Union" program. He said the administration would "do everything we can" to stabilize the shaky U.S. housing market.

A federal $8,000 homebuyer tax credit, which expired several months ago, had boosted home sales, helping to revive a flagging housing market that had been a key factor in driving the United States into recession.

It followed a $6,500 credit for those purchasing a new primary residence, which also has expired.

But an unexpectedly large drop in U.S. home sales in July — sales of existing homes in the period fell to their slowest pace in 15 years — has spurred fears that the nation could be on the cusp of another sharp drop in housing.

Donovan acknowledged the data was worse than the Obama administration expected but said the government was taking measures, including rolling out a refinancing program for some borrowers and an emergency loan program for the unemployed.

Those opposed to bringing back the homebuyer tax credit say it would blow a bigger hole in the federal deficit, while supporters see it as key to stabilizing a pillar of the economy that faces headwinds despite low mortgage interest rates.

"I think it would help enormously," Florida Governor Charlie Crist, who is running as an independent for the U.S. Senate in the November elections, told CNN. "I would absolutely encourage the president to support that."

One of Crist's challengers, U.S. Representative Kendrick Meek, a Florida Democrat, said he also supported reviving the tax credit.

Last month, Obama signed a law giving consumers already in the process of buying a home three extra months to close the deal and still get the tax credit.

Homebuyers with contracts signed by April 30 who failed to go to closing by the original June 30 deadline will now have until September 30 to complete their purchases.

Copyright 2010 Reuters. Click for restrictions.

Original Link

Five Surprising Reasons to Buy a Home Now
ForSaleByOwner.com offers five good reasons why now is a great time to buy a house:

1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today's record-low rates, they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction.
2. Houses are in move-in condition. Home owners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. As these houses enter the market, they are in marked contrast to tattered foreclosures.
3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties.
4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market.
5. Plenty of programs. Many programs that encourage middle-class families to buy homes continue to exist, despite market downturns. Buyers who qualify can get a big boost by combining one of these programs with today's low mortgage rates.

Source: ForSaleByOwner.com (07/29/2010)

Original Link

First-Time Home Buyers: Tips to Make Your House a Home

RISMEDIA, July 29, 2010—After getting the keys to their new homes, many first-time home buyers are excited about finally having the opportunity to personalize and furnish their new house. From coffee tables to lamps to lawnmowers, many previous renters leap into homeownership quickly realizing they need to do a lot of shopping to truly make their house a home.

“Whether you’ve been living in an apartment with roommates or at your parents’ house, many first-time home buyers do not think about all the items they need – and want – when moving into a house,” said Janice Jones, national vice president of merchandising for Centex. “With a little advance planning and budgeting, you won’t break the bank to make your new home a reflection of your personal style and showcase your pride of homeownership.”

A typical home buyer spends $7,400 on average on their home, with more than half of that spent in the first year after purchase, according to the National Association of Home Builders.

While many first-time home buyers may not have accounted for this level of spending, Jones offers advice on what types of items to purchase to not only properly maintain and live in the home, but also more importantly, items that help new homeowners feel like their house is a place to call home.

Furnishings
Many first-time home buyers no longer want their parents’ hand-me downs or their childhood bedroom set. From sofas to dining room sets to mattresses, many first-time home buyers take the opportunity to upgrade their furniture when moving into their new home. According to an NAHB study, furnishings take the biggest chunk of the budget, with home buyers spending about $5,300 on furnishings during the first year after buying a home. The biggest ticket item for all households is bedroom furnishings, including mattresses, followed by sofas.

Window coverings and linens
The median square footage of homes bought by first-time buyers is 1,500. So, you can only imagine the number of windows that need to be covered to ensure privacy and security in a home. According to Jones, many home buyers don’t account for this in their budget. Additionally, with the ability to now paint and decorate each room, new homeowners find that they want to purchase new bedroom and bathroom linens.

Garden tools
Since a first-time home buyer is likely to move into their home from an apartment, unless you plan on hiring a gardener, you’ll need to purchase a few basic gardening tools, including a lawnmower, garden hose, sprinkler and a shovel (for winter weather).

Flat screen TV
Let’s face it: many home buyers shop for their new home while taking into a consideration how a new, large, flat-screen television set will be situated in their new living space. So, it’s not a surprise that a hot item on the list is purchasing an entertainment system.

However, you’ll also need the basic appliances in your new home: a refrigerator, stove, and a washer/dryer. While many existing homes usually come with appliances, a home buyer needs to take inventory as to whether or not they will need to purchase these big ticket items before they purchase their new bedroom set.

Basic tool kit
Every home needs a well-stocked tool box. Many home improvement stores have sets you can purchase, but make sure it includes a hammer, screw drivers, pliers, wrenches, a tape measure and a staple gun.

“My biggest piece of advice for new home buyers is to be creative and tackle this room by room,” said Jones. “For example, after outfitting your home with the necessary items—like appliances and window coverings—move on to the kitchen and family room spaces. This area is the heart of your home where everyone gathers.

“Look for great values on the items you need that will be utilized most. Take your time and get the feel of how you want to use each space for both function and enjoyment. This strategy allows homeowners to stage their purchases and add new furnishings as the budget allows. Decorating your new home should be fun and a reflection of your personal style.”

For more information, visit www.centex.com.

RISMedia welcomes your questions and comments. Send your e-mail to:realestatemagazinefeedback@rismedia.com.

Original Link

More homeowners get help outside of federal program

How to Recognize a Sellers Market

by Carla Hill

As a homeowner, and a prospective seller, you may be wondering if now is a good time to put your home on the market. But how can you tell if the market is in your favor at this time? Will you lose money or make money? Is it a "sellers market"?

These are all very important questions. And the answer is in the market statistics.

As a seller, one of the first things you must evaluate is the desirability of your location. Market conditions are extremely localized statistics. While the national economy and housing market tie every area of the country together to a certain degree, markets and their conditions range widely from state to state, community to community, and even neighborhood to neighborhood within a community.

You must ask yourself, and your real estate agent, "Is my neighborhood up and coming or has it already come and gone?" If you live in a neighborhood that is highly desired due to its school system, local amenities, or even status and prestige, then you may find yourself in a continual sellers market, where you will always be in the advantage.

A great place to start your research is the National Association of Realtors's website, realtor.org. They offer monthly quarterly and monthly studies by region, that include such things as existing and pending home sales.

For a more local view, look at the most recent sales in your surrounding area. How much are homes selling for? And how does your home compare in both size, location, upgrades, and condition?

Unfortunately, an issue completely out of your control can have a direct effect on your ability to sell your home, and for a good profit. Foreclosures in your neighborhood affect your home's value. This isn't fair, but it is how the market works. Buyers look for the best home for their dollar. If they are able to buy a home on your street for a foreclosure price, then suddenly your asking price must decrease in order to compete. Be sure to ask your agent for tips on how to make your home stand out again to buyers, despite this issue.

Another stat you should be aware of is "days on market." This means how long it takes a home to sell from the time it hits the market. In general terms, anything less than 6 months is considered a sellers market. If the average time is longer than 6 months, then the market is in favor of buyers. This should be a consideration for when you look to buy your next home. Unless you are prepared to carry two mortgages, you will want to make sure your current home has sold before looking for the next.

How is the local job market faring in your city? If you live in a town that has a healthy economy, then chances are you live in a sellers market. People who have steady jobs are more inclined to look to buy. The bigger the unemployment figures, then fewer buyers on the market.

Another consideration is "appreciation." In a healthy market, a home should increase in value each year. Many of the areas of the country, however, experienced a "bubble burst" after seeing years of record appreciation rates. Two major areas of uncontrolled appreciation were Florida and California. Homes bought during the bubble may very well be worth less now than their owner owes.

Be sure to discuss all of these issues with your local real estate agent. They will be able to help you determine whether now is a prudent time or not to put your home on the market.

Published: July 26, 2010

Original Link

 

 

Board rules in favor of developers

 

A Denver board on Tuesday unanimously voted to give developers the green light to move forward on razing a single-family home and building a duplex in Northwest Denver, a proposal that had become a lighting rod for neighbors who fought it, as well as for members of the real estate community who supported it.

“We’re very excited,” said Jeff Plous, a broker with One Realty, and who has been working with Robert Plimpton the owner of the development site on Raleigh Street, just north of the popular West 32nd Avenue corridor.

“We’re very happy with the outcome,” following the Board of Adjustment for Zoning Appeals meeting that stretched for almost two hours, before the five-member board adjourned into an executive sessions to continue to discuss it behind closed doors.

Lots of drama, emotion

Plous said construction of the three-story duplex could begin within the next couple of weeks.

The decision came following a meeting that didn’t lack in theatrics – taped conversations with city employees and the testimony of newly elected City Council member Paula Sandoval, spiced up what often are more cut-and-dry meetings.

The proposal had become a cause celebre among both opponents and proponents of new development since it was first brought to public light a month ago in a blog titled Developer-Neighborhood Dispute Raises Difficult Questions, by InsideRealEstateNews.com. The decision also comes the day after the City Council approved the biggest zoning change in more than a half century, which effectively would eliminate the three-story duplexes proposed by Plous and Plimpto in northwest Denver.

About a dozen neighbors came to support Anthony Cooper at the board meeting. Cooper, an engineer, is one of the most vocal opponents of multi-unit construction in northwest Denver, and was leading the charge against a proposed duplex that ironically would be built next to his home along Raleigh Street. In protest, Cooper and several neighbors have planted toilets and signs opposing the duplex in their front lawns. Cooper at today’s meeting also presented a petition that he said had dozens of neighbors signatures opposing the development. Cooper could not immediately be reached for comment regarding the board’s decision.

 

Constitutional property rights issues key

The crux of the matter is whether the developers missed a 180-day deadline to get their zoning, as on Jan. 1 a moratorium for the area went into effect preventing developments that were not “substantially complete.”

However, assistant city attorney Jennifer Welborn repeatedly told the board the city’s position is that legally, the board should grant the zoning request being sought by Jeff Plous and Robert Plimpton. To not grant them the zoning – which the city did not initially approve because of an error it made – would deny them their property rights guaranteed under the 5th Amendment of the Constitution, she said at one point during the lengthy proceeding, in which this reporter took 45 pages of notes.

That is because is because the city made a mistake in at first denying the zoning request, she said. The city denied the initial zoning change to allow the duplex because it erroneously thought that it did not have enough open space. But the development did have enough open space and when the city discovered its error, it gave the developers its required zoning and canceled a hearing to appeal the initial decision. Welborn said that the 180-day deadline did not apply in that case.

Plous said he suspects that played a key role in the board’s decision to vote in their favor, as he believes it would have been a “takings” of their property rights, if they had not allowed them to continue the process to redevelop the property.

“Maybe they realized that if they voted against us, they would put the city in a position where it could have faced a legal challenge from us,” Plous said. He said he did become worried that during part of the board meeting that Penny Elder, the chair, seemed inclined to favor the neighbors.

Several times Elder wondered why the developers ad not done more to clarify their position, and at one point told developer Plimpton that he could see the impact of his decision to build a duplex was having on neighbors.

“The whole point is that it wasn’t whether board members liked duplexes or what neighbors think,” Plous said, adding that it seemed as board members Ben Romero and Michael Koch on several occasions would get the board to focus on the scope of whether they had followed all of the rules and should get their rezoning.

 

Cooper, however, supported by several neighbors, argued that it was a moot point whether the city was in error or not. He used basketball and baseball analogies to say that if a player scores, and the buzzer already has gone off before the shot is taken or a ref makes a bad call, it doesn’t count.

Cooper and neighbors were supported by City Council member Sandoval, who recently replaced Rick Garcia as the representative of District 1, which includes the West Highland neighborhood in which the drama between developers and neighbors is taking center stage.

Sandoval in neighbor’s corner

It is rare for City Council members to publicly take a side during hearings such as this, but Sandoval kicked off the meeting by testifying that this represents “a very difficult situation.”

“As I see it, you should rescind the permit,” said Sandoval. Sandoval said that even though the city made the error, the developers had not done enough to correct the mistake, so they “forfeited the right” to get the zoning. She also read a letter from fellow City Council Doug Linkhart siding with the neighbors. Sandoval could not immediately be reached in the wake of the decision in favor of the developers.

Attorney Welborn, however, said she is not sure what else the developers could have done. And their architectural designer, Anchen Wang, said he had told Jim McConnell, a senior plan reviewer, that they had enough open space, and he was waiting to hear back from him. When McConnell informed the developers by e-mail that their original zoning had been denied, they filed an appeal. The appeal was well within the required 30-day time period, Welborn said.

Cooper played a tape recording from McConnell, in which he physically moved the tape machine to the front of the room so the board members could hear it, in which McConnell said that because the developers had missed their 180 day deadline, they would not be able to build the duplex. Welborn, however, said she had no idea when the recording was made.

Cooper also said that McConnell told him that the developers had never contacted him once, after he initially denied the rezoning. Plous and Plimpton said that is not true, and they had left several messages for him, which he did not return. McConnell, when contacted by InsideRealEstateNews after the meeting, since he was not there and did not know what conversations took place at the meeting, he would not comment.

Did developers do enough?

One resident, who thanked Cooper for all of his efforts in spearheading the fight against the developers, said the developers had dropped the ball in proving they had pursued correcting the city’s error. If they truly tried to work things out with the city, they should have taken notes, taped phone conversations, and sent things by certified mail, so they would have proof.

“When he was saying that, I thought, “You know, he’s right,” Plous said. “One of the things I wanted to say, but I never had a chance to say, is that we’re new at this. We’re just cutting our teeth on this project. As much of a nightmare this has been at times, it was a learning experience. We got more than a grad-school education through this process.”

The developers had a fair amount of internal drama trying to put the deal together. Plimpton was in Kenya during three months of the process, Anchen Wang flew to Taiwan to care for his ailing grandmother, and they parted ways with their first general contractor.

Olive branch rejected

Developer Plimpton, near the end of the meeting, said that he never wanted to stir up such trouble with the neighbors.

“I just wanted to add value to the neighborhood,” noting that when he first bought the home in 2008, it was in such bad shape that it was a month before he could make it livable. Plimpton said that he never would have taken one of the nice homes that the protesters live in, and try to raze one of those to make way for a new project.

“I apologize for any inconvenience I have caused,” Plimpton said. He also said that he agreed with Cooper that the city procedures should have been better spelled out and more clear, and if they had been,  he would have followed them.

Cooper’s response was to ask him if he had installed an illegal bathroom in the basement of the home he plans to tear down.

But chairwoman Elder over-ruled the question, as it was not germane to the issue of the rezoning.

“I know this has all been very emotional and we have all gotten off topic from time to time,” Elder said.

 

Written by John Rebchook of www.InsideRealEstateNews.com

Original Link

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865

 

Developer-neighborhood dispute raises difficult questions

 

Video: Developer makes his case

Take a POLL at the bottom of the blog

Former Denver City Councilman Rick Garcia described his northwest district as “ground zero” for clashes between some homeowners and developers razing houses and replacing them with modern homes. Perhaps the epicenter of ground zero can be found on the east side of a tree-lined block of Raleigh Street between West 32nd Avenue and West 33rd Avenue. There, Realtor and fledgling developer Jeff Plous and partners are hoping to tear down a small home that is falling apart and functionally obsolete, and replace it with a three-story, energy efficient duplex designed by architect Anchen Wang.

Developing a high-end, spec home in this market is tough, given the challenging market and battered economy. But for Plous, a broker with One Realty and Robert Plimpton, the owner of the development site, the job is much more difficult because their proposed duplex on Raleigh Street  is adjacent to a home owned by Anthony Cooper, one of the most vocal critics of three-story developments in northwest Denver.

Developers “rape, scrape and prostitute” the neighborhood, according to Cooper, who has lived on the block for almost 14 years. He has placed a sign in front of his yard saying that he may be living next to a “huge puky duplex.” Similar signs are sprinkled on neighboring lawns.

 

Plous believe that Cooper represents the worst of NIMBYism, or Not In My Back Yard, a knee-jerk reaction to development, even smart growth, which he believes he is proposing.

Zoning appeal set for June 22

Cooper is trying to stop the development on a technicality. The area is part of a moratorium zone spearheaded by Garcia before he left the council to be HUD’s Region VIII director. Plous and Plimpton applied and received the permit for the duplex before the moratorium went into place. But Cooper argues they took 217 days to get their zoning in place, missing the 180-deadline. But Plous counters that the city made a mistake – they hadn’t violated an open-space requirement that the city originally thought it had- and when the city realized its error, it granted the zoning, without another hearing. In other words, the 180-day deadline did not apply. But Cooper, with the help of 26 neighbors, raised $300 to appeal the zoning with Denver. A Denver Board of Adjustment meeting on the matter is scheduled for June 22.

Duplex would help neighborhood

The duplex would replace the home, which Plous considers an eyesore, and the lone bad home on the block. The new duplex, he believes,will help the neighborhood and community in several ways, Plous contends. First, he believes an attractive duplex replacing a home that is little more than a dump, will raise the value of other homes on the street. The new duplex also will be green, with average utility bills expected to be less than $100 month – about a third of the current utility bills, even though the new homes will be more than three times the size of the current 949-square-foot home, he said. Each side of the duplex will have about 3,500 square feet, including the basements. In addition, current tenants park on the street, while the new homes would each have two-car garages, helping to reduce congestion, according to Plous.

DPS benefits

One thing that is often overlooked, Plous notes, is that most of the property taxes go to the Denver Public School District, and not to the city. So homes such as this, in the $650,000 price range, will bring more money to the financially struggling DPS. New homes such as this, he argues, also will keep or attract people to the city, who otherwise might buy a home in the suburbs.

Plous, who lives in the neighborhood, said he has no interest in tearing down and replacing houses that are attractive, in good shape and make economic sense. “I wouldn’t want to tear down any of the homes across the street, or Tony’s (Cooper’s) home for that matter,” Plous said. “He has a nice house.”

House plagued with problems

But there’s little to like about the home he wants to replace, Plous said. The home, built in 1924, has a side-entrance, which prospective buyers do not like. That design error is compounded, because it has resulted in long, narrow rooms and a tiny bathroom, all turn offs to buyers, he said. The roof, electrical and plumbing systems all need to be replaced. For the past six months, Plous said he has unsuccessfully tried to sell it for $325,000, “which is way below market.”  A similar-sized home across the street sold last year for $405,000, he said.

“We could put another $100,000 into it, which would mean we would have about $425,000 invested in it, and we would be able to sell it for about $400,000,” Plous said. “And the numbers just don’t pencil out for a single-family home on the site.”

Foreclosure could replace development

Plous said if they can’t develop the site, the home will fall into foreclosure.  “There is just no way we could hold on to it,” as a rental, Plous said. “Believe me, we have already put a lot of money into this. This is my first development, the one I’m cutting my teeth on. Whatever happens, we’re not going to make a ton of money on this. But the last thing the neighborhood wants to see is a foreclosed home on the block. That would be terrible.”

Plous lives a few blocks from the development. He resents people who think that he is a carpetbagger who is looking to make a quick buck and leave the West Highland neighborhood.

“I’m not the bad guy,” said Plous, who sold the home to Plimpton, then joined him as an equity partner on the development. “We’re not some heartless developers. We love this neighborhood.”

They bought the house in a pre-foreclosure deal. The woman who owned it prior to Plimpton kept two, 200-pound dogs that she rarely let out, Plous said. “The smell was so bad you had to wear a mask when you entered,” Plous said. “You could smell it from the street. The basement was full of dog feces. We had to spend $10,000 right after buying it, just to make it livable.”

Protests hurt design

Aesthetically, he said architect Wang will design the duplex  to blend in the neighborhood. Indeed, he said Wang was working on a different design, which would have set-back the third-floor element of the homes to the back of the lot, so it would have looked more like a two-story home from the street. Ironically, Cooper’s protest killed that plan, he said.

“He pushed our backs against the wall,” as they can’t go back to the drawing board with the second elevation, Plous said.

“If Tony (Copper) had played nice, I think we would have ended up with an even more neighborhood- friendly home,” Plous said. “But we are going to use most of the same kind of materials you find in the neighborhood, with brown and red bricks. It will have a little bit of metal, because it is going to be modern.” Also, the design calls for one front door, with the entry into each unit in the interior, a little touch that will make the duplex look more like a single-family home, he said.

“Rape, scrape, prostitute”

Cooper, for his part, doesn’t buy any of it.

“I, and I think most of the neighbors, don’t like the idea of a lot-line to lot-line, three-story duplex with a flat roof that is gong to steal the sun from the neighbor on the north side of it and allow people to look into my back yard,” Cooper said. (Plous says the duplex will not run from the line of the lot to the other, which he said Cooper knows.)

Asked if he considers himself a NIMBY, Cooper had this to say: “Well, none of us want this. That is why we did the moratorium here. Developers come in and they rape, scrape and prostitute the neighborhood for their own profit. Mr. Plimpton and Mr. Plous don’t plan to live there (although they both considered it, Plous said.) They’re just going to prostitute the property and make it as big as they can.”

Cooper said he could care less if the homes falls into foreclosure.

“Who cares? If it goes into foreclosure, someone else will buy it and either live in it or tear it down and build a single-family home on the property,” Cooper said. “If they were planning to build a single-family home on the property, I don’t think anyone in the neighborhood would care.”

City Councilwoman Paula Sandoval, recently elected to replace Garcia in District 1, does care if the home becomes a foreclosure statistic.

“We don’t want to see houses end up in foreclosure,” Sandoval said. “You have an empty house. That is just the start of it. It brings crime and a slow decline in a neighborhood.”

Sandoval doesn’t see win-win

That said, Sandoval said she is quite familiar with the dispute and she can see both sides.

“It is a sticky situation,” Sandoval said. “It sounds like the city made a mistake when they asked the developer to cure a defect in their first application; it sounds like because it was a mistake on the city’s part, there was nothing to cure. On the other hand, Anthony Cooper is saying that they had a six-moth time period and they didn’t meet the six-month time period to get their permits in order, and technically, it doesn’t matter why they didn’t meet the deadline.”

She said the dispute almost rises to the need of a “Solomon-like” outcome, but she doesn’t think it is possible.

“Sorry I can’t come up with a ’split-the-baby’ solution,” Sandoval quipped. “I would love to see this end up as a ‘win-win,’ but I don’t see that happening. This is a very difficult and interesting one. I’m going to have to keep my eye on this one.”

Plous said that while Cooper doesn’t like the new breed of buildings in the neighborhood, for his part, he doesn’t care for some of the decisions Cooper has made on his property. For example, Cooper placed a toilet bowl in his front yard and filled it with flowers, which Plous finds unattractive. “Too bad, so sad,” Cooper said. “It’s my right. I can paint my house Bronco orange and blue if I want. Whose deal is going to impact the neighborhood more? My design and landscaping choices or a duplex that will be there for the next 50 to 100 years?”

 

lous knew about Cooper before he planned a duplex next to his house. But he had no idea that of all the homes in northwest Denver, he was choosing a development site next to Cooper’s home.

“He loves to use that line, ’scraping, raping and prostituting.’  He uses it every change he gets,”  Plous said. “We didn’t know he lived right next door until after the closing. We didn’t know how bad it was going to get. If we knew what we know now, we never would have bought it.”

Written By: John Rebchook

Original Article and Poll can be found here: Inside Real Estate News

 

 

 

Denver's Arapahoe Square ripe for redevelopment
By Andrew Simons
Special to The Denver Post

A long-forgotten swath of parking lots and low-rise buildings between Coors Field and Uptown, Arapahoe Square hasn't seen the redevelopment other downtown areas have seen over the past two decades.

That could soon change.

With new residential developments going up and business-interest groups rekindling intrigue in the area — which spans from Lawrence Street to Welton Street and 20th Street to Park Avenue West — Arapahoe Square stands to get a face-lift in the coming years, say urban planners, developers and downtown advocates.

"Arapahoe Square isn't broken," said Tami Door, president and chief executive of the Downtown Denver Partnership. "It's a clean slate."

In the next few weeks, city planners will select consultants who will advise them on best uses for land in the Arapahoe Square area, said Steve Gordon, development program manager, for the Denver Department of Community Planning and Development.

"That's when we'll get it done more rapidly," said Gordon.

Planners have long targeted Arapahoe Square as a place for urban renewal.

According to a 2007 plan developed by the Downtown Denver Partnership, "the remaining buildings are both economically and architecturally diverse, combining urban lofts and low-rise neighborhood commercial with warehouses, transportation facilities and light industry."

Among the goals for the area are restoring landscaped tree lawns; converting selected streets to two-way; improving pedestrian walkways; finding redevelopment opportunities along the Welton Street light-rail line; and redeveloping some of the many surface parking lots in the area.

"It's a blank canvas," said Brian Higgins, a Denver-based architect and developer. Higgins has started pre-construction selling of his residential complex in Arapahoe Square called Carbon Flats.

The development targets younger, lower-income buyers who cannot afford pricier residences in nearby LoDo or downtown. According to the Carbon Flats website, only one has been sold, but Higgins says Carbon Flats continues to receive inquiries.

"We recently put them on the market for pre-construction sale, and there's been really strong interest," said Higgins.

Such developments will be important to city planners as they plot out their vision of the area over the next several years, said Door.

"Everything that's in the works is money that's already being invested there," she said. "The question is, how do you leverage that, and incorporate that into your plans to ensure that those projects are successful and serve as a platform for future projects?"

Arapahoe Square has seen its share of blight over the years. For years, the 61-acre neighborhood has been a sea of run-down buildings, low-cost parking lots and homeless encampments. Fourteen years ago, the City Council rezoned 16 square blocks of Arapahoe Square near Coors Field to specifically exclude liquor and adult stores in order to clean up the area.

"Over time, we have seen that the downtown market is a very strong market," said Gordon. "It's not just a place to work. It has sports facilities, a performing arts center and all sorts of other things. So we think that trend will continue."

Redevelopment of Arapahoe Square stands to look much different than that of LoDo, which underwent improvements nearly two decades ago.

"LoDo developed because there were actually buildings there," said Door. With Arapahoe Square, "there's very little that's actually been built there," he said.

Denver Post
Orignally Posted 10/4/2009
Original Link

Brookings studies recession's impact on Rockies
Denver Business Journal - by Renee McGaw

The cities of the mountain West have felt the recession as deeply as any in the nation, although the pain has not been spread evenly, according to a report Tuesday.

Denver emerged as one of the strongest cities in the six-state region on a number of measures, according to the report by Brookings Mountain West, a partnership between the Brookings Institution and the University of Nevada.

“Phoenix, Boise, and Las Vegas... remained three of the most troubled metropolitan areas in the entire nation in the third quarter, with all residing in the weakest quintile of metros on a combined measure of overall economic performance,” researchers wrote. “Still, metros like Colorado Springs, Albuquerque, and Denver have only been moderately affected by the recession and seem poised to renew their upward trajectory as the pace of recovery quickens.”

Denver’s unemployment rate averaged 7.1 percent in the third quarter, below the 100-city average of 9.6 percent. It ranked 14th of the 100 cities in terms of unemployment rate — with 1 signifying the strongest-performing metro and 100 the weakest-performing — and ninth in terms of change in the unemployment rate over the 12 months ending in September.

The city also fared well on housing prices: over the 12 months through September, Denver house prices were up 1.6 percent, compared with an average drop of 3 percent.

But foreclosures remained a problem, with the city ranking 76th out of 100 in terms of real-estate-owned properties per 1,000 mortgageable properties.

Denver ranked 70th for gross metropolitan product, and 57th for employment growth.

Click here for the full report.


rmcgaw@bizjournals.com

RealEstate Outlook: Housing Warmer Than Weather
by Kenneth R. Harney

If new applications to buy homes are any gauge, the U.S. housing market is warming up, and that's despite the fact that we're now into the traditionally quiet holiday season.

Applications for home purchase loans soared 42 percent last week on a non-seasonally-adjusted basis compared with the week before, according to the Mortgage Bankers Association.

That burst of activity may have been influenced in part by the long Thanksgiving week layoff. Or it could have been an early reaction to the extension of the $8,000 tax credit or the start-up of the new $6,500 credit.

Either way, it was an exceptional week for mortgage lenders.

But here's another possibility: With the economy gaining a little momentum, interest rates have begun edging up again.

Mortgage rates are still close to historic lows, 4.9 percent on average for 30-year fixed and 4.3 percent for 15 year fixed, but MBA chief economist Jay Brinkmann says they're likely to exceed 5.2 percent by this coming March.

So, maybe the rush to nail down financing by home buyers is a smart move … compared with paying half a point higher rates by early spring.

On other economic fronts, we're looking at a mixed bag of reports this week, though mainly positive:

Freddie Mac's found home prices nationwide up by about one point on average during the third quarter. That's on top of a two percent gain for the second quarter. Clear Capital, a real estate data company, also found prices up marginally - by 1.4 percent - during the month of November, though a few local markets came in with double digit gains.

But not all surveys agree on that. The well-regarded “IAS 360” index came in with a contrarian result. It found that overall prices in the U.S. were down slightly on average -- by about half a percent.

Since there's not a huge variation among the three reports, we can probably safely conclude that -- at the very worst -- prices have stabilized in most markets -- and at the very best, they're up a little.

There were also positive indications on lower delinquencies and foreclosures across the country. Realty Trac says foreclosure filings in November dropped by 8 percent - the fourth consecutive month of declines.

And Trans Union, the big credit bureau, forecasts three percent fewer mortgage delinquencies next year - after three straight years of rising delinquency rates.

Meanwhile, ZIP Realty's latest national study on price reductions on listed properties found that during November the number of price cuts dropped in 27 major markets, a welcome sign of more realistic asking prices.

Published: December 15, 2009

Realty Times

Original Link

Washington Report: FHA Condo Rules
by Kenneth R. Harney

The Federal Housing Administration puts its long-awaited new financing rules for condominium units into operation last week -- immediately affecting sales in hundreds of condo projects across the country.

Among the key make-or-break rules that condo marketers, buyers, lender and realty agents now need to know about are the following:

FHA won't insure mortgages in buildings or complexes where less than 30 percent of the units haven't already been sold.

At least 50 percent of the units in a project must be owner-occupied or sold to purchasers who intend to occupy them.

No individual owner or investor can hold title to more than 10 percent of the units in the entire project.

No more than 25 percent of the square footage of a condo project can be non-residential -- in other words, used for commercial purposes.

No more than 50 percent of the units can have FHA insured financing on them. FHA doesn't want to “concentrate its risk” in any single project.

No more than 15 percent of the units in a project can be 30 days or more delinquent on their monthly payments to the condo association.

Although some developers and in urban areas welcomed the new rules, industry critics say they will actually curtail the availability of low-downpayment FHA financing for many individual buyers. Others say some of the percentage thresholds are off the mark.

For example, Phil Sutcliffe, a national condo financing expert based outside Philadelphia, says he recently had to turn down two condo projects that sought FHA financing - even though both were more than 50 percent owner occupied and pre-sold. The reason: The developers had chosen to rent out more than 10 percent of the unsold units to generate cash flow. But by doing so, Sutcliffe said, they crossed the “single owner” maximum, thereby denying future FHA financing to all remaining units in the building.

“It just makes no sense in this situation,” he said. With no FHA loans available to potential purchasers, “the owners may have to hand back the keys to the bank.”

Andrew Fortin, vice president for government affairs at the Community Associations Institute, which represents condominium, cooperative and planned unit developments across the country, told Realty Times that the 25 percent commercial-use cutoff is “problematic” because many projects have been designed for “mixed use” in urban areas.

Fortin's group also is critical of the new 15 percent delinquency ratio on association dues. Not only is a 30-day delinquency measure “a very arbitrary standard,” he said, but it's also not a good indicator of the association's underlying financial health.

Published: December 14, 2009

Realty Times

Original Link

Short sales rise as banks start approving them in lieu of foreclosures
By John Gittelsohn and Margaret Collins
Bloomberg News

Drew Schlosser tried for two years to sell his three-bedroom Punta Gorda, Fla., waterfront condominium for less than he owed on its two mortgages. The deal only went through last month when Wells Fargo & Co. agreed to take a $165,000 loss on the loans.
Even after he had an offer of $155,000 for the property, it took five months for the San Francisco-based lender to approve the purchase, a so-called short sale, in which the bank accepts less than the balance owed on a property. Schlosser said earlier offers had fallen through as bidders lost faith the bank would take less than the $320,000 in two mortgages.
"It was just kind of a mess," said Schlosser, 31, a market research company director living in Estero, Fla. "You really have to get buyers who are patient."
Banks are beginning to go along with short sales in increasing numbers, three years into a U.S. housing slump that pushed the economy into a recession and cut resale values by 30 percent from the peak in July 2006. Short sales tripled to 40,000 in the first six months of 2009 from the same period a year earlier.
Yet for each short sale, there were 25 foreclosures started or completed in the first half of this year, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency.
"It's really finally dawning on banks that they're better off with a short sale," said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles. "I think banks were in denial."
Wells Fargo, Bank of America Corp. and JPMorgan Chase & Co. this year have hired and trained more staff, developed software systems for expediting short sales, and increased marketing of short sales to delinquent borrowers.
Banks are increasing such sales under pressure from the Obama administration and lawmakers who criticized them for favoring foreclosures and delaying short sales, Green said. Lenders and loan servicers also stand to receive up to $2,000 in incentives to close short sales under a Treasury Department plan unveiled Nov. 30.
"Judging by how slowly the modification plan is up and running, it doesn't lend confidence this is going to jump-start things," said Mark Zandi, chief economist with Moody's Economy.com.

Link to Article

Denver home resales up 23% in November from 2008
Denver Business Journal - by Paula Moore

Sales of existing homes in metro Denver and selling prices increased in November compared to the same month of 2008, partly because the local housing market is “normalizing,” according to Metrolist Inc. data released Tuesday.

Existing homes are those that have sold at least once before. Sales of such homes are called resales.

Home resales, including single-family homes and condominium/townhomes, rose 23.3 percent last month to 3,599 from 2,920 in November 2008. Sales were down roughly 9 percent from 3,958 in October of this year, though, partly because homebuying traditionally slows during the winter holiday season.

Average selling price for both types of housing rose 5.3 percent year over year, to $238,852 from $226,895. November’s average sales price also ticked up from October’s average of $238,807.

“November of last year was the first month that the Denver market really saw the impact of the recession,” said independent Littleton broker Gary Bauer, explaining the strong, year-over-year increase in November home sales.

“This November was the last month on [the 2009] first-time homebuyer tax credit, and everybody was pushing to have a unit under contract to close by Nov. 30,” Bauer said. “Plus in the latter months of this year, we are normalizing.”

This year’s first-time homebuyer’s $8,000 tax credit was to have expired Nov. 30, but the U.S. Congress extended it until April 30, 2010. Home sales using the credit must close by June 30 next year.

Congress also added a repeat-buyer tax credit of as much as $6,500 for people who already own a home, but want to buy a new one.

Normalization of the Denver-area housing market, to Bauer, means there are more move-up buyers purchasing homes in higher price ranges than first-time buyers. In a “normal” market, roughly one-quarter of metro-area homebuyers are first-time buyers, 55 percent to 60 percent are move-up buyers, and the rest are people relocating from other markets as well as buyers of high-end homes.

“The first part of this year was all first-time buyers, and no [move-up] buyers,” Bauer said.

Bauer expects the recession to cost the metro-area home sale market $2 billion in lost volume this year. Using a multiplier of four, it will cost the service industry related to home sales $8 billion, according to Bauer.

Here is more specific November home-sale data:

• 2,751 single-family homes were sold, up 16.8 percent from November ’08, but down 9.9 percent from October of this year.

• 848 condo/townhomes sold, up 50.09 percent from November of last year, but down 6.4 percent from October of this year. David Simonson, broker associate at Re/Max Professionals Inc. in Highlands Ranch, attributed lower condo/townhome sales to “fewer available properties.”

• $265,498 was the average selling price for single-family homes, up 9.5 percent from November ’08 and up 1.4 percent from October of this year.

• $152,409 was the average selling price for condos, down 5.7 percent year over year and down 5.6 percent from this October.

• $218,000 was the median sales price for a single-family home, up 11.8 percent from November ’08, but down 1.8 percent from the previous month this year.

Median, or middle, selling price is the midpoint between highest and lowest price. Median is considered by some real estate experts a truer measure of price than average because it’s not skewed by price extremes.

• $135,900 was the median selling price for condos, up 4.5 percent year over year and basically flat from October.

• Average days on market for houses and condos dropped nearly 14 percent to 81 in November, year over year, and was down 12.9 percent from October.

Original Link

Denver Business Journal

House Flipping Makes a Comeback
By James R. Hagerty WSJ - Original Link

SCOTTSDALE, Ariz. -- Four years after the collapse of the U.S. housing bubble, flipping homes is back in fashion.

Jon Mirmelli, a Phoenix real-estate investor, learned late in the morning of Sept. 28 that a never-occupied custom house on the northern fringes of this Phoenix suburb was going up for auction around noon the same day. The six-bedroom home, built on a three-acre desert plot, has a kitchen with two dishwashers, four ovens, "antibacterial" copper sinks, and a master "spa" bathroom with space for a flat-screen TV visible from the tub.

The minimum bid, as set by a unit of Citigroup Inc., which had a $1.3 million mortgage on the home, was $379,900. After several minutes of bidding among investors and their representatives, some wearing shorts and flip-flops, Mr. Mirmelli won the home for $486,300. A week later, he agreed to sell it for $690,000 to a woman who moved in this month.

During the housing boom, millions of Americans tried to make money by buying and then quickly reselling new houses and condominiums. That kind of flipping stopped several years ago as home sales stalled amid a surge in foreclosures and curtailed lending.

Now, a different breed of flipper is proliferating: one who seeks bargains at foreclosure auctions. Unlike the boom-time flippers, the latest generation needs cold cash, lots of local-market knowledge and strong nerves.

Investors compete mostly with other full-time professionals who monitor foreclosure auctions at county courthouses across the country. The bidders often haven't had a chance to inspect the property or determine whether it's occupied by tenants, who may be hard to evict.

Sometimes "you have half an hour to make a half-million-dollar decision," says Damon Lines, an executive at PostedProperties.com, a Phoenix firm that provides information to foreclosure investors and bids on their behalf. "That's something most people can't or aren't willing to do."

In the states where home prices have fallen the most, many local real-estate markets are dominated by foreclosed property, dragging down the value of neighboring homes. Barclays Capital estimates that banks and mortgage investors have 639,000 foreclosed homes for sale across the U.S., largely concentrated in Florida, California, Arizona and Nevada. That's equivalent to more than 10% of expected U.S. home sales this year.

Flippers swoop in at public auctions of foreclosed homes, known as trustee or sheriff sales. In many states, the lender sets the minimum bid, and takes possession of the property only if no one bids more. In the past, the minimum generally was about equal to the mortgage balance due. But in today's market, in which many home values have dropped far below the loan balance, lenders wouldn't attract investors if they set the minimum at that level.

So lenders, or the loan-servicing firms that represent banks and investors, are increasingly likely to set the minimum much lower. Their goal is to tempt others to buy the house and spare banks the headaches and costs that come with taking possession.

Sean O'Toole, chief executive officer of ForeclosureRadar.com, a research firm, estimates that in November about 21% of homes sold in trustee sales in California went to investors rather than to a foreclosing lender, up from 6% a year earlier. The trend is similar in some other areas with high foreclosure rates, including Phoenix and Miami.

The advantage of such an outcome for the bank is that it gets money for the property right away, even if it isn't enough to cover the loan balance due. The bank doesn't need to make repairs to the home, cover the taxes and insurance, or pay real-estate-agent commissions.

The risk for banks is that if they set the minimum bid too low, the home might end up selling for much less than they could reap if they took ownership of it and sold it themselves. But with some 7.5 million U.S. households behind on their mortgage payments or in foreclosure, many lenders are overwhelmed. They're negotiating with distressed borrowers and figuring out how to sell the growing supply of foreclosed homes.

"The banks are so screwed up," says Mr. Mirmelli, the Phoenix investor, that they don't always have a clear idea of the value of the property they are foreclosing on.

To help them set the minimum bid, banks often consult with local real-estate agents and use software that estimates housing values. American Home Mortgage Servicing Inc., which collects payments and handles foreclosures on behalf of banks and loan investors, uses a formula designed to "achieve a fair value for the property and induce third-party bidders," says Christine Sullivan, a spokeswoman for the Coppell, Texas-based firm.

American Home starts with a broker's estimate and subtracts the expected costs of taking ownership of the house and selling it. The minimum bid is above the net proceeds American Homes believes it could get by acquiring and selling the property itself, she says.

Outside the Maricopa County court building in downtown Phoenix, trustees, companies that are hired to handle foreclosure auctions, offer as many as 600 or 700 houses every weekday. A typical auction lasts only a few minutes. On a recent afternoon, a few dozen bidders and onlookers were clustered around a trustee employee seated on a lawn chair conducting auctions. He kept track of the bids on a laptop computer perched on one knee.

Many of the bidders are regulars at the sale, bidding for themselves or on behalf of investor clients. "We're all kind of like a little dysfunctional family," says Steve Mutsaers, a representative of PostedProperties, who was wearing black sunglasses, a white polo shirt and gray plaid shorts. During the summer, Mr. Mutsaers says, he wears a sombrero to cope with temperatures well above 100 degrees.

People who attend trustee sales here and in other foreclosure hot spots around the nation say the auctions have recently been attracting more bidders. "Properties are getting bid up," says Hal Feinberg, a Phoenix property investor. "You can still get good deals, but you've got to be more patient than you were a year ago." He and other investors in the Phoenix area say they have been flipping a lot of the homes they buy to Canadians taking advantage of a weak U.S. dollar.

Buying at these auctions is perilous. There are no public viewings, so bidders often can't know how much damage may have been done inside a house by occupants facing foreclosure. "We've seen everything," says Doug Hopkins, chief executive of PostedProperties. "We've seen people pour concrete down the toilets." Unless they've done their homework, bidders also don't always know whether they're buying a home subject to a lien from another lender, which can happen in cases where the borrower took out more than one home loan.

Because of such complexities, many of the bidders are people with experience in the property business. Jon Goodman, a real-estate lawyer in Boulder, Colo., for example, has bought 19 properties so far this year with other investors and sold 11 of them.

In February, the group won an auction for a home in Commerce City, Colo., near Denver, by bidding $142,000. Only afterwards did they discover that the previous owners had stripped the house of a toilet, much of the carpeting and a kitchen range. They replaced the missing items and made other minor improvements, eventually selling the house in May for $209,000. (The loan balance on the house had been $265,663.)

Mr. Goodman says their expenses came to about $24,000, including about $8,000 for real-estate commissions. That left a pretax profit of about $43,000.

The foreclosure auction was handled by American Home Mortgage Servicing. Ms. Sullivan, the spokeswoman for American Home, says the firm believes it didn't underprice the home and it received "a fair, market-value price for the property."

In Miami, a group of investors led by Oded M. Kaiser recently bought a condo at auction for $170,000. Two weeks later, they flipped it for $330,000. The loan balance was about $466,000. A spokeswoman for Litton Loan Servicing, which handled the sale on behalf of mortgage investors, declined to comment.

Not all flippers come out on top. Mr. Goodman says one of his legal clients, bidding on his own, unwittingly bought a house that was still subject to a first-lien mortgage. To gain control of the property, the client had to pay off the first mortgage. As a result, says Mr. Goodman, the client, who declined to be named, is likely to have at least a small loss on the deal.

Last summer, Phoenix investor Greg Thielen bought a home at an auction and later found that the former owner had stripped out air-conditioning units, granite countertops and kitchen cabinets, and uprooted palm trees from the lawn. Repair costs came to about $30,000, leaving Mr. Thielen with a small loss on the purchase. "It's not as easy as people think," says Mr. Thielen.

The Scottsdale property bought by Mr. Mirmelli was supposed to be the dream home for Brad and Michelle McCaughey and their three children. Mr. McCaughey, who grew up in Ann Arbor, Mich., was a minor-league hockey player and coach after graduating from the University of Michigan. About nine years ago, having moved to Phoenix, he says he discovered "a passion for real estate." He became a real-estate agent and began investing with his father and brothers-in-law in rental properties. Soon they had a dozen homes.

In 2005, Mr. McCaughey and his wife paid about $500,000 for three acres of desert land and began building a home. By the time the house was nearing completion in 2008, the family rental-property business was in trouble because financing and other costs were exceeding their income.

The McCaugheys started selling their rental properties and put their own house on the market. They hoped to avert a foreclosure by getting Citigroup to accept a short sale, in which a home is sold for less than the loan balance due. Before they could find a buyer, though, Citigroup foreclosed on the home, and it went up for auction at the Maricopa County Courthouse this past September.

Citigroup initially set the minimum bid at auction at $1.3 million, far more than the market value, given comparable sales in the neighborhood. Then, on the morning of the sale, Citigroup lowered that minimum to $379,900. PostedProperties, which monitors Web sites for such price changes, sent out an email on the opportunity to Mr. Mirmelli.

Mr. Mirmelli has his iPhone set up so he can call up the address of a home due to be auctioned, see a map of the neighborhood with a tap of his finger and then see panoramic photos of the street with another tap. While he researched the home, one of his partners drove out to see the exterior and make sure there were no occupants. A PostedProperties employee bid on their behalf and won the house for $486,300, a sum that then went through the trustee to Citigroup.

After expenses of about $54,000, including real-estate commissions and minor repairs, Mr. Mirmelli and his partners expect a profit of about $150,000 on the flip. "It turned out to be a very good return," he says.

A spokesman for Citigroup declined to comment on the transaction.

The McCaugheys, who formerly owned the house, are now renting a smaller home. Mr. McCaughey now works for a telecommunications service and is thinking about going back into hockey-related work.

Over a bowl of soup at a Paradise Bakery & Café in Glendale, a suburb of Phoenix, Mr. McCaughey says he sees a lot of real-estate bargains now and may jump back into the market at some point. As for the losses he's taken on his former holdings, he says: "It is what it is. You deal with it."

Denver near the middle in Forbes report on affordable cities
Denver Business Journal

When it comes to affordable cities with stable employment and good housing markets, a new Forbes.com report ranks Denver as a bit better than average.

Forbes puts Denver at No. 43 out of 100 large U.S. metro areas on a list of the "Best Bang for the Buck Cities."

The survey looked at factors like commute times, home vacancies, housing affordability, real estate taxes, unemployment and jobs forecast.

The Denver-Aurora area ranks 14th among the 100 cities for low unemployment, 17th for best home-price forecast, and 20th for best job forecast.

On the other hand, Forbes ranks Denver 82nd out of 100 for typical travel times, 78th for housing affordability, and 71st for rental-home vacancies.

The "best bang for the buck" list is topped by Omaha-Council Bluffs, Iowa; Little Rock, Ark; and Jackson, Miss.

The lowest-ranked communities on the list include the New York-Northern New Jersey-Long Island metro area (No. 98), Miami (No. 99) and Los Angeles (No. 100).

Click here for the Forbes report. And click here for the full list of 100 cities.

denvernews@bizjournals.com

http://denver.bizjournals.com/denver/stories/2009/12/07/daily4.html

Loan-Modification Plan Revised to Address Second Mortgages
By RUTH SIMON of the Wall Street Journal http://www.wsj.com

The Obama administration on Tuesday laid out new guidelines for its foreclosure-prevention program that aim to address one key stumbling block to its efforts to stabilize the housing market: how to deal with borrowers who have home-equity loans and other second mortgages.

About half of seriously delinquent borrowers have a second mortgage, according to Credit Suisse Group. Yet when the administration two months ago announced its $75 billion program to help stabilize the housing market, the plan drew criticism from investors who own mortgage-backed securities because it didn't address the question of second mortgages.

Investors, who include pension funds, insurance companies and hedge funds, say that rewriting the first mortgage without touching the second violates their rights, because second mortgages are supposed to be repaid second. They also say the original Obama plan created a conflict of interest, because many loans are serviced by big banks that also hold second mortgages -- and, as a result, have a financial interest in how these loans are handled.

Under the revised plan, mortgage-servicing companies that participate in the loan-modification program for second liens must automatically modify the second mortgage when the first mortgage is reworked. The government will share in the cost of reducing the interest rate on second mortgages for five years. As an alternative, it will pay holders of second mortgages to extinguish that debt.

Mortgage-servicing companies that modify second mortgages will receive an upfront payment of $500 and additional payments of $250 a year for up to three years for successful modifications of home-equity loans and other second mortgages. Borrowers who remain current on the modified loan would receive payments of $250 a year for up to five years that would be used to pay down the balance of their first mortgage.

The revised plan also encourages the use of the federal Hope for Homeowners program, which allows borrowers to refinance into a more affordable, government-backed loan, provided the investor who holds the mortgage agrees to a principal write-down.

The use of second mortgages grew during the housing boom as borrowers took out home-equity loans to fund spending or finance as much as 100% of the home's purchase price without private mortgage insurance. Administration officials estimate that addressing second mortgages could help as many as 1.5 million homeowners.

"By bringing the first and second lien together, we can reduce monthly payments for borrowers and make it more likely they can stay in their homes," an administration official said.

Twelve mortgage servicers, covering more than 75% of mortgages, have signed contracts to participate in the first-mortgage program, government officials say. Some of them also expressed support for the second-lien program. The new guidelines balance "the needs of all stakeholders -- the customer, the investor, the servicer and communities across the nation," said Kevin Moss, executive vice president of Wells Fargo Home Equity Group.

The latest announcement "certainly goes a long way towards alleviating investor concerns," said Laurie Goodman, a senior managing director with Amherst Securities Group. The Hope for Homeowners program "is very important," she said. "It appears that large numbers of delinquent borrowers will qualify for this program."

Some investors still have concerns about pending legislation that would protect mortgage servicers from lawsuits over loan modifications. "The way the investor community will be comfortable with this is if there is no servicer safe harbor," said one investor. An administration official said that "we don't feel like we need safe harbor for our program to be successful."

The revised program requires mortgage servicers to determine whether a borrower is eligible for the Hope for Homeowners program and includes financial incentives to encourage these refinances. Many investors say they would be willing to take a principal write-down in exchange for getting troubled loans off their books. But so far, just 51 loans have been refinanced under the Hope for Homeowners program, the Department of Housing and Urban Development says.

Hope for Homeowners is an "important alternative," said HUD Secretary Shaun Donovan, but "there were fundamental flaws with the program the way that it was set up." The administration hopes that legislation now before Congress will correct those problems.

-Nick Timiraos contributed to this article.
Write to Ruth Simon at ruth.simon@wsj.com

Colorado House OKs incentives for NASCAR track
Denver Business Journal - by Ed Sealover

Colorado took a big step closer to being able to attract a NASCAR racetrack when the House approved a legislative proposal Wednesday that would allow the first-ever state-funded package of incentives geared toward attracting major tourism projects.

Senate Bill 173 won final approval on a 46-19 vote one day after extensive floor debate over whether it was an economic-development tool or corporate welfare. Twenty-three Republicans and 23 Democrats backed the measure, while 15 Democrats and four Republicans opposed it.

The proposal allows city and county governments to enter into agreements with the Colorado Economic Development Commission to set up special enterprise zones around potential locations for tourism-generating projects.

The governments would set a baseline amount of state sales tax collected currently within those zones and put any new tax revenue above that line to improving the infrastructure of the area or even toward helping to build the private tourism facilities.

A main goal of bill backers is bringing a NASCAR track to the Aurora area, but the enterprise zones also could be used to build everything from Winter Olympics facilities to museums that might draw visitors across state borders.

SB 173, sponsored by Sen. Jennifer Veiga, D-Denver, blew through the upper chamber on a 30-3 vote in late February but stalled when a number of House Democrats questioned whether the bill represented a giveaway of tax dollars to private companies.

Rep. Jack Pommer, D-Boulder, led the floor fight against the measure Tuesday, saying that the tax revenue that could go to roads or schools around the new development will instead go to out-of-state companies who will siphon business away from local stores and restaurants.

But House sponsor Rep. Joe Rice, D-Littleton, argued that a NASCAR track would create the equivalent annual economic impact of four Super Bowls with the number of out-of-state visitors it would bring for a week per race. That boost would spur more jobs and spending in the area and would create an infusion of tax revenues because of it, he said.

"I think that NASCAR is probably already aware that we passed this bill," Rice said after the final vote Wednesday. "As the economy starts to recover ... hopefully they will move quickly."

The bill now heads back to the Senate, which must either call for a conference committee or concur on a few minor amendments that include a requirement for the state to report annually to the Legislature on the success of the enterprise zones.

Also on Wednesday morning, the House gave final approval to:

• HB 1331, sponsored by Rep. Sara Gagliardi, D-Arvada, which expands the types of vehicles that qualify for the state's tax credit for alternative-fuel cars and trucks. The bill passed 61-4 and heads now to the Senate.

• Senate Bill 121, sponsored by Sen. Al White, R-Hayden, which eliminates the requirement that free or reduced-price meals provided to employees of restaurants be considered part of their wages in order for the meals to be exempt from sales and use taxes. That measure did not receive any opposition and is on its way now to Gov. Bill Ritter.

ESEALOVER@bizjournals.com | 303-803-9229
http://denver.bizjournals.com/denver/stories/2009/04/27/daily63.html

The Green House of the Future
We asked architects to draw up plans for the most energy-efficient houses they could imagine. They imagined quite a bit.
By ALEX FRANGOS of the Wall Street Journal

What will the energy-efficient house of the future look like?

It could have gardens on its walls or a pond stocked with fish for dinner. It might mimic a tree, turning sunlight into energy and carbon dioxide into oxygen. Or perhaps it will be more like a lizard, changing its color to suit the weather and healing itself when it gets damaged.

Those are just a handful of the possibilities that emerged from an exercise in futurism. The Wall Street Journal asked four architects to design an energy-efficient, environmentally sustainable house without regard to cost, technology, aesthetics or the way we are used to living.

The idea was not to dream up anything impossible or unlikely -- in other words, no antigravity living rooms. Instead, we asked the architects to think of what technology might make possible in the next few decades. They in turn asked us to rethink the way we live.

"This is a time of re-examining values, re-examining what we need," says one of our architects, Rick Cook, of the New York firm Cook + Fox. "We are re-examining the idea of home."

A fresh look may be long overdue, given the amount of damage that homes can do to the environment. It's easy to envision a power plant spewing pollution or a highway full of cars burning billions of gallons of petroleum. But buildings -- silent and unmoving -- are the quiet users of much of our energy, through electricity, heating and water consumption. The U.S. Energy Department estimates buildings are responsible for 39% of our energy consumption and a similar percentage of greenhouse-gas emissions.

The growing awareness of that fact helps explain why green building is one of the most pervasive trends in the construction industry -- even as the economy struggles and home-building is at its lowest level in a generation.

So, how will the green homes of tomorrow help solve the energy puzzle? Here's a gander into the future.

Out on a Limb
"I'd love to build a house like a tree," says architect William McDonough of the Charlottesville, Va., firm William McDonough + Partners. And that's what he set out to do here.

The surface of his house, like a leaf, contains a photosynthetic layer that captures sunlight. Unlike today's solar panels, which are often pasted above a roofline, these are woven into the fabric of the exterior. They heat water and generate electricity for the home -- and create oxygen for the atmosphere, to offset carbon produced in other areas of the home.

The appeal of ultrathin, integrated solar panels goes beyond convenience. Today's solar is plain ugly and off-putting to many homeowners, something Mr. McDonough calls the "potpourri of miscellany stuck on our roofs." Unseen solar arrays, especially ones that create hot water, will be a "breakthrough from aesthetic perspective, which is a huge issue," he says.

As for the rest of the design, Mr. McDonough envisions a sleek, curved roof with generous eaves to provide shade, which lowers the heat load in summer, thereby reducing the need for energy-hogging air conditioning. The roof also insulates and provides an outdoor garden. (Mr. McDonough designed a similar "green roof" for a Ford Motor Co. factory -- one of the first large U.S. buildings with that design.)

The "bark" of the treelike house would be thin, insulating films that would self-clean and self-heal, Mr. McDonough says, thus avoiding the need to replace them after years of exposure to the elements.

It sounds far-fetched, but some of these technologies already exist. Self-cleaning glass, for instance, has a special coating that uses ultraviolet sunlight to break down organic dirt; rainwater then washes the filth away.

Self-healing paints that contain microscopic capsules of color are in use on some car paint, for instance. These vessels break open when the surface of the paint is scratched to repair the damage. Similar ideas could expand to repair other materials such as glass or cladding.

The "trunk" -- or the frame of the home -- would eschew wood or metals. Instead, lightweight, "resource efficient" carbon tubes would keep the structure standing upright.

Finally, the "roots" of the home would be a ground-source heat-pump exchange system buried in the yard. It would take advantage of the relatively constant temperature of the soil to control the home's climate -- bringing in heat in winter, when the ground is warmer than the surrounding air, and cool in the summer, when the ground's temperature is lower. Such systems exist today, but cost puts them out of the reach of most homeowners.

Other technological advances in the home include cement that would absorb carbon dioxide as it cures, offsetting the heavy loads of energy used to make the material. What's more, special surfaces on the house would capture condensation for water use, avoiding the need for wells or faraway sources.

The design also takes into account what happens to the building when its useful life is over -- something most builders never consider, Mr. McDonough says.

Today's buildings are often filled with chemical insulators and films on windows. While there have been major advances in these areas, such as the use of low-chemical-emitting paints and carpets, most insulating windows today still contain mercury and other heavy metals.

Mr. McDonough envisions a building industry in which everything that goes into a house eventually breaks down harmlessly, much as a tree falls and biodegrades on the forest floor. So, in his house, building materials from the cladding to the floors would be easily disassembled and reused, or, as he says, "return to the Earth."

The Reptile House
If Mr. McDonough's house is a tree, then this one is a lizard -- whose skin is among its most important features for survival.

Cook + Fox's house has a "biomorphic" skin that reacts to the weather, turning dark in the bright sun to insulate the house from heat and turning clear on dark days to absorb as much light and heat as possible.

The façade also captures rain and condensation to fill the household's water needs -- much like a desert-dwelling horny lizard rolls drops of dew from its nose to its mouth.

Mr. Cook sees the house of the future looking toward nature's way of solving problems as much as it looks to technology, a concept called biomimicry. "You need to view a house as a surface area for life, as opposed to a thing to be power-washed," Mr. Cook says.

Cook + Fox is well known for its green designs. Its biggest green project is the New York headquarters of Bank of America, which is known as One Bryant Park.

The sculpted white-glass tower, Manhattan's second-tallest after the Empire State Building, creates massive ice blocks in the evening when electricity is cheapest. As the "ice batteries" melt, they are used to cool the building during times of peak electricity loads during the day.

The Cook + Fox house has a modern look, but it's designed to fit into a traditional neighborhood setting.

Inside, rooms are easily configurable for lounging or work. Walls and furniture are on rollers, for instance, to take advantage of the fact that some spaces, such as bedrooms, are underutilized most of the day.

What's more, toilets and washrooms are separated, serving more people with less space. Making a house that's more conducive to work is important for energy efficiency because it eliminates driving -- and thus reduces energy consumption.

A key feature of the house is perhaps its most traditional: a front stoop, which enables the home dweller to look out on neighbors and observe the area.

Noting an idea from scientist E.O. Wilson, Mr. Cook says, "No matter how advanced we get with technologies, there are things that make the human feel good no matter what. People like to see a horizon view and feel safe."

Meals at Home
Rios Clementi Hale Studios cheekily calls their concept the "Incredible Edible House."

This somewhat fantastical design seems to be as much about the future of food production as architecture. The façade of the three-story abode is slathered in a vertical garden that includes chickpeas, tomatoes, arugula and green tea. Step outside in the morning and harvest your meals.

The plants both nourish the inhabitants and provide shade and cooling, absorbing heat better than a wall made of wood, brick, stucco or glass.

Rios Clementi Hale, based in Los Angeles, has a reputation for playful and innovative designs. Its best-known works include the angular red, ochre and green-striped campus of the California Endowment in downtown Los Angeles. It has also done designs for Hollywood powers such as Walt Disney's Robert Iger and movie and music impresario David Geffen.

But the plants aren't the only striking feature of the design. At three stories, the edible house is also more vertical than the typical suburban home, a nod to the importance of building dense, urban-style houses in order to reduce energy use. A rooftop reservoir collects water and keeps the building cool; rooftop windmills generate energy.

The house is also put together in an intriguing way: It's made of three prefabricated containers stacked on top of each other that can be moved on a trailer if the mood fits. This method exists today, but it's not used very much, since homeowners associate prefabrication with lower-end homes.

But the benefits for lowering energy use are substantial. The standardized construction in prefabricated homes reduces defects that can hamper energy conservation. And it's easier to ship prefabricated parts, which means reduced fuel use for deliveries.

Learning From the Past
Looking to the future isn't the only way to be innovative. The house from architect Steve Mouzon, of Mouzon Design in Miami Beach, Fla., uses tomorrow's technologies while mining ancient techniques to reduce energy use.

For instance, solar paneling built directly into the roof and façade provides electricity and hot water. But the house also employs a "breeze chimney," an architectural tool used by the ancients, as a kind of old-school air conditioning.

The difference between the air pressure in the chimney and outside causes hot air to flow out of the chimney stack and cooler air to enter through windows and doors.

"It must make sense first," says Mr. Mouzon, a so-called New Urbanist architect who believes in traditional designs that emphasize pedestrian-friendly neighborhoods. His house "isn't trying to do wild and wacky things with roof shapes or wall shapes but a good sensible building that is highly lovable. It is inventive where it needs to be."

Like Rios Clementi Hale, Mr. Mouzon sees the house as a source of food. He would add "melon cradles," an invention he says he thought up for this project, to allow heavy melons and other vegetables to grow vertically up the sides of his house.

Another of his innovative ideas would require Americans to do more than just feed the goldfish bowl: He would install tilapia pools in a "kitchen garden" to provide fresh fish to the homeowner. It's among the most energy-efficient ways to raise animal protein, Mr. Mouzon says.

But the most important order for Mr. Mouzon is to make the house compact. "The smaller thing you can create, the more sustainable it is."

In fact, that's something that all four of our architects agree on: Americans need to learn to live in smaller spaces if we are going to make an impact on the environment.

-Mr. Frangos is a Wall Street Journal staff reporter in New York.
Write to Alex Frangos at alex.frangos@wsj.com