Vermont Investment Blog

As Realtors, Nick and I spend much of our day on our cell phones. Over the years we have collected numerous phones that now do nothing, but take up space. In an effort to help those rebuilding their lives in Haiti, while at the same time preserving our environment, we want to collect your used cell phones to send to the American Red Cross & ReCellular Inc,PHONES FOR HAITIprogram.

Dig through your junk drawer, closets and shoeboxes for all those used cell phones - batteries, chargers and any other additional accessories are accepted, but not required.

We'll make it easy for you - Just drop off your phone(s) and we'll take care of packing them up and shipping them off to PHONES FOR HAITI.  A clearly marked drop box will be located in our Coldwell Banker Hickok & Boardman Office lobby Monday through Friday, 8:30 - 5:00 p.m.   Our address is 346 Shelburne Road, Burlington, VT 05401. 

We will be accepting phones until Monday, February 28th.  If you have any questions or concerns, please feel free to email me at Jessica@VermontInvestments.com.

Thank you for your help with this cause!
Jessi and Nick

*There are an estimated 130 million phones retired in the United States every year.  If even a small percentage of them are donated to Phones for Haiti, it would contribute millions of dollars towards relief from the devastating earthquake. ReCellular will give 100% of the phone value as a contribution to the American Red Cross.  In addition, qualifying phones will be refurbished and supplied to aid groups working in Haiti.  The materials that comprise our old cell phones can also be recycled and reused to make many other products, helping to preserve the world around us.

The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November.

Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.

Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening.

Lawmakers are pushing to revive legislation in the Senate that would almost double an $8,000 tax credit for first-time home buyers and expand the program to all borrowers.

Senator Johnny Isakson, a Georgia Republican, plans to introduce a bill this week that increases the tax credit to $15,000 and removes income and other restrictions on who can qualify for the credit, according to his spokesman, Sheridan Watson.

The legislation, which is co-sponsored by Senate Banking Committee Chairman Christopher Dodd of Connecticut and other Democrats, would extend the home buyer credit to multi-family properties that are used as the borrower’s primary residence. It would also eliminate income caps of $75,000 and $150,000 on individuals and couples seeking to claim the credit.

“The housing market continues to be a drag on the economy, said John Castellani, president of the Washington-based Business Roundtable, which represents the interests of more than 100 CEOs including General Electric Co.’s Jeffrey Immelt and Exxon Mobil Corp.’s Rex Tillerson. “We believe that if we don’t stabilize this vital sector, we can’t turn the tide on the recession.�

The Business Roundtable and the National Association of Realtors are both pushing to expand the tax credit and to lower mortgage rates to revive the U.S. housing market.

Isakson’s bill would extend the credit, which expires at the end of 2009, to one year after it’s signed into law, according to Watson. It would also allow borrowers to divide the credit over two years. The bill is co-sponsored by Republican Senators Lamar Alexander of Tennessee, Saxby Chambliss of Georgia, David Vitter of Louisiana and James Risch of Idaho.

Senators Patty Murray, a Washington Democrat, and Joseph Lieberman, a Connecticut independent, have also signed on to the bill, according to Watson.
Mortgage Rates

The roundtable and Realtors groups also recommended the Federal Reserve continue its plans to purchase mortgage securities guaranteed by Fannie Mae, Freddie Mac and the Federal Home Loan Banks to drive down mortgage rates below 5%.

The Fed is about a third of the way through its $1.25 trillion commitment, holding $427.6 billion of mortgage debt backed by the government-sponsored enterprises as of June 3, according to the New York Federal Reserve.

The average rate on a 30-year fixed-rate U.S. mortgage jumped last week to the highest level since November, rising to 5.57% from 5.25% the prior week, according to data released today by the Mortgage Bankers Association.

With an election in our near future and extreme press about the entire economy, especially Real Estate, I think it is essential that everyone is kept up to date with what is going on our local economy.  Vermont Real Estate has not seen the highs nor have we seen the lows that other sections of the US have experienced. 

In my opinion, what separates us from many other areas of the country are our Vermonters.   We tend to live within our means and are typically down to earth people who will not make a dollar to spend two.  This is reflected in Vermont ranking as one of lowest foreclosure rate states in the country. 

Although many developers in the past would complain about ACT 250, we can all be grateful for it right now.  Act 250, the state's development-control law, has "protected us" by making it more difficult to build massive housing developments.  Unlike many other states we do not have entire developments either sitting vacant or with foreclosure signs. 

After examining our Multiple Listing Service numbers from the past several years (see below for the actual numbers), there are some important facts to take away from these figures:

1. We are up 12.5% since 2004.
2. Although “Days on the Market� has increased from 43 to 83 days, things are still selling at a good rate.
3. Our average, sales price is only down 5% this year compared to last year.  While other sections of the US are down over 20%. 
4. Real Estate is LOCAL, not National. 

*These numbers are from January 1^st, 2008 through September 30, 2008 and do not reflect a full years worth of data.

** All information is taken from MLS and not guaranteed. 

Sunday's federal takeover of Fannie Mae and Freddie Mac will likely translate into lower mortgage rates and greater availability of credit, experts said. Rates could drop by 1 percentage point from the stubbornly-high 6.39% for a 30-year fixed rate mortgage.

"This could be good for would-be homeowners," said Tom LaMalfa, managing director, Wholesale Access, a research and consulting firm. "It would reduce the cost of financing at the new and improved Fannie and Freddie."

The government bailout is aimed at making mortgages easier to obtain and afford. By shoring up the mortgage financing giants, they can continue buying mortgages from lenders and injecting much-needed cash into the system.

"Fannie Mae and Freddie Mac are crucial to turning the corner on housing," said Treasury Henry Paulson. "Therefore, the primary mission of these enterprises now will be to proactively work to increase the availability of mortgage finance. Our economy and our markets will not recover until the bulk of this housing correction is behind us."

But the news isn't all good. With Friday's report that foreclosures and delinquencies are at all-time highs, Fannie and Freddie are expected to maintain - if not ratchet up - tighter lending standards. And the fees they have introduced for borrowers with weaker credit histories won't go away anytime soon.

Mortgage rates borrowers pay are dependent on the yields that investors demand when buying mortgage-backed securities from Fannie and Freddie.

Investors' doubts about the companies' viability have sent interest rates on those securities soaring. Despite regulators' July promise that they would step in to save the mortgage companies, investors are still demanding rates of 2.25% to 2.45% above Treasuries, LaMalfa said. Historically, the spread has been 1.25%.

With the government now taking over the companies and minimizing the risk associated with their debt, investors may be willing to ease off their need for higher rates.

High borrowing costs have led, in part, to a decline in mortgage borrowing. Applications are down 27% from a year ago, according to the Mortgage Bankers Association.

Also Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) will likely reverse their recent pullback from the mortgage markets. In early August, when they reported just over $3 billion in combined second-quarter losses, both said they would scale back their purchases of mortgage securities to preserve their capital.

Borrowers, however, shouldn't expect the ever-tightening lending standards to ease. With defaults and delinquencies multiplying and home prices falling, Fannie and Freddie will likely keep a close eye on underwriting practices. Lenders are demanding credit scores above 700 these days, up from 620 in the past, and downpayments of 20%, up from zero in some cases, experts said.

The mortgage titans have also increased their fees in hopes of shoring up their finances. Just last month, Fannie Mae announced higher surcharges for loans to weaker borrowers. For instance, applicants with credit scores between 640 and 659 who are putting down 15% to 20% will pay an additional 2.25% charge.

The same borrower would pay 1.7 percentage points more because of higher fees and rates for the same loan today as he or she would have paid 18 months ago, LaMalfa said.

If the market continues to worsen, standards could further tighten and fees could rise more, he said.

"We may have more stringent standards over the next few weeks because of the continued deterioration," he said. "We don't know where the bottom is yet. It's a falling knife."

Also, while investors have initially cheered regulators' moves in the past, their confidence has been short-lived. It remains to be seen whether and for how long Sunday's action will placate them, said Kurt Eggert, law professor at the Chapman University School of Law. And if investors' spook again, rates will rise.

"If I were an investor, I'm not sure this would be enough to make me want to jump in with a lot of money," Eggert said. 

The number of such homes sold in Essex fell steadily over the last four years -- from 296 in 2004 to180 last year. Through June this year, 68 homes were sold.

The real estate market in Essex differs from those in major cities across the country, where the prices of single-family homes are falling, according to the Standard & Poor's/Case Shiller Home Price Indices. All 20 cities -- from Boston to Los Angeles -- posted annual declines for April and May, with nine posting record lows, according to the indexes.

NAR has been trying for more than a year to put the current problems in the housing market in the proper perspective, telling the media and consumers that the housing “crisis� is really an isolated problem and that we already are working to fix it.

I have to give credit to Dennis Kneale for his commentary on CNBC last week. He provides the best assessment I have heard thus far about this so-called crisis and where the problem really lies. Listen to what he has to say and please forward this to anyone you know who is thinking about Real Estate!

The U.S. Senate has passed a bipartisan housing stimulus bill that “is a big step toward helping people buy and keep their homes,� said National Association of Realtors^® President Dick Gaylord. The Senate action moves a housing stimulus package closer to law, which would help bring stability to the housing market and stop the rising rate of foreclosures.

“We are eager for the House and Senate to come together to finalize an aggressive bill that will ensure that every American who can afford to own a home and wants to do so will have the opportunity, and that every American who responsibly owns a home is able to keep it,� said Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif.

NAR has expressed ongoing support for many of the provisions in the legislation, including Federal Housing Administration Modernization that will simplify and make FHA-backed mortgages more available, a tax credit for first-time home buyers, reform of government-sponsored enterprises Fannie Mae and Freddie Mac, permanent increases to both GSE and FHA loan limits, and a program to expand FHA that would allow more mortgages to be refinanced.

“The tax credit for first-time home buyers would be a strong stimulus to a weak housing market, and FHA stabilization should help thousands of families refinance existing mortgages and in many cases keep their homes,� said Gaylord.

The National Association of Realtors^®, “The Voice for Real Estate,� is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

http://www.vreinmls.com/ver/maildoc/a003I32989.html

Vermont can add another title to its growing list of national rankings. A child welfare non-profit says Vermont is the safest place for children to grow up.

In a report called "Geography Matters - Child Well-Being in the States," the Every Child Matters Education Fund ranks states based on ten wellness indicators: infant mortality, child deaths 1-14, teen deaths 15-19, births to teen mothers, little or no prenatal care, child poverty, uninsured children, juvenile incarceration rates, child abuse deaths and child welfare expenditures.

State officials and child welfare advocates say it's an affirmation of what those of us who live in Vermont already know.

"It's just fantastic, and it's everything we have worked and continue to work so hard to make true," says Linda Johnson, executive director of Prevent Child Abuse Vermont.

Vermont is joined at the top of the list by the other New England states: Massachusetts, Connecticut, Rhode Island, and New Hampshire.

At the opposite end of the spectrum, the study says children in Louisiana are the least safe, with four other South Central U.S. states rounding out the bottom of the list: Mississippi, New Mexico, Oklahoma, and Texas.

Both the Department for Children and Families, and Prevent Child Abuse Vermont say our state stands out because we have a cohesive and cooperative system for providing education, healthcare, abuse prevention and parental education.

"When you look at these data it's not just because government did its job well, it's because the people of Vermont and the communities of Vermont that provide opportunities, after school opportunities, sports programs, good schools. I mean it goes on and on," says DCF Commissioner Steve Dale.

Vermont does have room to improve. Johnson says she'd like to see more emphasis on education about shaken baby syndrome, and DCF says it would like to see more work in the area of child poverty.

Bianca Slota - WCAX News

Like many small New England towns, Colchester, located near idyllic Lake Champlain, offers easy access to camping, sailing, and great swimming. While there's no downtown, the Mallets Bay area serves as a hub for marina activity.

Colchester is still a quiet place, but the Vermont Center for Emerging Technologies, an incubator for tech startups, recently built a facility in Colchester with the support of Sen. Patrick Leahy. David Bradbury, the center's president, says the incubator will help scientists and students at the nearby University of Vermont launch businesses based on their research and collaborate with existing companies in the burgeoning local tech community. -Mina Kimes

A recent list of year-end mortgage foreclosure rates in 100 top metropolitan areas drew a lot of attention. Released by RealtyTrac, a company that compiles data on home foreclosures, the list showed the number of foreclosure filings in each metro area, the percentage of homes being foreclosed and the percentage change from the previous year.

Though the report had some dismal news -- such as the nearly 4.9% foreclosure rate in the Stockton, Calif., area -- a close look at the data also provides some reassuring information. It tells me, for instance, that the foreclosure crisis is a regional problem, not a systemic one. It could become a systemic problem, of course, but we're a long way from that now.

This news will disappoint the gloom-and-doom crew and all those seeking the excitement of financial upheaval. But it may be time to temper our worry and take a closer look at some of the year-over-year foreclosure statistics:

• Though the national rate of foreclosure increased by a whopping 79% between December 2006 and December 2007, the rate was still only 1.033%. Because about 30% of all homes are owned mortgage-free, this means that for all the noise about a crisis, only seven-tenths of 1% of all homes were in foreclosure.

• In the top 100 housing markets, the average foreclosure rate was somewhat higher -- 1.38% -- and it was up 78% over the previous year. But if you rank-ordered the list of the top 100 areas, only 34 had foreclosure rates above the group average. Fifty-one areas had rates of 1% or less.

• Foreclosure rates actually fell in 14 of the 100 areas. More important, many of the areas with the highest increases in foreclosure rates were rising off rates that were tiny. The Bethesda, Md., area, to offer the most extreme case, saw foreclosures rise 1,288% -- to a rate of 0.682%. In other words, foreclosures there were virtually nonexistent the year before. Today they are still well below the national average. The same can be said for the Albany, N.Y., area (up 638% to 0.25%), the Baltimore area (up 544% to 0.73%) and the Providence, R.I., area (up 354% to 0.41%).

Another pattern emerges if you cross the foreclosure rates with the Office of Federal Housing Enterprise Oversight (OFHEO) index of home prices. It shows that the top 10 foreclosure areas in America are areas of extreme price change -- changes far from the national average of 46.92% over the past five years. (See the table below.)

Seven of the top 10 foreclosure areas had experienced major price spikes in the past five years. Three of the top 10 foreclosure areas had experienced price increases that were dramatically lower than the national average. That pattern continues when you examine the top 25 foreclosure areas.

The seven areas with the top price appreciation for the past five years averaged a stunning 91.6% increase, nearly double the national average. The national average, in turn, was about triple the inflation rate for the period.

Small wonder the foreclosure rate is booming as well. Anyone who bought in the past few years with a 5% or 10% down payment has a good chance of being upside down as froth comes off the market. In those areas the problem is about irrational price spikes and the hazards they bring to homeownership.

Some would call this "a Cadillac problem" -- a great problem to have, like having more boats than you have water-skiers. Though 5% of the homeowners may be losing their homes, most of the other 95% probably feel significantly richer.

How much richer? Try this. Suppose you paid three times your income for a house and it nearly doubled in value over five years. What does that mean? It means your net worth grew by nearly three years of income. Try achieving that with your 401(k) plan. Even if you bought halfway through the surge, your gain is likely to be well more than one year of income. However you cut it, the change compares quite favorably with working and saving.

Owning your own home is an idea so popular that it's known as the American dream. But as prices fall and foreclosures rise, for many it's become a nightmare instead.

The three metro areas with low price appreciations are a different matter. Homeowners in Detroit have actually lost money on their homes over the past five years. That, in turn, has limited their ability to make up for income shortfalls by borrowing against home equity. Add a shrinking job market, and places such as Detroit are coping with a perpetual surplus of sellers over buyers.

One indication is the cost of renting a U-Haul truck. It recently cost $1,447 to rent a 26-foot truck to move from Detroit to Dallas but only $521 to rent the same truck to move from Dallas to Detroit. The real economic problem, for the most people, isn't the price-spike states. It's the deflation states.

Article from msn.com

Famed Money Manager is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

That's no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It's enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?

There has rarely been a moment in history when you couldn't scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, "in spite of all the great and minor calamities that have occurred ... all the thousands of reasons that the world might be coming to an end--owning stocks has continued to be twice as rewarding as owning bonds."

A top reason to not buy stocks, in Lynch's view, is if you don't already own a home--in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me--housing debacle and all.

When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, "The way to make money is to buy when blood is running in the streets."

And the streets are stained crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventually, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already--or we may avoid one altogether. You just never know.

As for housing, certainly some skepticism is in order. Formerly sizzling markets in Florida, Nevada, Arizona and California probably haven't seen the worst headlines just yet, though they may well be close. And "jumbo" mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues.

But let's say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It's time to get serious--before an inevitable rise in interest rates wipes out your advantage. "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you'd have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be.

It's more complicated if you must sell before you can buy. But that logjam won't persist forever--and if it appears you'll be trapped for a few years, try to refinance at today's lower rates. Risks always seem most acute when the headlines give you ulcers. But that's exactly when you should think long term--and get off your thumbs.

The National Association of Realtors® today expressed ongoing support for legislative reform to Fannie Mae and Freddie Mac that would help stabilize the housing market and improve liquidity to the secondary nonconforming market. NAR stressed the importance of permanently increasing the loan limits as part of any reform package; that will help encourage healthier conditions in the housing market and strengthen the national GDP.

In testimony submitted to the U.S. Senate Committee on Banking, Housing and Urban Development, NAR reiterated its position that legislative reform to the government sponsored enterprises (GSEs) should focus principally on regulating safety and soundness and expanding the role Fannie Mae and Freddie Mac play in the secondary mortgage market. “We are pleased that Chairman Dodd, D-Conn., and Sen. Shelby, D-Ala., agreed to hold a hearing on the important issue of enhancing the GSE regulatory system,� said NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif.

“Fannie and Freddie are our partners in the housing industry and are important to stabilizing and strengthening the housing market,� Gaylord said. NAR stated that any GSE reform should include establishing a strong regulator and GSE governance; permanently increasing conforming loan limits; reviewing the housing mission; providing flexibility in new program approval and increasing the portfolio caps.

NAR’s research found that simply increasing the loan limits for Fannie Mae and Freddie Mac to $625,000 would permit as many as 300,000 families to enter the housing market, reduce foreclosures by as many as 210,000 and allow as many as 500,000 jumbo loan borrowers to refinance to lower cost loans, saving these people $274 to $411 a month. “I can think of no other reform that could have such a quick and profound impact on the housing industry and our national economy. NAR urges the Senate to work quickly to pass full GSE reform,� said Gaylord.

The National Association of Realtors®, “The Voice for Real Estate,� is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

1-How will this effect mortgage rates? 

  There is what you might call an implied link between mortgage rates and the a move in the Fed Funds Rate.  Fed Funds Rate is the overnight lending rate between banks.  This is the rate the Fed lowered, now banks that are cash strapped (from large write downs and losses) will have greater ability to lend money to each other thus helping banks lend to consumers and businesses alike.  This will help a slowing economy or an economy in recession pull itself out.  The long end of the yield curve (10-30 year rates) are not directly changed by the Fed, the bond market participants move these rates.  Mortgage Backed securities, which determine our rates, usually react positively to  Fed cuts but not as drastically as the short end of the curve.  So if the consumer hears the Fed cut rates by .75% it doesn't mean mortgage rates drop that much because longer term rates have to reflect inflation and growth expectations, as well as investor sentiment of other risks.

 2- Is there a direct link?

Close to a direct link but not percentage point to percentage point.  Sometimes the Fed lowers the Fed Funds rate the yield curve will steepen, that is long term rates increase.  This is because investors borrower at the long term rates (sell bonds, decreases the price of bonds and increases yield) and purchase short term bonds (increase the price of the bond and decreases the yield/rate).  They do this because if they anticipate more rate cuts by the Fed.... of the Fed cuts rates again the price of the short term bond increases and they sell their new short term bonds (which they just bought) at a gain in price (profit for a bond investor)----buy low sell high....

 3- Good time to refinance/buy?

Yes this is good time to refinance because mortgage rates are low and nearing historical lows, but it looks like it will be a bumpy ride until more is known as to the extent of the slowdown or recession and further hints as to the Feds moves.

Compliments of Buddy Singh from
SpruceMortgage
bunguy@together.net
802-652-0162

"Call Nick Riina.  He can help answer a lot questions for you.  He was my Realtor.  He is really awesome, a great Realtor and a great guy. He kills it.  He made looking for and buying a house a really easy and fun.  You won't find a better Realtor in Vermont!"

Matt H - Burlington

  "I was transferred to Vermont by a large multi-national company.  We found Nick to be the best agent that we have ever worked with in the US."

Marty G - Essex Junction

 "We were relocating and meeting several seller agents during our home search.    Our acquaintance with Nick began with contacting him on-line on a property that he represented. His excellent follow through and subsequent meeting lead us with confidence to have him represent us as our buyer broker on the home that we purchased.  My parents trailed us to Vermont and used Nick as their buyer agent also with the same great satisfaction!  Nick also has been a great resource before and after the purchase of our home.  Thank you Nick!"

 Marty G - Essex Junction

 
 "Nick Riina's ability to have a flexible schedule that met my needs allowed my relocation to be a success and a minimal interruption while I was focusing on my new career." 

   Jason – Burlington

Weak housing markets and tighter lending requirements mean more renters are staying put in apartments, and demand for rental housing is expected to continue to outstrip supply.

Other big rent increases were registered in San Jose, Calif. (8.8%); Seattle (7%); Orange County, Calif. (5.6%); Fairfield County, Conn. (4.6%) and northern New Jersey (4.8%) -- all areas with pricey and somewhat limited housing stock.

Sun Belt markets lag

Left off this list of biggest gainers were some of the nation's hottest rental markets last year, such as Las Vegas and Phoenix, which are cooling quickly as a slew of condos and apartment-to-condo conversions return to the rental market. More than 5,400 apartment-to-condo conversions came back on the rental market this year in the areas that Reis tracks, and more units that investors are unable to sell are expected to surface next year.

In addition to Phoenix and Las Vegas, Jacksonville and several markets across southern Florida were among the hardest hit by this "shadow market" of condo and town-house rentals. "These were among the top five or 10 strongest markets in the country last year in terms of rent growth," Chandan says. "Now they are among the weakest."

The vacancy rate in Palm Beach and Jacksonville jumped 2.5% in the third quarter from the same time last year. Vacancy increased 2.2% in Phoenix, 2.1% in Orlando, 1.8% in Tampa and 1.5% in Fort Lauderdale.

Accordingly, rent growth in these markets slowed or leveled out in the third quarter. But average rents did not decline in any of them, in large part because single-family houses continued to be out of  reach for many in these areas. But with more units coming back on the market each month, rents in these Sun Belt cities could slide, becoming one of the few exceptions to a robust national market. "A large number will see rents fall in the fourth quarter," Chandan says.

Rosy outlook for landlords

Landlords who are unwilling to lower rents may begin offering temporary promotional concessions such as a month's free rent to get more people in the door. Renters may also gain some bargaining power next year in a handful of economically sluggish areas such as Hartford, Conn., and Colorado Springs, Colo., Chandan says.

For much of the rest of the country, however, landlords are the ones with the upper hand. Even with apartment developers adding an estimated 84,590 units to the existing apartment inventory and the economy teetering on the brink of recession, the problems in the housing market should keep rental demand above supply.

For U.S. renters, who have seen their average monthly payment go up more than 10% in the past three years, that may not be quite the Christmas gift they were hoping for.

But, on the bright side, the housing bust won't translate into exaggerated rents either.

"The market isn't experiencing a boom. It will continue to chug along with rent growth of 3.6% next year," Chandan says.

Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors®.  However, a recovery for new-home sales is unlikely before 2009.

Lawrence Yun, NAR chief economist, said the worst part of the credit crunch has already worked its way through the data.  “The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming,â€� he said.  “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.â€�

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September.  It was the second consecutive monthly gain, but remained 18.4 percent below the October 2006 index of 106.8.  “The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007,â€� Yun said.

The PHSI in the Northeast jumped 16.0 percent in October to 80.6 but is 11.1 percent below a year ago.  In the West, the index rose 8.4 percent to 87.3 but is 16.9 percent lower than October 2006.  The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago.  In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.

“The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans,â€� Yun said.  “Lawmakers need to understand that raising the loan limits on FHA and GSE-backed conventional loans will markedly improve mortgage availability.â€�

Existing-home sales are likely to total 5.67 million this year, the fifth highest on record, rising to 5.70 million in 2008, in contrast with 6.48 million in 2006.  Existing-home prices should be down 1.9 percent to a median of $217,600 for all of 2007, and then rise 0.3 percent to $218,300 in 2008.

“Home price growth in the vast affordable midsection of America will help raise the national median existing-home price slightly in 2008.  I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one or two percentage points above the rate of inflation,â€� Yun said.

“Even with a modest decline in the national aggregate price this year, it’s important to keep in mind that nearly two-thirds of the metro areas in the U.S. are showing price increases,â€� he said.  “The apparent disparity results from fewer sales in high-cost markets, so a change in the mix of sales is dragging down the national median home price.â€�

Areas showing healthy price gains include disparate markets such as Gary-Hammond, Ind.; Binghamton, N.Y.; Corpus Christi, Texas; and Spokane, Wash.  “We can’t emphasis enough how much local conditions vary, even within a given area, so it’s important for consumers to make decisions based on local market conditions.â€�

New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million 2006; no sustained improvement is seen for new homes until 2009.  Because builders have correctly adjusted production, housing starts, including multifamily units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year.  The median new-home price is projected to drop 3.0 percent to $239,100 for 2007, and then decline another 0.2 percent to $236,600 in 2008.

The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest rates.

Growth in the U.S. gross domestic product (GDP) should be 2.1 percent in 2007, down from a 2.9 percent growth rate last year; GDP growth is forecast to improve to 2.4 percent in 2008.

The unemployment rate is likely to average 4.6 percent for 2007, unchanged from last year, but rise to 5.0 percent in 2008.  Inflation, as measured by the Consumer Price Index, will probably be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006.  Inflation-adjusted disposable personal income is estimated to grow 3.1 percent this year, the same as in 2006, and then grow 2.2 percent next year.

The National Association of Realtors®, “The Voice for Real Estate,� is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report. Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades.

The most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale. Wood deck additions and wood window replacements also returned more than 80 percent of costs, at 85 percent and 81 percent, respectively. On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.

“The results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye,� said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “Realtors® know what attracts buyers in their local markets and can help your house put its best façade forward, so to speak – it’s another way Realtors® add value to the real estate transaction.�

The 2007 Remodeling Cost vs. Value Report compares construction costs with resale values for 29 midrange and upscale remodeling projects comprising additions, remodels and replacements in 60 markets across the country. Data are provided for nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 10th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as Realtors® provided their insight into local markets and buyer home preferences within those markets.

Four new projects were added this year: the aforementioned wood deck addition, a back-up power generator, and both a midrange and upscale garage addition. Nationally, the back-up power generator only returned 58 percent of the investment on resale, although the return was highest in the West South Central region, which comprises Arkansas, Louisiana, Oklahoma, and Texas, at 68 percent. Buyers in the Pacific region of Alaska, California, Hawaii, Oregon and Washington value their garages: The midrange garage addition returned nearly 70 percent nationally but 88 percent in this region, while the upscale garage addition returned approximately 65 percent nationally but 78 percent in this area.

Homeowners in the Pacific region could also expect to see some of the highest percentages of remodeling expenses returned at resale, with 13 of the 29 projects returning 90 percent or higher of project costs. Homeowners in the East North Central region of Illinois, Indiana, Michigan, Ohio and Wisconsin might expect some of the lowest returns; only one project – upscale fiber cement siding – returned more than 80 percent upon resale (82 percent of costs recouped), while nine projects returned less than 60 percent of project costs.

The least profitable projects were a back-up power generator, sunroom addition, and home office remodel. The back-up power generator returned the lowest percentage of initial cost in the East North Central, New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), Pacific, and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.

Sunrooms are least popular in the East South Central (Alabama, Kentucky, Mississippi and Tennessee), Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming), and West South Central regions. Home office remodels return the lowest percentage of project costs in the Middle Atlantic (New Jersey, New York and Pennsylvania) and South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) regions.

Gaylord explained that the resale value of any given remodeling project depends on a variety of factors. “When considering a remodeling project, particularly with an eye toward resale, it’s important to evaluate your home’s current condition, how the project will change the existing space in your home, as well as how your remodeled home will compare to other homes in your community,� said Gaylord.

“For example, using a breakfast nook to expand the kitchen seems like a good use of space, but using the same space to add a first-floor bathroom in an older home that doesn’t have one will draw more buyers,� Gaylord said. “Realtors® see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area.�

Results of the report are summarized in the December 2007 issue of REALTOR® Magazine. To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 60 cities covered by the report, visit www.costvsvalue.com. “Cost vs. Value� is a registered trademark of Hanley Wood, LLC.

Hanley Wood, LLC, is the premier media company serving housing and construction. Through four operating divisions, the company produces award-winning magazines and Web sites, marquee trade shows and events, rich data, and custom marketing solutions. The company also is North America’s leading provider of home plans. Founded in 1976, Hanley Wood is a $240 million company owned by JPMorgan Partners, LLC, a private equity affiliate of JPMorgan Chase & Co.

The National Association of Realtors®, “The Voice for Real Estate,� is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

  The new third-quarter figures from the National Association of Realtors underscore the severity of the housing market's slump, which has economists increasingly pessimistic about the economic outlook.

  Vermont and North Dakota were the only two states to show sales increases. Existing home sales in Vermont rose 0.8 percent from the same quarter a year ago, while sales in North Dakota rose 2.9 percent. No sales figures were available for Idaho and New Hampshire. The Realtors though saw a silver lining in the data, noting that home prices rose in 93 of the 150 metropolitan areas surveyed. Yet big price drops beset formerly booming parts of the country. Median prices fell by more than 10 percent in parts of Florida and California compared with the third quarter of last year.

  Trade group officials emphasize the real estate market is not a national one, and conditions vary — sometimes dramatically — from market to market.

  "Some metro areas are hot while others are experiencing localized problems," Lawrence Yun, the group's chief economist, said in a statement. "Home prices in the vast midsection of America, from the Appalachians to the Rockies, are affordable and, perhaps, even undervalued."

  Still, numerous experts forecast a continued decline in median prices nationwide as conditions deteriorate in the housing and mortgage industries.

  Nationwide, existing homes sold at an annual rate of 5.42 million units in the third quarter, down 13.7 percent from the sales pace of the third quarter in 2006, the Realtors group said.

The foundation, along with the American Public Health Association and Partnership for Prevention, rated each state on 20 key measures of wellness, such as rates of obesity, infant mortality, cancer deaths and high school graduation.

Sharon Moffatt, commissioner of Vermont's Department of Health, attributes its success to a "full system" approach, where a range of groups, including community, public policy and health care providers, work together to change unhealthy behaviors. For example, to combat smoking, phone lines to counsel smokers to quit were established, lawmakers worked to ban smoking in bars and restaurants, and doctors encouraged their patients to stop or avoid smoking.

On the other side of the spectrum, Mississippi is the unhealthiest state. Although it has a high public health spending per capita, it also has high rates of obesity and children in poverty.

The nation's overall health improved annually during the 1990s, but it declined in the first half of this decade and has stagnated since. Reed Tuckson, a foundation board member, says there has been an overall decline because more Americans live with preventable chronic diseases in an "extremely expensive" health care system.

South Carolina improved its health score the most with a jump of 6.3%, according to the report. The jump came as the percentage of uninsured decreased.

The annual report is based on data from a number of sources, including the Centers for Disease Control and Prevention, the National Center for Health Statistics, the American Medical Association and the Census Bureau.

Who would ever have dreamed that credit could be so thrilling? And yet tremors and shivers over credit, and especially over subprime mortgages, have led to some real panic in the financial markets, and rings of fire in the ventricles of the coldest-hearted financiers.

Despite the oceans of ink that have been written on this subject, it seems to me that a few points have rarely been made, and may be worth making now.

IT WASN’T ALL BAD
The subprime mortgage industry apparently helped some people either get into homes or stay in their homes. Yes, it was far from an unmixed good, as we have seen in vivid hues lately. But because of these mortgages, many thousands of Americans who would otherwise not have their own homes now have homes. (Much of the recent subprime mortgage activity was about refinancings, but not all.)

Owning your own home is generally considered the bedrock of the American dream, so this is a good thing, both socially and individually. Walking into your own home, seeing your own dogs waiting for you there, is a major blessing.

The percentage of those who have defaulted is still fairly small, possibly 10 percent to 15 percent of subprime loans, and maybe less. (And subprime mortgages are very roughly 10 percent to 15 percent of mortgages.) That means that the experiment with granting loans to less-qualified buyers worked to a point. I guess — as I have said before — that there was a reason these loans were called “subprime.�

The lending system, however, did go too far in the direction of laxity. Obviously, there should have been tighter standards at the lower end of the borrowing scale. “Stated� income (in other words, “unverified�) and “no doc� loans were probably not a great idea, except for borrowers who were well known to the lender or already had documents on file. There was excessive eagerness to put borrowers into these loans, and now we are all paying the price for the immense fees that the subprime lenders garnered.

This is what we economists call an externality: a cost associated with the transaction that is borne by society in general, not just the parties to the transaction. That cost will be whatever government programs are enacted to bail out borrowers in trouble — while those who lent the money get away pretty much scot-free.

THERE’S PLENTY OF BLAME TO GO AROUND
There has been major dishonesty about mortgages at every level. Subprime issuers in many cases did not tell borrowers what their full costs were going to be, especially when the interest rate reset. This will clearly become a problem, although we cannot yet measure its impact.

The bundlers of subprime debt into collateralized debt obligations did not always tell the buyers of this stuff — especially the foreign buyers — just how risky this paper was, and now the buyers are suffering. (The amounts at risk because of defaults, though, are generally small compared with the capital of the banks in question.)

Alas, there is a long tradition of the United States not telling foreign lenders just how dicey certain loans are. It goes back to the 19th century and American borrowings from Europe for railroads, bridges, canals and farmland. Caveat emptor. Caveat lender.

Today, some of the foreigners send us their toys with lead paint and we send them our bonds with (sometimes) toxic default rates. This isn’t a good thing, but it’s the way the world works. There are a lot of scammers out there. Foreign lenders have every right to be concerned about American standards of truthfulness and disclosure.

But what is often overlooked is that many borrowers, people who look at themselves in the mirror every morning, lied like madmen to get their mortgages.

Years ago, I spoke to a gathering of mortgage sales representatives. Their tales of buyer fraud were almost unbelievable. These salespeople were pretty aggressive themselves, and I wondered how many borrowers would wind up in tears from what they did. But their customers — so I was told — would say anything, sign anything, to get a loan.

The human animal is often dishonest, and if it takes telling a few fibs about income and money in the bank to get into a house, many people will do it. My only point here is that it is not just the big boys whose lies and entrapments got us into trouble. Plenty of ordinary citizens played along.

IT’S GOING TO TAKE TIME
Real estate crashes do not end quickly. Realtors have a rule: there are no soft landings. Residential real estate is like a huge ship. Once it starts moving, it’s hard to stop. Once it slows down, it’s hard to make it speed up again.

We lucky citizens of sunny Southern California have been through some hair-raising real estate crashes since I moved there in 1976. The worst started in the spring of 1990 (just as I closed on my not-at-all-lavish Malibu home). Prices did not recover for a good eight years. That was harrowing, but there is a lesson here: real estate crashes are not like stock fluctuations, in which the market can lose 10 percent in a month and gain it back a few months later. In many cases, real estate takes a long time to turn around.

There is a good side to this, too. Namely, the time to buy real estate is when it’s down. Now, or some time close to now, buyers will be able to find real bargains. In time, maybe a long time, prices will recover and a new peak will be reached. But when everyone is crying the housing blues is the time to buy. Bargain hard. In many regions, sellers want to hear any offer right now.

GOD BLESS THE FED
We should be thankful indeed for the Federal Reserve. I know that some strict disciplinarians want to let the markets go through hell and let borrowers and investors suffer. Except for the possibility that this could provide them with some sadistic glee, I don’t see the point.

A few weeks ago, the markets were in a genuine panic. The traders were erupting with fear in some cases, and with greed as they went short in other cases. If the Fed had not stepped in to supply liquidity and confidence — and to send these overtired traders to their rooms for a time-out — there could have been real problems. Innocent people could have been terribly hurt.

We are lucky to be at a stage of capitalism when we have a Federal Reserve, led by Ben S. Bernanke, and Alan Greenspan before him, that will stop a hysterical market meltdown that is not based on fundamentals. The free marketeers may want to see suffering. Let them watch a boxing match. There is no reason for the innocent to be impoverished because traders panic. I know that the Fed’s rescue mission saved some rich people from distress, too. It’s a small price to pay for keeping the economy on an even keel.

THIS IS A BIG BOAT
“There is a lot of ruin in a nation.� This is from the greatest of all economists, Adam Smith. There is especially a lot of ruin in a nation with the economic power of the United States. I get to the point of laughing when I read doom-saying articles in the business sections of newspapers or watch Jim Cramer on CNBC.

Yes, there are real problems: housing, mortgage defaults, losses at financial firms, rot in hedge funds. But over all, things will be fine. Unless there is a genuine dollar crisis or a devastating recession (very unlikely), things will work out. This economy is very big and very solid. It cannot be derailed for long by anything we have seen lately.

If I were the editor of the business section for just one day, I would run one immense headline: “Everything Is Going to Be Fine. Go Back to Work.�

Ben Stein is a lawyer, writer, actor and economist.

NAR's Beginnings & Key Events

The NATIONAL ASSOCIATION OF REALTORS® was founded as the National Association of Real Estate Exchanges on May 12, 1908 at the YMCA Auditorium in Chicago, IL. Three earlier attempts (beginning in 1891) at organizing a national real estate group were unsuccessful. With 120 founding members, 19 Boards, and one State Association, the National Association of Real Estate Exchanges' objective was "to unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests."

The Association's founding boards included the Baltimore, MD; Bellingham, WA; Chicago, IL; Cincinnati, OH; Cleveland, OH; Detroit, MI; Duluth, MN; Gary, IN; Kansas City, MO; Los Angeles, CA; Milwaukee, WI; Minneapolis, MN; Omaha, NE; Philadelphia, PA; St. Louis, MO; St. Paul, MN; Seattle, WA; Sioux City, IA; and Tacoma, WA, boards and the California State Realty Federation (now the California Association of REALTORS®).

The Code of Ethics was adopted in 1913 with the Golden Rule as its theme.

In 1916, the National Association of Real Estate Exchange's name was changed to The National Association of Real Estate Boards.

The term “REALTOR,� identifying real estate agents as members of the National Association of Real Estate Boards and subscribers to its strict Code of Ethics, was devised by Charles N. Chadbourn, a past president of the Minneapolis Real Estate Board, and was first used to designate members of the Minneapolis organization. The Minneapolis Board gave all rights to the word "Realtor" to the National Association in 1916.

• A newly painted wall (in a light or neutral shade) is a canvas to the eye of prospective buyers; and clean windows brighten and enlarge each room.
• A well clipped yard - free of scattered toys - allows viewers to focus on the neatness of the home.
• Fix dripping faucets and repair any caulking cracks.  Bathrooms are a key selling point.
   

If you are prepared to invest some money to improve your home’s presentation, start with the most cost-effective projects and remember to keep a journal of jobs and receipts.  Home improvement costs are often deductible (when costs are incurred 90 days before the sale and paid within 30 days after the sale).  While lawn-mowing and weekly cleaning bills do not qualify according to IRS regulations, new paint, a new water heater, or new gutters usually do apply.  Some hints:

• Replace broken gutters and shutters.
• New paint indoors or out is usually approved by the IRS for deduction if completed and paid for near the time of sale.
• New floor coverings (in neutral shades) on kitchen and bathroom floors may be another affordable investment which can speed a sale by appealing to buyers’ desire for a property that is ‘ready to move in,’ particularly if the current style of colors are dated.
• Repair broken woodwork, loose planks, and creaky stairs.  No buyer wants a home that needs structural repairs.
• Hardwood floors are a plus.  If you have hardwood floors, consider removing the floor covering, especially if the carpet is worn.
   

This is probably one of the most important aspects in Staging and Selling a home.  You must draw that person out of the car, unto the sidewalk and up to the front door.  Color, landscaping, walkway, driveway, neighbors... all give a feel to the home.  In order to show the home to a global buyer, it must look pristine from the street to the doorknob.

If a home is taking longer to sell than the average there may be a good reason. What is the first thing you notice when you drive up to the home? How does the home make you feel?  Do you want to get out and see it? How does it look compared to the other homes in the neighborhood?  These are questions you need to ask yourself when preparing your home for sale.  

Well, you can't change the neighborhood, and you probably didn't budget for a complete front yard makeover.  So what can you do?

Here is a start:

Walk across the street or as far way as you can.  View your home by at least 3 angles such as the right side, front and center and left side. Now take a really good look at it.

#1. Can you see it?  This sounds funny but if you can't see your home, you can't sell it. Trees and shrubs are great and should be trimmed so that you can still see the house.  I usually suggest trimming trees up to the rain gutter line or the top of the highest window.  Shrubs should follow a same line as the bottom of a window trim. If a lot of trimming needs to be done, do it several weeks before so that the plants have a chance to recover.

#2. How is the paint?  Is it a neutral color?  Does it flow with the rest of the homes on the street?  Painting your house bright Blue will attract attention for sure, but not when you are selling.  Remember, with global buyers... neutral is key here.  Start with the trim if you can't paint the whole house, especially around the front door and front porch. It can be as simple as painting the front door a different color.  That can be a quick and easy fix.

#3. How is the driveway?  Are there cracks, oil stains, garbage cans?  The driveway is the largest hard area near the home, the material and look of the driveway and garage have a huge impact on curb appeal.  Clean it up and clear everything off.

#4.  Is your walkway to the front door defined?  Does it lead buyers to the front door or front entry? Make sure people know where your front door is, and then work on drawing people toward the front door. If the front entry area has a patio, create an outdoor sitting area.

#5.  How is the landscaping? Make sure that the grass is well watered, edged, and mowed. Flowers, flowers and more flowers. These little pops of color make us happy and cheerful.  Add some pots near the garage and plant away.

Curb appeal is really part of the whole package, which means the small details are as important as the big picture. A manicured front yard means a manicured home in a buyer's eyes.

Finally, don't forget to tidy up. Remove the garbage cans, hide the hose, pick up the paper, etc. Curb appeal means a place that looks neat and clean, the kind of place you'd like to live.

Since the last survey in 2004, oversize garages saw the biggest growth in terms of what recent buyers considered very important in a home, gaining 16 percentage points to 57 percent. Among buyers who purchased homes without this feature, 56 percent of them said they would have paid more for an oversize garage, compared to only 6 percent in the 2004 survey.

Other priorities for today’s home buyers include air conditioning, with three out of every four respondents ranking this as “very important,� and a walk-in closet in the master bedroom, which was very important to 53 percent of respondents. Hardwood floors and granite countertops each gained 7 percentage points from the 2004 survey, with 28 percent and 23 percent, respectively, of buyers viewing these features as “very important.� Gaining 6 percentage points was cable/satellite TV-ready, at 46 percent.

The survey reports responses from buyers who purchased homes in 2006. Home buyers were asked about 75 features and room types to assess the importance of each.

“Realtors® see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home,� said NAR President Pat V. Combs, of Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt. “This insight is one more way Realtors® add value to the real estate transaction and why nearly eight out of 10 recent buyers used a real estate professional when buying their home.�

According to the survey, nearly six out of 10 recent home buyers took on remodeling or home improvement projects within three months of their purchase. Close to half of home buyers who remodeled or made improvements updated their kitchen, and nearly half remodeled or improved their bathroom. New homeowners spent a median of $4,350 on home improvement or remodeling projects undertaken within three months of purchase.

More than half of home buyers believe their home has high investment potential, and another four out of 10 believe it has moderate investment potential. Only 3 percent felt their home’s investment potential was low.

“The fact that a majority of home buyers quickly remodel key areas of their homes ties into the fact that their home is a good, long-term investment,� said Paul Bishop, NAR manager of real estate research. “Regardless of market conditions in the short term, when purchased for the long term, housing is one of the safest investments consumers can make.�

Energy efficiency was more important to new-home buyers than buyers of existing homes, with 65 percent of new-home buyers saying it was very important compared to 39 percent for buyers of existing homes. Older buyers placed a higher priority on energy efficiency than did younger buyers – 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.

The survey identified some regional preferences in home features. For home buyers in the South and Midwest, central air conditioning was a priority, with 91 percent and 81 percent, respectively, saying this feature was very important. Sixty-six percent of buyers in the South thought a walk-in closet in the master bedroom was very important, while 61 percent of Midwesterners valued an oversized garage. In the Northeast, the highest percentage of buyers placed a premium on a backyard or play area (53 percent), followed by central air conditioning at 41 percent. Two-thirds of buyers in the West want oversized garages (66 percent), followed by central air conditioning at 59 percent.

Age was the biggest differentiation in what buyers were looking for in a home. Buyers 75 years old and older wanted a single-level home (74 percent) that was less than 10 years old (43 percent) with a walk-in closet in the master bedroom (74 percent). Most buyers between the ages of 25-34 wanted a backyard or play area (60 percent). More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34.

For those who purchased a home without it, 65 percent of buyers said they would be willing to pay a median $1,880 extra for central air conditioning. One out of four buyers was willing to pay a median of $4,760 more for waterfront property.

Homes are getting bigger, but have fewer bedrooms. From 2004 to 2006, the size of the typical home purchased increased by about 100 square feet to 1,840 square feet, while the median number of bedrooms dropped from four to three during the same period. The median home age reported in the current survey is 12 years, down from 15 years in 2004.