NEW YORK – Dec. 18, 2009 – Joseph Ferrara of TheClozing.com, a real estate news aggregator site, predicts increased reliance on technology in the property industry in the coming year.

He expects more brokerages to go mobile or virtual to lower costs in a weak market; and he believes agents will take advantage of mobile video text-messaging to send virtual tours and slideshows to clients and Facebook’s “fan” feature to design pages for themselves, neighborhoods, and local events that target their fans in the hopes of generating new business.

Ferrara also believes a new cell phone from AT&T with an attachable projector will make it easy for agents to show slideshows, photos, and videos to clients in the field; and he expects a new iPhone or BlackBerry app for the National Association of Realtors’ (NAR) Realtors Property Resource will give members a competitive advantage

Among other trends, Ferrara predicts video e-mail, Web sites that allow agents to bid on listings, and services that allow buyers to quickly obtain home details by pointing cell phone cameras at a bar code on the For Sale sign or magazine ad will gain popularity next year.

WASHINGTON – Dec. 17, 2009 – Out of the depths of housing’s worst downturn, smaller new homes are turning into a bright spot for some home builders.

The trend toward more compact new homes is being driven partly by the fact that more customers are first-time buyers who have less to spend.

Home builders are responding by offering smaller designs with features such as high ceilings and large windows that create a spacious feel and options that let buyers personalize the model they choose.

KB Home’s smaller model helped it achieve a 62 percent increase in year-over-year net orders in the third quarter.

The trend cuts across the industry. The median square footage of new homes has dropped 9 percent from a peak of 2,300 square feet in the third quarter of 2006 to 2,100 square feet in the July-September period this year, according to data from the National Association of Home Builders (NAHB).

Housing size drops with each recession, but economists expect the current movement toward smaller homes to continue for some time in part because of the severity of the current housing market slump.

First-time buyers are driving the trend toward smaller homes because that is what they can afford, says David Crowe, chief economist at the NAHB.

As the economy improves, move-up buyers generally enter the market and begin buying larger homes. But this time, so many homeowners owe more on their homes than their properties are worth that many potential move-up buyers will be stuck even as the economy strengthens.

That means first-time homebuyers will still be buying smaller homes while larger homes will find fewer buyers.

“This downsizing is more sustainable,” Crowe says. “The first-time buyer will continue to be a large part of the market because the move-up buyer will not have as much equity. It’s going to take them awhile to climb out.”

The NAHB doesn’t keep data on the percentage of new home sales that are made by first-time home buyers, but about half of all home purchasers were first-time buyers in October, according to the National Association of Realtors.

For builders, smaller, less-expensive homes mean less profit. But the industry is already facing strong competition from a high supply of foreclosed homes selling at comparatively low prices.

A welcome change

Some analysts say the downsizing trend could be good news for builders.

“The appetite for smaller homes may be a welcome change for home builders as new home sales have been challenged in the past few years,” says Tom Lydon, editor of ETF Trends, which educates investors on fund choices and market trends.

Major home builders such as KB Home and Pulte Homes are responding to the shift in demand by offering more of the smaller properties.

At Pulte Homes, its most popular designs today are 100 to 200 square feet less than the most-popular plans in 2005-06.

So the lower-priced homes don’t seem bare-bones to buyers, open floor plans and 9-foot ceilings provide a sense of roominess. Fireplaces are an option.

To hold down costs, Corian – a surfacing material created by DuPont – is a standard for kitchen counters instead of granite. Appliances are standard models instead of pricier stainless steel.

“It’s not just making it smaller, it’s maximizing the space in the home,” says Caryn Klebba, a spokeswoman at Pulte Homes. “It’s a 9- or 10-foot ceiling rather than a cathedral ceiling.” Cathedral ceilings are 14 to 18 feet.

Getaway option

Smaller homes also are appealing as vacation homes.

Nancy Coronado, 55, a retired framer in an art gallery, has a large home in Whitehall, Mich., and bought a second Pulte home in Florence, Ariz., in March. The new home is about 1,400 square feet. “I have a big home in Michigan and didn’t want another big home,” she says. “I wasn’t looking for that.”

KB Home also has redesigned its homes to reflect the trend, because nearly 80 percent of its customers are first-time homebuyers.

Toll Bros., which builds luxury homes, says demand is down across the board, and not just for larger homes. Company officials say they, too, see an increased interest in smaller homes but believe that homebuyers will someday return to wanting larger properties.

Smaller homes, they say, reflect a down economy and tighter credit rather than an appetite for less space.

“We see the demand for smaller homes, but it’s not as though there’s huge demand for smaller homes but no demand for larger homes,” says Kira McCarron, a spokeswoman for Toll Bros. “There is still a demand for luxury homes.”

WASHINGTON – Dec. 17, 2009 – The think-tank Center for American Progress is questioning the premise that a 30-year, fixed-rate mortgage is the best option for homebuyers.

The reason mortgage-backed securities looked so attractive to banks is that they solved the problem of a mismatch between low rates on mortgages and higher rates for deposits. Banks worried about getting stuck earning low rates on a mortgage for 30 years while having to pay higher rates on bank accounts to attract depositors. Their answer: unload their mortgages to investors and let them worry about the profitability of the loans. Those investors hedged their bets by purchasing interest-rate swaps and other derivatives. Now, even Fannie Mae and Freddie Mac are having a hard time getting a handle on what those hedges are worth.

In other parts of the world, variable rates are the norm. While borrowers face the risk of rates going up, lenders at least can ensure the rates they pay to depositors don’t outstrip what they receive in mortgage products. Homeownership rates in Canada and the European Union, where variable rate mortgages are the norm, are about what they are in the U.S.

And in any case, there are ways for borrowers to mitigate their interest-rate risk. They can take out loans with fixed initial periods, for example. For homeowners who typically hold their homes for seven years, a five-year fixed rate provides considerable security.

If the country persists in choosing fixed-rate mortgages, some observers say, lenders might consider the Danish model where mortgages are financed through the bond market rather than a separate securities market. That’s a system that has worked well for two centuries.

Broker of the Year: Cynthia McQuaig
Realtor of the Year: Michelle Ginn
Citizen of the Year: Judith DeVita
Affiliates of the Year: Hunter Palmer and Irene Wynn
Realtor Ambassador of the Year: Alisa Stone Herring
Roy Crecelius Award for Distinguished Service: Tom Neubauer
Presidents Awards: Janet Roan and Mary Sowell

Honor Society Awards:
Jan Cox
Judith Devita
Denise Fitchben
Rex Free
Alan Graham
Alisa Stone Herring
Anthony Jensen
Christi Jensen
Doreen Morgan
Vince Price
Janet Roan
Anne Stroud
Vicki Swenk
Jim Vider

HAMPTOM, VA - Dec. 7, 2009 - Felicia Bradley found a great deal on a town house for rent on Craigslist.

But the more the Hampton resident looked into it, the more suspicious she became.

“It was just a total scam,” said Bradley, who works at the Daily Press.

A hoax that first came to light in Hampton Roads in August has resurfaced. It involves phony ads on Craigslist, a popular classified advertising Web site.

The phony ads list a home for rent or for sale. When contacted, the advertiser asks for personal identifying information and/or a deposit.

In August, a real estate agent listing a James City County home for rent discovered someone else had lifted the information to create a fraudulent ad. A potential renter fell for the scam and provided her Social Security number. When the homeowners found out about the false ad, they alerted police.

After the August incident, Rebecca Grossman, chief executive of the Virginia Peninsula Association of Realtors, conducted a series of educational meetings about social media and its associated scams, such as the Craigslist ones.

Consumers need to know that these scams exist so they can protect themselves, she said.
Last week, Bradley was browsing Craigslist when she spotted a two-bedroom town house for rent in the Michael’s Woods area for about $850 a month. She e-mailed the contact for more information.

“They replied back saying they were Christian people and they were interested that a decent person gets it and keeps up the property,” Bradley recalls.

The man who responded asked for $350 before she even looked at the property. He also included an application form that asked for her date of birth.

“It sounded funny to me,” she said. “I said, ‘I don’t want to give this information over e-mail.’”

That’s when she reread the e-mail and noticed it was full of spelling and grammatical errors. She told him that she wouldn’t send money until she met someone and saw the property.

His reply asked for her phone number to discuss it. She instead asked for his number.
“He sent two numbers that looked really crazy,” she said. “I said, ‘Thank you, but no thank you. I felt more comfortable if I could meet someone in person.’”

And that’s the advice that Craigslist offers to avoid scams. Browsers should avoid scams by dealing locally and should be wary of arrangements involving Western Union, Moneygram, wire transfer or a landlord or owner who is out of the country or cannot meet you in person, Craigslist warns.

Copyright © 2009 Daily Press, Veronica Chufo; Newport News, Va. Distributed by McClatchy-Tribune Information Services.

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