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WASHINGTON -(Dow Jones)- The National Association of Realtors expects sales of new and existing U.S. homes to drop to “high plateau” levels in 2006, while home prices continue to rise.

Existing home sales, expected to rise 4.7% to a record 7.10 million this year, are projected to fall 3.7% in 2006 to 6.84 million, the second-biggest figure on record, the NAR said Monday. The realtors’ group foresees a similar trend for new homes, with sales projected to drop 4.8% next year to 1.23 million, also the second-biggest number on record.

“Home sales are coming down from a mountain peak, but they will level out at a high plateau – a plateau that is higher than previous peaks in the housing cycle,” NAR Chief Economist David Lereah said. “This transition to a more normal and balanced market is a good thing.”

Housing construction is also expected to fall back after reaching this year the highest point since 1972. The NAR projects housing starts will decline 4.8% next year to 1.92 million.

Despite slowing activity, the NAR says it expects the national median home price to continue to increase next year, as it has each year since reliable recordkeeping began in 1968. The U.S. median price for existing homes is expected to rise 6.1% next year to $221,400 after an estimated 12.7% surge this year. The median price for new homes is projected to grow 7.3% next year to $ 250,100 after rising 5.5% this year.

Temporary price declines in certain areas are still possible if job markets are weak or housing is oversupplied, but the odds of home-price appreciation remain “very good,” NAR President Thomas Stevens said.

The realtors’ group says the 30-year mortgage fixed rate is expected to rise ” modestly” to 6.6% in the second half of 2006. It anticipates U.S. economic growth will speed up to 4.1% next year from 3.7% this year, and that unemployment will fall to 4.9% by the second quarter of next year and then stabilize.

-By Campion Walsh; Dow Jones Newswires; 202 862 9249; campion.walsh@ dowjones.com

With land at a premium, Las Vegas Real Estate Developers are concentrating more and more on high-rise condominiums.

Las Vegas, NV (PRWEB) December 10, 2005—It seems that for real estate development in Las Vegas, the only way to go is up. And we’re not just talking about prices.

You’d think that in the desert, there’d be lots of room to move. But not so in Las Vegas. The federal government owns 80% of the land in Nevada, and they’re not selling. With the influx of new residents now exceeding 5,000 per month—and continuing to increase—that leaves land-starved Las Vegas real estate developers no alternative but to build higher and higher. In fact, there are over 80 new mid and high rise condos planned—for the Las Vegas Strip area alone.

Of course, this is great news for Las Vegas residents who like high rise condominiums. Higher density means shorter drives—and less time stuck in Las Vegas traffic. It’s now increasingly common for Las Vegas condo owners to live little more than an elevator ride from work.

When shopping for homes or condos in the bewildering Las Vegas real estate market, it’s critical to deal with an experienced agent. You’ll avoid a lot of fruitless pavement pounding, and it won’t cost you a dime.

Slowing housing prices and a stagnant rental market have landlords squeezed from both sides.

Small fortunes have been made during the past few years by investing in rapidly rising real estate…buy, rent out, flip, repeat. But now stagnating home prices and a bad rental market threaten to end that—and put the holdings of small landlords in jeopardy.

Signs of a slowdown in the housing market keep coming, with drops in housing starts, sales, and more than a few dire forecasts (see: House party is over.)

Rental markets have soured as well. Rents in most cities have been either flat or down in 2005.

In Boston, a net loss of about 180,000 jobs in the past few years drove rents down about 10 percent in 2005, according to the U.S. Department of Housing and Development (HUD).

Rent declined even more in San Francisco, about 13 percent. Chicago and Houston rents are down about 3 percent. (See table for how the rents on two-bedroom apartment in selected metro areas have changed this year.)

What’s more, rental vacancy rates have soared—to about 10 percent, according to the latest Census Bureau data, up from about 7.5 percent 10 years ago.

Jane Garvey, a small landlord in the Chicago area, says so much emphasis has been placed on home ownership that most everyone who could afford to buy a home already has. That has shrunk the pool of tenants and made it hard to find reliable, qualified renters in many locales. “You’re looking for the ‘cream of the crap,’” says Garvey.

Do the math
The double whammy of a falling rental market and slowing prices puts the squeeze on real estate investors who plunged into the market during the past year or two.

An investor who bought a two-bedroom, condo apartment in Boston last year, for example, might have spent about $800,000 for it.

If he financed 80 percent of the purchase price for 30 years at 5.5 percent, his mortgage payment is about $3,600. Add in $500 in common charges and $200 in property taxes and insurance, and the monthly nut comes to $4,300.

Even if he can rent for substantially more than the Boston metro-area average of $1,266 for a two-bedroom apartment, he’s still in a deep hole. And if he was counting getting bailed out by rising prices, forget it; the latest housing price data shows Boston housing appreciating only in the mid-single digits, and the growth rate may slow even more in 2006.

Of course, the numbers may not be quite so bad in other U.S. markets, but many will at least grow much more slowly than they have the past few years.

Coping with a slowdown
How can real estate tycoons protect themselves from the double whammy of stagnating prices and declining rents?

Katherine Brookins, who owns several rental units in Boston, has advised other landlords to pay down their mortgages if they can. “You aren’t going to be getting the rents,” she says, which make it difficult to keep cash flow positive. Eliminating a mortgage payment can turn a monthly loss into a profit.

Karen Pio, a landlord in Bristol Connecticut, says it’s important to tighten up rental requirements. “When [landlords] hungry they’ll grab at anybody,” she says. But renting to the wrong person may put a landlord’s whole enterprise at risk. Pio knows some who have lost entire properties because of problem tenants who trash apartments, pay no rent, and prolong the eviction process.

She recommends that landlords screen all tenants dutifully. Pio does a credit check, a criminal check, and an eviction screen. And she calls all the references on the tenant’s application.

Simmering in the cultures of the American Southwest, Native America and Mexico, Yuma, AZ is often considered Arizona’s best kept secret as a nice place to call home.

Bordering both California and Mexico, the small town of some 100,000 residents may also be the nation’s best-kept secret as a booming housing market.

For the second quarter in a row, Yuma’s home prices grew faster than any other city in the nation among the hundreds—“ranked” and unranked”—tracked by Office of Federal Housing Enterprise Oversight’s (OFHEO) Home Price Index (HPI).

Fueled, in part, by emigrating agricultural workers and often by speculative investors fleeing higher priced housing costs in California and elsewhere in Arizona, Yuma’s prices soared 35.71 percent in the third quarter this year, compared to the third quarter of 2004. In the second quarter this year, the increase was 35.98 percent, according to OFHEO.

Nationwide, home prices increased 12 percent during the third quarter this year, according to the latest HPI released Dec. 1.

“We’ve had some subdivisions with prices that have grown by 80 percent and 100 percent,” said Shelley Ostrowski, president of the Yuma Association of Realtors.

Yet, even with home price growth as hot as a mid-summer day in Yuma, home prices remain in the low $200,000s for a 1,500- to 1,700-square-foot, three- to four-bedroom home that’s only a few years old. In most cases, newer homes cost more, older homes cost less, but not a lot more or less.

Third quarter statistics released now, near the end of the fourth quarter, however, can be misleading because they don’t indicate what is happening now.

“Our area within the last year has undergone tremendous growth. We have seen a large interest from out of area homeowners and investors looking to secure property in our city. Our local property values have nearly double within this period, Carl Nevels an agent with Nevels & Nevels – Keller Williams reported to RealtyTimes Market Conditions for Yuma.

Sandra Nevels added, “Recently we have experienced a slight cooling down in what we feel has been a very market. Homes that were on the market hardly one day are two- to three-week turnovers.”

That’s due, in part, to Yuma’s inventory which is up to 500 single-family homes for sale. That’s near normal levels. Three months ago, there were less than 200 homes for sale, according to Ostrowski.

“What happened? We don’t have the investors here any more. They can’t turn them as fast, but now we are able to offer more to those who live here on a full-time basis. We aren’t going to continue to see huge increase in prices, but it’s still a good market,” Ostrowski said.

Like any housing market that flames Super Nova, Yuma can’t sustain the out-of-this world heat and a more down-to-earth correction has begun to follow.

“It’s a correction because it was going so fast and so furious it finally got to a point where all the sellers jumped in and now it’s like a teeter-totter,” said Ostrowski, also an associate broker with Century-21 Action Group in Yuma.

Yuma’s boom had its roots in the California housing market which became unaffordable to Yuma’s population of agricultural workers. For years, farm workers made their summer homes in the Golden State’s crop growing regions, but took up temporary residence in the Yuma area during its winter growing season.

The migratory-level commute to work continues, but to a lesser degree. Many farm workers now call Yuma home and the new trend takes, well, a lot of lettuce—in more ways than one.

“We are the worlds No. 1 supplier of lettuce. We’ve always had agriculture here. So they come here for the winter-growing season. Agricultural people are finding they can’t afford to buy in California. So instead of Salinas (CA), they buy here because it’s more affordable. We are now seeing some people who bought here are not leaving and going back,” Ostrowski said.

The area is also populated by military families who count on military and civilian work at the U.S. Army’s Yuma Proving Grounds and the U.S. Marines’ Air Corp Station for their bread and butter.

Retail growth has followed the growing number of home-buying farm workers and others moving to the region.

“There’s also the border patrol. I think we aren’t going to see a huge increase in prices now, but prices are not going down. You just have to be more competitive when you sell. It can’t go for top dollar any more because you are not the only house on the block for sale,” Ostrowski said.

Yuma’s boom helped catapult Arizona, to the top of the home price-growth list. Arizona’s prices soared 30.33 percent in the third quarter 2005 compared to the same period in 2004, according to OFHEO.

Following Arizona were Florida (25.18 percent), the boom market anchor in the South; Hawaii (21.33 percent), the nation’s tropical resort and a second home mecca; Washington, D.C. (20.53 percent), the nation’s capital and headquarters for political shmoozing; Maryland (19.29 percent), thanks to D.C.’s market influence; California (19.26 percent), the home price stronghold in the West; Virginia (18.66 percent), thanks again to the D.C. influence; Nevada (17.59 percent); Oregon (16.92 percent) and Washington (15.64 percent). The last three, like Arizona, also enjoy the same Golden State housing market glow that shines on Arizona.

Yuma, was tops in the nation in home price growth among all cities and tops among so-called “unranked” Metropolitan Statistical Areas (MSAs) which have smaller statistical samples of homes sold.

Among “ranked” MSAs, with larger, and therefore more statistically sound samples, another Arizona area, the Phoenix-Mesa-Scottdale MSA, was tops in the third quarter with a 34.37 percent increase in home-price growth.

Following the Phoenix-area MSA were Cape Coral-Fort Myers, FL (33.16 percent); Naples-Marco Island, FL (32.35 percent); St. George, UT (31.57 percent); Sarasota-Bradenton-Venice, FL (30.35 percent); Merced, CA (30.27 percent); Coeur d’Alene, ID (29.88 percent); Pensacola-Ferry Pass-Brent, FL (29.80 percent); Visalia-Porterville, CA (28.46 percent) and Palm Bay-Melbourne-Titusville, FL (28.36 percent), OFHEO reported.

Published: December 6, 2005

Real estate fraud is surging, fueled by a booming housing market, feverish refinancing activity and lax regulation, authorities say.

In the last two years, according to the FBI, reports of mortgage fraud nationally have tripled to 21,994, while the dollar value of the alleged crimes quadrupled to $1.01 billion.

The dramatic run-up in the housing market during the last four years was a boom with few equals. Abnormally low interest rates spurred refinancings, construction and speculation, while the industry developed loan products for every income and attitude.

Swindlers have lots of room to hide in an industry so flush, so busy and so much more complex than it used to be.

Mortgage fraud can be as simple as a loan applicant lying about income and as complicated as a ring of conspirators using identity theft, fake appraisals and straw buyers to steal properties from unsuspecting owners.

Much of the industry is not required to report fraud to regulators, so it doesn’t.

The amount of deceit is undoubtedly much greater than the reports indicate, FBI officials say. Fraud increases the price of mortgages for all buyers as lenders pass on their higher costs.

Consumers will take out $2.8 trillion in mortgages this year, but regulation is a hazy patchwork of local and national agencies that have minimal communication with each other.

This is especially true in regard to mortgage brokers, who barely existed 30 years ago but now are key players in the loan process. Two-thirds of home buyers turn to brokers to find financing for the biggest purchase of their lives, industry associations say.

Yet in California the agencies that monitor these middlemen say they don’t know the most basic facts about them, including how many brokers are operating in the state or how often there are complaints.

Regulation of brokers “has sort of fallen through the cracks,” FBI Assistant Director Chris Swecker said.

Some brokers think this neglect opens the door to trouble.

“We’ve got to do something to better protect the consumer,” said John Marcell Jr., an Upland, Calif., broker who is president of the California Assn. of Mortgage Brokers. “We need better education, and better policing.”

But policing requires a regulatory agency with teeth. Real estate has no equivalent to the U.S. financial industry’s overseer, the Securities and Exchange Commission. The number of fraud cases investigated by the FBI is not keeping pace with the rise in reports. The bureau’s conviction rate is falling, from a national total of 256 in 2003 to 170 this year.

Policing also requires victims to come forward. In a boom, they can be hard to find.

“It’s not like you have a bunch of bullet casings on the ground and a victim in the hospital,” said Bill Denny, a deputy district attorney in Alameda County who prosecutes criminal real estate fraud.

“The whole industry hates regulation,” he added. “Lenders never write to us and say, ‘Please [pursue] this case.’ “

The urge to ignore includes some of the industry’s biggest players. Last summer, the Office of Federal Housing Enterprise Oversight, which oversees Fannie Mae and Freddie Mac, the two largest federally chartered lending institutions, ordered them to start informing it of mortgage fraud “in a timely manner.”

The regulation was developed after Fannie Mae was accused of covering up a $6-million fraud instead of reporting it.

Last week, the FBI arrested two people who operated real estate and escrow agencies in Downey and Seal Beach. Martha Rodriguez and Edward Seung Ok were charged with 10 counts of mail fraud in an alleged scheme that preyed on 70 homeowners facing foreclosure.

It came as a big surprise to the real estate industry last year that second homes were accounting for more than one-third of annual sales.
Before 2005, the National Association of Realtors’ survey techniques failed to accurately gauge the size of this market, even though anecdotal evidence indicated a substantial increase in second-home purchases in the previous decade.

Newly accurate or not, the percentages don’t tell the whole story: Though baby boomers make up a large part of the second-home market, a growing number of foreign buyers are taking advantage of a weaker dollar. And the opposite is true: Many U.S. buyers are finding the dollar purchases more in foreign markets.
The second-home market has become so large that 140,000 of the nation’s more than 1.6 million Realtors acknowledged specializing in it in 2005, a 30 percent increase over 2004. An indicator of its importance came in October, when the NAR announced a certification program for resort and second-home specialists.
When the second home can be as near as 50 miles—or as far away as 5,000—from the primary residence, knowing the market is critical to an agent’s success, said Maire Rosol, Park City, Utah, who specializes in resort sales.
“We have a lot of buyers coming here from countries that have security problems, and we are finding that these buyers favor gated communities,” Rosol said. “From what they’ve told us, they find being able to ride a bicycle for long distances safely worth the price.”
Ron Acker, of Re/Max 200 Realty in Winter Park, Fla., said agents in resort areas who are more used to selling primary homes often don’t realize that many second-home buyers are looking as much for an investment as for places to live. “Don’t assume this is their last home,” he said. “They might sell someday.”
Because Acker’s market encompasses the Orlando area, including Walt Disney World, his clients are a mix of American and foreign buyers. His agents speak eight languages.
British buyers spend an average of $200,000 to $400,000 for houses, and most stay two to four weeks in Florida and rent out the houses the rest of the time, Acker said. “The British are attracted here by the price, the weather and the relatively inexpensive airfare,” he said.
Rosol said the needs of the foreign buyer differ from market to market, and U.S. real estate agents “have to be aware of cultural etiquette and practices that are used in their home markets.”
Panama and Costa Rica are trying to lure British second-home investors from Florida, Acker said.
The recent increase in the number and intensity of hurricanes in Florida has shifted a lot of buyers “away from the ocean and to the golf-course communities of the interior,” he said.
Some of that shift can be attributed to what Steven Friedman, national director of housing at Ernst & Young, calls “the Aspen effect,” meaning that when prices get high enough, “second-home owners start leaving Naples, Florida, for the mountains of Tennessee.”
Meanwhile, Rosol said, 1 million Americans have retired to Mexico, Costa Rica and even Eastern Europe.
Buyers from abroad often capitalize on other countries’ problems.
“Foreign buyers started considering Argentina when we devalued our currency and property values dropped 40 percent,” said Paul Reynolds, owner of Reynolds Propiedades in Buenos Aires. “Those values have only just recovered to 1997 levels, and with airfare from Miami only $700 round-trip, we are drawing in a lot of Florida investors.”
Short-term rentals are popular, because a furnished apartment in Buenos Aires averages $400 a week, while one night’s stay in a comparable hotel runs $100 to $300, Reynolds said. “Occupancy rates on these are 80 to 90 percent, so you can recover your investment. But, then again, you can buy a 220,000-acre farm in the interior for $1.5 million, so your dollar is going farther.”
Mexico is becoming the biggest draw for Americans because, according to AARP magazine, “for $600 a month, retirees can live in a three-bedroom home with a gardener.”
The boom in second homes doesn’t come without pain. In some resort areas, an abundance of second homes has led to a decrease in affordable housing for permanent residents, said William S. Hettinger, of Wyndham Financial Group.
“Maintaining a balance in support housing is critical to protecting the core of the community—its residents and workers,” he said.
Nor can the second-home movement probably be sustained at current levels. “We can’t do another 35 percent market share of second homes,” said Ernst & Young’s Friedman. “That is the peak.”

16 percent compared with 2004 numbers, and the forecast is for the market to fall a little farther.

By CHRISTIE SMYTHE
Staff Writer
Real estate activity on the Cape is still sliding, according to November sales statistics from the Barnstable County Registry of Deeds.

Compared with November 2004, the total number of sales recorded last month was down 15.9 percent; the total dollar amount of sales was off by 18.9 percent; and the average sale price was down by 3 percent, according to registry information released yesterday.

The registry tracks sales of residential and commercial properties valued between $25,000 and $1 million.

John Meade, county register of deeds, said there was nothing surprising about the November numbers given the previous month’s statistics: the number of October sales and the total value of all sales both dropped by nearly 18 percent.

‘’Things are easing off a bit,’’ he said. ‘’That’s the trend we’ve been seeing. It may decrease a few percentage points more as we proceed.’‘

For the past month, the registry reported 571 sales representing a total value of a little more than $220 million. The average sale price was $386,097.

In November 2004, the registry reported 679 sales with a total value of about $270 million, and an average sales price of $398,042.

The number of mortgages recorded for the month was off by 4.7 percent, compared with November 2004. The average mortgage price, however, was up by about 6.8 percent, to $226,966.

Meade said the early months of 2006, when the real estate market tends to lag, may show more pronounced decreases in activity.

Because of the time involved in closing real estate deals, sales statistics typically reflect purchasing activity from several weeks prior to their release – meaning that January numbers indicate purchases taking place in December.

‘’Once the new year kicks in, expect things to slow down significantly,’’ he said, adding that he expects December’s numbers ‘’will probably be OK.’‘

Dips in monthly statistics are to be expected, he said, in part because the monthly numbers in the previous year were surprisingly high.

Meade pointed out that year-to-date sales numbers for this year compared with 2004 are showing less drastic changes.

Sales for the first 11 months of the year are down 8.3 percent, while total sales value is down 3.3 percent, and the average price is up 5.6 percent.

‘’It’s still pretty good in the scheme of things,’’ he said.

Whether the market heats back up in the spring will likely depend on whether mortgage rates continue to rise, he said.

Christie Smythe can be reached at csmythe@capecodonline.com.