Focus on Real Estate

Will we migrate back to a seller's market?
For the past 20+ years, central Ohio has been, for the most part, a `seller's market'. But with a significant increase in inventory, drop in home prices as well as a drop in the number of buyers in the market, we've seen a dramatic shift in the past 15 months. Will our buyer's market continue throughout 2007? Or will inventory level out and prices begin to rise? NAR's 2007 advertising campaign includes 2 new spots advising consumers that "Every market's different, call a REALTOR® today." So be prepared to answer these questions.

NAR housing outlook is optimistic
With the economy and job market performing nicely, 2007 will likely bring another respectable housing year. The number of existing-home sales will essentially match that of last year and home prices again will squeeze out a gain.

Mortgage rates are projected to remain favorable throughout 2007, averaging 6.6%. But we are still in a typical year with a high housing inventory overhang brought on by the exit of investors/speculators. The inventory needs to thin out before the housing market revs back up to cruising speed.

Home sales are, therefore, projected to not increase in 2007. But come 2008 and beyond, a steady 3% to 5% increase in home sales will be the norm. Home prices by then will also begin to outpace CPI inflation growth. Housing will again prove it can provide attractive longterm investment returns.

Federal Reserve Alert: Questionable Solicitations
The Federal Reserve received complaints from recipients of direct mail solicitations that suggest there is a `Community Reinvestment Act (CRA) program' that entitles certain homeowners to cash grants or equity disbursements. Some of these solicitations may be read to indicate that the Federal Reserve endorses or supports the offers they contain. These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home.

The Federal Reserve cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumers cash grants or equity disbursements as part of a `CRA Program.' No such federal programs exist and these programs are not required by the CRA, which encourages depository institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods, in ways that are consistent with safe and sound banking operations. For questions about this, contact: crahelp@frb.gov or call the CRA assistance line at: 202/872-7584.

Hot Color Trends for 2007
What colors will hold center stage in 2007? If you're thinking fluorescent colors, think again. From fabrics to food mixers, furnishings to appliances, pillows to paint, next year's key colors are coming down to earth. According to Color Marketing Group (CMG), the most powerful color trends for 2007 are driven by concern for the environment. Specifically, CMG predicts these trends:

• "Green" rules! -- The idea of "green" means the color green, too. But look for softer, more botanical greens inspired by nature. 
• Blues from Nature -- The color of the sky, the color of water, true blues from nature will be everywhere. 
• New Natural Neutrals-- The newest neutrals, especially medium to dark browns, are soulsatisfying. Beiges, browns and tans will be more earthy and grounded -- reflecting the colors of rock and stone and soil. 
• Rich, Ethnic Accents -- Lighter, neutral settings will be punctuated by warmed-up accent colors from a rich mix of countries and cultures. Deep, rich ethnic reds and warm, glowing oranges are the "punch" colors for 2007.

The Home of the Future
"The Home of the Future" study, conducted by the National Association of Home Builders' Economics Group, provides a detailed view of what buyers can expect to find in an "average" home and an "upscale" home in 2015.

According to the experts, the pace of change in new homes will be much faster over the next 10 years than in recent years, and buyers can expect that all homes will be significantly "greener" and more resource efficient than today. There will also be increasing emphasis on universal design/handicap access.

Perhaps most surprising, the consensus was that although average home size has increased significantly in the past decade, it is not likely to increase in the next 10 years. In fact, average home size in 2015 is likely to stay in the range of today's 2,400 square feet, and homes are increasingly likely to be two-story rather than one-story.

Communities are likely to reflect consumer preferences for open space, recreational opportunities and amenities such as walking and jogging trails and are also likely to be close to public transportation.

Following is a profile of the typical new singlefamily home in 2015 based on the survey results:

• 2,330-square-foot, two-story home with 2.5 to 3.5 bathrooms and 4 bedrooms 
• One-story entry foyer 
• One-story family room (no loft or volume ceilings, etc.) 
• Living room will vanish or become parlor/retreat/library 
• Nine-foot ceilings on first floor; eight- to nine-foot ceilings on second floor 
• Exterior walls of vinyl or fiber cement siding or brick 
• Staircase located in foyer 
• Front porch 
• Patio 
• Fiber optic network, programmable thermostat, structured wiring system, multi-line phone system 
• Both shower stall and tub in master bathroom 
• Toilet in master bath will have separate enclosure

House price estimator shows value of various features
To show the effects that various features can have on a home's value, the National Association of Home Builders' (NAHB) Housing Economics Department has created a house price estimator model based on data from the American Housing Survey (AHS), a nationally representative survey of about 60,000 housing units conducted by the U.S. Census Bureau in oddnumbered years.

Based on this information, NAHB found that waterfront locations have the most significant positive effect on home values in every census region and in every type of setting. For example, being on the waterfront raises the value of a standard home in a Midwestern suburb by 43 percent, or $92,000, and the value of a standard home in the non-metropolitan South by 44 percent, or $75,000. In the central city of a large California metro area, being near water raises the value of a standard home by 41 percent or $243,000.

The characteristic with the largest negative effect on home value is the presence of abandoned buildings within one-half block or roughly 300 feet of the home. For example, abandoned buildings with in 300 feet of a standard home in a Midwestern suburb would reduce the home's value from an estimated $212,137 to $188,805. Bothersome trash, industrial buildings, inadequate shopping and bad roads also have significant negative effects on the price of a home.

To learn more about the house price estimator, or to explore the price effects of other house features and location characteristics, check out the model online at http://www.nahb.org/estimator.

Fewer, bigger builders expected
During the last 15 years, more than 150 mergers and acquisitions have taken place among the top 14 builders. In 2006, it seems the merger and acquisition process has slowed down with the slowdown of the housing market. Industry watchers are suggesting that homebuilding company mergers may begin again this year.

During the International Builders' Show® in Orlando, Fla. last month, Jody Kahn Kline of Michael Kahn and Associates, a Florida consulting firm, commented that once the market begins to stabilize, we fully expect Wall Street to begin to pressure the national builders to achieve growth. It's pretty hard to do that organically. Instead, big public builders are likely to buy up smaller companies.

Condo purchase: a lifestyle choice
Nearly half of all condo buyers choose their new homes without considering any other style of housing, according to a new survey by the National Association of Home Builders (NAHB) that examines the preferences of condo buyers. The survey found that the majority of condo buyers are looking not just for a home, but a lifestyle.

According to the survey, two groups of condo buyers drive the condo market: young, well-paid professional singles or couples who want to own their first home close to urban amenities; and older households who want to remain in the suburbs but shed the maintenance burden of a house. Both groups also clearly indicated that they expect their condos to appreciate in value.

The NAHB survey identified price and location as the top two factors determining the decision to buy a particular property, followed by size, desirable neighborhood and investment potential.