Real Estate New York

Market Update July 2008

Mortgage Rates Predicted to Rise

"Now could be the time to pull the trigger before rates rise even further. Yields on 10-year treasury notes are still relatively low, an indication that 30-year mortgages could still be a good deal."

NEW YORK (CNNMoney.com) On Wednesday, the Federal Reserve held a key short-term interest rate steady, following a series of steady rates cuts - a move that signals to some that rates are about to change direction. And most assume that means consumer lending rates will rise as well.

But the central bank had cut rates seven times since September in an effort to bolster the lagging economy and spur economic growth. And during that time, mortgage rates were increasing . So what gives? And what should consumers expect loan rates to do next?

Rates on 30-year fixed mortgages have surged to a 9-month high on growing concerns about inflation, according to a recent report by mortgage backer Freddie Mac.

And rather than track the fed funds rate, which is the rate banks charge one another for overnight loans, fixed mortgage rates are more closely aligned with the yield on the 10-year treasury note, which offers a long-term look at a fixed investment.

While the lagging economy has bolstered the yield on the benchmark 10-year note, it still remains at a relatively low level, Eric Tyson, author of "Personal Finance for Dummies said.

Even as the Fed leaves rates unchanged, what they say about the economic picture could also influence consumer interest rates in one direction or another.

"Most likely they will express concern about inflation," said Keith Gumbinger, vice president of HSHAssociates.com, an online publisher of consumer loan information, which could send consumer interest rates higher as people take that as a cue that the Fed intends to start raising rates soon.

So if you are in the market for a house, now could be the time to pull the trigger before rates rise even further, Tyson points out, yields on 10-year treasury notes are still relatively low, an indication that 30-year mortgages could still be a good deal.

Read more from CNN Money by Jessica Dickler,

Click to comment on this article

Landscaping Trends: Just Add Water

Pools, spas, hot tubs, ponds, waterfalls, fountains, and creeks - all offer soothing sights and sounds that appeal to today's buyers.

Water can do great things for a back yard. Whether it's rippling in a swimming pool, bubbling in a creek, or splashing down a fountain, water features can add a luxurious look, block undesired noise, and create a tranquil ambiance for home owners.  

It can also add a “wow” factor that makes a home memorable in the eyes of a potential buyer, says master gardener Ann Robinson, who designed her urban St. Louis yard with a naturalistic looking pond with waterfall, rock, and perennial gardens.

“Visitors are surprised to find the serenity it provides in the city,” Robinson says. “Fish and frogs thrive with our largest koi, Moby. Occasionally, ducks, owls, and egrets come to visit.”

Water Works: What to Consider

When adding a water feature, home owners should make sure it matches the scale and style of the house and the neighborhood, experts say. Cost, safety, and maintenance are also top considerations that shouldn't be overlooked.

Some home owners also want to be sure that they're not out of step with good environmental practices. While a water feature may seem wasteful, there are ways to do it right, consuming less energy, using less water, and actually attracting wildlife. “A bird bath can be placed low enough to the ground so it also attracts frogs and toads,” says Cheryl Long, editor-in-chief of Mother Earth News .

Read more from: The National Association of Realtors

Click to comment on this article

How Peak Oil May Relocate the American Dream

“The so-called McMansion, may become the new multi-family home for the poor.”

Since the 1940's home buyers have left urban areas for the greener grass of the suburbs. Peak oil may change all that by making the daily commute plus numerous errands and visits into the city cost prohibitive as gas prices rise relentlessly in the coming years.

Add to that the subprime mortgage crisis where thousands of suburban homes across the country are in foreclosure and the picture become even darker with unoccupied homes and unkempt lawns in the thousands.

In addition, an interesting demographic trend has been emerging since the mid 1990's that may change the American landscape.

This trend, according to Christopher Leinberger, an urban planning professor at the University of Michigan and visiting fellow at the Brookings Institution , stems not only from changing demographics but also from a major shift in the way an increasing number of Americans -- especially younger generations -- want to live and work.

This change can be witnessed in places like Atlanta, Georgia, Detroit, Michigan, and Dallas, Texas, (but so far not in the Capital Region--ed) said Leinberger, where once rundown downtowns are being revitalized by well-educated, young professionals who have no desire to live in a detached single family home typical of a suburbia where life is often centered around long commutes and cars.

Instead, they are looking for what Leinberger calls "walkable urbanism" -- both small communities and big cities characterized by efficient mass transit systems and high density developments enabling residents to walk virtually everywhere for everything -- from home to work to restaurants to movie theaters.

Thirty-five percent of the nation's wealth, according to Leinberger, has been invested in constructing a “drivable suburban” landscape.

But now, it appears the pendulum is beginning to swing back in favor of the type of walkable community that existed long before the advent of the once fashionable suburbs in the 1940s. He says it is being driven by generations molded by television shows like "Seinfeld" and "Friends," where city life is shown as being cool again -- a thing to flock to, rather than flee.

"The image of the city was once something to be left behind," said Leinberger.

Changing demographics are also fueling new demands as the number of households with children continues to decline. By the end of the next decade, the number of single-person households in the United States will almost equal those with kids, Leinberger said.

And aging baby boomers are looking for a more urban lifestyle as they downsize from large homes in the suburbs to more compact town houses in more densely built locations.

Recent market research indicates that up to 40 percent of households surveyed in selected metropolitan areas want to live in walkable urban areas, said Leinberger. The desire is also substantiated by real estate prices for urban residential space, which are 40 to 200 percent higher than in traditional suburban neighborhoods -- this price variation can be found both in cities and small communities equipped with walkable infrastructure, he said.

The result is an oversupply of depreciating suburban housing and a pent-up demand for walkable urban space, which is unlikely to be met for a number of years. That's mainly, according to Leinberger, because the built environment changes very slowly; and also because governmental policies and zoning laws are largely prohibitive to the construction of complicated high-density developments.

But as the market catches up to the demand for more mixed use communities, the United States could see a notable structural transformation in the way its population lives -- Arthur C. Nelson, director of Virginia Tech's Metropolitan Institute, estimates, for example, that half of the real-estate development built by 2025 will not have existed in 2000.

Yet Nelson also estimates that in 2025 there will be a surplus of 22 million large-lot homes that will not be left vacant in a suburban wasteland but instead occupied by lower classes who have been driven out of their once affordable inner-city apartments and houses.

read more: by Barbara Ballinger of Realtor Magazine

Click to comment on this article