National Realtor Outlook 'Least Optimistic Yet'

More today on the housing market's decline in a staff story in the The New York Times and a Reuters story in the
Los Angeles Times. From The NYT:

The latest report to predict a decline in the housing sector was notable for its source. The assessment from the National Association of Realtors, which has until recently been generally upbeat about the health of housing, was the group’s least optimistic yet.

“The boom is cooling now,” said David Lereah, the chief economist for the association, who added that falling home sales have been “a bit worse than we had anticipated.”

The group said that it now expected sales to fall further than it has said in the past — about 7.5 percent this year compared with an earlier projection of a 5 percent decline. It also said it expected prices nationwide to drop during the next few months, instead of appreciating modestly. If that happens, it would be the first time since 1993 that median home prices have fallen in any given month.

The revised realtors’ forecast came on the heels of announcements from KB Home and Beazer, two of the nation’s largest home builders, that profits this year would be lower than initially predicted.

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Exotic Mortgages Bite Some Buyers

Unfortunately, there are probably going to be more stories like this one from MSNBC:

"Joe" is a homeowner who did not want to give his full name for this story because he’s ashamed to admit that he soon won’t be able to afford his monthly mortgage payments.

In order to get the $800,000 house he bought early last year in California’s Silicon Valley, Joe got an “option ARM,” an adjustable-rate loan that lets him choose from a variety of payments every month. The smallest payment included no principal and less than 100 percent of the interest due. The unpaid interest was tacked onto the principal, creating “negative amortization.”

This let Joe trade lower payments now for higher payments later. He initially thought his salary would rise along with his home’s value — he was a marketing executive for a small software firm he was confident would be successful. But when a lost deal closed the company and “For Sale” signs popped up — and stayed up — in his neighborhood, a now-unemployed Joe is wondering how he will afford those higher payments when his rates adjust.

More...

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NAR Economist Says Flippers Could Get Burned

There was more bad news on the housing market today as one of the biggest home builders in the US cut its profit forcast in response to diluted demand in a slowing housing market. KB Home's CEO says that both new and resale homes are taking longer to sell. From the Associated Press:

"Our earnings expectations for the third quarter and full year reflect an increasingly challenging housing market, where the supply of new and resale home inventories has built up in recent months in markets that have experienced rapid price appreciation or substantial investor activity, or both, in the past few years," said Bruce Karatz, chairman and chief executive.

Bloomberg.com expands on that quote by explaining that Karatz is concerned about "flippers," property investors who may be attempting to exit the market en masse. Bloomberg.com quotes David Lereah, chief economist for the National Association of Realtors, as saying "People who purchased last year with the intent of flipping are likely to get burned."

Meanwhile, the lack of affordability in Los Angeles again made headlines in the LA Times:

The city of Los Angeles has made little headway in expanding the supply of housing for low- and middle-income residents because old affordable units have been destroyed almost as quickly as new ones have been built, according to a new study.

The analysis, to be released today by the Southern California Assn. of Non-Profit Housing, is likely to fuel an increasingly heated debate about housing and gentrification in the city.

I just mentioned the condo conversion issue yesterday in reference to another story about Standard Pacific Corp's decision to pull out of a condo project downtown.

Lereah, however, is optimistic about the big picture for the nation. As reported by Bloomberg.com:

"We'll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory,'' David Lereah, NAR's chief economist, said in the report released today in Washington by the real estate industry's largest trade group. He didn't provide a monthly median estimate.

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Another Developer Decides L.A. Too Big A Risk

Yet another indicator of a slowdown in the Los Angeles housing market was reported today by the Los Angeles Times. The LA housing market, and all those adjectives that came with it the past few years (soaring, booming, skyrocketing, etc...) now appears analogous to a pop fly approaching its apex, which raises more questions than it answers. What now? Do prices drop? Do they level off and float? And what about the concerns expressed by many people about the condo conversions that have pulled so many rent-stabilized apartments out of LA's housing pool? Might a slowdown be good news in that regard? No one has the answer yet, but situations like this one seem to offer at least enough fodder for a hearty debate:

Suburban home builder Standard Pacific Corp. has opted out of an agreement to buy a major Los Angeles condominium project, another sign that downtown's once-sizzling condo market might be losing steam.

The condo development, adjacent to Union Station, was behind schedule and was having trouble attracting buyers for the units priced in the $600,000 range. Instead of being sold as condos, the 272 units will be leased as apartments beginning today by the project's owner, Lincoln Property Co. of Dallas.

"The delays of getting buyers into the building, combined with the market softening, all conspired to cause us to reach the conclusion we did," Steven Ross, director of planning for Standard Pacific's Los Angeles division, said Tuesday.

Although prices in the downtown market — one of the last in the Southland to heat up and stay hot — continue to rise year over year, sales have slowed considerably while the supply of units continues to grow, creating what some analysts say is a condo glut.

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Why Does Water Triple In Price At The Airport?

Wrigley Field: Water as a "bottled drink."

On my recent journey through the Midwest most all the conversations I had with strangers involved not the weather, the war in Iraq, nor the price of gasoline, but rather the cost of water.

Throughout the four flights I took in the past two weeks I encountered dozens joining the water rant, and with good reason. In the past, complaints about the high cost of water in places like ballparks, stadiums, and airports was met with the reply "plan ahead and bring your own next time." But at our nation's airports that's no longer possible.

You can't bring water, or any other liquid, through an airport security checkpoint. That rule forces travelers wishing to stay hydrated to either pay the ridiculous $3 or more per bottle in a terminal snack bar, or wait until the beverage cart works its way down the aisle during their flight. If you arrive two to three hours early for your flight, be prepared to be parched.

For those who break down and make the investment in a bottle, they'll have to drink up before boarding. Once on the plane, flyers are asked prior to takeoff to hand over any liquids they might have accidentally carried on board. On one flight, TSA was in the jetway doing spot searches. At another airport, the window ledge beside the boarding line was filled with half-consumed cups of Starbucks coffee and bottles of water.

There's been plenty of debate about the effectiveness of the security measures. But the matter many travelers harp on is how airport vendors have managed to escape criticism while charging more for a bottle of water than for a soda, or hot drink. What happens to a $1 bottle of water between the convenience store and the airport that causes it to more than triple in price?

Every savvy traveler knows that the price per gallon of gasoline increases at service stations closest to airports (blame the nearby rental car lots). But as pricey as that gasoline can be, it's never three times the cost of gasoline elsewhere in town. Were that the case there'd surely be an outcry, as well as an investigation.

Not so with water, which unlike other beverages is not a luxury, but rather a necessity.

Congress has to be aware of it. They fly the same airports and follow the same rules. But, maybe their bottled water qualifies as a reimburseable travel expense.


— TJ Sullivan

AUDIO: Marketing Yourself As A Freelancer

Wendy Hoke, SPJ National Freelance Committee

If you weren't able to make it to the Society of Professional Journalists National Convention in Chicago last weekend, you missed an outstanding panel discussion on freelance journalism.

The session, entitled "Marketing Yourself As A Freelancer," was packed full of eager journalists, attendance that served as both a testament to the quality of the panelists, as well as to the level of interest writers have in freelancing.

Audio of entire 60-minute session is available here.

The panel was organized and hosted by Wendy Hoke (inset), the immediate past chair of the SPJ National Freelance Committee, and an advocate for independent journalists. Unfortunately, Wendy will no longer be the chair of the committee, but I have no doubt that she will continue to be a strong and effective voice for the growing number of freelance journalists who pay dues to SPJ.

Joining Wendy on the panel were three accomplished freelancers:

John Ettorre, a Cleveland-based writer and editor with more than 20 years of experience in journalism. Ettore's work has appeared in the New York Times and the Christian Science Monitor.

Stephenie Overman, a full-time freelance writer specializing in workplace and health care issues. Overman is also managing editor of Staffing Management magazine.

Sally Lehrman, author of "News In A New America," and an independent journalist specializing in the coverage of health policy, health care and medical technology.

The audio is available here, and when I figure out how to create a podcast, I'll add that as well.

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