Developers see a lot of possibilities in Anaheim

Ideas include a hotel and retail and office space for site that was being eyed by the NFL.

By SARAH TULLY
The Orange County Register

ANAHEIM – Office towers, a hotel with a rooftop bar and a youth-sports facility could fill the land next to Angel Stadium, under three developers' proposals.

The city solicited ideas for the well-placed property after the National Football League failed to choose the site for a stadium by the city's May deadline. City officials are continuing to negotiate with the NFL, which has no time frame for choosing a Southern California site, while considering alternatives for the 51.4-acre, city-owned plot.

Later this month, the City Council is set to review plans by five developers – one of which would set aside space for a possible NFL stadium.

"It is very clear that we have many different options," said Councilman Harry Sidhu, who was against the NFL's initial offer. "These options are healthy for our community and healthy for the taxpayers."

Three developers discussed plans with The Orange County Register. The city has agreed to release all five plans after the council reviews them, but only did so after a Register attorney wrote a letter asking for the information.

The city decided to seek proposals now because land prices have skyrocketed in the Platinum Triangle area.

Earlier this year, the NFL was willing to pay $53 million for the land. SunCal now is offering $82 million. Others declined to release their offers.

Mayor Curt Pringle said the city should sell the land only if it would provide a long-term economic benefit for the city. "I have no motivation, no interest, no drive to sell it for a short-term infusion of cash," he said.

Current zoning and leases restrict uses of the property, which now has a parking lot, train station and The Grove of Anaheim theater. A lease with the Angels prohibits residences on the property, so a developer would have to negotiate a lease change to get permission to build homes.

The offers:
Lennar Corp.

Details: 650,000 square feet of office space; 300,000 square feet of retail and entertainment; a 200-room hotel; 30,000 square feet of recreational uses; and 4 acres of open space. A second option would add 1,800 homes.

Lennar submitted two options. One would meet zoning and lease criteria and another would include housing.

The developer envisions a sweeping project that would help connect the Honda Center and a proposed transportation hub across the Orange (57) Freeway with Lennar's A-Town, the largest triangle development, across State College Boulevard, said Richard Knowland, Lennar's division president.

High-rise office buildings would dot Katella Avenue. A pedestrian bridge and street would slice across to A-Town.

Standing above Angel Stadium, a hotel would have a rooftop bar and rooms with peek-a-boo views of baseball games.

The second option would include most of the same features but add 1,800 homes.

If approved, Lennar would give up a second housing project, A-Town Stadium, that is planned for south of the stadium. That land could be used as a bargaining tool with the Angels, which would have to agree to a lease change to allow housing.
SunCal

Details: 1 million square feet of office space; 350,000 square feet of retail and entertainment uses; a 450-room hotel; and 1,300 homes, including 15 percent for affordable units.

SunCal would divide the project into three districts: residential, retail-entertainment and financial.

The developer would set aside land for "community benefits," incorporating an art promenade, a civic plaza, a theater and a youth-sports training facility, said Frank Elfend, SunCal's consultant.

Premium restaurants, such as Fleming's Prime Steakhouse and Houston's, and designer boutiques, such as Calvin Klein and Gucci, would line a retail row, along with a movie theater and children's stores.
Windstar Communities

Details: Four options were submitted, which include all the uses allowed by the city, such as entertainment, retail, office, hotel and youth-sports facility uses. Windstar declined to release a breakdown of each.

Two proposals incorporate an NFL stadium. Some include homes, said Eric Heffner, a principal at Windstar Communities.

Windstar would give the NFL a certain amount of time to decide if it wants to build a stadium on the property. If the league decides against the Anaheim site, Windstar would build something else on the set-aside land.

"We think our proposal allows us to see what happens with the NFL in a couple of years," Heffner said. "We don't need a football stadium to make the development successful."

Windstar, which built Stadium Lofts, is the first to sell homes in the Platinum Triangle.

Moving from a home they love

Affordable Medical Center apartments are being torn down for a new hospital

By ALEXIS GRANT
Copyright 2006 Houston Chronicle

Chemotherapy always has been a short commute from Elizabeth Cabrera's home near the Medical Center. It was just a five-minute drive when she was fighting breast cancer more than a decade ago, and she still makes the same trip once a week, now for lung cancer treatments.

Her commute is about to get longer.

Cabrera, 59, is one of hundreds of residents of the Parkwood Apartments, a cluster of old brick buildings next to the Michael E. DeBakey Veterans Affairs Medical Center, who must move out by next month before the buildings are demolished to make room for Baylor College of Medicine's new hospital.

"It's sad for us, it's very sad," said Cabrera, who moved into the apartment 14 years ago with her husband, a Baylor physician. "For reasons of my health, I always was here."

Like Cabrera and her husband, most of the people who live in the small neighborhood work or study at Baylor or one of the other nearby medical facilities. They were shocked, Cabrera said, to learn several weeks ago they had two months to find another place to live.

Hospital to be built
By the end of this year, their homes will be torn down, and soon afterward construction will begin on a hospital, Baylor officials announced last week. The college has owned the 35-acre property since 1988, though a separate company manages the apartments.

Moving vans dotted the quiet, tree-lined streets on Saturday, and some residents hauled furniture out of the four-unit buildings. They were old, built in 1948, but well-maintained, some residents said, and housed mainly immigrants.

"We weren't planning to move because we like the area and it's close to where I work," Cabrera's sister, Marina Motta, said as she packed hangers into a box in the apartment just across the hall from her sister's. A doctor's assistant, Motta moved there with her husband seven years ago so she could be closer to her ill sister. "When they tell you at the last minute, it's crazy."

Since Parkwood residents have no leases, management was required to give only 15 days notice, though they gave 60. They stopped renting out units in August and management is providing relocation services to help residents find new homes, said Baylor spokeswoman Lori Williams.

"We are trying to make the transition for the residents as easy as possible," she said.

The demolition was planned before Baylor decided to build the hospital, she said, because apartment repairs were becoming too costly and property taxes too high.

Residents who have begun looking for new homes said they knew all too well about the high costs of living in the area. Some said they would move farther away than they had hoped because they couldn't find housing in the Medical Center that was comparable to what they had paid at Parkwood: $600-$700 for one- or two-bedroom apartments.

"We're priced out of decent housing in this area," said Michael Hickey, Motta's husband. The couple decided to rent a place about 10 miles away.

"Whatever I found first, that's what I took," said Motta, a Guatemalan immigrant. "I wasn't looking to live all the way over there."

Management could not be reached for comment.

The notification letter sent to residents read, "Rapidly escalating maintenance costs and property taxes make the continued operation of the property impractical."

No warning
Bill Zhou, a 32-year-old University of Houston chemistry student who on Sunday was helping neighbors move their stuff into a truck, said he had to look for new housing right after he had settled at Parkwood.

"I just moved in two months (ago) and now I have to move out," he said, adding that he had not been warned about the impending demolition when he moved in.

As for Cabrera, who had boxes piled in one corner of her apartment, she and her husband planned to move in with their daughter until they found a suitable house. It needs to be one floor like their apartment, not a two-story, she said, because the cancer causes her to tire easily.

Houston housing market starts off with a bang

Allison Wollam
Houston Business Journal

The Houston real estate market experienced continued strength as 2006 began with the highest sales on record for the month of January.

Many other parts of the country have seen weakness at the beginning of the year, but the Houston housing market is as strong as ever, with monthly records for sales, volume and prices, according to statistics released by the Houston Association of Realtors Multiple Listing Service.

Total property sales for the month totaled 4,584, which was a 16.4 percent increase over January 2005.

Properties sold during the month reached a total of nearly $775 million, an 18.6 percent increase compared to last year's more than $650 million in January sales.

The median home price for a single-family home reached $138,110, and the average price rose to $179,160, both increases from last year of 4.4 percent.

Additionally, total sales for single-family homes in Houston increased by 13.2 percent to 3,641 in January, up from last year's 3,217.

"The greater Houston housing market should never be underestimated, as real estate has been one of the reliable backbones for the local economy for quite some time," says Lorraine Abercrombie, chair of HAR. "Signs are already surfacing that indicate 2006 will be another banner year for the real estate market in the region."

Month-end pending sales of properties reached 4,349, which was up 19.3 percent from last year, and already signals a stronger February 2006, compared to 4,078 properties sold in February 2005.

Houston's current median price of $138,110 is 34 percent less than the national median price, which reached $209,300 in December, according to statistics from the National Association of Realtors.

Houston shrugs off Enron drama

City image-makers in full-spin mode

By PATTI BOND
The Atlanta Journal-Constitution
Published on: 02/07/06

Houston — The biggest fraud trial in business history, tied to one of the biggest bankruptcies ever, is playing out right in the middle of the downtown business district here, but it's all a mere footnote, as civic leaders see it.

Four years after the fact, the Enron scandal is being shrugged off as rather passé in this Texas town still fueled by old-economy energy businesses that preceded and survived the start-up energy trader.

"It just wasn't the devastating blow, economically, that it was made out to be," said Charles Savino, executive vice president of the Greater Houston Partnership, an economic development group.

Savino and other area business leaders contend that Houston got a bad rap in the aftermath of the late-2001 collapse of Enron, once the seventh-largest U.S. company. In the resulting media frenzy, Enron's impact on Houston was overblown in the headlines, they say.

"Houston went through a flat period from 2001 to 2003, but it was mostly the result of [the 2001 terrorist attacks], not Enron," Savino said.

But the specter of Enron is back — emanating from the federal courthouse down the street. The government's massive trial of Enron founder Kenneth Lay and former Chief Executive Jeffrey Skilling began last week, and that has put Houston's image-makers into overdrive. Dozens of reporters from news outlets across the globe have swarmed downtown, and this time around, Houston is on the offense.

"We want to make sure that all the professionals coming in to cover the trial have good, accurate information about the city," said Jeff Moseley, president of the Greater Houston Partnership. "They're naturally going to have questions about the community Enron grew up in, and we want to give them the answers."

Indeed, answers are everywhere. For the first day of jury selection, workers for the partnership had stocked the media overflow room at the federal courthouse with stacks of Houston-friendly info, including maps, economic data and a recently prepared document titled, "Enron in Perspective," offering a tit-for-tat rundown on "Enron Then" and "Houston Today."

Plan hatched 5 months ago

Civic leaders launched their game plan for the trial five months ago, at one point floating the idea of coaching hotel workers on what to say if nosy journalists started sniffing around. That proposal fell by the wayside, though. Instead, they persuaded downtown hotels to set up media-friendly areas, such as press rooms, and hand out city economic info packets.

Metro Houston, with a population of more than 5 million, is clearly big enough to handle losing Enron, which employed more than 6,000 people locally.

Savino says that Enron's once-well-paid employees have largely stayed close to home to start their own businesses or find other work.

"We're not like the city that lost a manufacturing plant. Enron had a huge talent base, and that created a venture capital community here," he said. "We've seen that happen historically in other downturns. People tend to stay close to Houston."

Boom-and-bust in general is second nature to Houston, a town built around oilmen.

Recent history: In 1982, plunging crude prices sent the city into a five-year downward spiral following the giddy "Urban Cowboy" oil boom days of the 1970s and early 1980s.

By the 1990s, Houston was back in business, thanks in part to a new focus on endeavors outside oil: the Johnson Space Center and the Texas Medical Center.

Still, energy is the bread and butter of the economy in Houston, which is home to about a third of the country's energy exploration jobs, according to the partnership.

Although the loss of Enron dealt a blow to the city's blossoming energy trading sector, there has been a bounceback, thanks to high demand and skyrocketing prices. And that's pushing expansions of local offices.

The city's overall economy has grown for 35 months straight, according to a monthly report by the National Association of Purchasing Management-Houston.

Like Atlanta, Houston also is seeing a surge of redevelopment intown.

Just blocks from Enron's old headquarters building, for example, the city's Midtown neighborhood is a construction zone of newly opened or soon-to-open lofts, restaurants and shops.

Still, Enron's gleaming glass towers (one of which now is occupied by Chevron Corp.) are iconic reminders of what some remember as darker days.

"I stood at the window, watching the Enron people walk out with their cardboard boxes," said Savino, whose office is directly across from the former headquarters.

As today's headlines go, so far, so good for the country's fourth-largest city.

April Young, media relations coordinator for the Greater Houston Partnership, fielded an average of 10 Enron-related calls a day leading into the trial. Looking at the resulting flurry of stories for the kickoff of the trial, Young said she's pleased.

"I think Houston has done well in coverage so far," she said. "The media, both local and national, is really focusing on the trial and not the city, which is nice."

HOUSTON AT A GLANCE

•Metro area population: 5.18 million.

•Economy: Nearly 50 percent of Houston's economic base is energy-related. It is home to nine of the country's 25 largest publicly traded oil and gas exploration and production companies.

In all, more than 3,600 energy companies, including 600 exploration/production firms and more than 170 pipeline transportation firms, operate there. Houston also calls itself as the world's largest medical center, with 43 health-care operations such as the University of Texas M.D. Anderson Cancer Center, the Baylor College of Medicine and Texas Children's Hospital.

•Biggest employers: Memorial Hermann Healthcare System (16,300 employees), Continental Airlines (16,000), University of Texas M.D. Anderson Cancer Center (16,000), Halliburton (14,000).

•Job growth: The Texas Workforce Commission forecasts that employment in the greater Houston/Gulf Coast area will grow by nearly 482,000 jobs, or 19 percent, by 2012.

Source: Greater Houston Partnership, Greater Houston Convention and Visitors Bureau

COLD HEARTS OF TEXAS?

Jan. 12, 2006, 1:47AM

Houston ranked 'mean' to homeless
Two groups cite laws they say criminalize people living on streets
By MIKE SNYDER
Copyright 2006 Houston Chronicle

Houston ranked seventh on a list released Wednesday of 20 U.S. cities with particularly harsh measures that criminalize sleeping in public, begging or other behavior associated with homeless people.

In including Houston on the "meanest cities" list for the first time in the four years it has been compiled, leaders of two national homeless-advocacy organizations cited other neighborhoods' efforts to be added to the areas covered under a city ordinance that makes it illegal to lie, sit or place belongings on downtown or Midtown sidewalks from 7 a.m. to 11 p.m.

The report's authors also cited rules the city adopted in April that prohibit people with "offensive bodily hygiene" from using public libraries. Advocates for the homeless say the rules, which also forbid sleeping on tables or using restrooms for bathing, obviously target homeless people.

The National Coalition for the Homeless and the National Law Center on Homelessness and Poverty said such measures are growing more common across the country even as urban homelessness worsens.

"A war on the homeless is being waged in downtown America," said Michael Stoops, acting executive director of the national coalition.

"The criminalization of homelessness is a burning civil rights issue for this decade."

Several homeless people in areas affected by Houston's ordinance said enforcement has been particularly intense recently under the eastern portion of the Pierce Elevated.

The western portions were fenced off last year to provide parking for Metropolitan Transit Authority employees.

"They woke us up one afternoon because the sleeping bag was 1 inch over the sidewalk," said Kris Kirchner, 48, who said she's been living on the streets intermittently for years.

Such efforts, Kirchner said, seem intended to keep homeless people out of downtown, "but I want to know how you make 6,000 people disappear."

Leaders of local groups that serve the homeless said homeless people often move to adjacent neighborhoods in response to police enforcement efforts. Mayor Bill White said he is inclined to agree.

"These ordinances are limited and not effective in dealing with the issue because they focus on moving people around rather than solving the problem," said White, adding that he had supported the 2004 extension of Houston's ordinance to Midtown because of the "overwhelming support" from residents there.

The ordinance applied only to downtown when it was adopted in 2002.

Two years later, leaders of rapidly developing Midtown successfully petitioned for inclusion. The city secretary's office is reviewing similar petitions submitted by three other neighborhoods, including two in the Montrose area, said Dale Harger, the president of the Avondale Association in Montrose.

Harger said an overwhelming majority of the neighborhood's residents and property owners support the extension of the ordinance to Avondale.

Harger and other neighborhood activists say well-intentioned programs offered by churches and charities offer food or showers without helping the homeless find temporary shelter or permanent housing.

"There are some organizations in the neighborhood that artificially attract and concentrate the young homeless crowd, which draws the wolves and the predators," Harger said. "They are hurting the people they're trying to help."

The homeless-advocacy groups said the concerns that often motivate such laws are valid, but they said approaches other than criminalization are more effective and humane.

In Broward County, Fla., a nonprofit agency has partnered with police to create outreach teams that, in five years, have placed more than 11,000 people in shelters while arrests of homeless people have declined.

Don't Buy the Bubble Talk

By Lisa Scherzer
December 29, 2005

JUST BECAUSE THE HOUSING market has been on fire for several years, doesn't mean homeowners are about to get burned. In fact, housing costs are now only a bit above historic norms, and are not extreme even in boomtowns like Miami and San Diego, according to Todd Sinai.

Tell that to someone on the market for a new home and they'll think you've been renting an apartment on Mars for the past five years. But Sinai makes his academic home at the University of Pennsylvania's Wharton School, where he is an associate professor of real estate.

Sinai says home buyers should look at the annual cost of owning a house, not its price, when considering a purchase. And based on a recent study1 he did with Chris Mayer of Columbia Business School and Charles Himmelberg of the Federal Reserve Bank of New York, Sinai says homeownership costs are near the long-term average, relative to rents and incomes.

How does he figure? Traditional measures of housing values, such as the rate of appreciation, or the house-price-to-rent ratio, are misleading, Sinai says.

The study by Sinai and his colleagues examined 46 housing markets from 1980 to 2004, estimating the true one-year cost of owning a house and comparing it to rental costs and income levels. Naturally, the low interest rates of recent years have offset high prices by keeping mortgage payments down. Variable and interest-rate-only mortgages have also lowered the annual dues of homeownership.

That's why the most expensive U.S. markets are especially sensitive to changes in interest rates. In any city, the faster prices appreciate, the more they'll drop if mortgage rates rise. "The so-called bubble markets really are more sensitive to changes in interest rates, because they are markets where people are buying the right to live there in future years," says Sinai.

Although Sinai believes today's house prices are justifiable, he does see a slowdown ahead, especially if interest rates continue to increase.

SmartMoney.com spoke with Sinai about the state of the housing market and similarities between San Francisco real estate and growth stocks.

SmartMoney.com: Why did you look at the annual cost to live in a house in your study, rather than the price of the house itself?

Todd Sinai: We look at the difference between the cost to own vs. the cost to buy. The typical way people look at pricing of the housing market has been the cost to buy a house. What is the price to buy a house? I was having lunch with a colleague this morning, and she said, "Do you ever in your life think about buying a house for $1 million? To which my response was, "Do you ever in your life think you'd buy a stock for $50 a share?" It's an asset; assets have prices. But it has nothing to do with the return of the asset; I mean it's not an indicator of it, anyway.

The cost to buy is the sticker price. The cost to buy a car, say, an entry-level Mercedes may be $38,000. But the cost to own it may be monthly lease payments. The cost to own can be low relative to the cost to buy. As an example, we see higher-end cars on the roads now. It could be because people have more money. It could be lower financing costs. In the housing market we think the right thing to think about is what is the cost to own the house for a year. That's much different than what's the cost to buy the thing. Over the course of the year, maybe the initial price was $1 million and you sold it for $1 million. You let someone else own it... Looking at the price is somewhat misleading. Looking at cost, you compare it to how much it would cost to rent a house for a year. That's apples to apples. [If] housing is expensive relative to renting, then you really want to annualize the cost. It's important to look at the annual cost to own a house.

SM: What factors do you include to figure out the cost per year?

TS: [You figure out] the annual cost of financing. Take out a mortgage, pay real interest costs in the mortgage. Also you put equity into that house; you're giving that up to tie it into the house. So that should be counted. Then there's the usual tax benefit offset to that.... You may or may not get a tax deduction. Also property taxes and maintenance. There's a risk adjustment you want to put into that. And what capital gains you could expect. By analogy to that, what's my return on a stock? Dividend plus capital gain. In housing, the dividend is you get to live there, and there's appreciation in the course of a year. What is a reasonable long-run price appreciation I would get in that market? You basically say, how much would it cost to buy $1 worth of house? In Philadelphia, it's something like six cents for one year. If you're buying a $600,000 house, it costs $6,000 for a year.

SM: In what kind of case would a potential home buyer be willing to pay more for a house than they would initially?

TS: You can immediately see what affects that. If interest rates are lower, the cost is lower. If you're in a market where the house appreciation is higher, the capital gains are higher, and you're more likely to sell your $1 million house for $1.1 million later...

Once you realize that's what's going on with cost per dollar...what do people do? If there's a lower cost of ownership, are they willing to bid more for a house? People are willing to pay a higher price for a house, on a lower cost-per-dollar basis... That happens a lot in markets where it's not easy to build new housing. But in markets like Houston and Dallas, where it's easy to build, you can acquire land, and the cost per dollar goes down. People aren't going to bid higher. They can just get another house at a lower cost. [The lower cost per dollar] goes on in markets with lower supply.

The reason it's important is because there's a huge run-up in price but not in the cost of owning a house, because the cost per dollar is going down. Multiply the cost of the house by cost per dollar gets you the annual cost. Annual costs are not growing as rapidly as house prices. The reason is because interest rates are plummeting.

SM: Explain how some cities are more, as you say, "sensitive" to interest rate changes than others.

TS: Say real interest rates fell by three cents a dollar. So you go from 10 cents per dollar to seven cents. Then they fall again from seven cents to four cents a dollar. Going from seven to four cents, I'm willing to pay almost twice as much for the house and still have the same annual costs. You're operating on a much lower base. It's a bigger percentage change in house price.

One thing we've seen over the last 20 years is a linear decline in real interest rates (interest rates after inflation). But because each change is operating off an ever-lower base, it's an accelerating percentage decline in real interest rates. That means we should get an accelerated operating increase in house prices. There are two sides to that coin: What real interest rates giveth, real interest rates can taketh away. A small increase in real interest rates can change house prices a lot because you're operating off a smaller base.

Another thing that's been going on, another way you get a low annual cost of housing is if you expect the market to have high capital gains, high future price growth. You'd expect the price of rent to go up. If you have a higher expected capital gain, that total annual cost will be lower. What markets are like that? In San Francisco, over the last 60 years, real annual house price growth was 3.5% per year. The national average is about 1.5%. There are a handful of other places like that: San Diego, New York City, Boston... If you compound that over 60 years, it's huge... In markets like San Francisco, people should be willing to pay a higher initial price [for a house] because they expect to get more of the value back on paper.

As an analogy, San Francisco is like a growth stock because more of the value comes in the future. Whereas Philadelphia is like a value stock: The value is not going to go much higher.

SM: So, because of the real interest rates, house prices in markets like San Francisco are justified?

TS: In those markets like San Francisco, any given interest rate change is going to matter more there; it's going to have a bigger bite. San Francisco is starting at, I think, a cost per dollar of 2.5 cents; Philadelphia is at five cents. Suppose real interest rates go down by 50 basis points. In San Francisco it's now two cents. The same change in Philadelphia would bring you from five cents per dollar to 4.5 cents per dollar. That affects the annual cost of owning a house more in San Francisco than it does in Philadelphia.

The so-called bubble markets really are more sensitive to changes in interest rates, because they are markets where people are buying the right to live there in future years...

In San Francisco, because the value of housing is expected to go up more every year than in a place like Philadelphia, more of the value of owning the house comes from the fact that you get to live there in future. In Philadelphia you don't have to pay rent this year, and you don't have to pay rent in the future, but those rents aren't expected to go up much. The discount rate is going to go up more in the future... San Francisco is more susceptible to changes in interest rates. As with a stock, if interest rates go down, stocks' price-to-earnings ratio should go up.

The punch line is that at the end of 2004, when we did our study, we found that while prices have gone off the charts (relative to rent and incomes), the annual cost of owning relative to rents and owning did not. They were just at about their 20-year historical average. The reasons: There's been rental growth and income growth in a lot of these markets... The big thing that's going on is declines in real interest rates are offsetting increases in house prices. That offset was biggest in markets where price rises were the highest. Since then real interest rates have not gone down further.

SM: So you think all the talk of bubbles is unwarranted?

TS: It's not a bubble. People are having unreasonable expectations for future capital gains. I expect things to slow down. I would've expected price growth to slow down last year; since they didn't, they really should slow down now.

At the end of 2004 house prices are at levels they should be at. I think they should level out unless rents and incomes keep rising or real interest rates go down... In the nine months since then, house prices have grown in excess of rents and income and real interest rates haven't changed. So I don't think house prices [would be much higher]. It would make me uncomfortable if they kept rising. Then the cost of renting to owning would be higher.

Since the end of 2004, prices have been going up, rents have gone up a bit and real interest rates haven't really done anything. The cost per dollar really hasn't changed, and prices have gone up. So the annual price has gone up since the end of 2004; it's gone up faster than rent and incomes. They're above historical averages...

SM: What's your forecast for the housing market for next year?

TS: The only forecast I'd care to make is that if real interest rates go up significantly, then we should have relatively less price growth in markets most sensitive to interest rates. And we should have declines in prices in those markets... What we're seeing now, is that the market — by the measures I use — finally got to the point where annual costs are above its long-term average. That means the market was overpriced. It's tricky; economists think about bubbles differently from how lay people think about bubbles. [Rapidly increasing prices] is not the definition of a bubble... You could have a big price change without it having been a bubble. It's a bit of a fine distinction.

Links in this article:
1http://rider.wharton.upenn.edu/~sinai/papers/Housing-Bubble-Himmelberg-Mayer-Sinai-wp-09-07-2005.pdf

URL for this article:
http://www.smartmoney.com/theproshop/index.cfm?story=20051229

Houston's housing voucher program is still drawing evacuees

Some families come after looking into opportunities in other cities
By CYNTHIA LEONOR GARZA
Copyright 2005 Houston Chronicle

It was only three days ago that Maria Laborda found out from an aunt about Houston's generous housing voucher program for evacuees.

After months of drifting among family members in various cities — including, most recently, a trip back to their storm-damaged home in Kenner, La. — the prospect of a year of paid housing and utilities in a major city with plenty of job opportunities was just what Laborda and her family needed to get back on their feet. After securing a place to live, she said, "we plan to get our jobs and go on with our lives."

Sitting with her two children at the Greater Houston Area Disaster Recovery Center's housing section on Tuesday as she waited for her husband to fill out housing forms, Laborda admitted that Houston "wasn't my first choice."

"Austin was my first choice," she said, "but Houston is offering these vouchers."

In recent weeks, those vouchers have drawn to Houston hundreds of out-of-town evacuee families who have already checked out the services and job opportunities in other host cities. Being close to the Gulf Coast and thousands of other families who have a shared evacuee experience also makes Houston alluring.

Other evacuees, unaware that Mayor Bill White had just announced he was halting the voucher program after today, considered themselves lucky to have arrived when they did. Disaster Recovery Center spokesman Tom Kennedy said he is expecting a big crowd today.

Also at the center on Tuesday, Sherald Daniels, 45, said she didn't even know about Houston's voucher program until she and her husband came to Houston from Seguin, just east of San Antonio, two days ago.

"We came here to look for work and look for an apartment," said Daniels, who also signed up for the housing program after finding out about it.

Finding work similar to what her husband did in New Orleans as a maintenance supervisor — a liaison between the Orleans Parish school board and contractors — has been impossible.

"The town we live in is really nice, but we just really need to start working," said Daniels, a nurse.

Looking around the Disaster Recovery Center at the number of people still signing up for services in Houston surprised Daniels, who added, "I thought this part was over, really."

HOMESICK IN HOUSTON

For many evacuees, the Bayou City holds the promise of a better life. But it's the Bayou State that holds their hearts.

Monday, December 05, 2005
By Michelle Krupa
West Bank bureau

HOUSTON -- In a hotel suite about 350 miles from home, Karen Williams flipped through snapshots of her October visit to New Orleans.

She looked at her second-floor apartment in the St. Bernard public housing complex, complete with an orange "X" spray-painted by rescue workers and a grimy line near the balcony marking the floodwaters' height. Another photo showed her husband maneuvering around their sedan, which was caked with white silt from the brackish water that covered it for weeks.

Williams said she wept when she returned to New Orleans to see whether Hurricane Katrina had spared any of her family's belongings. She found hardly a thing, except a vacant place laced with stinking garbage. "It's an echo," she recalled in late November. "It's like a ghost town."

In Houston, Williams has found charity, from generous local residents and through federal hurricane assistance programs that offered meals, clothes, linens, rides to church and 12-month apartment vouchers to people like her who left home by boat with hardly anything in hand.

But even with plans to move after Thanksgiving into an apartment subsidized by FEMA, Williams wanted nothing more than to return to her hometown, nestled precariously on low ground between a vast lake and a mighty river.

"Right now, I feel like I'm an alien in another country," she said, sitting on a couch in Room 515 at the Hampton Inn & Suites near the Astrodome. "I want to go back home."

Missing the familiar

Yearning for New Orleans is not uncommon in Texas' largest city, where an estimated quarter-million evacuees found shelter in the days after Hurricanes Katrina and Rita tore across the Gulf Coast. In any corner of the sprawling metropolis, it is not hard to find southeast Louisiana residents who want to go back.

Back to where bus drivers know every nook of each neighborhood. Back to where cashiers call shoppers "dawlin' " and "baby." Back to block parties, costume balls and drinking beer out on the sidewalk. Back to streetcars. Back to crawfish. Back to shelves stocked with Bunny Bread and Blue Plate mayonnaise.

Going home, however, is a wish more easily made than granted. Back home, there are uninhabitable houses and long waits for a trailer. A fractured levee system that poses a frightening threat. Uncertain employment. Shuttered schools. Environmental hazards.

Indeed, some residents acknowledge that life is better in Houston, with secure jobs, high-quality schools and a fraction of the violent crime that recently seemed to seep into New Orleans' safest neighborhoods.

But to varying degrees, Louisiana evacuees said they are willing to turn their backs on freshly forged Texan security to return home to an unpredictable future because Houston, simply put, is just not New Orleans.

"I just don't feel like there's any soul," said Erika Hahne, a Mid-City mother of three who fled Katrina with her husband to a rented house on Houston's northern edge. "There's no soul. There's no flavor."

Creative itch

Hanging in Hahne's new family room are pieces of laminated artwork of purple and pink and blue hues spattered with silver splotches. They were made by her daughter and son, ages 9 and 7, at Lusher Elementary, a coveted public magnet school in the Carrollton neighborhood.

Besides comprising the few vestiges of New Orleans life that survived the 6 feet of flooding in their Mid-City home, the pictures represent a free-thinking, creative culture that the children's Houston school, Deerwood Elementary, has failed to replicate, Hahne said.

"There's no art here," she said, noting that Texas school days consist of basic academic subjects such as math, English and science. At Lusher, each day began with a song.

Further, most students at Deerwood, unlike at Lusher, are white, like the Hahne children. "I like diversity; I seek it out for my children," Hahne said. "I'm not a suburban dweller. I don't own an SUV. I didn't vote for George Bush. . . . Here, it's just a bunch of strip malls and chain restaurants."

Other Louisiana evacuees complain that Houston is too big: a metropolitan area of eight counties stretching 640 square miles, with seven major highways and more than 4 million people. Some said it is hard to navigate the sprawl, with taxi fares running into triple digits for a ride across town and city workers unwilling or unable to help newcomers navigate the complicated transit system.

Daisy Davis, an evacuee from the 7th Ward, said one bus driver told her he could not advise her on getting to her destination. "How you don't know? It's your town," she said. "It's not like that in New Orleans. New Orleans people know where everything's at."

Others bemoaned Houston as lacking that indefinable New Orleans character that makes Halloween a holiday for costumed adults and the New Orleans Jazz and Heritage Festival a perfectly acceptable excuse to miss a workday in early May.

"It's like, in New Orleans, if you would see a man dressed as a woman, you wouldn't think nothing. Here, you would stare," said Brian Colletti, who evacuated from Chalmette to Houston when his wife's employer transferred her job as a nuclear medicine and X-ray technician.

'It's safer' in Houston

Michael Miller, stepfather of Daisy Davis' two teenagers, admitted that his family's opportunities might be better in Houston: more job choices, less violent crime and a smaller risk of catastrophic hurricanes.

"It's not as bad as some parts of New Orleans," Miller said. "They don't kill like they did in New Orleans. It's safer than the St. Bernard" public housing complex, where the family lived. "And we're doing better than we were in New Orleans, living month to month."

A poll completed in October found that more than 70 percent of those displaced by Katrina intended to seek employment in Houston, with 40 percent planning to stay permanently. The latter figure fell to 24 percent among Rita evacuees, according to the survey by the United Way of the Texas Gulf Coast and the Houston Downtown Management District.

More than 150,000 displaced residents still were thought to be living in Houston last month, the bulk of them from Louisiana, said Frank Michel, a spokesman for Mayor Bill White.

But among many New Orleanians still in exile, the sentiment is strong for leaving the Lone Star State and heading back to the Crescent City, even as its future remains cloaked in uncertainty and some of its neighborhoods still lack drinkable water and electricity more than three months after the Aug. 29 storm.

"I still want to go back to New Orleans," Miller said. "It's my home. It's my heritage."

Fearful of returning

Fulfilling that desire, however, is hampered for many by the myriad roadblocks Katrina erected when it blew in from the Gulf, driving at least 31,000 households to the Houston area, according to the U.S. Postal Service.

In a photo snapped in April, Colletti's back yard on Karen Drive near Val Reiss Park in Chalmette looked like a nature preserve, with a red fence shadowing a pond lined with a brooklike fountain and big, green ferns. In the post-Katrina pictures, cars lean up against nearby houses filthy with swamp grass and spilled oil.

In their corporate apartment in far west Houston, about 20 miles from downtown, Colletti and his wife, Stephanie, giggled with their 15-month-old daughter, Camryn.

The family's hopscotch evacuation from Chalmette eventually landed them in Texas, where the Veterans Administration relocated Stephanie Colletti to a local hospital. Brian Colletti, who had been learning to repair air conditioners and refrigerators with Local 60 of Metairie, stayed home to watch Camryn.

Despite a heartbreaking desire to return home -- "When I went on my honeymoon, I was homesick by the fifth day," Stephanie Colletti said -- the couple has agreed not to rebuild on their property for the sake of their daughter's health.

"I'm not even sure I'd go back to live there, with all the environmental concerns and the levees," Stephanie Colletti said. "What's going to happen in 20 years? I think there are a lot of people like us who want to go back so bad but are scared of the long-term effects."

'Death sentence'

Erika Hahne, too, was feeling stuck in Houston, even as she longed to be back at her house near Tad Gormley Stadium, in the same neighborhood as her parents.

The Hahnes ended up in Texas because her husband Matt's company, Intermarine, which manages ocean cargo transport, resettled there in Katrina's immediate wake. By Sept. 4, they had signed a $2,200-per-month lease for a furnished house with a backyard pool that they chose because of its location in the touted Houston Independent School District.

"It was like a bidding war to get this place against all the other New Orleans families," Hahne said as she played with her 20-month-old son, Jack.

If Intermarine makes its move permanent, Texas suburbia could become the family's new life, a move Erika Hahne has dubbed "the death sentence." But it would ensure financial security for the Hahnes, who have exhausted the $2,358 in FEMA rental assistance doled out to most Katrina evacuees, much of it during their flight from Houston before Hurricane Rita.

The family could not maintain its quality of life and rebuild a swamped house if Matt Hahne quit his job in Houston to return to New Orleans. Erika Hahne could go back to work as a part-time preschool teacher at Louise S. McGehee School in the Lower Garden District, but her husband might not find work in his field.

"What company's going to go back if the government is not going to guarantee that the levees are going to be safe?" she asked. "I'm in financial denial."

City of opportunity

Daisy Davis and Michael Miller were trying to temper their desire to return immediately to the 7th Ward, also because of family finances.

The couple, along with Davis' children, left the St. Bernard public housing complex by boat Sept. 1, then rode a bus to the Cajundome in Lafayette, where they were picked up by Miller's brother. They stayed a week with relatives in White Castle, but they could not manage to tap federal resources they heard were available to hurricane victims.

"We seen that on the news that FEMA was giving money away in Texas. So we thought: Houston. It come out for the better for us," Miller said.

Within hours of being dropped off by Miller's brother, the Davis family had a room at the Holiday Inn Express on Bell Street downtown and a pack of donated clothes and linens from the Reliant Center. They got a housing voucher, bought a used SUV and in a little more than a month had found a two-bedroom place off Tidwell Road on Houston's northwest edge, which FEMA will subsidize fully for one year.

Miller found work driving a forklift on a 3 a.m. shift, and Davis was hired as a bus driver for her son's charter school, relocated from New Orleans to Houston through next spring. But three months after Katrina, the pull of New Orleans, both on his heartstrings and his wallet, has altered Miller's plan.

With Davis and her children set up in Houston, Miller intends to begin splitting his time between the two cities, spending weekdays with his brother in a FEMA trailer in the 9th Ward and weekends with his family in Houston. Miller thinks he can double his Texas salary doing construction work, possibly to as much as $22 per hour.

"I'm going to go down there and work," he said. "We're going to help rebuild this city."

'Everyone's exhausted'

Despite a desperate craving for home, most evacuees called Houston a lovely town whose residents deserved perpetual thanks for opening their hearts, doors, closets and pantries to hurricane refugees. "Their hospitality is beautiful," Daisy Davis said.

Michel, the mayor's spokesman, said his city was glad to host so many evacuees, especially in light of Houston's own risk of getting hit by monster storms. "There, but for the grace of God and the direction of the wind, go us," he said.

But Houston residents and New Orleanians alike said they were beginning to sense fatigue from the city called upon with hardly a warning as a refuge for tens of thousands of freshly homeless people who arrived in shell shock, not knowing even the day of the week.

At the La Quinta Inn Houston East about 10 miles from downtown, 47 of the hotel's 112 rooms were filled with residents who ran from the storm at the evacuation's peak, manager Cathy Thorsen said. In late November, about five weeks before the last day FEMA promised to pay evacuees' hotel bills, 20 rooms still housed hurricane victims.

"It's unusual for a hotel to run full for months at a time, so when it does, everyone's exhausted," Thorsen said, adding that her staff, though tired, was glad to help and had gotten to know many of the long-term guests. "A hotel is a nice place to stay, but I certainly wouldn't want to live in one, especially not with a family."

Scouring for place to live

Maurice Rendon said some Houston residents seemed reticent to hire or rent to New Orleanians because of fear that evacuees would transplant the city's abhorrent crime rates to Houston. He felt embarrassed by the few Louisiana evacuees who had been caught causing trouble in Houston. "I don't like telling people where I'm from," he said.

Rendon and his girlfriend, Sherry Stevens, also were staying at a hotel near the Astrodome, their fourth FEMA-paid hotel since the hurricane. Unlike other evacuees, they had caught nary a break in the Bayou City.

The couple rode out Katrina in the north shore town of Hickory. But when they realized New Orleans would be without water and power for weeks, or longer, they cashed their initial $2,000 check from FEMA and bought bus tickets to Houston, where they hoped to find interim jobs.

Riding toward Texas, Rendon knew what he was leaving. Since 2000, he had headed into disaster zones to drive dump trucks hauling storm debris to disposal sites. He earned hundreds of dollars daily in the places smashed by Hurricanes Fran, Opal and Dennis.

But those were temporary junkets, where housing was not so tight for relief workers as in New Orleans after Katrina, which swamped Rendon's basement apartment on St. Charles Avenue as well as his Toyota Camry.

"Ever since Katrina hit, everything's been up in arms," he said. "I'd be more than happy to go back if there was some place to go back to. Ain't much you can do without a car."

Added Stevens: "People don't want to hire you when you say you live in a hotel."

And an apartment proved harder to find than the couple expected. The challenge was still faced in mid-November by an estimated 19,000 evacuees in Houston, for whom FEMA would pay hotel bills through Jan. 7.

"We got a voucher for a two-bedroom apartment," Rendon said, "but they don't know where they will be able to give it to us. There's a lot of red tape to cut through."

With so many roadblocks, Rendon and Stevens hoped to find jobs and make some money to get back to New Orleans soon, even though housing and transportation in the city was uncertain. "I don't want to be here that long," Rendon said. "I want to go home."

And that sentiment, for all its subtlety, seemed to be at the core of post-Katrina exile for Rendon and so many New Orleanians still displaced in Houston.

'Can't help' bad attitude

Spanning the "master-planned community" of Kingwood, extolled as The Livable Forest, are subdivisions of manicured lawns where trash is collected twice weekly from bins near the houses so that garbage bags do not spoil the scenery.

Unlike in her New Orleans' neighborhood, Hahne cannot walk to the local market or a family-run restaurant. She likened her new neighborhood to the horror film locality of Stepford, Conn.

"We used to think that it was strange if we didn't talk to our neighbors every day," she said. "Here, I haven't even met our neighbors."

Admitting that her feelings toward Houston were disdainful, Hahne said, "I know I'm poisoning my children with my bad attitude, but I can't help it."

Even an attempt to conquer the Top 10 things to do with children in Houston left Hahne wishing for a visit to the Audubon Zoo.

But staying in Houston, with its Texas oysters and its franchise sprawl, would be a nightmare for the Hahnes, who may well move back to Mid-City without job security and with their house still in mold-ridden shambles.

"I just feel like life's going on without us," Hahne said. "I know it's bad, but I want to be one of the ones to bring it back. I'm hung up on missing (New Orleans) so much and comparing everything to it. There really is nothing else like it."

Don't block their window on Dallas

As more high-rises go up, more condo owners fight to save views

12:00 AM CST on Friday, November 11, 2005

How's the view out your window?

About all I can see out the front of my house is a 30-foot holly bush that keeps the summer sun at bay. It also blocks the sight of the McMansion across the street – not a bad thing – and gives me a lot of privacy.

Of course, if I'm paying $300 or $400 a foot to buy in one of those fancy Uptown high-rises, I probably don't want to stare at a holly bush. The residential towers going up on Dallas' near north side brag about their views of the skyline.

But what happens when there are so many high-rises that the million-dollar view is looking at the building next door?

It's already a worry for folks who want to live the high life along Turtle Creek and McKinney Avenue.

Each time a new tower is announced, the neighbors get antsy about losing their view.

This fight has been going on for decades in Manhattan and Southern California. With the high-rise condo craze that's swept the nation, the battle has spread to places as disparate as Minneapolis and Las Vegas.

So are you surprised that plans for a McKinney Avenue high-rise have stirred up the view police in Uptown?

Houston developer Hanover Co. plans to erect a spiffy apartment tower on the vacant lot at McKinney and St. Paul Street. That's riled some of the owners of nearby buildings who worry that their vantage of downtown will be obscured. They are opposing the developer at City Hall in hopes of quashing the deal. Good luck.

A few years ago, we couldn't beg, borrow or pay people to come back to the downtown area. Now residents are fighting to preserve their view of the town.

I guess that's progress. And the Uptown building boom ensures that such dust-ups will become more common in the years ahead.

Court rulings have been pretty consistent in allowing landowners to build even if it blocks their neighbors' view. Don't believe it when your project's developer "promises" nothing will ever be built next door – ever is a long time, so you'd better get it in writing.

And unlike my holly bush, you can't lop the top off the tower across the street just because it's in the way.

Texas is tops

When it comes to business investment, you can't top Texas.

A new report by Ernst & Young found that Texas topped the nation in business facilities investment last year with a total of $13 billion.

That's more than double second-place Michigan. Ohio, California and New York also trail the Lone Star state.

The biggest project on Ernst & Young's report is the new Texas Instruments plant in Richardson. And Countrywide Financial Group's new Telecom Corridor regional office also made the list.

"It's my business not to be surprised by this kind of thing," said Bruce Rutherford, who heads real estate firm Jones Lang LaSalle's Texas regional office. "But most people who don't follow this would be surprised.

"Texas is attracting a lot of larger industrial installations," he said.

The new business facilities in North Texas created about 11,500 jobs.

Townhouse project

Marketing for a new Richardson townhouse project gets under way next week.

The Lake Park Estate, an 18-acre development at 1250 Jonsson Blvd., will have 253 townhouses built around jogging paths and water elements.

Developer and architect Mark Humphreys planned the project of two- and three-story homes that will cost $190,000 to $400,000.

The project is being touted as one of the biggest townhouse developments built in Richardson.

Shops at McCreary

A Plano developer is planning a shopping center in Wylie.

Kinsman Ventures LLC has purchased the northeast corner of FM 544 and McCreary Road and plans to build the Shops at McCreary retail center.

Construction is to begin in December on the 12,000-square-foot project. An adjoining tract will contain office and retail space.

Tower on way up at Victory

Residential high-rise is planned for '07, will have 252 apartments

01:42 PM CDT on Tuesday, October 25, 2005

By STEVE BROWN / The Dallas Morning News

Work is under way on the next tower at Victory, and developers hope to have the residential high-rise ready by the spring of 2007.

Called Cirque, the 28-story tower is being developed by Houston-based Hanover Co. Hanover also built the Ashford apartment tower across the street from the Crescent.

Hanover calls the new building a "sky sculpture," with a curving glass and masonry exterior. The building was designed by architects Gromatzky Dupree & Associates.

The building is located just east of American Airlines Center at 2500 N. Houston St.

Cirque will have 252 apartments averaging 1,200 square feet. Rents in the building will average about $2,500 a month.

"Select units will feature private terraces and multiple balconies," said Hanover spokesman Stuart Rosenberg. "Additional highlights will include three two-story penthouse units; clubhouse with business center, conference room, surround-sound theatre, Internet cafe coffee bar and demonstration kitchen."

On the seventh floor, the building will have an "aqua lounge," and a fitness center, tennis court and resort-style pool.

There will be 10,000 square feet of retail space on the ground floor.

Cirque is the fifth residential building under construction at Victory.

The first homes – condos in the W Dallas Victory Hotel & Residences – will open in May.

Houston housing companies take refugees

The Associated Press/HOUSTON
By LAUREN VILLAGRAN
AP Business Writer

SEP. 2 4:23 P.M. ET New Orleans is nearly empty. About 350 miles to the west, Houston is filling up fast.

Faced with tens of thousands of refugees of Hurricane Katrina, Houston property managers are opening their doors and setting aside their usual requests for deposits, background checks and yearlong leases.

Camden Property Trust Inc. owns 15 properties in the city with some 7,000 apartments. The Houston-based company had a slim 4 percent vacancy rate before the storm but expects to be 100 percent occupied by the end of the week.

"The city is basically inundated with hurricane refugees," said Chief Executive Ric Campo. "We've seen a huge increase in people trying to get in our properties."

Frank Michel, a city spokesman, estimates some 50,000 to 100,000 refugees of the storm have fled to Houston.

Camden is bending its usual rules to more quickly house the influx of people, Campo said.

Employees with displaced families are being offered power-ready, furnished apartments free for 60 days -- not just in Houston but among the company's 200 properties and 70,000 units nationwide. The company also donated 30 furnished and power-ready apartments to the American Red Cross for 60 days.

The company's rents normally run between $589 and $1,100 per month.

For refugees, Camden is offering month-to-month rent without the customary 25 percent markup, no fees and an $87 deposit rather than the usual $300 to $500 charge.

But with the charity comes "serious concerns," Campo said.

"We're doing very short-term leases, relaxing credit and criminal background checks," he said. "People could move in and be stuck there for a long time."

Campo estimates the free lodging and discounts may cost the company around $100,000 per month. Camden is committed to its program for two months, but the future of New Orleans -- and its refugees -- could remain uncertain for much longer.

"What happens if 60 days turns into 90 days, 120 or 180, to a year? All of a sudden you've got a situation. We want to be sensitive to the crisis situation," he said. "But it could encumber the business for a long period of time. The risk is that it becomes a lot longer and more expensive than anybody thought."

Dave Neeb, 52, is a personnel manager at Premier Industries, a Louisiana-based oil field fabrication company. A relative who works for Camden accepted the company's offer. Now Neeb -- with his mother, father, sister, her husband and three children -- is bunkered in a two-bedroom, rent-free apartment for two months.

None of them are sure what they'll do next, he said.

The cost of its charity amounts to a fraction of what it earns, but Camden is a public company that answers first to its shareholders. In the three months ended in August, Camden generated $139.5 million in revenue and turned a $21.9 million profit.

The company "can afford it," Campo said. "We're willing to take that risk today because it's the right thing to do."

Dallas-based Lincoln Property Co. and Union Dominion Realty Trust, headquartered in Richmond, Va., each own tens of thousands of units in Houston and other Texas markets. Both private companies also are cutting out fees, deposits and the penalties on short-term leases.

While the housing industry scrambles to absorb the influx of refugees, retailers are also ramping up distribution to Houston and other areas.

A spokesman for Kroger Co., the nation's largest chain of grocery stores, said the company is diverting truckloads of supplies -- water, baby products and bread -- to Houston stores and the Astrodome, as well as to other expanding markets in the region.

A Wal-Mart Stores Inc. spokeswoman said its stores are adding more basic necessities such as clothing, food and bedding. The company is also giving away many of those items from "mini Wal-Marts" set up in trailers near Houston-area shelters.

Some of the uprooted are just waiting for a green light to go home.

Rachel Breunlin, 27, runs a literacy program at a New Orleans public school. She and her fiancee -- and a growing group of their friends -- are staying at a friend's house in Houston. Although they're considering "longer-term temporary plans," they say they want to return.

"Everyone's waiting to see if there is going to be a window to go back," she said.

New Orleans mayor issues 'desperate SOS'

Violence disrupts evacuation, rescue efforts

NEW ORLEANS, Louisiana (CNN) -- The mayor of New Orleans issued a "desperate SOS" Thursday as violence disrupted efforts to rescue people still trapped in the flooded city and evacuate thousands of displaced residents living amid corpses and human waste.

Residents expressed growing frustration with the disorder evident on the streets, raising questions about the coordination and timeliness of relief efforts.

Video from the city's convention center showed a group chanting "we want help, we want help," as mothers tried to console their tired and hungry children. (See video on the desperate conditions -- 4:36 )

Government officials insisted they were putting forth their best efforts and pleaded for patience, saying further help was on the way.

The evacuation of patients from Charity Hospital was halted after the facility came under sniper fire, while groups of armed men wandered the streets, buildings smoldered and people picked through stores for what they could find.

Another physician at Charity Hospital said that -- despite the violence -- staff members and patients were eager to get out after three days with no water and electricity and little food. (See video on the sniper's attack -- 1:06)

"A single sniper or two snipers shouldn't have to shut down a hospital evacuation for two hours now," Dr. Ruth Berggren told CNN. "I look outside, I'm not seeing any military."

Mayor Ray Nagin issued his plea for the thousands of people stranded in and around the convention center with no food or water and fading hope.
Living 'like animals'

The city is "out of resources at the convention center and doesn't anticipate enough buses," the mayor said in his statement.

CNN's Chris Lawrence described "many, many" bodies, inside and outside the facility on New Orleans' Riverwalk.

"There are multiple people dying at the convention center," Lawrence said. "There was an old woman, dead in a wheelchair with a blanket draped over her, pushed up against a wall. Horrible, horrible conditions.

"We saw a man who went into a seizure, literally dying right in front of us."

Nagin said that "the convention center is unsanitary and unsafe and we are running out of supplies for [15,000 to 20,000] people."

He said the city would allow people to march up the Crescent City Connection to the Westbank Expressway in an effort to find help.

People were "being forced to live like animals," Lawrence said, surrounded by piles of trash and feces.

He said thousands of people were just lying on the ground outside the building -- many old, or sick, or caring for infants and small children.

More people were arriving at the center, walking south along Canal Street. The route north to the Superdome is blocked by chest-deep water.

The convention center was used as a secondary shelter when the Louisiana Superdome was overwhelmed.

Food drops began Thursday afternoon at the convention center, as rain also began falling.

A National Guard helicopter delivered MREs -- meals ready to eat -- and bottles of water. The amounts in the first few drops, however, were far short of enough for everyone.

State officials believe Katrina and its aftermath killed "thousands" of people in New Orleans and surrounding parishes, but no official count had been compiled, Gov. Kathleen Babineaux Blanco said Thursday.
Evacuation points swamped with people

A Louisiana National Guard official told CNN Thursday morning that between 50,000 and 60,000 people had converged at evacuation points near the Superdome hoping to get on one of the buses out of town.

"It's no longer just evacuees from the Superdome, as citizens who were holed up in high-rise office buildings and hotels saw buses moving into the dome, they realized this is an evacuation point," Lt. Col. Pete Schneider of the Louisiana National Guard said. (Watch report on violence delaying evacuation -- 1:51)

Desperation was evident as the buses rolled out.

State Sen. Robert Marionneaux recounted a story about a woman near the Superdome who handed her 2-month-old baby to someone who had managed to get on a bus to Houston, begging her to take care of the baby. CNN could not independently verify his account.

Homeland Security Secretary Michael Chertoff denied reports that rescue efforts in New Orleans had been halted for security reasons Thursday, saying those operations "are continuing in full force."

"We are going to continue to increase the tempo of that program until we've cleared people out of the Superdome and we've cleared people out of New Orleans," he said.

Chertoff said that the Coast Guard has rescued about 3,000 people from flooded areas in New Orleans and the surrounding parishes.

Buses are carrying people from New Orleans to the Astrodome in Houston, Texas, which has offered to house about 25,000 people. San Antonio, Texas, has agreed to take another 25,000 people, officials said Thursday. Schneider said that officials were looking for additional locations.

Nagin ordered his police force to leave search-and-rescue operations to the Coast Guard and concentrate on establishing order.

But officers told CNN they lacked manpower and steady communications to properly do their jobs -- and that they needed help to prevent the widespread looting and violence now prevalent in the city.

A police officer working in downtown New Orleans said police were siphoning gas from abandoned vehicles in an effort to keep their squad cars running.

The officer said police are "on their own" for food and water, scrounging up what they can from anybody who is generous enough to give them some -- and that they have no communication whatsoever. Police also told CNN they were removing ammunition from looted gunshops in an effort to get it off the streets.

Chertoff said that 4,200 National Guard military police would be deployed in New Orleans over the next three days, nearly quadrupling the overall law enforcement presence there.

Blanco said Thursday she has requested the mobilization of 40,000 National Guard troops to restore order and assist in relief efforts.

President Bush, in an interview on ABC's "Good Morning America," said that their should be "zero tolerance of people breaking the law during an emergency such as this."

He promised a rapid federal response to the disaster.
Mississippi death toll rising

The breadth of the brutality of Hurricane Katrina became clearer as more death toll figures began to filter in from Mississippi's coastal region.

Authorities said at least 185 people died in Monday's Category 4 storm.

In Hancock County alone, Sheriff Eddie Jennings put the death toll at 85, with 60 people dead in Pearlington, 22 in Waveland, two in Bay St. Louis and one body that had washed up on the beach.

In neighboring Harrison County, which is home to Gulfport and Biloxi, authorities reported 100 bodies had been found, an emergency official in the state capital, Jackson, told CNN.
Power out; gas prices rising

Katrina knocked out electricity for more than 2.3 million people in Mississippi, Louisiana, Alabama and Florida.

Meanwhile, the storm's effect on oil supplies and gas prices spread nationwide, prompting the White House to tap the U.S. Strategic Petroleum Reserve.

Two major suppliers of gasoline to the Eastern Seaboard of the United States resumed partial service Thursday.

Colonial Pipeline announced that it is now operating at about 38 percent capacity after electrical power outages due to Hurricane Katrina shut down key portions of the pipeline in Louisiana on Monday.

The news came as gasoline prices surged to more than $3 a gallon in some parts of the country due to outages and bottlenecks in the wake of Hurricane Katrina.

The flow of water into New Orleans from Lake Pontchartrain has abated, Army Corps of Engineers officials said. But engineers won't begin trying to pump out the water until the breaches are plugged. (Recovery efforts)

The Army Corps of Engineersis attempting to plug a 300-foot breach in the Industrial Canal, a 500-foot breach in the 17th Street Canal and two smaller breaches in the London Avenue Canal.

Engineers were working Thursday to correct the problem at the 17th Street Canal, the Corps' Walter Baumy said.

The plan is to close the front of the canal at the lake rather than at the breach, a job that should be completed by Thursday evening, Baumy said.

There are accessibility problems with one of the other problem areas, he said.

New Home Sales Set Record, Keep Housing Market Sizzling

Median Price For New Home Falls

POSTED: 10:29 am CDT July 27, 2005
UPDATED: 10:43 am CDT July 27, 2005

WASHINGTON -- There have been worries of a bubble, but sales of new homes soared to an all-time high in June as the housing market kept on sizzling.

The Commerce Department reported Wednesday that new single-family homes were sold at an annual rate of 1.4 million units last month.

That was a 4 percent rise from the previous record set in May.

The report came just days after sales of existing homes were reported to have set a record in June as the housing industry continues to be powered by low mortgage rates.

As for prices, the median price of a new home fell for a second month, dropping by 5.5 percent in June to $214,800.

Many economists believe we may be seeing the peak for home sales and prices as mortgage rates begin to rise.

They are forecasting that sales gains and prices will level off in the second half of the year.

Meanwhile, there was good news for American manufacturers as orders for big-ticket manufactured products rose at a surprisingly strong clip in June.

The Commerce Department reported Wednesday that demand for durable goods grew by 1.4 percent last month to total more than $215 billion.

This marks the third straight month that manufacturers have seen orders increase following three consecutive declines at the beginning of the year.

The June increase was unexpected. Private economists had been forecasting a decline of around 1 percent.

A drop-off in demand for commercial aircraft was offset by strength in a number of other sectors, from computers to communications equipment.

Excluding transportation, durable goods orders were up a solid 2.6 percent in June.

Flat report on housing may signal a slowdown

July 19, 2005, 11:53PM

Associated Press
WASHINGTON - Construction of new homes and apartments showed no change in June after a decline the month before, with weakness in every part of the country except the South.

Analysts said June's weaker-than-expected performance could be a sign that the red-hot housing market is finally starting to cool a bit. But they said any slowdown was likely to be gradual as long as mortgage rates do not rise too rapidly.

The Commerce Department reported Tuesday that builders broke ground on 2 million new homes and apartments in June at a seasonally adjusted annual rate, exactly the same pace as in May.

Private economists had been expecting a small rise in construction activity in June.

A cooling of the housing market would be welcome news for those who had begun to worry that the country was developing a dangerous housing bubble similar to the speculative bubble that developed in the stock market in the late 1990s.

But economists said they did not expect any precipitous drop in housing activity, given that mortgage rates, which have started to rise, still remain at extremely attractive levels.

Despite the flat housing report, Wall Street got a lift when Merrill Lynch & Co. and other businesses beat earnings expectations.

The Nasdaq composite index hit a high for the year as the market anticipated after-the-close earnings reports from Yahoo and Juniper Networks.

But it was the earnings reports from IBM and Merrill that reassured investors Tuesday after disappointing earnings from Citigroup on Monday halted three weeks of stock market gains.

The tech-dominated Nasdaq rose 28.31, or 1.32 percent, to 2,173.18, while the Dow Jones industrial average rose 71.57, or 0.68 percent, to 10,646.56.

The Standard & Poor's 500 index rose 8.22, or 0.67 percent, to 1,229.35.

Bonds rose, and the dollar was up against other major currencies in European trading. Gold prices were unchanged.

There goes the neighborhood

July 10, 2005, 4:03PM

What's the difference between a historic house and an empty lot?
In Houston, it's 90 days.
By LISA GRAY
Copyright 2005 Houston Chronicle

Yes, the house's new owner, Barry Norman, told the city commission, he knew he was buying property in a historic neighborhood, the Old Sixth Ward. But he had no intention of keeping the little Queen Anne cottage that stood at 1814 Lubbock since 1885. In fact, he was applying for permission to tear it down.

On the lot, Norman and his wife, Maria Isabel, proposed to build an aggressively modern house out of concrete block, metal and Hardiplank siding. Isabel, an architectural designer, had drawn up the plans herself.

With its tallest point (a meditation tower) at 49 feet 9 inches, the new house would loom over its one-story neighbors, blocking their views of nearby downtown. Though the neighbors' porches hug the sidewalk -- the old-fashioned setback is only 10 feet -- the new house would hang back 17 feet and more, creating an unsettling gap. And to the pretty street, the house would present a blank face: a wooden fence and the door to a garage big enough to accommodate five cars and the couple's RV.

Isabel and Norman's dream house would be, to say the least, very different from the dilapidated 1885 cottage currently on the lot. That cottage was built by Urbain Valentine, a son of Peter Valentine, the Houston valet of university founder William Marsh Rice (and no, not the one who famously murdered Rice in New York). When Rice retired to New York, he left his elderly Houston valet a large sum in appreciation for years of service. Peter Valentine died soon after, and his widow divided the money among their six children. Urbain Valentine used his share to set up housekeeping in what was then a middle-class neighborhood.

Neighbors admit that the Valentine house is tiny and greatly in need of work -- much like the previous incarnations of houses that some of them have turned into showplaces. Last year, neighborhood resident Charles Stava's house won the national restoration contest sponsored by Victorian Homes magazine; this fall, his house will be featured on HGTV's If These Walls Could Talk. Two houses in the 1800 block of Lubbock proudly display plaques declaring them to be in the National Register of Historic Places; with restoration work, the Valentine house could also qualify
Norman's plan spooked the neighbors, who described it with phrases such as "monstrosity," "McMansion on steroids" and "defeating the principles of good architecture." They worried about their own property values. Most of all, they worried about their neighborhood, a laid-back, friendly place, proud of its distinctiveness.

The Old Sixth Ward is only six blocks at its longest point -- smaller than a Wal-Mart parking lot, neighborhood association president Larissa Lindsay notes -- so a blow to one of its best-preserved streets would hurt deeply.

In 1997, more than two-thirds of the Old Sixth Ward's property owners signed a petition to have it designated a City of Houston Historic District. That designation gave the neighborhood the toughest preservation defenses in all of Houston, tougher even than the neighborhood's listing on the National Register of Historic Districts. Which is to say: not much at all.

The neighborhood's last line of defense against the Norman house was the Houston Archaeological and Historical Commission, which rules on the appropriateness of permit-requiring alterations to officially recognized historic properties. At its June 3 meeting, Thomas McWhorter of the Greater Houston Preservation Alliance noted that though Norman's proposed house might be appropriate in many Houston neighborhoods, it would wreak havoc on the Sixth Ward. McWhorter pointed out that the city recognizes only seven historic districts, some as small as a single cul-de-sac. Taken together, they make up far less than 1 percent of the city's land. Norman's dream house would fit much better almost anywhere in that other 99 percent, he noted. Why not go there?

Lynn Edmundson of Historic Houston also railed against Norman's plan. Randy Pace, the city's preservation officer, judged that Norman's request to demolish the Valentine house was inappropriate in every category the commission considers. All seven members voted to deny the request.

The board deployed what its legal counsel advised was the strongest weapon in its arsenal: a 90-day delay for Norman's demolition permit. "If somebody is determined to be an obnoxious neighbor," explained chair Texas Anderson, "there is precious little we can do."

On Sept. 2, Norman and Isabel will be free to raze the house. "I want to get the neighborhood cleaned up," says Isabel, who likes the Old Sixth Ward for its proximity to downtown, Memorial Park and Buffalo Bayou. "Right now that lot is full of bums. People come and put trash there. Cleaning it up -- that's my thing. The historical movement, it's not my bag."

Isabel says instead of demolishing the Valentine house, she'd prefer to have someone move it. So far, though, no one has been willing to accept the hefty expenses: replacing the house's floor joists, cutting the entire house in half, removing its roof and maneuvering the pieces around the large palm tree in the front yard. Norman and Isabel plan to preserve the palm tree.

Houston preservationists have grown used to losing battles like this one. The city's ordinances make other outcomes unlikely.

Houston's preservation laws are among the weakest in the country. Other relatively young cities, such as Seattle and Los Angeles, have far more stringent laws -- as do other cities in regulation-hating Texas.

"When we'd tell people in other cities about our ordinance, they would laugh," remembers Edmondson.

"It used to be that Houston and Dallas were always at the bottom of every list," says Bart Truxillo, a member of the Houston Archaeological and Historical Commission. "But Dallas got smart 10 years ago." In Dallas, the board that reviews proposed changes to historic neighborhoods has the power to kill a proposal like Norman's. And in Dallas, an owner willing to rehab in a historic district near downtown could receive up to a 100 percent abatement of city taxes for 10 years.

Why is Houston so careless with its history? The city prides itself on being a place where individual freedom trumps everything else, says architectural historian Stephen Fox, a fellow of the Anchorage Foundation of Texas. "It's our economic niche," he says. "We're a place where people make their own rules, where no one can tell them what to do. That idea has become Houston's identity."

That attitude, says Anderson, a Realtor, dates back to the Allen brothers, the real-estate speculators who founded Houston: "Move ahead. Do what's new. To heck with the past."

Lindsay, the neighborhood association president, points out that boom times pose special dangers for historic neighborhoods. As property values soar, Harris County's tax assessor tries to keep the valuations of existing properties relatively constant so that homeowners aren't forced out of their houses.

That part is great, Lindsay says. The catch comes in the way the tax assessor keeps the valuation stable. The assessor raises the value of the land -- and lowers the value of the house sitting on top of that land by an equal amount. On paper, the houses plummet in value precisely as fast as the land beneath them grows more valuable.

What bank, asks Lindsay, would give a home-improvement loan to someone with a $20,000 house sitting on a $275,000 piece of land? Strapped, existing owners are often forced to sell their land rather than remodel their bathrooms. Potential buyers then confront expensive land with houses in desperate need of maintenance.

Bureaucratic kinks like that determine the future of houses, and the future of houses adds up to the future of a neighborhood -- and, some argue, to the future of an entire region.

In his much-discussed book The Rise of the Creative Class, Richard Florida asserts that in the global economy, cities that thrive are those that attract knowledge workers, the highly educated, highly mobile people high-wage companies compete to hire. Those talented people, he says, gravitate toward distinctive places -- quite often historic neighborhoods. Encourage the right habitat for those people, argues Florida, and your city's economy will thrive.

Preserving the Valentine house would also make sense for the neighborhood as a whole. Norman and Isabel's future neighbors worry that as their views are blocked and Lubbock Street loses its charm, property values along the whole street will sink.

Rehabbing the beat-up little Valentine house might even make dollars-and-cents sense for Norman and Isabel. Stava points out that well-restored houses in the neighborhood have sold for $150 per square foot -- among the highest prices in Houston. Currently, he says, three Old Sixth Ward houses are on the market for prices hovering around $500,000.

Anderson doubts that Norman and Isabel's new house will turn out to be a good investment: "We've seen developers try that, building big, new-looking things in old neighborhoods. People don't want to buy those. They look wrong."

Lindsay is one of about a half-dozen Old Sixth Ward residents who devote a large chunk of their lives to protecting its character. "None of us have kids," she explains, "so we have time to scream and yell. We scream and yell a lot. That's why the neighborhood is still standing."

Every Monday morning, she goes online to check for building and demolition permits. She signs starchy letters to Realtors who market historic houses as teardowns. To more sympathetic Realtors, she offers to chat with potential clients, to help sell them on the joys of owning an old house in the Sixth Ward.

"This place has a history," Lindsay explains. "It's a place that's alive. I want people to understand that -- what it's like to live in a place that's not cookie-cutter. And to know that when it's gone, it's gone. It doesn't come back."

A few weeks ago, after hearing that the Valentine house was doomed, Lindsay ran into another of the neighborhood's activists. "How are we going to save the neighborhood?" Lindsay asked.

"Do you think we can save the neighborhood?" her friend replied.

"We have to," said Lindsay. "We just have to."

OPENING SHOT

Where's the Bubble?
by James K. Glassman

The blazing-hot topic at suburban cocktail parties this spring is whether there's a bubble in the residential housing market. No wonder. In 2004, existing home prices rose faster than in any year since the 1970s. Some markets are going bonkers. Alexandria, Va., is up 31% in 12 months; San Bruno, Cal., 25%; and parts of Manhattan, more than 50%. A front-page New York Times story featured a Florida couple who had bought and sold four properties -- two condos and two houses -- in the space of six months, clearing $500,000. And none of the homes had yet been built! "It is much better than the stock market," says Carlos Lidsky, who, with his ebullient wife, flipped the houses much as investors in the late 1990s jumped in and out of high-tech IPOs.

Uh-oh.

The power of fear. But while such signs of speculation are troubling, there is little solid evidence that a real estate bubble is puffing up. One reason for optimism is that so many people are worried. Fear puts a lid on prices.

Another reason is history. Since 1950, according to data gathered by Freddie Mac, which provides financing for mortgage lenders, U.S. home prices overall have never declined over the course of any year. By contrast, even the broadly diversified Standard & Poor's 500-stock index dropped in 12 years since 1950, and Treasury bonds fell in 17 years.

Certainly, individual housing markets can suffer boom-and-bust cycles. (Look at Houston during the 1970s and California during the 1980s.) But real estate prices as a whole have been remarkably stable. The housing market has characteristics, such as sales commissions and transfer taxes, that tend to dampen volatility. Skipping in and out of a house in a day or two isn't particularly feasible, and the vast majority of home buyers, unlike stock buyers, are in for the long haul.

As a result, though existing-home prices rose faster in 2004 than in any year in a quarter-century, they were up just 8.3%, according to the National Association of Realtors. Since 1950, residential real estate prices have increased an annual average of 5%, says Freddie Mac. That's only a little more than 1% per year after inflation.

n other words, if you buy a house expecting to get rich, you're a fool. Real estate is very different from stocks. With stocks, you get a high reward as a payoff for high short-term volatility. With real estate, you get a lower reward but a smoother ride -- a good thing because most people own just one home at a time, so they don't get the risk-dampening benefits of diversification.

No free shelter. But let's be clear: The house you live in is not an investment. It's an asset that produces nontaxable personal income, in the form of comfort and joy. When you sell your home, you have to buy another one. By contrast, if you sell your General Electric stock, you can do anything you want with the cash. And selling a home when prices are relatively high inevitably means buying a home when prices are relatively high.

Of course, you could sell your house and rent, which The Economist prescribed, only slightly tongue-in-cheek, in a recent editorial. Yes, rentals are cheap these days compared with home values. Owning your own house, however, provides not only extra security (the landlord can't boot you out when the lease is up) but also tax breaks.

And don't forget the consumer's best friend: the glorious 30-year fixed-rate mortgage. You can get a loan that's only slightly above the rate at which the U.S. government borrows. (As I write, the average 30-year fixed-rate mortgage costs 5.5%; the 30-year T-bond, 4.8%.) Unlike the Treasury, you have the option of refinancing your loan to take advantage of a decline in rates.

Getting back to bubbles: In his book Bubbleology: The New Science of Stock Market Winners and Losers (Crown Business, 2002), economist Kevin Hassett defines a bubble as "a period when the price of an asset (stocks, real estate, tulips, etc.) suddenly soars for irrational reasons and then collapses." The key word is irrational. Prices often rise for good reason. For example, the price of a share of eBay rose from $8 in 2001 to $32 in 2003. A bubble? Not at all. The increased value was rooted in fundamentals. Revenues nearly tripled over that period, and profits quintupled. In fact, eBay kept rising and now trades at $38.

What can you afford? In a bubble, prices get divorced from reality -- though reality, in financial terms, is often in the eye of the beholder. One measure is affordability. "If people are paying a realistic portion of their income for housing," Marc Louargand of Babson Capital writes in a letter to clients, "it is hard to see conditions as a bubble."

Louargand cites the housing-affordability index calculated by Economy.com. If the median family income in a market is exactly the amount needed to qualify for a loan to buy a house at the median resale price, then the index is 100. If the median income is more than sufficient, then the index rises above 100. Louargand found that of the 318 metropolitan areas tracked, only 29 had affordability indexes less than 100. "In fact," he writes, "the average index value as of year-end 2004 was 180, which indicates that the median family income can qualify for nearly twice the median home value."

How can so many Americans afford houses at a time of rising prices? High incomes and low interest rates. Rates may rise, but they won't necessarily cause prices to tank. As Louargand points out, "The last time we had high interest rates [in the 1970s], home prices were soaring." High interest rates indicate inflation, which tends to be good for hard assets like real estate. And even if rates jump a full percentage point, the number of sub-100 markets would rise from 29 to 43 -- still a small number.

Even in places where prices are soaring, worries of a bubble could be overblown because higher prices appear grounded in good old fundamentals. Garrett Thornburg, who heads Thornburg Mortgage, pointed out to me that in hot markets, such as San Francisco and Aspen, Colo., "it is difficult to bring new product online." Environmental regulations, zoning restrictions and a shortage of land create limited supply, he says, "so if you want to be there, you have to pay up." Freddie Mac's data also show lean inventories of both new and existing homes.

On the demand side, purchases of second homes are rising as baby-boomers get close to retirement, and "the rapid influx of new immigrants has enlarged the home-buyer pool," writes Value Line Investment Survey's William Ferguson.

Investing alternatives. I am, however, annoyed and concerned when I hear my friends, who have made big, unrealized profits on their condos, talk about putting together pools to buy and sell real estate. As if it's so easy! Sure, consider buying a few rental properties for income and holding them for 20 years. But making money in real estate is no cinch. You're up against some very smart competitors who do it for a living. If you're convinced that prices will continue to climb, it's better to join the experts than to try to outsmart them.

You can, for example, buy stock in homebuilders, a course I've advocated for several years now. Ferguson notes that many of these builders "have strong balance sheets" and own "a large supply of land in a relatively land-constrained business." The home-building sector ranked number one in early March among the 98 industries Value Line covers.

Among the stocks rated 1 for timeliness by Value Line are Beazer Homes USA (symbol BZH), which concentrates on entry-level and first-move-up buyers; KB Home (KBH), because its PEG ratio (the price-earnings ratio divided by the rate of earnings growth) is just 0.6, and anything below 1.0 is generally considered a bargain; and Ryland Group (RYL), which has seen its share price triple in two years but still trades at a P/E of 10.

The REIT alternative. One warning, however: Although homebuilder P/Es are low compared with the market as a whole (the S&P 500 has a P/E of 20), they've escalated significantly in the past few years, from about 8 to about 11. As a hedge, it may be time to look at the sector that ranks 96th on Value Line's list: real estate investment trusts. If housing prices start to weaken with rising interest rates, then rentals will come back into fashion, and apartment REITs should benefit. Among them: Archstone-Smith (ASN), AvalonBay Communities (AVB), Equity Residential (EQR) and United Dominion Realty Trust (UDR). Each of these REITs currently carries a dividend yield of 4% to 5%.

But the main question about a real estate bubble is, why should you care? If you own a house for the right reason -- to live in it -- then short-term fluctuations are meaningless. If you are thinking about a first purchase or a trade-up, then the main issues are whether you can afford what you want on your income and whether you want to spend the dough on a house or on something else. If you do buy, don't expect the value of your house to rise much faster than inflation. Remember, it's not an investment. It's something better.

Weak dollar, low interest rates attract investors

By MIKE SCHNEIDER
Associated Press

ORLANDO, FLA. - There's a new group of buyers in the U.S. real estate market: foreigners.

A weak dollar and relatively low mortgage rates have turned houses and other real property into the investment of choice for a growing number of people from other countries. Some see real estate as a better way to earn money than stocks or other securities, while others are interested in using the properties themselves.

Ana McColgan, of Donegal, Ireland, is in the market for a three-bedroom home in the metro Orlando area.

"We keep coming over there anyway, so I'd rather have it than pay for hotel rooms," said McColgan, who's married with two children. "Maybe we could rent it out to offset the cost of having it."

Lowerys USA, which specializes in helping British buyers find properties in central Florida, saw sales increase threefold last year to $15 million.

"There has been a tremendous sales binge going on here for about 15 months now," co-owner Roy Young said.

Going beyond coasts
Historically, coastal areas have gotten the most attention from foreign investors; the East Coast was attractive to Europeans, while the West Coast appealed to investors from Asia. But the recent boom in foreign investment has included areas such as Atlanta, Chicago and Las Vegas, said Mark Levine, director of the Burns School of Real Estate and Construction Management at the University of Denver.

"We have seen this grow from coastal areas to major cities across the U.S," Levine said.

A favorable exchange rate has been a big factor in the increase. The dollar has fallen significantly over the past three years against the 12-nation euro and the British pound. Last week, a euro was worth about $1.30, and a pound about $1.90.

"There is a sense that the falling dollar does make U.S. real estate more attractive because, relatively speaking, homes are more affordable than they are in other countries," said Walter Molony, a spokesman for the National Association of Realtors.

The weak dollar played a role in Howard Gould's decision to purchase a four-bedroom, three-bathroom home in Kissimmee, near Walt Disney World, for $260,000 in September as a rental-home investment. The Briton wasn't deterred by three hurricanes that had passed recently through the region.

"We bought at what we thought to be a good exchange rate," said Gould, a director of a turnaround and management company in Leeds, England. "We chose Florida because we like it there. We thought property, at least in that particular area, would appreciate at a fast rate."

Attractive mortgage rates
Mortgage rates are also a draw. While 30-year fixed rate mortgages hit an eight-month high of 6.04 percent at the end of March, they have retreated since then and are still quite low by historical standards.

And the Internet makes it easier for foreign investors to look for properties in the United States and then market them to potential renters. Gould, for instance, offers images of each room of his Florida home on a Web site, along with a calendar of which days the property is available.

In 2002, the last year figure were compiled, the leading countries of origin for foreign investors of U.S. property were Japan, Canada, Britain, Germany and the Netherlands.

An upbeat Canadian
Canadian Brian Krausert's family owns a condominium in Hawaii, but they plan to sell it and purchase another one in cash this year. They tend to visit for several weeks during Christmas and Easter.

"I believe the Canadian dollar will grow against the U.S. dollar," said Krausert, president of Beaver Drilling in Calgary.

"If the Canadian dollar becomes stronger against the U.S. dollar, the asset becomes cheaper for us to buy. The prudent thing to do would be to sell now."

Some German clients are looking at golf communities in Atlanta since "everybody is in love with golf now in Germany," said Sebastian Haase, an Atlanta real estate agent with Coldwell Banker.

Other German clients are thinking about purchasing homes in north Georgia's Blue Ridge Mountains.

"It looks a little bit like the Black Forest. There's a homey feeling," Haase said. "Prices are excellent up there."

While Las Vegas real estate has always been popular with international investors, particularly those from Asia, the new focus of foreigners has been on high-rise condominiums springing up around the area.

"They're looking at what good investments they can get, and of course a weaker dollar will enhance that aspect," real estate agent Crete Carey said.

The current conditions have made property in Phoenix more desirable for foreign investors, especially Canadians who for years have been major land investors in the area, said R.L. Brown, publisher of the Phoenix Housing Market Letter.

"In many cases they have been in effect the land bankers for the Phoenix home building community," Brown said. "They have bought and held farmland or desert land to ultimately resell to home builders."

Downward trend seen
After four record years, U.S. home sales are expected to cool off in 2005 as the mortgage rate creeps up. The National Association of Realtors is predicting a 3.2 percent decline in the sales of existing homes and a 5.9 percent decline in new-home sales. But real estate experts said foreign investment in U.S. real estate should continue to grow because of the market's stability and the diversity of properties available.

McColgan plans to go to an expo in Belfast on buying homes overseas next month and has contacted a real estate agent in Florida to help her find a home.

"We hope in years to come to spend a couple months of the year in Orlando," she said.

Eliminating the perks could mean lower rates

April 16, 2005, 6:40PM

Title insurance firms used them to get business
By NANCY SARNOFF
Copyright 2005 Houston Chronicle

A new state rule banning Texas title insurance companies from offering perks to real estate firms — ranging from season tickets to Astros games to sponsoring golf tournaments for agents — is being put to the test.

Some 20 title companies are under investigation for giving gifts to firms that can send business their way, according to the Texas Department of Insurance, which regulates the title insurance industry.

Robert Carter, deputy commissioner for the insurance department's title insurance division, would not say which companies are under scrutiny.

These perks are also referred to as rebates or kickbacks, depending on who's speaking.

The probes stem from an insurance department rule implemented last year that outlawed the use of these practices. The rule is meant to enforce a state law intended to limit this type of activity.

A $10,000 fine
First-time offenders can be subject to a fine of $10,000 per violation per day, and penalties affect the giver and receiver of the rebate. If they continue, violators could have their licenses revoked, Carter said.

"I'm almost positive there will be fines," he said of the cases now under investigation.

The state rule could lead to lower Texas title insurance premiums, which are some of the highest in the nation.

The typical title insurance premium in Texas for a $100,000 property is around $870. However, only about 5 percent of what the title industry takes in is paid out in claims to property owners with losses because of disputed titles, Carter said.

On top of that, 90 percent of the expenses reported to the state go for salaries, employee training and maintaining property records, leaving a 5 percent profit margin.

Title insurance companies are paid to search title records for things that could raise questions about the title upfront, like property liens for unpaid remodeling work, seeking to avoid later payouts, Carter said.

Cutting the extras
The new rule went into effect last April. It said title companies couldn't give anything of value to firms that might entice them to refer them business.

"We found title agents and insurers were falling all over themselves trying to give things to lenders, agents and builders," Carter said.

Premiums on title insurance are set by the state. Because prices are uniform, title companies compete on customer service and business relationships.

This has led many title firms to offer perks to lenders, developers and real estate agents who are likely to steer business their way.

Title companies report those expenses, which are classified as training or other business purposes, to the insurance department. These costs are taken into account when setting rates, Carter said.

But the costs of the perks are difficult to document because they are often mixed in with other costs under advertising, travel or salaries.

While there have been rate cuts in previous years, they might have been bigger if this ban had been in effect, Carter said.

The state will consider any rate reductions — or increases — at its biennial rate hearing, which is expected to take place later this year.

"I don't know how much of an impact it will have, but I think it has to be significant," he said.

Before the state rule was enacted, the U.S. Department of Housing and Urban Development found seven title companies doing business in Texas were paying for virtual tours, an online tool used by agents to market properties. HUD law is also designed to restrict these practices.

In 2002, they all signed settlement agreements saying they would discontinue the practice and paid fines ranging from $1,260 to $43,500.

Those companies were Chicago Title Insurance Co., Stewart Title Austin, Heritage Title Co., Gracy Title Co., The First American Corp., Austin Title Co. and Fidelity National Title Insurance Co.

Texas real estate agents and builders are fighting the new state rule.

Toni Nelson, chair of the Houston Association of Realtors and a division vice president at Coldwell Banker United, Realtors, said while there was a need to crack down on more serious violators, "I think they went overboard."

Defending the practices
Jay Dyer, director of regulatory affairs with the Texas Association of Builders, said many title companies have stopped advertising in industry publications for fear they might be breaking the rule.

Carter said it's fine for title companies or agents to advertise, as long as they don't promote particular real estate agents or their properties.

While there are still violators, the rule has started to rein in some giveaways.

"The word I hear is that it has pretty much shut down the in-house publishing operations that a lot of these title companies had to print up brochures and signs," Carter said.

And some title firms are finding it easier to say no to real estate agents pressing them for freebies, he said.

Ne