By John Spence

From MarketWatch

Homebuyers have been backing out of sales contracts and forfeiting their down payments during the housing slowdown, but cancellation rates should steady in the first quarter and taper off later in 2007, said the chief executive of one of the nation’s largest home builders Thursday.

“Cancellations are likely to stabilize and stay level this quarter, and then decrease,” said Ara Hovnanian during a Web cast of a real estate conference sponsored by Deutsche Bank in New York, adding cancellations should get back to “normalcy in a quarter or two.”

The Hovnanian CEO said many cancellations are for older contracts signed when the market was booming and home prices were rising. He said one way the company is avoiding cancellations is to negotiate with buyers at the closing table.

Related Link

Builders Poised to Post Big Profit Drops

“We don’t like to do it, but it can prevent cancellations,” Hovnanian said.

Home builders have been reporting surging cancellation rates driven higher by sagging consumer confidence and difficulty in selling existing homes.

When asked to pick an indicator he’s looking at to spot a potential bottom for housing, Hovnanian said “we’re watching [home] resale listings, which is something we never used to focus on.”

Home builders face an inventory glut sparked by overbuilding and speculative demand drying up, but are hoping the spring selling season can jumpstart a recovery in 2007.

“The time between Thanksgiving and the Super Bowl is a slow time, so it’s difficult to gauge anything,” Hovnanian said. “We’re waiting to see if things stabilize.”

Meanwhile, Toll Brothers Inc. Chief Financial Officer Joel Rassman said the speed of various markets’ recoveries will depend on the amount of “speculative” building and the use of incentives.

Home builders have ramped up concessions to buyers such as appliance upgrades and financing breaks in order to move homes in inventory. For example, Lennar Corp. earlier this week said sales incentives offered to homebuyers averaged $47,300 per home in the fourth quarter, up from $10,600 the previous year.

Rassman said buyers are putting off home purchases because they think the house may end up being cheaper soon. The CFO said the luxury builder is closely watching buyer traffic at its communities and reservation deposits to get a handle on where the market is heading. It also conducts “soft” interviews during home tours to see if people are “real buyers” or what the company calls “tire-kickers.”

If local housing markets and economies bounce back, there could be some consolidation in the home-building business, especially with larger public companies snapping up smaller private competitors, Rassman said.

“There was no [spring] selling season last year, and if it happens again a lot of the smaller private builders won’t be around the next selling season,” he said.

Email your comments to rjeditor@dowjones.com.

– January 22, 2007

By June Fletcher

Question: I’m thinking about buying a home in Mexico. Where should I look and what should I keep in mind?

Answer: You’re not alone in your quest. The U.S. State Department estimates that there are 385,000 Americans living permanently in Mexico, almost twice the number of a decade ago. Many are buying in new waterfront resorts targeted to Americans in popular destinations like Puerto Vallarta, Cancun, Sonora and the Baja Peninsula.

Related Links

American Baby Boomers Fuel Yucatan Land Grab in Mexico

More House Talk columns

The appeal is more than just the thought of permanently toasty weather. The cost of living, from housing to health care, is significantly lower in Mexico than it is in the U.S. That makes the country especially attractive to retirees on fixed incomes, as well as to younger telecommuters and others with portable jobs fleeing high-cost U.S. cities. Increasingly available creature comforts like high-speed Internet access are making the country more attractive to Americans. In Baja, there’s even a Costco with an oceanfront view.

Buying south of the border has its risks, however, so keep these thoughts in mind:

1. Beware of high-pressure sales tactics. Anyone who’s ever visited Cancun knows how annoying it is to step off the airplane, bleary-eyed from the flight, and be set upon by pushy real-estate and time-share salespeople. Even the fanciest resorts participate in similar aggressive tactics, offering discounts on meals or popular side trips if you’ll listen to a real-estate spiel.

My advice: Walk away from anyone who pressures you. If you get roped into signing a deal, remember that you have five days under Mexican law to cancel the contract and get back your deposit money.

2. Obtain title insurance. By Mexican law, foreigners can’t own real estate outright within 100 kilometers (about 62 miles) of a border and within 50 kilometers (about 31 miles) of any coastline. Of course, that’s just where Americans most want to live. So the Mexican government allows foreigners to buy through bank trusts, with the bank holding title to the property. That generally works well, unless there’s a challenge to the title — a real problem in a country that recognizes squatter’s rights. Although title insurance is more readily available than it was a decade ago, it isn’t offered on every property. If you can’t get it, pass on the deal.

3. Check your finances. Often, Americans are lured to Mexico by its comparatively low cost to buy or build a house. But they overlook other costs, which can be much higher than they are stateside. In general, acquisition fees are high, about 6%, and include a mandatory real-estate transfer tax, a fee for a government-appointed notary to handle the transaction, and a bank appraisal fee. And while Mexican property taxes tend to be low, capital-gains taxes on the sale of investment property can reach 35% — a pretty big bite. For more information, check out Tom Kelly’s excellent book, “Cashing in on a Second Home in Mexico” (2005, Crabman Publishing).

– June Fletcher is a staff reporter at The Wall Street Journal and the author of “House Poor” (Harper Collins, 2005). Her “House Talk” column appears most Mondays on RealEstateJournal.com. Email your questions about the residential real-estate market. Please include your name, city and state. If you don’t want your name used in our column, please indicate that. Due to volume of mail received, we regret that we cannot answer every question.

Share your comments on the House Talk discussion board.

Email your comments to june.fletcher@wsj.com.

– January 22, 2007

By Mark Whitehouse

From The Wall Street Journal Online

Consumer prices resurged a bit and builders broke ground on more new homes in December, but the activity did little to change economists’ view that inflation is cooling and that the housing slump has yet to hit bottom.

A bump up in energy prices caused consumer prices to rise 0.5% in December from a month earlier after remaining flat or falling in the three previous months, the Labor Department reported yesterday. Excluding food and energy, so-called core prices — a measure officials at the Federal Reserve watch closely — rose 0.2%, in line with economists’ expectations, as apparel retailers ratcheted back holiday discounts. Compared with a year earlier, overall prices rose 2.5% and core prices were up 2.6%.

Meanwhile, unusually warm weather prompted new-home construction to rise for the second consecutive month, the Commerce Department reported. At a seasonally adjusted annual rate of 1.64 million in December, housing starts were up 4.5% from November, but still down 18% for the year. All of the gain came in multi-unit structures such as apartment buildings. Construction of new single-family homes, which account for about three-fourths of total activity, fell 4.1% in December from the previous month despite the warm weather. Single-family housing starts were down 25% from a year earlier.

Economists saw the reports as well within the game plan of Fed policy makers, who expect persistent weakness in housing to help cool the economy, gradually bringing core inflation back down to a more acceptable annual level of 1% to 2%. In the fourth quarter, core prices rose at an annualized rate of 1.4%.

“Things are playing out pretty much along the lines the Fed expected,” said Joshua Shapiro, chief U.S. economist at consultancy MFR, Inc. “Inflation pressures are gradually easing and housing is still weak.”

While many economists believe the worst of the housing slump has passed, declines in home construction could still have a way to go. Major housing slumps over the past several decades have seen home construction drop by an average of about 60% over at least two years. As of December, total new-home construction was down 28% from its most recent peak, which came in January 2006.

Builders face a large backlog of unsold homes, suggesting they will likely have to pull back further to get supply in line with demand. Earlier this week, home buildersLennar Corp. andCentex Corp. offered downbeat outlooks, with the latter saying it was facing the toughest market in 25 years. The National Association of Home Builders index of sentiment has shown some improvement in recent months, though it remains well below 50, meaning negative responses outweigh positive.

On the inflation front, concerns remain. For one, workers’ wages have started rising after a long period of relative dormancy: As of December, the average hourly production wage stood at $17.04, up 4.2% from a year earlier. When people make more money, they tend to push prices of goods and services up, though so far that hasn’t been evident in the consumer-price data, said Andrew Tilton, U.S. economist at Goldman Sachs in New York.

“The dog that hasn’t barked is really wage inflation,” he said. “That’s the biggest risk over the next six months or so.”

Another concern is that the recent string of subdued inflation numbers could be the temporary result of unusually heavy holiday discounting. In recent months, big retailers such asWal-Mart Stores Inc. andBest Buy Co. have slashed prices of electronics items such as flat-panel televisions in an effort to spur sales. That trend appeared to continue in December, as audio and video prices fell 0.7% from a month earlier.

In apparel, though, retailers appeared to be regaining the power to raise prices. Apparel prices rose 0.3% in December after falling in previous months, a move that Brian Bethune, U.S. economist at Global Insight, attributed to strong demand at high-end retailers. “The upscale channels seem to be doing very well,” he said. “That may have put more pressure on apparel prices toward the end of the year.”

Beyond the goods sector, inflation in services has yet to show much sign of abating. Rent of shelter, a category that makes up about 40% of the core price index, rose 0.4% in December from November, and has risen at a 4.4% annualized rate over the last six months. Still, some relief could be on the way. Richard Campo, chief executive of Houston-based Camden Property Trust, which owns some 70,000 apartments across the country, says he expects rents to keep rising in 2007, but at a slower rate than in 2006.

Email your comments to rjeditor@dowjones.com.

– January 22, 2007

By Robert Schroeder

From MarketWatch

Sales of new and existing homes will continue their slide this year, due largely to investors pulling out of the housing market, mortgage-finance company Fannie Mae said Wednesday.

In an economic and housing outlook, Fannie Mae said sales of new homes are expected to drop by 7.1% in 2007, while sales of existing homes are expected to drop 8.1% this year.

Fannie Mae’s projections follow similar estimates released Tuesday by the Mortgage Bankers Association. The trade group forecast declines in 2007 of 7% in existing-home sales and 8% in new-home sales. See full story.

Discuss

Share your views with other readers on the U.S. housing market.

Fannie economists said the projected sales for 2007 would be the lowest since 2002.

The two-year drop in sales during 2006 and 2007, the economists said, would be the largest since the 1989-1991 housing downturn.

“We expect additional declines later this year as investors continue to leave previously hot housing markets, although the largest drops may be behind us,” wrote Fannie economists including chief economist David Berson.

Nation-wide, home prices should fall by between 1% to 2% this year, Berson predicted at a press briefing Wednesday.

However, he said, “most of the United States will probably not see home price declines at all — simply more modest gains.” He said the modest gains combined with significant declines in some parts of the country would produce the estimated 1% to 2% overall gain.

Later in the year, an end to the glut of unsold homes may help prices rise, he predicted.

Berson also told reporters at the briefing Wednesday afternoon that the condominium market is suffering as investors are pulling out.

Also, Fannie is projecting drops in mortgage originations for last year and this year.

For 2007, Fannie Mae is predicting a decline of 11.2% in purchase originations. It would follow an estimated drop of 3.1% in 2006.

Refinance activity, meanwhile, is projected to change little this year thanks to refinancing out of upward-adjusting adjustable rate mortgages, or ARMs.

Fannie said total single-family home originations are expected to decline by 7% to $2.33 trillion in 2007 following a drop to $2.5 trillion in 2006.

Email your comments to rjeditor@dowjones.com.

– January 19, 2007

By Sara Schaefer Munoz

From The Wall Street Journal Online

The growing popularity of scented and decorative candles as a chic and inexpensive design element is prompting fire safety concerns.

Safety and industry officials are weighing new labels and standards for candle accessories that would lay out warnings more clearly. And the nonprofit National Fire Protection Association has stepped up its campaign to warn homeowners and children about the potential dangers of candles.

“People look at candles and see how calming and pretty they are and sort of forget they are dealing with a potential fire hazard,” says Barbara Miller, spokeswoman for the National Candle Association, an industry group in Washington.

Related Links

More Home & Garden articles

Americans bought $746 million worth of candles and accessories in 2006, up 2.3% from the year before, according to market-research firm ACNielsen. The number, based on sales from mass retailers, doesn’t include additional sales from specialty stores such asYankee Candle Co., a national candle retailer based in South Deerfield, Mass.

The number of fires sparked by home candles fell from 2003 to 2004 after climbing steadily from 1990 to 2001, according to the National Fire Protection Association. The fires prompted a public-awareness campaign by fire officials and the industry. But the popularity of specialty candles and continued house fires has safety officials and the industry focusing on new prevention efforts.

The National Fire Protection Association, a nonprofit advocacy group based in Quincy, Mass., in 2005 dedicated a fire-prevention campaign to candle safety, running radio and print ads and giving fire departments lesson plans to use in classrooms.

ASTM International, a standard-creating organization for thousands of products and materials, is working on safety standards for candle accessories. Homeowners should always use a stable candle holder of fire-resistant material that is large enough to catch drippings, safety advocates say. Candle makers voluntarily use labels that warn people not to leave candles unattended, not to put them near combustible materials, and to keep them out of reach of children and pets.

Some homeowners learn that the hard way. In December, Windsor, Colo., homeowner Kelly Anderson accidentally started a fire when she lit a scented candle to get rid of the smell after cooking meat. When she put down some laundry, it caught fire. She and her family were unharmed but the blaze caused about $20,000 worth of damage and they had to spend four weeks over the holidays in a hotel.

Email your comments to rjeditor@dowjones.com.

– January 19, 2007

By Ben Casselman

From The Wall Street Journal Online

Last year proved to be a tough one to sell a house. In many parts of the country, sales were down, inventories were up and homes lingered longer on the market. In August, the median price of an existing single-family home fell 1.7% compared with a year earlier, the first year-to-year price decline in more than a decade, and prices continued to fall for the remainder of 2006, according to the National Association of Realtors.

The high end of the market wasn’t immune, either, as evidenced by the lackluster sales of the homes highlighted in Weekend Journal’s “House of the Week.” Of the 46 houses featured between October 2005 and September 2006, only 14 have sold, most at steep discounts — an average of 16% below the asking price published in our column; another four are in contract. Timing was also critical: Only one house featured since June has found a buyer. (None of those featured in the fourth quarter of 2006 have sold, but they aren’t included in this survey because most have only recently come on the market.)

Homes featured in House of the Week aren’t representative of the national housing market. For one thing, they tend to be high-end properties: the average asking price for the homes in our sample was nearly $10 million, while only one asked less than $1 million. They are also selected for other qualities — noteworthy architecture, colorful histories or singular locations — that set them apart even from other luxury homes.

House of the Week

See a photo slide show of this week’s House of the Week.

Still, their sales performance has generally followed national patterns. Overall sales volume peaked in mid 2005 and then declined steadily throughout most of 2006, according to the National Association of Realtors, and existing home sales in November 2006 were down 11% compared with the previous year. The same held true for the Houses of the Week. Of the 23 properties featured from October 2005 through March 2006 — when the overall market was relatively strong — 12 have sold or are in contract, compared with just six of those featured during the following six months.

The properties that were most likely to find a buyer were those with the highest price tags. Half of the Houses of the Week with asking prices of $15 million or more have sold, versus just over a quarter of those asking less than $15 million. That, too, follows a national trend, according to Jonathan Miller, president of the New York appraisal firm Miller Samuel. “Super luxury” homes have continued to sell in high numbers, he says, though not necessarily close to their asking prices. In fact, one reason they tend to sell, Mr. Miller says, is because their owners can be more flexible; these deals don’t live or die over a $5 million difference. And unlike the general housing market, which is strongly affected by interest-rate fluctuations, upscale home sales tend to be more sensitive to the stock market and the overall economy because buyers are more likely to pay in cash.

San Lee, the owner of a 10,000-square-foot waterfront mansion in Palm Beach, where the market remains healthy, actually raised her asking price recently, to $22 million from $18.5 million. That builds in room to negotiate, says listing agent Wallace Turner of Sotheby’s International Realty. At the same time, “the buyers feel that they’re getting a value, even though we’re settling it at about the same price in the end,” Mr. Turner says.

Most sellers, however, moved in the opposite direction. About half of the House of the Week properties still on the market have had a price cut since they appeared in the column, in one case by 35%. Others have been taken off the market entirely, although many sellers say they will try again when the market improves. It may be a while, according to Mark Zandi, chief economist for Moody’s Economy.com. “There’s still a lot of oversupply,” even at the high end, he says. “I think the correction really has a year left to run.”

Here’s a sampling of four Houses of the Week in different parts of the country.

SOLD: Southern California oceanfront contemporary, for $27 million.

This 3,544-square-foot home in Carpinteria, about 12 miles south of Santa Barbara, sold for 77% of its $35 million asking price, but Charlene and Sherrill Broudy say that’s still far more than they expected before they put it on the market in the spring. The asking price was “a shot in the dark,” Ms. Broudy says. The value in the 1.7-acre property lay primarily in its seaside location — with 150 feet of beachfront — rather than the house itself — a four-bedroom home built in 1980 (which Ms. Broudy says needed work). Listing agent Kathleen St. James of Sotheby’s International Realty moved into the house while the owners were away in Costa Rica and cleaned it up, a project that included pressure-washing and oiling its redwood exterior. The May 5 “House of the Week” sold in 60 days. The buyer, local venture capitalist Brian Kelly, saw the property in its first week on the market, before Ms. St. James’s cleaning job, and submitted the only serious bid. “You don’t have that many people calling you up to spend that kind of money,” Ms. St. James says. “Sometimes you get lucky.”

AVAILABLE: 319-acre Montana ranch on the Yellowstone River. Asking $13.5 million.

Dan and Barbara Todd recently cut 10% off the $15 million price of their ranch in Livingston, about 26 miles southeast of Bozeman, after it had been listed for about a year. Mr. Todd says the price cut was a response to a softening market — Montana ranch sales volume is down from last year, though prices have continued to rise — and to signal that he is ready to make a deal. The property includes a recently built six-bedroom, 6,400-square-foot main house, a guest cottage and a one-bedroom barn/artist studio.

This is the eighth ranch that the Todds have bought and sold, but the first that is primarily recreational, not agricultural. “When I show the property, I don’t know whether someone wants to shoot a deer or look at it,” Mr. Todd says. He isn’t concerned that the house, which was featured on March 17, has yet to attract a buyer. Listing agent David Johnson of Hall & Hall says ranches usually stay on the market at least a year.

SOLD: Connecticut midcentury modern with pedigree, for $3.75 million.

This Philip Johnson-designed house in New Canaan went into contract within four months of being listed, albeit at a 12% reduction, from $4.25 million. The sale closed in just six months. Meanwhile, sales volume in Fairfield County, Conn., was down nearly 15% in the first three quarters of 2006 compared with the same period in 2005. Listing agent Susan E. Blabey of William Pitt Sotheby’s International Realty attributes the modern home’s speedy sale to its being “100% pure Philip Johnson,” practically unchanged since the award-winning architect designed it in 1950. Not that there weren’t challenges to overcome, including strict preservation easements that protected the land, the house and even some of the interior features. The “House of the Week” for June 9, had also been vacant two years and needed work.

But Craig Bassam and Scott Fellows knew what they were getting into. The buyers run the design firm BassamFellows and also own another vintage modern in New Canaan, which they’re selling.

AVAILABLE: Low Country home on a South Carolina island. Asking $1.95 million.

This four-bedroom, nearly 5,000-square-foot home on Daufuskie Island, a second-home area about a mile from Hilton Head Island, came on the market in July 2005, just missing the area’s primary selling season. Interest picked up the following spring, says listing agent Catherine Donaldson of Cora Bett Thomas Realty, but then the market hit a severe slump in the summer. (The home was featured on June 16, 2006.) The owners — Detroit Red Wings center Robert Lang and his wife, Jennifer — cut the price in August, but by then it was too late, Donaldson says. She adds that the 21% cut has generated interest, but mostly low-ball offers. “When you drop a price that much, you give the impression that it’s a fire sale, and it’s not.” It doesn’t help that Daufuskie Island is accessible only by water. “It is tough to sell a home on an island you can only get to by boat,” she says.

Email your comments to rjeditor@dowjones.com.

– January 19, 2007

By Michael Corkery

From The Wall Street Journal Online

As hedge funds have flooded this affluent community in recent years, Joseph Beninati and Jim Cabrera have placed some winning bets on the local real-estate market.

Related Links

Join a discussion on the U.S. housing market.

Messrs. Beninati and Cabrera co-founded Antares Investment Partners, which has profited handsomely by turning a ho-hum office building in downtown Greenwich into sleek office space for prestigious financial companies and private-equity firms. Antares also helped transform the Delamar hotel — which replaced a run-down motor lodge — into a popular place for money managers to entertain their investors, some of whom commute there by yachts that they dock alongside the hotel.

Now, Antares is embarking on what some consider one of its boldest and riskiest projects. At a time when big home builders across the country are cutting back, Antares is proceeding with plans to construct a handful of mansions, the largest of which will include roughly 41,000 square feet of space spanning several buildings and cost about $25 million. That mega-mansion is being built off Round Hill Road, an area that includes many other opulent houses, and some of the other houses are being built off Taconic Road in Greenwich.

Antares’s Joseph Beninati, Jim Cabrera.

What could make the development risky is that Antares is putting up the homes on spec, meaning they currently don’t have buyers. Typically, such massive homes are built from the ground up by people who buy the land, hire an architect and developer and build the house of their dreams to their exact specifications.

Increasingly, that process is being stymied in wealthy communities by residents who balk at the swelling size of homes and try to block their construction. Last winter, Joseph Jacobs, president of Wexford Capital, which manages several hedge funds and private-equity funds, withdrew his plans to build a house with nearly 39,000 square feet of living space in Greenwich after attracting lots of publicity over neighborhood complaints that his house would be just too big, according to newspaper accounts. Mr. Jacobs declined to comment through a spokesman.

“It’s more and more time consuming to develop a piece of property in Greenwich,” says John Tesei, a lawyer who has focused on land use in Greenwich for 30 years. “You see greater regulatory involvement, and greater ’scrutiny’ — to be polite — by abutting property owners.”

Even when massive mansions aren’t rejected outright, it can take more than three years to build a large home due to strict oversight of development from Greenwich’s government boards. Large spec homes face similar scrutiny. Antares’s strategy is that it will fight the battles and get the approvals so that the home buyer can avoid the hassle.

Antares started preparing for the mansions four years ago, when it assembled 50 acres of land around Greenwich, readied the properties for development and worked through the planning and zoning boards to obtain approval for the large homes. “Going through the approvals wasn’t any fun,” Mr. Beninati says. “A hedge-fund guy doesn’t want to deal with this.”

Antares is betting that there are enough rich people in a hurry who would gladly give up the satisfaction of building their own home in exchange for the ease and speed of moving into an already built home. Mr. Beninati says Antares is providing most of the equity, and is using relatively little debt, to develop the mansions.

The Delamar on Greenwich Harbor, a hotel partly owned by Antares

Antares is a private-equity and development firm that manages real estate, renovates the buildings, builds them, finds tenants and invests its own equity. The company has about $4.5 billion in assets under management and projects under development; its properties are located in Connecticut and New York. While other private-equity firms also manage their real-estate investments, Antares, as a relatively small firm, is unusual because it is involved in so many different types of real estate, from offices to high-end homes.

“Most groups will be in either office, hotel or multifamily,” says Charlie Schoenherr, a managing director at Lehman Brothers, which provided financing for two of Antares’ projects in Greenwich. “They invest in various different property types within a certain region. They are more regionally focused than focused on one property type. We like the whole Fairfield market with Greenwich as the epicenter. They are the most dominant firm in that market and we think that is a good strategy.”

Mr. Beninati and Mr. Cabrera and other Antares executives own the majority of the company. Mr. Beninati says that investors in its projects include the private equity firmsArch Street Capital Advisors LLC and Lubert Adler, which invest capital from university endowments.

Most of the mansions come with finished interiors, but the company is taking an unusual approach in selling its largest home — where the main building spans 35,000 square feet. Antares built the stone exterior, but will leave the interior design — moldings, floors, bathroom and kitchen fixtures — to the buyer once they purchase the home. Antares believes this approach lets high-end buyers make the kinds of decisions about their living spaces they usually care most about.

There is little doubt the market for high-end homes in Greenwich is strong. The median price of a single-family home through the third quarter of 2006 was about $1.94 million, up from a median price of roughly $1.55 million in 2004, according to David Ogilvy & Associates, which sells high-end Greenwich homes. Last year, eight homes sold for more than $10 million, said the firm’s president, David Ogilvy.

The risk for Antares and its largest mansion — which the company dubbed the Lake Carrington estate — is that affluent buyers in that high price range will want to design the entire house themselves. It also could prove difficult to sell such a large house that has very little on the inside. “It’s unheard of,” says Mr. Ogilvy “People want to see the home done. They might want to change it all, but they want to see it done.”

One of Antares’ mansions — a 17,000 square foot home — is on the market for $10.9 million. Lake Carrington will go on the market next month and a third mansion will hit the market in March.

Mr Beninati and Mr. Cabrera, who are friends from prep school and who grew up in and around Greenwich, founded the firm in 1996. It started out investing in engineering companies and real estate, but began focusing almost entirely on the latter in 2002. “We saw Greenwich turn into a town where everyone commuted to New York City to a place where they both live and work,” Mr. Cabrera said.

The company founders say they got their big break in the late 1990’s when they brokered a deal to move hedge-fund manager Paul Tudor Jones into his current Greenwich headquarters — a former mansion previously occupied by Tenneco, an oil company.

In June 2002, Antares bought a stake in a 240,000-square-foot office plaza — called Pickwick Plaza — in downtown Greenwich, which sold for $120 million. At the time, it was the highest price ever paid for a suburban office property and all the leases were up for renewal. Antares, which managed and renovated the property, planned to more than double the rents, which were as low as $30 a square foot. Antares says it was able to raise the rents to more than $100 a square foot. The company and its partners recently sold the property for roughly $235 million.

Whether Antares will enjoy the same success with its aggressive push into Greenwich’s housing market remains to be seen. Last February, it bought a worn out 466-unit apartment complex in Greenwich for $223 million. Antares has spent another $125 million on massive renovations, as it turns many of the units into for-sale condos.

Antares has deposits on 40 units and several investors who are interested in buying a block of 120 units. Antares says it expects to close on many of the units this spring. The condos start at $487,000 for a one-bedroom 750-square-foot unit and are geared to the young traders, analysts and other young people or empty nesters looking for a piece of Greenwich.

Antares also is expanding into Stamford, redeveloping 80 acres of former industrial sites on the waterfront into office space geared to financial companies, condominiums and a marina. The $3.8 billion project is years away from completion, but the company is betting that the hedge-fund economy will keep expanding. “How do you take Greenwich and expand it?” Mr. Beninati says. “Right next door is the Stamford waterfront.”

Email your comments to rjeditor@dowjones.com.

– January 18, 2007

By Jane Hodges

The Investors: Randy Bither, a schoolteacher, and his wife, Karla, a landscape designer and mortgage loan officer, both from Beaverton, Ore., decided to invest in real estate to help finance their plans to move to the countryside. They considered buying fixer-uppers and renovating them, but realized they didn’t have the time or finances required. After talking to other investors and a real-estate agent, they decided to buy a newly constructed home and try to flip it for a higher price.

By the Numbers

Check out how our investor’s investment stands up.

The property:The 1,450-square-foot bungalow is located in Beaverton, Ore., a suburb of Portland, Ore., and home to many tech companies. The property was built in a Northwest style with Hardiplank siding and a front porch. The house has three bedrooms, two and one-half bathrooms, a living-room fireplace and a single-car garage. The top floor is carpeted and the ground level has bamboo floors.

Purchase price: $241,000 in July 2006

Additional investment: $2,000 (included in the purchase price). The Bithers paid $2,000 more than the home’s original price to the builder to get a better grade of  kitchen counters and cabinetry and for bamboo flooring throughout the ground floor, Mr. Bither says. His wife tiled the fireplace herself to give the living room more character.

The investment property in Beaverton, Ore.

The strategy: Assuming they would sell the home shortly after it was built for 15% to 20% more than they paid, the couple took out a loan with no money down, Mr. Bither says. The 80/20 loan — in which 20% of the mortgage has a double-digit interest rate and the remaining 80% carries regular market rates in the 6.85% range — makes the mortgage expensive, close to $2,000 a month, he says. Since they assumed they’d sell the home quickly, they weren’t concerned about carrying the pricey loan, he says. But because the house isn’t selling, they are hoping to find a renter to purchase the home through a lease-option deal to help offset the high mortgage and guarantee a buyer.

The pitfalls: The slowing housing market, the high-interest loan, and a plethora of other investor owners in the development have stymied his deal, Mr. Bither says. After he made the purchase, the market shifted to favor buyers, he says. At least three other houses in his development were purchased by investors with similar strategies, he says. Two are listed for sale by agents, and the other is, like his home, listed as for-sale-by-owner, he says. Had he and his wife anticipated holding the property, they would have considered something other than the high-interest loan they acquired. A lower-interest loan may have allowed them to rent the house out at market rates and earn about $300 a month in cash flow, he says.

The transaction: He and his wife have listed the home for sale by owner for $250,000, Mr. Bither says. If the buyer has a real-estate agent, the agent’s 3% commission of $7,500 (if the home sells for its asking price), will negate any profit, he says. The couple is also offering the property through a lease-option plan, hoping to find a renter who wants to buy the home at the end of 12 months. As part of the deal, the renter would put down $5,000, pay $1,685 per month in rent and have the option to purchase the home for $262,500, or for 5% more than the home’s current listing price. If a renter puts down $10,000, he or she could rent for $1,266 a month and buy on the same price terms. “Whichever option comes first and can stop the bleeding, we’ll take,” Mr. Bither says.

– Ms. Hodges is a free-lance writer in Seattle.

Email your comments to rjeditor@dowjones.com.

– January 18, 2007

By Lauren Baier Kim

Here’s a look at what’s new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

Thinking about buying a home but have questions about the quality of the neighborhood? Ready to hire a real-estate agent, but want information from other home sellers about the agent’s credentials? These questions and more potentially can be answered through a plethora of real-estate blogs, many of which gained visibility in 2006, says a CNNMoney.com article. For instance, Outside.in.com, created about two months ago, includes blogs from readers in 3,000 neighborhoods in 55 cities, according to CNNMoney.com. Posts include everything from the local real-estate scene to the weather to area restaurants and clubs. Another Web site, Homethinking.com, invites readers to rate their real-estate agents, CNNMoney.com says. Readers can search for their area by typing in their city and state, or by entering their zip code. Upon doing so, the site will list agents serving that area and reviews for local agents, if available. The site also notes how many listings an agent currently has and how many that agent has recently sold, agents’ contact information, plus the dollar range of an agent’s listings, noting the highest and lowest dollar amounts. Listing info includes homes’ addresses, “advertised” prices, “sold” prices and dates, and the homes’ locations on a local map. 

Speculators are retreating from California’s housing market, in which sales are down and prices have leveled off, says a Los Angeles Daily News article. House flipping — the practice of purchasing a home and quickly reselling it in the hopes of a profit — is down to its lowest level in the state since 2003, the article says. Resales of homes owned for six months or less dropped from 4.2% in 2005 to 3.2% in 2006, the newspaper says. In 2003, these type of sales accounted for 2.4% of resales, Daily News says. Last year, flippers sold their properties for a median $45,000 above their purchase price, down from a median of $52,000 in 2005, the article says. The source of this data is from HomeSmartReports.com of San Juan Capistrano, the paper says. “Investors, if they can, have adopted a buy and hold strategy until prices come back up,” the article quotes Steve Morgan, the company’s senior vice president, as saying.

As investors pull out of the housing market, condo prices are softening, says an article by NorthJersey.com. The national median condo price, which rose from $168,500 in 2003 to $223,900 in 2005, only rose slightly in 2006 to $224,600, the article says. In Northern New Jersey, average condo prices have dropped 5%, while condo developers slashed prices on new units by up to 25% last year, the Web site says. The median condo sales price for the third quarter of 2006 for the New York metropolitan area was $326,000, NorthJersey.com says. The article notes that because of the slowdown, some builders are focusing on developing rental units instead of condos, the article says. What to do if you have a condo you want to sell? Hold off and wait for the market to recover, the Web site suggests.

Dignowity Hill, a historic district two miles east of downtown San Antonio, Texas, may become the city’s next “it urban neighborhood,” according to an Express-News article. Buyers are purchasing homes at about $85 per square foot to renovate and sell in the area, which is located on one of the city’s highest points, the newspaper says. Among the incentives for these buyers are 10-year city-tax abatements for the renovation of historic homes, the article says. Dignowity Hill has been known for “house fires, drug dealing, robberies and other crimes,” but local residents say the neighborhood is improving, Express-News says. A redevelopment project aimed at connecting the neighborhood via train to downtown over the Hays Street Bridge may also aid in Dignowity Hill’s rebirth, the newspaper says. Says one investor quoted by the paper, “I feel positive enough about it that I didn’t want to wait four years to buy there.”

Last week, residents of Briny Breezes, Fla, a 43-acre town sandwiched between the Atlantic Ocean and the Intracoastal Waterway, approved the sale of the community to a Boca Raton developer for $510 million, says an article published by the Orlando Sentinel. The town is run like a corporation and owners of the community’s 488 homes each own shares in the town, based on their lot’s size and location, the newspaper says. The sale was approved by 82% of the shares, with the sale to be made final in 2009, the article says. When the sale goes through, each homeowner will receive an average of $1 million for their property, while owners with small interior lots will get less, about $700,000 the article says.

Join a reader discussion about the housing market.

Send links to articles about residential-real-estate markets to Lauren Kim at lauren.kim@wsj.com.

Email your comments to lauren.kim@wsj.com.

– January 17, 2007

By Kimberly Lankford

From MarketWatch

Question: The rural county where I live has just reassessed real estate values, and my home’s assessment more than tripled, as did most others in the country. The assessed value is now more than my most recent property appraisal. Should I appeal? What information would I have to present?

Answer: Go for it. As many as 60% of homes are assessed for too much, estimates Pete Sepp, of the National Taxpayers Union, and about 33% of property-tax appeals succeed.

Procedures vary, but you generally have 30 to 60 days after receiving an assessment notice to file an appeal. Ask the assessor’s office for a copy of your property card, which documents the information on which the assessment was based. If the card lists the wrong number of rooms or square footage, for example, you may be able to get your assessment changed without a formal appeal.

If the information is accurate, go to Zillow.com to see how your home’s assessment stacks up against others in your neighborhood. If you find that similar homes are assessed at a lower value, you may have a strong case.

If you spot big discrepancies, check your local assessor’s office’s records for more details on homes with similar features and lower assessments. Or find comparable assessments and explain why your home’s value should be lower, says Sepp, whose organization publishes the helpful brochure How to Fight Property Taxes ($6.95). Some jurisdictions also allow you to submit as evidence market-value information, such as your recent appraisal.

Question: My wife and I just bought our first house. Within a week after closing, we found out that you can use your IRA toward a first-time home purchase, and each person can withdraw $10,000 toward “qualified acquisition costs.” We have an 80-10-10 mortgage (80% from the first mortgage, 10% second mortgage, 10% down). Can each of use withdraw $10,000 from our IRAs without paying a penalty if we put the money toward paying off the second mortgage?

Answer: Good idea, but the answer is no. You can’t take an IRA distribution to pay off any mortgage, regardless of whether it’s a first or a second loan.

First-time home buyers (which the IRS defines as anyone who hasn’t owned a house within the past two years) can avoid the 10% early-withdrawal penalty only if they use the IRA money to pay qualified acquisition costs for a principal residence before the end of the 120th day after withdrawing the money.

Qualified expenses include acquiring, constructing or rebuilding a residence. Closing costs are covered, but paying off a loan isn’t, says Greg Rosica, a tax partner with Ernst & Young. Nor can you withdraw the money after the fact and treat the distribution as though the cash had been used for the down payment you’ve already made, says Bob D. Scharin of Thomson Tax & Accounting.

For more information about rules for IRA withdrawals, see IRS Publication 590, Individual Retirement Arrangements.

Email your comments to rjeditor@dowjones.com.

– January 17, 2007