GOLD MEDALIST JONNY MOSELEY CALLS TELLURIDE SKI RESORT HOME

TELLURIDE RECEIVES SILVER EAGLE ENVIRONMENTAL AWARD

Housing Gets Even Less Affordable

US existing home sales rise 1.0 percent

WASHINGTON (AFP) - US existing home sales climbed 1.0 percent in March to their third highest pace on record, the National Association of Realtors reported, in a sign of a still-hot housing sector. Home sales grew to an annualized pace of 6.89 million units, better than the 6.8 million expected by Wall Street analysts. "With mortgage interest rates remaining historically low, gains in the labor market and economic growth appear to have lifted the confidence of home buyers," said David Lereah, NAR's chief economist. "There's no question there is a strong demand for housing from a growing population." The national median existing-home price for all housing types was 195,000 dollars in March, up 11.4 percent from March 2004 when the median price was 175,000 dollars. The inventory of unsold homes fell 0.2 percent to 2.33 million, a four-month supply at the current sales pace, "a very lean supply," Lereah said. The all-time record low inventory was 3.8 months in January. "Not a whole of air has come out of the housing bubble yet," said Joel Naroff of Naroff Economic Advisors. "With mortgage rates basically going nowhere and still reasonably low, there is no reason to expect the huge surge in housing sales and prices to slowdown sharply. It appears that it will take much higher rates to dampen the spirits of home buyers." "The trend in sales remains remarkably steady at a very high level, though no further upward movement is likely," said Ian Shepherdson, chief US economist at High Frequency Economics. Despite a steady rise in the federal funds rate, mortgage rates -- reflecting bond yields -- have fallen for three straight weeks after hitting an eight-month high in March. The average 30-year fixed rate mortgage dropped back below 6.0 percent to 5.95 percent last week, according to Bankrate.com.

Real estate sales slow in Canada's major markets

In the first quarter of 2005, a total of 78,802 homes traded hands via MLS – on par with sales activity in the first quarter of 2004. Sales remained particularly strong in Calgary, Edmonton, Kitchener and St. John's, where activity reached its highest level on record for the first quarter.

The major market MLS residential average price set a new monthly record in March, climbing 8.6 percent on a year-over-year basis to $259,736. Average price reached its highest level ever for the month of March in a number of major markets, including Vancouver, Calgary, Edmonton, Ottawa and Montreal.

In the first quarter of 2005, the major market MLS residential average price rose 8.1 percent on a year-over-year basis to $253,826 – its highest quarterly level on record. Average price set a new quarterly record in many major markets across Canada, including Vancouver, Calgary, Edmonton, Regina, Saskatoon, Toronto, Ottawa, Montreal and St. John's.

Seasonally adjusted MLS residential new listings numbered 42,653 units in March. This represents a decline of 1.2 percent from the previous month. Similar month-over-month declines for sales and new listings kept market balance virtually unchanged in March compared to the previous month.

New listings rose by 0.4 percent to 129,208 units in the first quarter of 2005 compared to the fourth quarter of 2004. Identical quarterly percentage increases in sales and new listings kept market balance on an even keel in the first quarter compared to the fourth quarter of last year.

"The Canadian dollar remains strong despite jitters about the possibility of a federal election," said CREA Chief Economist Gregory Klump. "With inflation expected to remain grounded, the trendsetting Bank rate should remain stable over the next six months.

"Low and stable interest rates will continue to support consumer confidence and fuel housing activity. Although higher prices will weigh on sales momentum as the year progresses, activity will remain strong and reach its second highest level in history," Klump said.

The Canadian Real Estate Association is one of Canada's largest single-industry trade associations, representing more than 76,000 Realtors working through 102 real estate boards, 10 provincial associations, and one territorial association.

TALL TREES MALICIOUSLY PLANTED MIGHT BE A SPITE FENCE

DEAR BOB: We don't get along with our neighbors. They are the meanest people we have ever encountered. A few years ago they planted a row of trees on their side of the property line, knowing that in a few years the tall trees would block our view. Do we have any recourse to get the neighbor to trim or remove the trees that block our view? – Jess W.

DEAR JESS: There is no legal right to a view unless you have purchased rights to a view or an air easement over your neighbor's property, or unless there is a local city or county view ordinance. Unless those situations apply, your neighbor can plant trees on his property wherever he/she wishes.

However, if you can prove to a judge that the neighbor maliciously planted the trees as a spite fence (defined by statute in most states as being over 6 feet without a building permit), you might get a court order to remove the trees as a spite fence. It's a legal "stretch," but it's worth consulting a local real estate attorney for details.

The new Robert Bruss special report, "How to Buy a Home Even If You Have Less Than Perfect Credit," is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet download at www.bobbruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center).

Real estate purchases drop

The MBA seasonally adjusted purchase index decreased by 5.3 percent to 446 from 470.9 the previous week. The seasonally adjusted refinance index decreased by 3.1 percent to 1798.8 from 1857.2 one week earlier.

The refinance share of mortgage activity increased to 38.3 percent of total applications, from 37.8 percent the previous week. The adjustable-rate-mortgage share of activity decreased to 35.2 percent of total applications, from 36.6 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.91 percent from 6.08 percent one week earlier. Points including the origination fee decreased to 1.26 from 1.34 for 80 percent loan-to-value loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.48 percent from 5.61 percent one week earlier. Points including the origination fee decreased to 1.32 from 1.39 for 80 percent loan-to-value loans.

The average contract interest rate for one-year adjustable-rate mortgages decreased to 4.29 percent from 4.39 percent one week earlier. Points including the origination fee decreased to 0.9 from 0.97 for 80 percent loan-to-value loans.

Washington, D.C.-based Mortgage Bankers Association is a national association representing the real estate finance industry.

Oil prices could spell trouble for global economy

In a thin-news week, long-term rates enjoyed a routine improvement from the quick run-up in March – routine and temporary. The 10-year T-note's range: 4.62 percent last week, 4.4 percent yesterday, back to 4.51 percent today, taking mortgages from 6.25 percent to 5.875 percent, and back to 6 percent today.

The credit markets are in a standard, between-Fed-meeting pause, re-calculating how fast and how far the Fed will raise the overnight cost of money. It's certainly going to hike another .25 percent on May 3 to 3 percent, but the range of forecast from there is more scattered than at any time this year.

The high-rate voices insist that inflation pressure will force the Fed to switch from .25 percent hikes per meeting to one or more .5 percent moves, and to go at least to 4.5 percent by year-end. Then, instead of pausing at "neutral," the Fed will adopt a tight policy. I assume that those with this forecast are short bonds; would profit handsomely from a sell panic; and are doing all that they can to induce one.

Low-side guessers expect a Fed pause any time, but they have already been wrong: PIMCO, the bond-fund giant, predicted a pause at 2.5 percent.

I think the centerline expectation is now a Fed at 3.75 percent by year-end, and trading the 5-year T-note strongly suggests a long pause there, or perhaps below. The 5-year hit 4.35 percent at the worst of last week, traded all the way down to 4.08 percent in this week's rally, and is settling at 4.15 percent. If the Fed is going past 3.75 percent, then the market would want a lot more than 4.15 percent from a 5-year note. If 3.75 percent is tops, followed by a pause, mortgages may not rise above 6.5 percent this year.

The economics governing all this Fed-guessing are as weird and circular as they can be. High oil prices should mean inflation, and a tight Fed. However, in an era of vast over-capacity in both manufacturing and labor, businesses can't raise prices and labor can't demand higher wages. This time, very high oil prices cut quickly into consumers' disposable income; rising costs eat into corporate earnings; and the global economy should slow, possibly with little actual increase in inflation. If that equation holds up, the Fed has only to remove the last accommodation left over from post-bubble ease, and the economy will achieve a soft landing.

The crazy part of this calculus: if oil prices suddenly retreat from what Federal Reserve Chairman Alan Greenspan this week called a "price frenzy," then the brakes will come off the global economy while residual inflation pressure from expensive energy is still in the system. In the worst case, accelerating growth and inflation (the bond bears correct by accident), the Fed would have to come hard and fast.

So the markets have been trading each day: oil above $57/bbl, rates fall and stocks sink. When oil falls, rates and stocks tend to rise.

The gaping hole in the theory behind the crazy part (the low-oil-high-growth-high-inflation-high-rate part): there is no way for oil to fall far except as a consequence of a global economic downturn that reduces demand for oil. Nothing in $55/bbl oil has unleashed new supply. $55/bbl ain't that high: in constant dollars it's only about half the cost of a barrel in the '79-'81 spike. Refineries are at capacity worldwide, and new ones are not even on drawing boards. The Saudis say they're going to pump, but they are near capacity. Russia, Nigeria and Venezuela are mismanaging themselves to reduced capacity.

The economic downturn that likely will reduce oil demand and limit inflation is underway. German unemployment is now 12 percent, the highest since WWII, and the rest of Europe expects only 1.5 percent GDP growth. Japan is re-entering recession and deflation, its exports shrinking. China is the great unknown, but any slowdown among the buyers of its exports can painfully expose its bubbled economy.

This situation calls for caution and gradualism at the Fed, and they know it.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

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