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'Birthday Houses' Celebrate Unwanted Anniversary

Barbara Correa — 2011-03-24T12:38:00 00:00

Filed under: News

So many unwanted homes are sitting on the market for so many days that maudlin sellers have come up with a name for them: birthday houses. As in, this is the first, second, third or fifth year that my house has been in limbo: up for sale, but not selling.

Gabrielle Rudin, a marketing executive in Manhattan, bought her 3-bedroom house in Catskill to get away from the stress of the city (photos below). When the recession hit, she found it unaffordable. Now the house, which has been on and off the market since 2008, is a cause of stress. "I resent it,'' says Rudin. "I compare it to other houses that have sold in the area and I think, it has a porch, it has a deck and a two-car garage. ... Why me?'' She even cut the price from $235,000 to $195,000, but still no takers.

Realtors tell Rudin it's not her fault; it's the market's. But the birthdays are becoming more like wakes.
On Monday, the National Association of Realtors delivered more bad news. Home sales fell almost 10 percent in February after three straight months of gains. The glut of houses listed for sale rose to 3.5 million last month, and that doesn't even count the shadow inventory of millions more that will come to the market eventually.

Some estimates project distressed homes currently in limbo between foreclosure and the sales

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market could take three years to sell off. Florida, where 18 percent of all homes sit vacant, is suffering from the worst oversupply in the country. Analysts there say it will take 8 years for vacancy numbers to drop into single-digit territory.

Unsold birthday houses fall into several categories. Some come with price tags and square footage that are simply obsolete in this job-starved economy. Others are worth less than they cost, and their owners can't afford to hold a fire sale. Some houses belong to owners still living in delusion about what the house is worth. And some homeowners are just unlucky.

Joan Frank put herself in that last category. In 2006, she put her 4,000 square-foot home in Sedona, Ariz., on the market. A massive wildfire ripped through the area. Then, the city started work on a major highway project and the road to her house was completely blocked off. Then the recession hit and the economy began to tank. "Every single thing was against us,'' she says.

One freezing winter day more than a year after the house was put up for sale, a water pipe exploded, flooding the space between the first and second floors. For Joan, that was the last straw. She decided she would call her real estate agent and pull the house off the market, right after she called the insurance company to report the water leak.

Just as she was ready to give up, however, her luck changed. While Joan was on the phone with her insurance company, her Realtor called and said a young couple who had seen the house the day before had come forward with an offer. Within days, the pipe was fixed and the sale was underway.

Finally, the house was sold. But the uncertainty and anxiety of living in limbo for more than a year was not. To help her out of her funk, Joan wrote "Home Seller's Blues and How to Beat Them,'' a how-to of tips on how to sell a home and advice for living with frustration and uncertainty when it takes forever.

Her two key pieces of advice for strung-out sellers: Be extremely flexible, and check your ego. "Do not equate yourself with the price of your house,'' she says. "People think, I'm a $900,000 person. If I sell for less than that, I'm worth less than that. You have to get over that.''

For more on home prices and related topics see these AOL Real Estate guides:

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Rental Market Still Belongs to Renters

Barbara Correa — 2011-03-22T12:10:00 00:00

A headline-grabbing article last week suggests that after three years of flat growth, apartment rents are poised to spike and may jump 10 percent by 2012.

The piece, from CNN Money, bases its prediction of double-digit rent increases on pent-up demand from twentysomethings who were forced to move in with their parents during the recession. Now, it says, these ranks of the young and underemployed are desperate to leave the nest.

It's true that rents rose steadily -- if slowly -- for most of last year. But in the fourth quarter of 2010, from October through December, the average rent paid in U.S. cities actually fell $2 to $956 per month, according to apartment data tracker RealFacts.
RealFacts founder Sarah Bridge, who has been studying rent price movement for 22 years, told AOL Real Estate that today's market belongs to the renter, especially those with good credit. "The days when there was a lot of turnover and the feeling landlords had was you could get another tenant ... those days are over,'' she says.

Today landlords realize the value of having a good tenant in place. Jacking up rent by $50 a month -- just as prices for food, gas and healthcare are also on the rise -- could motivate a good tenant to look elsewhere.

The drop in rents at the end of last year clearly shows that all those desperate 20-somethings are willing to pay more

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rent, but only up to a point. That means property owners will have to relax and play the waiting game as the economy makes its snail-paced comeback.

All that doesn't sound seem to add up to 10 percent rent hikes, unless you happen to live in San Jose or one of the other markets that are extra hot at the moment. Those include Baltimore/D.C., Colorado Springs and Denver, and Chicago, all of which have seen rents jump more than 5 percent in the fourth quarter compared to the same period in 2009.

And even in those markets, there are still lots of foreclosures and unsold homes offering themselves up to cost-conscious renters. Remember how the Great Depression created an entire generation of penny pinchers? Maybe Generation-Y is learning the cheap skate habits of their great-grandparents.

Want to know how to deal with other rental issues? Here are some AOL Real Estate guides that can help:

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Is Your Home Earthquake Proof?

Barbara Correa — 2011-03-18T11:14:00 00:00

Filed under: News,Home Improvement

In the wake of last week's devastating earthquake and tsunami in Japan, prospective home buyers may be asking themselves what about a house makes it more able to weather a natural disaster.

There isn't a huge difference in the way residential homes are built in Japan compared to in the U.S., although the Japanese are more likely to invest in special earthquake engineering, particularly in commercial and higher-end residential buildings.

Home builders in both Japan and the U.S. use a lot of wood-frame construction, which is flexible and tends to ride out a quake fairly well, said Heidi Faison, outreach director at the Pacific Earthquake Engineering Research Center in Berkeley, Calif. But wood frame structures do have potential vulnerabilities in two key areas: the foundation and the wall that supports a crawl space, which is called a cripple wall.
She recommends home buyers hire an engineer to make sure the wood frame is bolted to the foundation. If a house has a crawl space underneath it or you need to climb a few steps to get up to the first floor, it likely is supported by a cripple wall, which can buckle in an earthquake. If you're in an earthquake-prone location, that space needs to be filled in with a solid material.

Gary Ehrlick, a structural engineer and program manager for Structural Codes & Standards at the National Association of Home Builders, outlines some other house features to consider:

o. Look at the garage, if the house has one. A large garage door opening or a lot of big windows on the first floor, that can create a soft story -- an open space without enough support to withstand violent shaking.
o. Brick veneer can present a major hazard if it's not attached well. Brick was a problem in the 6.3 magnitude temblor that struck New Zealand last month. "It doesn't create as much of a hazard inside, but outside it can injure or kill,'' he said.
o. Houses built on a slope are often an issue. They need to be tied back well with footings. Also make sure the slope is stable. Liquefaction -- where saturated soil becomes liquid -- can be a problem and can occur when a building is located near a lake or river. In an earthquake, liquefaction can cause the ground to behave like quicksand, as seen in New Zealand and in the 1989 earthquake in Loma Prieta in the mountains of Santa Cruz, Calif.

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These are all important things to look for in a house. But they only address hazards caused by the shaking of the earth.

In Japan, most of the damage was actually inflicted by the subsequent tsunami, just as most of the destruction in the San Francisco quake of 1906 was caused by fires that ripped through the city after gas lines were ruptured.

A disaster's chain of events makes the preparation scenario a bit more complicated.

There is a growing interest in designing homes better able to survive a tsunami. The basic idea in tsunami design, as in flood-resistant construction is to get some of your structure up above the expected level of water, said Gary Ehrlick.

"In commercial structures they talk about vertical evacuation zones.'' Under this theory, the first floor, built out of concrete or steel, is strong enough to withstand the pressure of the water. The "zone of refuge'' occupies the upper floors.

Another concept that came out of the earthquake/tsunami that leveled Banda Aceh, Indonesia, on Boxing Check out our gallery of Day in 2004 is a house where the first floor allows the wave to wash through it, destroying the walls but preserving the foundation. This would be a concrete frame with columns or wall segments in each corner of the house. The walls are panels made out of something light, like bamboo or wood. After a disaster, such panels would be easy to replace.

Check out our photo gallery of a tsunami-resistant home designed by Kazunori Fujimoto Architect & Associates:

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More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

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Vincent Gallo Selling L.A. Loft -- It's Gritty and Overpriced

Barbara Correa — 2011-03-16T14:15:00 00:00

Filed under: News,Celebrity Homes,Selling

Actor and director Vincent Gallo is just the type of Hollywood personality who would eschew Malibu for the industrial grit of downtown Los Angeles.

Best known for directing Buffalo '66, Gallo has apparently had enough of the low life and has put his 1,650 square-foot live/work loft space in the Toy Factory building on the block (see photos below).

Trouble is, his $698,000 asking price is off the mark. "It's high,'' says René Avedon, a real estate agent at Prudential California Realty. "Based on the comps and last sales in the building, it's high. But don't tell him that.''

Sellers with a connection to Hollywood shouldn't make the mistake of thinking their star power will add anything to a property's value, says Avedon.

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No matter who the owner is, real estate is always about location, location, location. And downtown L.A. has been hit even harder by the downturn than other areas in greater Los Angeles.

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During the boom years, developers poured resources into buying up landmark properties downtown and turning them into condos. But the expected renaissance of the area -- and rising real estate prices -- never quite materialized.

Gallo's two-story home is located on the ground and first floors of the loft complex. The unit has soaring 18-foot ceilings, a windowed gym and rooftop with a pool, fireplace and green spaces.

Nico Valentino, commenting on the sale at Curbed L.A., sums it up succinctly: "I like the unit ... pretty good, decent layout. However, it's overpriced, location sucks, and sleeping under a bunch of sewer pipe has gotta be bad feng shui." Ouch.

Indeed, the listing for the 1-bedroom, 1-bath loft implores would-be buyers to consider that "the seller will finance up to 70 percent of the sale.''

For more on home prices and related topics see these AOL Real Estate guides:

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Current Mortgage Rates: Fixed-Rate or ARM?

Barbara Correa — 2011-03-09T12:17:00 00:00

Filed under: News,Buying,Financing

Until recently, the only dilemma for home loan seekers was what kind of mortgage to take on: a 30-year fixed rate mortgage or adjustable rate (ARM). A gentle upward climb of current mortgage rates -- as well as home prices -- was looking inevitable. The smart money was predicting that home prices had dropped as low as they could go. For people looking for loans, it seemed like the perfect window to buy low and lock in a rock-bottom fixed rate.

But then the U.S. jobs report hit in February, and it was ugly. It showed an anemic gain of only 36,000 new jobs created. Then oil prices shot up in response to uprisings against Hosni Mubarak of Egypt, Tunisia's Zine al-Abidine Ben Ali and, of course, Libyan dictator Muammar al-Qaddafi. All this chaos started to weigh down on interest rates and home prices.

What does all this mean for Joe homebuyer or refinancer? It means the housing market may have further to fall before it starts to rebound. And rates could drop even further.

Understanding adjustable rate mortgages

But rates fluctuate all the time, and it's a mistake to make a financing decision based on which way rates are going to go, says Victor Shaio, a mortgage broker at MetLife Home Loans who handles real estate for NBA and NHL stars like former New York Rangers center Scott Gomez.

What borrowers must ask themselves is, How long do I think I'm going to be in this property? If

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they can answer that question, it's pretty simple. Rates are a lot lower on adjustable rate loans, but they reset to a new interest rate after the initial fixed period. If the borrower knows they are going to sell or refinance before the reset, an ARM is great.

But for someone who is buying the property as a longterm home, or is risk-averse, or won't sleep at night worrying about how much their payment could jump to, a 30-year fixed mortgage is a no-brainer. Yes, a fixed rate loan is going to cost more than an adjustable, but rates are still at historical lows.

"Don't be wowed by the sexy ARM interest rate," says Shaio, though he admits, "It can be a great program for the right borrower." For people wondering how long they will keep the house, or are unsure if they could handle a higher payment if they had to, it may be better to stick with a fixed.

A few other points to keep in mind:

--If you do go with an adjustable mortgage, be sure you understand if it comes with prepayment penalties and what index the reset is based on. ARM resets are typically pegged to the London Interbank Offered Rate (LIBOR) or U.S. Treasury yields.

--Consider loan types based on whether the purchase is an investment property or a home.

Remember, buying a house isn't a strictly financial decision. If you fall in love (with a home) you might be willing to pay more per month.

For more on mortgages and related topics see these AOL Real Estate guides:

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Will Rising Price of Oil Help Sell Green Homes?

Barbara Correa — 2011-03-01T14:23:00 00:00

Filed under: Design,News,Economy

What does the revolt in Libya have to do with green home design? Well, now that the price of oil has spiked to over $100 a barrel, energy-efficient green homes are looking better and better.

One reason is that the price of heating oil, the main source of heat for more than 8 million U.S. homes, moves in tandem with petroleum. Today, heating oil costs 25 percent more than it did just two months ago due to fears that popular uprisings across the Middle East could disrupt oil supplies.

Home builders are making the most of the opportunity in an otherwise dismal climate for home sales. KB Homes has taken to labeling its green homes with the type of energy efficiency stickers you're more used to seeing at a car dealership.

The Las Vegas Sun reports Meritage Homes unveiled a new development in Las Vegas where homes come with a solar energy system included in the base price, which begins at $150,000. And Pulte Homes' green houses feature real-time energy usage meters, bamboo flooring and dual paned windows.

There's just one problem: Green home buyers may save money on utility bills, but they're looking at a higher purchase price.

In a survey from the National Association of Home Builders and Whirlpool Corp. released in November, more than half of respondents of all income levels said a green home would be

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affordable to live in or maintain. But only high-income respondents said they could afford to buy a green home.

Buy New Vs. Retrofit

So which is more cost-effective, moving into a brand-new green home or retrofitting the house you already own? If your brand-new green home is also a lot more space-efficient (fancy way of saying smaller), then it may be a cheaper way to go. Meanwhile, if all you need to do is install solar panels in your current house, maybe that's the economical way to go.

Federal loan programs including FHA, VA and Fannie and Freddie loans offer energy efficient mortgages. These loans let borrowers finance energy-saving improvements by bundling those costs into the mortgage without increasing the down payment. See http://www.energystar.gov/ for more info.

Performing a deep energy retrofit on walls, roof, foundation and more starts at about $150,000, says Emile Chin-Dickey, principal at ZeroEnergyDesign, a Boston-based firm that designs new green homes and also retrofits existing homes. But that retrofit pays off over the long term, say several decades, because it vastly reduces the amount of energy needed to heat the home. He advises clients who can't afford that cost all at once to take a staggered approach and renovate over time.

On the other hand, it's a lot simpler to move into a house that was built green from the ground up. "With a renovation you don't always know what you're going to find, and it's occupied so you may be displacing the people living there.'' Having to move while your house is being retrofitted doesn't exactly sound like an inexpensive proposition.

More Home Energy-Efficiency Tips From Emile Chin-Dickey

o. An air source heat pump -- like an air conditioner that runs in reverse -- is extremely energy efficient. Since it runs on electricity, it's also much easier to convert to a future renewable energy source, like wind or solar.

o. A biofuel pellet stove might be a good alternative to heat a smaller space. Availability of biofuel pellets may be a problem in some areas, however.

Home Heating Stats From TreeHugger

o. 10%: Percentage of your heating bill you can save in the winter by using a ceiling fan which circulates warm air from the ceiling to the floor.
o. 8%: Amount of heat that escapes through your chimney when the fireplace damper is not closed.
o. 5%: Amount of heating costs you save by cleaning your furnace filters monthly. Dirty filters restrict airflow and increase the amount of energy used.
o. $115: Amount of money saved per year by installing an Energy Star thermostat.
o. 15%: Percent efficiency that an Energy Star qualified furnace is over an older furnace.
o. 20%: Percentage of energy saved by using an Energy Star heat pump when compared to a standard new model.

For more insight on mortgages and refinancing see these AOL Real Estate guides:

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

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Seattle Home Values Doing Better Than Reported

Barbara Correa — 2011-02-23T12:17:00 00:00

Filed under: News,Buying,Economy

Clueless on Seattle home values? Stable real estate markets thought to be immune to steep home price declines are finally feeling the same pain that cities like Phoenix have been suffering through for the last three years, according New York Times. Home prices in Seattle plummeted 4.7 percent in the last year, an even bigger drop than for houses in the foreclosure capital of the world, Las Vegas.

Um, not so fast, says Jonathan Miller, real estate guru and number cruncher for MRIS, the largest database of housing data in the U.S.

Miller takes the Times to task for what he claims is a major hole in the story: The plunge in home prices described in the article is based on data that is up to five months old.

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Price fluctuations outlined in the article come from the most recent Case-Shiller Home Price Index, which measures prices for homes that closed last September.

Now, summer is normally the busy season for home sales, but last summer was different. Since the federal government's tax credit for first time buyers expired last April 30, the summer of 2010 was a very slow one for home sales. Artificially slow, in fact.

To find out what's really going on in Seattle, you need to look not at prices, but on pending sales figures, says Miller. Deals reflect "the meeting of the minds'' between buyers and sellers. The deal is a leading indicator, meaning prices move in response to sales activity, not the other way around.

Miller explains it this way: Say you have a town with 10 sales a month for 5 years. Then, all of a sudden you have 100 sales a month. What happens after that? Prices begin to rise.

So, what does all this mean for Seattle and other "stable'' markets that now seem to be on the ropes, like D.C. Metro and Baltimore?

It means prices in those markets will stabilize and maybe even rise, says Miller. His Real Estate Business Intelligence Pending Home Sales Index released last week shows home sale deals jumped 34% in January from December for the Washington DC Metro and Baltimore regions. Miller doesn't do Seattle, but he predicts that sales activity will be a lot healthier there than the NYT snapshot suggests.

"I'm not trying to be a Pollyanna or a cheerleader for the market," he says. "But this is being presented as if it's happening now. But it's based on five months ago after the first-time buyer credit expired.''

Click here for home listings in Seattle.

For more on mortgages and related topics see these AOL Real Estate guides:

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Robin Williams Back in the Big Apple, For $15,000 Per Month

Barbara Correa — 2011-02-23T11:23:00 00:00

Robin Williams just rented a fourth-floor condo (see photos below) on New York City's Upper West Side that was recently listed for almost $4 million, the New York Post reports. Williams is in town for the Broadway premiere of Bengal Tiger at the Baghdad Zoo, a new play about a tiger walking the streets of Baghdad in search of the meaning of life.

Williams is paying about $15,000 monthly for the 2,489-square foot 4-bedroom, 3-bath spread in The Rushmore, a family-friendly luxury building overlooking the Hudson River at 64th Street. The custom-designed unit had been up for sale for the past eight months, according to the listing at StreetEasy.

The Rushmore, which also houses a La Palestra Wellness Center, indoor swimming pool and Kidville indoor playground, has not been the easiest sell since opening in 2006. The Rushmore was one of those Manhattan buildings that started selling just as the real estate market began to crest. For the past year and a half, building developer Extell has been fighting with a group of 41 purchasers suffering from buyers' remorse want $16 million in deposits returned.

It's anyone's guess how the lawsuits will pan out. But uncertainty surrounding the building hasn't turned off another celebrity resident also moving in to the Rushmore: baseball star and Cameron Diaz main man Alex Rodriguez. Unlike new neighbor Robin Williams, Rodriguez is buying, a 3,600 square-foot penthouse, thank you very much -- for a cool $6.5 million.

Want to know how to deal with other rental issues? Here are some AOL Real Estate guides that can help:

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For Sale By Owner: Not a Good Move Right Now?

Barbara Correa — 2011-02-18T15:32:00 00:00

Filed under: News,Advice,Selling

Do you really need a real estate agent to sell your house? Fans of the For Sale by Owner (FSBO) approach say no. But here is a cautionary tale about the potential pitfalls of going the For Sale by Owner route.

Matthew Peters and his wife, Fiona, had two FSBO home sales under their belt, so they naturally opted for the do-it-yourself strategy the third time around as well.

The average seller looking to unload a home automatically assumes the first stop is securing a trustworthy real estate agent to market and sell the property. But for an adventurous few, the idea of saving that 5 to 6 percent broker commission is just too tempting.

The Peterses were in that small percentage. The couple had been renting out their two-bedroom ranch in Madison, Wisc., for about three years when they finally found a buyer last year willing to pay the $191,000 asking price.

Then the trouble began.

The couple planning to buy the Peterses' home was anxious to move -- the lease was ending on their rental -- so they asked if they could come in three days prior to closing. With a loan commitment letter in hand, the Peterses opened their house to the new family. That's when the trouble started.

According to Matthew Peters, their would-be buyers promptly charged roomfuls of new furniture, even two flat-screen TVs, to the point that they compromised their credit score and the bank canceled their loan. The worst was yet to come.

Soon, Peters learned that the ideal family he thought he'd been dealing with were actually his

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worst nightmare, and now they were living in his house. "The house that we kept so tidy and spent thousands getting ready for a sale was now a disaster area,'' says Peters. "They ruined some of the floors, kids drew on the walls, they punched holes in the walls. They had a troubled teen that kicked in a door, the lawn was ruined from the above-ground pool they put in. We started getting complaints from neighbors.''

The family was now renting, and in addition to trashing of the house, they were constantly late with the rent. Peters continued to show the house to prospective buyers, but in its junked condition, it was a hard sell. Finally, after six months, Peters evicted his tenants for nonpayment. He spent two full days cleaning and hired some contractors to fix a series of broken items.

Then he ran into a little luck. One day, a man called about the house, saying his 70-something mother was looking for a single story place in the neighborhood and could pay cash. The house closed 10 days later. The two parties ended up splitting the fee to the buyers' broker, each paying around $5,000.

Peters, who is now renting, says if he had it to do all over again, he would definitely hire a sales agent. "We thought we were going to cash in not having to pay the broker commission,'' he says. "One thing people don't factor in is the time. I probably spent dozens of hours on showings.''

Still interested in trying it yourself? Check out these factoids:

o. FSBO sellers declined in 2010, from 14 percent of overall home sales in 2003 and 2004 to just 9 percent in 2010.
o. Another 32 percent of FSBO sellers sold to a relative, friend or neighbor.
o. Before listing your own home, you need access to good current data about sales prices, market times, and activity. Be familiar with the process and know the requirements for your state. Some sellers believe that because they are not licensed, laws and regulations do not apply to them. Know the law, or hire someone who does.
o. You will need to invest time to market the property and be available to show your home and respond to any inquiries.
o. If the property is priced to reflect true market value and it is placed in the multiple listing service, nothing will stop it from selling.
o. Most FSBOs often wind up paying at least half of the brokerage fee to the broker who produces a buyer.

Source: RISMedia

These AOL Real Estate guides can help, whether you're in the market to buy, rent or sell:

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Adjustable Rate Mortgages: Time to Reconsider?

Barbara Correa — 2011-02-14T12:12:00 00:00

Filed under: News,Economy,Financing

Mark Shapiro, owner of a public relations company in San Diego, went shopping last month for a mortgage to buy a house near Poway, Calif. Shapiro, pictured left, had every intention of following his mortgage broker's advice and choosing a 30-year fixed-rate mortgage. But then he looked at the difference between what he'd pay in interest for that fixed loan -- more than 5 percent -- versus 3.8 for an 7-1 adjustable rate mortgage.

To boot, the 30-year fixed was going to require more paperwork, since Shapiro is self-employed. The adjustable rate mortgage was easier to obtain.

Shapiro also likes the idea of being able to reduce his mortgage principal. "I love being able to throw in extra money whenever I feel like it and watch my payments go down," he told AOL Real Estate. "If it is a good month, I can throw in an extra thousand or so. If it is a tight month, I just pay the regular monthly bill.''

Shapiro's experience helps explain why adjustable loans are beginning to make a comeback.

Adjustable rate mortgages have earned a reputation as a main culprit -- along with

Fixed Rate or ARM

shady lenders and unbridled greed -- in the spread of foreclosures and waves of underwater homeowners. So why are consumers continuing to sign up for mortgages with interest rates that start out fixed but then float up or down, depending on the whims of international credit indexes?

Bottom line: They're cheap. And now that mortgage rates are beginning to drift upward, they look like an even better deal.

In the summer of 2004, way before the bubble burst, ARMs hit a peak, accounting for 40

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percent of all new home loans. Of course, a lot of that debt was of subprime quality, and by early 2009, adjustable loans fell to just 3 percent of the market, according to Freddie Mac's annual ARM survey. Since then, they've clawed their way back to about 7 percent of new mortgages. Look for that number to hit 9 percent by year's end, said Freddie Mac chief economist Frank Nothaft.

The number one considerations for borrowers deciding between a fixed or adjustable loan are how long they plan to live in the house, and how much risk they're willing to take on. That second part of the equation is a powerful argument for the fixed, long term loan. "It's been a crazy last few years and people don't really want to put themselves into a product that's going to adjust,'' said Matt Hackett, underwriting manager at New York direct lender Equity Now.

But for Mark Shapiro, the risk is worth it. In seven years, when his loan is due to adjust, he'll be looking to sell. And by then, he figures the market will have improved to the point where he'll break even. Or maybe -- he dares to dream -- make a tidy profit?

For more on mortgages and related topics see these AOL Real Estate guides:

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