Condo demand red-hot but FHA policies chill buyers

WASHINGTON — Call it the condo conundrum: Demand for condominium units is rising in many urban areas nationwide, according to new real estate industry estimates, yet mortgage financing is getting squeezed for entry-level condo buyers by a key federal agency.

It's a little schizophrenic. List prices for condos in major markets are rising faster for single-family detached homes in the same area. Nationwide, condo sales are steadily taking away market share from traditional homes as suburban boomers downsize and other owners want to live closer to urban workplaces and center city attractions.

But here's the troublesome flip side: Significant financing barriers erected by the federal government are making purchases of entry-level condos by millennials and other first-time buyers more difficult. Despite indications from the White House as recently as last month that the government wants to loosen up on mortgage credit availability for middle-income Americans, the Federal Housing Administration continues to severely restrict the number of condo projects where it will make its low down payment insured mortgages available. The same restrictions make it impossible for large numbers of seniors who own condo units to obtain reverse mortgages ­— an important home-loan niche that the FHA dominates.

Despite these problems, condos on the whole are doing well. The real estate site Trulia reports that increases in asking prices in the 20 largest condo markets are outpacing increases in single-family asking prices. In Miami, list prices for condos in September were 17 percent higher than the year before, compared to single-family list prices, which jumped 11.7 percent. In Boston, condo list prices increased at a rate four times as fast as single-family homes. In the Washington, D.C., area and San Diego, condo list prices rose by nearly double the rate of single-family homes. Nonetheless, selling prices for condos remain significantly below detached homes on average nationwide, making them more affordable.

All of this points to rising popularity and market share for condos. Lawrence Yun, chief economist for the National Association of Realtors, estimates that condos recently have grown from roughly an 8 percent market share to between 11 percent and 12 percent. But in some urban markets, the condo share is considerably higher. During September in Los Angeles, according to CoreLogic's DataQuick, condos accounted for about 27 percent of home resales. In Miami, they were 44.9 percent.

The main problem in the otherwise surging condo sector, many housing experts say, is the unnecessary blockage of entry points at the lower ranges of the price spectrum. The FHA, which for decades was the go-to source of mortgage money for first-time buyers, currently will only consider insuring mortgages in less than 7 percent of the country's estimated 150,000-plus condominium developments. The agency has stopped approving so-called "spot" loans in condo projects that have not applied for and received special "certification" — a process that many condo
homeowner association boards consider burdensome and frequently leads to rejection.

David Stevens, who was FHA commissioner in 2010 when the agency banned spot loans and now heads the Mortgage Bankers Association, says "it's time" to bring them back with reasonable restrictions because for many young first-time purchasers, "FHA is the sole source" of low down-payment financing. Though the agency confronted significant condo foreclosure problems stemming from the housing bust, Stevens told me in an interview "that doesn't mean you keep 'these restrictions' on" when the crisis has abated, as at present.

So are there any fresh signs of a change of heart at the FHA — any reason to hope for an improvement? Maybe. The agency declines to comment on whether it might loosen its certification restrictions and allow spot loans to buyers and owners in uncertified developments that can qualify under financial stability criteria. But industry and other sources say the agency is feeling the political heat from real estate and mortgage lobbies as well as from Capitol Hill and is drafting a major condo proposal for 2015 that could bring back FHA financing to greater numbers of buyers and existing unit owners.

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Innovative pump delivers meds

One of MassChallenge's recent winners is a startup that says it has developed the first soft, flexible, bandage-like pump capable of delivering one or more medications simultaneously to a broad range of people, from a diabetic at home to a wounded soldier on the battlefield.

Laurence Alberts, CEO and co-founder of Cam Med, said for many diseases such as diabetes, Parkinson's and osteoporosis, whose treatment involves frequent delivery of injectable drugs, using continuous-infusion pumps often leads to better outcomes than multiple daily injections, resulting in healthier patients and lower health care costs because they don't run the risk of ending up in the emergency room if they miss an injection.

But many people are unwilling to use pumps currently on the market because they're too visible and "clunky" to wear, Alberts said. So one of his two co-founders, Yanzhe Qin, a visiting fellow at Harvard's School of Engineering and Applied Sciences, thought: Why not make a pump that's an extension of the body?

In May 2013, Qin and his roommate — and now co-founder — Zhifei Ge, a Ph.D. candidate in mechanical engineering at MIT, began working on the Evopump. At 2 inches by 1 inch by 1⁄4 inch, it is less than half the size of the most widely used pump, Alberts said. And unlike other pumps, which operate with an automated syringe connected to a motor or a metal alloy that expands or contracts to move the syringe, the Evopump is powered by a tiny battery and works through electrolysis.

An electrical current is applied to a material such as water or a salt solution, forming small gas bubbles that create pressure, which moves the medication from the pump to the body. And it can be either pre-programmed or controlled in real time by the patient.

The pump also can deliver multiple medications, making it ideal for medics to use on wounded soldiers, who might simultaneously need a painkiller, a coagulant to stop bleeding and medications to prevent infection and inflammation.

"When Yanzhe approached me through a mutual friend in August 2013, I was just blown away by it," said Alberts, whose background was in strategic consulting. "It was so different and better than everything else in the field. I decided on the spot to team up with them."

In January, the three established Cam Med and a few months later applied to MassChallenge — the world's largest startup accelerator and competition — with "zero expectation," Alberts said, of walking away with $50,000, money they'll now use to have a commercially manufactured prototype made so that they can begin to generate the kind of performance data that potential partners look for.

The Evopump still will need to undergo about two more years of testing, followed by another two years or more of clinical trials before it can be approved by the Food and Drug Administration, after which Alberts expects it to sell on par with existing devices, which today sell for between $30 and $35, and be available to patients with a prescription.

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Contemporary offers space, style

This custom-built contemporary in Georgetown is shaped like a barn — with an attached silo — and has a huge garage ideal for car collectors.

The three-bedroom home at 282 Andover St., built in 2003, sits on almost two acres of land behind the 10th hole of the Black Swan Country Club golf course.

This unique 4,660-square-foot home, with a green metal roof, light-colored vinyl siding and an attached silo that holds the kitchen, a billiards/game room and an elevator, is on the market for $850,000.

Its ground level has a 2,300-square-foot garage with four overhead access doors that has room for nine vehicles. It may not be for everyone, but if you like buying and fixing up cars, the garage gives you ample space to restore and to store them — and a bathroom with a shower stall to clean up.

Most of the living space is on the second level, which has radiant heated floors, central vacuum and handicapped accessibility fixtures and handles as well as an elevator. Almost all rooms on this level, including the great room, kitchen and master bedroom, open out onto a multi-tiered outdoor deck with great views of the golf course.

The showpiece space on the second level is a great room with oak floors, a wall of side windows and 30-foot vaulted ceilings. This space serves as an open living/dining/family room with a full-wall media center built-in at one end and a dining area with a gas fireplace at the other. There's also a wood-topped wet bar with a sink.

Behind the great room, in the five-sided silo bumpout, sits the home's expansive kitchen with custom wood cabinets, commercial grade appliances including an oversized Sub-Zero refrigerator, two dishwashers and two ovens. There are four windows, track lighting, a ceramic tile floor with patterned wood inlays, and a large dark granite-topped pendant-lit island with a six-burner gas cooktop that can seat at least a half dozen diners.

Also on this floor is the home's expansive master bedroom suite, with Pergo floors, a wrought-iron chandelier, a gas fireplace, a walk-in closet and a large three-part Palladian window. The en-suite bathroom features dual pedestal sinks, a custom built-in linen cabinet, a whirlpool tub plus a large beige marble walk-in shower.

There's a second bedroom on this level with its own ceramic tile bathroom, as well as a pocket-doored home office/study with dentil crown molding, two built-in desks and a built-in bookcase/cabinet. A laundry room holds a side-by-side washer, storage cabinets and dryer and a sink.

Off the third-floor landing above the great room sits a vaulted-ceiling loft bedroom as well as a full and a half bathroom. In the silo bumpout sits a custom billiards/gaming room (table included) with wood-paneled wainscoting and Pergo floors. The game room also has sliding doors out to a third-floor deck.

The large driveway with a circular stone planter in the center can hold an additional 20 vehicles.

Home Showcase

• Address: 292 Andover St., Georgetown
• Bedrooms: Three
• Bathrooms: Four full, two half
• List price: $850,000
• Square feet: 4,660
• Price per square foot: $182
• Annual taxes: $11,167
• Location: A mile to Georgetown Shopping Center including 
a Crosby's supermarket
• Built in: 2003
• Broker: Gail Tyrrell of ReMax Advantage Real Estate at 781-760-0670

Pros:

• Open living dining/family great room with 30-foot vaulted ceilings, wall of windows
• Large kitchen with custom cabinetry, large island and commercial grade appliances
• Master bedroom suite with three-part Palladian window, large marble walk-in shower
• Multi-tiered wide deck with views of golf course

Cons:

•  Huge garage with multiple overhead doors may not fit with potential buyer's lifestyle

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Volvo V60 no ordinary wagon

A brilliant red paint job on my Volvo tester dismissed any notion that the V60 was an ordinary wagon.

This, of course, was validated by a turbocharged, 6-cylinder engine that yielded 325 horsepower. Our test model, which topped out at just under $50,000, had Volvo's R-Design trim package that gave the wagon a sporty edge with an upmarket interior.

Low-profile summer tires mounted on 19-inch wheels combined with shallow ground clearance and sport-tuned suspension gave the V60 impressive handling. While the blend made the wagon exhilarating to drive, the downside was a harsh ride, especially in the city and over bridge expansion joints on the highway.

A silky, six-speed automatic transmission produced brisk acceleration. Aluminum paddle shifters, tucked behind the steering wheel, were ready at the finger- tips to wind out those gears. All-wheel-drive certainly makes the V60 an attractive choice for the New England driver, but a second set of all-weather tires is a must. My V60 tester did 19 miles per gallon in the city and 28 on the highway in fuel economy.

An understated interior, finished in flat black, blended comfort and luxury. Brushed aluminum highlights on the leather-wrapped steering wheel, center console and doors broke up the darkness. Leather seats were supportive and fatigue-reducing.

Volvo's climate package takes heated components to another level.

In addition to heated front and rear seats, the V60 had a heated steering wheel, windshield, windshield nozzles, and mirrors.

Rear seating was decent, but lacked footroom with two adults in the front. Three children across the back was a squeeze. While our tester had an opening over the cockpit, a panoramic moonroof would help to brighten the backseat environment and provide better light for the deep, rear storage compartment.

Volvo includes an abundance of safety and security features as standard equipment on the V60's base model. Our tester also had a $900 exterior sensor technology package that included blind spot warning, cross traffic alert, lane change merge, and parking assist.

Volvo also offers a smartphone app that not only provides a remote starter, but also provides access to the V60's dashboard to check fuel levels and maintenance warnings, and provides a journal of where the wagon has been. I liked the fact that I could tap my iPhone to confirm if the doors where locked before I went to bed.

I looked forward to every opportunity to get behind the wheel of the V60 as the combination of modest power and sharp handling made the wagon entertaining to drive. An entry level V60 starts at just under $36,000 and Volvo offers 4- and 5-cylinder engine options.

I recommend taking a close look at the sport wagon segment to anyone considering a compact SUV. Other wagons to consider are the Audi Allroad, Subaru Outback, or the Volkswagen Jetta. The Volvo V60 is a sports car disguised as a wagon.

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Expert: Home Depot email hack may lead to ID thefts

Two months after it revealed that 56 million of its customers' debit and credit cards had been compromised, Home Depot yesterday disclosed that hackers also stole 53 million email addresses — information that, coupled with customers' financial data, could be used to hack their family and friends, as well as banks, businesses and government agencies, one expert said.

"This is the new crime wave of the 21st century," said Anthony Roman, president of Roman & Associates, a global investigative and security consulting firm. "It's an emerging style of robbery and warfare."

Home Depot said the hacked file containing the email addresses did not contain passwords or other sensitive personal information. However, Roman said that once hackers have an email address, they can send emails embedded with a virus, and if the recipients open the attachment, their computers become infected, allowing the hackers access to those people's passwords, contacts and all of the other information on their computers.

"With financial data like your debit or credit card, the implications are clear. If they now have your email address, it makes it easier for them to assume your identity because they can now communicate with your family, your friends, your bank, your mortgage company, your place of business, posing as you," he said. "And by embedding viruses in all of those people's computers, they can create a super computer called a botnet and use that computing power to steal corporate secrets and business plans and attack institutions and government agencies."

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AG probes hospital closure plan

The Attorney General's Office is investigating whether Steward Health Care System violated the terms of a 2011 agreement when it announced yesterday that Quincy Medical Center will shut down operations by the end of the year, a spokesman said.

"We have just been notified about this decision and are currently reviewing it in the context of Steward's legal obligations," said Brad Puffer, a spokesman for Attorney General Martha Coakley.

When Steward bought the 196-bed Quincy hospital in a bankruptcy auction in 2011, it signed an agreement with Coakley that included a 10-year "No Close Period" requiring that it "maintain an acute care hospital in Quincy providing at least the same scope of services as Quincy Medical Center currently provides."

Steward could close Quincy Medical in the last three-and-a-half years of that 10-year period if it could show the hospital "experienced two consecutive fiscal years of negative operating margins" and provide the state's Department of Public Health with "at least 18 months prior written notice of its intent to close," according to the agreement.

A Steward spokeswoman declined to comment when asked about the no-close clause last night.

The Quincy hospital, which has 680 employees, reported a $19.7 million loss last year and has projected a $20 million loss for 2014.

"This positions us to be stronger," said Dr. Mark Girard, president of Steward Hospitals. "Quincy Medical Center has been losing about $20 million (annually) and ... that $20 million comes from the other hospitals in diversion of resources. So, to the extent that we're not diverting those resources, we're allowed to reinvest in our other locations."

Quincy Medical Center's financial losses, Girard said, forced Steward Hospitals to delay the development of an emergency room at Morton Hospital in Taunton and stalled construction projects at Carney Hospital in Dorchester and Holy Family Hospital at Merrimack Valley in Haverhill.

"Health care has evolved ... technology allows you to do a lot of things that historically required inpatient care or extended inpatient care that now you can do either in one day or out of the hospital altogether," Girard said. "That's one big trend that we're all facing and certainly one that has been part of the issue for Quincy Medical Center."

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Schools, industry plan security consortium for cybersecurity

University, private industry and governmental support is being corralled for a New England research consortium to tackle cybersecurity issues confronting the financial services industry, become a regional force in vying for large federal grants and create a cyber­security talent pipeline.

Organizers of the New England Cyber Security Research Consortium have a $2 million commitment from an undisclosed industry source toward the estimated $8 million to $10 million needed for the first four years of operation, according to William Guenther, founder and CEO of Boston consulting and research firm Mass Insight Global Partnerships.

Mass Insight and the 3-year-old nonprofit Advanced Cyber Security Center plan a formal launch of the consortium next year. They so far have letters of support from the Univer­sity of Massachusetts, Northeastern University, MIT Computer Science and Artificial Intelligence Laboratory, State Street Corp., the Federal Reserve Bank of Boston, .406 Ventures and the city of Boston.

The consortium would have university faculty and students working alongside industry researchers on projects such as developing automated, real-time, threat-sharing networks to aid in cyberattack defense and building the security of mobile payments. It would serve as an incubator for emerging businesses.

"This is outsourcing from industries to univer­sities," Guenther said.

The effort will enable New England universities to access large-scale government funding, said Jack Wilson, UMass president emeritus and professor of higher education, emerging technologies and innovation. State and federal governments give preference to regions with strong industry/university partnerships when awarding grants in the $30 million to $70 million range, according to Guenther.

The consortium would take a multidisciplinary approach to cybersecurity, tapping sources in information technology, social and behavioral sciences, economics, law and policy. Developing a "new breed" of talent with well-rounded skills is important, as is collaboration with industry partners sharing the same problems, said John McKenna, Liberty Mutual Group's chief information security officer. "We can't solve these things alone," he said.

A search is underway for a downtown Boston location for the consortium, but much of the work will be done virtually, via connections to partner universities.

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Repeal dead, Walsh ready to deal with Wynn Resorts

With casinos now here to stay, Mayor Martin J. Walsh said he is ready to talk turkey with Wynn Resorts on improvements to Boston roadways leading to its $1.6 billion gambling palace just over the city line in Everett.

"We have a lot of outstanding questions that we have to figure out when it comes to traffic, and I think they have their own questions with the land over there and some of the environmental issues around the land," Walsh said yesterday. "As far as Boston goes, I'm going to talk about Sullivan Square, Rutherford Ave., benefits for the people of Charlestown. The people of Charlestown are going to be the most impacted by this casino, so I'm going to go back to work now and see what I can do."

All seven of Charlestown's precincts voted to repeal expanded gaming Tuesday, the only neighborhood in the city to skew so anti-casino. Statewide, the ballot question failed by a 60-to-40 margin.

Walsh had his first face-to-face meeting with Vegas gaming titan Steve Wynn two weeks ago in a low-key affair at the Parkman House, which the mayor described as "mostly small talk" because the repeal vote was in the offing.

"We really didn't get into much of a conversation about the benefits, although he said, 'You can work with me, I'm a person you can work with,'" Walsh said. "So I take him at his word, and I look forward to seeing if we can hammer out some type of agreements here for the city of Boston."

Wynn's project, which will receive its formal license award today from the state Gaming Commission, is expected to generate 31,000 new vehicle trips on an average day. Wynn executives expressed confidence that tensions with Walsh and any other permitting and legal hurdles will be smoothed over.

"Anything that comes along I think can be dealt with," said Robert DeSalvio, president of Wynn Mass LLC.

Wynn needs permits from Boston for road alterations, and pledged to submit Sullivan Square fixes to the city's Public Improvements Commission within 90 days after the referendum.

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New school music to charter’s ears

A music-oriented Boston charter school stands to be part of Roxbury's revival after signing a purchase-and-sale agreement for land to build a permanent facility about a quarter-mile from Dudley Square.

The 16-year-old Conservatory Lab Charter School plans to consolidate two temporary Brighton and Dorchester locations into a new school for about 450 pre-kindergarten through eighth-grade students. The land is part of the planned $140 million mixed-use Bartlett Place development.

"We're very excited to be where we are right now in terms of the process," Head of School Diana Lam said. "Most of our students come from Roxbury and the surrounding area, and we feel that also it is right at the center of the city."

The Conservatory Lab is "music-infused," with a focus on project-based learning and daily music instruction. All students play an instrument, and the school has 10 orchestras.

Plans call for a 70,000- to 72,000-square-foot school.

"We are engaged in trying to get the money together," Lam said. "The building may cost anywhere from $30 (million) to $35 million, but we don't need to raise all of that because we will have a stream of revenue."

The school receives tuition-reimbursement funds from the state to the tune of about 
$5.8 million this year.

The 1.6-acre building site is in the former 8.5-acre MBTA Bartlett bus yard bought in 2010 by Nuestra Comunidad Development Corp. and Dorchester's Windale Developers. Their Bartlett Place plans include 323 mixed-income apartments and owner-occupied homes, 55,000 square feet of retail and commercial space — including a 12,000-square-foot Harvest Co-op Market — in addition to the school.

"We have three buildings that could go into construction next year, which is exciting for Roxbury," said David Price, Nuestra Comunidad's executive director. The charter school could be the first, because it needs to open by mid-2016, he added.

The school would be open to the community at night and weekends for classes, workshops and music lessons.

"We're very excited to expand the services that we can provide to community members in Roxbury and to students that may not attend our school, but who live in Roxbury," Lam said.

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CVS earnings soar on sales of specialty drugs

CVS Health Corp.'s third-quarter earnings exceeded Wall Street expectations, as growing sales of specialty drugs helped offset the loss of tobacco products, which the company stopped selling in September.

The nation's second-
largest drugstore chain's net income fell to $948 million, or 81 cents per share, from
$1.25 billion, or $1.02 per share a year earlier.

Adjusted to extinguish debt and for amortization costs, earnings were $1.15 per share, topping the $1.14 per share that was the average estimate of analysts surveyed by Zacks Investment Research. Revenue also surpassed expectations, rising to $35.02 billion, compared to the $34.65 billion analysts had forecast, according to Zacks.

Revenue from the Woonsocket, R.I.-based company's pharmacy benefits management, or PBM, side increased 16 percent, and operating profit from that segment grew 7.3 percent, helped by new business and the growth of expensive specialty drugs for complex chronic health conditions.

"PBM revenue growth and profitability were above our estimates, boosted by net new business and growth in specialty pharmacy, including ... contributions from Specialty Connect," a new program that allows CVS customers with these prescriptions to either pick them up or get them through the mail, according to Meredith Adler, a Barclays Capital analyst.

CVS said revenue from its retail pharmacy business increased 3 percent, but the loss of tobacco sales hurt earnings by 3 cents per share. The full-year impact of missing tobacco products will reduce earnings by 7 to 8 cents per share, the company said.

"As expected, the tobacco exit negatively impacted," Peter Costa, a Wells Fargo Securities analyst, said in a note. "We expect this impact may nearly double in Q4."

Herald wire services contributed to this report.

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