An increasing number of prospective home buyers are seeking a true dream luxury home — specifically, a multimillion dollar residence located on a picturesque island and loaded with amenities.

As for location, a recent survey, conducted by Coldwell Banker Previews International and the research firm ICR, revealed that 27 percent of buyers want a luxury home situated on an island, and 22 percent desire it to be located in a rural-country area. Others expressed a preference for a location in a suburban area, an international destination, or a luxury unit in a high-rise development in a city.

The survey revealed that high-end homeowners are particularly optimistic about home values, with a strong majority (85 percent) of them expecting the price of their homes to rise over the next five years. That's a sharp increase from the 66 percent tallied in last year's survey. Also, four out of five of these homeowners believe the increase in value will be "significant" or "moderate."

"Key findings in our survey of the luxury market demonstrates that the typical million-dollar homeowner is invested not only in the value of their home as a current part of their portfolios, but also see long-term gains coming from this investment," said Jim Gillespie, president of Coldwell Banker Real Estate LLC. "It's interesting to note that while 44 percent of those surveyed indicated they plan to stay in their primary residence for at least 10 years, they also dream of owning the perfect home."

The survey polled homeowners whose current primary residence is valued at over $1 million ($2 million for California residences). They all had investable assets of more than $1 million, and the average household annual income was $754,000.

About half of the affluent homeowners (48 percent) own at least one secondary residence; most of these properties are located in beach areas. For those who own second homes, significantly more men than women cited that the primary purpose of the residence was a retirement property.

"Must have" luxury amenities cited by respondents include designer kitchens, formal landscaping, water views, customized home entertainment centers, swimming pools, indoor gyms and wine cellars. About three in 10 homeowners named specific rooms in the house that are used to impress guests — the living room (72 percent), with only one in 10 respondents saying other rooms are used primarily to impress visitors.

In the area surrounding their houses, respondents want a variety of amenities such as a boat dock, putting green, and tennis or basketball courts.

The recently passed legislation, Housing and Economic Recovery Act of 2008, is receiving an enthusiastic response from most housing industry leaders. The president signed it into law on July 30.

"This is the most important piece of housing-related legislation in more than a generation," said Kieran Quinn, chairman of the Mortgage Bankers Association. "The provisions in this bill will give lenders, servicers and borrowers another tool to help keep families in their homes. It will also help stabilize the housing and capital markets."

A key element in the bill is designed to modernize Federal Housing Administration programs. It authorizes a $25 million appropriation to improve technology, processes and program performance, eliminate fraud and provide appropriate staffing. Effective the first of next year, it increases the FHA loan limit to 115 percent of the local median home price or $625,500, with a floor for lower priced markets of $271,000.

The bill also creates a voluntary program for lenders to write down a mortgage loan balance in exchange for an FHA guaranteed loan, not to exceed 90 percent of the new appraised value of the home. The lender would pay a 3 percent FHA loan origination fee. To qualify, the borrower must have a debt-to-income ratio above 31 percent on the original loan.

Another important provision is to reform the system of the government-sponsored enterprises oversight — Fannie Mae and Freddie Mac, major buyers of existing home mortgages. It would create a new regulator with oversight authority similar to bank regulators, and establish new affordable housing and capital magnet funds.

For more detailed information about the bill, visit: http://banking.senate.gov/public/.

I received a letter from Betty Peters in Lodi, Calif. She brings up an interesting point:

"I saw your recent column about home warranty contracts, and wanted to ask if it's wise to renew these contracts when they are about to expire," she wrote. "We had such a contract on a former home and the company was not pleasant to work with. We now live in a condo we purchased seven months ago, and the company that backs the warranty is a breeze to work with. Is it worth it to keep these warranty contracts in force year after year?"

In most cases, I would say no; it's not worth paying annual fees to keep the warranty coverage in force. The basic premise of a warranty is to protect a new homeowner from unexpected expenses related to problems with the operating systems of their newly acquired residence. Those costly problems usually surface during the first year of ownership; therefore, justifying the cost of coverage over that initial year of ownership.

Warranty companies, of course, would like for homeowners to continue their coverage endlessly. That would financially benefit the companies, but usually not the homeowner. An exception might be when the owner has reason to expect a problem with a system or appliance during the second year of ownership.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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