The Fifth Luxury Condos

Royal Oak is redefining the notion of Detroit's 'burbs, fashioning a downtown that appeals to urban dwellers and cultural creatives. It's latest addition --and the community's tallest building-- brings a touch of the metropolitan to this Metro Detroit hotspot.

With stunning (or dizzying, depending on your stomach) views, top-of-the-line features and a choice locale, this 18 story midrise is the next evolution in RO's walkable, workable downtown.

Tom Hendrickson takes you on a tour. All you have to do is click the magic YouTube link below!

As New Home Sales Stall, Deals Abound

On Nov. 20, the residential real estate industry seemed to finally get an unexpected dose of much-needed good news. After four consecutive months of declines, the number of new homes being built crept up by a stronger-than-expected 3% in October, according to the Commerce Dept.

But on closer look, the October numbers may just be an aberration. Building permits, an indicator of future construction, plunged 6.6% as homebuilders faced mounting inventories of unsold homes and sluggish demand from buyers.

The annual rate for houses and apartments rose to just over 1.2 million in October. But the rate for single-family homes dropped 7.4% to 884,000 -- the lowest level since the early 1990s. Overall, the pace of groundbreaking dropped 16.4% from October, 2006. The small increase in overall housing starts in October was driven by multi-family dwelling starts, which tend to fluctuate widely from month to month.

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Survivor's guide to a slowdown

The credit market is still in turmoil, economic growth on both sides of the Atlantic looks likely to be weak in 2008, and the prices of a variety of assets are worryingly high. Asset prices should already have discounted that negative outlook for next year, and it is foolish to try to predict their path too precisely, but for the average investor trying to manage their wealth, it is worth considering a scenario in which the slowdown becomes worse.

A shock in the US housing market has hit construction, produced losses for banks and lenders, and caused a reappraisal of the right price for risk. Financial sector profits have been hit and credit will be harder to come by. The next stage could be a wider slowdown in investment and consumption that hurts corporate profits still further, causing layoffs and rising unemployment, and therefore still weaker US demand. In the worst case, the result could be a global recession.

Central banks will cut interest rates in a recession, so the obvious place to hide is government bonds, but those markets have already reacted. Five-year UK gilts yield only 4.5 per cent and three-year US Treasuries less than 3 per cent. Given the inflationary risks of high oil prices and the falling dollar, the Federal Reserve's ability to cut interest rates may be limited, and cash may produce better returns.

The risk of further falls in the dollar is severe. Currencies have a marked tendency to follow trends and to overshoot estimates of "fair value" once they start moving. The great danger - to which the pound sterling is also exposed - is foreigners losing confidence and selling assets. East Asian currencies still look cheap, however, as do those of oil exporters that peg to the dollar.

Adjusted for the economic cycle, equities look too expensive, and if a slowdown hits corporate profits, they are likely to fall. Lower prices are good for long-term investors who buy regularly for their pensions, but for short-term investors, buying is hard to justify. The S&P 500 index is up this year in spite of the flow of bad economic news.

That leaves property: the asset class at the centre of the US slowdown. Real estate prices look high relative to incomes and rents in many countries, and while that has been true for several years, it means they are at risk of falls. It will always make sense to own a residential property - it hedges our own demand for somewhere to live - but as a pure investment, real estate looks vulnerable. Investors should note that new risk-management tools, such as house price contracts listed on the Chicago Mercantile Exchange, are now available.

After 20 years of strong growth and benevolent markets, few assets look cheap. For those investors worried about tougher times there are a few simple rules: avoid leverage, keep cash to hand and remember that lower asset prices are an opportunity as well as a cost.

Copyright 2007 Financial Times