Why leasing solar panels may not be a good idea if you’re planning a home sale – The Washington Post

By Jill Chodorov, (Katherine Frey/The Washington Post)

The Washington region is at the bottom of a steep learning curve regarding solar panels on homes. And some local homeowners have learned the hard way that it pays to read the fine print.

According to Marcus Beal, media relations manager of Pepco Holdings, the Pepco region has about 7,200 customers who have completed the application process, installation and are fully integrated with the company’s electric system. That number is rapidly growing at an estimated rate of 100 percent per year.

As these solar-powered homes come on the market for sale, unexpected issues are bubbling to the surface. What’s more, almost all of the issues are happening to homeowners who lease rather than own the solar panels, which comprise an estimated range of 60 to 90 percent of the market.

“My seller couldn’t believe what I was telling him,” said Yolanda Muckle, a real estate agent in Mitchellville, Md. “The solar panel company wanted $32,000 to buy out the lease if a buyer did not agree to sign the transfer agreement.”

Muckle said her clients had just signed a 20-year lease agreement prior to listing the house for sale. They had more than 19 years left on the lease.

“I received three offers on the house and all three buyers walked,” said Muckle. “I honestly don’t think my clients read the lease agreement. They just believed what the salesperson told them, that it would increase the value of their home.”

Muckle’s clients are saving about $50 per month on their electric bills with the solar panels.

“With a savings of $50 per month, that means that my clients would save $600 per year. Over 20 years, that is a $12,000 savings. Yet the company wants $32,000 to buy out the lease,” Muckle said.

Explaining solar panels and lease agreements is a new issue for local real estate agents.

“Most agents in this area have not sold very many homes with solar panels,” said John Jabara, founder of Savenia Home, a Bethesda-based firm that provides independent third-party ratings and marketing materials for solar installers and home sellers.

“If you don’t know how to push the benefits of solar, you run the risk of making a huge benefit into a negative,” Jabara said. “Many lease agreements do provide a real value for a homebuyer.”

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Jabara did agree that the challenges of selling a home with leased solar panels are numerous.

“Appraisers do not consider leased solar panels in the value of a home. Since it is a leasehold improvement, the bank cannot take the asset in a foreclosure,” Jabara said.

Sandra Adomatis, a certified LEED Green associate of Florida-based Adomatis Appraisal Service and co-author of the recently released study, “Selling into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes,” said that there are many challenges involved in appraising and selling a home with leased solar panels.

“If the panels are owned outright, there is no problem,” Adomatis said. “With leased solar panels, there is another layer added to selling a home.”

Adomatis referred me to page 296 of Fannie Mae’s “Selling Guide” that outlines the rules on leased solar systems for FHA loans.

The rules are cumbersome and confusing.

First, if the buyer will acquire a leased system as part of the home purchase, the lease payments will be counted in the debt-to-income ratio when qualifying for a loan.

“Think of it like leasing a car,” Adomatis said. “If you lease a car and then go to borrow money, you cannot use the value of a leased car as an asset on your application. Rather, the lease payments are an expense.”

Other rules for FHA loans on homes with leased solar panels include: The monthly lease cost cannot be financed into an FHA mortgage. The lease must be free of restrictions that prevent the borrower from freely transferring the property. The lease cannot be subject to a third party approval. It cannot be subject to limitations on the amount of sale proceeds a borrower can obtain due to a lien or sale clause. There can be no liens on the property from the solar company that are superior to Fannie Mae’s first lien position. The panels must be removable without causing damage to the property.

Adomatis also explained that a big part of the revenue model for solar companies is the 30 percent federal tax credit and the five-year appreciation schedule.
“Because the solar company owns the panels, they reap the benefit of the federal tax credit, not the homeowner,” Adomatis said.

“In addition, the solar companies make it very difficult to buy out a lease agreement in the first five years. They don’t want to lose the five-year appreciation on the equipment.”

Adomatis suggested strongly to read every item in the lease agreement and to consult your accountant and an appraiser to understand all the ramifications of the lease agreement.

“A few dollars spent now can save thousands later,” she said.

Help is available

So, are solar panels just a dark and gloomy proposition, or is there a brighter side? The good news is that there is a brighter side, and help is right nearby.

The Community Power Network (CPN), a national nonprofit based in the Mount Pleasant neighborhood in Northwest Washington, helps communities build and promote local renewable energy projects.

Anya Schoolman, founder of CPN, has been working to make solar accessible and affordable to homeowners. She has implemented state projects in Washington (DC SUN), Maryland (MD SUN), West Virginia (WV SUN) and Virginia (VA SUN), through which homeowners can get advice and assistance in going solar.

Schoolman and her staff will assist homeowners in reviewing and negotiating lease and purchase agreements with solar companies at no charge. In addition, they assist homeowners in creating neighborhood coops to share in the cost of purchasing solar panels outright.

“If you are going to do it, do it now,” said Schoolman, when asked about the benefits of buying solar panels. “The 30 percent federal tax credit which is fueling the solar market will go away at the end of 2016.”

John Young, an agent with Re/Max Realty Services in Bethesda and a National Association of Realtors “green agent,” explained that buying solar panels is not as expensive as most believe. Young said he just installed a souped-up solar system on his own home.
Young said that 5 kilowatts of power, an adequate amount of power for an average size home, should only cost $15,000 to install. “The prices have dropped substantially,” he said.

“After you take off the 30 percent tax credit, it should take only seven to eight years to recoup your investment,” Young said. “Don’t look at the gross price, look at the net.”

Based upon those figures, a home that spends about $1,300 a year on electricity would recoup the investment in eight years.

Another benefit of owning versus leasing solar panels is the premium it offers on the value of your home.

According to new research sponsored by the U.S. Department of Energy’s Lawrence Berkeley National Lab, buyers are willing to pay $15,000 more for homes with average-size solar photovoltaic (PV) systems (3.6 kilowatts). The homes used as part of this study had solar panels that are owned outright and not leased.

As solar panels become more commonplace on local homes, homeowners will become wise to the financial and environmental benefits of solar energy. In the meantime, it is important to analyze your options before signing on the dotted line.

Here are some tips to stay out of hot water when leasing solar panels:

• Seek guidance from third party experts, like DC SUN or Savenia Home.
• Join a solar coop to take advantage of bulk purchasing.
• Read the fine print.
• Do not lease solar panels if you will sell the home in the next five years.
• Check your roof’s exposure to the sun. You want a southern exposure with at least five hours of sunlight each day to maximize the benefits.
• Get at least three bids from recommended companies.
• If you determine that solar would be a good investment, it may be better to purchase now, before the 30 percent federal tax credit expires.

via Why leasing solar panels may not be a good idea if you’re planning a home sale – The Washington Post.

Looks Like Rents Are Going Up Again –

apartmentThink your rent’s too darn high? Just wait

While some thought the skyrocketing rents of 2014 couldn’t be sustained, they did, and then some. There’s no sign of any easing any time soon.

Annual rent growth in September was 5.2 percent, the highest since 2011 and the eighth-straight month the rate has been 5 percent or higher, according to Axiometrics, an apartment research firm. Annual rent growth was at 4.1 percent a year ago, which was still considered high.

“The eight months the rate has been above 5 percent is the longest sustained period of strength we have seen. The last growth cycle was only four years, and this cycle is already five years long — with no sign of stopping,” said Stephanie McCleskey, vice president of research at Axiometrics.

While apartment construction has been strong, it hasn’t been enough or in the places where it is most needed. Now, there are signs it may be tempering. Permits for multifamily construction dropped nearly 15 percent in September from August and are now 1 percent below September 2014, according to the U.S. Census.

The vast majority of new supply has been in pricier areas, in particular major urban cores, which has not helped renters in the suburbs or in smaller cities who are in dire need of more affordable rental housing.

“New inventory coming to market is weighted to the high end; it’s urban, Class A, with a rich set of amenities, targeting the coveted college-educated millennial,” said Sam Chandan, president of Chandan Economics. “Overall, we still have an affordability crisis in the United States with rents rising faster than incomes for the fourth-consecutive year.”

Apartments were 95.3 percent occupied in September nationally, a slight drop from August, but the third-strongest month this year, according to Axiometrics, which considers anything above 95 percent as a “full” market. Occupancy has been at or above 95 percent for six-straight months and 10 of the past 16.

It is clearly a tale of two apartment markets. The pipeline of new product is rich and full in urban downtowns, which will likely temper the rent gains there over the next few years. When doing the math on suburban or Class B markets, however, developers and investors just don’t see desirable returns. Weak income growth will simply not support rent growth.

“When you’re evaluating that as your target market, there is only so hard you can push on rents,” Chandan said.

While some studies have shown that it is now more affordable to buy a home than to rent, several factors keep rental demand high: a lack of homes for sale, especially on the lower end, a desire by younger Americans to remain mobile, a downsizing baby boom generation that may be owning-averse, and high rents themselves keeping potential buyers from being able to save for a down payment.

Rent gains have been largest in cities with growing technology sectors, like Seattle, Denver and Portland, Oregon, but growth is also above average in Nashville, Charlotte and several cities in Florida. Playing into that demand is simple demographics.

“Younger, newly formed households continue to move out of their parents’ or roommate living arrangements and rent an apartment, driving up the demand for more rental units,” said David Crowe, chief economist for the National Association of Home Builders. He said the trend is expected to continue into 2016.

As single-family construction gains, perhaps the rent crisis will ease, but homebuilders like Lennar and Toll Brothers are hedging their bets, putting up rental apartments as well. Thirty-five percent of new home starts in 2015 have been multi-unit. That is higher than a year ago and the highest share since 1973. Developers are simply going to where demand is highest and most lucrative.

http://www.cnbc.com/2015/10/20/think-your-rents-too-darn-high-just-wait.html

inGaithersburg Magazine Fall 2015

The latest inGaithersburg Magazine is available now. There’s a lot to do in the coming months! Check it out here…

Where to Pick Your Own Apples and Pumpkins in Washington

Pumpkins and Apples

Photograph via trjphotog/iStock.

By Angie Hilsman, The Washington Post | October 8, 2015

Take advantage of these beautiful fall days and go visit one of these local farms or pupmkin patches! Angie Hilman at The Washingtonian has compiled a great list of local places to go.
http://www.washingtonian.com/blogs/afterhours/guides/your-guide-to-apple-picking-and-pumpkin-patches-in-washington-dc.php?utm_content=21121778

New Gaithersburg Restaurant getting RAVE reviews!

Inferno

With Inferno, former Oval Room chef Tony Conte wants to put his own spin on Neapolitan pizza

By Tim Carman, Washington Post, October 7
Two years ago, when he was racing back and forth between Oval Room and 701, obsessing over every last detail at the two fine-dining restaurants where he was chef, Tony Conte realized he had reached his limit.

Tony Conte pays homage to his ancestors (and his mother in law) with his forthcoming pizzeria. (Tim Carman/The Washington Post)
Former Oval Room chef Tony Conte pays homage to his ancestors (and his mother-in-law) with his forthcoming pizzeria. (Tim Carman/The Washington Post)
“I like things a certain way, and it just made me totally crazy” to run two restaurants simultaneously, Conte says.

Besides, “I felt that I put myself in a box at Oval Room,” the chef adds about the restaurant that peaked at three-and-a-half stars in 2011. “I was trying to achieve something there. I wanted certain things to kind of happen and evolve and one day I said, ‘You know, this is not fun anymore. I need to do something different.’ And usually those are words for something drastic.”

Few, perhaps, could have guessed how drastic: With one small decision, Conte made one giant move away from fine dining. His next restaurant will be a pizzeria, one that returns him to his roots both in Italy (his family hails from Pontelatone, north of Naples) and New Haven, Conn. (where Conte was born and raised).

Not that Inferno Pizzeria Napoletana will produce replicas of pies you can obtain in either Naples or New Haven. The pizzeria, set to open on Tuesday, Oct. 13, near Gaithersburg, will feature Conte’s personalized spins on Neapolitan pizza. The fine-dining-chef-turned-pizzaiolo ?would like to get his marinara and margherita pizzas certified by VPN Americas as authentic Neapolitan, which would place him in rare company: Only 2 Amys, Il Canale, Pupatella and several others in Virginia have received such certification in the region.

But Conte is walking a fine line with the VPN rules: He wants to follow them, but he also wants to find his own expression within their limits. The chef turns semi-coy when talking about how he approaches authentic Neapolitan pizza, but one of his tricks will be to blend highly refined, so-called “00” flours to create his dough. He won’t, in other words, rely on Caputo, the self-described “flour of Naples.”

“To go Caputo, that’s easy,” says Conte as he stands in his 40-seat pizzeria. “There’s a lot more stuff that comes from overseas. There’s a lot of stuff that’s grown in the States that’s 00. . . We’ll see what’s available and what’s out there and how we can create our own.”

Conte will be the man working the pizza peel at Inferno. (Tim Carman/The Washington Post)
Conte will be the man working the pizza peel at Inferno. (Tim Carman/The Washington Post)
You get the sense VPN certification is a kind of validation to Conte, proof the chef hasn’t forsaken his Italian heritage in the pursuit of four stars during his nine years at the Oval Room. Pontelatone, in fact, will play a role in the design of Inferno, maybe even in the production of its pizza: Photos of the Italian comune will hang on the walls, and Conte hopes to secure a source for fresh buffalo mozzarella from the family hometown.

Authentic Neapolitan pizza is “still a part of who we are and what we do,” Conte says. He clearly wants in the club.
But before he fills out the VPN paperwork, Conte wants to get his pizzeria up and running. He’ll open with a limited menu of seven pizzas. Aside from the marinara and margherita, Conte will offer rounds as diverse as a white pie with roasted fairytale squash and ‘nduja and a red pie with organic egg, San Marzano tomatoes, fontina cheese and freshly shaved truffles.

“We’re not even weighing” the truffles, Conte promises. “We’re going to let it rain.”

Inferno will also offer a small handful of salads and appetizers, prepared with vegetables sourced from local farms. The apps will include shaved fall vegetables with Asian pears and a charred hot-pepper vinaigrette as well as ember-roasted beets with Calabrian chili, kefir, pecans and maple vinegar.

Those beets, not to mention the seven pizzas, will be prepared in a wood-burning oven custom-made by Marra Forni in Beltsville. The firebrick oven, covered in gorgeous white-pearl tile, doesn’t sport the name of the pizzeria on its exterior, as so many of these wood-burning behemoths do. Instead, it includes a few dragonflies made from Murano glass.

“The dragonflies represent, essentially, my mother-in-law. She passed away from lung cancer” in 2010, Conte says. As the family lore goes, mother-in-law Mary Russo had said that whenever she dies, she would like to come back as a dragonfly. The chef didn’t tell his wife, Kim, that he was paying tribute to Mary with the centerpiece of his pizzeria. He just unveiled the oven to her at Inferno.

Her reaction?

“Tears,” says Conte.

Inferno Pizzeria Napoletana, 12207 Darnestown Road, Darnestown, 301-963-0115. The pizzeria opens Tuesday, Oct. 13. Opening hours: 5 to 10 p.m. Tuesday to Sunday. After a few weeks, Inferno will expand its weekend hours to noon to 10 p.m. Friday, Saturday and Sunday.
Tim Carman serves as the full-time writer for the Post’s Food section and as the $20 Diner for the Weekend section, a double duty that requires he ingest more calories than a draft horse.

Inferno Menu

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

via: http://www.washingtonpost.com/news/going-out-guide/wp/2015/10/07/with-inferno-former-oval-room-chef-tony-conte-wants-to-put-his-own-spin-on-neapolitan-pizza/

Montgomery County’s I-270 life sciences corridor is running out of room

First, the good news: Montgomery County’s life sciences industry is expected to continue growing for the foreseeable future, says a new survey from Rockville-based commercial real estate group Scheer Partners.
The bad news? The renowned I-270 corridor is running out of room for those life sciences companies to grow into, said Matt Brady, a vice president who specializes in office, research and development, and industrial leasing for Scheer.
Novavax opened a new 54,000-square-foot research and development facility in Gaithersburg this summer. Scheer Partners warns growth among life science companies could be stymied in the I-270 corridor due to low amounts of available lab space for these companies.
Enlarge
Novavax opened a new 54,000-square-foot research and development facility in Gaithersburg… more

COURTESY PHOTO

In the recent survey of more than 100 biotech and life sciences companies in Greater Washington — the majority from Montgomery County — 87 percent indicated plans to hire in the next 12 to 24 months. Six in 10 said they planned to expand their lab space by 5,000 square feet in the next 12 to 24 months.
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“Incubators are starting to say, ‘It’s time to get out on your own,'” Brady said about life sciences companies on the smaller end of the spectrum. At the same time, mid-size companies are starting to ramp up growth and larger companies such as Novavax Inc. and GlaxoSmithKline have been taking larger pieces of real estate.
Nearly half of those surveyed by Scheer indicated they believe there will be a shortage of wet labs — laboratories for handling chemicals and other materials that require direct ventilation and specialized piped utilities — in the region.

The vacancy rate for lab space in the I-270 corridor is 7.8 percent, which represents approximately 605,000 square feet of available lab space in a 7.6 million-square-foot-market. This is down sharply from January, when the vacancy rate was more than 12 percent with 970,000 square feet available.
“We need more landlords with access to capital to build these spaces who also have a risk threshold that will accommodate a biotech,” Brady said, referring to the deficits life sciences companies often run in their growth stages.
The major life sciences real estate transactions in the third quarter included MacroGenics Inc.’s expansion into125,000 square feet at the J. Craig Venter Institute, and Novavax leasing 50,000 additional square feet. Scheer Partners anticipates an additional 50,000 square foot space will come on the market in late 2016, but declined to specify the space.
Tina Reed covers health carefor the Washington Business Journal.

Read the article here:

http://www.bizjournals.com/washington/blog/2015/10/montgomery-county-s-i-270-life-sciences-corridor.html

10 richest neighborhoods in US

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10 richest neighborhoods in US

Published: Wednesday, 26 Feb 2014 | 1:13 PM ET

By: Robert Frank | CNBC Reporter and Editor

Sorry, New York and California. The state with the richest neighborhoods is little ole’ Maryland.

A new ranking of the 100 richest neighborhoods in America finds that three of the top five are in Maryland, all of them close to Washington, D.C.

This follows another recent study that found that Maryland also has the highest population of millionaires per capita than any other state, suggesting that the D.C.-area is becoming one of the nation’s leading centers of wealth.

The new neighborhood list, called the Higley Elite 100, is compiled by Stephen R. Higley, professor emeritus of urban geography at the University of Montevallo in Alabama. The list ranks neighborhoods—rather than ZIP codes or cities—by mean household income and census data, and is based on the Census Bureau’s “American Community Survey 2006-2010.”

Higley said that since the census income measure tops out at $2 million, it doesn’t give more credit to the super-rich earners. That could lower the rankings for neighborhoods in New York, Los Angeles and San Francisco.

Still, the list is a good measure of overall affluence—if not superwealth.

Ranking first on the list is the “Golden Triangle” in Greenwich, Conn., which includes homes for many of top hedge funders. The mean household income in the triangle is $614,242. Higley said the average asking price of a home in the “Triangle” was $6.7 million.

Ranking second was the Bradley Manor-Longwood enclave of Bethesda, Md., with a mean household income of $599,440, followed by Potomac Manors in Potomac, Md., with $599,331. Another Potomac hood, Carderock-The Palisades, came in fifth, with $595,669.

Other neighborhoods near D.C. also ranked high, including the Swinks Mill-Dominion neighborhood in McLean, Va.,(ranking 7th) and the Glendale area of McLean (ranked 19th).

Some say the rise in wealth in D.C. is a sign of the growth in the “business” of Washington, like lobbying and contractors. But Higley said it’s more a sign of the rise of dual-earners in D.C.

“In Maryland and Virginia, you have all these double-professional families,” he said. “They may be making $300,000 or $400,000 a year. But they’re not rich in the way that you’d find in New York or Los Angeles.”

The Golden Triangle bumped off the previous No. 1 on the list, Holmby Hills, Calif. But Higley said Holmby’s fall was due mainly to a redrawing of the neighborhood to include an area with condo towers.

“Nothing kills a high ranking like condo towers,” he said.

Higley said the study also shows the increasing diversity of today’s rich neighborhoods. He said Asians and Latinos have gained the most. The white population of America’s highest-earning 1,000 communities has fallen to 83 percent from 91 percent in 2000, he said. In some rich neighborhoods, the decline is far more substantial.

The Old Cutler-Hammock neighborhood of Coral Gables, Fla., ranked fourth on the list, with a mean household income of $596,851. Fully 48 percent of the neighborhood’s population is Latino. Higley said that roughly two-thirds of the Latinos are Cuban—mostly business owners or entrepreneurs, many of whom were wealthy in Cuba before emigrating.

“Even in the richest neighborhoods, the demographic change is substantial,” he said.

Here are the 10 most affluent neighborhoods in America, as measured by mean household income.

Rank Neighborhood City Mean household income
1 The Golden Triangle Greenwich, Conn. $614,242
2 Bradley Manor-Longwood Bethesda, Md. $599,440
3 Potomac Manors Potomac, Md. $599,331
4 Old Cutler-Hammock Oaks Coral Gables, Fla. $596,851
5 Carderock-The Palisades Potomac, Md. $595,669
6 East Lake Shore Drive Chicago $593,454
7 Swinks Mill-Dominion McLean, Va. $562,596
8 Cameo Shores-Highlands Newport Beach, Calif. $554,721
9 Pelican Hill-Pelican Crest Newport Beach, Calif. $549,659
10 Greenhaven Rye, N.Y. $540,403
Source: Higley Elite 100

via 10 richest neighborhoods in US.

How to prepare for a home appraisal

House_Appraisal_0bf4a_image_982wJoan Barnett Lee/The Modesto Bee via Associated Press Appraiser Walter Watson prepares to examine a home in Modesto, Calif.

How to prepare for a home appraisal

BY KATHY ORTON

February 27 at 5:30 am

The dreaded low appraisal. It’s what every home seller or refinancer fears. Low appraisals can kill a sale or wreak havoc on a refinancing application. The last thing you want is to be unpleasantly surprised by a lower-than-expected value of your home.

Instead, plan and prepare to put your home’s best impression forward before the appraiser arrives at your door.

According to the Appraisal Institute, the nation’s largest professional association of real estate appraisers, homeowners are allowed to accompany the appraiser during their inspection and are encouraged to provide the appraiser with any information or documentation they consider important to the valuation of the home.

Appraisal Institute president Ken P. Wilson recommends making available a survey of the property that delineates its boundaries and a list of improvements that have been made to the property in the past several years along with the associated costs.

“An appraiser wants as much information as possible,” Wilson said. “That’s going to help them develop a credible and reliable opinion of value. Now, cost does not necessarily equal value so whatever was spent may not translate to a dollar for dollar value increase. But it’s good information for the appraiser to consider when comparing that property to other properties.”

The best way for homeowners to head off potential problems with appraisals is to make sure the appraiser is highly qualified and competent.

“A homeowner cannot specifically choose an individual appraiser but they can request that they’re a member of a particular organization and that they have geographic competency,” Wilson said.

Before the appraiser arrives, Wilson recommends calling the mortgage lender and requesting an appraiser with field experience in the market where the home is. The homeowner should ask what professional credentials the appraiser holds, how long the appraiser has been in practice, what experience the appraiser has in this market and with this type of property and how familiar the appraiser is with property in this neighborhood.

“You have every right to do that because at the end of the day, you’re paying for that appraisal,” Wilson said.

Homeowners are entitled to a free copy of the appraisal from the lender no later than three days prior to the loan’s closing. They should carefully check the report for accuracy, such as number of bedrooms and bathrooms and the square footage.

If the homeowner finds inaccuracies, he should contact the lender, not the appraiser.

“It is inappropriate for the property owner to contact the appraiser directly,” Wilson said. “An appraiser cannot discuss the results of the appraisal with the owner. The communication has to come through the [lender].”

Wilson recommends that homeowners who are considering renovations to their home before they put it on the market contact an appraiser before undertaking any work. By conducting a feasibility study, an appraiser can give the homeowner an idea of what the return on investment would be for the proposed improvements.

Because the general appearance of a home can affect an appraiser’s evaluation, it is a good idea to tidy up your home both inside and out to make it appealing. Mow the lawn, trim the bushes and clear away debris. Fix peeling paint, cracked bricks, damaged gutters and siding. Replace or repair torn screens, non-working door knobs and latches, worn-out carpet and damaged plumbing and light fixtures. Make sure all your appliances are in working order.

via How to prepare for a home appraisal.

Purchase mortgage applications hit 19-year low

shutterstock_155808050-300x200Weakening housing activity image via Shutterstock

Purchase mortgage applications hit 19-year low

MBA: ‘We would expect a significant pickup in purchase activity, and we are not yet seeing it’

Teke Wiggin, Staff Writer

Feb 26, 2014

Applications for purchase mortgages hit a seasonally adjusted 19-year low last week, as demand from borrowers continued to lag despite the imminent onset of spring buying season, the Mortgage Bankers Association MBA reported.

Purchase loan applications fell a seasonally adjusted 4 percent for the week ending Feb. 21 to their lowest level since 1995, and were down 15 percent year over year, according to the latest Mortgage Bankers Association’s MBA Weekly Mortgage Applications survey.

“[T]his is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it,” said Mike Fratantoni, chief economist at MBA.

The survey’s results offer the latest indication that the housing recovery has lost some steam. Existing-home sales and pending home sales which predict future existing-home sales have both trended downwards in recent months.

Many real estate analysts say that increased mortgage rates and home prices are largely responsible. According to RealtyTrac, they’ve driven up the cost of owning a home by 21 percent in the last year.

In addition, housing experts cite unusually cold weather, tight credit potentially exacerbated by new mortgage rules and low inventory as headwinds.

But Jed Kolko, chief economist at Trulia, said there’s reason to believe that the demand from mortgage-financed buyers may recover soon.

“[R]ates remain low by historical standards, and the new mortgage rules could expand credit availability for loans that conform to the new standards, so part of the slowdown in purchase mortgage applications may be short-lived,” he said.

via Purchase mortgage applications hit 19-year low | Inman News.

Neighborhood Red Flags When Renting

wfpNeighborhood Red Flags When Renting
Aug 22, 2013   |  By: Neal J. Leitereg  |

So, you have found a great apartment, one that is in your price range. While it seems perfect, it is important to consider not only the apartment itself, but also the neighborhood you will call home for the foreseeable future. You want to feel secure in your neighborhood, have access to the basic amenities that you need and feel that you’ll live there with peace of mind. Here are tips on looking for neighborhood red flags when apartment hunting.

Ask Questions
The best way to find out about an apartment building or an area in general is to ask survey the neighbors already living there. When you tour your apartment, not only take notes about the rental itself, but also about the social climate. If you happen to bump into residents, be proactive and ask them questions about the apartment. If you don’t run into any potential neighbors, quiz the landlord or apartment manager giving you a tour about the neighborhood.

Scope Out the Local Atmosphere
Before signing a lease, drive around the neighborhood at different times of day to get an idea of the atmosphere and to observe your potential new surroundings. Is it safe? Are people socializing or loitering? An obvious police presence should alert you to potential criminal activity in the neighborhood. You can also research crime rates online. Will you feel comfortable walking your dog in this neighborhood after dark?

Local Businesses and Storefronts
As you tour the neighborhood, scout out the local businesses. What types of stores are there? Small mom-and-pop stores and a rustic-looking downtown shopping district may indicate a warm, community-minded neighborhood. Large shopping malls with major chain stores and fast food restaurants could indicate a suburban, working-class area. Count how many boarded-up storefronts or run-down strip malls you find. A large percentage of closed businesses could indicate that the neighborhood is in the midst of an economic downturn. If you have children, look at school ratings online.

Neighborhood Maintenance and Homes for Sale
Try to get a feel for the economic direction of the neighborhood by examining the area’s real estate market. Well-maintained homes with nicely kept landscaping, fresh paint and modern cars in the driveway signify economic well-being. Untidy homes with junk littering the lawns indicate a lower quality of life. Look out for “home for sale” signs. A glut of houses for sale or declining home values could indicate a neighborhood that is going south.

It’s impossible to ignore the ever-present real estate and rental mantra of “location, location, location.” No matter how nice an apartment looks and how beautifully it suits your needs, it cannot compensate for a bad neighborhood. Inspect the neighborhood carefully to make sure that you buy a house in a neighborhood where you will feel happy and safe.

via Neighborhood Red Flags When Renting – Apartment Hunting, Rent – realtor.com.

How to hunt for the right real estate agent before hunting for a home

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How to hunt for the right real estate agent before hunting for a home

By Michele Lerner, Published: February 20 | Updated: Friday, February 21, 7:15 AM

If you’re planning to purchase a home in the Washington area this spring, you may face competition from other buyers for the still-limited inventory in the market.

Homes that are in good condition and priced appropriately may garner multiple offers, so the better prepared you are as a buyer, the more likely it is that you’ll be scheduling movers sometime later this year.

The first steps in your house-hunting journey are finding a lender, getting prequalified for a loan and determining your budget. If you’ve done that and know how much you can spend, you’re ready to begin your search for a real estate agent who will represent your interests and help you become a homeowner. Some buyers choose an agent before finding a lender — either way, it’s important to line up a team of professionals as soon as you’re ready to buy a home.

“A good Realtor can help guide you through the financing part of buying a home by recommending a good lender,” says Karen Brown, an agent with Long & Foster Real Estate in Reston. “In fact, a prequalification from a lender that your Realtor can vouch for can be an asset during the buying process, especially if you’re competing with other buyers for a home. I work with a lender who I know will answer calls on the weekends and evenings and make sure the transaction gets to closing, so that’s something I can share with the listing agent to make my buyers’ offer stronger.”

Brown recommends lining up a lender and an agent at least six months before you buy a home. She sometimes works with buyers for as long as a year .

Why you need an agent

“Some people think they can buy a home without a Realtor, but this is a challenging market with lots of moving parts,” says Suzanne Des Marais, an associate broker with the 10 Square Team at Keller Williams Capital Properties in Washington. “You need a Realtor to help you manage it. You need someone who’s invested in educating you about how to buy a home and can help you interpret the local market while giving you some nitty-gritty advice like making sure you have some liquid cash available before you start looking at homes so you don’t have to wait to make an offer.”

Des Marais says that buying a home is a three-part process, including looking for property and arranging financing, negotiating a contract and then getting to settlement. She says an agent can provide advice and insight during each of those phases.

Says David Bediz, an agent with the Bediz Group at Coldwell Banker Residential Brokerage in Washington: “Realtors can sometimes show buyers properties that they didn’t think they wanted to see but that work for them. Realtors have the knowledge and connections to push an offer or to make sure it’s written strongly enough to compete with other offers when there’s competition. When there isn’t competition for a property, an experienced Realtor can make recommendations about how much to offer formulated on evidence of the actual home value.”

Bediz points out that because agents’ commissions are paid by the sellers from the profit of the sale, buyers get the guidance for free.

“There’s almost never a reason to buy a house without the representation of a Realtor,” he says.

Des Marais says experienced, full-time agents see so many properties that they can help buyers understand the value in different homes and be realistic about the condition of the property and potential repair costs.

“If you’re looking at a For Sale by Owner, it’s even more important to have an agent representing you because you need to know whether the house is priced appropriately,” she says. “You need someone to coordinate the appraisal and the contract contingencies and the closing. D.C. is a very agent-driven market, unlike some other places like New York, where attorneys write real estate contracts.”

If you plan to buy a new home, Brown recommends working with an agent who’s experienced with new construction and familiar with local builders to represent your interests.

“The sales agent on site works for the builder and your own agent can help you with negotiations, inspections and choosing options,” she says.

Buyer agency

Although the details of the laws vary slightly between D.C., Maryland and Virginia, all three jurisdictions require a signed buyer-agent agreement to be in place for an agent to write a contract for an offer on a home. Agents are expected to explain agency rules to buyers at their first consultation so they understand when and how their interests are being represented. Many Realtors work as buyers’ agents and as listing agents for different transactions; some work with a team on which some agents work only with buyers and some work only with sellers.

An exclusive buyer agency represents only buyers and never lists homes for sale.

“Our company only represents home buyers, which eliminates any conflict of interest for the company and the agents, since there’s no possibility that the company will represent the seller and the buyer in any transaction,” says Mary Richeimer, broker/owner of the Buyers Best Realtors in Urbana, Md. “Traditional agents sometimes represent buyers and sometimes represent sellers, but I always represent buyers.”

In Virginia, Brown says, all agents technically work for the seller unless a buyer-agency agreement has been signed.

“For instance, if you’re showing a house to a buyer you’re not supposed to disclose any adverse things about it to the buyer unless you have a signed agreement,” she says. “If a buyer is uncomfortable about signing the agreement, we always explain that the buyer can cancel the contract at any time. We’ve never had anyone cancel the agreement, but buyers need to understand that if they’re unhappy they can end the relationship.”

Before signing a buyer-agency agreement, be sure you understand your responsibility under the contract and how either you or the agent can cancel the agreement.

Finding an agent

Agents say the best way to find someone trustworthy to represent you is to ask friends and colleagues for recommendations.

“You need to find someone you can trust and someone who’s smart and understands the local market,” Bediz says. “It’s important to do some legwork and research on agents even if they’re recommended by a friend, because you don’t want to choose someone who’s a nice person and a fun drinking buddy who may not be a great agent.”

He says you should check out the agent’s Web site and ask for references.

Says Richeimer: “Some agents are better at listings or at representing buyers. When you get a recommendation you should find out whether the agent was representing the buyer or the seller.”

Des Marais recommends looking for an agent who’s very familiar with neighborhoods where you want to live and your price range.

“You can look for open-house signs and ask people who live in the area for names of Realtors,” she says. “You need someone who understands how to interpret the market and how offers work in different areas.”

An open house can be an excellent place to meet an agent and ask questions, Bediz says, but he says buyers should do their homework and find out more about the agent. The agent at the open house represents the seller of that property, but if you aren’t intending to make an offer on that home, you can hire the agent to represent you.

Once you’ve identified a few potential agents, you should interview them over the phone and then meet one or two in person. You’ll be spending a lot of time with your agent and trusting that he or she will represent your interests, so it’s important to take your time to find the right person.

Agent interviews

Brown suggests meeting a prospective agent at his or her office so you can look for awards and meet the agent’s team members.

Says Bediz: “You should treat choosing a Realtor with the same perspective as if you’re the boss and you’re hiring a new employee. Find out the agent’s qualifications compared to other applicants and then do some interviews.”

Your agent will be key to the success of your home buying experience, so it’s important to take your time to choose the right one.

Lerner is a freelance writer.

What to ask your potential real estate agent

?How long have you been in business? How many transactions did you have last year?

?Are you experienced working with first-time home buyers? Can you explain the buying process?

?Can you tell me about state, local and federal programs for first-time home buyers?

?What neighborhoods do you specialize in?

?What price range do you usually work in?

?Can you provide me with a list of references?

?What is the fastest way for me to reach you if I have a question or think I have found a home to buy?

?How often should I expect to hear from you while I am looking for a home?

?Will you be able to give me advice about future home maintenance or improvement projects that could help my house retain its value?

via How to hunt for the right real estate agent before hunting for a home – The Washington Post.

In Tough Times, the Fix Is In

WFP_WhiteLogo_Reverse-PMS275BlueBackgroundIn Tough Times, the Fix Is In

When the economy weakens and home prices drop, many homeowners boost spending on routine repairs and maintenance, a study shows

By SANETTE TANAKA

Feb. 20, 2014 9:18 p.m. ET

When the economy is down, many homeowners look for places to scrimp and save. Home maintenance isn’t one of them.

Rather than cut back, homeowners increase the amount they spend on routine repairs and maintenance, such as painting, during poor housing cycles, says Tammy Leonard, clinical assistant professor of economics at the University of Texas at Dallas, who studied maintenance expenditures of households between 2001 and 2009.

Between 2007 and 2009, after the housing bubble burst in 2006, homeowners upped their maintenance spending by an annual average of 63%, or $423 for the average household, compared with an 18% annual average increase in the period between 2001 and 2007 when house prices were rising. When combining all sample years, the average household spent $671, adjusted to year-2000 dollars, annually on maintenance.

Homeowners may have decided to spend more to maintain their homes because they expected to stay there longer.

“Their expectations in the tenure of their house may have changed,” Prof. Leonard says. “No one wanted to sell in 2007, and people have thought they would invest.

The study’s findings applied to all housing groups except for one—households with low home equity and low income. That pool of homeowners likely faced a high risk of default and slashed their maintenance costs to nil when the market turned.

Prof. Leonard examined roughly 10,000 to 12,000 single-family homes, based on data from the American Housing Survey administered by the U.S. Census. Households reported their maintenance costs as well as the estimated value of their home, which determined their loan-to-value ratio as well as their perceived default risk.

The study, “The Impact of Housing Market Conditions on Residential Property Upkeep,” was published in Housing Studies in January 2013.

Madeleine Romanello, broker associate with One Sotheby’s International Realty in Miami Beach, Fla., says homeowners may increase their spending in poor housing cycles to help their property sell.”

[Good maintenance] is a major, major factor in selling a listing,” Ms. Romanello says. “The house has to look completely pristine. Every light bulb needs to be working; the house has to be totally clean.

“Some buyers believe cosmetic issues indicate larger functional or structural problems. “The minute buyers see any sort of neglect that’s visible, they think there are more underlying problems with the property,” she adds.

“In the buyer’s mind, one little thing can trigger a negative feeling about the whole area,” says Linda Olson, an agent with Better Homes and Gardens Real Estate David Winans & Associates in Arlington, Texas.

Four weeks ago, Ms. Olson got a $182,000 listing for a two-story, well-maintained home in Mansfield, Texas. Within a week, five agents had criticized the neighborhood. One agent mentioned a nearby house, which had overgrown grass, chipped paint and an old truck in the driveway.

Ms. Olson promptly knocked on the neighbor’s door. “I said, we were really trying to sell the house, and it would help me out a lot if you could cut the grass and rake the leaves and move your truck,” she says. Fortunately, the neighbor obliged.

“I’m negotiating an offer right now,” Ms. Olson adds.

via In Tough Times, the Fix Is In – WSJ.com.

Why You Are Spending More and Enjoying It Less

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Photo:  Dongyun Lee

Why You Are Spending More and Enjoying It Less

Financial Advisers Agree—Americans Spend Way Too Much

By VERONICA DAGHER

February 16, 2014

When a taco shop opened across the street from Stefanie O’Connell’s New York City apartment, she figured it would be harmless to go there a few times a week and grab a quick dinner.

But before she knew it, the actress and freelance writer was dropping $10 to $15 a week on tacos—that comes to more than $500 a year, or just about enough to pay for a round-trip ticket for her dream trip to Amsterdam.

“Dining out has always been a budget buster of mine,” she admits.

Ms. O’Connell decided to rein in her taco habit and save for her trip by wrapping a picture of Amsterdam around her cash and credit cards.

So far, it’s working. She hasn’t had a taco in a month.

Few of us will have our dreams thwarted by the cost of a couple of tacos, but there’s one thing most financial advisers agree on: Americans spend way too much.

You may overspend because you’re bored, you have no budget or you want to keep up with your neighbors.

Or you might be letting your emotions dictate your financial decisions.

Whatever the reason, you may be setting yourself up for a financial disaster.

But fear not: There are a few ways you can rein in your spending before it’s too late.

Tracking your cash flow and tapping into your feelings are two things financial advisers say you can do to curb your urge to spend.

“The spending choices you make now will greatly impact your quality of life later on,” says Patrick McDowell, a Miramar Beach, Fla., financial adviser

Get a Plan

Financial planner Jorie Johnson once met with clients who had more than $50,000 in credit-card debt. The Manasquan, N.J., planner asked the couple where the boat or pool or RV was that they purchased to incur such a debt.

“They couldn’t even remember one thing they bought,” Ms. Johnson says.

Ms. Johnson found out later that all of their debt was from many purchases of under $100 which compounded over time when they paid their credit-card bills late. The wife also had a “penchant for Target and Old Navy,” Ms. Johnson says.

To help her clients get back on track, Ms. Johnson recommended the wife shop only with a list and pay with cash. She also told her to get a part-time job.

“If you aren’t earning money or sleeping, you’re most likely spending,” Ms. Johnson says.

Jeff Duncan says folks usually overspend because they have no budget.

“Money comes in and money goes out each month without any grasp of what their actual monthly overhead expenses are and what their actual monthly household income is,” says the Little Falls, N.J., financial adviser.

In turn, Mr. Duncan says to create a budget. He also says to set up monthly automatic deductions from your checking account into an emergency savings fund or investment vehicle such as a 401k or individual retirement account. That way, the money is siphoned off before you have a chance to spend it.

Karol Ward, a New York psychotherapist, says to track everything you spend for a month using a small notebook or an app such as Wally or Mint. Doing that will help you see areas where you may be overspending, she says.

Understand Your Emotions

Ms. Ward recently worked with a client who overspent at restaurants because he was always picking up the check for everyone at the table.

The client felt insecure about his success and compensated by showing others that he was successful enough to buy dinner. But at the end of the month, he always struggled to pay his credit-card bill.

“Overspending on others actually made him feel less successful because he never had enough money for himself,” Ms. Ward says.

This client’s need to keep up the appearance of success kept him in a perpetual state of anxiety and fueled his feelings of inadequacy, she says.

To make more-conscious spending decisions, says Chicago financial psychologist Marty Martin, ask yourself “What need am I trying to fulfill?” or “How will I react when the credit-card bill comes in the mail?”

“The key is to be mindful about spending rather than engaging in the automatic behavior which is the goal of the marketers and merchandisers,” he says.

Seeking the counsel of a coach or minister to help you uncover your feelings about money can also help, Ms. Ward says.

Lauren Lindsay, a Covington, La., financial planner, recommends waiting 24 hours before making a purchase. And don’t take your frustrations out by shopping online, either. “Take a walk or bath,” she says.

Know Your Hot Buttons

In addition, Ms. Lindsay says it’s important to know your spending “hot buttons.”

For example, Ms. Lindsay says she can spend $100 in Barnes & Noble in about 20 minutes.

Why? She loves to read, and she was very poor when she was young. Other kids owned books, but she had to borrow library books. Returning them always reminded her of her poverty. To this day, books are some of her most treasured possessions.

In turn, she’s set a monthly budget for books so she doesn’t overspend. She recommends you do the same for your hot buttons.

“Figure out what gives you joy so you can have it in moderation,” she says.

Constance Stone, a Chagrin Falls, Ohio, financial planner, says to keep a daily gratitude journal to focus on all the “positives” in your life. This may help you lessen the feelings of “not having enough,” she says. It could also prompt you to place more value on nonmaterial aspects of life, such as family and friends.

Prioritizing and setting a time table for buying big-ticket items can also help keep spending in check, says Ms. Stone.

San Diego financial planner Peg Eddy says to visualize a big goal, such as retirement—or a dream trip to Amsterdam—that you wish to save for, and recall a picture of it every time you’re tempted to spend money on something that doesn’t align with your goal.

“Sometimes it can help you understand that cutting back here and there can help underwrite some big goal,” she says.

But if you’re stuck in a cycle of overspending you may need to take more extreme action, like Ms. Johnson’s clients with way too much debt and too little to show for it. Her advice: “Cut up your credit cards.”

via Why You Are Spending More and Enjoying It Less – WSJ.com.

To buy or to rent: The decision requires care and planning

buy or rentJason Raish/for The Washington Post

To buy or to rent: The decision requires care and planning

By Michele Lerner, Published: February 14

If, like many Washington-area residents, you’re frustrated at paying an exorbitant rent for your apartment, you may be considering whether now is the right time to buy a home.

Making the leap from renter to homeowner isn’t as simple as deciding your rent’s too high, though. In reality, you need to carefully weigh the pros and cons of homeownership in the context of your finances and your future.

“There’s a notion that we have in our heads that we have to buy a house and that it’s somehow wrong to rent,” says Anna Behnam, a financial adviser and managing partner with Ameriprise in Rockville. “The reality is that it’s not true for everyone and there are positive points to renting and to buying.”

Behnam says that renting offers the benefit of being able to move whenever you want to take a job in another part of the country or even just in a different location within the Washington area.

“It’s also nice not to have to pay for maintenance,” says Behnam. “If your air conditioning breaks down, your landlord has to pay $6,000 to replace it, not you.”

Homeowners not only need the money to make repairs, but they must make time to maintain their property, says Nancy Wert, a realty agent with Re/Max Realty Centre in Olney. Even a relatively small and newer home requires at least some maintenance; an older home may require a bigger budget for home repairs.

An important factor in deciding to buy your first home is how long you plan to stay in the area.

“The D.C. area is very transient, with people coming in for a few years for jobs with the government or a contractor,” says Shelley Green, an associate broker with the Banner Team at Long & Foster Real Estate in Bethesda. “If you’re only here for three years, you should probably rent. It’s best to stay in your home at least five to seven years to recoup the cost of buying and to build equity.”

Another option to consider, if you’re here for just a few years but think you’ll be back, is to purchase a home that will appeal to renters, says Jen Angotti, a real estate agent with DCRE Residential in Washington.

“You should look for a place near Metro with the finishes and amenities a renter might like, live in it yourself and then rent it,” says Angotti. “Of course, you need to be ready at that point to be a landlord.”

Wert says many buyers decide to become homeowners when they’re ready to commit to a location for their children to attend school, because they want to invest in that community and maintain friendships there.

Behnam says another incentive to become a homeowner is the ability to make decisions about how to decorate or improve your property rather than having to seek your landlord’s approval.

On a purely financial basis, many Washington area residents feel that they’re wasting money by paying outrageous rents and are concerned about rent increases, says Angotti. Buyers who opt for a fixed-rate mortgage have the advantage of knowing their principal and interest payments will remain the same, although property taxes and homeowners’ insurance premiums can rise.

“While rents in the D.C. metro area for Class A apartments typically increase by an average of 4.2 percent per year, we’ve had a big supply of new apartments completed in 2013, so the average rent actually dropped by 3 percent,” says Grant Montgomery, senior vice president and apartment practice director for Delta Associates, a provider of data on real estate trends. “Our data looks at new apartments being marketed, and we expect a similar pattern for 2014 and 2015, since a number of new buildings are in the pipeline to be completed over the next two years.”

Rents for older apartments and homes are not included in Delta’s data, which also showed a slight increase of 0.8 percent for rents in the District.

“Over the long term, a lot of financial planners say buying a home is a great way to build wealth, because you build equity as you pay down your loan and you have the benefit of the tax deduction,” says Angotti.

While there’s no guarantee that home values will increase during any given period and values sometimes decline, holding onto your home for the long term offers more of an opportunity for the value to increase in addition to building equity through loan repayment.

Even if you’re emotionally ready to buy a home and think it’s a smart financial move, you need to find out as soon as you can if you’re qualified to buy. While a stable job history and a solid income are important, you also need good credit and money saved for a down payment.

Are you financially ready?

The sooner you talk to a lender, the better, says Gail Kullman, a senior loan officer with Prime Lending in Alexandria.

“The way rents have escalated in the D.C. area means that buying a home sometimes costs less than renting or the same,” says Kullman. “But you need to get your finances in order and give yourself time to improve your credit score if you need to, because your score not only allows you to qualify for a loan but it also dictates your interest rate.”

Kullman warns that would-be buyers need to estimate a comfortable mortgage payment for themselves rather than relying on the lender’s loan qualification process.

“If you think you can afford a $1,500 per month mortgage but your rent is $1,100 and you haven’t been able to save, you may need to rethink that,” says Kullman. “Part of your decision to buy should be to take a hard look at your income, to see if it’s stable and rising, and to look at your assets to make sure you have enough for a down payment and for reserves in case of an emergency.”

Kullman suggests saving the difference between your rent and your estimated mortgage for a year or longer to get used to the larger payment and to generate additional savings for cash reserves and a down payment.

While the Consumer Financial Protection Bureau’s new “Qualified Mortgage” rules allow for a debt-to-income ratio of 43 percent, Behnam says she thinks that’s too high because it’s based on your gross income.

“You should base your budget decisions on your net income rather than your gross income,” says Behnam. “A lot of buyers estimate their payment based on the principal and interest they pay, but you also need to include property taxes, homeowners’ insurance, homeowner or condo association dues and possibly mortgage insurance and flood insurance.”

Behnam recommends keeping a cash reserve equal to two mortgage payments in the bank to cover potential home repairs in addition to your emergency fund of three to six months or more of expenses.

“When you look at your available cash for a down payment, you need to make sure you’re not draining your savings to get into a house,” says Behnam. “I recommend making a larger down payment of at least 20 percent, though, to avoid paying mortgage insurance, to get a lower interest rate and to make your monthly payments more affordable.”

She also cautions buyers to think in the long term about the affordability of their home.

“You need to look down the road to make sure your income will match your needs for the house but also for other expenses such as college tuition and retirement savings,” says Behnam. “Don’t look at buying a home as purely an investment,” says Behnam. “This will be your home for the next seven years or more, so you need to enjoy it.”

Michele Lerner is a freelance writer.

Five steps to take when deciding whether to buy or rent

?Develop a five-year plan. You need to own a home at least five years to build equity.

?Determine your budget. Regardless of the loan amount you qualify for, you need to know what you’re comfortable paying for your housing.

?Check your credit. Your credit score is paramount to getting a loan — you may need time to improve it.

?Consult a lender. Before you look at homes, you must know your price range and your ability to obtain financing.

?Consult a real estate agent and see what’s available in your price range.

via To buy or to rent: The decision requires care and planning – The Washington Post.

Mortgage rates hold steady

Mortgage rates hold steady

BY KATHY ORTON

February 13 at 10:00 am

Mortgage rates held steady last week, according to the latest data released Thursday by Freddie Mac.

After falling for five weeks in a row, the 30-year fixed-rate average reversed course. It ticked up slightly, rising to 4.28 percent with an average 0.7 point. It was 4.23 percent a week ago and 3.53 percent a year ago. The 30-year fixed rate hasn’t moved above 4.5 percent since early January.

The 15-year fixed-rate average remained the same, holding at 3.33 percent with an average 0.7 point. It was 2.77 a year ago. The 15-year fixed rate has remained below 3.5 percent for five weeks.

Hybrid adjustable rate mortgages were mixed. The five-year ARM average fell to 3.05 percent with an average 0.5 point. It was 3.08 percent a week ago and 2.64 percent a year ago.

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Pam Tobey/The Washington Post

The one-year ARM average climbed to 2.55 percent with an average 0.4 point. It was 2.51 percent a week ago.

“Mortgage rates were little changed amid a week of light economic reports,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“Of the few releases, the economy added 113,000 jobs in January, which was below the market consensus forecast and followed a slight upward revision of 1,000 jobs in December. Meanwhile, the unemployment rate fell to 6.6 percent, which makes thirteen consecutive months without an increase.”

Mortgage applications were sluggish last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, declined 2 percent. The Refinance index was nearly unchanged, slipping 0.2 percent. The Purchase Index dropped 5 percent.

The refinance share of mortgage activity was unchanged, accounting for 62 percent of all applications.

via Mortgage rates hold steady.

Expired tax breaks for homeowners could be restored — retroactive to Jan. 1 — by this summer

Capitol_shutterstock_113019124-300x198U.S. Capitol image via Shutterstock.

Expired tax breaks for homeowners could be restored — retroactive to Jan. 1 — by this summer
Why Obama’s appointment of Max Baucus to serve as ambassador to China is great news for real estate
Ken Harney, Contributor
Feb 11, 2014

Though it’s not attracting much attention, the impending arrival of Sen. Ron Wyden, D-Ore., as head of the Senate Finance Committee could be good news for housing and real estate in the weeks ahead.

That’s especially true if you care about mortgage forgiveness relief and other tax code provisions that help homeowners, buyers and sellers.

Things are looking up.

Wyden replaces Max Baucus, D-Mont., who is leaving to serve as the Obama administration’s new ambassador to China. Baucus spent much of the past two years developing comprehensive tax reform legislative proposals with severely negative impacts on real estate, including total elimination of tax-deferred exchanges and lower depreciation write-offs for investors. Now he’s gone.

Baucus’ reform efforts were paralleled in the House by Ways and Means Committee Chairman Dave Camp, R-Mich., who is sitting on a closely guarded tax bill that is potentially so explosive — it would reportedly kill or limit pretty much all popular deductions, such as those for mortgage interest and property taxes — that the House Republican leadership convinced him not to release details late last year.

Camp’s bill would use the revenue that would be generated by eliminating deductions to offset the cost of lowering the top marginal tax brackets for individuals, as well as corporations, to 25 percent.

 

Meanwhile, Baucus’ and Camp’s insistence on major tax reform had stalled efforts in the House and Senate to extend key expiring provisions in the code.

Max Baucus spent much of the past two years developing comprehensive tax reform legislative proposals with severely negative impacts on real estate. Now he’s gone.”

Among the most important for housing: reauthorization of the mortgage debt forgiveness law that allows financially stressed homeowners to escape federal taxation on the principal balances written off by lenders in connection with short sales, loan modifications and foreclosures; deductions for private and FHA mortgage insurance premiums; and write-offs for certain home energy-saving improvements.

Those three and about 50 other special interest provisions expired Dec. 31, and won’t be available for taxpayers this year unless Congress puts them back into the code retroactive to Jan 1.

But supporters of Baucus and Camp have argued that there shouldn’t be any extensions of special interest tax provisions until Congress takes up a full reform of the tax code. After all, they say, many of the so-called extenders won’t be retained in any major tax reform bill that passes both houses.

Now to the reasons why Wyden taking over as chairman of the Senate Finance Committee is a plus for real estate. No. 1: He is certain to call for a reassessment of Baucus’ reform proposals — a process that could take months.

That will delay consideration of fundamental tax reform in the Senate this year, and would provide fresh pressure to move an extenders bill sooner, not later.

In fact, Wyden has said he intends to take up the extenders issue before proceeding onto major tax reform. That’s welcome news for Wyden’s Democratic colleague from Michigan, Debbie Stabenow, who is sponsoring bipartisan legislation that would reauthorize mortgage debt relief through the end of 2014.

Even better: Wyden has his own ideas about comprehensive tax reform. And based on previous bills he has authored on the subject, they don’t require mangling or killing popular real estate deductions or tax-deferred exchanging a la Baucus.

Wyden’s “Bipartisan Tax Fairness and Simplification Act,” co-sponsored in 2011 with Sen. Dan Coats, R-Ind., would reduce the number of tax brackets for individuals to just three — 15 percent, 25 percent and 35 percent — and eliminate the widely despised Alternative Minimum Tax.

His bill also would seek to simplify the code by encouraging vastly larger numbers of taxpayers to opt for the standard deduction, which would be nearly tripled in size. Though that would encourage some homeowners to stop itemizing, and thus claiming mortgage interest and other real estate write-offs altogether. Wyden estimates that on average, individuals and couples with incomes up to $200,000 “will do as well or better” under his plan than they do today.

Meanwhile in the House, the departure of Baucus increases the pressure on Camp to abandon his plans for comprehensive tax reforms in 2014. With Wyden open to taking up an extenders bill sooner than later, Camp will eventually have to cave and go along.

Bottom line: Baucus heading to China is a great for real estate. Not only are Camp’s and Baucus’ bills essentially knocked off the track, but the popular extenders reauthorization is likely back on track.

Timing is uncertain, but veteran Capitol Hill tax experts say the now-expired housing benefits could be on the president’s desk — retroactive to Jan. 1 — by the summer recess, right before most members of Congress head home to campaign.

Ken Harney writes an award-winning, nationally syndicated column, “The Nation’s Housing,” and is the author of two books on real estate and mortgage finance.

via Expired tax breaks for homeowners could be restored — retroactive to Jan. 1 — by this summer | Inman News.

D.C. area housing market was weak in January

D.C. area housing market was weak in January

BY KATHY ORTON

February 10 at 10:00 am

The Washington, D.C. region housing market had a sluggish start to the new year. Although January is typically a quiet month, the number of homes sold, the number of homes on the market and the median sale price tumbled in January compared to December, according to report released Monday by RealEstate Business Intelligence, a subsidiary of the Rockville-based multiple listing service MRIS.

Except for median sale price, several categories — sales, pending sales, active listings and new listings — were lower than their five-year average for the month. The 2,444 sales in January represented not only the fewest homes sold in two years, but were also down 32.9 percent compared with December and down 2.1 percent compared with January 2013.

“The weather has been hideous,” said Rick Hoffman, a regional vice president at Coldwell Banker Residential Brokerage.  “The weekend weather has not been good. People aren’t listing their homes. They’ve got ice on their sidewalks. Brokers haven’t been able to hold open houses.”

Sales of single-family detached homes showed the largest decrease, falling 6.5 percent last month compared with January 2013. One reason for the decline is the scarcity of single-family homes on the market. Sales of townhouses were down 2.8 percent, while sales of condos rose 6.8 percent.

“We have a big challenge right now in that inventory is so low,” Hoffman said. “It’s like walking into the store. If there are only 10 things on the shelf as compared to 300, your sales are going to be down.”

dc_metro_keytrends_012014 1

Source: RealEstate Business Intelligence

The median sale price for the area has been rising steadily, and January marked the 24th consecutive month of year-over-year increases. The median sale price for the D.C. region was $370,000 last month, up from $343,200 in January 2013 but down from $391,362 in December 2013.

Fairfax city and Prince George’s County had the biggest gains in median sale price, while Alexandria city, Falls Church city, Howard County and Frederick (Md.) County each saw a decrease in their median sale prices year-over-year. Falls Church city’s 36.3 percent drop was attributable less to a significant decline in property values than to the limited sample size (six sales), which tends to skew the mean.

dc_metro_prices_012014 2

Source: RealEstate Business Intelligence

The median sale price for a single-family detached home in the D.C. region was $450,000 last month, $49,500 higher than in January 2013. The median sale price for townhouse was $369,950 last month, $29,950 higher than in January 2013. The median sale price for a condo was $279,000 last month, $19,000 higher than in January 2013.

Although rising prices could put a damper on buyer enthusiasm, buyers should be encouraged by the 4,071 homes that came on the market in January — the most new listings in a month since October. Sluggish sales combined with more sellers listing their homes mean buyers should have more options.

“There’s always a little influx of inventory after the holidays because it’s something that has been shelved through the holidays,” Hoffman said. “I expect inventory to start climbing.”

Still, there aren’t a lot of homes for sale. The 6,745 active listings last month were down 2.9 percent from December but up 11.5 percent from January 2013. For the first time in two years, all property segments saw year-over-year gains in active listings in January. Condo listings showed the largest increase, rising 27.6 percent. Townhouse listings gained 25 percent, while single-family detached home listings edged up 1.8 percent.

via D.C. area housing market was weak in January.

 

Start preparing now to file your taxes

photo-right-Capitollitup-against-med-blue-sky-copy-copy

 

 

 

 

Start preparing now to file your taxes

By Benny L. Kass, Published: February 6 | Updated: Friday, February 7, 7:40 AM

“The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.” — Mark Twain

It’s tax season, and many Americans are determining whether to file early, file on the April 15 deadline or file late.

If you request an automatic extension, you will have to pay any tax you owe in April, but the final return would not have to be filed until Oct. 15.

Regardless of when you decide to file, you should start preparing now. Every year, the Internal Revenue Service circulates a large publication, entitled “1040 Instructions,” which is available on its Web site. According to the IRS, the average time required to complete and file Form 1040 the most commonly used income tax return form is 15 hours. The bulk of this time — eight hours — involves only record keeping; tax planning accounts for two hours, completion of the form and submission another four hours, and one hour for miscellaneous.

You should have received statements from your employer and lender at the end of January. By law, any lender private or commercial that receives $600 or more in mortgage interest must send the borrower Form 1098. Although in recent years, most consumers were not paying points to buy down a mortgage loan, any points that were paid must also be listed on this form. The form will also include any mortgage insurance premiums that were paid last year.

If you paid such insurance premiums on policies issued on or after Jan. 1, 2007, and if the policy was for “acquisition debt” — which refers to a home that you purchased or substantially improved — those payments may be deductible on your 2013 tax return. Unfortunately, this was one of the many tax benefits that Congress did not extend for this year.

When you get Form 1098, don’t just put it in your tax file. Review it carefully, since the same information has been transmitted to the IRS. Get an amortization table — available on the Internet or in local bookstores — and make sure that all of your payments have been properly credited. This is especially important for those of you who have been making extra principal payments over the years so as to reduce your loan obligation as quickly as possible.

And if you bought or refinanced a house including a condominium or a cooperative apartment last year, there may be real estate tax adjustments or interest payments reflected on the HUD-1 settlement statement that may not be included in the 1098 form.

Every year, there is always something new in the tax law. Sometimes, it will cost you more money. For example, beginning in 2013, a 0.9 percent Medicare tax may be imposed, depending on your income.

But you may also get a tax benefit. If you have a same-sex spouse whom you legally married in a state or even a foreign country that recognizes same-sex marriage, you and your spouse generally can use the married filing jointly or married filing separately on your 2013 return. According to the IRS, this is true even if you and your spouse now live in a state that does not recognize such marriages.

I am always asked — especially by homeowners who for the first time will be able to itemize their tax deductions — what’s the best way to start. My suggestion: Go to the IRS Web site, and download a number of its helpful publications.

Recently, the IRS announced that it has significantly updated “Your Federal Income Tax” forms. According to the IRS, Publication 17 includes important changes to help taxpayers “get the most out of various tax benefits and get a jump on preparing their 2013 federal income tax returns.” This 292-page guide contains thousands of interactive links to help taxpayers quickly get answers to their questions.

Other publications that may assist you include: No. 1, “Your Rights as a Taxpayer”; No. 502, “Medical and Dental Expenses”; No. 504, “Divorced or Separated Individuals”; No. 523, “Selling Your Home”; and No. 530, “Tax Information for First Time Homebuyers.” A complete list can be found at www.irs.gov; click on Forms and Publications.

Additionally, you can obtain free help with problems you cannot resolve on your own by contacting the IRS Taxpayer Advocate Service. According to the IRS, there are offices in every state as well as in the District. For more information, go to www.taxpayeradvocate.irs.gov/
individuals/get-tax-help
 
.

Finally, beware of scam e-mails or phone calls. The IRS periodically issues a warning not to provide any personal and financial information — such as name, Social Security number, bank account and credit card or even PIN numbers — to anyone calling or e-mailing claiming to represent the IRS.

The IRS makes it very clear: It does not send taxpayers e-mails about their accounts. And the only way to get a tax refund or to arrange for a direct deposit is to file a tax return. For more information, see “Suspicious e-mails and identity theft” on the IRS Web site.

Benny L. Kass is a Washington and Maryland lawyer. This column is not legal advice and should not be acted upon without obtaining legal counsel. For a free copy of the booklet “A Guide to Settlement on Your New Home,” send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036.

 

via Start preparing now to file your taxes – The Washington Post.

Mortgage Rates Hit Three-Month Low

mortgageBloomberg News

February 5, 2014, 11:46 AM

Mortgage Rates Hit Three-Month Low

By NICK TIMIRAOS

Average mortgage rates fell to the lowest level since mid-November last week as unease over economic growth in the U.S. and market turmoil abroad prompted investors to load up on government bonds, pushing down long-term interest rates.

The average rate on a 30-year fixed-rate mortgage was 4.47% last week, down from 4.52% the week before, the Mortgage Bankers Association said Wednesday. Mortgage rates are tied to yields on 10-year Treasury note, which closed at 2.64% on Tuesday amid market jitters.

But the modest decline in mortgage rates hasn’t yet been enough to trigger any meaningful gain in home-loan refinancing. Applications for refinances were up 3% from a week earlier but remain at extremely low levels.

Market strategists say that rates would need to ease to about 4% from their current levels in order to provide any lift to refinancing. Rates remain more than a percentage point above their lows of May 2013, when they fell to 3.6%.

“We are eyeing 4.0% on the primary mortgage rate to be a bellwether for increased originator supply,” said Walter Schmidt, an analyst at FTN Financial in Chicago, in a note on Wednesday morning. Refinances accounted for 62% of loan applications last week, which was unchanged from the prior week.

The Mortgage Bankers Association estimates that refinance volume will total about $440 billion this year, down from $1.1 trillion last year. That would be the lowest level of refinancing since 2000.

Mortgage rates jumped more than a percentage point last June as investors grew anxious over the Federal Reserve’s plans to unwind its unprecedented bond-buying campaign. The rise in rates ended an unusually long refinance wave that had generated huge profits for U.S. banks. It also led to a pullback in home sales during the fall.

Mortgage applications for home purchases fell 4% last week on a seasonally adjusted basis and stood 17% below their year earlier levels, a grim indicator of falling demand for homes. The small declines in rates in recent weeks could serve as a tailwind to the housing market as the spring buying season gets underway in the coming weeks.

Banks may be able to see refinancing drop by a smaller-than-expected margin if rates stay low and more borrowers find that rising home prices have restored equity, making it possible to refinance. Many borrowers have been shut out from refinancing because their homes have dropped in value, though a series of government programs have enabled more borrowers to refinance. But analysts don’t expect refinance volumes to come anywhere close to their levels of the past few years.

via Mortgage Rates Hit Three-Month Low – Developments – WSJ.

5 questions buyers can ask about a flipped home

Flip5 questions buyers can ask about a flipped home

Here’s how to tell if it’s wise to buy a home that has been fixed and quickly put back on the market.

By MSN Real Estate partner 20 hours ago

By Dana Dratch, Bankrate.com

Buying a flipped home is like negotiating a Cold War treaty: Trust, but verify.

Flippers often make just a few cosmetic changes before they resell a house. With fresh paint and new appliances, what’s not to love? Frequently, flippers target projects the next buyer would have had to tackle anyway. Buying a home with a smaller to-do list is a plus.

In some cases, flippers renovate or make structural changes. That’s also good, if they do it right. Not so hot if they make a hash of it. And, in rare instances, a less-than-scrupulous? soul might disguise a home’s flaws with paint or well-placed wallboard.

While buying a flipped home isn’t a bad thing, a smart buyer wants to know that upfront and ask a few extra questions before making an offer.

Here are five questions that the pros in real estate, construction and renovation recommend you ask to determine whether the home was flipped, and what its true condition is.

1. What’s the home’s history?

You want to know how often the house has been sold. Were there any quick sales with a big uptick in price?

A home that sold on the low side of market value, then was resold six months later at the high end of the spectrum, could indicate a flip, says Patricia Szot of Keller Williams Realty Lake Cities in Garland, Texas.

Also, if the sellers have flipped a few homes, they have a track record, Szot says. So get the names of earlier buyers and talk with them. Ask the buyers if all the home’s systems worked when they moved in and whether they discovered hidden problems.

2. Is this an older house with a new interior?

One big clue that a house is a flip: “It’s an old house and everything is brand-new,” says Pat Vredevoogd Combs, past president of the National Association of Realtors and vice president of Coldwell Banker AJS Schmidt Realty, in Grand Rapids, Mich.

With a flipped home, “typically, owners are looking to sell it as soon as possible and not have to carry the expense,” Szot says. In some cases, they’ll put the home on the market before they’re finished updating, she says.

Some flippers will give buyers a stipend to “choose what they want” for things like flooring or wallpaper, she says.

That can be a great way for potential buyers to personalize the house, but it’s not always a great deal, Szot says, because sometimes those allowances cover only inexpensive materials.

Check out how much that stipend is and what it will really buy ahead of making any agreements, Szot says.

3. What changes have you made to the house?

Some states such as Texas are “full-disclosure” states, says Szot, who lives in the Lone Star state. A full-disclosure policy means that sellers have to tell buyers everything they know about the house, including changes they’ve made.

That makes it easy to get a list of the work an owner has done to the home, she says.

Even if you don’t live in a full-disclosure jurisdiction, you can still ask the current owners for a written, detailed report of all the changes they’ve made to the property — and ask them to sign it, Szot says.

Permits, and other documents related to work or upgrades, should be available to prospective buyers, says Mike Holmes, contractor and author of “The Holmes Inspection: The Essential Guide for Every Homeowner, Buyer and Seller.”

Check with the permitting authority to make sure that work passed inspection once it was completed, he says: “The more you do your homework, the better.”

4. Am I hiring an independent inspector of my choice?

“Often you don’t know if the people who flipped it did a surface job or dug deep and did a great job,” Combs says. The solution is to hire a professional home inspector.

While getting an inspection is a smart move for any homebuyer, it’s especially important if the home was flipped, Holmes says.

An experienced inspector “will just point out things that were done wrong or improperly,” says Michael Hydeck, past president of the National Association of the Remodeling Industry and owner of Hydeck Design Build Inc. in Philadelphia.

If you love the home but find problems, you can ask the owner to fix them or negotiate for a lower price, he says.

Make sure the inspector is licensed, accredited, insured and has been in business a long time, Holmes says. Don’t pick the first name you find or select anyone connected to the sellers, he says.

5. Is the work properly permitted?

Whether your work is done by a professional or yourself, anything more complicated than paint or wallpaper likely requires a permit.

One sign of a flip: “The real estate agent says ‘all new,’ and there’s no evidence of permits,” Holmes says. “When I hear ‘new, new, new,’ I want documents to back it up.”

Look under the sinks, Holmes advises. A good pro won’t tie old plumbing into new kitchens or bathrooms, he says. Check the electrical panel. Wiring should be clipped and tidy, not messy, he says.

Scan places where unfinished space meets finished space: basements, mechanical closets and under cabinets. You should find good workmanship — “neat and professional” — whether the area is designed to be seen or not, Holmes says.

Then compare the list of permits granted to the address with the work that’s been done.

Unpermitted work is a red flag, Szot says. “There’s a huge chance it isn’t up to code,” she says.

Along with safety concerns, a house that doesn’t meet code can be risky when it comes to getting insurance or even financing, Szot says. And you want to know before you make an offer, she adds.

via 5 questions buyers can ask about a flipped home – MSN Real Estate.

The 8 most common tax filing errors, and how to avoid them

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The 8 most common tax filing errors, and how to avoid them
Real Estate Tax Talk
Stephen Fishman, Contributor
Feb 3, 2014

It’s tax time! The IRS started accepting individual returns for processing on Jan. 31 — later than usual, but better late than never.

Last year, the IRS issued a useful list of the eight most common filing errors made by individual taxpayers. Many of the mistakes people make are incredibly easy to avoid — it just takes a little care and attention.

If the IRS owes you a refund, it could be delayed if your return contains an error like one of these:

1. Wrong or missing Social Security numbers: Your refund could be delayed simply because you made a mistake listing your Social Security number. The number on your return must match the number on your Social Security cards.

2. Names wrong or misspelled: You’ve got to spell your own name right, or the IRS will get confused. Again, your name on your return should match the name on your Social Security card.

If you’ve changed your name since you filed your last return, you need to notify the Social Security Administration (SSA) and obtain a new Social Security card before you file your taxes. The SSA will issue a new Social Security card with your new name, but will keep your old Social Security number. This way, the name on your tax return will match Social Security records.

If your name and Social Security number don’t match, the IRS will flag your return and require that the error be corrected. It’s easy to let the SSA know about your name change and get a new Social Security card. All you need to do is file Form SS-5, Application for a Social Security Card, at your local SSA office or by mail with proof of your legal name change. You can get Form SS-5 from the SSA’s website at www.ssa.gov

“The IRS says that an unsigned tax return is like an unsigned check — it’s invalid.”

3. Math mistakes: Your math needs to add up. This ordinarily isn’t a problem if you file electronically, since the software does the math for you. Because most people file electronically, math errors have gone down. Such errors were found in 2 percent of returns filed in 2012, less than one-fifth the rate for 2002. Still, if you file on paper, be sure to double-check your math.

4. Wrong bank account numbers: The IRS will direct-deposit your refund directly into your bank account. But you have to give the correct account number.

5. Forms not signed, dated: The IRS says that an unsigned tax return is like an unsigned check — it’s invalid. Also, remember both spouses must sign a joint return.

6. Electronic signature errors: If you e-file your tax return, you sign the return electronically by using a Personal Identification Number (PIN). For security purposes, the IRS software will ask you to enter the Adjusted Gross Income (AGI) from your return for last year. This should be the AGI from the return you originally filed. If you later amended your return, or the IRS provided you with a different AGI after correct your return, don’t use those numbers. You may also use last year’s PIN if you e-filed last year and remember your PIN.

7. Filing status errors: Your filing status means whether you file your return as single, married filing jointly, married filing separately, head of household, or qualifying widow(er) with dependent child. Usually, it is pretty obvious what your status should be, but there can be complications. If you e-file your return, the software will help you choose the right filing status.

8. Errors in figuring credits, deductions: This is where taxes can get complicated. Moreover, a mistake here can cost you extra taxes or prevent your from getting a refund. For example, if you are age 65 or older, you’re entitled to a larger-than-normal standard deduction. But you must claim the deduction on your return. The same goes for common deductions such as charitable deductions.

Stephen Fishman is a tax expert, attorney and author who has published 20 books, including “The Real Estate Agent’s Tax Deduction Guide,” “Working for Yourself,” “Deduct It!” and “Working with Independent Contractors.” His website can be found at fishmanlawandtaxfiles.com.

via The 8 most common tax filing errors, and how to avoid them | Inman News.

Massive credit-data breaches may pose problems for people trying to buy houses

photo-right-Capitollitup-against-med-blue-sky-copy-copyMassive credit-data breaches may pose problems for people trying to buy houses

By Kenneth R. Harney, Published: January 30 | Updated: Friday, January 31, 7:50 AM

The numbers of affected consumers are as yet impossible to predict, but mortgage credit experts warn that the recent massive data breaches at Target, Neiman Marcus and other retailers could have significant side impacts on some real estate transactions in the coming months, as damaged credit files depress scores and jeopardize loan applications and home sales.

The Target breach alone could touch as many as 70 million credit and debit card customers, according to the company. Neiman Marcus says that data on 1.1 million of its customers may be vulnerable to fraud. Data security researchers report that at least six other merchants have experienced data breaches from point-of-sale malware similar to what was used in the Target thefts.

Both Target and Neiman Marcus have sought to reach out to customers and have offered free credit-monitoring services. But credit experts say it’s likely that given the sheer size of the data thefts, large numbers of people either have not taken advantage of these offers or have, for varying reasons, not been aware that their data may have been compromised.

So what are the potential blowbacks on home sales and mortgage applications?

Start with the basics: Identity theft, if not corrected quickly, can make a mess of anyone’s credit bureau files. Though victims may not be liable for the unauthorized debts racked up, their credit reports — and, in turn, their credit scores — can be damaged for weeks or months.

Listen to Terry Clemans, executive director of the National Consumer Reporting Association, the primary trade group that represents independent credit-reporting companies serving the mortgage industry.

Clemans says that mass identity heists such as those at Target and Neiman Marcus have the potential to create “havoc on credit files for as long as it takes for the consumer to document [that] the accounts are due to identity theft and get them removed from the file. The impact on credit scores, although short-term, is devastating because they are current defaults and [trigger] a big hit to the score. With the sizes of the breaches, this could be painful for a long time.”

Sarah Davies, senior vice president for VantageScore Solutions, one of the two major providers of consumer score models used by banks and other creditors, confirmed that unauthorized debts on credit reports “can have quite a big impact” and could interfere with certain transactions you want to undertake, such as buying a home or applying for a mortgage.

Among the scenarios that could begin surfacing as the stolen information from retailers is sold and used in the coming months:

?Home sales could be knocked off track by the sudden appearance of new debts on buyers’ credit reports. Many lenders monitor national credit bureau files electronically from the date of loan approval to moments before closing.

Even if you explain that you were a victim of identity theft, your financing could be put on ice until you and the bureaus clean up your reports. That could cause you to miss contractual deadlines with the home seller and, worst case, cause you to lose the house.

?Undetected run-ups of balances on credit cards could seriously affect “utilization ratios” — how much of the available credit maximum a consumer has drawn down — and cause declines in scores. High rates of utilization, or “maxing out,” are penalized by the major scoring models. Lower credit scores, in turn, may disqualify you for a mortgage, at least until you are able to document to the credit bureaus’ satisfaction that the new debts were the result of identity theft.

?Undetected use of your information to create one or more new credit cards could be especially damaging and time-consuming to fix.

Clemans notes that although merchants and the bureaus may be eager to help resolve identity theft situations, they are also on guard against attempts by consumers to blame everything negative in their files on identity theft. They’ll want proof and documentation before expunging the bad information.

In the mortgage context, there’s another complication: Although independent credit reporting agencies, which resell and reformat the national credit bureaus’ data for lenders, can often help advise loan officers on ways to improve their applicants’ scores — a service known as “rapid rescoring” — they can’t help in identity theft repairs. That needs to be done by the consumers themselves, by contacting the bureaus, placing fraud alerts or freezes on their accounts, then working to clean out the bad stuff, line by line.

via Massive credit-data breaches may pose problems for people trying to buy houses – The Washington Post.

A look at the 2013 D.C. region housing market data by Zip code

1(Kevin Cobb/The Washington Post)

A look at the 2013 D.C. region housing market data by Zip code

BY KATHY ORTON

January 31 at 7:30 am

Home owners in the D.C. region don’t want to spend much time in their cars. At least that’s what we’ve learned after reviewing the 2013 housing market data.

With the help of RealEstate Business Intelligence, a subsidiary of Rockville-based MRIS, we crunched last year’s numbers to get a sense of where sellers and buyers fared best in this area. We found a few surprises – Springfield and Hyattsville – and got confirmation of what we’ve long suspected. Great Falls is an expensive place to live.

But after speaking with a number of real estate agents to find out what they had to say about the market, one term we kept hearing was “walkability.” At every income level, home owners seem to want to walk or take public transportation to where they need to go. They’re tired of being stuck in their cars. The push to move outside the Beltway to buy a bigger house is in the past. These days buyers are sacrificing space for shorter commutes.

“With walkability, you don’t necessarily need a car in this city,” said Christie Weiss of TTR Sotheby’s International Realty. “We’ve been such a car-oriented city. Now we’re developing more of an urban culture where it’s okay not to have a car.”

To give a sense of what’s happening where, we’ve broken down the data by Zip code to show which places favored buyers and which ones favored sellers based days on market, median sale price and price per square foot and included insights by real estate agents who know these areas best. We also show how the region as a whole fared in these categories.

2

(James Smallwood/The Washington Post)

Advantage: Sellers

3

(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Great Falls, 22066: “Great Falls is very desirable for its larger home sites and wooded acres,” Mark McFadden of Washington Fine Properties said. “It also offers amazing restaurants and River Bend Country Club for golf and tennis. . . . In addition, it is well located just 15 miles from the nation’s capital and the Dulles tech corridor with easy access to Dulles International Airport and National Airport.”

4

(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

West End, 20037: “There are a number of things going on, especially north of Pennsylvania Avenue,” Christopher Ritzert of TTR Sotheby’s International Realty said. “Most of the properties are newer construction, starting with the Ritz Carlton. That really ratcheted up the quality of construction and amenities available in the neighborhood. . . . People want to be downtown. They want to be in buildings where they have services.”

5

(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Mount Pleasant & Columbia Heights, 20010: Mount Pleasant “feels like some of the more upper Northwest neighborhoods, but it really is still more affordable, especially for what you get,” Mandy Mills of Coldwell Banker said. “You look at places like Logan and Dupont and U Street, and you’re going to pay more for those areas than you will for Columbia Heights. … Everything that’s happening on 11th Street, locally owned, really chic slash hip slash divey bar fun places, I think that’s a huge draw. Our friends and clients from Logan and Dupont are walking up or cabbing up or Ubering up to go out on 11th Street. I think that is a real shift.”

Hyattsville, 20783: “We’ve stabilized in this area as far as the market goes,” Kimberly James of Long & Foster said. “This area in particular has a lot of things that are happening that make it desirable. We have the Route 1 corridor plan being worked on. We have the Purple Line. We have a new magnet school in College Park. Hyattsville’s old town has been renovated. There’s just a lot of stuff going on that makes it very attractive.”

6

(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Springfield, 22151: Buyers “like the fact that it’s a single-family home,” Lorraine Arora of Long & Foster said. “A single family home that’s affordable and you have a little bit of a yard. Plus, the [Springfield] mall rehab, they’re going to make it a lot like a town center. People look at walkability.”

Advantage: Buyers

7

(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Greenbelt, 20770: “Overwhelming the sales are condos,” Ariana Loucas of Re/Max Specialists said. “That’s why it’s popular. The price bracket is affordable. And the accessibility to the Metro and to D.C., it’s just off 295. Whether you’re driving or want the Metro, it’s a great location. . . . A lot of people like the convenience of D.C. or northern Virginia, but they don’t necessarily like the pricing so it’s a good alternative.”

8

(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

9

(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Indian Head, 20640: “There are really no community amenities down there,” said Emerick Peace of Keller Williams Preferred Properties. “There are no sit-down restaurants to speak of. So in order to do anything, you wind up driving back up to Waldorf, back up [Route] 301. That [Route] 210 Indian Head corridor, once you get past [Route] 228, it becomes what I call the dead zone. . . . Those next seven miles feel like 20 miles. There’s not a lot of traffic. It’s just not a scenic drive. It’s the epitome of a country mile, let me put it that way.”

10

(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Crownsville, 21032: Despite being close to the water (Severn River), close to Baltimore and D.C. and near an airport, Crownsville is a town stuck in the 1990s era of big homes on big lots. “I don’t know that our average buyer today and certainly our younger buyers are not looking for that size and maintenance of homes or land,” Kathy Brooks of Coldwell Banker said. “Everything is cyclical. Tastes change. I truly believe that it will come back at some point. But right now I think we’ve moved away from it. It was just affordability. Big houses have big electric bills and big landscaping bills.”

via A look at the 2013 D.C. region housing market data by Zip code.

High radon levels may be a downside to having a tight, energy-efficient house

radon(Mary Ann Chastain/ASSOCIATED PRESS)

High radon levels may be a downside to having a tight, energy-efficient house
BY JILL CHODOROV
January 30 at 5:30 am

Chodorov,  a real estate agent with Long & Foster, writes an occasional column about local market trends and housing issues.

Robert Eisen purchased his home 13 years ago in the Kemp Mill neighborhood of Silver Spring. At the time, the radon level was well below the United States Environmental Protection Agency’s recommended level of 4 picocuries per liter, or 4 pCi/L.

When a neighbor found considerably higher levels of radon during the recent sale of his home, Eisen decided to test his home again. He was shocked to discover that his radon levels had skyrocketed.

Last December, Eisen distributed a notice on the neighborhood listserv letting residents know about the high radon levels and encouraging them to get their homes tested. Eisen speculated that the radon levels might be linked to the earthquake in 2010. “The reason for the jump in radon levels is probably due to the earthquake…..” he said in his e-mail.

“I was reluctant at first to share the news because people can be irrational,” Eisen said in an interview. “I was concerned that it would reduce the value of my home. I was worried that our friends might be concerned about having sent their kids into our basement. In the end, I sent the e-mail because I felt an obligation to let others know.”
Soon afterward, Ben Bazian, another Kemp Mill homeowner, sent a similar e-mail to his neighbors.

“Though our house was tested when we purchased it, I decided to test again after hearing about a neighbor finding radon in his home,” Bazian said. “This area appears to have a high level of radon and I highly recommend that you have your house tested,” Bazian warned in his e-mail. “Whether you believe that radon is a health issue or not, you will not be able to sell your house if the radon levels are above acceptable levels so you may as well deal with it.”

Eisen said he heard that a local radon inspector received 20 calls as a result of his e-mail, but does not know the results of those tests. “I wonder if people are quiet about it because they consider it a badge of shame. Maybe they are concerned their friends or family won’t come to their house anymore.”

Bill Long, director of the Center for Radon and Air Toxics in the Office of Air and Radiation at the U.S. EPA, said “radon is nothing to be ashamed about” and is easy to remediate.

Long, however, warned that radon is the second most frequent cause of lung cancer, after cigarette smoking. According to the EPA’s Web site, radon causes 21,000 lung cancer deaths per year in the United States. Radon is the number one cause of lung cancer deaths among non-smokers, according to EPA estimates. More people die each year of cancer related to radon than from drunk driving, drowning or home fires.

Long also said that most of the Maryland, Virginia and D.C. area is in Zone 1, which has the highest risk for radon among the three zones. The EPA’s map of radon zones assigns each of the 3,141 counties in the United States to one of three zones based upon radon potential.

The zone map, Long said, is not intended to be used to determine if a home should be tested for radon. “Homes with elevated levels of radon have been found in all three zones. All homes should be tested regardless of geographic location.”

As for Eisen’s theory about the cause of the elevated levels of radon, Long said “there is no conclusive evidence about a link to earthquakes.”

Stan Edwards, chief of the Division of Environmental Policy and Compliance for the Montgomery County Department of Environmental Protection, added: “Nothing suggests that we have higher levels of radon since the earthquake. We certainly do have areas in our county that are above the EPA’s recommended levels. So, we always recommend that everyone test for radon.”

But Ryan Paris, radiation safety specialist and radon coordinator of the Virginia Department of Health Office of Radiological Health, said there could be a possible link between the earthquake and the elevated radon levels.  “It does make logical sense that an earthquake could make radon levels worse,” Paris said. “An earthquake could conceivable open up bedrock and damage the foundation of a house, allowing radon to enter a home. However, we have no formal documentation to prove that.”

An online search for additional information about radon led me to the Center for Disease Control’s (CDC) Web site with information about their National Environmental Health Tracking Program. The environmental public health tracking program is an “ongoing collection, integration, analysis, and interpretation of data about environmental hazards and their effects on public health.”

Antonio Neri, commander in the Division of Cancer Prevention and Control in the National Center for Chronic Disease Prevention and Health Promotion at the CDC, said that the agency has been debating the feasibility about including radon in the tracking program.

“The issue is that there is a lot of variation in the quality of information out there,” Neri said. “The biggest problem is the condition of the home when the tests were taken, such as were the windows open or closed, were the doors kept shut, was the test taken before or after fixing radon? Which one do you report to the tracking program? It is very difficult to have any accuracy or consistency in the test results. In general, the CDC is thinking about it but the quality is variable.”

Robert Whitcomb, lead physical scientist at the Radiation Studies Branch of the Division of Environmental Hazards and Health Effects at the CDC’s National Center for Environmental Health, offered another possible reason for increases in radon experienced by the residents of Kemp Mill.

“Increased levels of radon in homes are mostly a factor of today’s lifestyle. Everyone wants an energy-efficient home,” Whitcomb said. “We install new windows, we add weather stripping and caulking, we buy new high efficiency systems. All of these things seal up our homes and limit ways for the radon to escape.”

“Radon occurs everywhere in the environment,” Whitcomb added. “In our homes, we trap the radon. Our home is like a suction cup above the earth. Based on temperature changes and pressure changes, the radon in our home can fluctuate daily.”

Whitcomb was not suggesting that we don’t improve the energy efficiency of our homes. “Testing is the theme here. It is very easy to remediate radon from a technical standpoint. After making improvements to your home, including finishing a basement, it is important to test the radon levels.”

“Too often people are scared about it. It is nothing to be scared of,” Whitcomb said. “There is greater interest in healthy homes. More and more builders are installing radon resistant options in new homes. But people must be aware that energy efficient homes can trap radon.”

Experts suggested that property owners test their homes during the winter, a time when the dwellings are closed up and more sealed and when people may be more exposed to radon because they are indoors. In fact, the U.S. EPA has designated January as radon action month to raise awareness about the potential danger and to encourage people to have their homes tested.

Radon testing is not required in the District, Maryland or Virginia as part of the home sale transaction. Here are some things you might want to consider if you’re buying a house or making your house more energy efficient:

• Contact your state or county radon office or regional EPA office to determine if there are any testing requirements in your local jurisdiction.

• Test your home after making any energy efficiency upgrades or renovations.

• Test a home before buying or immediately upon purchase, even if the home already has a radon reduction system.

• Ask your homebuilder to incorporate a radon reduction system into new home construction.

Yvonne Blanc, a certified radon specialist with the EPA and co-owner of Pro-Spex Home Inspections, said a professional radon test costs under $200 for a short-term 48-hour test. “The longer you leave the test in the house, the more accurate a reading you get,” she said. “Average cost of installing a radon ventilation system is between $1,500 and $2,000 on an average size home.”

Eisen, the homeowner, said it makes sense to him that the possible cause could be his efforts to make his home more energy efficient.

“Our house was drafty when we bought it, so we installed new windows and sealed up the house,” Eisen said. “I didn’t think that improving the energy efficiency of our home would increase our radon levels.”

via High radon levels may be a downside to having a tight, energy-efficient house.

Cold Spell Heats Up House Searches in Warm-Weather Markets

BN-BG417_Trulia_E_20140127155642Trulia

January 27, 2014, 5:01 PM

Cold Spell Heats Up House Searches in Warm-Weather Markets

By SANETTE TANAKA

The start of 2014 brought plunging temperatures and record-breaking lows in many parts of the country. It’s the kind of weather that makes migrating down south seem like a good idea.

And it turns out that, the colder the temperature, the more house hunters seek out warm-weather locales like Miami and Phoenix, says Jed Kolko, chief economist and head of analytics at real-estate website Trulia.

Trulia analyzed online searches originating from metro areas where the average daily January temperature was below 41 degrees Fahrenheit between Dec. 1, 2013, and Jan. 21, 2014. Those cold weather metros are in the Northeast, the Midwest, Plains and Mountain states and even some of the South. Trulia used temperature data from the National Climatic Data Center.

In those areas, for every 10-degree Fahrenheit drop in temperature, searches for warm regions increase 4.4%, according to Trulia. In comparison, searches for properties nationwide increase roughly 2.6% for every 10 degree-drop in temperature in cold places.

Most of the metro areas that see the highest increase in searches are in the South and West. At the top of the list is Miami, which sees a 7.3% increase in searches from cold-weather dwellers for every 10-degree drop in temperature. Following is Phoenix with a 6.9% increase and Jacksonville, Fla., with a 6.4% increase. House hunters aren’t shunning colder areas completely, though—Dayton, Ohio, also made the top 10 list.

The boost is even larger for warm vacation areas, which are defined as areas where vacation homes account for at least 25% of the housing stock, according to the U.S. Census.

Searches for warm vacation areas increased 5.5%, more than twice as much as the nationwide increase. “Vacation areas have more second homes, so when the weather gets colder, people search for homes not only for where they might move to, but even more, for where they might vacation,” Mr. Kolko says.

These findings fit an overall trend of people flocking to the South and Sunbelt, where population and housing stock has increased over the past century, says Edward Glaeser, a professor of economics at Harvard University. Medical and technological advances have made it easier for people to live in warmer climates and encouraged more economic growth and centers of business, he adds.

Paddington Matz, an associate broker with Town Residential, says she has felt the effects of the freeze. “I think I’m getting much fewer hits now that it is really cold as far as the Finger Lakes go,” says Ms. Matz, who works in New York City as well as the Finger Lakes region in upstate New York. Two years ago, one of her clients sold one of two New York properties in order to buy in Miami. He has held onto the second condo so far, she says, but is now considering selling that one, too.

via Cold Spell Heats Up House Searches in Warm-Weather Markets – Developments – WSJ.

Existing-home sales in 2013 were strongest in 7 years

homes_production_line_shutterstock_83557312-300x200Production line image via Shutterstock.

Existing-home sales in 2013 were strongest in 7 years
Despite improvement, some loss of momentum seen

Teke Wiggin, Staff Writer

Jan 23, 2014

Existing-home sales last year hit their highest level since 2006 as the housing market continued to stabilize, the National Association of Realtors (NAR) reported.

Compared to 2012, existing-home sales in 2013 increased by 9.1 percent to 5.09 million, marking the strongest performance since 2006, “when sales reached an unsustainably high 6.48 million at the close of the housing boom,” NAR said.

NAR Chief Economist Lawrence Yun said the housing market has experienced a healthy recovery over the past two years. Job growth, pent-up demand and low mortgage rates have helped drive up existing-home sales nearly 20 percent since 2011, he said.

Despite the improvement, Yun noted that the recovery has slowed recently.

“We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population,” he said.

Existing-home sales edged up slightly in December, rising 1 percent to a seasonally adjusted annual rate of 4.87 million from a downwardly revised 4.82 million in November. But sales that month were still down 0.6 percent on an annual basis.

 

In November, existing-home sales dipped on an annual basis for the first time in more than two years, NAR previously reported.

Economists say that a spike in mortgage rates that occurred last spring may have partly induced the recent slowdown.

Inventory shortages have also served as a headwind.

The outlook on that front did not improve in December. Housing inventory last month fell 9.3 percent to 1.86 million existing homes available for sale. That represents a 4.6-month supply of homes at the current sales pace, down from 5.1 months a month ago but up 1.6 percent year over year.

NAR reported that pending home sales, a forward-looking indicator based on sales under contract, remained mostly flat in November. At the time, Lawrence Yun said the market may have hit a “cyclical low.”

Other barometers paint a rosier picture of the housing market. Construction of new single-family homes and new-home sales have grown substantially in the last year.

via Existing-home sales in 2013 were strongest in 7 years | Inman News.

Mortgages have become harder to obtain, but consumers do have some alternatives

WFP_WhiteLogo_Reverse-PMS275BlueBackgroundMortgages have become harder to obtain, but consumers do have some alternatives

By Kenneth R. Harney, Published: January 23 | Updated: Friday, January 24, 7:50 AM

The verdict was nearly unanimous at a recent hearing on Capitol Hill: The new federal “ability to repay” and “qualified mortgage” regulations that took effect Jan. 10 will make obtaining credit tougher, not easier, this year, and potentially force large numbers of credit-worthy home buyers to defer or cancel their plans.

What nobody addressed at the hearing, though, was the elephant in the room: Okay, we’ve got a problem. But what, if anything, can buyers who find it difficult to meet the new standards do about it?

The testimony came from mortgage, banking and credit union leaders — even the head of a nonprofit Habitat for Humanity chapter. Though they didn’t dispute the good intentions of Congress or federal regulators in adopting the sweeping changes — banning or severely restricting most of the worst practices and loan features that facilitated the mortgage debacle of the last decade — they said the new rules amount to overkill.

By forcing creditors to offer mortgages within a tightly confined box of complex underwriting requirements and imposing crushing financial penalties for infractions, the new regulations are making lenders hyper-cautious about approving anybody, especially applicants who appear marginal or don’t quite fit the standard profile.

Bill Emerson, chief executive of Quicken Loans, one of the country’s highest-volume lenders, said the new rules could “impair credit access for many of the very consumers they are designed to protect.” These people are all over the country — young first-time buyers with student debts, middle-income minority buyers, self-employed individuals and those whose incomes are not received at regular intervals, plus just about anybody with household debt that exceeds 43 percent of income.

But are there ways for folks such as these to improve their chances to get a mortgage this year, rather than waiting the estimated 12 to 24 months it may take for regulators to assess the impact of their rules and loosen up? Yes. Here are a few practical strategies.

?Debt ratios. Though the baseline standard for a new “qualified mortgage” (QM) is that a borrower’s total debt-to-income ratio should not be greater than 43 percent, lenders say there is wiggle room if you search for it. For example, conventional loans being sold to giant investors Fannie Mae and Freddie Mac may exceed 43 percent by a little, provided your overall application makes it through the companies’ electronic underwriting systems, which take multiple factors into consideration beyond household debt burdens.

Dennis C. Smith, co-owner of Stratis Financial in Huntington Beach, Calif., says, “We’ve had some people with 44 percent to 45 percent” debt ratios get through the hoops. Smith uses another technique where appropriate: Getting a qualified co-borrower, typically a close relative, to join with the buyer and sending the application to Freddie Mac, which he says has a more generous rule on non-occupant co-borrowers than Fannie does. According to Smith, this allows a sharing or “blending” of household finances and can produce a lower overall debt-to-income ratio if the non-occupant co-borrower has a strong financial profile.

Another option: The Federal Housing Administration offers additional flexibility on debt-to-income ratios in its version of a qualified mortgage. Though FHA has raised its insurance premiums recently, it is still an important potential resource if your debt levels are high and you have only modest down-payment cash. FHA’s minimum down is still just 3.5 percent; Freddie and Fannie require at least 5 percent.

John Councilman, president of AMC Mortgage Corp. in Fort Myers, Fla., says that FHA’s current maximum acceptable debt-to-income ratio through its underwriting system appears to be around 50 percent. Applicants who have veterans status should check out VA loans for similar flexibility, and buyers in rural areas should look to the Department of Agriculture’s loan program.

?Down-payment assistance. Toughened federal rules are shedding new light on some alternatives that get relatively little public attention: hundreds of bond-funded, low-cost mortgage assistance programs run by state and local housing finance agencies. According to Downpaymentresource.com, an online service that helps connect buyers with houses and funding, there are nearly 1,600 such programs across the country. The site estimates that 70 percent of for-sale listings in any given market are eligible for at least one of these programs.

Bottom line: You may have options. Check them out with the help of an experienced loan officer who works with a variety of funding sources. Ask about that upfront.

via Mortgages have become harder to obtain, but consumers do have some alternatives – The Washington Post.

Mortgage rates fall for second week in a row

freddie-mac-2013_image_982w

Jonathan Alcorn/Bloomberg

Mortgage rates fall for second week in a row

BY KATHY ORTONJanuary 23 at 10:07 am

Mortgage rates fell for the second week in a row, according to the latest data released Thursday by Freddie Mac.

The 30-year fixed-rate average sank to 4.39 percent with an average 0.7 point, its lowest level since late November. It was 4.41 percent a week ago and 3.53 percent a year ago.

The 15-year fixed-rate average edged down to 3.45 percent with an average 0.7 point. It was 3.45 percent a week ago and 2.81 percent a week ago.The 15-year fixed rate was below 3.5 percent for only the second time in the past six weeks.

Hybrid adjustable rate mortgages were mixed. The five-year ARM average rose to 3.15 percent with an average 0.5 point. It was 3.1 percent a week ago and 2.7 percent a year ago.

The one-year ARM average moved for the first time in four weeks, dropping to 2.54 percent with an average 0.5 point.

“Mortgage rates were flat to down a little this week amid reports that inflation remains subdued,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “The Consumer Price Index was up to 0.3 percent in December after being unchanged in November. For the year as a whole, consumer prices rose just 1.5 percent in 2013.”

Meanwhile, spurred by falling interest rates, mortgage applications showed an uptick last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, rose 4.7 percent. The Refinance index grew 10 percent, while the Purchase Index increased 2 percent.

The refinance share of mortgage activity rose to its highest level in two months, accounting for 64 percent of all applications.

via Mortgage rates fall for second week in a row.

Economic mobility hasn’t changed in a half-century in America, economists declare

photo-right-Capitollitup-against-med-blue-sky-copy-copyEconomic mobility hasn’t changed in a half-century in America, economists declare

By Jim Tankersley, Published: January 22 | Updated: Thursday, January 23, 12:01 AM

Children growing up in America today are just as likely — no more, no less — to climb the economic ladder as children born more than a half-century ago, a team of economists reported Thursday.

Even though social movements have delivered better career opportunities for women and minorities and government grants have made college more accessible, one thing has stayed constant: If you are growing up poor today, you appear to have the same odds of staying poor in adulthood that your grandparents did.

The landmark new study, from a group led by Harvard’s Raj Chetty, suggests that any advances in opportunity provided by expanded social programs have been offset by other changes in economic conditions. Increased trade and advanced technology, for instance, have closed off traditional sources of middle-income jobs.

The findings also suggest that who your parents are and how much they earn is more consequential for American youths today than ever before. That’s because the difference between the bottom and the top of the economic ladder has grown much more stark, but climbing the ladder hasn’t gotten any easier.

Those findings add up to a surprising take on the status of the iconic American Dream, and they cast Washington’s roiling debate about the consequences of economic inequality in a new light.

The paper suggests that “it is not true that mobility itself is getting lower,” said Lawrence F. Katz, a Harvard economist and mobility scholar who was not one of the paper’s authors but has reviewed the findings. “What’s really changed is the consequences of it. Because there’s so much inequality, people born near the bottom tend to stay near the bottom, and that’s much more consequential than it was 50 years ago.”

Americans have always placed great faith in economic mobility, the idea that any child born into poverty can grow up to be middle class, or that a middle-class kid can grow up to be rich.

As the country struggles through the slow recovery from recession and decades of middle-class stagnation, politicians including President Obama and Rep. Paul Ryan R-Wis. have lamented that mobility is getting worse; that it is getting harder to climb out of poverty or into wealth.

Previous research has suggested that that might be true, particularly work by Bhash Mazumder, a senior economist at the Federal Reserve Bank of Chicago who found mobility declined as inequality increased in the 1980s.

Chetty and his colleagues — Nathaniel Hendren of Harvard, Patrick Kline and Emmanuel Saez of the University of California at Berkeley and Nicholas Turner of the Treasury Department’s Office of Tax Analysis — examined millions of anonymous earnings records and found that mobility has not changed appreciably since the 1970s.

(The authors looked at records for parents at a set age and for their children once they reached adulthood. For the most recent generation of children, many of whom have not yet started working, they measured college attendance, which correlates with higher earnings).

Incorporating results from a previous study dating back to the 1950s, the authors concluded that “measures of social mobility have remained remarkably stable over the second half of the twentieth century in the United States.”

That finding implies mobility is stuck at a low rate, at least compared to other wealthy nations: It is much harder for a poor child born in America to climb into the rare air of the country’s highest earners than it is for a similar child in, for example, Canada or Denmark.

Several economists who study mobility and inequality expressed surprise at that stasis — starting with Chetty, the lead author. “I am really struck by how stable it seems to be,” he said in an interview. “I would not have expected that, because many things have changed over time.”

Heather Boushey, who heads the Center for Equitable Growth, a new inequality-focused think tank, said the findings were “making me rethink” her previous belief that mobility may be declining, particularly for men.

David Autor, an MIT economist who writes frequently about issues related to inequality, called the findings “a sort of Rorschach” test that will support many economists’ preconceived notions about the effectiveness of government programs in providing opportunity.

Some could view the results as a failure of programs such as Pell grants, Head Start and nutritional supplements for children that are intended to promote mobility. Or, he said, “you can view this as: Social policies have fought market forces to a draw.”

Another leading voice on mobility issues, Manhattan Institute economist Scott Winship, said in an interview that he has found a similar trend in mobility — no change for children born in the 1980s compared to those born in the 1940s — using a different data set.

The findings from Chetty and his co-authors are likely to set off a new round of debate over mobility and inequality, which Obama recently called “the defining challenge of our time.”

There’s something in the paper to challenge both political parties’ converging approaches to the issue. It suggests that both sides are wrong to talk about mobility declining. It explicitly calls into question the “Great Gatsby Curve” invoked by the Obama administration, the idea that widening inequality will depress mobility over time.

But the findings also suggest that Republicans are wrong to downplay inequality and focus solely on improving mobility.

Companion work by the Chetty team suggests that geography may be a critical factor in the pursuit of the American Dream. That research shows that some parts of the country, particularly the Southeast, have experienced persistently lower mobility over time than other parts, such as the Mountain West.

via Economic mobility hasn’t changed in a half-century in America, economists declare – The Washington Post.

CFPB’s new ‘qualified mortgage’ rule now in effect

wfpCFPB’s new ‘qualified mortgage’ rule now in effect

BY ILYCE R. GLINK AND SAMUEL J. TAMKIN

January 22 at 5:30 am

Last week, the Consumer Financial Protection Bureau’s CFPB new qualified mortgage also known as the ability-to-repay rule went into effect.

The new rule is about helping borrowers understand the true costs of the mortgage they apply for. On the flip side, it is designed to keep lenders from lending money to borrowers who can’t afford to make those payments over time.

If it works out the way the CFPB has planned, the number of foreclosures should drop in the coming years, and, hopefully, some of the conditions that helped create one of the biggest real estate bubbles in U.S. history will be eliminated.

To be considered a qualified mortgage, a lender may not charge excessive upfront points and fees capped at 3 percent of the loan, and the loan cannot be longer than 30 years in length say goodbye to 40-year mortgages.

Also, interest-only loans also known as zero-down payment loans and negative amortization loans where the monthly payment doesn’t cover the true cost of the interest, so the total amount of the debt grows each month will not be considered qualified mortgages.

No-doc loans, also known as stated-income loans because the loan officer would just write down how much the applicant said he or she earned and not verify that information, have been eliminated. Starting this week, if you apply for a mortgage, you have to be able to prove that you can afford to repay it in full.

In addition, the loans must fall into one of three categories: The monthly loan payment plus the borrower’s other debt payments cannot exceed 43 percent of the borrower’s gross monthly income; the loan must qualify to be purchased or guaranteed by a government-sponsored enterprise such as Fannie Mae or Freddie Mac or to be insured or guaranteed by a federal housing agency; otherwise, the loan must be made by a smaller lender that keeps the loan in its portfolio and does not resell it.

As the CFPB Web site puts it: “The ability-to-repay rule is intended to prevent consumers from getting trapped in mortgages that they cannot afford, and to prevent lenders from making loans that consumers do not have the ability to repay. It’s that simple.”

So, of course, the nonprofit real estate and mortgage trade associations, which represent the housing industry’s interests in Washington, are up in arms. They claim that self-employed individuals, small business owners and many others will have a harder time qualifying for loans. They also say that loans will cost more.

Perhaps. But while lenders may offer other sorts of nonqualified mortgages provided they verify that the borrower can repay that loan, if a loan doesn’t fall into the qualified mortgage category, it will not receive the same sort of legal protections.

And after the billions spent to pay off the housing crisis, lenders may be inclined to primarily offer qualified mortgages.

Ilyce R. Glink’s latest book is “Buy, Close, Move In!” If you have questions, you can call her radio show toll-free 800-972-8255 any Sunday, from 11 a.m. to 1 p.m. EST. Contact Ilyce through her Web site, www.thinkglink.com.

via Real Estate Matters | CFPB’s new ‘qualified mortgage’ rule now in effect.

More Developers Want Your Next Home to be a Micro-Unit

2014-01-11 Micro Unit(Roger K. Lewis for The Washington Post)

More developers want your next home to be a micro-unit

By Roger K. Lewis, Published: January 16 | Updated: Friday, January 17, 7:45 AM

Given the potential market for affordable apartments, particularly in urban locations, developers increasingly are interested in building “micro-unit” projects.

Near the District’s Logan Circle, developer Brook Rose is planning an eight-story apartment building containing 38 units, of which 32 are micro-units ranging in size from 280 to 350 square feet. Rising behind three existing rowhouses on Church Street NW, the project might not include parking if the Board of Zoning Adjustment approves — in which case any tenant with a car will not receive a street parking permit.

The former Latham Hotel at 30th and M Streets in Georgetown might be transformed into a mixed-use building containing more than 100 micro-units. And the JBG Companies, according to a company source, is exploring several future projects in which micro-units would be included.

You might be thinking that “micro-unit” is just another term for “efficiency apartment.” Why this new, trendy terminology?

A micro-unit is, in fact, a very small apartment, typically smaller in floor area than a one-bedroom apartment and smaller than many efficiency and studio apartments. A micro-unit can be comparable in size to a hotel room.

One-bedroom apartments rarely are smaller than 500 square feet, while efficiency apartments usually range in size from 350 to 450 square feet. Micro-units commonly encompass 250 to 350 square feet. It’s worth noting that under District regulations, the floor area of a dwelling in a multi-unit building generally must be at least 220 square feet.

Clearly, compactness characterizes the micro-unit trend. But other attributes differentiate micro-unit development from conventional apartment development.

As a Google-based mosaic of images shows, micro-unit interiors can be more inventively configured and elaborately designed than many efficiency apartments. Intended to accommodate one and perhaps two individuals, micro-units often include built-in furniture and storage systems, plus a complete bathroom and efficiently configured kitchen. With greater-than-average ceiling height, a micro-unit can feel relatively spacious and offer a sleeping loft floating above a small portion of the space.

But the most noteworthy attribute is the potential for prefabricating micro-units entirely in factories, then transporting them to a building site. There they would be lifted into place to form new apartment buildings or attached-housing structures. Such a construction technique can save time and money and ensure quality, but only if micro-unit designs are standardized and production volume is sufficiently high and reasonably steady.

The micro-unit market is basically the same as the efficiency apartment market: singles of all ages, but especially younger generations preferring to live near the heart of a city, or well-adjusted couples who can amicably cohabit cheek-by-jowl. Residents make do with minimal wall space, virtually no free-standing furniture and limited resources for at-home entertaining. They must be willing to accept less space in return for a favorable location and lower rent.

In light of the limited dwelling space, thoughtfully conceived buildings composed of micro-units need to include communal areas — including cooking and catering capability — where residents can informally socialize, organize events or host parties. And a shared business office for the building, with a couple of copy machines, wouldn’t be a bad idea.

Of course, affordability drives the market: A 250- or 300-square-foot unit will cost considerably less than one with 500 or 600 square feet. However, a micro-unit will cost more than half the price of an apartment twice its size because it still requires a bathroom and kitchen, a relatively fixed cost for apartments of all sizes. And micro-units with more built-in storage cabinetry entail an additional building cost.

Is there a micro-unit in your future? Not if you have furniture you can’t live without, love the artwork displayed on your current home’s walls and throw frequent dinner parties If that’s the case, you’ll need to consider other options.

Roger K. Lewis is a practicing architect and a professor emeritus of architecture at the University of Maryland. To view his cartoon, go to washingtonpost.com/realestate.

via – The Washington Post.

New federal rule on appraisals will be useful to home buyers

appraisal
Photo credit: Photos.com

New federal rule on appraisals will be useful to home buyers

By Kenneth R. Harney, Published: January 16 | Updated: Friday, January 17, 7:50 AM

A new federal rule could give millions of home buyers insights they’ve never had before about a crucial element of their mortgage application: the appraisal, including the electronic cross-checks and reviews now used by lenders to determine the amount of the loan they’ll approve.

The new rule will also give buyers the time and ammunition to challenge appraisals they suspect contain errors. Starting this weekend, lenders nationwide will be required to inform mortgage applicants that they can receive a free copy of whatever appraisals, reviews, computer valuations and other data are used in the transaction. You’ll be entitled to see this material “promptly” after the appraisal report is completed, or three days before your loan closes, whichever is earlier. The lender will have to inform you of your new rights within three business days after receipt of your mortgage application.

This contrasts with the current system, where lenders don’t have to provide you a copy of the appraisal unless you request it. The additional valuation data — which may include follow-up review appraisals by a second appraiser, multiple “automated” valuations and “broker price opinions” provided at low cost by realty agents — currently are not subject to disclosure.

Now everything will be mandatory. You must be provided any significant information that was integral to the valuation of the property, even if you had no idea it existed and didn’t ask to see it.

The new rule implements changes to the Equal Credit Opportunity Act made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It will be overseen by the Consumer Financial Protection Bureau. Unlike earlier rules, the disclosure requirements will be limited to mortgages that are first liens on a home, including reverse mortgages and construction loans. If you’re applying for a second mortgage or second-lien home equity credit line, the bank will not have to provide you appraisal materials, although you are still free to ask.

So what might this mean to you in practical terms? Potentially plenty. Say your appraiser works for a management firm that uses low-cost, inexperienced appraisers. By chance it turns out that your appraiser lives 80 miles away and is not familiar with local real estate trends. Then the valuation comes in low because the appraiser used inappropriate “comparable” properties, including a house that sold at a depressed price because the owners were in financial distress.

Under the new rule, your lender will have to send you a copy of the full appraisal report, soon after receiving and reviewing it, including exhibits and attachments. Your realty agent and other advisers should have time to spot errors, challenge the apprasial’s validity and demand corrections.

Among the questions you might ask: Why did the appraiser select one or more comparables that bear minimal resemblance — lot size, square footage of the house, age, location, view, interior improvements — to the house you’re buying? Why were the physical dimensions of the property inaccurately measured? Why did the appraiser add no extra valuation credit for the solar panels on the roof and the extensive energy-conserving equipment throughout the house?

For their part, experienced appraisers generally welcome the new mandatory transparency for consumers. Some of them have fought for years against lender overreliance on poorly trained appraisers who receive only a modest portion of the $450 to $500 that lenders charge consumers at settlement. The rest goes to the management company, and some portion may be pocketed by the lender itself.

“I am thrilled,” says Pat Turner, a senior residential appraiser in the Richmond area, “to have my appraisal stuck beside an [automated valuation] or a broker price opinion,” which will now be mandatory. “Let everyone see the clear distinction of time, effort, expertise and accuracy of a truly professional appraisal.”

But there’s some potential quicksand for unwary borrowers. The rule allows you to waive your right to receive your appraisal materials early on, and instead get them on the day of the closing.

That’s not a smart move. Why give up your guaranteed opportunity to carefully review the appraisal shortly after it’s completed — when you can do something about errors — rather than rush through it during a paper blitz when your eyes are glazed over?

Ken Harney’s e-mail address is kenharney@earthlink.net.

via New federal rule on appraisals will be useful to home buyers – The Washington Post.

With home buying, planning ahead will make the multiple-step process easier

With home buying, planning ahead will make the multiple-step process easier

financesBrian Taylor illustration for The Washington Post – Planning ahead and getting your finances in order will make the home-buying process less challenging.

By Michele Lerner, Published: January 16 | Updated: Friday, January 17, 7:30 AM

If you’re planning in the spring to buy your first house, you already may be feeling a bit overwhelmed about what can often be a complicated and convoluted process. ¶ The good news is that you have plenty of time to learn the myriad steps to buying a home and getting prepared for the endeavor. ¶ Many experts say that — even before finding a real estate agent — the first things you should do are to get your finances together and to find a lender who can get you prequalified and advise you on how much house you can buy.

Scott Davis, a senior loan officer at McLean Mortgage in Fairfax, says buyers should never start searching for a home without speaking first with a lender. This will help you avoid falling in love with a home you can’t afford. Plus, a lender can advise you on how to prepare for a mortgage application.

“Applying for a mortgage is actually counterintuitive,” Davis says. “Things that might be good for you financially can actually hurt your chances of getting a mortgage approved. For instance, some people think it’s really smart to take all their cash and pay off their debt, then close their current credit card accounts and open a zero interest card. The problem is, you won’t have enough cash reserves for a deposit, a down payment and an emergency fund. You’ve also dropped your credit score from 800 to 600 if those closed credit cards had a good payment history. Now your score is based on a history of about 30 days.”

Even before you contact a lender, there are a few steps you should take as far in advance as possible before making an offer on a home, including checking your credit, developing a budget, saving money and getting your cash in place.

Steven Cohen, vice president at First Place Bank in Rockville, says prospective borrowers should request their own credit report to check for errors. A 2012 Federal Trade Commission study found that 20 percent of all consumer credit reports have mistakes. You can get a free copy of your credit reports annually from AnnualCreditReport.com. You don’t have to get all the credit reports at once; you can request one from Equifax, TransUnion and Experian at different times of the year to keep on top of your credit profile. You can also pay a small fee to get your credit score.

“You should make sure that everything is reported correctly, such as any late payments that you actually made on time or a debt that you don’t actually owe,” says Craig Olson, vice president of mortgage operations at Pentagon Federal Credit Union in Omaha. “I had an account that showed up twice.”

Cohen recommends that each credit card account have a balance of less than 50 percent of the limit. He says it’s better to have two or three accounts with smaller balances than one card with a high balance. Your credit score will be higher if you limit your credit card balance to less than 25 percent of the limit.

Get your cash ready

Olson says first-time buyers often come to him without an idea of their own budget. He recommends sitting down for a few minutes at your computer or with pen and paper to draw up a quick plan that shows your income and expenses.

“You can find calculators online that can help you estimate what your payment will be under different scenarios,” Olson says. “You can use those numbers as a starting point and figure out your own comfort level with different payments.”

Depending on the loan program you choose, you’ll need at least 3.5 to 5 percent or more for a down payment, plus you may need cash for closing costs unless you can negotiate to have the seller pay those fees. You should have been saving for a down payment, but there are some other options for cash, such as a gift or borrowing from your retirement account if you’re employer allows it.

“Some people may be depending on gift money from their parents, but you need to get an idea of how much to expect,” Cohen says. “Someone may think they’re getting $20,000 when the parents are thinking $2,500.”

Davis says that Federal Housing Administration loans allow for the entire down payment to come from gift funds, but conventional loans require borrowers to have at least 5 percent of their own funds for the down payment.

“If you’re receiving a gift or moving funds from one account to another, you should put the funds into an account at least 60 days before you apply for a mortgage,” Davis says. “Lenders are required to look at two months of bank statements during the application process, so any money placed in your account earlier than that becomes your money and you don’t have to provide a source for the funds.”

Olson says that while you’re consolidating your funds, you should begin to gather the paperwork you’ll need for a loan application, including:

?Two most recent W-2 forms.

?Two most recent pay stubs.

?Two months of bank statements.

?Two months of investment/retirement account statements.

?Two years of tax returns.

Consult a lender

Once your paperwork is in order, then you can meet with a lender to discuss your loan options. If you’ve already identified a real estate agent to work with on your home purchase, he or she can suggest several reliable lenders. You can also ask trusted friends and colleagues for recommendations and then interview two or three lenders.

“Interviewing a lender should be a lot like a job interview,” Davis says. “I think it’s important to have a face-to-face meeting because you need to find someone you can trust and form a relationship with. You can ask if they’ve worked with a lot of first-time buyers, but I think it’s more important to find someone you can trust to work with you regardless of your price range. You want to work with someone who’s driven by building a relationship, not by earning a commission.”

A lender can help you wade through the options for various loan programs and then use your paperwork and loan application to preapprove you for a loan.

“Some lenders offer a ‘prequalification’ for a loan, which can be a good starting point for learning about the mortgage process,” Cohen says. “A prequalification is based on your verbal statements about your income and assets and an estimate of your credit score. A loan preapproval, which many Realtors require before they’ll work with a buyer, means that the lender has verified your credit, your employment, your income and assets, and determined how much you can borrow based on that information.”

The preapproval letter can be used as part of your offer when you’re ready to buy a home to prove that you can afford the property. Cohen says a preapproval letter is generally valid for three months and can be renewed with a quick update of your credit profile.

Loan programs

“There are a lot of factors that go into a loan approval,” Davis says, “which is why every prospective buyer should consult with a lender to see where they stand.”

Many first-time buyers opt for FHA financing, because this program requires a down payment of only 3.5 percent. While the FHA says borrowers must have a credit score of 580 or higher to qualify for a low-down-payment loan, most lenders require a minimum credit score of 620 or 640 or above, Cohen says.

“FHA loans are less popular now, though, because they carry heavy mortgage insurance that lasts for the life of the loan if you make the minimum down payment,” Cohen says.

Cohen says that a down payment of 20 percent is ideal because you won’t have to pay private mortgage insurance (PMI) and you’ll pay the lowest interest rates, particularly if you have good credit. He says borrowers with a credit score of 740 and above pay the lowest interest rates for conventional financing. Most conventional lenders offer loans with a down payment of 5 percent, although there are some special loan programs available with a lower down payment. Veterans Administration loans, available to veterans, do not require a down payment.

In addition to your credit score, an important element of your loan qualification is your debt-to-income ratio.

The federal government’s new “qualified mortgage” rule, aimed at toughening standards to prevent another foreclosure crisis, “requires a maximum debt-to-income ratio of 43 percent,” Cohen says. “If you make $120,000 a year, your gross income would be $10,000 per month, so your maximum payments for your housing plus the minimum payment on all other debt, such as your car, credit cards and student loans, would have to be $4,300 or less.”

Home buyer programs

In addition to consulting a lender, most first-time buyers can benefit from taking a home buyer education class that helps them establish a budget and prepare for homeownership. The Consumer Financial Protection Bureau offers a list of government-approved housing counselors that offer free programs; state and local governments also offer home buyer education.

The DistrictMaryland and Virginia offer home buyer assistance for down payment funds or low-cost loans, provided the buyers meet specific criteria. Some programs are limited by income or exclusively for first-time buyers.

A strong understanding of your finances is an important first step on the path to homeownership.

Michele Lerner is a freelance writer.

Mortgage terminology

Here are definitions of several terms you will encounter as you confer with lenders:

Adjustable-rate mortgage (ARM): A mortgage loan with an interest rate that periodically changes.

Annual percentage rate (APR): The yearly interest rate paid on a loan. Federal law requires that this rate is disclosed as part of the truth-in-lending documents.

Conventional mortgage: A mortgage offered by a lender that will probably be bought on the secondary loan market by Fannie Mae or Freddie Mac; these loans have an upper limit of $625,500.

Federal Housing Administration (FHA): A government agency that offers low-down-payment loans along with housing information.

Fixed-rate mortgage: A mortgage loan in which the interest rate remains the same for the entire length of the loan.

Good faith estimate: An estimate of the entire cost of buying a home, including all down payment, interest payments and closing costs associated with a loan; to be provided by the lender within three days of a loan application.

Jumbo loan: A mortgage loan above $625,500; these loans sometimes carry a higher interest rate and require a higher down payment and higher credit score than smaller loans.

Loan origination fee: A fee charged by the lender for administering and processing the loan; also sometimes called a “point” and is equal to 1 percent of the loan amount.

Mortgage insurance: Insurance that protects the lender against loss if the borrower defaults on the loan.

Points: A fee charged by the lender equal to 1 percent of the loan amount; points can be paid at the closing to lower the interest rate on a loan.

Preapproval: A qualification for a mortgage by a lender based on proof of your income, assets and credit score that states the maximum loan that you can qualify for; final loan approval also requires an appraisal on the property, which demonstrates that the value of the property is more than the loan amount.

Prequalification: An estimate of your ability to qualify for a loan given by a lender based on your credit worthiness, income and assets but without a complete proof of all assets.

via With home buying, planning ahead will make the multiple-step process easier – The Washington Post.

How to get your finances in home-buying shape

wfpHow to get your finances in home-buying shape

BY ILYCE R. GLINK AND SAMUEL J. TAMKIN
January 15 at 5:30 am

Money makes the world go around. And every year we make resolutions to save more of it, invest it more profitably and spend more wisely.

The good news is that the economy truly seems to be on an upswing. The third quarter GDP number hit 4.1 percent, suggesting faster growth than we’ve seen in years. Distressed properties seem to be a much smaller part of home sales, and real estate prices are up. The stock market is on a tear.

Whether it is real or not, we feel better about our money and generally richer. So now’s a perfect time to make some personal finance resolutions that will help you save more, spend less, avoid getting ripped off and invest intentionally in 2014.

In other words, it’s time to focus on you. Mortgage interest rates are at or near a historic low, and housing affordability is near a record high. Let’s start a conversation about how to make your finances real estate-ready and get your credit in home buying shape.

This year, resolve to:

• Put yourself and your family on a budget you can afford. We hate the word budget, and from the studies we’ve seen, so do most of you. But even if the word “budget” turns your stomach, we’d like you to think about being a smart spender.

Here’s how it works (and there’s no real magic here): Spend less than you earn. Buy in bulk (if it’s cheaper), at sales, and in advance of when you’ll actually need something. (If you wait until the last minute, it’ll generally cost you more to get the same item.) Cook at home more often, and use coupons if you can. Avoid takeout foods and save restaurants for special events.

Ilyce’s favorite money-saving game is called “trading down.” Here’s how to play: Each week, try to find a simpler and less expensive way to do the same thing. If you drink a bottle of $25 wine each week, try to find one you like at around $8 to $10 per bottle. If you’re eating out twice a week in restaurants, cut back to once a week or once every other week. If you’re spending $200 per night out (babysitter, dinner, theater, movie, transportation, etc.), cut that to $100 per night.

The savings are enormous. Ilyce had a caller to her radio show who said they liked to eat out but just gave up ordering beverages, alcoholic or other. They saved $10,000 in a single year.

Just cutting back a little in a bunch of areas will give you plenty of ways to set real cash aside for your down payment.

• Pay off your charge card debts. The average American has around $8,000 in credit card debt. And most of those have a mortgage, car loan and some sort of student loans to pay off as well. College graduates leave school with nearly $20,000 in credit card debt on top of federal and private student loans. No wonder the rate of student loan defaults has gone through the roof.

While Americans are paying down more credit card debts, the savings rate has been falling as well. Last year, Americans were saving roughly 4 percent of their income. Now they’re saving 3 percent. That number should be higher.

By paying off your debts, you’ll have more free cash each month to sock away for something more important — like a down payment. It’ll also help you sleep better at night knowing that you don’t have to worry about whether there’s enough cash in your checking account to make good on all your bills.

Finally, while you’re paying off your charge cards, remember to pay them on time. Paying on time, over time, is the surefire way to improve your credit history and your credit score.

• Pay myself first and last. This kind of common-sense advice seems overplayed — everyone hears it, but most don’t follow through.

Again, it’s not hard to do, but take $50 or $100 out of your checking account at the beginning and end of the month and sock it away in a savings account. If the cash isn’t in your account, you won’t spend it. (And if you have trouble keeping cash in your wallet without succumbing to temptation, don’t take cash out of the ATM.)

The higher-tech way to do this, of course, is to have your bank or financial investment company electronically pull the money out of your checking account each month and send it to a different account. And we’re all about using technology to make you a savvier spender and saver.

Open another savings account at your bank and set up a regular automatic transfer of the cash into that account. Then, watch it grow and grow until you’re ready with the 20 percent you’ll need for a cash down payment. Now, that’s a game worth playing.

via Real Estate Matters | How to get your finances in home-buying shape.

Higher interest rates will slow housing market growth in 2014

Higher interest rates will slow housing market growth in 2014
BY DAVID CHARRON
January 14 at 5:30 am
2013 real estate

(Jonathan Ernst/REUTERS)

David Charron,  president and CEO of Rockville-based multiple-listing service MRIS, writes an occasional column about the Washington-area real estate market.

If 2013 was the year of stabilizing the housing recovery, then 2014 will be one of slower, steady growth.

Last year strongly favored sellers over buyers and is a trend we expect to continue, albeit with a softening of several critical factors. Inventory, home equity, days on market and interest rates are four of the major market components we’re tracking closely as we begin 2014 and will determine the relative health of the real estate market.

The dominant story line for 2013 was the shortage of inventory for buyers in the middle and lower price ranges. The combination of homeowner reluctance to list their property due to low equity plus lower interest rates led to strong buyer demand for much of the year.

Accordingly, this led to an increase in prices as the year went on and many zip codes within the MRIS geographic footprint saw home prices the highest they had been in the past five years. We fully expect home prices to continue increasing but the rapid rise that we saw in recent months is not sustainable. Thus, the pace of growth for both list prices and final sales prices will slow considerably in 2014.

As prices increased, homeowners began to regain equity in their houses and consequently more of them decided it was a profitable (or at least an affordable) time to list. This trend should continue into the new year so the inventory shortage will not be as much of a burden to the market in 2014.

However, there remains such pent up buyer demand in the Washington region it is unlikely enough homes will enter the market to meet all of the willing buyers. As a result, conditions will continue to favor sellers for most of 2014.

Along with strong buyer demand in 2013 came a drastically decreased length of days on market (DOM). Houses moved off the MRIS system in record numbers, with some of the more popular neighborhoods — such as Zip code 20005 in D.C.’s Logan Circle; Zip code 20851 in Rockville; and Zip code 22032 in Fairfax — seeing a median DOM of less than two weeks during the peak buying periods of spring and summer.

Days on market will likely lengthen in 2014 due to the expected increase in asking prices for homes in middle and lower price ranges, while high-end priced properties won’t see much change.
Besides inventory, the biggest driving factor of the market will be the rise in mortgage interest rates. They have shown an upward climb over the past year starting off around 3 percent and are nudging up toward 5 percent as we begin the new year.

We fully expect the interest rates to continue a slow climb through 2014, with several periods of time when they remain unchanged to prevent any volatility in the market. The increase could result in a stronger turnout of buyers earlier in the year than usual so they can take advantage of interest rates when they are at their lowest for the foreseeable future.

The Washington metropolitan area weathered the housing crash of a few years ago relatively well compared to the rest of the country. However, it was not without a few setbacks such as government shutdowns.

With the signing of the two-year budget deal, buyer confidence should be higher and bring back stabilization for the D.C. metro area. As the economy and employment rates continue to improve, this will, hopefully, allow millennial workers (many of whom are living with their parents or renting) to purchase their first home and boost first-time homeownership levels which actually fell last year.

The positive growth that took place during 2013 was healthy, stable and free from any major swings in market forces. All signs point to 2014 being a solid year for real estate.

via Higher interest rates will slow housing market growth in 2014.

Fewer homes in financial distress in the U.S.

houselifepreserverraftunderwatersaved-304Jan 13, 2014, 8:11am CST

Fewer homes in financial distress in the U.S.

Olivia Barrow, Staff Reporter-Dayton Business Journal

In an encouraging sign for the U.S. economy, a new report shows that fewer homeowners across the country are underwater with their mortgages.

In December, 9.3 million U.S. homes were underwater, meaning their value was at least 25 percent less than the mortgages and loans on the property. That figure represents 19 percent of all mortgage properties at the time of the report, published by RealtyTrac, a housing data source.

In September, the number of underwater homes was 10.7 million, and in January the figure was 10.9 million, showing a steady decrease in homes in financial distress.

“During the housing downturn we saw a downward spiral of falling home prices resulting in rising negative equity, which in turn put millions of homeowners at higher risk for foreclosure when they encountered a trigger event such as job loss,” said Daren Blomquist, vice president at RealtyTrac.

“Now we are seeing the reverse trend: rising home prices resulting in falling negative equity, which in turn is giving millions of homeowners a lifeline to avoid foreclosure when they encounter a trigger event.”

via Fewer homes in financial distress in the U.S. – Birmingham Business Journal.

Washington D.C. area housing market improved in 2013

Washington D.C. area housing market improved in 2013

BY KATHY ORTON

January 10 at 10:00 am

The D.C. metro area housing market made solid gains in 2013, according to a report released Friday.

Data provided by RealEstate Business Intelligence, a subsidiary of Rockville-based multiple listing service MRIS, showed that the median sales price, the number of homes sold and the number of homes for sale were all up compared to a year ago and that the slowdown in the housing market as a result of the federal government’s partial shutdown in October was just a speed bump on the road to recovery.

Although the median sales price for the metro region fell for the fifth time in the last six months, it was nearly 10 percent higher last month than in December 2012. Since tying its record high of $440,000 in June, the median sales price for the D.C. area has fallen nearly $50,000 to $391,362. Still, last month’s median sales price was more than $30,000 higher than December 2012 and the highest December-level in six years.

The median sales price for the D.C. region in 2013 was $399,900, a 9.6 percent gain from 2012.

housing trends metrics

(RealEstate Business Intelligence)

Every jurisdiction saw its median sales price increase compared to 2012. Prince George’s County made the biggest leap, rising to $197,000 in 2013 from $170,000 in 2012, a nearly 16 percent increase. Falls Church City, the District, Prince William and Frederick also experienced double-digit increases.

median sales price by jurisdiction

(RealEstate Business Intelligence)

The number of homes sold in the region climbed 9.3 percent in 2013 compared to 2012. After the government shutdown put the brakes on home sales in November, they rebounded last month. There were 3,644 homes sold in December, nearly 19 percent higher than the previous month.

Rising prices encouraged more people to put a home up for sale in 2013 than the previous year. There were 64,618 homes listed for sale last year, an increase of more than 9 percent from 2012. Last month also saw an increase in the number of active listings compared to December 2012, the third consecutive month they increased year-over-year. The 2,565 new listings in December were driven mostly by an increase in condos coming onto the market. The number of condos for sale grew by nearly 16 percent.

Home sellers in Falls Church didn’t have to wait long to sell their home in 2013, while those in Frederick had to have a lot more patience. The median days on market for a home in Falls Church was 10; in Frederick, it was 26. Half the homes sold in the D.C. metro area were on the market for 15 days or less.

median days on market

(RealEstate Business Intelligence)

Low inventory – the number of homes listed for sale is down nearly 75 percent from the September 2007 peak – led to a seller’s market in the D.C. region last year. The average sales-to-original-list-price ratio rose 2.2 points to its highest annual level since 2005. The District led the region at 98.8 percent, while Prince George’s County had the biggest jump, rising to 97.6 percent last year from 93.1 percent in 2012.

avg sales to original list price ratio

 

(RealEstate Business Intelligence)

via Washington D.C. area housing market improved in 2013.

New mortgage rules aim to prevent risky loans

WFP_WhiteLogo_Reverse-PMS275BlueBackgroundNew mortgage rules aim to prevent risky loans

Julie Schmit, USA TODAY

7:21 p.m. EST January 9, 2014

Here’s a look at what they do and why they matter to potential home buyers.

New mortgage-lending rules take hold Friday that federal regulators say will guard against the risky lending practices that fed the housing bubble, which led to the greatest collapse in U.S. home prices since the Great Depression. For most home loan borrowers, the change will have little or no impact on whether they can actually get a mortgage, experts say, but they may have to show even more proof that they can afford one. Here’s a look at the rules, what they do and why they matter.

Q: What are the new rules, and where did they come from?

A: There are several terms to know. The first is the “ability-to-repay” rule. It was required by the 2010 Dodd-Frank financial overhaul legislation as a response to the financial crisis. The rule was crafted by the Consumer Financial Protection Bureau, which will oversee its enforcement.

Q: What does it do?

A: It requires mortgage lenders to make sure borrowers can actually afford their loans, over the long term, by weighing their income, assets, savings and debt against their monthly house payments. “It really is pretty basic,” says Richard Cordray, head of the CFPB. He calls the changes a “back to basics” approach for mortgage lending.

Q: What else is new?

A: Another term you need to learn is “Qualified Mortgage” or QM. A QM meets new guidelines, and borrowers who get them are presumed to meet the ability-to-repay requirements. If lenders make QM loans, they have more protections against future lawsuits should the loans later go sour.

Q: What are the QM guidelines?

A: QM loans cannot:

• Contain risky features, such as terms that exceed 30 years, interest-only payments or payments that are less than the full amount of interest so that the home loan debt grows each month.

• Carry more than 3% in upfront points and fees for loans above $100,000.

• Push a borrowers total debt load above 43% of his or her monthly income, unless the loan is eligible to be backed by Fannie Mae or Freddie Mac, or a federal housing agency such as the FHA, or is made by a small lender that keeps the loan on its books.

Q: Can lenders still make loans outside those guidelines?

A: Yes, but they’ll still have to make sure borrowers can afford the loans, and theyll have less protection against future legal challenges if the borrower fails — even if they resell the loan after they first make it.Bank of the West, for instance, says itll continue to do interest-only loans. Many borrowers in high housing-cost areas also frequently have debt-to-income ratios that exceed 43% and lenders will likely keep making home loans in those areas, too.”Were seeing a lot of lenders say they’ll keep making” non-QM loans that are “perfectly sound,” Cordray says.

Q: How many mortgages are likely to fall under the QM definition?

A:The CFPB estimates that 92% of mortgages in the current marketplace meet the QM requirements.

Q: Why is this needed at all?

A: Lenders weren’t always so careful. Goldman Sachs estimates that 50% of recent home loan defaults could have been prevented had the QM rule been in place when the loans were made, largely before the housing bust.

Over time, should the housing market get superheated again, the new rules will “serve as a barrier,” against risky loan practices, says Ira Rheingold, executive director of the National Association of Consumer Advocates.

Q: Will the rules make it harder for some people to get home loans?

A: That’s not clear. Goldman Sachs says it may be tougher for borrowers to qualify if they have difficult-to-validate incomes, including those for whom tips, bonuses, commissions, rents or investments constitute a big part of their total income. One in nine Americans are also self-employed, and that income is harder to substantiate than is wage income, Goldman says.

Borrowers above the 43% debt-to-income level will also face more hurdles, but mostly in terms of documentation, says Wendy Cutrufelli, Bank of the West vice president.

That’s because lenders have to be able to prove that they exercised extreme due diligence in making such loans, she says. Borrowers should expect to have to produce even more tax records, pay stubs and bank and investment account information.

The 43% standard may also prevent some borrowers from qualifying for the loan needed to buy the house they want, says Roelof Slump, managing director of Fitch Ratings. Others may need bigger down payments to stay within the 43% standard, he says.

Q: What’s going to be the required minimum down payment?

A: The rules don’t set any down-payment requirements.

Q: Will the rules mean it’ll take longer to get home loans approved?

A: They may, especially early on, says Keith Gumbinger, mortgage expert with HSH Associates. It’ll still take lenders more time to get systems up and running that track and handle new documentation requirements. While lenders have had months to prepare, he still expects that loan officers, underwriters and compliance offers will need more training.

“It’ll be a muddy mess until the rules settle in,” he says.

Q: What are the downsides to these changes?

A: Critics say minimum-down-payment requirements would be a good thing. Goldman Sachs’ analysis also shows that eliminating loans with risky features would have prevented 59% of defaults that occurred in loans issued in 2007; it also would have prevented 30% of the loans that didn’t default, too.

via New mortgage rules aim to prevent risky loans.

Home prices rise slightly in November

wfpHome prices rise slightly in November

Julie Schmit, USA TODAY

8:51 a.m. EST January 7, 2014

STORY HIGHLIGHTS:
-Prices rose 0.1% from October
-Home prices are up 11.8% from a year ago
-Rising mortgage rates slowing home sales, economists say

Home prices finished 2013 up 11.5% for the year, marking the best performance since 2005, market researcher CoreLogic predicts.

Its latest data shows prices were 11.8% higher in November year over year and up 0.1% from October.

However, prices will dip slightly in December from November, it says.

With last year’s strong gains, home prices are now at new peaks or within 10% of previous peaks in 21 states and Washington D.C., according to CoreLogic.

Many economists predict smaller home price gains for this year, as credit remains tight, interest rates rise and as new mortgage rules take hold.

In November, the five states with the highest home price appreciation were Nevada, up 25.3% year over year; California, up 21.3%; Michigan, 14.4%; Arizona, 13.5% and Georgia, 13.3%.

The only state to show depreciation was Arkansas, down 1.1% year over year.

CoreLogic’s figures aren’t adjusted for seasonal variations, such as cold winter weather that slows sales.

via Home prices rise slightly in November.

When a ‘prelisting’ appraisal or inspection is worth the trouble

inspector_shutterstock_11864818-300x200Home inspector image via Shutterstock

When a ‘prelisting’ appraisal or inspection is worth the trouble

Insights from experts can help agents and sellers price a property, but buyers will want second opinions

Hank Miller, Contributor

Jan 8, 2014

Does having a home “pre-appraised” or “pre-inspected” make a difference? Is this money well spent by the average seller?

Do buyers and buyer agents care, or are “prelisting” appraisals and inspections not considered credible?

Should a seller-provided appraisal be accepted as impartial by a buyer?

What is your natural reaction to being told something is worth X? Do you say to yourself, “It might be worth that to you?”

A few things immediately come to mind when a seller-provided appraisal is pushed front and center:

-What is the relationship of the agent to the appraiser? Seller to the appraiser?

-What was the stated purpose of the appraisal?

-What is the background of the appraiser?

-When was the appraisal completed and what are the trends in the area?

-Who paid the appraiser?

-Was the appraisal completed as an underwriter would expect?

It’s interesting how frequently prelisting appraisals are above list price: “Appraised at $450,000 and reduced to $380,000.”

It’s reduced because the market — buyers — don’t agree. Saying it appraised higher is idiotic. The market indicates value.

“There isn’t an appraiser on Earth that can pinpoint what a home might sell for when listed. At best they can offer a value range.

But shouldn’t this be something that a competent agent can do as well?

Are agents bringing in appraisers as a crutch — perhaps because they don’t want to offend a seller and lose a listing? In the so-called “recovering” market, are listing agents afraid to level with buyers that are convinced values have increased?

Clearly there are times to bring an appraiser in — if a home is truly unique, or the listing agent is genuinely stymied, for example –  but those occasions should be infrequent.

Prelisting inspections are also a debatable call for sellers, though not nearly as much as appraisals.

At least half of any report is obvious. Homes constantly need maintenance, and every home will benefit from cleaning gutters, controlling surface water, changing filters. Is an inspector needed for that?

But unless it’s obvious, who is to say that repainting, a new roof, or major mechanicals are needed? A prelisting inspection will outline repairs that enhance appeal. But is a buyer looking at a stained and weathered roof going to rest easy because the seller pulls out a report that says it’s fine?

Appraisals and inspections are opinions. Buyers are finally getting smart, and don’t want to be told what to think based on something provided by the seller.

Is there a role and use for both of these real estate professionals? Yes. But more as aids during the listing; buyers and lenders want “their experts” to offer opinions, not the seller’s.

Appraisers may serve as consultants during the selling process, working with sellers and agents to establish a list price, advising them on pricing strategies while the property is listed, and preparing an information packet for the buyer’s appraiser, for example.

Inspectors can play an effective role by detailing the less obvious issues and working with the seller to evaluate the buyer’s inspection report.

Sellers can save money by making obvious repairs and by using experienced agents that can look at the data like an appraiser.

If required, bring in experts and use them as the situation dictates. IF is the operative word.

Hank Miller is an associate broker and certified appraiser in Atlanta, Ga. The lead agent for HMT Atlanta, he’s known for his candid opinions and real estate expertise.

via When a ‘prelisting’ appraisal or inspection is worth the trouble | Inman News.

What home sellers can expect in the market this year

photo-right-Capitollitup-against-med-blue-sky-copy-copy

 

 

 

What home sellers can expect in the market this year

BY ILYCE R. GLINK AND SAMUEL J. TAMKIN
January 7 at 5:30 am
A year ago, we saw far fewer “For Sale” signs. And this year, there are even fewer.

The surprising thing about the real estate market is its resiliency. It never fails to surprise how decisively a market turns. When it’s time, it’s time. And it’s clear to us that 2014 is looking very good for real estate.

There are a few troubled spots on the horizon: Mortgage interest rates are at least one percentage point higher than they were a year ago. And home prices are higher. That means homes are less affordable than they were, particularly since incomes haven’t risen, in real terms, in years.

That’s good news, and not so good news for sellers. It’s great that home prices are rising. In part, homes that were in foreclosure or listed as short sales, have closed and now prices are rising again. But rising interest rates (depending on how high they go) mean fewer buyers can afford to pay those higher prices.

At the end of 2011, mortgage interest rates reached 3.7 percent, before falling back. In 2012, mortgage interest rates were about 3.3 percent on a 30-year fixed-rate mortgage. We ended the year with mortgage interest rates around 3.5 percent for a 30-year fixed rate loan. In 2013, we ended at 4.3 percent for a 30-year fixed rate mortgage. (If you’re wondering, we think these rates are still great from a historical perspective.)

The Federal Reserve has indicated it will now pull back its monthly spend of $85 billion in mortgage-backed securities and Treasury securities, which it did to keep interest rates at historic lows through 2015, or when the employment rate falls to 6.5 percent. The economy is improving. Third quarter 2013 GDP numbers were revised upward to 4.1 percent. The economy hasn’t grown that fast in years.

So, with low inventory, still low mortgage interest rates, and modestly rising prices, here’s what you need to do to get your home in selling shape for 2014:

• Overcome any possible objections a buyer would have.

Buyers are always looking for a reason not to purchase your house. Your job as a seller is to eliminate any potential objections that would stand in the way for a buyer to make an offer.

If you really want to sell quickly, you’ll work hard to exceed the buyer’s expectation of your home as well. If your home is competitively priced, and your home’s condition exceeds a buyer’s expectations based on other homes in the neighborhood, you’ll get an offer — even if it isn’t the offer you want.

• Get your home into selling shape.

Cleaning your home is a must. After that, you should consider hiring a stager to give your home the television-worthy polish so many buyers expect today. (Yes, they want your home to look like something they’d see on HGTV.) Assess what other sort of work needs to be done, such as fixing things that don’t work, touching up paint, or cleaning or replacing your carpets.

Decide if you need to update your landscaping, and paint, clean or tuck point your home’s exterior. And if you’re selling in January, clear out the holiday decorations as quickly as possible.

• Invite at least three agents to create a comparative marketing analysis (CMA).

Often, sellers simply call the agent who sold them their home to list it. While you may wind up hiring that person, you’ll be doing yourself a favor if you invite a couple of other agents in from different firms. That’s because each will bring different ideas to the table about how much your house is worth and what kind of marketing plan will work. They’ll all have different experiences to draw on and have different buyers in mind who may want to make a quick offer.

• Understand what it will take to sell your home.

If you live in an area littered with foreclosures, you may have to meet that price point in order to sell. Is it worth it? Probably not, but you’ll have to really evaluate price and timing in order to get the most for your property. If homes have begun to appreciate, you might be pleasantly surprised. Again, a CMA will be incredibly helpful.

• Be realistic about the market.

Find out what types of properties are selling in your area and how many days they’re sitting on the market. Accept the reality of your local market and make sure you price your home realistically.

Don’t blame your broker if you don’t get three offers over your list price within 24 hours of putting your home on the market. Sellers who set sky-high (or even pretty high) prices could wait months or years for an offer (one of my neighbors has been trying to sell his overpriced home for years) and may wind up with the same price they would have had if they’d priced their home correctly the first time — or a lot less.

In this real estate market, one of the worst things you can do is overprice your home from the start. The more realistic you are, the better off you’ll be.

• Rent if you can’t sell and buy at the same time.

We don’t recommend putting in an offer on another property until you have some serious interest in your current property or unless you have enough cash to cover the expenses of both properties for six to 12 months.

It’s fine to start researching other neighborhoods, but if you’re not sure what you want to do, consider renting on a short-term or month-to-month lease. While a double move is a pain, and does have some added costs, it’s a lot cheaper than carrying two mortgages for two years.

• Read all documents thoroughly before you sign them.

Why would someone sign a legal document he or she hasn’t read? I’m not sure, but home sellers do it every day. If you’re going to sell (or buy) in the coming year, promise yourself that you’ll take the time to read and understand the listing contract, offer to purchase and loan documents for your next purchase.

(If you’re taking back a loan for the home buyer, have an attorney prepare the documents so you are sure to be protected.) Unless you’ve got cash to spare, a mistake in these documents and the warranties they contain could seriously affect your finances.

• Don’t be greedy.

One big mistake many sellers make is to get a little greedy, particularly if the first offer is above the minimum acceptable price you’ve set. Then the negotiation becomes a game of how much you can get.

Remember, a successful sale means everyone walks away feeling happy. If you get so greedy that the buyer walks away, you’ve let the deal get the best of you. Resolve to be reasonable and you’ll end up shaking hands with the buyer at the closing. You should also know that there aren’t unlimited buyers out there, and if you lose one it might take you quite some time to find another.

via Real Estate Matters | What home sellers can expect in the market this year.

Bring in the Drones – Real Estate From Above

drone-300x170

One of Scott Gerami’s Drones

Photo courtesy of Scott Gerami

Drones Could Be Next Tool for Real Estate AgentsReal Estate News

Jan 2, 2014

By: Erik Gunther

Scott Gerami says he’s always “had a passion for gadgets and technology,” and after 26 years in real estate he’s still looking for an edge to make his listings stand out in a crowded marketplace. Over the past year, the REALTOR® and managing broker of RE/MAX in Naperville, IL, has been tinkering with a camera-equipped drone aircraft to make his real estate photography really soar.

Folks in the Chicago suburb shouldn’t be alarmed if they see Gerami standing outside a home with a control panel, piloting one of his do-it-yourself flying machines overhead.

The intrepid Gerami is not alone. According to The New York Times and Chicago Tribune, the next trend in real estate photography is being deployed in increasing numbers to capture new angles on high-end homes for sale.

While regulatory issues on these unmanned aircraft are still being sorted out, the birds-eye views are enticing to agents such as Gerami. “I’m looking for unique ideas to set myself apart,” he said.

After watching one of Gerami’s drone-driven videos, you’ll get a sense of how the next wave in real estate photography is taking flight. He first built a couple of “rough and crude” devices “from the ground up,” but he’s continued to make refinements that have allowed him to explore new ways of deploying his flying machine.

He said his latest model, his fourth, cost him about $1,200 to build.

Gerami said he wants to give potential homebuyers “a different, fresh perspective of a home’s nearby amenities and the relative proximity of schools, parks and trails.

“Why not highlight close schools or a pool or a nearby park?” he said. “Showing where everything is in proximity to each other could be the key to a buyer’s decision.”

While Gerami admits that integrating drone photography into listings isn’t for every agent, he’s encouraging the 60 agents in his office to consider using the technology that he’s built.

“All agents should be thinking about this as a tool,” he said. “Aerial photography has a wide appeal. It’s not just for luxury properties.”

In addition to the videos he shoots, he also uses still photos that he’s captured from above.

“I’ve been using still shots of my aerial photography and incorporating them into my MLS listings,” he said. “It’s an eye-catcher. A buyer may be looking at 100 home listings and say ‘Whoa!’ when they see mine. It’s a differentiator.”

For now, Gerami’s waiting for the harsh Illinois winter to end while he continues to tinker with his drone.

“For some houses that are big enough, I might play around with it this winter and work on using it for interiors,” he said. “Interiors could be interesting.”

via Bring in the Drones – Real Estate From Above.

5 Tips to Manage Snow & Ice This Winter

Man removing snow from a driveway5 Tips to Manage Snow & Ice This Winter

DECEMBER 30, 2013
By Bob Vila

If it hasn’t already found its way to your home, it no doubt will. Winter is here, and if you live in a part of the country where snow and ice are likely — an increasingly larger swath of the country these days — then you’ll be shoveling, salting, deicing, scraping and blowing or throwing snow on your property soon. Here are 5 tips to help you prepare for whatever winter sends your way.

No. 1: Upgrade your snow shovel

There are a surprising number of snow shovel designs — including one that looks like a unicycle! Basic rules, however, apply. Don’t buy a snow shovel with a wide blade if your idea of a workout is watching a football game. A small scoop may lengthen snow removal sessions, but it will help save your back and keep your cardiologist happy. Choose a shovel with a securely fastened, comfortable D-shaped grip. Some models come with an auxiliary grip that reduces the need for you to bend your back, which can cause back strain. Look for a sturdy steel or wooden handle. The blade’s edge should be reinforced with galvanized steel.

Plow-style shovels or snow pushers, some of which come with wheels, allow users to push snow out of the way instead of lifting and tossing it. These are ideal for long, straight runs and for clearing decks. With blades up to 3 feet wide, however, strength and endurance are required.

No. 2: Buy a good windshield scraper

Treat yourself to the sturdiest scraper you can find. Cheap ones break when you need them most. Opt for one that includes a handle that’s at least 2 feet long and that has a brush or squeegee on one end. If your vehicle is large, get one that extends to 3 feet. The Thor ice scraper includes a squeegee and double scraper that removes ice on both the push and pull strokes. The stainless steel handle extends to 3 feet and includes an extra grip for improved leverage.

No. 3: Stock up on ice melter

The best ice melters contain magnesium chloride or calcium chloride. They melt ice at temperatures near 0 degrees Fahrenheit and are generally less harmful to the environment. Rock salt is slightly less expensive, but it melts ice more slowly, ceases to be effective below 20 degrees Fahrenheit, and may damage concrete, lawns and plantings. It may even be harmful to animals. That said, not all “green” melts are safe around pets (and wild animals), so look for a salt-free ice melter or a product that is made from magnesium chloride. Typically, such products will be labeled “pet friendly.” Sand or kitty litter, although not an ice melter, is useful for improving traction on icy surfaces too.

No. 4: Invest in a roof rake

If you’re plagued with ice dams, despite keeping your attic insulated and ventilated, consider a snow rake. Ice dams often form on roofs, such as a cathedral ceiling, under which there is no attic. Use the rake to remove snow buildup from the lower 3 or 4 feet of your roof, so that melting snow can drain off before ice dams have a chance to build up. Snow rakes are typically fitted with a 2-foot-wide blade that’s perpendicular to the handle. The handle may be telescoping or extendable with snap-on sections. Better models have wheels that protect roof shingles as you push and pull the rake. Handle lengths range from 15 to 22 feet. An innovative “rake” design that doesn’t fit the mold is called the Avalanche. Its blade cuts through snow accumulation instead of pulling or pushing it. As chunks of snow break loose, they slide to the ground on the plastic sheeting attached to the bottom of the blade.

If you’re too late in preventing an ice dam, and it’s beginning to back up and leak inside your home, it’s usually best to call a pro. Some homeowners, however, have had success tossing a pair of calcium chloride-filled pantyhose across the dam at 6-foot intervals. Ice melt tablets formulated for roofs may also be effective, depending upon temperature and your ability to safely place them near the ice dam.

No. 5: Consider a snow blower or thrower

Snow throwers and blowers are an attractive option if you live where average annual snowfalls reach 3 feet or if you are physically impaired. Otherwise, most people get by without them. The initial cost, maintenance, fuel and storage space required for such units is simply not worth it. Choose a snow thrower for small- and medium-size clearing, and a snow blower for larger areas. Snow throwers, also called single-stage snow throwers, are smaller both in width and vertical intake. They remove and throw the snow in one continuous motion. Snow blowers, also called two-stage snow blowers, scoop up snow with an auger that feeds it to an impeller. The impeller allows snow blowers to throw snow much farther than snow throwers.

For lighter-duty snow removal, consider an electric snow shovel or an electric snow thrower. The former are typically able to handle 4-inch depths; the latter can handle 10-inch depths. The nice thing about these machines is that maintenance is significantly reduced. Electric snow throwers are available both corded and cordless.

However you deal with the snow and ice, follow good common sense, and stay safe. And, remember spring is only a couple of months away.

via 5 Tips to Manage Snow & Ice This Winter | Zillow Blog.

With interest rates likely to rise, hybrid mortgages may be a good option for 2014

focus-interest-ratesWith interest rates likely to rise, hybrid mortgages may be a good option for 2014

By Kenneth R. Harney, Published: January 2 | Updated: Friday, January 3, 9:50 AM

Higher mortgage rates for 2014? Count on it. Could this be the year to check out hybrid mortgages, which haven’t been popular lately? Maybe.

You can count on interest rates going higher because:

?The Federal Reserve intends to continue reducing its monthly purchases of mortgage bonds and Treasury securities, which will have the side effect of raising rates.

?The national economy finally appears to be picking up steam, based on the latest quarterly data. Higher growth rates in turn will increase demand for available credit and probably nudge rates higher.

?New federal regulations for mortgage lenders aimed at avoiding another bust take effect Jan. 10. Not only will loan officers and underwriters scrutinize applicants’ income, debt ratios and credit extra carefully, they will also probably charge more to borrowers whom they see as a higher risk. Some mortgage economists predict that conventional 30-year fixed-rate loans could go to 5.5 percent before year-end.

So what does this mean for you if you’re thinking about buying or refinancing a house and you want to nail down the most favorable interest rate and terms? Should you shop primarily for a traditional mortgage product that guarantees you a specific rate for 15 to 30 years?

Or should you check out hybrids? These are loans that provide you a guaranteed fixed rate for a predefined period — say, five, seven or 10 years — then convert to a rate that can change annually.

The case for sticking with a traditional, fixed-rate mortgage is straightforward. Though 30-year rates are more than a percentage point higher this month than they were a year earlier, they are still not far off multi-decade lows. Bruce A. Calabrese, president of Equitable Mortgage Corp. in Columbus, Ohio, is adamant: “My advice for home buyers,”he says, “is to lock [early] into a 30-year fixed” while rates are still under 5 percent. “Take a 30-year fixed at 4.75 percent and be happy,” because that’s still far below average rates over the past several decades.

Paul Skeens, president of Colonial Mortgage Corp in Waldorf, agrees. “If fixed [rates] are under 5.5 percent and you are going to live in your home for five years or more, they are still a great deal,” he says. “I’m very partial to fixed rates, since I remember when anything under 7 percent was a great deal.”

To illustrate the historical point made by Skeens and Calabrese, consider these 30-year fixed rates: In 1974, they averaged 9.19 percent nationwide, according to mortgage investor Freddie Mac. By 1984, they were at 13.88 percent. In 1994, fixed rates averaged 8.38 percent; in 2004, 5.84 percent.

But what if you say: I don’t care about what rates were in previous decades. That was then. I’m here and now. I’m more concerned about being able to afford today’s housing prices given today’s income and household expenses.

Jeff Lipes, a lender in the Hartford, Conn., area and former president of the Connecticut Mortgage Bankers Association, believes that hybrids with fixed rates for between five and 10 years “are fantastic options for borrowers” in 2014, and can lock in rates that are one or more percentage points below competing 30-year fixed loans.

“Most first-time buyers purchase a home that will be sold when the family income increases or the family outgrows the house,” Lipes says. “That usually occurs in the first 10 years, so that is why a [hybrid] is a great option. The borrower saves a lot of money” — sometimes hundreds of dollars a month — “paying a lower rate.”

A check of Bankrate.com’s online rate monitor in late December found five-year hybrids averaging around 3.4 percent nationwide, seven-year hybrids at 3.81 percent and 10-year hybrids at 4.16 percent. Thirty-year fixed rates averaged 4.63 percent.

Ted Rood, senior mortgage consultant with Wintrust Mortgage in St. Louis, says he’s already seeing a shift in demand toward five- and seven-year hybrids. He just closed a seven-year at 3.5 percent on a house in Wyoming for a borrower who fully understood the risk that he could face higher rates at the conversion point in late 2020.

Bottom line for you if you’re in the market: Check out all the options on the menu. If you are comfortable with the potential risks, and if the monthly savings advantages of a hybrid are substantial, go for it.

Ken Harney’s e-mail address is kenharney@earthlink.net.

via With interest rates likely to rise, hybrid mortgages may be a good option for 2014 – The Washington Post.

Follow the mortgage money: Why 2014 should be a good year for housing

money_spigot_shutterstock_142147576-300x229Money spigot image via Shutterstock.

Follow the mortgage money: Why 2014 should be a good year for housing

Look for Fannie and Freddie’s new regulator to push for looser underwriting, down payment requirements

Ken Harney, Contributor
Dec 17, 2013

Disclaimer upfront: I live and work in America’s most dysfunctional political and bureaucratic environment — inside the Beltway, Washington, D.C. So I have to admit that my ability to make predictions is handicapped by the inherent unpredictability of the key actors here.

Outcomes are often determined by deeply partisan politicians who sometimes, but rarely, decide to come together to solve tough problems, and federal regulators who see laws like Dodd-Frank as providing mere starting suggestions for the rules they ultimately write according to their own whims.

Remember the original qualified residential mortgage (QRM) regulation, which as proposed would have required that lenders retain a share of the risk in mortgages made to borrowers putting less than 20 percent down? Invented out of whole cloth by bureaucrats who regulate banks.

That said, here are a few fearless forecasts for 2014 and beyond.

For really big housing issues like comprehensive tax reform and replacement of Fannie Mae and Freddie Mac, forget about 2014. There’ll be smoke, there’ll be a lot of talk and campaign promises. But think 2015 or maybe the post-presidential-election 2017 session of Congress for any real action. Until then it’s hard to see how either gets done. The players are simply not up to it.

Both House Ways and Means Committee Chairman Dave Camp, R-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont., have spent the past year meticulously examining the federal income tax code. They’ve been looking for ways to streamline and simplify current deductions, credits and special interest preferences, with the goal of possibly lowering maximum tax brackets for individuals and corporations.

 

They held hearings, commissioned staff studies and produced draft legislative proposals that are guaranteed to upset virtually every major industry — real estate and housing, in particular.

Though Camp has not yet disclosed what’s in his package, the word is that it seeks wholesale cutbacks in deductions and credits — mortgage interest, capital gains, property tax write-offs among many others — in order to partially pay for lower tax brackets and other simplifications.

When and if Camp actually introduces his bill, he’ll get kudos for his courage to address such a complex issue. Then watch as the Republican leadership backs away like it’s a dead skunk, too unpleasant to handle in an election year. Baucus is likely to meet a similar fate in the Senate.

Serious consideration of broad-based tax reform will have to wait until the next election sweep — House, Senate and White House — by one or another of the parties. The earliest that could happen is 2016, assuming the Republicans retain the House and Democrats the Senate in 2014.

With a new president, figuring out how to streamline the code will take at least another year, even with one party in charge. Mortgage interest, capital gains and other key real estate provisions should be safe until then.

The fates of Fannie and Freddie may well be the same story: Though committee hearings were held this year in both the Senate and the House on how to phase them out and create a replacement secondary mortgage market system, the bills that have emerged are philosophically so far apart that the gap cannot be bridged in the 2014 election year.

Republicans in the House want little or no federal role in mortgage finance other than a pared-down Federal Housing Administration. Senate Democrats insist on a strong federal financial backup for the mortgage market, and more than a few would like to retain something along the lines of Fannie and Freddie, perhaps combined.

Meanwhile, Fannie and Freddie are generating surpluses, and appear set to keep minting money by the billions for the federal Treasury. In an era of ballooning budget deficits, who’s going to stop that?

Certainly not the new head honcho for oversight of Fannie and Freddie, Mel Watt, who is replacing Ed DeMarco. Watt won’t take long to install the Obama administration’s agenda at the Federal Housing Finance Agency, which oversees the mortgage giants.

Even before his arrival as director, Watt has had an impact: DeMarco canceled cuts in Fannie and Freddie maximum loan limits that he had already scheduled. He knew full well that Watt would reverse them anyway (with DeMarco on his way out, the FHFA on Monday announced that it was seeking public comment on a plan to reduce loan limits in October).

Once in office, Watt is likely to open the door for the first time to principal reductions for Fannie-Freddie borrowers who have trouble affording their loans. DeMarco had long resisted White House demands that he allow such debt reductions on agency mortgages, angering the president and liberal Democrats.

Watt is also likely to look for ways — consistent with his legal role as conservator — to open conventional financing to broader segments of the homebuying public by easing up on credit score and other underwriting standards and possibly cutting current 5 percent minimum down payment requirements.

In other areas:

  • Get ready for some exceptionally bumpy mortgage market conditions in the first half of 2014 as lenders to figure out how to comply with the new qualified mortgage and other rules taking effect, beginning in January. Look for longer processing times, more rejections on QM grounds, all complicated by likely increases in mortgage interest rates as the Federal Reserve’s “tapering” of its securities purchases begins to phase in. More contracts written on home purchases are likely to fall through, and applicants are certain to find early 2014 a more challenging marketplace than they would have encountered in 2013.
  • After 18 months of cordial working relations with industry groups, look for the Consumer Financial Protection Bureau to take more of a bare-knuckles approach on key issues for Realtors, builders and lenders, such as the Real Estate Settlement Procedures Act (RESPA), equal credit opportunity and mortgage servicing complaints. The bureau is now likely to pick up on the Obama administration’s emerging second-term shift to the left in domestic policy, and go for the jugular on real estate issues such as affiliated business arrangements.
  • For the overall real estate market, 2014 is likely to be the first relatively “normal” year in terms of sales, inventory and price changes, since the bust in 2008. Rock-bottom inventories in multiple markets, especially California, helped push up prices abnormally in 2013. But listings should be less of a problem in most parts of the country in 2014.

Sellers have more confidence they’ll get fair pricing, plus millions of previously underwater owners have crossed over into positive equity status in recent quarters, giving them a shot at selling. Unless rates spike or Wall Street sees a 20 percent-plus correction, the better balance between supply and demand should make 2014 a good year.

Ken Harney writes an award-winning, nationally syndicated column, “The Nation’s Housing,” and is the author of two books on real estate and mortgage finance.

via Follow the mortgage money: Why 2014 should be a good year for housing | Inman News.

2014: drones, stock in top producers, a mystery acquisition and more

new_year_2014_shutterstock_151448366-300x225New year image via Shutterstock.

2014: drones, stock in top producers, a mystery acquisition and more
10 predictions from Inman News Publisher Brad Inman

Brad Inman, Publisher
Dec 26, 2013

1. A drone accident masterminded by a maverick real estate agent will make national news.

2. The private secondary mortgage market will be back in full force this coming year (though later in 2014), giving a fresh but sustainable lift to the housing market.

3. Interest rates will be higher, but housing demand will be fierce, squeezing the inventory and driving up home prices.

4. An investment opportunity to buy equity in individual top-producing real estate agents will unfold, like what is being done with stock offerings for individual athletes. Buyer beware.

5. Stung by some contentious investments in the tech sector back in the day, Realogy will come out of its shell and make at least one big technology move.

6. Institutional investors who bought blocks of foreclosed single-family homes will begin unloading later in the year as prices rise, giving the market some much-needed inventory and participants a handsome return.

 

7. Redfin will have a successful IPO. CEO Glenn Kelman will be wealthy and his investors will be very happy.

8. The amount of venture capital and private equity pouring into the real estate sector will reach record levels, driving innovation and experimentation in new business models, software and hardware.

9. Zillow and Trulia will make a horde of acquisitions. Zillow will make one masterstroke purchase or business model move that will be controversial.

10. HUD Secretary Shaun Donovan will resign (not under a cloud), and FHA Commissioner Carol Galante will replace him.

BONUS prediction: We have not heard the last of making agent performance data transparent.

Happy New Year! May the market be with you.

Brad Inman is the founder and publisher of Inman News.

via 2014: drones, stock in top producers, a mystery acquisition and more | Inman News.

As home prices and interest rates rise, more home sales are cash deals

All-cash-dealsSource: RealtyTrac

As home prices and interest rates rise, more home sales are cash deals

RealtyTrac: Proportion of all-cash deals has doubled since May, to 42 percent

Paul Hagey, Staff Writer

Dec 20, 2013

The proportion of all-cash home sales has doubled since May, making up 42 percent of all deals done in November, RealtyTrac reports — the largest proportion of cash sales since the data aggregator began tracking the stat nearly three years ago.

RealtyTrac had previously reported that cash deals made up 45 percent of sales registered in August, but the firm has since revised that tally down, citing a revision it made to methodology.

Regardless, the data — and the raw numbers behind it — does not indicate a greater raw number of investors, RealtyTrac Vice President Daren Blomquist told Inman News. What it shows is that rising home prices and rising mortgage rates have diminished the pool of buyers using a loan to buy a home.

The number of homes purchased with a mortgage fell 40 percent from October to November, to 135,154 — the lowest monthly total of financed home sales in the three years RealtyTrac’s been keeping the data. The raw number of all-cash deals in November was also down 31.2 percent from October, to 98,030.

The number of homes purchased with a loan has dropped steadily each month since May, when rates began to ratchet up. Mortgaged home sales totaled 360,227 in May, shrinking in June 338,650, July 317,002, August 288,094, September 250,026, October 225,076 and November 135,154.

Yesterday, the National Association of Realtors reported that all-cash deals made up 32 percent of existing-home sales, up from 31 percent in October. However, that number is likely not as accurate as it could be because of methodology issues that are being addressed, NAR spokesman Walt Maloney told Inman News in August.

RealtyTrac’s tally show a much lower percentage of cash deals than a Goldman Sachs Group report earlier this year that showed more than half of all the transactions in the 18 months between January 2012 and June 2013 were completed with nothing but cash.

The RealtyTrac report also revealed that institutional investors snatched up 7.7 percent of all the residential homes sold in November.

The methodology change that led to the revision of RealtyTrac’s previously reported all-cash sales data produces a more accurate portrayal of what’s actually happening on the ground with such deals, Blomquist told Inman News.

The firm calculates the percentage of all-cash deals in a month by comparing the records of home sales from deeds filed at county courts throughout the U.S. to loan data it has in the same areas. After discovering that it actually did not have loan data in a few locations where it mistakenly thought it had the data, RealtyTrac revised the methodology, Blomquist said.

For example, in addition to August’s downward revision, in October, RealtyTrac had all-cash deals making up 49 percent of September’s transaction total, which now stands at 37 percent.

via As home prices and interest rates rise, more home sales are cash deals | Inman News.

Mortgage rates rise on Federal Reserve’s decision to pull back on stimulus

mortgagePhoto:  Pam Tobey/The Washington Post

Mortgage rates rise on Federal Reserve’s decision to pull back on stimulus

BY KATHY ORTON

December 19 at 10:00 am

Mortgage rates began to wander upward again just as the Federal Reserve announced that it would start winding down its stimulus program early next year.

Before Wednesday’s announcement, mortgage rates already had started to climb, according to the latest data released Thursday by Freddie Mac.

The 30-year fixed-rate average rose to 4.47 percent with an average 0.7 point. It was 4.42 percent a week ago and 3.37 percent a year ago. Since spiking to 4.58 percent in late August, the 30-year fixed rate has bounced between 4.57 percent and 4.1 percent.

The 15-year fixed-rate average jumped to 3.51 percent with an average 0.6 point. It was 3.43 percent a week ago and 2.65 percent a year ago. The 15-year fixed rate had remained below 3.5 percent since late September.

Hybrid adjustable rate mortgages also increased. The five-year ARM average edged up to 2.96 percent with an average 0.4 point. It was 2.94 percent a week ago and 2.71 percent a year ago.

The one-year ARM average went up to 2.57 percent with an average 0.5 point. It was 2.51 percent a week ago.

“Mortgage rates rose slightly leading up to the Federal Reserve’s policy announcement,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “The statement indicated that the central bank would begin to trim its bond buying program. The Fed noted that the economy expanded at a modest pace, but the unemployment rate remains elevated. In addition, housing starts in November rose to a seasonally adjusted annual rate of 1,091,000, the highest rate since February 2008. Permits were at a seasonally adjusted annual rate of 1,007,000 in November, 7.9 percent higher than in November 2012.”

Meanwhile, mortgage applications took a downturn last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, dropped 5.5 percent. The Refinance index fell 4 percent, while the Purchase Index declined 6 percent.

“Mortgage applications fell further last week, with the market index falling to its lowest level in more than a dozen years,” Mike Fratantoni, MBA’s vice president of research and economics said in a statement  “Both purchase and refinance applications fell as interest rates increased going into [Wednesday’s] Federal Open Market Committee meeting.”

The refinance share of mortgage activity rose slightly, accounting for 65 percent of all applications.

via Mortgage rates rise on Federal Reserve’s decision to pull back on stimulus.

Mortgage applications hit 12-year low as refi boom dries up

percent_up_arrrow_shutterstock_47355832-300x300Percent sign image via Shutterstock

Mortgage applications hit 12-year low as refi boom dries up

Applications for purchase loans are also down 12 percent from a year ago

Teke WigginStaff Writer

Dec 18, 2013

Mortgage applications fell to their lowest level in more than 12 years last week as interest rates increased in advance of the Federal Open Market Committee Meeting that began on Dec. 17 and ends today, the Mortgage Bankers Association MBA reported.

Applications for purchase loans during the week ending Dec. 13 were down a seasonally adjusted 6 percent from the week before and 12 percent from the same time a year ago, to the lowest level since December 2012. Requests to refinance were down 4 percent from the previous week, continuing their long downward trajectory.

During the housing downturn and recovery, the Fed’s purchases of Treasurys and mortgage-backed securities helped push mortgage rates to record lows. While mortgage rates are still low by historical standards, many homeowners who were eligible to refinance have already done so.

Trulia Chief Economist Jed Kolko tweeted that increased mortgage rates — which jumped in the spring after the Fed signaled it was preparing to dial back its stimulus program — have “whacked” refinance applications, and the housing recovery has been too weak to fill the gap with purchase loans.

Joel Lobb, a senior loan officer at Louisville, Ky.-based American Mortgage Solutions, said that in all his 18 years as a loan officer he’s never seen it this slow.

“Refinances are pretty much not existent in the loan pipeline anymore, with a lot of mortgage refi shops closing,” Lobb said.

But purchase loan demand has dried up, too, he said. After hitting a three-year peak in early May, purchase loan applications have dropped by 21 percent, according to MBA data.

In addition to elevated interest rates, Lobb said fewer people are seeking to purchase homes with mortgages or refinance because the Federal Housing Administration FHA has both increased the mortgage insurance premiums that it charges borrowers and tightened its underwriting requirements.

“Once you figure those premiums in, it is very costly to refinance or buy a home,” Lobb said of FHA insurance premiums. “The private mortgage insurance market is supposed to supplement the government-insured mortgage market, but it is still very restrictive with higher credit scores requirements usually being at least 660 or higher.”

At the Fed committee meeting, officials are discussing when to begin tapering the central bank’s stimulus program, which has helped keep interest rates low in recent years. Some analysts expect the Fed to begin winding down the program as early as this month, a move that could spark erratic activity across financial markets and potentially drive up interest rates.

Market activity in recent months has illustrated investors’ sharp sensitivity to the status of the stimulus program. Mere anticipation of a Fed pullback has helped push up 30-year fixed-rate mortgage rates by around 1 percentage point since the spring.

via Mortgage applications hit 12-year low as refi boom dries up | Inman News.

Congress’s inaction on real estate issues leaves homeowners and investors unsettled

wfpCongress’s inaction on real estate issues leaves homeowners and investors unsettled

By Kenneth R. Harney

Published: December 12 | Updated: Friday, December 13, 9:50 AM

For one of the least productive congressional sessions in modern history, the final word about tax reform last week was entirely in character: Nothing’s happening.

But is that good news or bad news for homeowners, buyers and small-scale real estate investors? A bit of both.

When House Ways and Means Committee Chairman Dave Camp (R-Mich.) announced that he not only will not reveal the details of his long-awaited comprehensive tax reform bill this year but also will not seek passage of a so-called “extenders” bill for expiring tax code benefits, it was a sweet and sour mix for real estate interests.

Camp’s big reform bill, which would attempt to lower individual and corporate income tax rates to a maximum of 25 percent, is expected to call for significant cutbacks in — possibly elimination of — prized real estate deductions for home mortgage interest, local property taxes and other write-offs in order to pay for lower marginal rates. With major changes such as these now pushed back well into 2014 for even preliminary debate — in the middle of a reelection year for Congress — homeownership advocates are at least moderately relieved.

But there’s a key negative here as well: The failure of tax writers to put together an extenders bill means that important Internal Revenue Code provisions affecting large numbers of homeowners — especially relief from taxation on mortgage debt forgiveness by lenders in most states, along with current deductions for mortgage insurance premiums and energy-saving home improvements — will lapse Dec. 31. California owners are not affected by the debt-forgiveness expiration because state law exempts them from taxation when lenders cancel mortgage principal debt as part of short sales. The IRS has announced that it will not levy taxes on such transactions in California even if the federal exemption for owners elsewhere expires.

Complicating matters even more: Though they were tucked away in eye-glazing discussion drafts and attracted little attention before Thanksgiving, Senate tax writers’ reform-bill proposals for real estate should be unsettling for anyone owning residential investment property, such as rental houses.

Senate Finance Committee Chairman Max Baucus (D-Mont.) would terminate one of the oldest financial planning techniques used by real estate investors: tax-deferred exchanges under Section 1031 of the code. In a 1031 exchange, property owners can defer taxes indefinitely when they swap “like kind” investment real estate within time periods specified by IRS regulations. Under current law, investors can exchange rental real estate without incurring immediate tax liability even if they’ve racked up huge paper gains on their properties. Taxes generally are not due until the investors actually sell their real estate for money.

Baucus also would sharply increase the depreciation period for residential investment real estate from the current 27.5 years to 43 years. Stretching out the depreciation schedule means investors would be able write off less per year on their properties than at present.

On top of that, the Senate reform proposal would tax so-called “recapture” of depreciation — where the IRS requires payback of a portion of an investor’s earlier write-offs — at property owners’ ordinary income tax rates, rather than at lower capital gains rates, as at present.

Under Baucus’s plan, mom-and-pop real estate investors — people who have purchased a small portfolio of rental houses or condos — could be hit hard. Besides the depreciation-deduction stretch-out, the inability to exchange properties tax-free for others of similar or greater value would put a severe crimp in their ability to grow and manage their investments over time.

William Horan, president of Realty Exchange Corp. of Gainesville, Va., says that “if Section 1031 of the code is repealed, then small investor owners would be facing massive taxes and most likely would not sell their properties. [Real estate] values for everyone would be lowered by removing vital investors from the market.”

A more immediate concern for homeowners, however, is Congress’s inability — or unwillingness — this year to extend key tax laws. Tops on the list is the mortgage debt forgiveness law. Unless Congress agrees to a retroactive extension, large numbers of owners could face big tax bills following short sales, foreclosures or loan modifications next year when lenders cancel a portion of the balances owed them. To bring that home: A $100,000 debt cancellation could lead to $28,000 in additional taxes for a short seller — solely because Congress could not get its act together to extend a popular, pro-consumer law.

Ken Harney’s e-mail address is kenharney@earthlink.net.

via Congress’s inaction on real estate issues leaves homeowners and investors unsettled – The Washington Post.

10 Best-Kept Secrets for Selling Your Home

10 tips

 

 

 

 

 

10 Best-Kept Secrets for Selling Your Home

Tricks of the trade to help you get top dollar when selling your home.

Selling Secret #10: Pricing it right Find out what your home is worth, then shave 15 to 20 percent off the price. You’ll be stampeded by buyers with multiple bids — even in the worst markets — and they’ll bid up the price over what it’s worth. It takes real courage and most sellers just don’t want to risk it, but it’s the single best strategy to sell a home in today’s market.

Selling Secret #9: Half-empty closets Storage is something every buyer is looking for and can never have enough of. Take half the stuff out of your closets then neatly organize what’s left in there. Buyers will snoop, so be sure to keep all your closets and cabinets clean and tidy.

Selling Secret #8: Light it up Maximize the light in your home. After location, good light is the one thing that every buyer cites that they want in a home. Take down the drapes, clean the windows, change the lampshades, increase the wattage of your light bulbs and cut the bushes outside to let in sunshine. Do what you have to do make your house bright and cheery – it will make it more sellable.

Selling Secret #7: Play the agent field A secret sale killer is hiring the wrong broker. Make sure you have a broker who is totally informed. They must constantly monitor the multiple listing service MLS, know what properties are going on the market and know the comps in your neighborhood. Find a broker who embraces technology – a tech-savvy one has many tools to get your house sold.

Selling Secret #6: Conceal the critters You might think a cuddly dog would warm the hearts of potential buyers, but you’d be wrong. Not everybody is a dog- or cat-lover. Buyers don’t want to walk in your home and see a bowl full of dog food, smell the kitty litter box or have tufts of pet hair stuck to their clothes. It will give buyers the impression that your house is not clean. If you’re planning an open house, send the critters to a pet hotel for the day.

Selling Secret #5: Don’t over-upgrade Quick fixes before selling always pay off. Mammoth makeovers, not so much. You probably won’t get your money back if you do a huge improvement project before you put your house on the market. Instead, do updates that will pay off and get you top dollar. Get a new fresh coat of paint on the walls. Clean the curtains or go buy some inexpensive new ones. Replace door handles, cabinet hardware, make sure closet doors are on track, fix leaky faucets and clean the grout.

Selling Secret #4: Take the home out of your house One of the most important things to do when selling your house is to de-personalize it. The more personal stuff in your house, the less potential buyers can imagine themselves living there. Get rid of a third of your stuff – put it in storage. This includes family photos, memorabilia collections and personal keepsakes. Consider hiring a home stager to maximize the full potential of your home. Staging simply means arranging your furniture to best showcase the floor plan and maximize the use of space.

Selling Secret #3: The kitchen comes first You’re not actually selling your house, you’re selling your kitchen – that’s how important it is. The benefits of remodeling your kitchen are endless, and the best part of it is that you’ll probably get 85% of your money back. It may be a few thousand dollars to replace countertops where a buyer may knock $10,000 off the asking price if your kitchen looks dated. The fastest, most inexpensive kitchen updates include painting and new cabinet hardware. Use a neutral-color paint so you can present buyers with a blank canvas where they can start envisioning their own style. If you have a little money to spend, buy one fancy stainless steel appliance. Why one? Because when people see one high-end appliance they think all the rest are expensive too and it updates the kitchen.

Selling Secret #2: Always be ready to show Your house needs to be “show-ready” at all times – you never know when your buyer is going to walk through the door. You have to be available whenever they want to come see the place and it has to be in tip-top shape. Don’t leave dishes in the sink, keep the dishwasher cleaned out, the bathrooms sparkling and make sure there are no dust bunnies in the corners. It’s a little inconvenient, but it will get your house sold.

Selling Secret #1: The first impression is the only impression No matter how good the interior of your home looks, buyers have already judged your home before they walk through the door. You never have a second chance to make a first impression. It’s important to make people feel warm, welcome and safe as they approach the house. Spruce up your home’s exterior with inexpensive shrubs and brightly colored flowers. You can typically get a 100-percent return on the money you put into your home’s curb appeal. Entryways are also important. You use it as a utility space for your coat and keys. But, when you’re selling, make it welcoming by putting in a small bench, a vase of fresh-cut flowers or even some cookies.

 

via 10 Best-Kept Secrets for Selling Your Home : Decorating : Home & Garden Television.

How wise agents get appraisers to see what they see

frustration_shutterstock_143418421-300x200Photo:  Frustration image via Shutterstock.

How wise agents get appraisers to see what they see

Data speaks louder and more effectively than anything you can say

Hank Miller, Contributor
Dec 13, 2013

Appraisals continue to be a potential issue with every contract. It doesn’t need to be this way.

Of course, there will always be situations where a genuine value challenges exists. But for the most part, better preparation by agents can alleviate the majority of problems.

A key component of that preparation is an understanding of what an appraiser does and how they operate. This can quash issues before they arise.

Appraisers have no interest in “killing a deal.” They get paid to complete reports. Appeals or contested reports waste everyone’s time, and no appraiser goes out looking to waste time.

Agents would do well to understand that the appraiser is not their enemy, but simply one of the many people involved in the sale. Appraisers report the market — they don’t create it.

The agent-appraiser relationship can be contentious, mainly due to a lack of understanding. Appraisers have little idea of how much time can be invested with a client, and agents have little understanding of the requirements appraisers work under.

Agents can be a huge asset by providing comps an appraiser can use. Learn what is required. Don’t just toss data that’s largely useless at an appraiser and say, “Here you go!” Opinions are good, appropriate data that supports them is great.

The appraiser could care less if you are a ‘top agent.’ They are there to complete the appraisal. Be a peer and be helpful, then leave.”
It’s important to note that appraisals are a “look back.” While consideration is given to active and pending comps, closed sales are given most support.

Areas where the market is very fluid and on the rise presents a challenge for all. Remember that underwriters hold the reins with appraisals.

Most appraisals are written for underwriters. Requirements are clearly stated, and appraisals that don’t comply are sent back for edification. Despite the fluid housing market over the last few years, underwriting is still rather stiff with regard to adjustment percentages, closing date, distance and other parameters.

The real estate crash was especially hard on the appraisal industry. Management companies drove many experienced appraisers out, and those who remain must increase volume to earn what they did before the crash.

There are less-than-perfect appraisers out there just as there are less-than-perfect agents. The wise agent makes it easy for the appraiser to see what they see. Here are key points to consider:

-Understand the appraiser’s role, requirements and what underwriters expect. If nothing else, understand what they are required to look for when considering comparable data for the report.
-Meet the agent at the listing if possible. Agents can talk with an appraiser, but they cannot exert undue influence. Give the agent an info packet on the area, home and the contract, and include appropriate comps that might be considered. Leave a packet of info if you don’t meet them.
-No discussion should last more than five to 10 minutes. Everything you touch on should be in the packet you give them. Do not sell the appraiser — just point out things that might not be obvious. Be certain to leave your contact info and respond as/if needed.
-Don’t try to exert any type of authority or expertise. The appraiser could care less if you are a “top agent.” They are there to complete the appraisal. Be a peer and be helpful, then leave. The data speaks louder and more effectively than anything said.

There is no agent-appraiser nirvana. Real estate by its very nature operates in an environment of distinctiveness and unpredictability.

But agents and appraisers should recognize they have a common objective: to complete a transaction that satisfies the client and the lender. An antagonistic approach based upon preconceived notions benefits no one.

Not every deal will end up working. The data obviously has to be there, but it’s far better to try with a unified front than to grasp at straws. Something about flies and honey comes to mind.

Hank Miller is an associate broker and certified appraiser in Atlanta, Ga. The lead agent for HMT Atlanta, he’s known for his candid opinions and real estate expertise.

via How wise agents get appraisers to see what they see | Inman News.

The D.C. suburbs dominate the list of wealthiest U.S. counties

Median-Income-County-1024x802

Photo:  Census

The D.C. suburbs dominate the list of wealthiest U.S. counties

BY CAROL MORELLO

December 12 at 2:00 pm

The Census Bureau has confirmed that, once again, the Washington region dominates the list of the most affluent places in the United States.

Among more than 3,000 counties across the nation, Loudoun County is the richest, with a median household income last of almost $119,000. Maryland’s Howard County and Virginia’s Fairfax, Arlington and Stafford counties also made it into the top 10. Three New Jersey counties outside New York City also were among the well-off top 10.

The Census Bureau listed the city of Falls Church, where the median income is $121,000, as the richest location, but that’s just because of a quirk in how the census ranks independent cities in Virginia alongside much larger counties instead of with cities or towns. Montgomery County and Prince William County fell just below the 10 wealthiest counties. Also in the top 30 were Charles, Calvert, Anne Arundel and St. Mary’s counties in Maryland, and the city of Fairfax in Virginia.

The Washington area has reigned at the top of the most affluent counties for years, in large part because it has so many residents with college degrees working at professional jobs. That gives the region a disproportionately large share of two-income households in which both adults have well-paying jobs.

Here’s the Census Bureau list of the counties with the highest median incomes (including tiny Falls Church):

1.  Falls Church city, Va. $121,250

2.  Loudoun County, Va. $118,934

3.  Los Alamos County, N.M. $112,115

4.  Howard County, Md. $108,234

5.  Fairfax County, Va., $106,690

6.  Hunterdon County, N.J. $103,301

7.  Arlington County, Va. $99,255

8.  Douglas County, Colo. $98,426

9.  Stafford County, Va. $95,927

10.  Somerset County, N.J. $95,574

11.  Morris County, N.J. $95,236

12.  Montgomery County, Md. $94,365

13.  Prince William County, Va. $93,011

via The D.C. suburbs dominate the list of wealthiest U.S. counties.

Open floor plans are prevalent in new home designs

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Miller & Smith’s Tribeca model features a contemporary loft-like open floorplan with dining and living areas open to the kitchen, which has an oversized center island.

Photo:  Jim Kirby

Open floor plans are prevalent in new home designs

By Michele Lerner, Published: December 5

If you’ve toured a newly built model home recently, you may have noticed a few things missing: a formal living room or the once-popular two-story family room.

Today’s new homes are a bit more practical and reflect the way people live: in their “family center” — an oversized, open great room with a center island kitchen, a casual dining area and a family room.

Washington area residents prefer traditional homes, but local builders and architects say that even though exteriors remain mostly traditional, buyers increasingly are looking for more contemporary interiors with open floor plans.

Now that new home sales are making a comeback along with the rest of the housing market, builders are incorporating these new ideas into their home designs.

“Builders scaled back home sizes and features right after the housing crisis in order to be at a particular price point, but now they’re bringing back larger homes in order to meet buyer demand,” says Debbie Rosenstein, vice president of the Christopher Companies, a local builder based in Oakton, Va. “But buyers are a little different now. They’re looking at values more carefully.”

Kim Ambrose, vice president of marketing for Miller & Smith in McLean, says builders now use every possible square foot as efficiently as possible, without any two-story spaces but with an open feeling from 9- and 10-foot high ceilings that are standard in many new homes.

The most notable trend in new home designs is the contemporary style open floor plan, ideally with an unobstructed view from the front of the house to the back. The best option would include view of a porch or sunroom since people want to see outdoor space if they can, says Michael Kingsley, principal of KTGY, an architecture and planning firm in Tysons Corner.

“One way to bring the outdoors inside is to build a covered outdoor corner room within the footprint of the home and accessible through glass doors to the family room or kitchen,” says Kingsley. “It’s an efficient way to create an outdoor living area without adding an appendage to the house.”

Linda Ellington, vice president of sales and marketing for Mitchell & Best Homebuilders in Rockville, says the company offers an integrated outdoor living space as an option on some of their models with glass openings to the space from the family room since that’s where most people entertain and spend time with their families.

Even if the lot configuration doesn’t allow for an outdoor room, most new home designs focus on creating an open primary living space rather than on formal rooms.

“Buyers want an open kitchen with space to spread out and entertain,” says Lauri Chastain, vice president of marketing for Stanley Martin Homes in Reston. “Even if we don’t have space for an enormous kitchen, we design one that’s well laid-out with an ample island and a walk-in pantry if possible.”

A living room is a rare find in all but the largest new homes, but some still offer a separate dining room for buyers who want a more formal space for entertaining.

In addition to open, contemporary floor plans, some of the other trends in new home designs include:

Flexible rooms. “There’s usually a flexible space set aside in single-family homes on the first floor for a library, a parlor or a home office,” Kingsley says. “In smaller homes people like to have a little office space near the family room instead of a separate home office. People don’t really need a big office anymore, so this is more natural.”

At One Loudoun, Miller & Smith offers an optional studio space above the rear attached garage that has both an interior and an exterior entrance.
“The studio has a bedroom, a full bath and a little kitchenette,” says Ambrose. “We were surprised that about 25 percent to 30 percent of our buyers are choosing it, but some people want it for boomerang adult kids and for extended family visits.”

Mitchell & Best offers a second level loft that can be wired for a homework center, used as a traditional sitting area/library or closed off for a formal office.

Miller & Smith offers a loft with its three-bedroom designs and has also introduced floor plans with four bedrooms and a loft that can be used as a study space or recreation room for children.

First floor bedrooms. Most builders offer an optional first-floor bedroom with a full bath, but few offer a first-floor master suite because of space requirements.

“More people are asking for a first-floor bedroom, but they don’t want to lose the great room space, so that’s one reason it’s nice to have the flexibility of a den that can be converted to a bedroom,” says Rosenstein.

Family entrances. One of the more practical changes in new floor plans is an emphasis on efficient use of space, particularly the family entrance from the garage. Instead of a mudroom, this space often has multiple options for customization for sports equipment, a charging station for cellphones and tablets, and backpacks, Rosenstein says.

Ellington says they offer personalized family entrances for every floor plan, including things like a computer station and sometimes a second powder room.

Efficient designs. “We try to make sure there’s no wasted space at all, so we design homes without two-story spaces and with the main stairs moved out of the foyer,” says Chastain. “This gives us the opportunity to add more space for smarter living like more ample space in the mudroom and to meet our goal to have a walk-in closet in every bedroom.”

Extra customization. “Most small builders, including the Christopher Companies, offer more flexibility to move things around [such as] non-load bearing walls,” Rosenstein says. “It’s much more prevalent now than it used to be to ask for customization. People want to be able to say they’re not in a cookie-cutter home and to express their individuality.”

Smaller but more luxurious master baths. “Consumers prefer more space in the master bedroom closet instead of one of those huge ‘dance hall’ bathrooms where you could host a party,” says Chastain.

Kingsley says “gallery-style” baths that are elongated and have more windows rather than square master baths have become more popular because they offer more efficient use of space.

“We’re also designing more spa baths with a shower and separate tub cordoned off with glass wall,” says Kingsley.

Ambrose says more buyers want an oversized shower in the master bath instead of separate tub and shower, particularly among younger families buying in their Loudoun County communities.

Deemphasized garages. On single-family homes, it’s becoming more popular to recess the garage so that it’s less of a feature, Rosenstein says.

At Maple Lawn in Howard County and Poplar Run in Silver Spring, Miller & Smith is building single-family homes with rear entry garages. Ambrose says their research shows that people prefer attached garages rather than detached, even when they are behind the house.

New materials and designs for exteriors. “The D.C. area still isn’t a contemporary market, especially for exteriors, but we’re seeing a little innovation with arts-and-crafts style exteriors,” says Rosenstein. “We still have a lot of brick, but we’re seeing more stone and Hardiplank cement siding in more price ranges.”

Ambrose and Ellington both say they offer a variety of brick, stone and siding combinations so that the homes look different and the streetscapes are interesting.

“We’ve seen a nice change in the past few years with people being more willing to embrace new ideas and move away from the focus on traditional design,” says Kingsley. “These more open floor plans make a home feel better, even when it’s smaller; especially when you have nice sight lines and high ceilings.”

While the majority of D.C. residents may not be ready for ultra contemporary homes, the trend toward lighter and more open homes with smart, efficient design elements seems to be a growing preference in this area.

Michele Lerner is a freelance writer.

via Open floor plans are prevalent in new home designs – The Washington Post.

Every foot matters when it comes to real estate near Metro, researchers say

Every foot matters when it comes to real estate near Metro, researchers say

WRITTEN BY Jonathan O’Connell

PUBLISHED: DECEMBER 10

Developers are gobbling up land near Metro stations and much of the new construction in the area, whether apartments, condos, offices, shopping or hotels is near Metro stations.

For instance, of the 5.5 million square feet of office space under construction in the region at the moment, about 4.6 million of it, or 84 percent, is within a quarter mile of a Metro station.

So sure, real estate near Metro is more valuable, but measuring by miles may be using too big of a ruler. Researchers from the real estate services firm Cushman & Wakefield recently looked at real estate values in one of the region’s hotter markets for development, Arlington’s Rosslyn-Ballston corridor, and found that even among properties that are less than a third of a mile from a station, there is still a pretty well defined scale for how much property is worth, and the closer to the station the better.

For instance, looking at office properties near the five Rosslyn-Ballston stations, through which the Orange line runs, researchers found that offices within one-20th of a mile 264 feet of Metro earn a more than 30 percent premium over those that are a quarter of a mile from a station.

RBOffice

Office rents in the Rosslyn-Ballston corridor. (Cushman & Wakefield)

This is no small sample size. There are now 101 office properties totaling 20.2 million square feet near the Metro stations in Rosslyn, Courthouse, Clarendon, Virginia Square and Ballston, 92 percent of it within a quarter mile of a station.Washington commuters may walk faster than most, but if one assumes that the average walking speed for someone headed to work is around 3 miles an hour, walking a quarter of a mile takes five minutes, while walking a 20th of a mile takes one minute.

Is saving around four minutes of walking time per trip really worth paying that much more for real estate? Do executives think their companies perform better or attract and retain better talent because of that proximity? Apparently they believe they do.

“People don’t like to walk more than 10 minutes,” said Paula Munger, managing director of research for Cushman & Wakefield. “So being farther out just doesn’t attract the tenants that being near Metro does. People don’t want to take a shuttle. They want to walk to their office and preferably not even go outside, which is why if you’re on top of the station there is even more of an advantage.”

Munger and her team also looked at the rents that apartment buildings collect near Metro stations. There is more variance, likely due in part to the variance that newer, well-managed apartment buildings can achieve over older ones that have fewer amenities are more dated design.

RBRental

(Cushman & Wakefield)

Apartment buildings right on top of stations or nearly so within a 20th of a mile still command a premium, one that Cushman estimated at 23 percent over average rents for the area.

Properties more than a quarter mile from Metro, meanwhile, are available at an 18 percent discount off of average rents. “Investors know this. So that’s why they are buying properties that are on or near Metro, so they can command those higher rents,” Munger said.

Word to the wise: Realtors and brokers favor saying the properties they advertise are “steps” from Metro, but every one of those steps matters.

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz

via Every foot matters when it comes to real estate near Metro, researchers say – The Washington Post.

Green groups push consumers to healthy building materials

GreenGreen advocates are encouraging consumers to buy low and no VOC paints, which are healthier for people and widely available. (Andrea Bruce Woodall/THE WASHINGTON POST)

House Watch | Green groups push consumers to healthy building materials

BY KATHERINE SALANT

December 9 at 5:30 am

GreenBuild is the United States Green Building Council’s annual exposition to showcase the latest and greatest in green building. The spotlight at this year’s conference held recently in Philadelphia was on health, a cornerstone of the original green building mandate but one that so far has received relatively little attention.

Discussion on the broader level centered on creating built environments that encourage residents to incorporate exercise into their daily routine because the distances to shopping, local schools, public transportation and even one’s workplace are walkable or bikeable.

On a narrower scale, discussion focused on indoor air quality and healthy building materials.

As buildings become tighter to save energy, mechanized ventilation is needed to bring in fresh air; for houses, a continuously operating bathroom fan will often suffice. Specifying healthy building materials turns out to be much more complicated because most manufacturers do not disclose what is used to make their products.

But this is about to get much easier.

A big push within the green building community has led to the creation of the Health Product Declaration Collaborative, an organization that is developing standard disclosure forms so that consumers can easily make comparisons as they select building products. The list of large, mainstream building material manufacturers working with the HPD Collaborative is a good indication that the idea of disclosure has legs.

In the meantime, what can homeowners do?Bill Walsh, of the Healthy Building Network, who has worked on health-related aspects of building for the last 13 years, and his colleague Jim Vallette offered the following suggestions:

• Use plumbing pipes made of polypropylene or PP. This type of plastic piping has been used for plumbing in Europe for more than 30 years. It does not leach into the water, has a long life and it can be recycled to make new pipe so it won’t end up in a landfill.

It is often used in combination with acrylonitrile butadiene styrene or ABS, another type of plastic piping. Neither of these types of plumbing pipes creates the environmental problems associated with piping made of polyvinyl chloride or PVC, the type most commonly used in residential construction in the U.S.

Among other issues, a byproduct of PVC manufacture is dioxin, a carcinogen for which no exposure level is safe. Through wind and water, dioxin from PVC manufacture has been dispersed across the globe; it has been found in the tissues of every mammal on the planet, including humans.

• Use low VOC or no VOC paints. Almost all paint manufacturers now make products which release very small amounts of volatile organic compounds or no volatile organic compounds, known as VOCs, into the air after they have dried.

Of the many VOCs that can be released, the one of largest concern has been formaldehyde, which has been declared a known carcinogen by the World Health Organization and the U.S. Environmental Protection Agency.

• Avoid building products with asthma-causing chemicals. Chemicals that can cause asthma to develop are often referred to as asthmagens, and these are found in many building products, including flooring. With carpeting, asthmagens are used in the backing and installation glues.

Homeowners can avoid the glue exposure by specifying “dry tack” installation typically done for residential work, but not always. As yet there is no asthmagen-free backing for residential carpeting, but some carpet manufacturers use it in their commercial lines.

Linoleum and vinyl have asthmagens in their top coating commonly known as the wear surface, but the amount in linoleum is miniscule .03 percent; by comparison, vinyl has about 50 times as much 15 percent. Wood flooring is commonly finished with polyurethane; the asthmagen-free alternative is a traditional oil wood finish.

Katherine Salant has an architecture degree from Harvard. A native Washingtonian, she grew up in Fairfax County and now lives in Ann Arbor, Mich. If you have questions or column ideas, she can be contacted at salanthousewatch@gmail.com or http://www.katherinesalant.com.

via House Watch | Green groups push consumers to healthy building materials.

Buying a new home? An experienced real estate agent is essential.

photo-right-Capitollitup-against-med-blue-sky-copy-copy

 

Buying a new home? An experienced real estate agent is essential.

By Katherine Salant, Published: December 5 | Updated: Friday, December 6, 9:45 AM

When you buy a new house, do you need the services of an experienced real estate agent?

The answer is yes, and here’s why.

When you buy an existing house, what you see is what you get for the asking price. When you buy an as-yet-unbuilt house, what you see in the builder’s furnished model is not what you get for the advertised base price.

That’s because a furnished model is filled with beguiling features that enhance the basic house. The to-die-for kitchen, the four-foot extension that makes the family room feel so spacious, the classy Brazilian cherry hardwood floors, and the bay windows that give character to the front rooms and look swell from the street are all optional upgrades. When their cost is added in, the seemingly affordable $400,000 advertised base price quickly balloons out to $500,000, far more than you can afford.

When you check out a more affordable version of the model — a nearly completed house down the street that has only $30,000 worth of upgrades — it’s not the same house that has become the stuff of your dreams.

Had you been working with an experienced real estate agent, you would have avoided such a disheartening experience, because the agent would have directed you to new construction that fit your budget in the area where you want to live. As you toured models together, the agent would have helped you distinguish the upgrades from the basic house and pointed out the options that are prudent choices, said David Zadareky, the broker/owner of Re/Max Evolution in Alexandria.

Though option choices never come up in a resale transaction, they are central in a new-home purchase because the basic house is almost always very spare, Zadareky said. The challenge is to keep option choices to an affordable limit, which he caps at 15 to 20 percent of the base price. If your total budget is $400,000, as in the example above, you should be looking at houses that are base-priced about 15 to 20 percent lower, or about $320,000. That would give you $80,000 for options, an amount that would seem to cover everything you might want, but, in fact, will not go very far. “If you’re not careful, the final sticker price that you are trying to keep at $400,000 will quickly balloon up to $440,000 or even $480,000,” he said.

When choosing specific options, Zadareky advises his buyers to get features that will be difficult or costly to add later; in our earlier example, this would be the four-foot family room extension and the bay windows on the front. The to-die-for kitchen and the hardwood flooring can be future remodeling projects, and some options should be nixed outright because they will not translate into a better resale price. “No one will pay extra for a fireplace in the master bedroom,” he said.

In addition to helping buyers negotiate the purchase, Zadareky said he nudges them to budget for the cost of new-home ownership — a concern a builder’s agent is unlikely to mention. For example, once you move in, you’ll realize that you’ll have to purchase window treatments because the neighbors will be closer than you realized.

And he raises critical issues that do not occur to most buyers, such as finding out what is planned for the acreage adjacent to the community where they want to buy.

Why don’t most new-home buyers use real estate agents to help them navigate a brand-new house purchase?

It requires planning ahead, and most new-home purchases begin spontaneously when the buyers chance upon a “Grand Opening” for a new-home development and stop to take a look. When asked to “register” by the model sales agent, they fill out a card with their name and contact information. Should the buyers then decide to bring an agent on board, the builder will demand that the buyer pay the agent’s fee, usually 2 to 3 percent of the base price. (For the $320,000 house noted above, the fee would be $6,400 to $9,600.)

To get the real estate agent’s help and have the builder pay the agent’s fee, the agent must register the buyers on their initial visit. But if you visit the model and decline to register, you should be able to return later with an agent in tow, Zadareky said.

Katherine Salant has an architecture degree from Harvard. A native Washingtonian, she grew up in Fairfax County and now lives in Ann Arbor, Mich. If you have questions or column ideas, she can be contacted at salanthousewatch@gmail.com or www.katherinesalant.com .

via Buying a new home? An experienced real estate agent is essential. – The Washington Post.

Mortgage rates increase for second week in a row

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Photo:  Pablo Martinez Monsivais/Associated Press

Mortgage rates increase for second week in a row

BY KATHY ORTON

December 5 at 10:00 am

Mortgage rates continued their climb on the heels of strong economic reports, according to the latest data released Thursday by Freddie Mac. After bouncing around the past couple of months, fixed rates increased for the second week in a row.

The 30-year fixed-rate average spiked to 4.46 with an average 0.5 point. It was 4.29 percent a week ago and 3.34 percent a year ago. The 30-year fixed rate has remained below 4.5 percent since late September.

The 15-year fixed-rate average jumped to 3.47 percent with an average 0.4 point. It was 3.3 percent a week ago and 2.67 percent a year ago. The 15-year fixed rate has stayed below 3.5 percent since late September.

mortgage(Image: Pam Tobey/The Washington Post)

Hybrid adjustable rate mortgages were mixed. The five-year ARM average rose to 2.99 percent with an average 0.4 point. It was 2.94 percent a week ago and 2.69 percent a year ago.

The one-year ARM average fell to 2.59 percent with an average 0.4 point. It was 2.60 percent a week ago.

“Fixed mortgage rates increased this week following stronger than expected economic data releases,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“Private companies added 215,000 new jobs in November according to the ADP employment report, well above the consensus. In addition, revisions added 54,000 jobs in the prior month. Lastly, new home sales rose 25 percent in the month of October to a seasonally adjusted 444,000 annual pace, though this followed a weaker than expected September report and downward revisions over the summer months.”

Meanwhile, mortgage applications tumbled last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, fell 12.8 percent during the Thanksgiving-holiday shortened week. The Refinance index sank 18 percent, while the Purchase Index dropped 4 percent.

The refinance share of mortgage activity dipped to 63 percent. In early September, the refinance share had sunk to 57 percent, its lowest level since April 2010. Refinances had accounted for more than 80 percent of applications earlier this year.

via Mortgage rates increase for second week in a row.

New-home sales skyrocket in October

home-inventory-supply-price-increase-300x200image via Shutterstock

New-home sales skyrocket in October

Purchases up 21.6 percent from year ago

Teke Wiggin, Staff Writer

Dec 4, 2013

Sales of new single-family homes skyrocketed in October, ending a three-month slump that began in July and providing evidence that elevated mortgage rates have not seriously hobbled the housing recovery.

New-home sales leaped 25.4 percent from September to October to a seasonally adjusted annual rate of 444,000, according to data released today by the U.S. Census Bureau and the Department of Housing and Urban Development HUD. On an annual basis, sales of new single-family homes increased by 21.6 percent.

While the jump in mortgage rates that occurred last spring may have temporarily stymied home sales, any blow to the market was “entirely transitory,” according to research firm Capital Economics. October’s new home sales were about equal to those recorded between January and June of this year, despite the fact that average mortgage rates were 60 basis points higher in October.

“To our minds, this lends further support to our view that higher mortgage interest rates will not derail the housing recovery,” the firm said in a report.

At the same time, Trulia Chief Economist Jed Kolko cautioned not to assign too much value to the numbers in a tweet, saying that month-over-month changes in new home sales are “hugely volatile” and that home sales over the last three months are only 5 percent higher than they were during the same stretch a year ago.

The Census Bureau estimated that 183,000 new houses were for sale at the end of October. That represents a 4.9-month supply of homes at the current sales rate, down sharply from the 6.4-month supply measured for September.

While new-home sales increased substantially, existing-home sales in October fell for the second straight month, a decrease attributable to tight inventory, according to NAR.

Month over month, they dropped 3.2 percent to a seasonally adjusted annual rate of 5.12 million in October from 5.29 million in September, but increased by 6 percent on annual basis, NAR said.

During the same period the existing-home inventory shortage eased slightly, but today’s numbers indicate that a drop in new-home supply may have partly offset that increase.

via New-home sales skyrocket in October | Inman News.

Tax breaks real estate pros and their clients should be prepared to do without in 2014

taxesPhoto by Shutterstock

Tax breaks real estate pros and their clients should be prepared to do without in 2014
Real Estate Tax Talk
Stephen Fishman
Dec 3, 2013

Dozens of tax laws are set to expire at the end of 2013. Many of these provisions are quite popular and likely will be extended by Congress. Exactly when or how lawmakers will get around to doing this is unclear.

The situation is complicated by the fact that both the White House and Congress want to enact serious tax reform in 2014. Key members of Congress and the Obama administration have proposed that extending or making permanent some of these expiring provisions be made part of the overall tax reform process instead of being done piecemeal though special tax extension legislation.

The expiring provisions of most importance to the real estate industry include:

Mortgage insurance premiums deduction: Since 2007, qualifying homeowners have been able to deduct premiums for mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and private mortgage insurance. Homeowners whose incomes are not too high can treat such payments the same as mortgage interest payments. (IRC Sec. 163(h)(3)(E).) Unless the law is extended, no deduction will allowed for amounts paid or accrued after Dec. 31, 2013.

Discharge of indebtedness on principal residence exclusion: Since 2008, homeowners have been allowed to exclude from their taxable income up to $2 million of debt forgiven on their principal residence by a lender in a short sale, mortgage restructuring, or forgiven in a foreclosure. (IRC Sec. 108(a)(1)(E).)

Unless this provision is extended, the exclusion will not apply to indebtedness discharged after 2013. If this provison does expire, the impact will vary from state to state. See our previous column, “Good news for California homeowners facing short sales.”

 

Tax credit for qualified energy efficiency improvements to principal residence: Homeowners have been able to claim a maximum lifetime tax credit of up to $500 for installing energy efficiency improvements in their main homes, including the cost of insulation, windows, doors and roofs. The credit expires at the end of 2013.

Section 179 expensing deduction: IRC Section 179 allows small-business owners to deduct the cost of business property in a single year instead of depreciating the cost over several years. Section 179 is subject to an annual dollar limit. During 2010 through 2013, the annual limit was $500,000. The limit is scheduled to go down to $25,000 in 2014.

Bonus depreciation: Since 2007, businesses have been able to take advantage of special “bonus depreciation” rules that permit them to deduct in a single year 50 percent of the cost of qualifying business property. (IRC Sec. 168(k).) Bonus depreciation will end on Dec. 31, 2013, unless extended by Congress.

Energy-efficient commercial buildings deduction: Since 2006, a special deduction has been available to commercial building owners who upgrade their existing buildings to make them more energy efficient, or design more energy-efficient new structures. A deduction of up to $1.80 per square foot was available for energy upgrades to a building’s interior lighting system, ?heating, cooling, ventilation, and hot water system, or building envelope. This deduction ends in 2013, unless extended. (I.R.C. § 179D.)

Credit for construction of new energy-efficient homes: Since 2006, certain contractors have been allowed an efficient-home credit of $1,000 or $2,000 for constructing or manufacturing qualifying energy-efficient homes. Like the other energy efficiency deductions, this is set to expire at the end of 2013. (IRC Sec. 45L(g).)

A list of all the expiring tax laws is available in a report from the Joint Committee on Taxation.

Stephen Fishman is a tax expert, attorney, and author who has published 20 books, including “The Real Estate Agent’s Tax Deduction Guide,” “Working for Yourself,” “Deduct It!,” and “Working with Independent Contractors.” His website can be found at fishmanlawandtaxfiles.com.

via Tax breaks real estate pros and their clients should be prepared to do without in 2014 | Inman News.

Mortgage lenders get C+ in customer service survey

Home Buyers Ahead Of MBA Mortgage Applications Figures

Andrew Harrer/Bloomberg

Real Estate Matters | Mortgage lenders get C+ in customer service survey

BY ILYCE R. GLINK AND SAMUEL J. TAMKIN

December 3 at 5:30 am

If you borrowed money from a mortgage lender last year, odds are you’re fairly happy with the experience.

Overall customer satisfaction is at a seven-year high, according to the latest J.D. Power and Associates’ annual ranking of mortgage lenders. Lenders scored an average of 771 out of 1,000, or about a C+.

Every year, J.D. Power asks customers of the 25 largest lenders in the country to rate their experience with four parts of the mortgage origination process, including the application/approval, the customer’s loan representative also known as the loan officer, the closing experience and the contract.

In this year’s survey, for the fourth year in a row, Quicken Loans came out on top, earning 841 points out of the 1,000. Quicken is the only lender that passed the 800 mark, though BB&T came close with 798, followed by U.S. Bank 783, PNC Mortgage 778 and Chase 773.

The results were skewed slightly toward refinances, which made up a larger volume of response. Customers who refinanced tended to be happier with their lender than those completing their first home purchase simply because those refinancing are more familiar and comfortable with the process, said Craig Martin, director of the financial services practice at J.D. Power and Associates.

Because first-time homebuyers aren’t as clear about their loan options as repeat home buyer or refinancing customers, they need more old-fashioned hand-holding to have a good experience.

“What that [first-time home buyer] requires of the lender is to focus on over-communicating with those individuals, because you have to assume they aren’t going to fully understand” the process, Martin said. “Folks may be shy about asking questions and they’re going to agree to things in the end that they do not fully understand.”

Mortgage financing has become somewhat commoditized, and many lenders are offering similar loan programs at similar interest rates. Because it’s hard for lenders to differentiate themselves with interest rates so low, they’re trying to focus on improving the customer’s experience to gain new business.

“One of the things we noticed is that … problem prevention is an opportunity,” Martin said. “The most common problems are things like customers not being called back in a timely manner or customers not being able to get a hold of their loan representative.”

Good communication was a key factor for all the lenders that scored well because the highest ranked lenders are proactively communicative, Martin said, meaning they make calls to follow up with customers quickly, provide them with information as the process continues and are readily available.

All this is really good news for consumers, who should expect a better customer experience with top-ranked mortgage lenders, particularly because the market is so competitive right now. With refinance volume dropping, lenders have to replace that business with borrowers who are buying new homes rather than refinancing existing properties.“

Borrowers should feel empowered to ask questions, especially about the process” of getting a loan, Martin said.

He recommends that borrowers ask who they will be working with and how they will be updated on the process. Just asking those questions will “give you a good sense of what your experience will be like,” he added. “You have to feel comfortable that they will give you good information on a regular basis. It’s really about reducing your stress and feeling comfortable in the process.”

Ilyce R. Glink’s latest book is “Buy, Close, Move In!” If you have questions, you can call her radio show toll-free 800-972-8255 any Sunday, from 11 a.m. to 1 p.m. EST. Contact Ilyce through her Web site, www.thinkglink.com.

via Real Estate Matters | Mortgage lenders get C+ in customer service survey.

Capitol Hill mansion converted into new residences

FRIENDSHIPHOUSE

 

(Evy Mages/for THE WASHINGTON POST)

Town Square | Capitol Hill mansion converted into new residences
BY MICHELE LERNER
December 2 at 5:30 am

The former Friendship House is being converted into new condominiums.

William Mayne Duncanson, an Englishman who came to Washington in the late 18th century to establish an East India trade, built a mansion in Capitol Hill called the Maples between 1795 and 1797.
Now the historic estate at 619 D St. SE near the Eastern Market Metro station is being transformed into condomininums.
Altus Realty Partners is converting the manor house, carriage house, school and stables into one-, two- and three-bedroom condos, six of which are duplexes.
Much of the manor house, including the front porch, is being restored. Other features, such as the windows and the roof, are being replaced. Four- and five-bedroom townhomes also are being built on the property.
The townhomes and condos will include high-end finishes. The complex will contain an underground garage. The homes, which are priced from the $400,000s to $1.65 million, are anticipated to be ready for occupancy in the fourth quarter of 2014.
For more information, visit www.themaplescapitolhill.com or call (202) 580-6001.

Rendering of the Lyric Apartments (Capital Pixel)

New D.C. apartments friendly to people and pets

The new Lyric apartment building offers a variety of high-end amenities — for tenants and their pets — in Northwest Washington’s Mount Vernon Triangle neighborhood.
Called a pet-friendly development, the 234-unit building at 440 K St. NW has dog-walking services.
For people, the building has valet dry cleaning, a 24-hour front desk, a fitness center, WiFi, gated access to an underground parking garage and a bike storage room. The landscaped roof deck includes a fire pit, water features and an indoor social space, plus a two-tier infinity pool. The second floor of the building features a tranquility garden and an outdoor fireplace.
The apartments have floor-to-ceiling windows; Italian Porcelanosa tile flooring; a full-size washer and dryer; and a gourmet kitchen with double sinks, granite counters, stainless steel appliances, espresso cabinetry and a built-in wine rack. Some units include a private balcony or courtyard.
The one-bedroom units start at $1,990 per month, while the one-bedroom and den homes start at $2,600. Two-bedroom units range from $2,800 to $3,600 per month. For more information, contact the sales center at www.Lyric440.com or at (202) 777-0740.

House tour to support St. Albans School

The annual St. Albans School Christmas House Tour, a tradition for 31 years, will showcase five homes along Woodland and Normanstone drives in Massachusetts Avenue Heights on Friday and Saturday.
The homes will be decorated for the holidays by local florists.
This year’s tour includes two Georgian brick homes, a former ambassador’s residence, a Mediterranean style villa and a newly constructed house. One property was previously owned by former Treasury secretary Henry M. Paulson Jr.; and former senator Jon S. Corzine (D-N.J.). Another home has an original White House marble mantel on display.
In addition to the house tour, St. Albans is hosting a holiday market with items from more than 50 boutiques and a luncheon. The holiday market will be open from 9:30 a.m. to 5 p.m. and the tour runs from 11 a.m. to 4 p.m.
Tickets can be purchased at www.stalbansschool.org/CHT.

cabidoorThe Cabidor storage unit. (Giovanni Photography)

Tip of the week

If you’re lacking storage space, a new product called the “Cabidor” may offer a solution.
Unlike racks and hooks that hang over a door, the Cabidor attaches to the hinges of any door to create storage space. The Cabidor, which has the storage capacity of more than five medicine cabinets, can be customized with adjustable shelving and a retention rod system. You can use it for extra pantry space, craft or office supplies, jewelry, bathroom supplies, pet supplies, laundry or utility room materials.
The Cabidor, produced by Ingenuity, won best product awards at various houseware shows.
The Cabidor can be attached and detached easily, so it can be used by homeowners, renters, office workers or college students in their dorm rooms. The product, which ranges in price from $129 to $199, can be ordered at www.cabidor.com.

Lerner is a freelance writer. To pass on a tip or news item, contact us at realestate@washpost.com and put “Town Square” in the subject line.

via Town Square | Capitol Hill mansion converted into new residences.

10 Decorating Tips to Help You Outsmart the Holiday Season

holiday

10 Decorating Tips to Help You Outsmart the Holiday Season

If youd love to maximize holiday style and save money while doing it, these tips will help get your home ready for all your celebrations, big and small.

Courtesy of Chase Freedom®

1. If you love receiving holiday cards but never know what to do with them, transform a large bulletin board into a holiday display that can be used year-round. Secure ribbons to it in a square or crisscross pattern, and then tuck cards and party invitations in between. Once the holidays pass, keep or swap the ribbon and use it to hold favorite pictures, reminders, design ideas, birthday cards, etc.

2. Make your place even more fun to decorate by rearranging the furniture to accommodate holiday decorations like the tree or multiple trees. Add some new lamps, holiday-colored accent pillows and throws to reflect your current style. Get the whole family involved as this simple change of scenery for the holiday season will help everyone appreciate your home in a new way.

3. The holiday season is a crazy time of year; dont let it get the best of you and plan ahead for fun! Its the perfect time for DIY home decor projects because you can enjoy your family and get great new holiday decorations. Wreaths, glittered banners and painted ornaments are three of the easiest crafts to try and their supplies can be simple and affordable.

4. Be strategic about the limited time you have to prepare for the holidays by inviting friends over to help you decorate and do the same for them if theyre interested. Even if its just a short visit to catch up and get some new perspectives and ideas for your decorations this year, itll be fun and productive.

5. If you get a little sentimental this time of year when looking at catalogs, it isnt accidental. Take a design tip from your favorite retailers pages by shopping for old wooden sleighs and skis, wool mittens or ice skates. Prop them outside your door, near the fireplace or on the hearth for inexpensive nostalgic style.

6. As with most special occasions, candles help set a holiday mood. Plus, they make everyone look great! Take advantage of these low-cost decorating powerhouses to create a warm, welcoming atmosphere. Light an abundance of unscented tea lights and votives in matching holders for an inside forest of flickering fire light.

7. Take a fresh approach with color. Some of the latest trends include soft pastels, fuchsia, lots of silver and gold plus frosty blue. A refresh doesnt have to mean all-new items so punch up your existing favorites with some updated ornaments, a tree topper, stockings, dishes for entertaining, updated lighting or an advent calendar.

8. Expand your holiday decorating opportunities with the ever-increasing number of battery-operated outdoor holiday decorations. From elegant to whimsical, retailers continue to offer a wider assortment each year, enabling you to decorate anywhere you want without cords. Sync your holiday music with remote-controlled outdoor lights for a fun, festive display.

9. If its been a while, exchange some of your old holiday lights for LED ones, which last longer so you save over the years. Look for all the latest options like nets for hedges and bushes and ribbons for tree trunks.

10. Find low-priced holiday decorations and craft supplies by shopping at second-hand stores and thrift shops. Look for wreaths that can be updated with some DIY tweaks like new ribbons and lights, and vintage glass ornaments. You never know what youll find!

via 10 Decorating Tips to Help You Outsmart the Holiday Season : Holidays and Entertaining : Home & Garden Television.

When marketing to families, a staged listing should evoke lived-in feeling

stagingWhen marketing to families, a staged listing should evoke lived-in feeling

If prospective buyers cant picture living in a particular home, theyll walk away

Nov 22, 2013

Originally published by Debbie Reynolds, broker at Prudential PenFed Realty, on ActiveRain.

While showing homes to a young couple with two small children I discovered a house can look too perfect. Since I just met the buyers as they had arrived in town, I didn’t have much time to schedule appointments and make my showing schedule. Some of the sellers had only a couple hours’ notice to prepare for the showings. Even with the short notice, these sellers have extremely neat homes. There was not one child’s toy left out, or book, dish, wrinkled pillow or toothbrush out of place.

The buyers kept commenting about how neat these homes were and even questioned if these occupied homes had real people living there. The houses looked too perfect. I know for a fact that one of the homes was professionally staged because the listing agent always requires her sellers to stage their homes. Some of the other houses may or may not have been professionally staged.

Staging — when done right — can help a home sell. I have seen some wonderful staging jobs. But a couple of these homes lacked that warm, lived-in feeling. This turned off the young couple with the two small children. I saw them squirm and cross their arms. They made generic statements about how this is nice and that looks pretty, but not buying-sign comments.

We saw some vacant homes and some new construction, too. Seeing these homes empty did not seem to bother the buyers, as they could see the real potential the homes offered — a clean palette, so to speak.

I showed another home that was occupied where the sellers left it neat but with a lived-in feeling. You could feel it the moment you stepped in the door. The buyers responded very favorably and started seeing themselves living there. They wanted to linger and ask questions. Yes, there were some personal family photos around, toys in the corner, things on the kitchen counter. The beds were made and the house was clean, but it felt lived in by a happy family.

When the house is too perfect, it can work against a seller. I saw it happen with these buyers. The too perfectly staged homes lacked warmth and the feeling of a real home. I saw the buyers wiggle and become uncomfortable. They made comments to the fact that the homes even felt cold and too perfect.

The last occupied home, the one that felt warm and like a happy home, will likely be the one that gets the offer. They have crossed the other occupied homes off their list.

When selling a family a home, most families want to feel like it is a warm and welcoming environment. Yes, they want it neat and in good condition, but still looking like a real home. When the house is too perfect and has too much staging, it can take away the warmth and friendliness of the home and turn the buyers off. I saw this very thing happen with these buyers.

Remember: Don’t remove the warmth from the house when getting it ready to market.

via When marketing to families, a staged listing should evoke lived-in feeling | Inman News.

 

Forged document calls into question condo ownership

CONDO-MATTERS

Real Estate Matters | Forged document calls into question condo ownership

BY ILYCE R. GLINK AND SAMUEL J. TAMKIN

November 26 at 5:30 am

I bought a condominium in Washington in 2008 and received a summons by the “real” owner stating that the sale of the condominium was void because of forged documentation. What does this mean and what can I do? I’ve been paying mortgage for the last five years on a property that I now find out doesn’t belong to me.

We certainly hope that you obtained an owner’s title insurance policy. If not, you’re not going to like this answer.

Let’s start at the top. Even if you’ve been the victim of fraud, your lender may not have much to fear because just about every lender in every residential loan transaction obtains a new lender’s title insurance policy. That lender’s policy protects the lender in exactly your situation.

If you have an owner’s title insurance policy, you too should have some financial protection from this fraud. If you obtained the policy, you must follow the instructions in the policy to file a claim with the title company. The title company, in turn, can try to settle with the rightful owner or will have to settle with you.

You will need to make sure you follow the procedure set forth in the title policy for filing your claim, including how you notify the title insurance company.

If you don’t have a title insurance policy, the lender’s title insurance company will end up settling with the lender. The title company could settle with the rightful owner and you could in turn benefit from their actions. However, if they don’t settle with the owner but instead pay off the lender, you will be out of luck.

You will need to vacate the condominium and any moving expenses and money you put down toward the condominium will be lost. As with any other fraud or theft, if you find the thief and discover that he or she has assets, you can try to go after them.

Unfortunately, the fraud you are going through is one in which you might have a hard time finding the perpetrator.

Even if you do have title insurance, you may still lose money. The title insurance company’s liability is usually limited to the amount of the policy. If you purchased the condominium for $200,000, the title company usually has a maximum obligation to pay out your loss up to $200,000. Since your loss is total and you have moving expenses into the condominium and would have expenses to move out along with other costs, you might still be out of pocket some or all of these costs.

Go through your closing documents and see if you obtained a title insurance policy, then file your claim with the title company. Since you have described a fraud, you probably should report the fraud to your local police department. Whether they decide to do anything about it, the crime should still get reported. Good luck.

Ilyce R. Glink’s latest book is “Buy, Close, Move In!” If you have questions, you can call her radio show toll-free 800-972-8255 any Sunday, from 11 a.m. to 1 p.m. EST. Contact Ilyce through her Web site, www.thinkglink.com.

via Real Estate Matters | Forged document calls into question condo ownership.

Photo:  Michael S. Williamson/THE WASHINGTON POST

Town Square | Luxury apartments arrive in Alexandria

TOWNSQUARETown Square | Luxury apartments arrive in Alexandria

BY MICHELE LERNER

November 25 at 5:30 am

The site of the Belle Pre Bottle Factory in Alexandria has been transformed with two new apartment buildings surrounding a public plaza with a commissioned sculpture by artist William Cochran.

The luxury development, built by Equity Residential, will have 360 apartments and 9,700 square feet of retail space one block from the Braddock Street Metro at 800 North Henry St. in Old Town Alexandria.

Community amenities include a landscaped rooftop with a swimming pool; fire pit and grilling stations; a lounge for residents with a theater, a private dining room and multiple games; and a fitness center with a yoga studio.

The development will have 70 floor plans ranging in size from 534 to 1,348 square feet. The apartments have hardwood flooring, an open kitchen with granite counters, a tile backsplash and stainless steel appliances. The one- and two-bedroom and loft units also have oversized windows, some with views of the downtown D.C. skyline.

The first of the two buildings is available for occupancy, with one-bedroom units renting from the mid $1,600s and up and two-bedroom homes starting in the mid $2,400s.

For more information visit www.equityapartments.com or call the leasing office at 703 229-1366.

Mortgage rates projected to jump in 2014

Freddie Mac Chief Economist Frank E. Nothaft wrote in his Executive Perspectives Blog that he expects interest rates to gradually rise throughout 2014, reaching 5 percent by the end of the year.

In addition, he anticipates that home values will rise on a national level by 5 to 6 percent in 2014, although he says price increases are likely to be higher in areas that were hardest hit by the housing crisis.

Nothaft wrote that inventory will likely remain tight during the year because new home construction isn’t able to keep pace with homebuyer demand and many would-be sellers still lack enough home equity to put their homes on the market.

New resource for homebuyers

Singles have become accustomed to using matchmaking sites such as Match.com and eHarmony to find a life partner and now house hunters can use similar technology to find a home.

Redfin Matchmaker, a new software technology available to Redfin real estate agents, uses algorithms to track potential buyers’ and other users’ activity on the company Web site.

Redfin says the combination of the agent’s knowledge of the client’s preferences and the technology provided by the software can bring up different listings and neighborhoods to broaden the home search.

For instance, if a buyer is looking for a specific style and size of home in Georgetown, Matchmaker might suggest a home in Cleveland Park that could match the buyer’s wish list. The software makes it easier for the agent to expand the property search and then use his or her insight into the customer’s preferences to evaluate the match.

Holiday bazaar to feature home décor

EastBanc and Jamestown, which own commericial real estate properties in Georgetown, are hosting an open marketplace holiday bazaar in Georgetown’s Cady’s Alley, a destination for upscale home design shopping.

The 8,000-square-foot, split-level pop-up Cady’s Alley Bazaar, which began earlier this month, features Zestt, a contemporary home accessories store with textiles, decorating and entertaining items and Victoria Road, which features handcrafted gifts, home décor and accessories from small businesses in emerging markets around the globe.

The bazaar, located at 3330 Cady’s Alley off Wisconsin Avenue near the western edge of Georgetown, will be open through Jan. 5. Visit www.Cadysalley.com for bazaar hours.

Lerner is a freelance writer. To pass on a tip or news item, contact us at realestate@washpost.com and put “Town Square” in the subject line.

via Town Square | Luxury apartments arrive in Alexandria.

Photo:  SK&I Architecture

Baby boomers enhance the empty nest

Bethesda Bungalows

Baby boomers enhance the empty nest

By Deborah K. Dietsch, Published: November 21

The kids are grown. The mortgage is paid. The nest is feeling big and empty.

The next logical step is to sell the family home and buy a smaller, less expensive house or condominium unit, right?

Wrong.

Many baby boomers, the generation born from 1946 to 1964, prefer to stay put and enhance their homes rather than relocate.

“I don’t want to move,” says Bethesda homeowner Maureen O’Bryan, 59, a retired nurse. “I like our home’s proximity to grocery shopping, Metro and bus lines.”

Rather than downsize, she and husband, Ray O’Bryan, 55, a trade association executive, decided to upsize their 1950s brick rambler.

Part of the reason, they say, is the high price of real estate in the region, leaving little money left over for retirement or renovations after buying another home.

“We looked around at other houses in the area, but they were so expensive,” Maureen O’Bryan says. “That’s when we decided to get everything we wanted in this house and stay in the neighborhood.”

Research shows that most boomers are reluctant to move from their dwellings. Nearly seven in 10 of the 2,260 adults age 45 to 65 who participated in AARP’s 2011 Boomer Housing Survey said they want to age in place. More than eight in 10 said they want to stay in their homes because they like their communities.

The O’Bryans added on to create “me” spaces, the kind of personal luxuries passed over while raising their three kids. They turned their attic into a second floor to accommodate a spacious master suite, his-and-her walk-in closets, a convenient laundry room and a home office.

On the main floor, they expanded to create a family room opening to a new kitchen in what had been their daughter’s bedroom. The living room was turned into the dining room, and the basement remodeled to create a TV room and bedroom suite.

“I love to cook and entertain, and the house wasn’t conducive for that before since the family room was in the basement and the kitchen was small,” Maureen O’Bryan says. “We frequently entertain five to six people for dinner and have more formal dinner parties of eight to 14. That has become so much easier in the new space.”

In enlarging the home, Bethesda architect Jim Rill and builder David Clark of Woodhaven Contractors in Ijamsville, Md., created the look of a Craftsman bungalow with a spacious front porch and an outdoor stone fireplace at the rear. Aidan Design of Bethesda reworked the kitchen to incorporate top-of-the-line appliances, a breakfast bar, an island and a walk-in pantry.

“Most boomers have been through a remodeling at least once, and they are very specific about what they want this time around — easy maintenance and organization above all. They don’t want froufrou,” says kitchen designer Nadia Subaran, co-owner of Aidan Design. “Aesthetically, they want a more modern look and are open to less traditional finishes.”

Potomac boomers Marcia and Dave Gelfand reflect this embrace of contemporary decor in the upsizing of their family home. They bought their 1980s house in 2004 but didn’t remodel until their two sons had graduated from college.

via Baby boomers enhance the empty nest – The Washington Post.

9 things to do in the D.C. area on the weekend of Nov. 22-24

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Tiesto brings his floor-shaking set to Echostage on Friday and Saturday. (Doug Van Sant Photography)

9 things to do in the D.C. area on the weekend of Nov. 22-24

BY GOING OUT GUIDE STAFF
November 21 at 11:07 am

The weekend’s best in nightlife, music and art.

Friday: The Newseum marks the 50th anniversary of the assassination of President John F. Kennedy on Friday with JFK Remembrance Day, with gallery talks, panels and film screenings. The event, which is free with museum admission, also includes a chance to see 90 minutes of vintage CBS News footage of the events of Nov. 22, 1963.

Friday: Beaujolais Nouveau celebrations don’t get much classier than Beaujolais and Beyond, an event the Alliance Francaise and French-American Chamber of Commerce are throwing at the French Embassy’s La Maison Francaise. Snack on food from local French restaurants, drink unlimited wine (with non-Nouveau selections from France, Italy and the U.S.), participate in a blind wine-tasting contest, test your smarts in a trivia contest or dance to a DJ in the ballroom. The evening has a Roaring ’20s theme, so dress accordingly. General admission tickets are $60; get them here.

Friday-Saturday: Tiesto, the world’s biggest trance DJ has expanded his repertoire in recent years, adding dubstep and electro to his high-energy sets, several of which have been released as part of his “Club Life” live series. The Dutchman still fills soccer stadiums and festivals around the world, so expect two packed nights at Echostage, the city’s largest dance club. Tickets are $50, and they’re sold out, but tables were still available at press time.

Friday-Sunday: “American Voices,” the Kennedy Center’s three-day festival of songwriting and musicianship is a chance to see masters at work. Watch Alison Krauss, Dianne Reeves, Eric Owens, Ben Folds and others coach young artists during the weekend’s “master sessions,” or catch their performance together with the National Symphony Orchestra during an all-star concert Saturday at 8 p.m. The handful of remaining tickets for the American Voices concert are $29-$225 and can be had here.

Saturday: The Quidditch Mid-Atlantic Regional Championship is real, and this weekend, the game loved by Harry Potter and the rest of the young wizards at Hogwarts comes to the muggle world. Some minor changes have been made (sorry folks, no one goes soaring through the air) for Saturday’s game at Loudoun County’s soccer park in Leesburg, but the familiar snitches, bludgers and quaffles abound. For this event, 23 teams — including representatives from University of Maryland and the University of Virginia — will compete for the chance to go to the World Cup. In addition to cheering on the teams, children can tryout kidditch, a non-contact version of the game.

Saturday: It’s fitting that H Street NE, long a scenester outpost where a tattoo and excellent mustache can serve as kind of a passport, is playing host to a Movemberfest festival. Purchase a wristband to take advantage of food and drink specials at 13 bars and restaurants on the strip from 1 to 9 p.m., including the H Street Country Club, the Argonaut, Cusbah and Dangerously Delicious Pies. There will be free activities for kids at the Big Board and a late-night dance party with the funky Sinister Sound Set at the new RedRocks. All proceeds from ticket purchases benefit Movember and its partners, the Prostate Cancer Foundation and Livestrong. Buy tickets online to save $3, then pick them up Saturday at Big Board or the Queen Vic.

Sunday: Rapper Danny Brown has been the darling of critics for only a couple of years, when the Detroit native with the idiosyncratic nasal flow, skinny jeans and shock of hair caught the rap world on fire with “XXX.” But it’s funny the difference time makes; the one-time raunch king — who was embroiled not that long ago in a controversy involving an on-stage sex act — has mellowed considerably on his new album, “Old,” in which he’s reflective about a world that wants him to never change. After a sold-out show at the Rock & Roll Hotel this spring, he’s moving to bigger digs, the Howard Theatre, on Sunday.

Sunday: Jake Shimabukuro’s unique ukelele style draws from classical, flamenco and even rock guitar techniques to create songs that alternate between gorgeous and jaw-dropping. In concert, Shimabukuro sometimes uses special effects to loop his ukelele and perform with himself, but even when there’s no electronic trickery, his instrument produces a beautiful and compelling sound. See him at Lisner Auditorium on Sunday; get tickets, priced at $35, here.

Through Jan. 5: Can we officially get in the holiday spirit? Last week, Ice! officially returned to National Harbor, and there’s o better time than now, before the post-Thanksgiving crush, to check out this temperature-controlled world in which nearly everything from the nativity to a functioning slide is carved from cold stuff — two million pounds of it, in fact. The effect is glittering, and, despite the exhibit-issued parka, punishingly cold. (It’s just 9 degrees inside the tent.) This year, exhibit’s rooms tell the story of the theme of “The Night Before Christmas.”

via 9 things to do in the D.C. area on the weekend of Nov. 22-24.

Say goodbye to the incandescent bulb

2013-Wash-Post-Blog-LED-Update-Philips-New-A19-LED_Open-View-207x300BY KATHERINE SALANT
November 19 at 5:30 am

Jan. 1 will mark the end of residential lighting as we know it.

As of that day, the manufacture of the 60-watt incandescent bulb, the most widely used light bulb in America, will cease. In response, the U.S. lighting industry is working mightily to persuade U.S. consumers to purchase a near-equivalent: light emitting diode bulbs, known as LEDs.

Like most electronics, the first LED 60-watt equivalents, introduced several years ago, were expensive. But, as competing manufacturers continually introduce “new and improved” versions, prices are rapidly falling.

Though some firms have priced their LED 60-watt equivalents at $22, others are charging only $11 and in areas of the country where local utilities are offering rebates, the cost per bulb can be as low as $5. (In the Washington area, utilities in Maryland and the District are currently offering rebates on some brands of LEDs).

Five dollars is still more than five times the current cost of most incandescent bulbs, but the LED 60-watt equivalents last more than 22 times as long (yes, that’s 22 times) and they are far less costly to operate (about $1.14 a year versus $7.23 a year for the old-style 60-watt bulb when used for three hours a day at 11 cents per kilowatt hour).

Though the LEDs are not exact equivalents of the 60-watt bulbs they replace, they are close enough that most consumers will not, in my estimation, experience much of a change (when I tried several in my own house, my husband didn’t notice a thing).

Based on my home testing, and rating five LED 60-watt equivalents for both price and performance, the two that seemed the best bet for most homeowners are CREE’s “Soft White LED 60 watt Replacement” and Philips “11w – 60w,” (available at Home Depot for $12.97 and $14.97 respectively). They are both Energy Star rated, which means that they are both eligible for rebates when local utilities offer them.

In addition to a pleasing color of light (they each are 2700 degrees Kelvin, close to the 2800 degrees for an incandescent 60-watt bulb), both bulbs have excellent “light distribution.”

That is, when switched on, the light shines both up and down, making these suitable for reading as well as for general use.

Katherine Salant has an architecture degree from Harvard. A native Washingtonian, she grew up in Fairfax County and now lives in Ann Arbor, Mich. If you have questions or column ideas, she can be contacted at salanthousewatch@gmail.com or http://www.katherinesalant.com.

Photo by Philips

via House Watch | Say goodbye to the incandescent bulb.

Buyer demand continues into October, pushing up prices on scarce inventory

supply_demand_large_shutterstock_85566154-300x199

Realtor.com: Buyer demand continues into October, pushing up prices on scarce inventory
Listing data defying seasonal patterns
Inman News
Staff Writer
Nov 19, 2013

An analysis of listings data released today by realtor.com suggests that homes continued to turn over quickly in October, in defiance of seasonal patterns and in spite of price increases driven by inventory shortages in many markets.

The 1.9 million homes listed on realtor.com during October had been on the market for 94 days on average — up slightly from 93 days in September, but down 11.3 percent from a year ago, indicating demand for housing remains strong. Realtor.com rival Zillow reported a similar trend last week.

With inventory down 1.5 percent from a year ago, the median list price of homes listed on realtor.com was up 7.6 percent, to $199,000.

Although the country is still experiencing “significant supply shortages,” inventories are “stabilizing” compared to the dramatic year-over-year declines seen earlier this year, realtor.com said in releasing October data.

Realtor.com said the number of markets where inventories were down by 5 percent or more from a year ago declined from 102 in June to 65 in October. Inventory grew in 49 markets in June, up from 22 in June.

Among the top 10 metros with the shortest days on market, only Washington, D.C., saw age of inventory decline from September to October. Phoenix remained flat, and the other eight markets saw increases in average time on market.

 

Top 10 metros with shortest days on market

Market Days:

Oakland, Calif.     30
San Francisco      48
San Jose, Calif.     48
Denver      48
Stockton-Lodi, Calif.      48
Washington, D.C.-Md.-Va.-W.Va.      49
Phoenix-Mesa, Ariz.      50
Detroit      52
Sacramento, Calif.      54
Seattle-Bellevue-Everett, Wash.      55

Source: realtor.com

“This demonstrates that the overall strength of the national housing market is determined partly by inventory availability,” said National Association of Realtors Chief Economist Lawrence Yun in a statement. “We expect rising home price conditions to continue through the balance of the year.”

Price appreciation instills confidence in buyers and helps lift homeowners out from “underwater,” allowing them to put their homes up for sale without taking a loss. Data aggregator CoreLogic has estimated that at the end of June, 7.1 million homeowners owed more on their mortgages than their homes were worth.

This year, limited inventories have kept a lid on sales. For real estate agents and brokers, home sales are the critical number.

According to the most recent figures from NAR, the inventory of existing homes for sale in September remained flat at 2.21 million, representing a five-month supply of homes. Existing-home sales declined 1.9 percent from August to September, to a seasonally adjusted annual rate of 5.29 million.

Earlier this month, Yun forecast that home prices will continue to post gains next year, but that sales of existing homes will be flat due to factors including declining affordability, limited inventory and tight mortgage lending standards.

When the final numbers for 2013 are in, NAR’s top economist expects sales of existing homes will be up 10 percent from last year, to 5.13 million, but will hold steady at 5.12 million next year. Yun is forecasting that there will be inventory shortages again next spring, because builders would have to boost housing starts by 50 percent to meet underlying demand.

Homes repossessed by lenders could also ease inventory shortages in coming months as loan servicers clear backlogs in “judicial foreclosure” states where courts handle the process.

The number of properties headed to the auction block climbed for the 16th month in a row in October, according to the latest report from foreclosure data aggregator RealtyTrac.

via Realtor.com: Buyer demand continues into October, pushing up prices on scarce inventory | Inman News.

Supply and demand image via Shutterstock.

Unrecorded mortgage from ‘Bank of Mom’ fails to qualify for interest deduction

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CEO of “The Bank of Mom” image via Shutterstock.

Real Estate Tax Talk
Stephen Fishman
Contributor
Nov 18, 2013

One of the greatest tax benefits of homeownership is the home mortgage interest deduction, which permits homeowners to deduct the mortgage interest for a home loan or loans up to $1 million as an itemized deduction.

You don’t have to borrow the money from a bank or other financial institution to qualify for this deduction. Interest paid on money borrowed from other sources, such as relatives, can also be deductible.

However, certain technical requirements must be satisfied to get this deduction. If you fail to dot all your i’s and cross all your t’s, you could lose your entire deduction.

That’s what a Massachusetts couple named Christopher and Jennifer Gross recently discovered. They borrowed $427,333 from Jennifer’s mother to purchase a home in Northampton.

They weren’t legal experts, but they did their best to ensure that the interest they paid on the loan qualified for the home mortgage interest deduction. They all signed a document described as a “mortgage note” promising to pay Jennifer’s mother $427,333 — plus interest — in return for the loan.

The Grosses did in fact pay the interest to Jennifer’s mother — they paid $19,230 in 2009, and deducted this amount on their taxes as a payment of home mortgage interest.

The IRS never questioned the validity of the loan itself. It was clearly not a disguised gift or otherwise fraudulent.

Nevertheless, the IRS denied the mortgage interest deduction — and the Tax Court agreed. What went wrong?

The Grosses failed to comply with a simple technical requirement. For home mortgage interest to be deductible, the home loan must be secured debt. Secured debt means a debt that is on the security of any instrument (such as a mortgage, deed of trust, or land contract):

– i. That makes the interest of the debtor in the qualified residence specific security of the payment of the debt,
– ii. Under which, in the event of default, the residence could be subjected to the satisfaction of the debt with the same priority as a mortgage or deed of trust in the jurisdiction in which the property is situated, and
– iii. That is recorded, where permitted, or is otherwise perfected in accordance with applicable state law. (Reg. § 1.163-10T(o)(1).)
Unfortunately, the Grosses failed to record their mortgage or otherwise “perfect” it. Thus, it did not qualify as “secured debt.”

They lost a $19,230 deduction because they failed to spend the $20 or so to record a few pieces of paper with their county recorder.

However, the Tax Court took a little pity on the Grosses, ruling that they were not liable for a 20 percent accuracy-related tax penalty that the IRS had imposed. Noting that they were not tax experts, the court said it would not have been apparent to taxpayers that the interest on an otherwise bona fide home mortgage would not be deductible unless it was recorded. (Defrancis v. Comm’r, TC Summary Opinion 2013-88.)

The moral of the story is that relatives who loan money to each other to purchase homes should seek legal or other expert assistance to help them properly draft and record their mortgage documents.

Stephen Fishman is a tax expert, attorney, and author who has published 20 books, including “The Real Estate Agent’s Tax Deduction Guide,” “Working for Yourself,” “Deduct It!,” and “Working with Independent Contractors.” His website can be found at fishmanlawandtaxfiles.com.

via Unrecorded mortgage from ‘Bank of Mom’ fails to qualify for interest deduction | Inman News.

NAHB’s Housing Market Index flat, but remains positive despite political uncertainty, construction costs

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Home builders remain confident in housing market

Kent Hoover
Washington Bureau Chief

Home builders remain kind of confident in the market for new single-family homes, despite policy uncertainties in Washington, D.C., and rising construction costs.
The Housing Market Index compiled by the National Association of Home Builders remained at 54 in November. This marked the sixth consecutive month that more home builders viewed market conditions as good rather than poor.

That’s “an encouraging sign, considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline,” said NAHB Chief Economist David Crowe.

The survey asked builders to rate current sales, sales expectations, and traffic of prospective buyers.

Current sales conditions stayed at 58, while expectations for future sales fell one point to 60. Buyer traffic was the index’s worst-performing component, dropping one point to 42.
“Given the current interest rate and pricing environment, consumers continue to show interest in purchasing new homes, but are holding back because Congress keeps pushing critical decisions on budget, tax and government spending issues down the road,” said NAHB Chairman Rick Judson, owner of Evergreen Development Group in Charlotte, N.C. “Meanwhile, builders continue to face challenges related to rising construction costs and low appraisals.”

via NAHB’s Housing Market Index flat, but remains positive despite political uncertainty, construction costs – The Business Journals.

Photo by Ron Bath

Skepticism about proposed changes to the District’s zoning laws is unfounded

dc office of planningSkepticism about proposed changes to the District’s zoning laws is unfounded

By Roger K. Lewis, Published: November 14 | Updated: Friday, November 15, 9:50 AM

Washington is not what it was a generation ago. It has evolved because of changing economic, socio-demographic, cultural, technological, environmental and regulatory conditions.

But Washington’s static zoning laws, enacted decades ago and so forceful in shaping the city, have not kept pace with the District’s evolution. Which is why the zoning ordinance is at last being updated to reflect 21st century circumstances and enhance urban livability for future generations.

To this end, the D.C. Office of Planning has spent the past several years analyzing the District’s complex, decades-old zoning code and drafting revisions it believes necessary to update the code. Proposed revisions, based on current data and projected needs, would apply only prospectively.

The District’s zoning update process has entailed countless meetings and participatory work sessions with citizens, civic groups, consultants and other agencies to explore and critique diverse ideas leading to the Office of Planning’s proposals. This fall, the D.C. Zoning Commission is conducting multiple public hearings focused on various aspects of the zoning rewrite.

Yet despite all the outreach, three of the proposed zoning revisions in particular have elicited skepticism: reducing parking requirements deemed unnecessarily excessive, primarily in areas well served by transit and for new commercial and residential projects downtown; allowing accessory apartments — one per house — associated with homes in residential zones; and allowing small, convenience-style corner stores in rowhouse and apartment building neighborhoods.

Reducing parking requirements reflects a behavioral shift. A growing number of Washingtonians, as well as commuters, use transportation modes — Metro, bus, taxi, carpool, short-term rental car, bicycle — other than private cars. Telecommuting also is on the rise. People are walking more in the city and will walk even more as the District’s walkability increases. The Office of Planning projects that, in the future, our children and grandchildren will need and own fewer cars and will drive them less often.

Legalizing accessory apartments in house basements or attics, or atop detached garages, serves a worthy social and economic purpose without threatening neighborhoods. Allowing accessory apartments limited in size and occupancy increases affordable housing opportunities, enables multi-generational families to live together and adds value to residential real estate.

Corner stores in certain urban locations would provide much needed convenience shopping for neighborhood residents who would come to the store on foot. No parking would be required. Restricted in size and function, corner stores would be allowed only on city blocks containing rowhouses or apartment buildings. Contrary to what some homeowners believe and fear, corner stores would not be permitted within single-family detached home neighborhoods.

District homeowners are nervous because they fear these zoning changes would lead to development that would adversely affect real estate values, jeopardize neighborhood quality and make parking spaces scarce and expensive.

Cynical, conspiracy-minded citizens suspect less-than-honorable motives behind zoning changes. They believe that public officials and private developers seek zoning amendments only for financial gain rather than for achieving worthy planning, preservation and development goals in the public interest.

Such fears, suspicions and cynicism are unwarranted. Zoning in Washington, and in many metropolitan regions, too often deters desirable growth and progress. Zoning can obstruct rather than enable justifiable new development and redevelopment. It can make providing affordable housing difficult, unduly increasing construction and other real estate costs.

Cities and suburbs are shaped by legislated zoning ordinances coupled with economic and other unregulated forces. The latter are constantly in flux, but not zoning. Therefore, citizens see zoning laws as stable, long-lasting and protectionist, the first line of defense against unwanted physical intervention.

Zoning constrains and separates land uses, restricts density, establishes minimum lot sizes and yard dimensions, and designates parking requirements. But it rarely addresses proactively and holistically how a neighborhood, street, open space or building should look, function or relate visually to the surrounding urban context.

Thus, the effort to rewrite the city’s zoning code is a commendable, although hardly radical, attempt to correct this deficiency. The rewrite could have gone further. Nevertheless, in the interest of making the ordinance less obsolete and politically more palatable, the Zoning Commission, Mayor Vincent C. Gray (D) and the D.C. Council should adopt the Office of Planning’s proposed changes.

Roger K. Lewis is a practicing architect and a professor emeritus of architecture at the University of Maryland.

via Skepticism about proposed changes to the District’s zoning laws is unfounded – The Washington Post.

Homeowner tax benefits seem unlikely to get Congress’s attention before they expire

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Homeowner tax benefits seem unlikely to get Congress’s attention before they expire
By Kenneth R. Harney, Published: November 14 | Updated: Friday, November 15, 9:45 AM

Haven’t we seen this movie before? On Capitol Hill for the second year in a row, key federal tax assistance for homeowners is heading for expiration within weeks. And there’s no sign that Congress plans — or has the minimal political will — to do anything about it.

In fact, the prospects for extension of popular mortgage-forgiveness debt relief and deductions for mortgage insurance payments and home energy efficiency improvements appear to be more dire than they were last year at this time, when at least there was a formal bill pending to extend them.

This year there is none at the moment. The House and the Senate are spending their time trying to figure out a budget but are also considering overhauling the entire federal tax system, which could mean that a long list of special-interest tax preferences — including for housing — might be sucked into the tax reform vortex and never revived if they expire as scheduled on Dec. 31.

Robert Dietz, vice president for tax policy issues at the National Association of Home Builders, says the name of the movie is “Groundhog Day,” the Bill Murray classic about deja vu all over again. Remember last year’s New Year’s Eve “fiscal cliff” game of chicken that wasn’t resolved until the wee hours of Jan. 1? The tax benefits for homeowners were ultimately extended, but only for a year. Whether that’s possible again in late December is in doubt.

What’s at stake here? Begin with tax treatment of mortgage debt relief. Before Congress changed the law in 2007, any borrower who had a debt canceled by a creditor would have to report the amount forgiven as ordinary income, subject to federal taxation. If a mortgage lender chose to reduce a homeowner’s principal balance as part of a loan modification — say, by cutting $50,000 off the mortgage balance — the IRS would treat that $50,000 as fully taxable income.

That’s despite the fact that the owner never actually received $50,000 in cash and despite the fact that it was highly likely the owner was already in distress on the loan, facing financial challenges that made payments on the previous balance difficult.

Congress carved out a special exception for owner-occupied housing for five years, and that exception was later extended through Dec. 31.

What happens if it expires? It would mean that thousands of people who are in the process of doing short sales on their homes but won’t close until 2014 may be subject to income taxes on the amounts their lenders cancel as part of the transaction. Underwater owners who sign up for short sales in 2014 — or owners who receive cancellation of debt as part of loan modifications — would all be subject to harsh taxes on their phantom “income.”

Elizabeth A. Weintraub, a real estate broker in Sacramento, who specializes in short sales, has a client who illustrates the problem. The client faces a $60,000 tax bill from the federal government on a $400,000 mortgage debt if a short sale is not completed before the Dec. 31 deadline. Though Weintraub says “we are pushing” a short sale vendor working for Bank of America to get the deal done in time, it may not happen because “they move at their own speed” — far beyond Weintraub’s or her client’s control.

But mortgage debt relief is hardly the only real estate tax benefit set to disappear at the end of December. Also scheduled to terminate unless extended:

-The 10 percent credit currently allowable for energy-saving improvements you make to your house, including qualified insulation, high-performance windows, doors and roofs. The credits have a lifetime cap of $500.

-The $2,000 credit for newly constructed homes that meet federal standards for energy efficiency.

-The mortgage insurance premium write-off for anyone who takes out a home loan with a down payment of less than 20 percent. This includes conventional Fannie Mae-Freddie Mac loans, Federal Housing Administration insured loans and VA guaranty fees. This may be particularly important next year for new buyers who use FHA loans because that agency has recently raised its insurance premiums significantly and withdrawn its previous rule that allowed borrowers to cancel their insurance premiums, as is standard in private mortgage insurance.

Best advice for anyone counting on one or more of these tax benefits in early 2014: Don’t. This time around, it’s possible that some of them may not come back.

Ken Harney’s e-mail address is kenharney@earthlink.net.

via Homeowner tax benefits seem unlikely to get Congress’s attention before they expire – The Washington Post.

What buyers and sellers need to know about the end-of-year housing market

End of YearWhat buyers and sellers need to know about the end-of-year housing market
BY DAVID CHARRON
November 11 at 5:30 am

(Jonathan Ernst/REUTERS)

David Charron, president and CEO of Rockville-based multiple-listing service MRIS, writes an occasional column about the Washington-area real estate market.
It’s a stubborn truth about the real estate market that nobody has a crystal ball.
If only we could see exactly what was coming down the road, and adjust accordingly, our jobs would be much easier. Similarly, everything looks remarkably clear when viewed through the rear-view mirror.
Broadly speaking, this spring was a tough one for D.C.-area homebuyers, with not a lot of homes to choose from and lots of competition to buy.
It seems in retrospect that the combination of enormous pent-up demand and record low interest rates led to homes receiving multiple offers and being snapped up quickly. In the next year, the situation should normalize and come more into balance, with things easing up for buyers while being slightly less favorable to sellers. And while it’s never as simple as saying we anticipate a “good” or “bad” market in any given season, demand is still very high, which should make for a pretty brisk fall sales season.
Here are some of the developing trends we at MRIS are tracking this fall, and how we think they will impact the market:
• Demand will diminish. It’s no secret that the fourth quarter of the year is, comparatively speaking, a slower time of year for home sales —  typically a good 15 percent lower than the third quarter. While there is often a small end-of-summer, back-from-vacation uptick in new contracts in the fall, November and December traditionally show very modest contract activity.
You can’t compare the “apples” of modest November sales to the “oranges” of brisk May sales. That said, if you are a serious buyer, opportunities will present themselves.
• Interest rates will rise. The fall/winter 2013 housing market in our area could definitely be impacted by interest rates, which are almost certain to continue to creep up.
But even if they rise another full point, which could happen by the end of next year, they are still going to be at historic lows. Rising interest rates will require committed buyers to reset their expectations. If buyers are stretching every penny they have to get a house, they’re going to have to dial back their notion of how much home they can afford.
If buyers have a little more flexibility, they’re going to have to be willing to pay a little more each month to land the home they want. This small increase in monthly payment, however, may knock a small segment of the buying population out of the market completely.
• Inventory, though improving, will remain tight. Over the past five years, the D.C. metro area has had an average of 12,000 homes for sale at any given time.
Inventory levels have declined in this area for years, but are finally creeping back up. After dropping by an average of 8.6 percent per month between April 2011 and March 2013, new listing activity showed double-digit percent increases from April through August of this year, which may represent a turning point.
Since fewer homeowners are underwater, they now are able to extract equity when selling, making sales more attractive. Thus, I believe, inventory will continue to stabilize in the coming months. The active listings registered at the end of August were 10 percent lower than August 2012, but represented a much lower year-over-year gap than at the beginning of this year in March, when active supply was a good 40 percent lower than it had been in the same period of 2012.
• Days on the market will rise. There are currently more buyers than sellers in the market, which means that homes tend to sell quickly. We are seeing DOM numbers — indicating the number of days homes stay on the market before being sold — comparable to where they were back in 2005.
Townhouse sales have had the greatest activity, with a median of only nine days on the market, while condos typically sell in 13 days and detached homes in 16. But supply and demand is a simple concept: As more sellers enter the market and the number of available properties goes up, DOM will inevitably rise as a result in the next few months.
The real estate market dynamics are always changing, and no matter where you are in the buying/selling cycle it is important to understand your housing and financial position to make the best decision in any housing market.
Today, we are in unchartered territory with the recent government shutdown. The results from the fourth quarter will be telling in terms of the repercussions of the government budget issues.

via What buyers and sellers need to know about the end-of-year housing market.

Why Are Mortgage Rates Going Up?

why-are-mortgage-rates-going-upWhy Are Mortgage Rates Going Up?
Author: RealtyPin
November 14, 2013

Supply, demand, the overall economy, and the government are all integral parts of the mortgage industry. Some buyers feel some levels of frustration with the process, because they never know when the right time to buy is. While it’s not a perfect science, there are concrete reasons why mortgage rates are going up. Understand them, and you’ll know how to plan for the future.

Make no mistake, lenders are business owners. Since they’re trying to maximize their profits, they’re going to set their mortgage rates based on the supply and demand of the housing market. Lenders closely follow buying trends, since there is, obviously, a direct relationship between high levels of buyer demand and the subsequent need for a mortgage. Since there are so many buyers entering the market right now — and have been for months — the need for mortgages is also at a high level. That means lenders can set higher rates because they know hungry buyers will be willing to pay them.

And, with America’s overall economy slowly but surely improving, there’s room for rates to rise. After all, the better the economy is doing, the more buyers there are entering the housing market. Once again, that means more buyers are hitting the market, and the rates are increasing to match.

While no one wants to pay more for their mortgage, it is actually a good sign that rates are going up, because it’s a sign that the economy is getting better. While lenders have the final say when it comes to setting rates, they use several indicators to make a decision — including the federal fund rate, the Consumer Price Index, and the Producer Price Index. If these things weren’t improving, mortgage rates wouldn’t be going up like they are.

The government also has an effect on mortgage rates. Remember, when the economy crashed, the Federal Reserve began purchasing billions of dollars’ worth of bonds every month, in an effort to keep interest rates low — and, thus, encourage people to make big purchases, like homes. The plan worked, because the low rates sparked a home buying frenzy. These artificial rates won’t last forever, though. The Fed has already announced that the bond buying program (called “Quantitative Easing”) will end at some point. When it does, rates will go up even more.

The hope, of course, is that America’s economy will continue to improve, but that also means that the chances of mortgage rates going down significantly in the near future is not great. As long as the economy keeps making strides, mortgage rates will continue to go up.

So, how much have they risen so far?

According to Freddie Mac, the average rate for a 30-year fixed mortgage was up to 4.16%, compared to 4.10% the week before. A year ago during the same time period, the same mortgage had a rate of 3.4%. While a 0.7% difference may not seem like a lot, those numbers actually add up to a lot of money over the life a loan! Even that slight change could cost you thousands of extra dollars, which is why it’s so important to take advantage of lower rates while they’re still here. And, unless the economy hits some major speed bump, those rates will likely only get higher in the months to come.

Bottom line — mortgage rates will always continue to rise and fall based on many factors, and there is no single, surefire way to know if they are going to keep going up or start heading down a bit. So, if you’re thinking about buying a home, buy when YOU’RE ready, because it’s almost impossible to predict when the “perfect” mortgage rate will be available!

This article is brought to you exclusively by RealtyPin.com

via Why Are Mortgage Rates Going Up? – Real Estate News – RealtyPin.com.

Are We in Another Housing Bubble?

another-housing-bubbleAre We in Another Housing Bubble?
Author: Daniel Torelli
November 11, 2013

The latest S&P/Case-Shiller Home Price Index has been released, and the data has many experts questioning if we are currently in the beginning stages of another housing bubble. According to the report, home prices in August experienced their highest annual increase in 7 years, climbing 12.8% from the same month one year ago.

That’s a good thing, right? Not necessarily.

The index looks at home prices in 20 of the nation’s largest metropolitan areas and then forms a national average. The latest statistics show that home prices (not seasonally-adjusted) haven’t been this high since 2004, and they haven’t climbed this much in a year-over-year comparison since February 2006, which was right at the peak of the housing bubble. In fact, the latest data indicates that home prices are currently only 20% lower than their peak during the housing bubble.

The index also releases seasonally-adjusted figures, since spring and summer are usually the busiest times of year for sellers, and the statistics include both national average and individual data for each of the 20 metros. On all accounts, the information shows that home prices are skyrocketing, but experts don’t think that means the market is recovering as the statistics might suggest.

For example, in Las Vegas, home prices increased 29% from August 2012 to August 2013. However, Nevada has the nation’s highest unemployment rate, so it’s unlikely that a majority of those home purchases were made by traditional buyers. Instead, investors are probably the key spenders in this metro.

San Francisco also saw a significant increase in its home prices over the last year, climbing 25.4%, but again, it’s likely investors who are buying these properties. In fact, experts say the average resident in the area can’t afford to purchase a home at current rate based on their income levels!

Another alarming trend revealed by the latest S&P/Case-Shiller Home Price Index is that the number of homes being purchased is falling, while the average selling price per property is climbing. This likely means that more luxury, high-end homes are selling — meaning that they are distorting the median sales price across the 20 metros included in the index.

Some analysts speculate that investors are buying all the properties available, both the expensive ones and affordable homes that traditional buyers would usually purchase. They are beating out traditional buyers by making all-cash offers on the homes, and it’s gotten to the point that many would-be buyers have all but given up hope of owning a home and are instead now content with renting a home from an investor owner.

So what does all this mean?

Plain and simply, it shows that the statistics for home prices are distorted because investors are still making such a big chunk of the purchases. Since traditional buyers are still struggling to find affordable homes to purchase, we can’t truly say the market is recovering.

If a full recovery is going to happen, the housing industry needs homeowners who are interested in owning a home for a long period of time as their primary residence, instead of investors who are stockpiling properties until the time is right to sell. Until that occurs, we as a country can be happy that home prices are increasing, but we must also take the information with a grain of salt.

And, if investors are holding onto homes until the time is right to sell, they may dump all of their properties at the same time — essentially flooding the market and potentially causing it to collapse again. So as you can see, everyone who has an interest in the housing market should move forward with cautious optimism!
This article is brought to you exclusively by RealtyPin.com

via Are We in Another Housing Bubble? – Real Estate News – RealtyPin.com.

The Top 6 Outside-the-Box Home Selling Tips

outside-the-box-home-selling-tipsThe Top 6 Outside-the-Box Home Selling Tips
Author: Daniel Torelli
November 12, 2013
Even in a sellers’ market, it’s still important to be over-prepared when you go to sell your home. Everyone knows that you need to have a neat and clean home and that you need to market your home online, but there are a few secrets that you might not be quite as aware of.

We’re spilling the beans with the top 6 outside-the-box home selling tips:

1.  Write a seller’s list

A seller’s list is similar to a Frequently Asked Questions sheet for home buyers so that they have access to all of the pertinent information you want to highlight about your home. This information could include the school district, specifics about the neighborhood, or anything else that a buyer might want to know about. These sheets are easy to make, and they’re easy to have lying around when potential buyers come to check things out. In fact, have an entire stack sitting out so that each buyer can take it home with him.

2.  Accept constructive criticism

Everyone who looks at it will have an opinion about your home, and they won’t all be positive. The purpose of asking for feedback is to help you look at your home from the buyer’s eyes and make small improvements if you can. Instead of being offended, you can use every showing as a learning experience!

3.  Take advantage of social media

Many people don’t make use of their social media accounts when they are selling their home, but if you don’t, you could be missing huge opportunities. Even if one of your friends, followers, or connections isn’t currently looking for a new home, chances are they might know someone who is. It’s an easy way to get the word out, and it’s free, so make sure you let all of your social media contacts know you’ve got a home for sale.

4.  Work with other sellers

If there are other sellers in the neighborhood, talk to them to see if all of you can bring buyers into the neighborhood together. One option could be to plan all of your open houses at the same time to encourage more traffic. It may seem like counterintuitive to help the competition, but by pooling your resources, you could bring in opportunities you might not otherwise have.

5.  Always be available

If someone wants to see your house, let them. It may be a pain to be available all of the time — and to have to keep your house in tip top shape 24/7 — but people like instant satisfaction. If they can’t see your home right when they want to see it, you may risk losing them as a buyer all together. Make sure your home is always ready to show, and make sure your realtor is open to showing it when any requests arise.

6.  Be flexible

Not only do you need to be flexible with your showings, you also need to be flexible in the closing of your home. If you have many contingencies associated with selling your home, people may be hesitant to try and jump through all of your hoops. Be as easy and flexible as possible to attract the most buyers to make an offer on your home.

This article is brought to you exclusively by RealtyPin.com

via The Top 6 Outside-the-Box Home Selling Tips – Real Estate News – RealtyPin.com.

Americans Prefer to Live in Mixed-Use, Walkable Communities | realtor.org

mixed useWASHINGTON (November 1, 2013) – Choosing a community is one of the most important factors for consumers as they consider buying a home, and research by the National Association of Realtors® has consistently revealed that Americans prefer walkable, mixed-use neighborhoods and shorter commutes. According to NAR’s 2013 Community Preference Survey, 60 percent of respondents favor a neighborhood with a mix of houses and stores and other businesses that are easy to walk to, rather than neighborhoods that require more driving between home, work and recreation.

The survey findings indicate that while the size of the property does matter to consumers, they are willing to compromise size for a preferred neighborhood and less commuting. For example, although 52 percent of those surveyed prefer a single-family detached house with a large yard, 78 percent responded that the neighborhood is more important to them than the size of the house. Fifty-seven percent would forego a home with a larger yard if it meant a shorter commute to work, and 55 percent of respondents were willing to forego a home with larger yard if it meant they could live within walking distance of schools, stores and restaurants as opposed to having larger yard and needing to drive to get to schools, stores and restaurants.

“Realtors® build communities and care about improving those communities through smart growth initiatives. Although there is no one-size-fits-all approach, smart growth is typically characterized by mixed-use development, higher densities, and pedestrian friendly streets that accommodate a wide diversity of transportation modes,” said NAR President Gary Thomas, broker-owner of Evergreen Realty, in Villa Park, Calif.  “Growth patterns, economic development and quality-of-life issues are inextricably linked to the success of communities and residents.”

When asked to identify their ideal community, the most popular choice was a suburban neighborhood with a mix of houses, shops and businesses. The least popular was a suburban neighborhood with just houses.

As for transportation concerns, 41 percent said improving public transportation would be the best solution, while 29 percent would prefer the development of communities where people do not have to drive long distances to work or shop, and 20 percent would choose building new roads.

The survey of 1,500 adult Americans was conducted by American Strategies and Meyers Research from September 18-24, 2013.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

via Realtors® Report Americans Prefer to Live in Mixed-Use, Walkable Communities | realtor.org.

DC one of WSJ’s Top 5 cities for selling a home

By AnnaMaria Andriotis – The Wall Street Journal

DC Top 5Homes that sell in just a few days. Bidding wars. Above asking-price offers. They may sound like relics of the pre-housing-bust era, but for many homeowners, they’re a reality marking the beginning of a new seller’s market.

Existing single-family-home sales increased 9.1% in January from a year prior to a seasonally adjusted annual rate of 4.92 million units, according to data released Thursday by the National Association of Realtors. Median sales prices hit $173,600, up 12.3% from a year prior—marking the 11th consecutive month of year-over-year price increases.

Other conditions are also working to sellers’ advantage. The number of homes for sale is declining. Roughly 1.47 million properties nationwide were listed on the multiple listing services, the databases where listing agents maintain their postings, in January, down 16.5% from a year prior, according to Realtor.com. With fewer homes to choose from, more buyers are engaging in bidding wars that often push the purchase price of the home above the asking price. Homeowners are also spending less time trying to sell: Homes were on the market for a median 108 days in January, down 9% from a year prior, according to Realtor.com. The data suggests that sellers are beginning to gain more leverage. “It’s a fairly broad-based phenomenon,” says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles.

After waiting on the sidelines for years, would-be sellers in some markets are encountering favorable conditions. In particular, homeowners in markets that were hit hardest by the downturn, including Arizona, California and Florida, are seeing some of the biggest gains. For instance, the median sales price of existing single-family homes in Miami was $213,000 during the fourth quarter of 2012, up 15% from a year prior, according to the NAR. In Sacramento, median prices hit $193,200, up 18% from a year prior.

Sellers in such markets aren’t likely to unload their home at prices that surpass the boom years, but they have a shot at getting higher offers from buyers than they would have one or two years ago. For some owners, recent price gains may provide an opportunity to sell a home that they previously were underwater on, where they owed more money on their mortgage than it was worth. Roughly 1.4 million borrowers returned to “positive equity” during the first three quarters of 2012, according to the latest data from CoreLogic.

There are already signs that sellers are trying to make the most of the latest wave of buyer demand. Median asking prices in some markets, including Phoenix and San Francisco, were up more than 20% in January from a year ago, according to Realtor.com. And experts say more sellers will probably list their properties this coming spring (a peak season for home purchases).

via Top 5 cities for selling a home – MarketWatch.

D.C. condo market heats up

Jeff Clabaugh – Washington Business Journal

dc condoCondominium prices in the District continue to rise amid a tight market.

The median price of a condo that sold in D.C. during February was $396,500, up 9.2 percent from a year ago, according to the Greater Capital Area Association of Realtors.

The number of condo sales that closed in the District last month was up more than 43 percent from a year ago.

D.C.’s condo market remains a seller’s market. The ratio of total active listings to sales contracts is down 42.2 percent.

The same dynamics apply to the single-family housing market in the District. Median prices last month were up 12.1 percent to $485,000, and active single-family home listings were down 34.7 percent.

via D.C. condo market heats up – Washington Business Journal.

Buying A Home | How Do You Make an Offer a Seller Can’t Refuse?

Author: Daniel TorelliMarch 13, 2013

bidding warIn many parts of the country, it’s a seller’s market. Thanks to low inventory and lots of buyers, many sellers are receiving multiple offers – and even all-out bidding wars – on their homes! Although making the highest offer seems like the best (and only!) way to buy your next home, there are other ways to make an offer that a seller can’t refuse. Sometimes, you don’t even have to offer the most money!

How is that possible?

By making sure your offer is reasonable, keeping the offer simple and without contingencies, and adding personal touches, you can make an offer the seller can’t refuse.

The first step is to be reasonable. Although some negotiation is to be expected, your starting bid shouldn’t be so low that the sellers don’t take you seriously. If you make an offer that’s so low it’s insulting, most sellers will refuse to have anything else to do with you. They won’t even considering negotiating! If you really want to purchase the home, your offer should be close to the seller’s asking price.

Part of being reasonable involves letting the seller know that you’re a legitimate buyer. That means including a pre-qualification letter from your lender. If you are a strong candidate for the loan, ask the lender to add your level of qualification as well. After all, the last thing a seller wants is for the sale to fall through because your funding fell through – so do everything you can to prove to the seller you’re your financing is in check. That will help persuade the seller to take your offer seriously.

As far as keeping your terms simple goes, you need to make sure that your offer doesn’t come with any contingencies. Although contingencies can be hard to avoid (especially if you are relying on the sale of your current home), a seller may turn down your offer because they are afraid that it will fall through based on those contingencies. If you can help it, keep your offer as simple as possible with limited terms and contingencies.

Another way to keep the terms simple? Don’t ask for a lot. Most sellers have already made all of the upgrades and repairs that they want to make. Don’t scare them away by making an offer based on a lot of upgrade requests or stipulations.

If you really want to make an offer the seller can’t refuse, get a little insight into their needs and motivations. Your realtor should be able to find out this information for you and to help you frame an offer based on the seller’s motivations. One such need or want is the closing date. Sometimes a seller will take a slightly lower offer just so they can have a later closing date.

The final way to make an offer the seller can’t refuse is to personalize the offer with a little added touch. If you truly love a home, let the seller know how much the house means to you through a note or an email. Even when people are selling their home, there is usually a lot of sentimental value attached to it,  so just a small note assuring the seller how much the home means to you and how well you will take care of it could make the difference between an accepted or rejected offer.

via Buying A Home | How Do You Make an Offer a Seller Can’t Refuse?.

Housing: It’s Becoming a Seller’s Market

By Nick Timiraos – Developments – WSJ

Sellers MArketThe National Association of Realtors said on Thursday what home buyers in many parts of the United States have known for months: it’s becoming a seller’s market.

The number of homes listed for sale in January fell by 4.9%, leaving 1.74 million properties on the market. That’s the lowest since December of 1999, when there were 1.71 million homes on the market. By contrast, there were 2.91 million homes on the market two years ago at this time.

After adjusting for seasonal factors, home sales rose by just 0.4% in January, to an annual rate of 4.92 million units. Still, that’s up from 9.1% one year ago.

The upshot is that there’s a growing pool of buyers chasing a shrinking supply of homes. If the trend holds, prices will keep going up. At the current pace of sales, it would take just 4.2 months to sell the current supply of homes available for sale, down from a 6.2 months’ supply one year ago.

While inventories typically increase in the spring, the Realtors’ group has expressed growing concerns that sales volumes are being held back by the lack of choice. This is good news for homeowners who have watched home prices drop over the last six years, but it’s bad news for buyers—and for anyone that makes their living selling real estate.

Inventory declines have been the most dramatic in California, Arizona, and other markets that witnessed some of the largest home price declines. Those cities have large numbers of underwater borrowers—people who owe more than their homes are worth—while many others may have equity but aren’t willing to sell because prices have fallen so far.

Investors have also been aggressive in buying up properties that are selling for less than their replacement cost.

National Association of Realtors

Home sales could rise to 5.2 million units this year, an increase of nearly 12% from last year, according to economists atGoldman Sachs . They base their forecast on household formation and demographics, which both suggest rising demand for housing in the coming years, and affordability measures such as mortgage rates and home prices.

But the economists note that there’s a considerable amount of uncertainty that could make those targets hard to hit, particularly if there’s nothing for would-be buyers to purchase.

via Housing: It’s Becoming a Seller’s Market – Developments – WSJ.

Maryland Transportation Funding Debate Continues – What do you think?

By Erin Donaghue – Bethesda, MD Patch

Bethesda MEtroA new coalition is advocating for dollars for state transportation projects, including the planned 16-mile Purple Line light rail that would connect Bethesda with New Carrollton, The Washington Post reports.

Get Maryland Moving, a coalition of groups, including the Montgomery County and Bethesda-Chevy Chase chambers of commerce, Purple Line Now, Action Committee for Transit, and the League of Women Voters of Maryland, is pushing for state legislators to make new revenue for transportation projects a top priority this legislative session, according to the group’s website.

Maryland Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach has proposed a 3-cent gas tax that would raise about $300 million for transportation projects, Patch reported.

But without a tax increase to fund the Purple Line, the project—along with Baltimore’s Red Line and the Corridor Cities Transitway through the Interstate 270 corridor—could be put on hold, Maryland transportation officials have said. Montgomery County officials and transportation advocates have argued that deferring the funds in the state’s transportation funding plan could stall the projects and make them less competitive for federal dollars.

Get Maryland Moving is encouraging Maryland residents to contact their legislators and sign a petition supporting transportation funding. The petition reads:

“No funding solution this year means that critical capital projects such as the Purple Line, Red Line, and MARC upgrades may be delayed for years or decades. We call on our leaders to take a different path: to invest in our future by securing funding for critical transit projects, road maintenance, and other investments to support smart, sustainable growth for Maryland.”

via Advocates Form Coalition To Push For Purple Line Funds – Bethesda, MD Patch.

Investing in Curb Appeal Pays Off

BY DIAN HYMER – Inman News

curbappealIt might seem counterintuitive to invest money in a home you’re selling. Wouldn’t it be better to save that money for improvements on your next home?

Even though the home sale market has improved impressively, buyers still pay more for homes they can move right into without having to do work. This is not to say that buyers won’t buy homes that need updating, but they need to be able to see the potential. And the property needs to be priced right for the market, taking into account work that needs to be done.

For example, recently a home was sold in the desirable Crocker Highlands neighborhood in Oakland, Calif. It was owned by one family for more than 50 years. The property had deferred maintenance and a dated décor.

If the listing had been put on the market before it was partially updated, it would have been harder to sell and would have sold for less than it did with the repairs and tasteful upgrades.

Before the sellers ordered a structural pest control (“termite”) inspection, they had some obvious defects corrected. This kept the cost of the remaining repairs down. It also improved the appearance of the house. A back porch that was in poor condition and was easily visible was rebuilt. A pink vinyl bathroom floor was replaced with a neutral vinyl.

The most dramatic change was achieved by removing the heavy dark draperies, dark furnishings and the dark flocked wallpaper in the foyer. The draperies were left off to expose the beautiful wood windows. The house was transformed from a dark, outdated home to a light-filled home with a lot of potential.

After all the personal property was out of the house, the shag carpet was removed to expose the hardwood floors that were then refinished. The interior was completely painted, and the house was professionally staged with furniture, artwork and accessories.

The house showed beautifully, even though the kitchen and bathrooms were old. The listing sold in one week with multiple offers for well over the asking price.

HOUSE HUNTING: Improving curb appeal, i.e., the way a house looks from the street, usually pays off. For some buyers, curb appeal is so important that they won’t even look at a listing that lacks good street presence.

Enhancing curb appeal can often be done inexpensively. Trim overgrown plants to a size that allows buyers to see the architectural detail of the house. If the landscaping has been unkempt for years, remove dead plants and add colorful plants before the house goes on the market. A new lawn adds to the allure of a property.

Kitchens and bathrooms are important to today’s homebuyers. However, it wouldn’t be prudent to do a complete remodel just before you put your home on the market. You usually can’t recoup the investment. Generally, fix-up-for-sale projects should be limited to cost-effective improvements like new paint, replacing outdated light fixtures and replacing worn floor coverings.

In the listing described above, the old bathrooms were given cosmetic upgrades. Toilets and pedestal sinks were replaced inexpensively. The original tub in this 1920s home was reglazed to look like new. Reglazing was also applied to the unattractive brown tile walls and shower in another bathroom. It turned an eyesore into a bathroom that buyers could live with until they remodeled.

You can improve the look of a dated kitchen with new stainless steel appliances, paint, updated light fixtures and a new floor, if necessary.

It’s sad but true that most homes never look as good as when they’re for sale. Resolve to keep your next home in good shape to increase your enjoyment.

Read more about the importance of pre-sale prep here:

Why some homeowners are turning down free money

By Becky Quick – The Term Sheet: Fortune’s deals blogTerm Sheet

Businessman offering money— American homeowners are in the midst of a hot and heavy love affair with low interest rates. But not every courtship has a happy ending.

As the final days of 2012 slipped away, Lisa Price made her client an offer she thought he couldn’t refuse. Her client — we’ll call him John Doe — was paying a rate of 6.616% on his $435,000 mortgage, with 25 years left to go. Price, a mortgage banker for Quicken Loans, offered to refinance his loan at 4.125%, keeping the 25-year payout time. The deal would have knocked his monthly payments down to $3,383, a savings of $630 a month. Closing costs were minimal and would have been recouped through the savings within four months of signing. And with the streamlined process she proposed, it would have required very little paperwork and wasn’t contingent on any appraisal valuation. It seemed like a no-brainer. But John Doe said no thanks.

“It didn’t make any sense,” says a stunned Price, reflecting on the rejection. “Usually when I call someone with a deal like that they’re really excited.”

It’s typically pretty easy for mortgage brokers to give away money, and indeed, refinancing activity has skyrocketed as interest rates plummeted in recent years. The one group of homeowners who didn’t participate in the refi boom — those whose home prices tanked, leaving them without enough equity in their home to qualify for refinancing — are now eligible to restructure their loans thanks to a new government program. But as Quicken Loans and other mortgage originators have learned, it can be surprisingly difficult to persuade some of these people to take sweet deals like the one above, even when the government is greasing the skids.

The first government assistance programs after the housing bubble burst offered to help homeowners only after they stopped paying their mortgages. But a later program — the Home Affordable Refinance Program (HARP) — was designed specifically to help out those underwater homeowners still paying their mortgages on time by giving them access to the low rates so many others are enjoying. HARP has been refined several times since its inception in 2010, and every version of the plan has made it easier for homeowners to qualify. But getting the word out hasn’t been easy.

Quicken and other mortgage originators have aggressively tried to let homeowners who qualify know about the program. “We get their home number, the business number, their e-mail, we express-mail packages to their house so it looks serious,” says Dan Gilbert, founder and CEO of Quicken. “We leave messages; we tell them, ‘Go look up HARP on Google and you’ll see it’s real.’ We don’t quit.” And yet almost half of these homeowners don’t respond. “If you would have told me all the facts about how this works before, I would have predicted we’d get 80% to 85%,” Gilbert marvels.

Ultimately, Quicken says, only about 25% of the homeowners who qualify for HARP actually end up refinancing. And that’s the shame of it all. HARP is a smart program. It rewards good behavior — those who have continued to pay their mortgages — while lending a helping hand to those who could really use it. And it attempts to even the playing field by giving more Americans fair access to the low interest rates enjoyed by big businesses and the wealthy. This program is also good for the economy, as consumers spend much of the money they save on their mortgage payments.

So how do the government and mortgage originators convince the public to take advantage of a program that can truly help many who need it? It’s the classic lesson of once bitten, twice shy. Wounds from all those no-money-down loans and balloon payments have yet to heal for the homeowners bitten when the housing bubble burst. Others still feel the sting of paying hundreds for appraisals in an attempt to refinance, only to be spurned when their homes were valued at less than they owed on the mortgage. It may be hard for those consumers to trust again anytime soon. But for those with the courage to give it another go, love might actually be better the second time around.

This story is from the February 25, 2013 issue of Fortune.

via Why some homeowners are turning down free money – The Term Sheet: Fortune’s deals blogTerm Sheet.

Planning Board Approves Wisconsin Avenue Apartment

by Aaron Kraut | BethesdaNow.com

JBG7900WisconsinChevy Chase-based developer JBG on Thursday morning got preliminary approval of its plan for a 17-story, 475-unit apartment building at 7900 Wisconsin Avenue, which would feature a pedestrian walk-thru that would connect Wisconsin and Woodmont Avenues and include about 20,000-square-feet of retail.

JBG and New-York-based architect FX Fowle focused much of their presentation to the Montgomery County Planning Board on the walk-thru, which would provide a grassy area and public space underneath the building.

The ceiling of the building above would be built with reflective material. Architect Dan Kaplan told the Board the group imagines a unique public space with “kids looking up at themselves,” and special lighting used at night.

JBG attorney Steve Robins told the Board “the creativity of this project, the talent of JBG, FX Fowle, has impressed me quite a bit.”

Planning Staff got one e-mail about the project, from a group of residents at the nearby Fairmont Plaza condos concerned about construction issues. Planner Elza Hisel-McCoy said JBG will work with the group as the project moves toward construction.

JBG will required to pay a high school school facility payment required for the Bethesda-Chevy Chase cluster. Planning Staff is also asking JBG to pay for “Bethesda Red” brick on a small section of Wisconsin Avenue sidewalk just south of the site that doesn’t have it. That will depend on whether the property owner grants JBG permission.

The project will now enter the site plan process.

via Planning Board Approves Wisconsin Avenue Apartment | BethesdaNow.com.

Foreclosures Fall Due to New Laws

By: Diana Olick

foreclosureForeclosure activity continued to drop in January, led by dramatic changes in the state that once led the nation in foreclosures. A new law in California, the “Homeowner Bill of Rights,” makes it much harder and potentially more costly for banks to foreclose; hence they are suddenly finding alternatives.

“The new law imposes fines of up to $7,500 per loan for filing of multiple unverified foreclosure documents. As a result, the downward foreclosure trend in California accelerated into hyper speed in January, decisively shifting the balance of power when it comes to the nation’s foreclosure activity,” said RealtyTrac’s Daren Blomquist.

Foreclosure activity fell 28 percent from a year ago nationally, according to a new report from RealtyTrac, but in California, they were down nearly 40 percent. More telling is foreclosure starts, the first notice of a foreclosure filling. In California they fell 62 percent from December and 75 percent from a year ago. The new law went into effect January 1st, 2013.

“I do think some of these delinquent properties will still end up as foreclosures down the road,” notes Blomquist. “But this type of legislation is also forcing lenders to consider other creative ways of disposing of the delinquencies that may not be as difficult as foreclosure has become.”

That includes short sales, deeds in lieu of foreclosure and a growing trend of selling off bad loans to investors. The investors, since they are buying at a deep discount, are able to offer more drastic modifications to keep borrowers in their homes.

Short sales, when the property is sold for less than the mortgage, are becoming ever more frequent. Nearly 26 percent of Southern California home sales in January were short sales, according to DataQuick, while just 15 percent were foreclosure sales. Investor and cash buying was at or near record levels.

“A lot of today’s housing demand is fueled not by spectacular job growth and soaring consumer confidence, but by super-low mortgage rates and unusually high levels of investor and cash purchases. Take away any one of those elements and it will matter,” said John Walsh, DataQuick president.

With legal changes in California, Florida now has the dubious distinction of having the most properties with foreclosure filings in the nation. One in every 300 homes had a filing in January, according to RealtyTrac. That is twice the national average.

States that require a judge in the foreclosure process, like Illinois and New Jersey, saw big January jumps in foreclosure auctions (sales back to the bank or to an investor), but non-judicial states saw the biggest increases in newly started foreclosures. In Nevada, where new legislation slowed the process dramatically last year, foreclosure starts were up 87 percent from a year ago.

While the numbers can be parsed in many ways, the bottom line is that while fewer borrowers are getting into trouble, an enormous backlog of distress is still moving through the foreclosure system, in some places quite quickly, and in others ever more slowly. Until the overall numbers come down to a more normal level, any speculation on overall price stability is risky at best.

via Foreclosures Fall Due to New Laws.

Nerdwallet: #DC is a good place for single men

Jeff Clabaugh – Washington Business Journal

dc MenWashington ranks No. 3 among U.S. cities on a list of Best Cities for Single Men.

The list comes from financial literacy site Nerdwallet, which considered a number of factors, including the ratio of unmarried men to unmarried women. It also calculated the number of bars and gyms per 1,000 residents and factored in how walkable a city is, saying it’s easier to meet people if you’re in a walkable city instead of a drive-required suburb.

Finally, Nerdwallet calculated the cost of a date, including movie tickets, a 12-inch Pizza Hut pizza and a 6-pack of Heineken.

Washington, D.C. has 10 unmarried women for every 9 unmarried men. It is also a walkable city with a large number of bars and gyms, enough to rank D.C. as a great place to be a single guy, it says.

D.C. has 1.1 bars and gyms for every 1,000 residents. The cost of a date (as defined by a movie, a pizza and beer) is $27.65 per person.

Top 10 Best Cities for Single Men:

  1. Boston
  2. Baltimore
  3. Washington, D.C.
  4. Philadelphia
  5. Denver
  6. Fort Worth, Tex.
  7. Seattle
  8. Chicago
  9. San Francisco
  10. Indianapolis

Read the Nerdwallet study here.

Jeff Clabaugh covers general assignment and provides business coverage for WTOP.

via Washington is a good place for single men – Washington Business Journal.

Fannie Mae Predicts Housing Market’s Future

Author: James Paffrath – RealtyPin.com

fannie-maeFannie Mae Says There’s a New Housing “Normal” – It seems as though it’s time for us to realize that the housing market has changed forever.  Unfortunately, we need to get used to a new “normal” that involves a small level of growth that probably won’t escalate quickly any time soon – at least, that’s what Fannie Mae says.

Fannie Mae just made some bold predictions about the direction of the housing market and home loans stating that the growth rate in the next year is unlikely to improve. In fact, Fannie Mae says that Americans should get used to this new “normal” for the next few years. The Federal National Mortgage Association (FNMA) or more commonly known as Fannie Mae, released a report with their predictions about what Americans should expect over the next several years when it comes to their loans and mortgages.

What exactly are they saying?

According to their report, Fannie Mae says that the U.S. housing market has been on a “modest growth path” since 2009, and that this slow recovery should be considered the “new normal”. Unfortunately, they see bickering in Washington as a problem for future housing growth. Specifically, the report states, “The fiscal cliff and ongoing debt ceiling debate, which are likely to suppress consumer spending in the first half of 2013, continue to present potentially strong headwinds to meaningful growth activity.”

It’s not all bad news though. Fannie Mae’s report also predicts that interest rates will remain low, that there will be a significant increase in new home construction, and that foreclosure rates will continue to fall. Although there are experts that disagree with some of these findings, if the study proves to be true, interest rates will remain below 4.2% well into 2014. That prediction is in line with the Federal Reserve’s timeline for the Quantitative Easing Program, which is designed to keep interest rates low for the next couple of years.

Another positive forecast is that people won’t have to refinance their mortgages as often as they did in the past. Fannie Mae’s predictions include a smaller number of people refinancing their home loans because there will be a better balance of refinance and purchase-related activity. Fannie Mae also estimates a 23% increase in housing starts. This prediction is backed up by an increase in permits granted at the end of 2012. Fannie Mae does point out, however, that it will take a few years before we start seeing housing starts get back to where they were before the economy crashed. A very positive prediction in this report is fewer foreclosures. Foreclosure rates have dropped dramatically in part because the economy is steadily improving, but also because people more than ever are trying to avoid it – thanks to things like short sales and other programs.  Fannie Mae predicts that as short sales become more popular, and as banks come up with additional alternatives for their borrowers, the foreclosure rate will continue to decrease.

Although Fannie Mae addressed many of the issues, what it all boils down to is that there still remains uncertainty and plenty of guesses when it comes to the housing market. The steady, but slow increase could, however, mean good things for the future – as long as you’re willing to accept the new “normal”!

via Fannie Mae Says There’s a New Housing “Normal”.

What Baby Boomers Want in a New Home

Author: Daniel Torelli – RealtyPin.com

baby-boomers-homeThe Top 4 Things Baby Boomers Want in a New Home – As the Baby Boomers get older, many are making plans regarding their futures. Housing is a main focus, as they must decide if they want to continue living in their current home, purchase a new one, or move into an assisted living facility. If a recent survey is any indication, Baby Boomers are definitely willing to buy. In fact, most Baby Boomers have similar home buying preferences! The National Association of Home Builders (NAHB) conducted a poll, asking Baby Boomers around the country questions about their current homes and their housing plans for the future. Below are some of their top findings – and how they’ll affect contractors’ future plans:

1. Size matters
Nearly one-third of everyone surveyed said if they had to choose between  a smaller home with quality products or a larger home with fewer amenities, they’d take the smaller one. But they don’t want to be cramped into a tiny space! Almost half of Baby Boomer respondents said they’d like their new home to range between 1,600 and 2,499 square feet. In fact, for most of the people surveyed, adequate living space and number of rooms is the number one factor that would influence them to purchase a new home.

2. They like the ‘burbs
Survey respondents were also asked where they would like their home to be located. They were given four choices as a response – a home in an urban setting, a close suburb near city life, an outlying suburb, or a rural location. Nearly 40% of prospective Boomer buyers said they’d choose an outlying suburb, 28% said a close suburb, 28% responded that they’d like a home in a rural location, and only 7% said they want to live in an urban setting. Simply put, Baby Boomers want to be close enough to city life so they can enjoy it when they want to, but also prefer to live far enough away where they don’t have to deal with it on a day-to-day basis.

3. The easier, the better
More than one-third of all Baby Boomers polled said the number one determining factor that could influence them to buy a home is a better insulated or sealed home. That’s because a home with good insulation is easier to heat and cool during the winter and summer months, keeping electric bills low, and requires less upkeep. Speaking of upkeep, that was the third most common answer to the “what will influence you to buy a new home” question. More than one-third of all Baby Boomer respondents said ease of maintenance matters most to them.

4. Not everyone plays golf
Retirement and golf often go hand-in-hand, but according to the survey, Baby Boomers don’t want to live on a golf course. In fact, seven out of every ten survey respondents replied that they did not want their new home to be in a golf course community. Compare that to the 18% that said they were indifferent, and the 12% who answered that they would find that “desirable” or “essential.” Baby Boomers may out head to the links more often once they are retired, but according to the survey, they’d rather drive to a course than live on one!

While the survey certainly doesn’t take into account every Baby Boomer living in America, it does give builders some indication of the types of homes that consumers who are just past or near retirement age are looking for.

via What Baby Boomers Want in a New Home.

Harris Teeter coming to 8300 Wisconsin

by Aaron Kraut – BethesdaNow.com

Harris TeeterJust in case you needed further confirmation of Harris Teeter’s pending arrival at the 8300 Wisconsin apartment project, today developer StonebridgeCarras put out official details of the grocery chain’s lease.

The long rumored pairing was confirmed yesterday by the North Carolina-based grocery in Bethesda Patch. Bethesda-based Stonebridge says the 50,000-square-foot full-service grocery store signed to a 20-year lease for the corner of Woodmont Avenue and Battery Lane.

The groundbreaking for the 359-unit, 430,000-square-foot apartment building is set for April. Crews have been busy with preliminary utility and environmental work at and around the site. The projected completion of the site is Spring 2015.

“Our vision for 8300 is to create a first class, mixed-use project at the gateway to Bethesda that will include outstanding apartments and a great retailer in Harris Teeter that will enhance the entire Woodmont Triangle area,” StonebridgeCarras Principal Doug Firstenberg said in the prepared release. “Given the project’s great location with proximity to the National Institutes of Health, Walter Reed National Military Medical Center and two Red Line Metro Stations, we felt that Harris Teeter would elevate the project to its full potential and be a great addition for the surrounding neighborhood.  We are especially pleased to be able to expand our existing relationship with Harris Teeter.”

Harris Teeter has nearby locations in North Bethesda (11845 Old Georgetown Rd.) and Park Potomac (12525 Park Potomac Ave.).

Rendering via StonebridgeCarras

via BethesdaNow.com – Local News for Bethesda and Chevy Chase, Md..

Washington rated the worst for traffic congestion – again

By Ashley Halsey III – The Washington Post

washington trafficWhen it comes to traffic congestion around Washington, even the good news is bad, and it goes downhill from there.The city that so hungers to be No. 1 at something — usually on a gridiron or diamond-shaped field — has again risen to the top as the most congested metropolitan area in the United States, a place where the average driver burns 67 hours and 32 gallons of gas each year sitting in traffic.

The No. 1 ranking is the good news. The bad news is that it’s going to get worse.The annual crunching of numbers by the Texas A&M Transportation Instituteprojects that unless something is done about traffic, the economic recovery will put more wheels on the road and create more congestion. By 2020, analysts say, the average U.S. driver will spend an additional seven hours in traffic each year and waste six more gallons of gas.

The Institute’s calculations are based on data from transponders on millions of moving vehicles. It comes from Inrix, the commercial network that also provides much of the information used in traffic reports on radio, television and the Internet.

After Washington, the four most congested metro areas in the nation were among the perennial contenders: Los Angeles, San Francisco, New York and Boston. Raleigh-Durham rated as the easiest major city to get around.

Rankings are relative and don’t say much about your personal commuting misery, unless there’s perverse pride in being No. 1 or you’re looking to move some place where congestion isn’t so bad. (Traffic is light in Bakersfield, Calif.)

For the first time this year, the Institute came up with a new metric to salt the wound that is traffic congestion around Washington. It calculates the true meaning of an expression often used on traffic radio reports — “allow a little extra time” — a polite way of telling drivers that their traffic nightmare meter has hit the red zone.

The Institute calls it the Planning Time Index, and this is how Tim Lomax, one of the study’s authors, explains it: “It’s predicated on the notion that your boss will let you be late to work one time a month and you’d better be on time the other 19 days.”

So, the new index compares the time it would take to make a trip in light traffic with the time you need to allow if you want to be punctual for work (or anywhere else) 19 days out of 20.

It’s a new index that tells an old story: No place is worse than Washington, which rates 5.72 and is behind metro Los Angeles and New York. Baltimore ranks 15th among large cities with a 3.81, while Salt Lake City is at the bottom with a 2.02.

What does that mean?

“If you had a 20-minute trip in light traffic, 20 times 5.7 is almost 2 hours that you ought to allow for a really important trip in the middle of rush hour,” Lomax said. “That’s the combined effect of weather and bad crashes and special events and construction, and in y’alls cases, presidential motorcades. It’s everything rolled together.”

The Institute provided a plan for addressing congestion that applies to the Washington region and the rest of the nation. It was a collection of ideas, many of which are already in use.

It included addressing immediate traffic problems — such as having tow trucks poised to sweep away wrecks and stalled vehicles, and using metered freeway on ramps to modulate traffic flow — and obvious goals of increasing capacity, encouraging transit use and embracing flexible work schedules.

“You should be able to call the boss and say ‘Traffic’s bad today, how about if I telecommute for now and come in two hours later?’?” Lomax said. “And you need to take advantage of those options when they make sense for you. Don’t just get stuck in the rut of ‘I drive my car to work every day because that’s just what I do.’?”

Pete Ruane, the blunt-spoken president of the American Road and Transportation Builders Association, said the area had a double-barreled problem.

“Washington, D.C., has the dubious distinction of being number one in two areas. It is the capital of partisan gridlock, and now traffic gridlock,” he said. “The real news in the report is the projection that traffic congestion costs will balloon another 65 percent by 2020 if we maintain the status quo. The number of hours of lost time will also skyrocket 55 percent.”

via Washington rated the worst for traffic congestion — again – The Washington Post.

Walk Away From Your Mortgage? A New Rule Just Might Let You

Author: James Paffrath – RealtyPin.com

walkawayWill a New Rule Let You Walk Away From Your Mortgage? – A new rule that goes into effect on March 1st is set to dramatically change the way delinquent home loans are handled, and in essence, will allow some homeowners to walk away from their mortgage without going into foreclosure.

What is it?
The new rule applies to homeowners who are underwater on their mortgages – but can’t solve the problem through a loan modification or short sale. Instead, Freddie Mac and Fannie Mae have written a new escape clause into mortgage servicing regulations that allows servicers to approve deed-in-lieu of foreclosure for some borrowers.

What exactly does that mean?
A deed-in-lieu is an option where the lender takes over possession and ownership of the home without a foreclosure. It’s better for the lender because there’s less paperwork involved. It’s also better for the borrower. Yes, they’ll still lose their home, but they won’t have to deal with having a foreclosure on their credit report.

Here’s how it works:
The new program will be available to all borrowers, regardless of their delinquency status, but it seems targeted at those who do not qualify for the similar deed-in-lieu option available under the Home Affordable Foreclosure Alternative (HAFA) program. In order to be eligible for the HAFA program, a homeowner must be more than 90 days delinquent on their loan. However, this new rule allows borrowers who are current or less than 90 days behind on their mortgage to have some options. If a borrower is current on their loan – or maybe just a month or two behind on the payments – then suffers something unforeseen (like the death of a spouse or a serious illness), they might not be able to afford their home mortgage anymore. So, what can they do? Where can they go for help?

That’s where this new rule comes into play.
Of course, there’s tons of red tape, but that is designed to ensure that servicers follow all of the rules and regulations before granting a deed-in-lieu.

First, the borrower must provide documentation proving the new financial hardship, and must also provide evidence that they can no longer afford their mortgage. At that point, a servicer must complete an evaluation of all foreclosure alternatives. In other words, they must offer the borrower a loan modification or forebearance, or encourage a short sale before offering the deed-in-lieu option.
If none of those options are feasible, the servicer can proceed to the next step in the process – a deed-in-lieu.

There are other stipulations and guidelines that apply, depending on how delinquent the borrower is on their home loan. For example, if the homeowner is less than 31 days behind on their payments, the servicer must check financial records of the borrowers to make sure that their debt-to-income ratio is higher than 55%. All of these steps are in place to ensure that the deed-in-lieu really is the final and only remaining option for the homeowner.

At that point, the borrower must vacate the premises and turn over the keys to the servicer. The servicer is then required to do an interior property inspection no more than 48 hours before the final execution of the deed. They must make sure that borrower has moved out and taken all of their personal property with them, and left the home undamaged and in broom clean condition. If that’s the case, the servicer has the authority to offer up to $3,000 in relocation assistance to borrower to move into a new home.

However, if the borrower damaged the seized home before moving out, didn’t clean it, or left some of their personal property behind, the cost for cleaning and repairs is deducted from the relocation assistance amount. While a deed-in-lieu isn’t ideal, it is a better option than foreclosure for all delinquent borrowers, and thanks to this rule, experts expect more homeowners to choose this option when it is presented to them in the future.
via Walk Away From Your Mortgage? A New Rule Just Might Let You.

What Should You Expect in a Home Inspection?

Author: Daniel Torelli – RealtyPin.com

home-inspectionWhat Should You Expect in a Home Inspection? – A home inspection is an important part of the buying process that all buyers should invest in before they get the keys to a new home. Even though it is not required by law, an inspection can save you thousands of dollars by identifying problems that are not necessarily seen with the naked eye.

But what exactly are you getting when you pay an inspector to come into your home-to-be?
First off, be careful not to confuse a home inspection with an appraisal. Your appraisal will determine the value of the home, while the inspection will determine the stability of the home in its current condition. The inspection will alert you to any current problems or any problems that you may run into in the near future. Everything will be done by a certified home inspector who specifically looks for any problems that might not be blatantly-obvious during your walk-through.

What is your inspector looking for?
He’ll start by checking out the HVAC system to make that it’s working properly. From there, he’ll move onto the house’s structure, the foundation, the electrical system in the home, the plumbing, the roof and any other installed systems in the home.  Home Inspectors may differ in their services and although most will definitely check these things, it’s important to thoroughly discuss what is included in the service before hiring the inspector. Even though it’s a thorough process, it’s completely non-invasive, and it won’t cause any damage to the home.

It’s important to note that home inspectors typically don’t check for termites or mold. Luckily, though, good inspectors will alert you of anything suspicious they discover during the process. After the home inspector finishes all of his work, he’ll type up a written report of all his findings.  This report will tell you all about the current condition of anything in the home that needs repair, and it typically focuses on things that could be big expenses down the road.

Because the inspection essentially only benefits the buyer, the buyer pays for the home inspection. Although the typical cost of $300-500 may seem like an annoyance right now, it’s something you can’t afford to skip. Not only will it alert you to any potential problems, but it can also be a very valuable negotiation tool.

After you receive the findings of the inspection, it’s up to you what you do with them. Should there be anything troubling in the report, you’ll have to decide how to proceed.  You can ask the homeowner to fix the problem, or you can use those findings to negotiate down the price.  In some cases, you may discover such a major problem that you won’t want to proceed with the purchase at all. (In fact, a good realtor will tell you to make your offer contingent on the home passing an inspection!)

A home inspection is an important part of the buying process. Even if the home turns out A-OK, you’ll get valuable peace of mind about your new home. And, if things don’t go so well, you may be able to save a ton of money on future repairs.

So, how do you find a great inspector to look at your home?
You can find a qualified and certified inspector in your area by visiting the American Society of Home Inspectors’ website at www.ashi.org.
via What Should You Expect in a Home Inspection?.

Underwater Home Owners Get More Refinancing Help

DAILY REAL ESTATE NEWS | Realtor Magazine

underwaterMortgage giants Fannie Mae and Freddie Mac announced that mortgage lenders will be able to offer up to $2,000 to home owners with little or no equity in their homes who are seeking to refinance their mortgage under the government’s Home Affordable Refinance Program.

The lender incentives may be offered to pay down mortgage balances, closing costs, or other expenses usually required of borrowers who are refinancing using the HARP program.

The changes may encourage more underwater home owners to refinance — particularly those who had been reluctant to pay loan-origination fees or closing costs, which could total thousands of dollars.

The latest guidance “simply provides a clarification to lenders on benefits that can be passed back to borrowers on a HARP refinance,” says Meg Burns, a senior policy director for the Federal Housing Finance Agency, Fannie and Freddie’s regulator.

To date, nearly 1.8 million home owners have refinanced under the HARP program.

Source: “New Rules Help Borrowers Cover Refi Costs,” The Wall Street Journal (Feb. 4, 2013)

via Underwater Home Owners Get More Refinancing Help | Realtor Magazine.

Home Remodeling Pickup to Trigger Higher Sales Prices

DAILY REAL ESTATE NEWS | Realtor Magazine

homeImprovementAfter years of sluggish growth, home remodeling is rebounding and more home owners are tackling long-delayed house projects to spruce up their homes.

The growth in remodeling is coming at a time when more home owners are once again seeing equity in their homes as the overall housing market picks up. “Home improvements can further boost home values and help sustain both the housing recovery and economic growth,” Realty Times reports.

Spending on home improvement projects rose 9 percent in 2012 — the first increase since 2007, according to a study by the Joint Center for Housing Studies at Harvard University.

“With the U.S. economy and housing market now recovering, investment in the nation’s housing inventory is also picking up,” according to the JCH report. “Lenders and new owners are rehabilitating millions of foreclosed properties. Older home owners are retrofitting their homes to accommodate their future needs… And with the huge echo-boom population moving into the home buying market over the coming decade, the remodeling industry can look to an even more promising future.”

The National Association of the Remodeling Industry expects growth to continue in home remodeling, particularly as more clients feel more stable in their finances and employment situations.

Source: “Home Improvement Growth Latches onto Housing Recovery,” RealtyTimes (Feb. 5, 2013)

 

via Home Remodeling Pickup to Trigger Higher Sales Prices | Realtor Magazine.

Renderings For 17-Story Bethesda Apartment Project

by Aaron Kraut | BethesdaNow.com

7900WisconsinThe developer of a proposed 17-story, 475-unit apartment at 7900 Wisconsin Ave. wil go before the Montgomery County Planning Board for approval on Feb. 14.

In the presentation from Chevy Chase-based developer JBG are renderings, shown but not released to the publicduring two public meetings in December, of what the potential high-rise could look like.

It will include a yet-to-be-named grocery chain and marketplace on the ground floor, accented by a walk-thru and gathering place under a “bridge” in the middle of the structure.

Planning Staff has recommended the Board approve JBG’s project plan and preliminary plan at next week’s hearing.

JBG was originally going to develop both the 7900 site and the properties just to the north into a project that included the new 2nd District Police Station. But that joint plan with Montgomery County fell through after JBG did not acquire all of the properties that run up against Cordell Avenue.

The building as proposed will include 22,000 square feet of ground floor retail. It would run about 275 feet along Wisconsin Avenue with the “bridge” or arch in the middle for pedestrian access similar to the Bethesda Lane pedestrian and retail area at Bethesda Row.

The average unit size would be somewhere around 785 square feet. Parking garage access for residents would be on the Woodmont Avenue side of the building.

A JBG official at the December presentations said he doesn’t think the apartment will allow for more than a 0.7 parking space per unit ratio because of the property’s proximity to Metro.

Images/renderings via Montgomery County Planning Department

via Renderings For 17-Story Bethesda Apartment Project | BethesdaNow.com.

Council Approves Affordable Housing Assessment Bill

by Aaron Kraut | BethesdaNow.com

AffordableHousingThe Montgomery County Council today unanimously passed a bill that will make officials assess whether affordable housing can be added to new capital projects such as libraries or fire stations.

The bill, proposed last year by Councilman Roger Berliner (D-Bethesda-Potomac), is meant to encourage one of the wealthiest counties in the country to provide more affordable housing on its own land.

Berliner, when asked about the lack of affordable housing for young people at a town hall meeting last week, said he envisions the assessment will lead to convenient pairings of new library facilities with three or four floors of affordable housing for seniors.

“We have wonderful libraries, tucked away in places far from residents,” Berliner said. “We need a lot of senior affordable housing, not just housing for young people. It’s a hard place to live when you’re on retirement. Seniors and libraries are such an obviously good fit.”

Berliner again referenced an affordable housing project on top of a new fire station in Alexandria at today’s Council session.

“The irony of course is our community is obviously well-to-d0. It makes it harder to do affordable housing,” Berliner said last week. “There is no silver bullett. That’s not going to dramatically change the equation.”

The measure was amended to allow routine maintenance projects of existing county buildings to go through without the affordable housing assessment. The Council will determine whether a county executive-proposed project is worthy of an exemption. The county executive will do the same of Council-proposed projects seeking exemptions.

Photo via Builder Blog

via Council Approves Affordable Housing Assessment Bill | BethesdaNow.com.

What You Need To Renovate First

Author: Daniel Torelli – RealtyPin.com

renovate-firstThe Top 4 Things to Fix First in Your Fixer-Upper – As the famous saying goes, “You get what you pay for!” This holds true not only in life itself, but also in real estate. Many buyers are drawn to the low price of a fixer-upper. But once inside, these homes can be intimidating. Often times, a fixer-upper has a laundry list of repairs that need to be made, and deciding where to start can be frustrating, especially on a limited budget. That’s why we’ve made this list, in hopes of helping you prioritize which renovations need to be made first:

1. The electrical system
Aside from any emergencies (which should always be taken care of first!), your primary concern should be that your fixer-upper has a fully-functioning electrical system. After all, an improperly-wired or damaged electrical system can lead to electrocution or fire! Sometimes it’s obvious that there is a problem with the electrical wiring. For example, the circuit breakers may trip often, or the lights may dim when too many electrical outlets are being used at once. But other times, the homeowner may have no idea that a problem lies inside their walls until it’s too late. That’s why we suggest you hire a licensed electrician for an inspection. It will cost you a few hundred dollars, and depending on what he finds, the repairs and replacements could cost you a few thousand dollars. That may seem like a lot of money, but it’s a small price to pay for a safe place to live!

2. The basement/foundation
You need to make sure the base of your home is safe. Structural problems in the basement (or in the foundation if your home doesn’t have a basement) can lead to shifting and cracks upstairs, as well as rotting and bowed beams or termites down below. Most of these problems are caused by water, so be sure to keep the basement or foundation dry. If you suspect that you have structural problems, contact a licensed contractor to inspect the home.
They’ll usually do this for free, and only charge you if repairs are needed. Knowing that the base of your home is safe will make you sleep easier at night upstairs!

3. The roof and gutters
Ceiling rot, insects, electrical shorts, mold, pooled water near the home’s foundation, and leaky downspouts. These are all problems you don’t want to deal with when it comes to your new home. But if your roof and/or gutters need to be repaired or replaced, all of these situations can become a reality. There are some warning signs that your roof or gutters may be damaged – like dampness or stains on your ceilings, saggy ceilings, broken or missing shingles, green algae on your roof’s exterior, dented or discounted gutters, and pooling water near the downspouts. If you see any of these signs, we suggest you contact a professional roofer to come out and access the damage, and give you an estimate on the cost of the repairs. Depending what they find, you could end up paying anywhere from $1,500 to $15,000.

4. Exterior Walls
The base of the home, the roof, and the wiring inside the interior walls have all already made an appearance on our list, so the next most important part of your home are the exterior walls. If you see any paint or siding that is pealing, cracking, or blistering, these issues need to be addressed sooner rather than later. Moisture can enter the home much quicker from the basement or roof, so that’s why those portions of the home are higher on our list, but water can still make its way through the siding if it doesn’t have a weather-tight seal. This can cause wood rot or attract insects like termites, so don’t overlook the exterior walls during your initial assessment of the home.

After you’ve covered these four main areas of concern, then you can start to focus on the “pretty stuff” – like replacing old appliances, repainting interior walls, or remodeling the bathrooms, but make sure you take care of the items on this list first!
via What You Need To Renovate First.

Tax Advantages of Home Ownership

RealtyPin.com

tax-advantages-of-home-ownershipThe Top 4 Tax Perks to Owning a Home – Tax season is upon us, and depending on the circumstances, you may be either excited or stressed about this time of year. Some Americans receive big refunds from the government and look forward to the additional cash, while others end up paying Uncle Sam even more money – so, clearly, they don’t enjoy tax time very much! But regardless which scenario describes you, if you own a home, you can look forward to some tax breaks. If you’ve been a homeowner for some time, you probably already know all of this information, but first time buyers sometimes don’t realize the additional tax benefits of owning a home. That’s why we’ve compiled this list of the top 4 tax perks of home ownership:

1. The Mortgage Interest Deduction
This one is the biggie! Nobody likes paying interest on a loan, but it becomes more bearable when you realize that on a home loan, that money is tax deductible. The federal government allows you to claim the interest paid on your home loan during each calendar year as a write-off on your taxes. In layman’s terms, every dollar you spend on interest for your mortgage is one dollar you can deduct from your taxable income. So, if you paid $5,000 in interest in 2012, that’s $5,000 you can subtract from your gross income level when you and/or your accountant are figuring out your tax return over the next couple of months.

2. Higher Debt Limits
There are limits as to how much the federal government will allow you to deduct for your mortgage interest, but this year, they increased that cap. As of 2013, you can deduct the interest on the first $1.1 million in mortgage debt. Yep, you’re reading that correctly. As long as your home (or homes, if you own more than one) has a mortgage worth $1.1 million or less, you can deduct the interest paid on the loan from your taxes. If you’re married, but file separately from your spouse, each of you can only write-off up to $550,000 – but when you combine those two figures, the household is still eligible to deduct interest paid up to the $1.1 million threshold.

3. Discount Points
If you’re a first-time homebuyer, discount points and how you can deduct them from your taxes might be confusing. Hopefully, we can clear up any confusion for you! When you purchase a home, the lender might offer you the option of paying discount points. This is a form of pre-paid interest on the loan that lowers the interest rate on the mortgage. You can deduct these from your taxes one of two ways, depending on the deal between you and the lender. If you paid the discount points in full at the time you closed on the home, you can deduct them in their entirety from your taxes for that year. That can add up to a huge write-off! However, if you and the lender agreed that you will pay the discount points over the life of the mortgage, you’ll be forced to spread those deductions as long as you’re paying on the home.

4. Itemized Deductions
Once you purchase a home and deduct the interest paid on the mortgage as a write-off, you can no longer file a standard deduction. Since an interest write-off is considered an itemized deduction, you might as well go ahead and itemize all of your other deductions, and write them off as well. It might sound like a whole lot of extra effort, but it can add up to a whole lot of extra savings! After all, itemized deductions can include any charitable donations, tax preparation fees, unreimbursed work expenses, and state and local income taxes.

Who knew being a homeowner could make tax season so much fun?!

via Tax Advantages of Home Ownership.

2012 Home sales: Best year since ’07

By Chris Isidore @CNNMoney

2012HomeSalesThe National Association of Realtors said that December sales of previously-owned homes came in just slightly below November’s sales pace, but up 12.8% from a year ago. That brought full-year sales to 4.65 million, up 9% from 2011 and the best year for home sales since 2007, when there were 5 million homes sold just before the start of the recession.

Sales are being helped by a combination of strong market fundamentals — near record low mortgage rates, lower unemployment and a rebound in home prices, all of which are bringing in buyers into the market who had been waiting for it to hit bottom. The mortgage rates and years of depressed home prices have also combined to create the most affordable housing market on record, according to the Realtors’ group.

And the Realtors are predicting strong sales should continue into 2013 and beyond. It has a forecast for 5.1 million existing home sales this year, and 5.4 million next year.

The improved demand for homes in December led to the inventory of homes for sale to fall to 1.82 million homes on the market, the lowest supply since January 2001. One factor in tightening supplies is a drop in foreclosures and other distressed home sales, which made up only 24% of home sales in December compared to 32% a year ago. The tighter supply, and the drop in distressed sales, have helped to lift home prices so that the median sales price for the year rose to $176,600, up 6.3% from 2011. That’s the biggest gain in prices in since the bubble year of 2005.

The rebound in the market for previously-owned homes is also showing up in the market for new homes, where sales rebounded to their highest levels since 2009, while housing starts reached the highest level since 2008.

via Home sales: Best year since ’07 – Jan. 22, 2013.

Mortgage Rates Continue to Climb

Realtor Magazine DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 01, 2013

rising interest reatesMortgage rates continued to “trend upwards this week amid a growing economy led in part by the recovering housing market,” says Frank Nothaft, Freddie Mac’s chief economist.

The 30-year fixed-rate mortgage, the most popular choice among home buyers, rose above a 3.5 percent average for the first time since Sept. 13, 2012.

Freddie Mac reports the following national averages for mortgage rates for the week ending Jan. 31.

via Mortgage Rates Continue to Climb | Realtor Magazine.

Fannie, Freddie to Allow Walkaways in Some Cases

DAILY REAL ESTATE NEWS | Realtor Magazine

fanniefreddieUnderwater borrowers who have stayed current with their mortgage payments now may be able to give up their properties and get their debts erased, according to new guidelines issued by mortgage giants Fannie Mae and Freddie Mac.

Non-delinquent borrowers who have Fannie and Freddie-backed loans and who can document a hardship, such as an illness, job change, or other situation that requires they must move can apply for a deed-in-lieu transaction. Eligible borrowers also must have a 55 percent debt-to-income ratio. Servicers will be required to confirm that the property has been left in good condition.

Borrowers who are eligible will have the debt remaining between the property’s value and size of mortgage erased.

“The goal is to make sure people who have suffered a hardship have the appropriate options to prevent foreclosure,” says Andrew Wilson, spokesman for Fannie Mae.

Borrowers may still be required some repayment, however, if the borrower has the means to do so. “Home owners applying for deed-in-lieu transactions may be asked to make cash contributions of up to 20 percent of their financial reserves, excluding retirement accounts,” Bloomberg reports about the guidelines. “Or, they may be asked to sign a promissory note for future no-interest repayments. The amount and terms can be negotiated.”

Fannie and Freddie’s new eligibility for deed-in-lieu of transactions has been met with some criticism, particularly at a time with the government-sponsored enterprises are still underwater themselves from steep losses the last few years. The GSE’s have, to date, required $190 billion of taxpayer money since 2008.

“It’s an extraordinarily generous approach for companies still in debt to American taxpayers,” Phillip Swagel, a professor at the University of Maryland’s School of Public Policy, told Bloomberg. “We’re giving people an incentive to walk away, right when the housing market is starting to right itself.”

But some argue that past programs tended to penalize borrowers on the brink of foreclosure who kept making their payments, says Julia Gordon, director of housing finance and policy at the Center for American Progress. Mortgage servicers in some cases were even advising borrowers to stop making their mortgage payment so that they could qualify for more assistance.

“Fannie and Freddie are finally recognizing that some people are stuck in their homes,” Gordon told Bloomberg. “There are a lot of families who need to move who can’t do it if they’re going to have debt hanging over their heads. There’s no winner when someone is forced to default on their mortgage — not the investor, not the home owner, and certainly not the neighborhood.”

via Fannie, Freddie to Allow Walkaways in Some Cases | Realtor Magazine.

No-money-down mortgages are back

Some affluent buyers are getting the keys to their new home without putting a penny down.

By AnnaMaria Andriotis – MarketWatch

zerodownmortgageIt’s 100% financing—the same strategy that pushed many homeowners into foreclosure during the housing bust. Banks say these loans are safer: They’re almost exclusively being offered to clients with sizable assets, and they often require two forms of collateral—the house and a portion of the client’s investment portfolio in lieu of a traditional cash down payment.

In most cases, borrowers end up with one loan and one monthly payment. Depending on the lender and the borrower, roughly 60% to 80% of the loan can be pegged to the home’s value while the remaining 20% to 40% can be secured by investments. On a $2 million primary residence, for instance, the borrower could get a $2 million loan, which would require a pledge of assets in an investment portfolio to cover what could have been, say, a $500,000 down payment. The pledged assets can remain fully invested, earning returns as normal, without disrupting the client’s investment goals.

While these affluent clients may be flush with cash, this strategy allows them to get into a home without tying up funds or making withdrawals from interest-earning accounts. And given the market’s gains combined with low borrowing rates in recent years, some banks say clients are pursuing 100% financing as an arbitrage play—where the return on their investments is bigger than the rate they pay on the loan, which can be as low as 2.5%. Some institutions offer only adjustable rates with these loans, which could become more expensive if rates rise. In most cases, the investment account must be held by the same institution that’s providing the loan. See: Home improvement gets a makeover

These loans also provide tax benefits. Since borrowers don’t have to liquidate their investment portfolios to get financing, they can avoid the capital-gains tax. And in some cases, they can still tap into the mortgage-interest deduction. (Borrowers can usually deduct interest payments on up to $1 million of mortgage debt.)

Basil Petrou, Federal Financial Analytics managing partner, on the Consumer Financial Protection Bureau’s new mortgage rules and how the feds control nearly every corner of the housing market. Photo: Associated Press

While these loans make up a small portion of banks’ overall lending, demand for them has been rising. BNY Mellon Wealth Management’s mortgage team says it experienced a 10% increase in requests for 100% jumbo-mortgage financing involving clients’ investment portfolios in 2012 compared with a year prior. BOK Financial, which offers up to 100% financing just to medical doctors through its private-banking divisions in eight states, including Arizona, Oklahoma and Texas, says there has been a roughly 25% increase (or about 100 more borrowers) in this lending from a year ago. Also, at Citi Private Bank, applications have been growing over the past two years. “Demand is two to three times what it normally is,” says Peter Ferrara, managing director of the private bank’s residential real estate.

Some banks are using this product to lure in clients, such as BOK Financial’s offer, which is available to new physicians. To provide the loan, the bank must first receive proof that the borrower has cash or investments, like stocks or mutual funds, that equal 10% of the borrowed amount. (The company says it doesn’t seek a pledge of those assets but just wants to know that borrowers can meet their obligations over time.)

What to consider before signing up:

  • Portfolio restrictions. The amount clients can borrow against investment accounts will depend on what the portfolio comprises. In most cases, they can get up to 95% if the account comprises cash, up to about 80% if it’s bonds, and between 50% and 75% with stocks. Withdrawing pledged funds is typically restricted while the loan is outstanding.
  • Relationship pricing. To get the lowest rate, clients who already have significant assets at a particular bank should consider applying for 100% financing there.
  • Underwriting standards. Borrowers will still need to pass regular underwriting requirements, including having a high credit score, a low amount of overall debt—including student debt—and providing documentation of substantial income or assets.

via No-money-down mortgages are back – MarketWatch.

Wheaton Costco to open April 12

COSTCOBy Esther French – Wheaton, MD Patch

It’s the question almost everyone in the area has been asking for the last four months: When will Costco open?

The suspense is over. A Costco official has said that the warehouse store in Westfield Wheaton will open April 12.

The date has been posted on Costco’s website in the “New Locations” section, and Erich Brann, director of real estate development for Costco, confirmed it with Patch.

Costco’s originally scheduled October 2012 opening was delayed because of unspecified construction issues.

Westfield Wheaton has already had Costco signage in place around the mall property for months, with a “coming soon” notice affixed. The membership warehouse store will inhabit the anchor spot previously occupied by Hecht’s department store.

After the delays in the fall, the Costco store was expected to open in March or April, according to a transcript of an earnings call by the Costco Wholesale Corporation CEO.

via Costco Confirms Wheaton Opening Date – Wheaton, MD Patch.

11 things women want in a home

By Marilyn Lewis of MSN Real Estate

11ThingsWomenWantA growing segment of the housing industry is studying what in a home matters most to women. Real-estate agents, designers, marketers and researchers say some of women’s home preferences are purely functional: Moms like dining areas with easily wiped hardwood or tile floors, not carpeting, for example, and the location of a laundry room is likely to matter deeply to a female homebuyer.

Selling to women also requires catering to differences more innate. “We just think differently, and we’re more emotional,” says Stephanie Holland, creative director atHolland+Holland Advertising. She blogs atShe-conomy: A Guy’s Guide to Marketing to Women. “There’s really nothing more emotional than a home for a female.” Women account for 85% of all consumer purchases, and they’re the major influence in the purchase of 91% of new homes, Holland says.

Women respond most to a home’s aesthetics, such as paint and flooring, interior design, appliances, layout and functionality, saysJessica Riffle Edwards, Coldwell Banker Real Estate’s consumer specialist. Her company and others learn women’s preferences through polling and surveys.

Men, she says, seem more interested in a home’s space and dimensions. “The guy may be saying, ‘Oh, man, look at the size of this space,’ and the women would be saying, ‘Oh, gosh, look at the hardware on these cabinets.'”

 

1. Big closets

“We love big closets,” says Mollie Carmichael, consumer research expert at John Burns Real Estate Consulting in Irvine, Calif.

Female homebuyers walk into a home for sale and, invariably, after first inspecting the kitchen, will make a beeline for the bedroom to check out the closets, she says. Women tell researchers, real-estate agents and anyone else who will listen that they want a home that helps manage a family’s accumulation of stuff. That means cupboards, drawers, cubbies and organizing systems. But above all, it means great walk-in closets.

Why: Women’s lives are fast and full. Most work outside the home. Just 23% of married couples with kids under 15 have moms who stay at home, according to the Census Bureau. With jobs, commuting, running errands and chauffeuring kids, everyone’s dropping stuff everywhere — and then they can’t find it. Trendy open designs, while fabulous, typically rob homes of storage space because they have few interior walls, which are crucial for built-in closets, shelves and cupboards to help tame clutter.

2. Jetted bathtubs

Jetted tubs might sound ’80s retro, but, odd as it sounds, they are a big attraction for female buyers.

Why: “Moms love ’em because kids love ’em,” Carmichael says. “The bubblier the better. Life’s hard enough without having to drag kids kicking and screaming into the bathtub.”

3. Location

Wait a minute — doesn’t everyone care about location? Sure. But for women it’s an even higher priority, Carmichael says.

Why: Women generally care more about location and less about size, Carmichael says. A small home with great architectural character or a beautifully built little jewel box will fulfill many a woman’s dreams better than a megahouse — provided she loves the location. The difference between genders on this issue isn’t huge, but “it is enough to really make the case,” she says.

4. Security

Feeling safe at home is crucial to everyone, but women rank it as an extra-high priority. Qualms about safety will break a deal, particularly for single women, Coldwell Banker’s surveys reveal.

Why: Single women in particular are tuned in to a home’s security. “That’s not to say that if it was a husband and wife with children they wouldn’t feel the same way, but it’s just a little bit more in the forefront for a single woman buyer,” Edwards says.

“As a single woman, I wanted something on a top floor and with underground parking for security purposes,” Jennifer Musselman says of her condo purchase. Musselman wrote “Own It! The Ups and Downs of Homebuying for Women Who Go It Alone.”

5. A great place for socializing

A party space is nice, but an even bigger priority, women tell housing experts, is a comfortable environment for sitting around and sharing. Preferably with food. It could be a kitchen island or counter, a comfortable den or a corner with a couple of chairs and a sofa pulled up in front of a fireplace.

Why: Carmichael says that when female buyers inspect a property’s interior, they’re looking for places where they might relax with friends. Men like to socialize outdoors, she adds.

6. A dedicated laundry room

A magazine-worthy laundry palace with built-in cabinets, a TV, acres of counter space, a crafts area and a window to the garden would be fabulous. But few women will have one in their lifetime, and all of that’s not really essential. What matters, experts say, is the laundry room’s location.

Why: “A lot of people — a lot of women — don’t want to see a laundry room when they enter the house through the garage. They don’t want to have a pile of laundry greet them at the end of a long day. Women were telling us, ‘It’s like I’m coming home to a second job,'” says Paul Foresman, director of business development at Design Basics, an Omaha, Neb., stock-home-plan company that specializes in addressing women’s needs in its designs.

Trooping down basement stairs with a laundry basket to reach the washer and dryer is another huge turn-off. A simple utility closet near the bedrooms or off the kitchen is a whole lot better, Foresman says.

7. Low maintenance

When they’re asked what matters most in home design, women consistently say that a low-maintenance home is a very high priority. Female homebuyers love no-paint exterior siding, no-fuss landscaping and homes that are new or recently renovated.

Why: Women are overwhelmed by parenthood, demanding jobs and running a household. They don’t want more work. In marriages and partnerships, the discussion about who does maintenance chores is a perennial stressor.

8. Separate master-bath shower and tub

Women care deeply about the master bathroom, Foresman says. Many would like to send bathtubs to the dustbin of history. A spa shower with multiple heads is the big master-bath must have instead.

Why: Research by Design Basics finds that just 22% of adults take baths. “We’re designing a lot of homes now with a very nice shower and no tub in the master bath,” Foresman says. Women tell him they feel guilty for using too much water or that the bath gets cold and the water heater can’t keep up. Others say they’re sick of dusting a tub they don’t use.

9. A two-car garage

Douthitt says that even her single women clients want a two-car garage.

Why: Really? Even if they have just one car?  Absolutely, she says. “Hello? It’s storage.”

10. A great kitchen

Women love a great kitchen and so do men, Coldwell Banker’s research says. A third of the company’s agents say a kitchen is the most important feature of a home for their clients. Coldwell Banker’s research finds that 68% of women say they’re the primary chef for their household, while 23% of men say cooking is primarily their job.

Why: Both genders love big open kitchens that include space for dining, entertaining, doing homework, using computers, watching TV and hanging out together.

11. A smart layout

Women are critical of home plans that don’t allow life to flow smoothly. A home needs to be planned for the lives of real people.

Why: That means that there should be plenty of electrical outlets and that they should be located where you need them, near where you’d use a hairdryer or shaver, for instance.

Other functional preferences include weather-tight, energy-efficient homes that are easy on the pocketbook to heat. Hard-surface floors are ranked higher than carpet. Other favorites include two full baths and a place for dropping things when you walk in the door.

 

via 11 things women want in a home – MSN Real Estate.

#DC’s search is on for Walter Reed master developer

Michael Neibauer – Washington Business Journal

walterreedThe District has launched its search for a master developer to lead the transformation of Walter Reed from an historic Army medical center into a 67 acre, $640 million community of homes, retail, office and institutional uses.

The search process has started with the release of a request for qualifications for teams of potential developers who will not only construct a new community out of Walter Reed, but finance the work and actively market the site to destination retail anchors and corporate tenants.

The chosen team, according to the RFQ, will have the capacity and experience to acquire the site from the District and handle all aspects of the development — planning, design, entitlements, financing, permitting, construction, community engagement, sales and leasing and ongoing management. It must have a “demonstrated record of accomplishment” and “must understand development in the District and the unique aspects of redeveloping a former military facility.”

“At this point we’re just looking at qualifications,” Martine Combal, director of the Walter Reed Local Redevelopment Authority, said of the RFQ.

Herb Miller, chairman of Western Development Corp., is reportedly interested in developing Walter Reed. Ernie Jarvis, president of the D.C. Building Industry Association and senior vice president of First Potomac Realty Trust, said he’s heard from several others, though he declined to name them. They’re all well known and well financed, he said, given the bidding process alone may cost them millions of dollars.

“I think you’ll get a lot of interest from the development community on this,” said Jarvis, who raised his family near Walter Reed. “It’s an underserved retail market. And it’s very rare that you get a swath of land, call it a clean palette that you can design a mixed-use project around in the District of Columbia.”

A shortlist of prequalified teams that respond to the RFQ by the March 15 deadline will be asked to tighten up their proposals and respond to a request for proposals by June. The District expects to select a winning developer by July and quickly start negotiations on the terms of a long term ground lease.

Of the 110 acres that comprise Walter Reed, which was closed as part of the 2005 Base Realignment and Closure process, D.C. is expected to receive 66.57 acres and the State Department 43.53 acres for a Foreign Missions Center. The District’s site is bounded by Georgia Avenue to the east, Aspen Street to the south and Fern Street to the north and the interior of the campus to the west.

The District’s reuse plan for Walter Reed, approved last summer, proposes 90 townhomes, 1,864 apartments or condominiums, 767,000 square feet of office, 212,000 square feet of retail and 176,400 square feet of “other” uses, such as arts and entertainment.

The original brick hospital building will remain, likely for an institutional user, while the 2.6 million-square-foot concrete hospital will come down.

The project will be phased, with the initial efforts focused on residential, followed by office and retail development over the next 20 years.

The site is served by eight Metrobus lines but not Metro, though there is the potential for a Georgia Avenue streetcar line. A study of a north-study streetcar route connecting the Silver Spring or Takoma Metro stations with the Southwest Waterfront is expected to launch this summer.

“Thus far we’ve had an incredibly robust planning process, but we still have a vacant parcel,” said D.C. Councilwoman Muriel Bowser, who represents Walter Reed as the Ward 4 council member and chairs the economic development committee. “We need to get going.”

The Walter Reed redevelopment is progressing on multiple fronts. In addition to its master developer search, D.C. is coordinating with the Department of Housing and Urban Development to win approval for the District’s reuse plan, while negotiating with the Army on the disposition price for the property.

At this point, Combal said, the District has no idea what the fair market value of the property will be, or how it will pay for the land. That estimate will not be available until after a market study is updated, the existing campus buildings — those that will remain — are assessed and a capital improvement plan is created. The Army, of course, will do the same kind of appraisal work to develop its own estimate.

The two are likely to be quite different, D.C. officials say, due in large part to differences in the cost of building new infrastructure into the campus, such as utilities and roads.

There is no money budgeted for the Walter Reed acquisition or for its infrastructure — where the city’s five year capital improvement program includes $113 million for St. Elizabeths east and $48 million for McMillan. The latest CIP provided only $1 million for Walter Reed planning.

While the master developer will play a role in the Army negotiations, Combal said the District “will always be the lead.”

via D.C.’s search is on for Walter Reed master developer – Washington Business Journal.

ASF 2013: Zelman predicts housing rally with room to run

By Christina Mlynski | HousingWire

housing rallyChief executive officer Ivy Zelman at Zelman and Associatiesexpects housing starts to grow by 28% in 2013, she stated at the American Securitization Forum conference during a discussion on the U.S. housing market and the consumer economy.

The housing market is in the midst of recovery and the main driver that will fuel the continued improvement is demographics, Zelman noted.

The population is expected to increase 8% for the year and 11% for the decade in household growth.

The industry is coming up from a “horrific bottom, but still depressed and vast room to run.”

Similarly, home prices rose in 19 of the 20 U.S. cities studied by Standard & Poor’s for the S&P/Case-Shiller Home Price Indices, falling only in New York, for the 12-month period ending in November.

The 20-city composite index rose 5.5% during the 12-month period, while the Case-Shiller’s 10-city composite index rose 4.5%, suggesting a significant market turnaround in 2012.

With tighter inventory, new home construction taking share for the first time in 2005. Also, as real estate-owned pipelines shrinks, builders have a future opportunity to reclaim share.

Residential investment is also expected to drive 40 basis points per year of real gross domestic product growth.

In a recent outlook, Fannie Mae also noted the housing industry is expected to be a huge contributor to GDP growth.

In regards to consumer economy, more tailwinds and fewer headwinds are affecting consumers due to housing, healither household balance sheet, and steady job growth, said Director Elen Callahan at Deutsche Bank ($51.66 1.28%).

Increase in stock prices has held to stablize household assets and income. More improvement in the part of the balance sheet is expected going forward.

Over the past year, households continue to see positive, albeit modest, income gains.

Consumer confience is also moving away from recessional lows.

“This is one of the metrics where housing will have the greatest impact,” Callahan said.

However, the biggest challenge facing the housing market is employment growth, she noted.

via ASF 2013: Zelman predicts housing rally with room to run | HousingWire.

FHA to hike premiums on mortgages – Jan. 31, 2013

FHAThe Federal Housing Administration is raising premiums and taking other measures in order to bolster its capital reserves and reduce its exposure to risky loans.

By Les Christie @CNNMoney

Government-insured mortgages are about to get more expensive.

The Federal Housing Administration, which is the largest insurer of low-down payment mortgages, announced Wednesday that it will raise premiums by 10 basis points, or 0.1%, on most of the new mortgages it insures.

Translation: A borrower opting for a 30-year, fixed-rate mortgage who puts 5% or more down will now pay an annual insurance premium of 1.3% of their outstanding balance. And someone who puts less than 5% down will pay a premium of 1.35%.

The agency said it will also raise premiums for borrowers with jumbo loans — or loans of $625,000 or more — by 5 basis points, or 0.05%, and increase the minimum down payment requirement on these loans to 5% from 3.5%.

FHA said it will require most buyers to pay insurance premiums for the life of their loan. A policy that was put in place in 2001 allowed borrowers to cancel premium payments once their debt fell below 78% of the principal balance. One exception will be for borrowers who put more than 10% down at the time of purchase.

Additional new policies include a requirement that any mortgage for an applicant with less than a 620 credit score and debt-to-income ratio above 43% must be underwritten manually. Lenders who want to issue loans to these applicants must be able to adequately document why they decided to approve the loans.

The agency also decided to put new restrictions on reverse mortgages, no longer permitting retirees to take such large, upfront payments.

The changes are an effort to reduce the agency’s exposure to risky loans and bolster its financial reserves, which have been depleted due to high delinquency rates from the mortgage crisis. The agency did not say when the new rates will take effect.

Last spring, FHA increased both premiums and upfront costs on mortgages. Such hikes make it tougher for mortgage borrowers — especially first-time purchasers who can’t afford the large down payments most private lenders require today, according to Jaret Seiberg, a Washington policy analyst for Guggenheim Partners. “They are the ones most likely to turn to the FHA for credit,” he said.

And that could have a negative impact on the housing market overall. “You can’t have a healthy housing market without a constant influx of first-time buyers,” said Seiberg.

via FHA to hike premiums on mortgages – Jan. 31, 2013.

Women Driving Demand for Rental Apartments

By: Diana Olick – CNBC Real Estate Reporter

women rentersThe housing market is supposedly roaring back. Home prices are seeing their biggest annual gains since 2006.

Renters must be rushing back to buy, right?

Not exactly.

In fact, even as housing and the greater economy improve, a shift in demographic trends will likely favor the rental apartment market for the foreseeable future.  It is all about women.

Women are getting married later, having kids later and out of wedlock, all prompting them to seek the convenience of large, full-service rental apartment buildings, reports CNBC’s Diana Olick.

“I rent in an apartment building because it gives me a certain amount of freedom: I’m not positive that I want to stay in D.C. long term so I could leave at year’s end if I wanted to,” says 25-year-old Caitlin Huey-Burns, a working journalist. “My building has nice, built-in amenities, and it’s in the location I want, but where I know I wouldn’t be able to afford to buy.”

Most of Huey-Burns’ single, female friends, some in their thirties, who live in major cities, also rent in apartment buildings. Just one owns, and she lives in Canton, Ohio.

“What drives demand for single family homes is, ‘Oh honey, I’m pregnant,” says Buck Horne, a housing analyst at Raymond James.

But those words are being uttered less and less. Horne claims the shift in female education, marriage and fertility rates will drive rental apartment demand going forward. He points to a growing educational imbalance, that is, 3.1 million more women enrolled in college than men and 4 million more college-educated women in the workforce than men.

“That creates a structural imbalance in the number of suitable partners. Women leave college with good income prospects and are not finding suitable husbands and fathers,” says Horne.

Consequently, the millennial generation is delaying marriage and motherhood, and birth and fertility rates are dropping. The female fertility rate is at its lowest level in recorded U.S. history, according to the Centers for Disease Control/Raymond James research. 41 percent of children are born out of wedlock. Horne’s research finds single mothers prefer living closer in to cities and staying in full amenity apartment rentals. This all points to more structural, long-term demand for rental housing.

But, again, shouldn’t that rebound in home prices and growing confidence in housing still push more renters to buy, despite the female argument? Investors certainly think so. While stocks of the nation’s homebuilders are up over 60 percent from a year ago on the PHLX Housing Sector Index, multi-family REIT’s actually under-performed and inversely correlated to home builders. Investors were concerned about the single-family home recovery stealing renters. But should they be?

No, according to a recent Raymond James report:

Renter household formation remains at the strongest level in decades. Roughly 1.32 million new renter households were formed in the past year (including owner conversions), while the number of owner-occupied households declined by 175,000. Resident turnover and move-outs to homeownership remain near historic lows for most operators. Incoming leasing traffic is more than offsetting move-outs while paying higher rates.

The home ownership rate declined yet again in the fourth quarter of 2012, according to a new report from the U.S. Census today. It now stands at 65.4 percent, down from 66 percent a year ago and from a high of 69.2 percent in 2004. If you include the 5.3 million borrowers who are delinquent on their mortgages or in the foreclosure process, per Lender Processing Services, the real home ownership rate is even lower.

“The fact that the housing recovery is being driven principally by investor demand means that the slight decline in the homeownership rate in the fourth quarter is unlikely to be the last,” notes Paul Diggle of Capital Economics.

There is also a tremendous amount of pent-up demand for the rental market, as nearly 23 million young adults, male and female, under age 35 (31 percent of the cohort) are currently classified as ‘living at home’ with parents, according to Raymond James’ analysis. As job growth improves, they will move to rental apartments; the homeownership rate for this group is only 34 percent.

Investors are also concerned about a 49 percent jump in multi-family construction permits from a year ago, but those permits are still running well below normal levels, and every year about 150,000 units are removed from housing stock for various reasons, like age and damage.

Suffice it to say that the apartment sector and the multi-family REITs will likely see a surprise to the upside in 2013. Rents will still rise, despite housing affordability and growth in the single family market.

via Guess Who’s Driving the Demand for Rental Apartments?.

Wal-Mart opposing D.C.’s big box living wage bill

Michael Neibauer, Staff Reporter-Washington Business Journal

wal-martIn the least surprising policy position ever,Wal-Mart Stores Inc. will oppose D.C. Council legislation that would force it, and other big box retailers, to pay their employees a living wage.

During the groundbreaking Wednesday of Fort Totten Square, a Wal-Mart anchored mixed-use project co-developed by The JBG Cos. and Lowe Enterprises, Wal-Mart spokesman Steven Restivo told me the proposed bill will stunt economic development across the District.

“Given how underserved this city is from a grocery and retail standpoint,” Restivo said, “we think any action that seeks to block economic development is misguided.”

Restivo also noted that Wal-Mart’s wages in Virginia and Maryland “meet and exceed” those paid by its competitors in the D.C. area.

The Large Retailer Accountability Act, proposed by Council Chairman Phil Mendelson and co-sponsored by 10 of the other 12 members, argues that “some large retailers pay very low wages and do not provide their workers affordable health benefits.”

It is appropriate to set standards, the bill suggests, because large retailers can afford the cost of higher salaries and because “in other cities, the enactment of living wage laws has had no negative impact on retail employment and development.”

Wal-Mart’s lobbyists will likely argue otherwise.

The bill requires that all retailers larger 75,000 square feet, and whose parent company earns at least $1 billion a year, pay their employees a minimum wage of at least $11.75 an hour and provide them with health benefits. The legislative provisions do not apply if there is a collective bargaining agreement in place between a store and its employees.

(Of note: Safeway’s largest store in D.C., in Georgetown, is 71,000 square feet and all Safeway employees are unionized. Giant Food’s largest D.C. store is 60,000 square feet and most of its employees are members of UFCW Local 400.)

While the measure does not target a specific retailer, it is clearly aimed at Wal-Mart, which plans to open six D.C. stores over the next half decade. Other big box stores that may be affected include Target, Home Depot, Costco and Lowe’s. The bill does not appear to grandfather in existing stores.

“In order to safeguard the public health, safety, welfare and prosperity of all Washingtonians, the District must establish a code of conduct for responsible retailers in our community ensuring that large retailers pay their workers a living wage and provide affordable health benefits,” the bill states.

Councilwoman Muriel Bowser, chair of the economic development committee, co-sponsored the legislation when it was introduced Jan. 8, but later told the Washington Business Journal that she would not support any measure that chills economic development. Bowser attended the Fort Totten Square groundbreaking Wednesday and touted the incoming Wal-Mart.

via Wal-Mart opposing D.C.’s big box living wage bill – Washington Business Journal.

Should You Buy a New or Existing Home?

Author: Daniel Torelli – RealtyPin.com

buying-a-new-or-old-homeShould You Buy a New or Existing Home? – New homes are popping up all around the country as confidence in the housing market continues to rise.
Contractors are getting back to work, and soon, their construction sites will be full of completed homes that are ready to be purchased.

But should you save up for one of those new homes, or purchase an existing one?
Deciding if a newly-built home or a resale is right for you often comes down to your finances and your personal preferences.

Speaking of personal preferences, you may get more of them with a new home. There are two types of new homes – ones that are designed and built by a developer and then sold to a buyer once construction is complete, and others where the buyer purchases the land and helps design the home before construction ever begins. In both of these scenarios, the buyer feels like they have more control over the layout because they can either build from the ground up or choose from various different styles of homes built by the developer.

Also, with the housing market still recovering, sometimes developers will add incentives to a home to entice a buyer to purchase it. They will often not charge for extra amenities or upgrades, or reduce the price of the home by a small percentage in hopes of helping it sell. Another major selling point for new homes is that they come with a builder’s warranty, so if something is damaged or needs to be replaced, often the cost of those repairs is covered.

The main disadvantage to a new home is that they usually cost more than an existing one. Builders put a lot of money into the construction of a home, so they want to recoup their expenses. While some will offer assistance with closing costs, few will actually reduce the base price of the home in order to maintain price integrity for their work! There’s also another disadvantage – the noise. If the home is located in a new community, you could be living in a construction zone for the next few years until all of the homes in the neighborhood are complete.

What about an existing home? What are its pros and cons?
One of the biggest advantages of buying an existing home is that you can determine the long-term value of the home more easily than you can with a new home. After all, when purchasing a resale, you can take a look at historical perspective of the community as a whole. In other words, you can see what homes in the area have sold for in the past, both during the housing boom and the recession, which allows you to determine the true value of the home you are buying.

Also, you can know more about the schools, your potential new neighbors, and the area before buying the home. In a newly-constructed subdivision, all of those factors are unknown.

Of course, the disadvantage of buying an existing home is that you can’t easily customize it to your lifestyle. Sure, you can remodel or renovate the home to add an additional room or two, but that will cost you more money – whereas in a new home, you can tell the builder how you’d like it to look, and get your dream home for one price!

Regardless which route you end up going, experts say the best way to determine if the home is going to maintain its value over time is the location and condition of the home, not its age. In other words, newer isn’t always better!

via Should You Buy a New or Existing Home?.

5 Worst Home Selling Mistakes

Author: Daniel Torelli – RealtyPin.com

mistakesThe Top 5 Home Selling Mistakes – Selling your home is an exciting (and sometimes overwhelming!) experience. Even when the housing market isn’t at its peak, you can still get a good price for your home.  Unfortunately, many people sabotage this chance by making big mistakes.  Have you been guilty of any of these?

1. Listing too soon
Selling your home isn’t something you want to rush. Many times people get so excited that they list their home before it’s ready to go. However, the presentation of your home can mean the difference of thousands of dollars in your selling price! Take the time to browse online or go to open houses in the area to see the upgrades in other homes. Maybe it just means a fresh coat of paint or if your kitchen is grossly out of date, it may be an upgrade you consider before listing your home. But don’t go overboard! That leads to our second mistake…

2. Over-improving your home
If you live in a modest neighborhood, adding a new kitchen, a marble foyer, and a new pool to your home will not get you the money back that you are expecting. Instead, your best bet is to match the comparable’s upgrades or other homes in your neighborhood. You won’t get the return on your investment by outshining everyone else on your block.

3. Emotional Selling
Leave emotions at your front door. To most people, a home is not just an investment or a mortgage, but instead it represents memories, hard work, time and energy. That’s why, when coming up with an asking price, lots of people let those emotions drive up the price. Unfortunately, though, overpricing your home can leave it on the market far longer than you want or can afford. Find out what your home is worth, and price it competitively. Your house will be on the market for less time, and chances are good that with a competitively-priced home, you can get more than one offer driving the final price up even higher!

4. Being Unprepared for Showings
Clean! Clean! Clean! We can’t tell you enough how important it is to have a clean, uncluttered home for every showing. Consider each showing as a tough inspection. Dirty carpets or even dishes in the sink can turn off potential buyers.
And even though the furniture in your house most likely will being going with you, having a cluttered living room or an over-decorated bedroom can make those rooms feel smaller. During this time, make sure you are highlighting your home in its best possible form.

5. Foregoing a Realtor
You may be hesitant to enlist a realtor, but consider every opportunity a realtor gives you. For example, did you know that the vast majority of home buyers begin their search on the web. Do you know on which websites you should list your home? A realtor does! Not only do realtors handle the marketing of your home, they also help with the negotiation and many times will prequalify buyers. There is nothing worse than going through the whole process only to find that the buyer can’t get approved for a loan. In the same category, when hiring a realtor, find a professional you can trust. Although it may be tempting to use a friend-of-a-friend or a cousin who just got their license, your home is too big of an investment to not use a professional with years of experience!

Don’t get caught making these costly mistakes. Spending the time preparing your home and enlisting the help of a realtor can easily cut down the time your house is on the market and will get you the money your home is worth!
via The Worst Home Selling Mistakes.

25 Quick, Cheap and Easy Home Selling Tips

for sale tipsIf you want to get a home sold quickly and inexpensively, you should review these home selling tips.

BY BARBARA BALLINGER | Realtor Magazine

Even with rising values and reduced inventory in certain markets, selling a home remains challenging. Buyers expect not just a shiny new stainless sink but pruned hedges, freshly painted walls, glistening hardwood floors, and more. Making everything look great can cost a pretty penny, and many sellers won’t be able to afford all the suggestions you might make.

You can help them prioritize based on the condition of what’s needed most, what buyers in the area typically request, what competing houses offer, and — of course — cost. Here’s a list of 25 affordable, easy-to-make changes from top design and real-estate pros:

  1. Add power outlets with USB ports in rooms that lack them, especially in the kitchen, bathrooms, and bedrooms where they’re most needed. “Younger, more tech-savvy couples and individuals love them,” says Tyler Drew, broker and property investor with Anubis Properties Inc. in Los Angeles.
  2. Eliminate acoustic popcorn-style ceilings since they look dated and tacky.
  3. Remove exposed posts and half walls. Today’s buyers want more space, and partial walls and posts gobble up room. The only walls that should remain are those that offer privacy or conceal electrical wires or plumbing stacks.
  4. Update wiring for the Internet and flat-screen TVs. You don’t have to run CAT-5 through walls, which can be costly and require opening and closing and repainting walls. Instead, find a place to put a wireless router, Drew says.
  5. Clean carpets and wood floors since they’re often the first part of a room that buyers check out; you don’t need to replace them unless they’re in terrible shape. A good carpet steam cleaning or wood floor waxing can be relatively inexpensive, sometimes less than $200.
  6. Expand a small kitchen to make it work better and look larger. Two quick fixes: Change the backsplash by adding mirrors, stainless steel, or paint, which will introduce light and views; and add an island, which requires only 30” between counters and the island to pass through comfortably. If there’s not enough room for an island, bring in a rolling cart with pull-out shelves underneath and a wood top, says Libby Langdon, an interior designer, author, and expert with Liebherr Refrigeration..
  7. Clear out and clean a garage, a big selling feature.Power wash the floor or paint it if it’s in bad shape, remove dated cabinets, and remove all junk that’s been stored there, so prospects can see how much space they would have for their stuff.
  8. Change out corroded or dented door knobs and levers. The replacements don’t have to be expensive but they should look new and clean, Chicago architect Allan J. Grant suggests.
  9. Pay attention to landscaping, which can add 7 to 15 percent to a home’s value, according to HabitatDesign.com principals Jessy Berg and Bonnie Gemmell. Focus on mowing grass, removing crab grass, and eliminating dead plants and tree branches. “I’d rather have dirt and the potential to paint a picture for the buyers’ mind than a backyard full of dead plants,” Drew says. But if you have extra funds, consider Sacramento, Calif.-based landscape designer Michael Glassman’s ideas: Add lots of seasonal color through blooming annuals and perennial plants and remove problems like too much noise from traffic or neighbors by installing an inexpensive fountain with trickling water.
  10. Paint exterior windows, doors, gutters, downspouts, and trim, then go inside and paint the home’s trim, doorways, and walls that are in need of freshening. Don’t worry about the colors but consider those that veer toward quiet and comfort such as Benjamin Moore’s Yosemite Sand, Edgecomb Gray, or Carrington Beige. “Gray is a hot interior color now,” says Manchester, Vt.-based designer Amy Thebault. Painting rooms other, lighter colors such as white, yellow, and beige help to bounce and reflect sunlight and use more natural and less artificial light, according to Chris Ring, vice president at ProTect Painters, a professional painting source. But in cooler months, Ring says, dark colors such as deep brown and blue absorb sunlight, thereby reducing heating costs. And don’t forget ceilings, which can be a “fifth wall.” You can improve them with paint or old-style metal or faux-metal tiles, says Beverley Kruskol, a general contractor and owner of MY Pacific Building Inc. in Los Angeles.
  11. Remove outdated wallpaper, replacing it with paint and preferably a neutral color, says Shelley Beckes, ASID, CID, a designer with Beckes Interior Design in Los Angeles.
  12. Remove, store, or discard excessive accessories on tabletops and walls and in cabinets. “Less is more, and you want the house to be seen by prospective buyers without the distraction of too many personal items,” Grant says. Some suggest following the rule of three: Leave out only three things on any surface.
  13. Get the house inspected before it’s listed to know its condition and identify any structural issues that could derail sales. Many problems can’t be detected by an untrained eye, including those in a basement, crawl space, or attic, says BillJacques, president-elect of the American Society of Home Inspectors. “There might be roof damage or a plumbing leak. Many inspectors take photos and provide a detailed report,” he says. “And if home owners have repairs made, they should be handled by a qualified licensed contractor, so the home owner can get problems corrected.”
  14. Outfit closets for extra storage to make rooms look larger and less cluttered, but don’t redo all closets and elaborately. Top contenders for redos are an entry closet for a good first impression, kitchen pantries where storage is key, and a linen closet to keep sheets, towels, and other stuff neat, says Ginny Snook Scott, chief design officer at California Closets Co. “The costs needn’t be excessive. A linen closet can be fitted with baskets and cubbies for between $500 and $600, an entry closet for between $400 and $700, each dependent on closet size and features,” she says.
  15. Tighten a home’s “envelope” to improve energy efficiency and savings. Put money and effort into well-insulated double-paned windows, sealed furnace ducts, energy-efficient appliances, the newest programmable thermostats, LED and compact fluorescent lights, and a smart irrigation box on a sprinkler to cut water usage, says Kate Latham, energy consultant withWattzON, a service based in Mountain View, Calif., which analyzes home energy use to pare costs. “After a few months, sellers can show buyers how costs have dropped. They also should put together a green manual to show which features they added,” she explains.
  16. Improve a home’s healthfulness by using paints and adhesives with low or no VOCs. Point out these changes to prospective buyers in another list or manual, Latham says.
  17. Use what you have, and arrange each room in a conversational way if possible. Don’t set all furnishings in a family room so they face a TV, since most potential buyers like the idea of an open-room milieu for socializing.
  18. Remove and replaced faded draperies, fabrics, and rugs, or leave windows and floors bare to avoid showing lack of attention, Thebault says. Slipcovers, which can cover worn furniture can also provide an affordable decorative feature, changed for each season, says Hugh Rovit, CEO of Sure Fit, a manufacturer and distributor of ready-made slipcovers and other accessories. The company’s slipcovers range from $49.99 to $149.99, based on fabric and treatment.
  19. Replace old, dated, or worn bedding. Before any showing, fluff up pillows and covers, and make all beds neatly. Affordable choices can be found at stores like Target and Web sites likeOverstock.com.
  20. Toss out old magazines. “You don’t want a People magazine from a year ago; it looks like nobody lives in the house or cares,” Thebault says.
  21. Check smells regularly. Besides getting rid of bad odors from pets and mildew, introduce nice fresh fragrances, but don’t go heavy on scents from candles. A light lavender or citrus spray is smart and inoffensive. Open windows before showings to bring in fresh air.
  22. Make rooms lighter and larger for showings with good lighting. Thebault prefers warm, cool colors rather than fluorescents. Additionally, 60-watt bulbs are a good choice, even though they’re not as energy-efficient.
  23. Go with plants rather than flowers indoors since they last longer, but either choice can add vivacity to a room.
  24. Pay attention to your bathrooms. Specifically, make sure you have freshly laundered towels, new soap in soap dishes, spotless mirrors, and no mildew in view.
  25. Be sure your house is priced competitively with the current market and homes in your area. In most regions, it’s still the No. 1 “fix” to sell quickly. Go a bit under the market price, and you may even bring forth multiple offers that are higher than expected, says Jill Epstein, a REALTOR® with Nourmand & Associates in the Los Angeles area.

via 25 Quick, Cheap and Easy Home Sale Tips | Realtor Magazine.