Monthly Archive for February, 2009

The Value of an Emotional Remodel

Published
by
kmunsell
on February 25, 2009
in Home Buying, Home Selling and Market Conditions
. 114 Comments

I’ve been hanging around house sellers (too much) lately and I find myself wondering why the most fun loving, rational of people become raving mad lunatics as soon as their house goes up for sale.  It just shouldn’t come as a surprise that it takes longer to sell a home these days. The economy is in the toilet. On top of that, low ball offers shouldn’t be particularly startling either, so why is it that sellers fly off the handle and end up on a rampage when on the receiving end of one? 

This is very likely due to the ugly baby syndrome. Sellers wonder why their house is taking so long to sell or they become downright insulted when somebody asks for a deal. Sellers fail to see the strict business side of the deal –they only hear that they have an ugly baby. Consequently, if you’re a seller, the most productive thing you can do in today’s market is to give yourself an emotional remodel.

Consider:

You are selling your house, not your home. Make the mental transition for this transaction and realize that while you consider the sale of your home near and dear to your heart, the buyer sees this transaction as the purchase of a house or real property. There are no personal insults or attacks in a business transaction. There is no ugly baby.

A low ball offer is not an insult, it is an invitation to deal. No matter how far below asking price an offer is on your property, you need to keep in mind that it is not a personal statement. In today’s dismal economy, buyers are doing what buyers are expected to do. They are looking for a good deal and there should be no harm and no foul for asking for one. After all, some sellers are willing to make better deals than others, and it’s your prerogative as a seller to simply say no, or more wisely, to make a counter offer.

A lower offer might not be your ideal offer, but it might just make financial sense. Emotions get in the way and cloud solid financial sense. The holding costs of property might make a lower offer more reasonable that it seems at first blush, so do not discount what you have in front of you because it just might take longer than you think to find a buyer that values your house the same way you value your home.

The Crash Reshapes the American Landscape

Published
by
preynolds
on February 24, 2009
in Progressive Trends
. 39 Comments

We’re used to thinking of the economic crash on a micro-level (like who’s being foreclosed on our street, or how much more we ourselves owe on our house than it’s worth) but the Atlantic Monthly’s March issue takes an interesting look at the bigger picture.

 In an article entitled “How the Crash will Reshape America” Richard Florida examines some of the long-term effects of the current economic crisis. He argues that more than ever before, people will crowd into certain large mega-regions including the Boston-New York-Washington Corridor, the Char-lanta Corridor, Northern and Southern California, the Texas Triangle of Houston–San Antonio–Dallas, and Southern Florida’s Tampa-Orlando-Miami area. He also adds to this the Pacific Northwest’s Cascadia, stretching from Portland through Seattle to Vancouver; and both Greater Chicago and Tor-Buff-Chester. (What’s left, right?)

According to Florida, these mega-regions are developing as the clear new economic centers of coming decades because they are so economically diverse and tend to attract highly-educated workers. As more talent clusters into tight quarters, the phenomenon feeds on itself, propelling these regions to even greater heights in innovation, economic output and creative cross-pollination.

The big losers, according to Florida, are Rust Belt cities like Cleveland, St. Louis and Detroit. They’ve been losing population for decades with the decline of manufacturing in America, but that trend is only likely to accelerate now that the bottom has fallen out of the American economy. He also puts Sun Belt cities dependent on real estate and construction into the losers category. The growth of Phoenix and Las Vegas depended on the very notion of cheap housing and not much else. He expects radical changes in these sunny slot-machine dependent locales. He suggests reallocating resources to invest heavily in regions that are already showing their muscle. Forget the Rust Belt and the Boomtown Sun Belt cities.

Hmm… I wouldn’t write off the Mid-West just yet. Crisis is an opportunity for reinvention, after all. Just look at Pittsburgh, which seems to win “most livable city” awards every time you look around. There are plenty of creative types who are willing to take a chance in a very cheap place (think of Soho in New York City or the South End in Boston) just to have a little breathing room to create. Like in Soho or the South End, if enough creative types move in search of cheap living, eventually these areas become fashionable (and viable) again. In fact, you might say the “real” creative cross-pollination happens where people aren’t giving themselves migraines over paying (or not paying) the mortgage each month.

Don’t count the Rust Belt out just yet.

Don’t Shoot the Property Tax Messenger

Published
by
Editor
on February 22, 2009
in Home Selling and Market Conditions
. 12 Comments

The property tax issue of 2009 is undoubtedly local. Not only are we seeing assessments that reflect the moderately disappointing and/or apocalyptic decreases in home value, but each state and city is dealing with the decrease in revenue differently.

Arizona deals with a two-year lag in assessments to tax rates, meaning homeowners will be forking over a check for their sweet, sweet imaginary home values from 2007.

Florida is dealing with their deal with the devil a few years back, where the “Save Our Homes” act limited the hyperactive growth of property assessments to no more than 3 percent, but also ensured that if property values were to fall, their taxes would still rise. That little caveat might change in the state legislature very quickly if senators value their reelection status.

In Brooklyn, assessments have shot up for condos in particular, pissing a lot of people off, but showing that there is still money in the borough (while the island to the West is dealing with their own troubles). Collecting taxes is, as one might imagine, a logical way to decrease a city budget deficit. The gut renovations haven’t come to a complete halt, either.

And I can assure you, those gut renos are still happening across the street from me. The telltale sign:

The UFO landing of a garbage dump.

$8,000 Tax Credit for New Home Buyers is the Final Deal

Published
by
kmunsell
on February 18, 2009
in Home Buying and Market Conditions
. 140 Comments

News becomes old really fast. Just one week ago, I was hopeful and upbeat about a potential $15,000 tax credit making its way through Congress. Now, just one week later, that news is so yesterday.

On the bright side, the legislation finally looks like it’s a done deal. Potential home buyers can move forward with plans (to buy or not to buy), with full knowledge of what they can (or cannot) expect. The final legislation landed somewhere between the prior $7,500 interest-free-loan-disguised-as-a-tax-credit and the more generous $15,000 actual tax credit for all primary residence home buyers. In fact, the final deal allows first-time home buyers to claim a credit worth $8,000 or 10% of the home’s value, whichever is less, on either their 2008 or  2009 taxes.

Let’s try this one more time. Here are the finer points of the new legislation, now in effect:

  • First time home buyers will receive a tax credit equal to 10% of the value of the home or $8,000, whichever is less.
  • Qualifying home purchases must be made between January 1, 2009 and November 30, 2009.
  • A first time home buyer is anybody who has not owned a home over the past three years.
  • Qualifying home buyers must live in the subject home for at least three years. If the length of residence is less than three years, the tax credit must be repaid.
  • To qualify, a single home buyer must make less than $75,000, or a couple must make less than $150,000. (Partial credit is available to first time home buyers with incomes above these levels.)
  • The tax credit is refundable. That is, qualified home buyers will receive the entire amount of the applicable tax credit, regardless of the amount of taxes already paid or owed.

Let’s hear from you! Is this enough to slow market free fall, or is this just more wasted dollars thrown away?

The New Urbanism vs. Aging in Place

Published
by
preynolds
on February 17, 2009
in Progressive Trends and Sustainable Living
. 138 Comments

My parents are getting older. For years they’ve lived in a sprawling two-story home in a gated community in Las Vegas. My mom never minded the stairs. My father didn’t mind cutting the grass. Sure, there was maintenance, but in my parents’ eyes, the benefit was that the house was large enough to accomodate numerous family members during the holidays.

Now, however, with my parents advanced age, I’m starting to wonder just how much longer they can stay in the sprawling home with the staircase and pool. Not only is there a lot of maintenance, but my folks must get into a car every time they need a quart of milk. 

Their predicament is one that growing numbers of Americans are or will be facing. By 2030, one in five Americans will be 65 or older. These folks will be looking for homes that are fully accessible and useful into deep old age. Many won’t want to drive anymore.

Which brings me to my question: how does the “new urbanism” trend — that is, the push for living in multi-family dwellings with access to public transportation and shops on foot — square with universal design, that is, design for everyone regardless of age, size, strength or mobility? Universal design, after all, would seem to require wide walkways, elevators, wide kitchens, wide doorways for walkers or wheelchairs… stuff you just don’t get in cramped urban environments. Add to that the fact that most urban buildings were designed long before architects had given much thought to aging independently in place.

So now what? Can we have our urbanism and universal design too?

Rest assured, people are working on it. Naturally, the Europeans are there first. Last November, Dublin held a world conference on universal design within a city context. That Irish city intends to become the most “accessible” city in the world by the end of the decade.

Here in the New World, some developers are working on bringing universal design downtown, too.

 Armory Park Del Sol in Tuscon Arizona has been heralded  by the AARP and the National Association of Homebuilders for its solar, universally-accessible designs that are located just a few blocks from downtown Tuscon. Wide doorways allow for easy movement from room to room and access to the outdoors. Homes are all-electric because they use solar photovoltaic and water heating systems, reducing energy consumption by 56 percent. So its a two-fer.

 In St. Louis, the 6 North apartment building is the first large-scale multi-family housing development to incorporate universal design throughout its spaces. At 6 North, all 80 apartments, as well as the common spaces and fitness facility, are fully accessible by all, including those with disabilities. The project was recently awarded the John M. Clancy Award for Socially Responsible Housing.

Such projects, however, are still few and far between. If my parents want to live in a home that will allow them to age gracefully, AND live in an urban environment that will allow them to ditch the car, it looks like that for the time being, they’re going to have quite a search on their hands.

What, You Don’t Wanna Flip This House?

Published
by
Editor
on February 16, 2009
in Home Selling and Market Conditions
. 13 Comments

One of my favorite chunks of real estate is Mystic, Connecticut, home of Mystic Pizza, a trailer park fire AND a massive arson case on a historic mansion:

This place has been blocked off since August, with no restoration in sight. The best part? It was started by a probationary firefighter, a close relative of the fire marshall. He obviously knows which accelerant is the best accelerant.

Does the Broken Window Theory apply to towns with rock-solid home values in waterfront Connecticut? If you’d ask a 1980’s Julia Roberts, she’d tell you that it’s what’s inside that counts.

What You Need to Know about the $15,000 Tax Credit

Published
by
kmunsell
on February 11, 2009
in Home Buying and Market Conditions
. 114 Comments

Good news may be on the way for the lackluster real estate market. Last week, the Senate added a $15,000 home buyer tax credit to the economic stimulus package with the goal of kick starting the nation’s real estate market.

Previous attempts by Congress to bolster the tumbling market failed to elicit any real activity in home sales. Maybe it’s because the $7,500 tax credit wasn’t substantial enough. Maybe it’s because it was only applicable to the sale of a new homes, or maybe it’s simply because it wasn’t really a tax credit, but an interest free loan. Whatever the reason, it just wasn’t enough to kick start anything.  

However this time around, Congress might be more on mark. As part of the economic stimulus package currently making its way through Congress.Legislators propose up to a $15,000 tax credit for those who purchase any primary residence.  

While the economic stimulus package may be approved as early as this week, there are some important points about the proposed tax credit that prospective homeowners should know:

  • This actually is a tax credit – no repayment is required.
  • The actual amount of the tax credit would be either $15,000 or 10% of the subject home’s value, whichever is less. Therefore to be eligible for the full amount, the property must be $150,000 or more.
  • The credit will be given as a $7,500 tax credit over a two year period. Therefore, you must occupy the property as your primary residence for at least two years to receive the entire benefit. The credit applies to any purchase of a primary home, including single family homes and condos, regardless  of whether or not the home is new, a resale, or a foreclosure.
  • There are no income restrictions to receive the credit, but to receive the full benefit, you must earn enough to owe $7,500 in income taxes in one year. 
  • If you purchased a home under the $7,500 tax credit, the new $15,000 tax credit will not apply to you.
  • If the new $15,000 tax credit is passed, the previous $7,500 tax credit will no longer apply to any new home purchases from the date of enactment forward.

Let’s hope that Congress will move quickly, or waiting too long could have the opposite effect. With a tax credit looming in the air, potential homebuyers will likely sit back and wait until the legislative haggling is done and the credit can be secured.

The Wabi Sabi of Real Estate

Published
by
preynolds
on February 10, 2009
in Market Conditions and Progressive Trends
. 108 Comments

The Japanese concept of wabi sabi is all the rage these days, whether you’re talking interior design, fine art, or even just life.

And it makes sense. Times are tough. Now’s a great time to start appreciating what we have, no matter how imperfect it may be.

So why not apply the principle to real estate? With the housing and economic markets in crisis mode, now seems like a great time to go wabi sabi.

For those unfamiliar with the term, wabi sabi is an aesthetic philosophy associated with the Japanese tea ceremony that sees great beauty in that which is impermanent, humble and unconventional. Wabi sabi acknowledges and embraces the notion that all things pass away and that nothing is ever complete. It celebrates the brief, the ephemeral, the NOW, recognizing that beauty, and life itself, is an ever-evolving process with no fixed point where we can consider it all “done.” In interior design, wabi sabi interiors are simple, spare and essential, celebratory of the patina of age, and usually incorporate rough natural materials that show some signs of wear. They are clean and unencumbered, but never sterile. Usually, they are intimate in scale.

So what does wabi sabi in real estate look like?

1) Modest is beautiful. A small house you can afford is more beautiful than a big house you can’t afford. A small apartment that is efficient and costs less to maintain, furnish and heat is more beautiful than a large one where more of your money and the earth’s resources go to waste.

2) Old is beautiful. This applies to old homes which tend to have more character and which often incorporate better materials than newer ones, and it applies to older neighborhoods that are often better connected and more pedestrian-friendly than newer cul-de-sac developments.

3) Whatever it is, it won’t last. Whether it’s a housing bust or boom, a foreclosure or your home’s dip in value, this too shall pass.

4) Beauty can be coaxed out of ugliness. Times are tough but there’s beauty in that toughness. Now could be an excellent time for first-time buyers to enter the marekt.  If you’re a homeowner who feels stuck, now could be a great time to consider the many advantages of choosing not to ”trade up.” If you’ve got to sell, you may find a better housing situation for significantly less than you would have a few years back.  

5) Unconventional is beautiful. So what if you have to move in with your kids or they have to move in with you? So what if you have to rent out the spare room to a boarder? Your new “unconventional” lifestyle may prove more rewarding than the old conventional one.

6) Ostentation is dead. Enjoy and appreciate what you’ve got, even if its less than what others have. A tiny craftsman’s bungalow can have far more integrity and functionality than a 5,000 square foot McMansion that was built to impress but not to work.

7) Greatness exists in the overlooked details. A lot of people who obtained complex loans are realizing the wisdom of these words. But “overlooked details” really refers to all the small, oft-ignored aspects of the real estate experience, whether it’s the details of financing, or the details of making your house a home. A really great real estate experience may just be the simple joy of bringing order and beauty to whatever imperfect place that you happen to call home.

Does the Census Matter?

Published
by
Editor
on February 9, 2009
in Uncategorized
. 5 Comments

One of the many hot issues of the stimulus debate is whether to cut funding for 2010 U.S. Census. According to Rachel Maddow this week, Obama just made the U.S. Census an executive issue, and is no longer under the control of Judd Gregg’s Census-hatin’ Department of Commerce. In other words, we probably won’t see major budget cuts for the census. In other-other words, we may actually get the data we could use to figure out what’s going on in real estate during this mess.

Not to mention, the Census employs hundreds of thousands of temporary workers through the next two years. Just a little detail.

While we can thank organizations like the NAR for data on the market, the broad, nation-sweeping data, ethnic and cultural data comes straight from this bloated and time-sucking national project. Considering they are already behind in the project, I’d wonder how the would-be budget cuts would affect the breadth of the data we receive. I’m not talking about the total revenue in the real estate sector; I’m talking about the effects of Housing and Economic Recovery Act of 2008.

Yeah, maybe some of the “oh s*&t” feeling might go away if we get a detailed, unbiased report on what’s really going on in 2008 and 2009. Aside from the, ahem, “questionable” departmental move of the Census, I have hopes that it’s all for the better.

Ashton’s Neighborhood Antics And Other Fun

Published
by
kmunsell
on February 4, 2009
in Online Resources
. 116 Comments

 

Ashton Kutcher has a dickweed neighbor. So you probably heard. After enduring four months of 7 am construction noise from his neighbor, Ashton let loose in a regrettable, foul-mouthed video tirade, ranting on that his neighbor has been “pounding on steel and welding right next to my frickin’ house.” Seriously irked, Ashton signs off, “I’m gonna lose it on this guy. I’m gonna lose …I’m gonna lose it…I’m gonna lose it. It’s been going on for four months now. This guy’s got another thing comin’.”

Later that afternoon, after he’d broken out of his sleep deprived frenzy (goodness forbid he wakes up at 7 am like the rest of us working Joes), Kutcher apologizes to the Interweb in his sequel video, “In light of reflection, I just want to say I pledge to be more tolerant of my neighbor’s hammering in the morning as he tolerated the construction of my home.”

Ashton’s problem is a temporary one, gone as soon as the ga-zillion dollar construction job is complete, but what about the rest of us, whose problems are here for the long haul? For us, neighbors can make or break any home. A bad set can make your life miserable. Are there other methods of messaging your neighbors?

Certainly, posting a video to YouTube or to your blog is one way to let loose about those obnoxious neighbors but there are a couple of other methods as well. For example, you can join Facebook groups such as I Have Some Loud-Ass Neighbors or pinpoint their location on Google Maps and comment on them accordingly at RottenNeighbor.com. The site currently hosts some crowd-pleasing neighbor reviews such as “meth on the porch,” and “Ms. Brown breath in her presence and chances are she will find a county entity to ‘deal’ with you.” Originally conceived to provide home seekers with more “relevant market information,” RottenNeighbor has become more of an outlet for frustrated neighbors than anything. But like Ashton, don’t let the heat of the moment get the best of you. At the end of the day, keep in mind that badmouthing your neighbor is badmouthing your neighborhood– not necessarily an ideal electronic trail to have when the day comes to sell your house.

Instead, think more direct and less public. How about messaging your neighbors by renaming your wireless router connection to ShutYourFreakingDogUp or PutYourUglyBoatAway instead? You get the point.