November 12, 2018

Rookie buyers looking for an affordable home may purchase one in need of repair in hopes of turning it into the house of their dreams. But an extensive rehab can quickly become the stuff of nightmares.

Construction workers analyzing blueprints

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Realtor.com® contributor Erica Sweeney shares her personal story of tearing down and rebuilding her first home 11 years ago in Little Rock, Ark. The home was built in the 1940s, and the floor plan didn’t fit her and her family’s lifestyle. The entire process took eight months. “It was all worth it, but if I had to do it again, I’d definitely do a few things differently,” Sweeney writes in her realtor.com® article. She shares several of her biggest regrets, hoping to help others who are embarking on a similar remodeling journey.

  1. Figure out exactly what you want before you start. Do you only want to remodel the kitchen and master bathroom instead of the entire house? Sweeney says she and her husband kept adding projects onto their remodeling list before finally deciding to tear down the entire house and build new—which then required an architect and new house plans. “I wish someone had encouraged us to step back and think carefully about what we really wanted upfront, taking into account current and future needs and budget,” Sweeney writes. “That way, we could have done just one building plan rather than two.”
  2. Shop for what you need before beginning the project. Sweeney suggests making as many decisions about the look of the house and materials you want early in the process. This will help you get a better sense of your budget before you start. Prioritize what rooms or items are most important to you as you shop.
  3. Beware of the neighbors. If you’re doing a big renovation, you may want to inform your neighbors and apologize in advance for any inconvenience, Sweeney says. She once found a neighbor’s child playing on the construction site of her new home. It’s important to keep the construction site as secure as possible, such as fencing it off with a “no trespassing” sign. It’s a good idea to let the entire block know and remind neighbors about the dangers of a construction site, she notes.
  4. Check everything. “This is something I can’t emphasize enough: Check each invoice, list of materials, quotes, and anything else,” Sweeney writes. “Chances are something will be wrong, and problems found early are much easier to fix.” Sweeney says the quote for the doorknobs included the wrong count, and the window quote listed windows with the wrong grid pattern.

November 13, 2018

The last few years, the home improvement business has been booming as more homeowners look to spruce up their homes. But are owners getting too confident that they can do it all themselves? “Costs, pop culture, and perhaps overconfidence could be driving DIY culture,” according to a new study from NerdWallet, a personal finance website.

Where middle class owners can buy a home

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NerdWallet’s 2018 Home Improvement Report found that younger generations are particularly gung-ho about tackling home improvement projects themselves than other age groups. Homeowners under the age of 35 take on more than half of all their home repair or home improvement projects themselves, according to the study which surveyed about 2,000 adults in the U.S.

Eighty percent of all homeowners surveyed say that professionals charge too much for labor and materials. Further, 73 percent say there is a wide variety of resources available with enough information that homeowners feel they could do every single one of their home repair or improvement projects themselves if they chose to.

Some homeowners go DIY merely for the cost savings—but they tend to take on smaller projects when they do. Homeowners who did a kitchen renovation themselves typically spent $22,000 less than those who used a professional, according to the report. Landscaping and bedroom renovations were the most common projects that homeowners took on themselves rather than hiring a professional.

While homeowners may be more confident to take on a project, they don’t always complete it correctly. Forty-three percent of homeowners admit to butchering a DIY home project at least once. Thirty-five percent say a home improvement show influenced them to take on a DIY project that ended badly.

“Have some humility when you think about tackling repairs and renovations yourself,” says Holden Lewis, NerdWallet’s home expert. “If it’s a job you’ve never done before, and it’s hard to undo, think really hard whether you should do it yourself, even with the guidance of YouTube.”

For the most serious repairs, like those that involve plumbing and electricity, homeowners do say they are more likely to hire a pro.

Source:
2018 Home Improvement Report,” NerdWallet (Nov. 8, 2018)
October 15, 2018

Some home buyers may be drawn to the cachet of owning a property with a rich historical past, but there are more benefits than status. “Historic districts tend to hold their value better during economic downturns, and they appreciate more during upswings,” Tom Mayes, vice president for the National Trust for Historic Preservation in Washington, D.C., told realtor.com®. These areas come with “built-in character. They have a uniqueness and distinctiveness.”

Small town main street

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But buyers need to do some research before they purchase a historic property. Older homes can require more burdensome maintenance and updating, and there may be some restrictions on remodeling. Realtor.com®’s research team analyzed 500 of the largest urban areas in the U.S. to identify the areas with the most historic homes. They looked at the per capita number of properties listed on the National Register of Historic Places and the number of historic landmarks, as well as the property description of homes in those markets. The following are America’s most historic cities, according to realtor.com®:

1. Cambridge, Mass.

  • Median list price: $949,000
  • Properties listed on the national register: 209

2. Charleston, S.C.

  • Median list price: $305,000
  • Properties listed on the national register: 100

3. Davenport, Iowa

  • Median list price: $139,900
  • Properties listed on the national register: 251

4. St. Louis

  • Median list price: $174,900
  • Properties listed on the national register: 435

5. Santa Fe, N.M.

  • Median list price: $496,500
  • Properties listed on the national register: 61
October 26, 2018
Mortgage rates for 30, 15, ARM. Full information at http://www.freddiemac.com/pmms/

© REALTOR® Magazine

Borrowers were faced with rising mortgage rates again this week, after a slight pause from increases the week before.

“Despite volatility in the stock market, the 30-year fixed-rate mortgage inched forward just 1 basis point to 4.86 percent this week,” says Sam Khater, Freddie Mac’s chief economist. “We expect rates to continue to rise, which will put downward pressure on homebuying activity. While higher borrowing costs will keep some people out of the market, buyers with more flexibility could take advantage of the decreased competition.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 25, 2018:

  • 30-year fixed-rate mortgages: averaged 4.86 percent, with an average 0.5 point, rising slightly from last week’s 4.85 percent average. Last year at this time, 30-year rates averaged 3.94 percent.
  • 15-year fixed-rate mortgages: averaged 4.29 percent, with an average 0.4 point, rising from last week’s 4.26 percent average. A year ago, 15-year rates averaged 3.25 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 4.14 percent, with an average 0.3 point, climbing from last week’s 4.10 percent average. A year ago, 5-year ARMs averaged 3.21 percent.
Source:
October 9, 2018

Many buyers may be potentially leaving money on the table by failing to contact more than one lender when shopping for a mortgage. Two-thirds—or 65 percent—of 1,000 buyers recently surveyed said they didn’t shop around for a mortgage, despite it being the biggest purchase they’ll ever make.

Mortgage shopping

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The study, conducted by PenFed Credit Union, also found a lot of confusion surrounding mortgages. For example, 44 percent of home shoppers believe the best mortgage for them is always the one with the lowest rate.

“The lowest-rate mortgage isn’t always best and consumers should consider additional factors, including the total closing costs and the broader annual percentage rate,” according to the study. “It’s also important to choose a company you trust and consider one that you already have accounts with since it can simplify payments.”

Many consumers also believe being prequalified is the same as being preapproved, or they’re unsure of the terms, the study found. Being prequalified by a lender gives a buyer an idea of what they can afford, but being preapproved for a loan is the extra step that makes you a qualified buyer who can obtain financing for a home purchase.

The survey also found that a majority—58 percent—of surveyed Americans believe adjustable-rate mortgages are only for risk takers. However, lenders say that ARMs may be a viable option for homeowners who plan to stay in their home for less than five years. A 5/5 ARM has a fixed rate for the first five years, for example, and likely has a lower payment than a 30-year fixed-rate mortgage.

But by failing to shop around, consumers’ confusion over what mortgage is best for them may persist—and it could prove costly. A separate study earlier this year found that borrowers could potentially save an average of $1,500 over the life of a 30-year fixed-rate loan by getting just one additional rate quote when shopping for a mortgage, according to Freddie Mac. More quotes can offer even more savings—for example, 80 percent of borrowers who received one additional rate quote while shopping for a mortgage saved between $966 to $2,086 over the life of their loan. Borrowers who gathered five rate quotes saw an average savings of $2,914. Eighty percent of the borrowers who obtained five quotes saved between $2,089 and $3,904, according to Freddie Mac’s report.

Source:
October 16, 2018

Many homeowners may assume that if they retrofit their home with energy-efficient upgrades that they’ll be able to charge a premium at resale. But that’s not always the case nowadays, and the sales price boost may depend on how well the client chose their selling agent, according to recent studies analyzed in a new article by Kenneth Harney, a syndicated real estate columnist.

Green homes depend on agent

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In the past, studies have confirmed there is a price boost for “green” homes at resale. Some studies of home sales in California and Texas, for example, have shown green-certified homes tend to sell for anywhere from 2.1 percent to 8 percent more than similar homes with minimal or no green features.

But two recent studies by appraisers are calling into question the assumption of a green perk in home sales. The studies suggest that green improvements may help net a slightly higher price, but the premium will greatly depend on several factors, particularly how well versed the real estate selling agent is at selling green home features.

Sandra Adomatis, a real estate appraiser in Florida, found in both studies that having a real estate professional who is trained and knowledgeable at selling green properties is key to getting a price premium for green home features. Adomatis, who headed both research studies, looked at transactions of home sales in the San Francisco Bay area, Virginia, and Maryland, and found that green-certified homes did tend to sell for a premium—even up to 5 percent in some cases—but it depended on the real estate professionals’ marketing. The studies examined price differences in transactions by comparing similar homes, those with significant green features and those without. In some cases, where the properties were not heavily marketed or certified as green—despite having green features—the premiums dropped to 1 percent or lower.

An agent with formal training in the area—such as someone with a GREEN designation, which is also offered by the National Association of REALTORS®—may have a better skill set in knowing how to sell and present such added features. Harney also notes that a real estate professional trained in such ways would know to call out such green details in their local Multiple Listing Service, and for those MLSes that have it include “green fields” in their listings or a “green addendum” to detail the special features that make the home energy efficient.

Source:
October 9, 2018

After an inspector has finished a home report, buyers may feel overwhelmed by any flaws that might have been found. That’s why it’s important they take the opportunity to learn more so that they can move forward confidently in the transaction.

Home inspection questions

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A recent article at realtor.com® recommends home buyers ask their inspector clarifying questions like: “I don’t understand this; what does it mean?” or “Is this a major or minor problem?” and “Do I need to call in another expert for a follow-up?”

Home inspectors are bound to uncover something in a home; no home is perfect. But the majority of the problems they uncover will likely be minor. Have the home inspector clarify which problems fall within the “minor” or “major” categories.

Keep in mind: “The inspector can’t tell you, ‘Make sure the seller pays for this,’ so be sure you understand what needs to be done,” Frank Lesh, executive director of the American Society of Home Inspectors, told realtor.com®.

If the inspector identifies a potentially major problem, consumers will want to follow up whether they should call an additional expert in to investigate further. For example, consumers may need to bring in an electrician to take a closer look at potential electrical issues that were flagged or a roofer if a roofing problem is suspected. Those specialists can then give an idea of the cost to fix it, which the real estate agent can take to the seller to request a concession, if the seller doesn’t want to fix it prior to the sale.

Also, Lesh says that the list of items a home inspector identifies are issues the new buyer may need to address as soon as they move in. He says it’s like a “to-do list” for those items that did not get repaired by the seller prior to the sale.

Source:
October 10, 2018

Hurricane Michael gained strength early Wednesday to a powerful Category 4 storm that is threatening to become the strongest storm ever to strike the Florida Panhandle. The storm is expected to make landfall Wednesday afternoon, bringing destructive winds and flooding rain throughout the day.

If the storm continues its intensity and makes landfall as a Category 4, CoreLogic, a real estate data firm, predicts that about 84,200 homes in the Florida Gulf Coast will be at risk. Reconstructive costs could total up to $17 billion, as places like Crestview, Fort Walton Beach, Destin, Panama City, and Tallahassee face the brunt of the hurricane.

Two hands sheltering image of house drawn in chalk from rain

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Homeowners are bracing for impact, and if past hurricanes can offer a lesson, they would be well advised to check their homeowners insurance policies. “Most people fail to read their insurance contract to understand what’s covered and what’s not, and then they’re surprised after an event when they discover they didn’t have the coverage,” Lynne McChristian, a consultant to the Insurance Information Institute, told CNBC.

Flood damage is not covered under standard homeowners insurance policies, which means homeowners must get supplemental flood insurance through the federal government or private channels.

While homeowners in Michael’s path are unable to make insurance changes now, others in hurricane-prone areas should take events like this as a reminder to update their policies, McChristian says. The Atlantic hurricane season runs from June 1 to Nov. 30. Just three weeks ago, Hurricane Florence pummeled the Southeast and caused widespread flooding and wind damage in North and South Carolina.

The National Association of REALTORS® has a disaster preparation resource page to help homeowners and real estate professionals in the path of such storms, including Transaction Guidance After Natural Disaster and links to assist those filing a flood insurance claim.

September 24, 2018

Median home prices in cities with the highest risk of natural hazards have increased an average of 40 percent over the last 10 years, according to ATTOM Data Solutions’ 2018 Natural Hazard Housing Risk Index. That compares to an average increase of 24 percent in home values nationwide over the same time period. ATTOM Data Solutions tracked the risk of natural disasters, such as earthquakes, floods, hail, hurricane storm surges, tornadoes, and wildfires, and the dangers they pose to the nation’s housing stock in more than 22,000 cities.

Depiction of a supercell storm

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“While combined natural disaster risk has not seemed to hobble home price appreciation over the past decade, the story is much different for some individual hazard risks—namely flood, hurricane storm surge, and wildfire risk,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Home price appreciation in the overall U.S. housing market was double the rate of appreciation in cities with the highest flood risk and triple the rate of appreciation in cities with the highest hurricane storm surge risk over the past 10 years. The broader market has also outperformed appreciation in cities with the highest wildfire risk during the last decade, although the gap is much narrower.”

August 24, 2018

The shortage of homes for-sale continues to depress sales. Sales of newly built, single-family homes dropped last month and are now at the lowest level since last October, the Commerce Department reported Thursday. This follows on the heels of the National Association of REALTORS®’ report earlier this week that showed existing-home sales also dipped in July, reaching their sluggish pace in more than two years.

Contractors building a home

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“A lack of overall housing inventory is pushing up home prices, which is hurting affordability and causing prospective buyers to delay making a home purchase,” says Randy Noel, chairman of the National Association of Home Builders.

New-homes sales were at a 627,000 rate in July, about 1.7 percent lower than June sales. However, sales are now 7.2 percent higher than a year ago.

“Although this month marks the lowest sales pace since last October, we continue to see solid housing demand due to economic strengthening and positive demographic tailwinds,” says Danushka Nanayakkara-Skillington, NAHB’s senior economist. “Builders need to manage rising construction costs to keep their homes competitively priced for the newcomers to the housing market.”

The median price of new homes was $328,700 in July, which is 1.8 percent higher than a year ago.

Regionally, new-homes sales were up in the West (10.9 percent month-over-month) and the Midwest (up 9.9 percent month-over-month). However, those gains could not offset a 52.3 percent decline in the Northeast and a 3.3 percent drop in the South last month. “Year-to-date, sales in the Northeast are down 14.5 percent as the region deals with the impact from tax reform and persistent affordability issues,” NAHB notes in its release.

The slowdown in housing is getting the Federal Reserve’s attention, as reflected in the minutes of the central bank’s last meeting, which was released this week. Ward McCarthy, Jefferies LLC economist, noted:

“Housing activity in general has retreated from levels that were temporarily boosted by 2017 natural disasters—hurricanes and wildfires—that forced displaced households to seek alternative housing. The housing sector is also undergoing an adjustment to affordability that is less attractive than it was for most of the cycle, as well as changes in the treatment of SALT deductions in the federal tax code. That is the bad news. The good news is that there is no evidence of the type of imbalances that could cause a sharp downturn, such as heavy inventories and/or rising mortgage default and delinquency rates. We also note this is not the first temporary slowdown in housing activity this cycle.”

May 2018 Pending Home Sales - Content reflects article text.

© National Association of REALTORS®