The Strangest Real Estate Add-Ons

Daily Real Estate News | Monday, July 18, 2016 Some items should not be included in a home sale. But that hasn’t stopped some home sellers from trying to unload some unwanted items – or things – from snow machines to even the family dog anyway. Read more unusual tales from agents on the job (or submit your own) here. Realtor.com® recently featured some of the most bizarre items that home sellers have tried to sell with their home. Pets: Trying to give away Fido during a home sale apparently isn’t that uncommon. Glenn S. Phillips, CEO of Lake Homes Realty, recalls buying his first home with the seller offering his little black dog in the deal too. Phillips bought the home and took the little dog too, naming him “Mikey the Mortgage Dog.” Sally Slater with Douglas Elliman Real Estate in Bedford, N.Y., told realtor.com® that she sold her cat with her horse farm to buyers once. The buyers thought the cat would be good at keeping the barn free of mice and Slater realized that was the cat’s home anyway. A dungeon in the master: The owner of the home had an adult play area – resembling a dungeon – built into his master bedroom. The owner “refused to remove it, and he refused to lower the asking price,” recalls Dean Ferraro, a real estate professional in Oceanside, Calif., who says the home was listed about $500,000 over market value because the owner was adamant that his dungeon created more value. “He said he had invested a lot of money into it and was sure a buyer would enjoy it.” Eventually, after the home lingered on the market for six months, the owner refashioned the room into an office. The home finally sold. A snow machine and ski hill: How about your own ski hill? Buyers weren’t biting at that idea. One seller in the Hamptons offered up a 40-foot-high, man-made ski hill that even included a homemade snow-making machine for his home. The buyers of the home didn’t want it and insisted the seller remove the snow machine from the property (but they did keep the hill). However, they still got a surprise after closing – two cats were left behind. “After the closing, the buyers came to their new home to find the seller had left his [two] cats on the front porch with food and note for them to keep them,” says Palmer Gaget with Douglas Elliman in New York City. “I called the seller’s ex-wife, who came to get the cats immediately.” Source: “5 of the Weirdest Things People Have Tried to Sell With Their Homes,” realtor.com® (July 13, 2016)

What Moms Want in a House

Daily Real Estate News | Friday, July 15, 2016 The configuration of the home is more important to buyers with children these days, Jeff Martel, a real estate professional with Better Homes and Gardens Real Estate, told MarketWatch. Read more: Top 10 Cities for Families “Ten years ago, the only thing families were looking for was square footage and a large yard,” he says. But now more family home shoppers are placing an open floor plan high on their list rather than separated rooms. “Everything happens in the kitchen,” he says. “Kids use the islands now for breakfast, lunch and dinner.” Here are other house features that parents desire the most, according to real estate professionals: Office nook: Martel sees a declining interest in having a separate home office. Instead, he has more clients asking for an office nook off the main living space so that parents can better monitor their children while the kids are online. “You want a family office that’s very visible with a direct sightline to the kitchen,” he says. Garage access: Location of the garage is also important, adds Lindsay Alteri, who works for BHGRE in Raleigh, N.C., and is also a mother of two young children. “If there are stairs to and from the garage, are you going to be willing to go up and down them carrying a child” in from the car? she notes. Mud room: Also, a garage that walks into an area in the laundry room is desirable, adds Stacy Barry, a real estate professional at Century 21 Scheetz in Indianapolis. “You want a ‘mud room’ that has a bench and some storage for boots that’s done in a hardwood or laminate where you can drop everything like backpacks and jackets,” Martel adds. Built-in storage: “Kids come with clutter,” Martel says. Parents are wanting a lot of built-in storage in bedrooms, attics, spaces under stairs, and even hidden storage behind bookshelves. Source: “What Moms Look for When Buying a House,” MarketWatch (June 19, 2016)

Must-Have Design for Multigenerational Living

Daily Real Estate News | Monday, July 18, 2016 Multigenerational living is on the rise, due to grandparents moving in or millennials returning home. A record 57 million Americans – or 18.8 percent of the population – lived in a multigenerational family household in 2012, according to the Pew Research Center. Read more: Top Housing Preferences Depend on Your Age The homebuilding industry is paying close attention to this trend. They're changing design options to better accommodate multiple generations living under one roof. The Huffington Post recently spotlighted several key elements multifamily developers and homebuilders are keeping in mind when it comes to the demands of multiple generations in one home: Open access: Ensure access for every generation, from those who require a wheelchair or walker (by adding extra space through doors and hallways) to baby proof kitchens for young children. Model homes are merchandising these principles in homes they stage. More than one master bedroom: Aging parents moving into a home may increase the need for a second master suite with its own bathroom. This allows older generations to feel like they have their own space. Suite additions: In-law suites may be an alternative than an extra master bedroom. These mini apartments usually contain separate entrances and kitchens. More than half of home buyers aged 55 and older said they’d be willing to pay more for homes with in-law suites, according to a survey conducted in 2013 by NAR. Current zoning laws may restrict the presence of some of these structures, however. Privacy: When more people are sharing a home, privacy becomes more of an issue. One way to achieve greater privacy is to zone living areas to show potential owners how they can use one space for multiple functions and also accommodate different generations at the same time. For example, versatile living areas can help, such as by taking a large open area and designating spaces for built-in storage or shelving for toys that could present hazards for seniors. Source: “5 Design Features That Help Sell Multi-generational Housing,” The Huffington Post (July 14, 2016)

These Real Estate Markets Are Getting Very Hot

Daily Real Estate News | Tuesday, July 19, 2016 In a handful of markets, home prices are surging faster than inflation. However, rising home prices and the increase of bidding wars in some markets are due to a housing shortage and are not a sign of a housing meltdown, realtor.com® reports. Read more: 3 Reasons We're Not in a Housing Bubble Also, “only the most qualified buyers are able to get financing” for mortgages, says Jonathan Smoke, realtor.com®’s chief economist. “Flipping is back to normal. And we’re building about half as many homes as we need.” Smoke analyzed the 50 largest metro markets in the nation and looked at their housing trends from 2001 through 2015. He says there are some markets where the high prices likely can’t be sustained and are showing signs of overheating, though none of the metros are currently in “bubble” territory. “There are places that have risks,” Smoke says. “But even those places do not resemble what they looked like in their actual bubble years.” Realtor.com®’s research team pinpointed six factors that create a housing bubble to assess the 50 metro markets, including how quickly price appreciation has been climbing, the number of homes being flipped, how many buyers are getting mortgages, home prices compared with wages, home prices compared with rental costs, and the number of new homes being built. Smoke says the following six cities were showing the most signs of overheating: San Jose, Calif. San Francisco, Calif. Austin, Texas Salt Lake City, Utah Dallas, Texas Los Angeles, Calif. Source: “Bubble Watch: Could the Housing Markets in These Top Cities Be Getting Too Hot?” realtor.com® (July 18, 2016)

Two Ways to Compare Renting vs. Owning a Home

By Julian Hebron on 19 Jul 2016 Know-How When you're doing the math, make sure you've got all the data you need. One of the hottest topics in housing is whether it’s better to rent or buy a home. The answer always changes based on market conditions, so it’s handy to use a rent vs. buy calculator to do comparisons on the fly. But you should also know how rent vs. buy calculations actually work so you can feel confident in deciding what’s right for your budget and your family. Here are two easy ways to do this. Checking the numbers The first thing you need to understand is how rent vs. buy math works for you personally. You do this by calculating the monthly costs of home ownership, subtracting tax benefits, then comparing the final figure to the rental cost of a similar home in the same neighborhood. Let’s assume you have a credit score of 750, and a $300,000 home purchase price with 10 percent down (that’s $30,000) for a 30-year fixed mortgage. Current rates are around 3.25 percent. In this scenario, a mortgage calculator quickly tallies your total monthly housing costs as follows: Mortgage payment of principal and interest $1,175 Property taxes $300 Private mortgage insurance (PMI) $133 Homeowners insurance $67 TOTAL monthly housing cost $1,675 Next you calculate your tax benefit. As a homeowner, you get to deduct your mortgage interest and property taxes. To calculate annual mortgage interest, you multiply your $270,000 loan amount by your 3.25 percent rate to get $8,775. To calculate annual property tax, you multiply your $300,000 home price by a national average of 1.2 percent property tax to get $3,600. The sum of $8,775 in mortgage interest and $3,600 in property tax is $12,375 in deductible costs. Based on the income needed to qualify for a $300,000 home, your tax bracket is likely around 28 percent. To get a quick estimate of annual tax savings, we multiply $12,375 by 28 percent to get $3,465. Next we divide $3,465 by 12 months to get a monthly estimated tax savings of $289. Then we subtract $289 from your total monthly housing cost of $1,675 to get estimated after-tax cost of $1,386. Finally, you compare this estimated after-tax housing cost of $1,386 to market rent for a comparable home in the same city. Be sure to compare properties of the same size, quality, and location to ensure your analysis is accurate. How long before owning is cheaper than renting? The second thing you need to understand is how long it takes for buying to become more financially advantageous than renting. The threshold you cross when buying becomes more favorable is called the breakeven horizon. This is a calculation Zillow’s team of economists created to incorporate all possible buying costs and benefits such as the down payment, closing costs, mortgage payment, property taxes, insurance, utilities, maintenance, and tax benefits, as well as all renting costs for the same home. Calculations also incorporate home value and rental price appreciation. Breakeven horizon is the year when buying costs become less than or equal to renting costs, when accounting of all of the factors noted above. According to the most recent quarterly data, the breakeven horizon is less than two years in 72 of America’s 100 largest markets. When it comes to making an investment as large and as long-term as a home purchase, this is a very compelling breakeven period. The latest report allows you to look at local markets so you can see what the breakeven horizon is for you, and the tables also include median rents for quick reference. Take all this data into consideration when making your rent vs. buy decision. Related: Renting or Buying a Home: Which Is Best for You? 5 Ways to (Really) Save for a Down Payment Quiz: Are You a Savvy Mortgage Shopper? Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

First-Time Buyers Not Picking “Starter Homes”

Daily Real Estate News | Tuesday, July 19, 2016 The “starter home” trend may be fading in real estate. Prior to the housing bubble, first-time buyers with average incomes would shop for a more affordable, smaller house with the idea of moving on to a larger home in a few years. Starter Homes: Are They Over? New Homes Are Getting Bigger and Pricier Builders Shy Away From Starter Homes Today’s first-time buyers want a home that meets their needs now and in the future. Seventy-five percent of first-time buyers say they prefer to skip the starter home and find a house that meets their long-term needs, according to a survey commissioned by Bank of America in early 2016. Thirty-five percent say they even intend to stay in that home until they retire. First-time buyers nowadays tend to be higher earners, and due to rising home prices and tighter housing inventories they are wanting to buy a home where they can stay put for a long time. In 2013, first-time buyers purchased homes with an average of 1,845 square feet. The average home in the U.S., meanwhile, is just 1,819 square feet, according to BuildZoom, a real estate construction firm’s analysis of data from the Census Bureau. "So those home buyers who probably would have been looking for the lowest-end homes 10 years ago during the housing boom are today just not able to buy. And those that are able to buy are looking further upmarket," says Issi Romem, chief economist for BuildZoom. Many first-time buyers aren’t planning to upgrade and move on in five years, like they once did. They plan to stay put. "When they do purchase, they're planning on living there longer than buyers that we've seen in the past," says Jessica Lautz, NAR’s managing director of survey research. "They're expecting to live there 10 years." Source: “More First-Time Buyers Skip Starter Home Stage for Bigger, Better,” USA Today (July 17, 2016)

Builders Ramp Up Production This Summer

Daily Real Estate News | Wednesday, July 20, 2016 Builders are finally adding more homes into the pipeline. Housing starts across the country rose in June, ticking up 4.8 percent month over month to a seasonally adjusted annual rate of 1.19 million units, the Commerce Department reports. Permits, a sign of future construction, also rose, up 1.5 percent in June, and is at a seasonally adjusted annual rate of 1.15 million units. Buyers Want New Homes... New-Home Sales Surge to Post-Recession High Builders: Lot Shortages at Record Highs The West Drives New-Home Sales Jump “This month’s uptick in production is an indicator that the housing market continues to move forward,” says National Association of Home Builders Chairman Ed Brady. “At the same time, builders are adding inventory at a cautious pace as they face lot shortages and regulatory hurdles.” Single-family housing starts climbed 4.4 percent in June to a seasonally adjusted annual rate of 778,000 units. Multifamily production rose 5.4 percent to 411,000 units. “The June report is consistent with our forecast for a gradual but consistent recovery of the housing market,” says Robert Dietz, chief economist of the NAHB. “Single-family production should continue to strengthen throughout the year, buoyed by job growth, new household formations, and low mortgage interest rates.” By region, single- and multifamily housing starts posted the highest month-to-month gains in the Northeast, rising 46.3 percent in June, followed by a 17.4 percent increase in the West. On the other hand, the Midwest registered a 5.2 percent decrease in starts last month, while the South saw a 3.4 percent drop. Despite the overall drops, all regions of the country saw an increase in single-family production. Source: National Association of Home Builders

Student Housing Is Booming

Daily Real Estate News | Wednesday, July 13, 2016 The student-housing sector is reaching new highs. In the first quarter of this year, capital pouring into student housing reached a record $2.6 billion, according to commercial real estate services firm JLL. Sales volume for the student-housing sector was up 66.2 percent year-over-year. "We are seeing more direct deals by foreign investors this year," says Lucy Fletcher, a managing director and international capital expert at JLL. About half of the volume — or $1.4 billion — came from offshore investors, Fletcher says. Get Educated About Opportunities in College Towns 7 Most, Least Affordable College Towns 10 Best College Towns for House Flippers Help Parents—or Yourself—Tackle Rising College Costs Land lease agreements are also growing in popularity for campuses that need repositioning or that have been vacant, adding fuel to the boom, the National Real Estate Investor reports. "Investors are buying into really well-managed platforms. There is large pent-up demand across the entire sector of core products," says Scott Streiff, JLL executive vice president. Class-A products are deemed as those having enrollment of 30,000 students or more. "We are seeing investors chasing core products that deliver attractive cap rates with projected student enrollment increases." The student-housing sector tends to be recession-proof, and investors are viewing it as safer than some other investment classes. "I don't know if there will ever be a point of supply and demand meeting in this sector," adds Jaclyn Fitts, national director of student housing at real estate services firm CBRE. Student housing reached a new record in the 2014-15 academic year, adding about 60,000 beds, according to CBRE data. CBRE predicts another 45,000 student-housing beds will be added in 2016-17. "There will continue to be investment opportunities in 2017 and 2018," Fitts told the National Real Estate Investor. "We will continue to see new development in 2017. Additionally, purpose-built student housing properties completed in the 2000s are primed for repositioning, so we will continue to see opportunity there in rehabbing first-generation purpose-built [properties] and raising rents." Source: “Student Housing Sector Continues to Outperform,” National Real Estate Investor (July 12, 2016)

Millennials Want Suburbs That Feel Like a City

Daily Real Estate News | Wednesday, July 20, 2016 Millennials may be drawn from pricey city centers to the less expensive suburbs, but nonetheless say they want a suburb that still has the look and feel of a big city in some ways. Some suburbs are finding means to cater to that desire and promoting the amenities they can offer to attract more younger people. The Next Big Thing: The 'Burbs A Model for the Future Millennials Want the 'Anti-Suburb Suburb' Smart Growth: Where Do You Start? For example, some are touting their specialty shops, dining options, and the plentiful sidewalks, bike lanes, and trails. The bike lanes and trails may be one of the biggest lures. Homes near walkable — and bikeable — trails get a premium boost of 5 percent to 10 percent, according to a study by Headwaters Economics, a research group focused on land management and community development. “What’s happening is, a little bit of the city is following people into the suburbs,” says Ed McMahon, senior resident fellow at the Urban Land Institute. “Almost all the successful suburbs are building walkable, mixed-use [i.e., a housing and shopping combo] centers.” Also possibly getting more millennials relocating to the suburbs, more companies are either moving or expanding to suburban areas to lower their operating costs. “What millennials want are places that have a vibrancy, where you … can shop, go out to bars, walk, and bike,” says Lynn Richards, president and CEO of the Congress for the New Urbanism. Suburban communities across the country are spending more money to overhaul their Main Streets and make their downtown more walkable, says Brett Schwarz, program manager at the National Association of Development Organizations. They’re installing bike paths and trails that link to neighborhoods or nearby towns. In the past year alone, 136 communities nationwide applied to be designated as bicycle-friendly communities through the League of American Bicyclists (63 were suburbs, while 17 were rural towns). Bicycling is becoming the fastest-growing form of transportation in the country, according to McMahon. In 1983, more than 87 percent of 19-year-olds had a driver’s license. By 2014, that percentage has dropped to 69 percent. Source: “Bike Lanes Are Bringing More Millennials to the Suburbs,” realtor.com® (July 20, 2016)