Realtors, homebuyers are confident in today’s real estate market

Realtors in 37 states expect buyer traffic to be "strong" in 2018 BYMARIAN MCPHERSON Staff Writer JAN 5 Association of Realtors (NAR) today released the results of the Realtors Confidence Index (see report below), which measures NAR members’ expectations for the housing market over the next six months on a scale of 1-100. Source: National Association of Realtors According to the results, Realtors are confident about what the first half of 2018 will bring, especially when it comes to the sales pace for detached, single-family homes. Respondents in 36 states expect the sales pace to be “strong” (60+ points), while respondents in four states (Oklahoma, Illinois, West Virginia and Connecticut) only expect the market to be “stable.” The only state to receive a “weak” (50 points or less) rating was Alaska. Meanwhile, realtors in Washington, Nevada, Nebraska, Wisconsin, Kentucky, Tennessee, South Carolina, Delaware and Rhode Island expect their market to be “very strong” (75+ points) in 2018. When it comes to the sales pace for townhomes and condominiums, the outlook remains relatively robust with respondents in 41 states also expecting the 12-month outlook to be “stable” to “very strong” for townhomes, and respondents in 16 states expecting the 12-month outlook to be “strong” for condos. Will it be a buyer’s or seller’s market? Thanks to continued inventory issues, economists and real estate experts alike are predicting that 2018 will be a seller’s market, giving homeowners pricing leverage in a landscape with weak residential housing starts. Sixty-nine percent of respondents expect home prices to grow over the upcoming year, with the highest home price growth in the West and Southeast. Realtors in Florida, Maryland, Colorado, Nevada, Arizona and Washington expect home prices to skyrocket anywhere from 4 percent to 6 percent. Meanwhile, survey takers in Alaska, North and South Dakota, Oklahoma, Iowa, Illinois, Missouri, Louisiana, Mississippi, Vermont and Connecticut expect home prices to remain essentially unchanged with 0 percent to 2 percent growth. Furthermore, respondents said homes have been selling, on average, within 40 days and at a 31-percent premium. Despite these factors, Realtors expect buyer demand to remain robust over the next twelve months, echoing studies about millennials finally entering the homebuying market and buyers of all ages taking advantage of jobs and wage growth. The buyer traffic index is at 62, meaning that most Realtors expect buyers to continue vying for their dream homes. Respondents in 37 states expect buyer traffic to remain “strong,” and another seven states are expected to be “stable.” Buyer traffic in the Dakotas, Alaska, Louisiana and West Virginia is predicted to be “very weak” or “weak.” Delaware is expecting to have a knockout year. Realtors are still wary about the effects of low inventory and the tax reform bill, which includes changes to the mortgage interest deduction, state and local tax (SALT) deductions and capital gains taxes.

Landlords starting to accept digital currency for rent

On both coasts, companies are beginning to accept bitcoin, ethereum, and other popular digital cryptocurrencies to appeal to younger renters BYGILL SOUTH Staff Writer JAN 4 Forget cutting checks to pay for rent. On both coasts, several tech-forward real estate companies have begun accepting digital currency for rental deposits and payments, coinciding with the growing general interest in, and value of, these new electronic payment systems. On the West Coast, Hubilu Venture Corporation, a real estate asset management company which buys student housing and investment property around the University of Southern California (USC) campus, announced today it will accept rental payments in bitcoin, ethereum, bitcoin cash and litecoin–all popular digital currencies. Hubilu said it would use the Coinbase digital currency exchange for processing the cryptocurrency in their “respective blockchains.” Blockchains are the computer-based ledgers that record who owns how much of a given cyptocurrency, and keep a running tally of transactions made with each currency. Hubilu CEO, David Behrend, said in a press statement that, “we know the importance of digital payment systems and believe in the long term adoption of cryptocurrency.” Meanwhile across the country in Brooklyn, New York, tech-savvy brokerage Brookliv has begun accepting bitcoin for rental deposits, according to science and tech publication Inverse. The company reportedly has been accepting digital currency rental payments from three tenants already. Brookliv broker Ari Weber told Inverse that his company made the decision to accept payment via digital currency to appeal to his young rental base and as a way to stand out in a crowded market. Inverse also flagged that online rental payment platform, ManageGo is accepting bitcoin and other cryptocurrency for rent payments, although it is taking on the responsibility of converting the cryptocurrency into US dollars before putting it into property manager client accounts. Will other brokerages, landlords, and property holding companies follow suit in accepting digital currency for rent? That remains to be seen, but it’s probably a safer bet than buying into the currencies themselves.

Does the American Dream no longer include homeownership?

While it has no official definition, the American Dream has always been the notion that citizens of the United States can better their lot in life through hard work. That encompasses the idea that hard-working kids of hard-working parents would have a better life than the previous generation, and homeownership has generally been considered part of that. A decade after the housing market crashed, the homeownership part of the American Dream has become more elusive, according to a new study from Pew Research Center. The report, which analyzed Census Bureau housing data, showed that more United States households "are headed by renters than at any point since at least 1965." Between 2006 and 2016, the U.S. added 7.6 million households, but "in part because of the lingering effects of the housing crisis," according to Pew. During that 10-year period, the number of households renting their homes jumped from 34.6 million (31.2% of the total) to 43.3 million (36.6%). That tops the relatively recent high watermark of 36.2% renting in 1986 and 1988, while coming in just below 1965's 37% renters rate. Young adults lead the way While young adults have historically been more likely to rent than other age groups, the numbers are increasing. More than 6 in 10 (65%) of households headed by someone under 35 rent, Pew reported. That's up from 57% in 2006 but it's not as big a gain as the 35-44 age group made where the percentage of renters jumped from 31% in 2006 to 41% in 2016. The numbers rose among Americans 45-64 as well, going from 22% in 2006 to 28% in 2016. In fact the only demographic studied that did not post an increase was those 65 or older who stayed flat at 20%. It's not that people don't want to buy In many cases the increase in renters has been blamed at least partially on Millennials not wanting to be tied down or not working hard enough to afford buying. In fact most renters want to buy, according to a separate Pew report: "In a 2016 Pew Research Center survey, 72% of renters said they would like to buy a house at some point. About two-thirds of renters in the same survey (65%) said they currently rent as a result of circumstances, compared with 32% who said they rent as a matter of choice. When asked about the specific reasons why they rent, a majority of renters, especially nonwhites, cited financial reasons." While mortgages are cheap on a historical basis, inventories remain low, prices have soared, and mortgage standards have remained tough. Banks and other lenders may have more flexibility than they did right after the housing crisis, but the days of stated income, low-doc, or even no doc loans are largely gone. Add in the fact that some capable, qualified buyers have decided to put off homeownership due to lingering fears over the economy and you can see why homeownership has declined. Americans still want to buy houses. Some of us can't afford to right now, while others are waiting for better opportunities. Many simply lack the means to reasonably expect ever to be able to make a purchase. Owning a home remains part of the American dream, at least for most Americans, but it's also a less attainable goal than it was for previous generations.

DAILY REAL ESTATE NEWS | WEDNESDAY, NOVEMBER 29, 2017 The front porch—a classic feature of American homes—is making a comeback but with a twist.

The Front Porch Is in Demand Younger crowds are literally turning porches into stages. “Porchfest” is growing in popularity across the country, in which neighborhood music festivals pop up that are enjoyed from homeowners’ front porches. The Atlantic Monthly’s CityLab reports: “In the Instagram age, the front steps have become places to see and be seen, throw a rocking concert or party, and to foster metropolitan community in a walk-by, stop-in-for-wine sense.” Read more: Welcome Back the Front Porch Shelley Glica in Niagara Falls, Ontario, told CityLab how she organized a Porchfest in her community and how in warmer months she’ll also host a “Stories From the Porch” series of speakers on art, history, and culture. Glica and others represent a generational rethinking of the front porch, CityLab reports. Porches are growing in demand across the country. Twenty-three percent more new homes are being constructed with a front porch than two decades ago. The number of new homes built with porches was at 65 percent last year, according to the National Association of Home Builders. In the Southeast, that figure jumps to 86 percent. An NAHB survey from 2016 also shows that millennials—more than any other age group—say they want a porch. The front porch was once a celebrated signature of Federal architecture. In the 1800s, past presidents had launched successful front-porch political campaigns. For homeowners, front porches were a place to do chores, such as shuck beans, or to get fresh air on hot days before air conditioners. But once air conditioning was invented, Americans showed less need for cooling porches in the middle of the 20th century. The invention of televisions also pushed homeowners inside more. Nowadays, younger generations are finding the porch can be an enjoyable hangout spot. Scott Doyon, who organized a Porchfest in the Atlanta area, says the front porch is now being used as a place to host friends over for hors d’oeuvres or even sharing a concert on Instagram or other social media. “I try to find ways to plug those old ways of living into the modern world,” Doyon says. “I still believe in the value of porches as a conduit to community-building—it just unfolds in a different way now.” Source: “America Rediscovers Its Love of the Front Porch,” CityLab.com/The Atlantic Monthly (Nov. 20, 2017)

Charity Deduction Faces Same Tax Reform Risk as MID

Of all the itemized deductions, the one for charitable contributions might seem to come out the best under tax reform. That’s because it’s the only deduction under both the House and the Senate versions of the bill that is largely undiminished. And yet charities complain donations will dry up under tax reform. What gives? b“Provisions in the tax bill the House and Senate are considering would make the situation worse” for charities, Ray Madoff, director of the Boston College Law School Forum on Philanthropy and the Public Good, says in a Nov. 27 New York Times opinion piece. The problem, Madoff says, is the near doubling of the standard deduction. With all of the other itemized deductions either going away or constrained by new caps, most households will opt for the standard deduction rather than continue to itemize. That renders the tax deduction for charitable giving nearly meaningless. As Madoff puts it, “A vast majority of American taxpayers would no longer itemize and therefore would receive no benefits for their charitable giving.” That argument might sound familiar. It’s the same one NAR is making about homeownership. Under the Senate bill, the mortgage interest deduction would be left intact, but the deduction for state and local taxes would go away. In the House, MID would be limited to mortgages of $500,000 and the deductions for property taxes would be capped at $10,000, while the deduction for state and local income and sales taxes would be entirely repealed. So, while MID is preserved, either entirely or in part, very few households that itemize today would continue to do so. As a result, MID would continue to be a benefit only for the wealthiest households. Given the structural changes to the tax code lawmakers have before them, preserving the deduction for charitable contributions is mostly meaningless. This is exactly the same thing REALTORS® are saying about tax incentives for homeownership. They’re meaningless for most households if tax reform passes in its current form in both the House and the Senate. More on tax reform’s impact on homeowners in The Voice for Real Estate.

Selling an Older Home? Budget-Friendly Ways to Help It Compete Well With Newer Homes

For those who own and enjoy living in an older home, it can be disappointing to discover that many buyers, especially younger ones, often shy away from these stately beauties. Even when an older home offers features that are hard to find in newer construction, such as large pantries, plenty of storage space and large rooms with high ceilings, it can still lose out to newer homes that offer more open floor plans or more light. Owners of older homes who want to help their homes compete more effectively with newer construction homes can use the following tips to help level the playing field and score the sale! Conduct a Pre-Inspection to Find Lurking Issues Buyers who love the thought of living in an older home but hesitate to purchase one due to concerns about maintenance costs may be persuaded to change their minds if the sellers are willing to add something extra to the deal. One effective tool that sellers can use to help convince buyers that an older home is sound is to have it pre-inspected. If the pre-inspection report finds the home has a repair or condition issue, sellers can include documentation to show what they did to resolve the issue. This type of home pre-inspection will typically cost sellers a few hundred dollars, depending on the size and design of the home. To get an exact cost, sellers can ask their real estate professional for local home inspection prices and referrals to a reputable home inspector in their area. Once the inspection has been completed and any necessary repairs attended to, the sellers may want to ask their listing agent to use the pre-inspection notice and resulting documentation as part of their marketing to help encourage buyer interest. Gift Buyers with a Home-Warranty Plan Another relatively low-cost way for an older home seller to help encourage interested buyers is to offer a home warranty plan as a buyer incentive. Most home warranty plans cover: Systems in the home, including electrical, HVAC, and plumbing Large appliances, such as the refrigerator, hot water tank, and laundry appliances Additional coverage options for hot tubs, pool equipment, well pumps, and other features Alternative seller coverage while the home is under contract Home warranty premiums and levels of coverage vary by company. Sellers who are interested in purchasing a home warranty plan as part of their marketing strategy should discuss their plans with their listing agent. Their agent will be able to help them find a reputable warranty company and choose the best policy for their situation. Consider Repainting the Interior A common reason buyers give when deciding not to buy an older home is because they felt the home's interior was dark or dreary, when compared with newer homes that have a more open floor plan or larger windows. A cost-effective way for sellers to remedy this problem is to consider repainting the interior of the home in a lighter color. By using the same color throughout the home for the walls and adding an even lighter shade for woodwork and trim, the home will have more continuity, making it seem lighter and more attractive to today's active buyers. Maximize Lighting and Minimize Window Treatment Sellers may also want to make changes in the lighting to make the interior of the home feel lighter and more inviting. To this, sellers can start by replacing existing light bulbs with newer, brighter ones that offer a natural light. Adding additional lamps and situating mirrors to maximize the light sources in the home can also be effective in brightening up the interior of an older home. If the home has heavy draperies or dark window treatments, replacing them with sheer panels or allowing some windows to go bare is another excellent way to bring more light into the home. For more ideas on making an older home compete more effectively with newer homes in the local real estate market, sellers should consider asking their listing agent to show them an older home in the area that is attracting plenty of buyer attention or has recently gone under contract. Viewing it may provide additional ideas that sellers can use to make their home more saleable. The listing agent can also help sellers identify problems by touring the home and pointing out areas that need additional lighting or some other improvement to help attract and retain buyer interest.

Should you rent or buy a home?

Homeownership was once the cornerstone of the American Dream, but times are changing. More U.S. households are renting today than at any point in the last 50 years, according to a Pew Research Center analysis. For many people, the comforts of home include a well-funded bank account -- and in some circumstances, renting can be more financially savvy than buying. Ask yourself these questions as you make long-term housing decisions. You might find that renting is the better option. 1. How long do you plan to stay? Whether renting or buying a home is the best financial choice usually comes down to one thing: timing. Finding an affordable home (and later making a profit on it) depends heavily on how long you plan to keep the property. According to Zillow, for instance, the current home listing price in Bothell, Washington, is $698,448, and the average rental price is $2,500. Assuming a 20% down payment on a home purchase or a 5% annual increase in rental price, you'd need to own the home for at least two years before it becomes the better option. Keep in mind that not every market is booming. In fact, two-thirds of U.S. homes still haven't returned to their pre-recession values, according to a Trulia report, and owners looking to cash out may have to wait until 2025 before securing a profit. Carrying debt is something of a risk, and a 12-month lease gives you the freedom to move and adjust your housing expenses based on your current needs and income level -- two things a fixed mortgage can't deliver. Do your homework and use a comparison calculator to help you understand the costs of buying and renting. 2. Do you know all the costs? Comparing rental prices to mortgage payments is a good start, but it's also important to consider the hidden costs associated with each. For renters, the "cost" is the lack of home equity and the inability to claim housing-related tax breaks. For example, suppose you're a homeowner who lives in New York and falls within the 28% income tax bracket. If your mortgage is $200,000 with a 4.5% interest rate, you qualify for $3,585 a year in tax deductions. That said, you'll also deal with expenses that don't impact a renter's monthly budget, including: Homeowner's insurance: Protecting your home from damage comes at a price, and while insurance rates vary, the rule of thumb is to divide your home's value by 1,000 and multiply the result by $3.50. If you home's value is $200,000, for instance, you'd pay around $700 per year, or $58 per month, for coverage. Renter's insurance, meanwhile, is usually less than $20 per month. Private mortgage insurance (PMI): If you have less than 20% equity in your home, expect to pay PMI, which is usually between 0.50% and 1.2% of your loan value. For example, 1% assessed on your $200,000 mortgage would add $200 to your monthly housing expenses until you built up at least 20% equity in your home. Property taxes: A typical household spends $2,127 each year on property taxes, but you could pay much more depending on location and community benefits. Maintenance: Homeowners shell out nearly $170 per month on average for regular maintenance and repairs, and that's not including big-ticket items like a roof repair, a new HVAC system, and other needs that can cost four or five figures. In this scenario, owning that $200,000 home costs $7,267 a year in extra expenses -- more than double what you'd save in taxes. As a renter, you won't need to worry about adding these fluctuating expenses to your budget, and your landlord may even pick up the tab for your utilities, saving you even more compared to the average homeowner. Consider the hidden costs to learn whether those big tax breaks are worth it. 3. Are you "throwing money away?" It's often said that renting is "throwing money away," but building home equity isn't the only way to watch your money grow. There's no denying that property can be a valuable asset, but on a month-to-month basis, owning a home is still more expensive in all 50 states, according to a 2017 NerdWallet analysis, and an inflated budget can seriously impact your ability to save for retirement. According to the Economic Policy Institute (EPI), the average American has less than $5,000 in savings, and couples between age 50 and 55 only have about $125,000 earmarked for their golden years. That's not nearly enough to fund a long and financially secure retirement, and lower monthly costs can help you divert funds into catch-up 401(k) and IRA contributions, liquid savings, and other investments. For instance, if you're 50 and can save $500 a month in housing-related costs, investing it at a 7% return will yield almost $169,000 by the time you reach age 66. Over the course of several years, you'll likely come out ahead by owning rather than renting. However, if you have reason to doubt your ability to keep up with the costs of homeownership, or if purchasing a home would leave you unable to save for the future, then renting could be the more responsible choice for now.

1031 Exchanges Under Threat?

Daily Real Estate News | Thursday, June 15, 2017 A major tax advantage for the commercial real estate industry may be one of the casualties in a sweeping federal tax reform expected this year, The Wall Street Journal reports. Read more: Lawmakers Need REALTORS® on Tax Reform We Could Lose 1031s. Here’s Why That Matters Some lawmakers are eyeing the 1031 exchange provision to get the tax-rate cut they seek. The provision allows sellers of real estate and other assets to defer capital gains taxes by reinvesting any profit in “like-kind” properties. The 1031 exchange applies to a range of assets, but real estate accounts for the largest portion of exchanges at 36 percent, according to Ernst & Young LLP data. The Joint Committee on Taxation estimated in 2014 that repealing like-kind exchanges could raise $40.6 billion in extra tax revenue over one decade. Several lawmakers consider the provision to be loophole that has limited economic benefit and, therefore, some are looking to put it on the chopping block in order to pay for lower tax rates. For example, Mark Mazur, the director of the Tax Policy Center, says 1031 exchanges “really have become just a way to defer tax liability.” However, real estate executives believe that any move to get rid of 1031 exchanges would be devastating to the economy and the industry. A recent report by Green Street Advisors says that like-kind exchanges are used in 10 percent to 20 percent of commercial real estate transactions. Any threat to 1031 exchanges “would cause a lot of transactions not to occur,” says Jeffrey DeBoer, chief executive of the Real Estate Roundtable. He adds that investors who purchase real estate through 1031 exchanges are more likely to invest in those properties than those who pay cash. “Therefore, you have capital you can now put into the newly acquired property.” The House Ways and Means Committee has yet to release a bill on the matter, although The Wall Street Journal reports that the chatter among lawmakers on such legislation is growing. Maintaining 1031 exchanges is a top priority for the National Association of REALTORS®. Earlier this year, NAR President William E. Brown said the association will meet any proposals to curb 1031 exchanges with strong resistance because the provision is a vital vehicle in driving commercial real estate development. “If that goes away, commercial real estate will be decimated,” Brown said earlier this year. “That’s something we’re being very clear about with Congress. This provision is to commercial real estate what [the mortgage interest deduction] is for residential real estate. We will fall on our sword for this.” Source: “1031 Exchanges, a Cherished Real Estate Tax Break, Faces Extinction,” The Wall Street Journal (June 14, 2017) [Log-in required.]

Homeowners and Appraisers Disagree on Home Values

Daily Real Estate News | Thursday, June 15, 2017 Homeowners feel like their homes are worth more than what appraisers say they are, and the gap between the two estimated values has grown for the sixth consecutive month, according to Quicken Loans’ National Home Price Perception Index. Read more: Owners, Appraisers Aren't Seeing Eye-to-Eye Appraised values were, on average, 1.93 percent lower than what homeowners expected, according to the index. Appraisals are drifting farther from owner estimates, even though their assessments continue to rise higher each month, the index shows. “It’s important for consumers to see the HPPI and not only think about the difference in perceptions, but the different perceptions across the country,” says Bill Banfield, Quicken Loans executive vice president of capital markets. “Home values, and home value changes, vary widely depending on the city you’re in. Homeowners, and those looking to buy a home, should keep a close eye on their local market to better understand home values in their area.” For example, in Denver and Dallas appraisals are nearly 3 percent higher than what homeowners expect. On the other hand, in Philadelphia and Baltimore appraised values are more than 3 percent lower than what owners estimate. Source: Quicken Loans

Wealthy Buyers Turn to Bank-Owned Homes

Daily Real Estate News | Friday, June 16, 2017 Wealthy home buyers are getting around the pervasive inventory crunch by snapping up bank-owned properties and making high-end renovations. Homes listed as REOs “used to be a huge anchor on the property, but now it propels it,” Danny Hertzberg, an agent with the Jills Group at Coldwell Banker in Miami Beach, Fla., told The Wall Street Journal. Hertzberg says luxury bank-owned properties in his market are discounted about 10 percent, much less than the 20 percent to 30 percent discount that was typical a few years ago. Hertzberg recently sold a 10,383-square-foot waterfront REO property with six bedrooms for $8.7 million, which was 6 percent below the list price. The home had been appraised for about $13 million. But the market for bank-owned homes is also getting tighter. In April, the number of properties nationwide in some stage of foreclosure was 734,996—down 66 percent from a peak of 2.2 million in 2010, according to data from ATTOM Data Solutions. In 2016, million-dollar homes made up 2.06 percent of all REO sales, the largest share in three years, says Daren Blomquist, senior vice president at ATTOM Data Solutions. Research firm Clear Capital analyzed 20 metro areas with the highest number of distressed properties listed for more than $750,000 and found the median sales price to be $932,500. That is 3.4 percent lower than the sales price of non-distressed homes in those markets. The largest discounts for luxury distressed properties were in Dallas, where they sold for a median of 13 percent below asking price. On the flip side, in San Jose, Calif., such properties sold for just 0.5 percent below the list price. Source: “Bank-Owned Homes Get a Fresh Look From Wealthy Buyers,” The Wall Street Journal (June 14, 2017)

Study: The income needed to buy a home in the Bay Area has doubled in five years

Study: The income needed to buy a home in the Bay Area has doubled in five years By Amy Graff, SFGATE Updated 9:32 pm, Tuesday, August 15, 2017 A home for sale in San Francisco where the median-price on a single-family home is $1.45 million.Keep clicking for the 20 least affordable places to live in the U.S., according to Forbes. Photo: Michael Noble Jr., The Chronicle Photo: Michael Noble Jr., The Chronicle A home for sale in San Francisco where the median-price on a single-family home is $1.45 million. Keep clicking for the 20 least affordable places to live in the U.S., according to Forbes. The most arresting data point in a new report from the California Association of Realtors reveals that the income needed to buy a median-priced single-family home in the Bay Area has nearly doubled in five years. Back in 2012, a minimum annual income of $90,370 was needed to purchase a Bay Area home at the median price of $447,970. Now, a home buyer needs to be bringing in $179,390 to afford a mean-priced house at $895,000, the report looking at second-quarter 2017 home sales data concludes. This reality of skyrocketing real estate prices might seem rather unfair to those of us who haven't seen our salaries shoot through the roof. If you're trying to save for a home, it can be difficult to keep up with the rising prices unless you're receiving significant raises at work. Before you house-hunt, you've got to answer two questions. How much house can you afford, and how much house should you actually buy? And even if you do achieve that golden salary of $179,390, don't expect it to get you anything within San Francisco city limits where the median-priced home costs a staggering $1.45 million and requires a salary of $290,630. In fact, according to the report, only 12 percent of buyers in the city can actually afford a median-priced single-family home. The outlook is also rather grim in San Mateo (14 percent ), Marin (17 percent), Santa Clara (17 percent) and Alameda (19 percent) counties, all among the least affordable spots in the Bay Area. Solano County was the most affordable with 44 percent of buyers being able to purchase a median-priced home of $412,000 with a salary of $82,580. Here 44 percent of buyers can afford a home. Sonoma and Napa ranked the second most affordable with 25 percent of home buyers able to buy a home.

Thinking of buying a house? Here's where to start

Home Trends Thinking of buying a house? Here's where to start by Kathryn Vasel @KathrynVasel June 12, 2017: 12:18 PM ET So you're ready to take the leap from renter to homeowner -- but where exactly do you start? Many first-time homebuyers across the country are facing brutally competitive markets that favor sellers. That means buyers need to bring their A game to snag a pad of their own. Especially if you're a newbie. The road to homeownership can be long and daunting, but here's where experts say you should start. Powered by SmartAsset.com SMARTASSET.COM Check your bank balance How much have you saved for a down payment? Nothing? You might want to start there. Lenders usually like to see a 20% down payment before they'll give you a loan. But it's not a requirement. There are also a bunch of low down payment loans available, including government-backed FHA loans that only require a 3.5% down payment. Either way, you're gonna need some cash. So now's the time to start evaluating your spending habits and finding areas to cut back and sock that savings away. Note that anything less than 20% down means you'll pay more every month -- not only will you be borrowing more money, but you'll also likely be charged private mortgage insurance fees on top of your mortgage payments. Smaller down payments also make it tougher to compete in a hot real estate market filled with all-cash buyers who often win out in bidding wars. Know your number Lenders use a three-digit number called a credit score to decide whether to lend you money, so you need to know what yours is before you start house-hunting. The higher your score, the more likely you are to get to get a loan and a lower interest rate. There are three major credit reporting companies, and federal law mandates they each give one free report, once a year. You can check your reports for free here. You can also order your credit score while you review your report, though there could be fees. Many credit card companies offer free credit scores, so check with your bank first. Related: 3 million first-time homebuyers have been shut out of the market Be sure to review the reports carefully and get any mistakes fixed. If your score isn't where you want it to be, start taking steps to fix it. Along with your credit score, lenders also review your debt-to-income ratio (monthly debts divided by monthly income). Many lenders want to see this number no higher than 43%. home buyers guide Check in with your bank House hunting is fun, but it helps to know how much home you can afford before you start looking. If you're not sure, asking the bank what they're willing to lend you is a good place to start. "Too many first-time clients will fall in love with a home before they are qualified and they try to back into it," said Bob McLaughlin, senior vice president and director of mortgage at Bryn Mawr Trust. "Get the qualification first." To get pre-qualified, lenders will take a quick look at your financial picture and come up with a ballpark figure of how much you can afford to borrow. Related: Homebuying secrets from the real estate battlefield Some buyers choose to go one step further and get pre-approved for a loan to help them better compete against other bidders. This review process is more involved and results in an approved loan amount. Be prepared to hand over a stack of paperwork that will likely include at least one month of pay stubs, two years of tax returns and two months of banks statements from all your accounts. Check in with yourself Just because you got approved for a loan, doesn't mean you should spend that much. "On paper you might be able to afford a $2,500 monthly payment," said McLaughlin. "But it might be better to go with what you feel your budget can hold." When figuring out what you can afford, add up your mandatory expenses like student loan and car payments, health care costs, groceries, cell phone and utility bills. But don't forget to factor in the extra money you need for fun things like entertainment, shopping and travel. Getting saddled with a huge mortgage payment can leave you "house poor" -- or unable to spend money on other things you enjoy because you're struggling to afford housing. Start researching Now comes the fun part: house hunting. First start looking at online listings where you want to live to get an idea of what homes cost and figure out what you can expect to get within your budget. Related: Here's how long it takes to save for a down payment It helps to make a list of which features you definitely want the home to have, and which ones would be nice, but aren't deal breakers. Find a trusted adviser Now it's time to get up close and personal with some actual homes. You don't have to have a real estate agent to visit and make offers on a home, but having a professional in your corner can help make navigating the process easier. And since they're usually paid for by the seller's commissions after a sale, you shouldn't have to pay for their services. Experts recommend asking friends and family members to recommend somebody they've worked with personally, and then interviewing them. Happy house hunting! CNNMoney (New York) First published June 12, 2017: 11:27 AM ET

39 million households are paying more for housing than they can afford

39 million households are paying more for housing than they can afford by Kathryn Vasel @KathrynVasel June 16, 2017: 1:28 PM ET Rising housing costs are putting a major squeeze on Americans. Nearly 39 million households can't afford their housing, according to the annual State of the Nation's Housing Report from Harvard's Joint Center for Housing Studies. Experts generally advise budgeting about 30% of monthly income for rent or mortgage costs. Powered by SmartAsset.com SMARTASSET.COM But millions of Americans are far exceeding that guideline. One-third of households in 2015 were "cost burdened," meaning they spend 30% or more of their incomes to cover housing costs. Of that group, nearly 19 million are paying more than 50% of their income to cover their housing needs. Related: Best cities for first-time homebuyers When so much of your paycheck is going toward keeping a roof over your head, it forces sacrifices in other budget areas, including food, health care and transportation. "It depends on household type: Families with kids ... they cut back pretty severely on food," said Jennifer Molinsky, a senior research associate at the center. "Older adults cut back a lot on health care." In 2015, there were almost 25 million children living in cost-burdened households. Low-income families with children that are paying more than half their incomes to cover housing cut back the most on food, according to the report. They spend less than $300 a month, compared to households with no cost burdens, which spend about $500. Related: Thinking of buying a house? Here's where to start "To make ends meet, these families often do not buy enough food for their households or they substitute cheaper but less nutritious foods, either of which can jeopardize their children's health and development," the report stated. Low-income households are also more likely to compromise on the quality of housing, including living in places with structural issues. Low housing inventory levels have helped push up home prices as many markets struggle with a supply and demand imbalance. Bidding wars are common in some places. Home prices fell off a cliff after the 2007 housing crash, but they have been rising and last year surpassed their pre-recession peak. That price appreciation has scared away many wanna-be buyers, who have been forced to rent. Demand for rental units has increased and pushed up prices. As a result, the report found, more than 11 million renter households pay more than half their income on housing -- a 3.7 million increase from 2001. Miami has the highest percentage of cost-burdened renters, at nearly 62%, followed by Los Angeles and Deltona-Daytona Beach, Florida at 57%. CNNMoney (New York) First published June 16, 2017: 1:28 PM ET

Wealthy Buyers Turn to Bank-Owned Homes

Wealthy Buyers Turn to Bank-Owned Homes DAILY REAL ESTATE NEWS | FRIDAY, JUNE 16, 2017 Wealthy home buyers are getting around the pervasive inventory crunch by snapping up bank-owned properties and making high-end renovations. Homes listed as REOs “used to be a huge anchor on the property, but now it propels it,” Danny Hertzberg, an agent with the Jills Group at Coldwell Banker in Miami Beach, Fla., told The Wall Street Journal. Hertzberg says luxury bank-owned properties in his market are discounted about 10 percent, much less than the 20 percent to 30 percent discount that was typical a few years ago. Hertzberg recently sold a 10,383-square-foot waterfront REO property with six bedrooms for $8.7 million, which was 6 percent below the list price. The home had been appraised for about $13 million. But the market for bank-owned homes is also getting tighter. In April, the number of properties nationwide in some stage of foreclosure was 734,996—down 66 percent from a peak of 2.2 million in 2010, according to data from ATTOM Data Solutions. In 2016, million-dollar homes made up 2.06 percent of all REO sales, the largest share in three years, says Daren Blomquist, senior vice president at ATTOM Data Solutions. Research firm Clear Capital analyzed 20 metro areas with the highest number of distressed properties listed for more than $750,000 and found the median sales price to be $932,500. That is 3.4 percent lower than the sales price of non-distressed homes in those markets. The largest discounts for luxury distressed properties were in Dallas, where they sold for a median of 13 percent below asking price. On the flip side, in San Jose, Calif., such properties sold for just 0.5 percent below the list price. Source: “Bank-Owned Homes Get a Fresh Look From Wealthy Buyers,” The Wall Street Journal (June 14, 2017)

High-end hotel contemplated at Event Center

High-end hotel contemplated at Event Center San Mateo County looks to developers for proposals to upgrade key event facility By Samantha Weigel Daily Journal staff Aug 2, 2017 Updated 3 hrs ago 2 As the Peninsula’s economy thrives alongside bustling business growth, San Mateo County officials are looking to upgrade a key event facility that attracts people of all ages and backgrounds. The San Mateo County Event Center, best known for hosting the annual county fair, is being considered for new uses including a high-end hotel. Earlier this year, the Board of Supervisors issued a request for qualifications to encourage the development community to offer ideas for the San Mateo site located between San Francisco and Silicon Valley. A portion of the site’s 48 acres could be offered to a hotel developer as officials look to generate revenue and improve the event center facilities. Located next to the massive Bay Meadows mixed-use development and large office buildings popping up nearby, officials hope to attract more events to the county-owned site. Top employers in the area include Visa, SurveyMonkey, GoPro, Coupa Software, PlayStation Network, Gilead, Oracle and others that attract thousands to the region. One goal is to attract more use of the Event Center through improved conference facilities, said Supervisor Carole Groom, who represents San Mateo and is a former city mayor. While still on a “fact-finding mission,” the goal of the hotel would be to help finance improvements, which may be laid out during a separate update of the site’s Master Plan, she said. “There’s a lot of business trade shows and we wouldn’t have shows the size of Moscone Center, but there’s a middle ground and it would be great to have more weekday shows,” Groom said. “It’s a facility that’s of great use, a variety of events fit into it, though it’s older and, like a lot of older things, refurbishing could be helpful.” Last month, supervisors met in closed session to discuss two responses from real estate investment firm Broadreach Capital Partners, and local hotelier Solomon Tsai. Officials are expected to solicit more specific plans from the two developers by crafting a request for proposals. The county notes a sufficient market demand for additional hotels with nearby upscale hotels averaging around 86 percent occupancy last year with rooms going for nearly $194 a night. To create a hotel at the event center, about 3 to 5 acres could be offered under a long-term ground lease on a portion of the surface parking lot, according to the county. County Chief Communications Officer Michelle Durand said officials are undertaking a thoughtful process to consider a variety of options for improving the Event Center. “They’re doing their due diligence,” Durand said. “I think everyone agrees the Event Center could be a little more modern in its facilities and the goal has always been [to have] a place that can attract different events and shows.” Aside from the possible hotel, Durand said Event Center officials are looking toward an economic analysis and master plan update to improve the facilities. While the idea for a hotel has floated around for years, Durand and Groom cited the improved economy and new Event Center leadership as an encouragement for moving forward now. Immediately adjacent to the Saratoga Drive Event Center is the 160-acre mixed-use Bay Meadows Development. More than half way done, the former race track is being transformed into office, commercial and residential space. It hosts the Franklin Templeton Investments and SurveyMonkey headquarters, the private Nueva School, Kaiser Permanente Medical Offices, and will be home to thousands of residents and nearly 780,000 square feet of office space. “That area just seems ripe for having a hotel. There’s a lot of businesses that are bringing a lot of people, and a lot of people living there with residents having people visit,” Durand said. To the north, real estate developer Hines is nearing completion of nearly 380,000 square feet of office space at Concar Drive, and 599 housing units are slated at Station Park Green near the Hayward Park Caltrain station. “We put all that together and said you know, if we’re going to try to renovate the Event Center, a hotel would be a nice addition,” Groom said. “The hotel would do well with the Bay Meadows development, with the Concar development, as well as with additional kinds of shows at the Event Center.” Revenue generated from an agreement with a hotel developer could help the county afford improvements to the Event Center’s facilities. The site attracts a variety of events year-round from trade shows and expos to concerts and the Bay Area Maker Faire. The site also holds the rights to the former Bay Meadows horse race betting with five days of satellite wagering through the San Mateo Jockey Club. Hundreds of annual events are held at the grounds that include seven buildings comprised of 195,000 square feet of space, according to the center. The Event Center parking lot is also frequently rented out to large employers who shuttle employees to office headquarters in other parts of the region, and the city of San Mateo is also looking to underground a storage tank to temporarily hold sewage during extreme storms on a portion of the lot. While located in the city of San Mateo, the Event Center is a county-owned facility. Durand said it’s not yet clear whether a proposal would go through the city’s or county’s planning process. But she emphasized there would be a public planning process and stakeholder engagement. Groom and Durand agreed it’s important to be sensitive to neighborhood concerns and said they’re working closely with city staff as well as the Event Center board. Moving forward, there will be opportunities for public input should officials commit to proceeding with a hotel. Ultimately, they said the project could provide benefits to the city, county and those frequenting an improved Event Center. “That area is growing so much it would benefit the businesses, the residents and certainly the city of San Mateo and the county, to have a facility there that’s world class and in part draws a different caliber of shows,” Durand said. samantha@smdailyjournal.com (650) 344-5200 ext. 106 Twitter: @samantha_weigel

Bay Area rents see summer jump

There was an uptick across most of the region last month Not too long ago, Bay Area renters began to feel some relief. In the latter part of 2016, analysts described softening rents and, indeed, a plateau appeared to have emerged early this year. But here we go again. Related Articles Stanford opens affordable housing site Mayfield Place Real Deal: California housing market rebounds in May, but inventory remains low RV dwellers brace for Palo Alto’s 72-hour parking crackdown Silicon Valley Realtors urged to find solutions to housing issues … and fast Biz Break: AMD falls in “Epyc’s” wake; Toast with a mortgage The cost of renting an apartment moved up in June across the region, according to a new analysis from ApartmentList.com, a website that tracks the national rental market. Nationwide, the median rent for a two-bedroom apartment was $1,150, up 2.9 percent from a year earlier. Most Bay Area cities were about double that, or more. Here are a few highlights from the report. In San Jose, the median monthly cost of a one-bedroom flat was $2,050, while a two-bedroom went for $2,570. Month-over-month, that spelled a 1 percent increase, while the year-over-year increase was 2.2 percent. In Oakland, a one-bedroom unit typically rented for $1,710 last month, a two-bedroom for $2,150. Month-over-month, the increase was 1.2 percent, while June rents were up 2.8 percent from the year before. In San Francisco, a one-bedroom fetched $2,420 and a two-bedroom cost $3,040. There was a small boost of less than 1 percent on a month-over-month basis, but San Francisco’s rents actually were down slightly year-over-year, by just under 1 percent. Get top headlines in your inbox every afternoon. Sign up for the free PM Report newsletter. If any of these numbers come as a surprise, that’s because ApartmentList.com has altered its methodology “to provide more accurate rent estimates and avoid luxury bias in private listings,” explained Andrew Woo, data scientist for the website. Its December report had indicated a median monthly cost of $4,550 for a two-bedroom flat in San Francisco and $2,500 for a two-bedroom in Oakland. Rents have not tumbled drastically in the time since, Woo explained. In fact, with the exception of San Francisco’s small year-over-year decrease, rents have increased across the region. The latest numbers, however, reflect the website’s adjustment in methodology. Several other numbers jumped out of the report — for instance, one showing that a two-bedroom in Fremont ($3,550) cost more than one in San Francisco, another showing that a two-bedroom in Cupertino ($5,040) was pricier than similar apartments anywhere else in the region. Woo explained: “In smaller cities, for example, Cupertino, rentals and neighborhoods tend to be more homogeneous, whereas in larger cities like Oakland rents vary more between neighborhoods, often resulting in lower median rents. Additionally, a two-bedroom in Fremont may be more spacious than a two-bedroom in San Francisco, resulting in a higher rent price.”

Tech-engineering high school being built in Menlo Park

The Sequoia Union High School District has begun construction on a new $51 million public high school focusing on technology, innovation, design and engineering in eastern Menlo Park. The TIDE academy is set to open with 100 ninth graders in fall 2019. When fully enrolled, it is expected to serve 400 students from southern San Mateo County. It will be the first new district-run high school built in the East Palo Alto-Belle Haven area in 60 years. Since Sequoia closed its Ravenswood High campus in East Palo Alto in the late 1970s, most high school students east of Bayshore have been bused to schools across the freeway. The 45,000-square-foot building at 150 Jefferson Drive will have flexible learning spaces, including a makerspace shop, a coding lab and a design lab and a green roof. The campus is funded by proceeds from voter-approved bonds. The district also will apply for state bond funds.

City of San Carlos Public Safety Fair

Bay Area fireplace rebate applications to start Friday

SAN FRANCISCO — Starting Friday, Bay Area homeowners can apply to receive $750 to $12,000 in rebates to replace wood-burning fireplaces or stoves with cleaner gas or electric heating devices such as fireplace inserts. Preparing to give away big public subsidies to reduce smoke, the Bay Area Air Quality Management District set 10 a.m. Friday to begin taking applications for a total of $3 million in rebates. Pollution officials urge homeowners to sign up promptly because the rebates are available on a first-come, first served basis. The money is expected to cover rebates for only about 1,500 homeowners, and 40 percent of the funds will be set aside for low-income homeowners or residents of ZIP codes heavily impacted by winter smoke, or neighborhoods without access to natural gas pipelines to heat homes. “We expect the rebates to go fast,” said Tom Flannagan, an air district spokesman. “We’re doing the rebates now so that these installations will be done over the next few months and people in winter can enjoy the benefits of switching from their dirty old wood-burning devices to cleaner alternatives.” Rebates start at $750 to decommission and seal up a fireplace and $1,000 to replace a fireplace with a natural gas fireplace insert, which relies on gas logs to produce flames. Low-income homeowners are eligible for larger grants. The maximum rebate is $12,000. Flannagan said that to fill out the application, homeowners need to figure out generally what type of device they intend to install — such as a gas fireplace insert. Before the installation can begin, homeowners selected for grants must receive an air district notice that their project plan has been approved. The air district last year set aside the $3 million for the rebates in an effort to protect public health from wood smoke particles, which can lodge deep in the lungs and cause or aggravate asthma, strokes and other problems. Burning wood fires is generally banned in the Bay Area on Spare the Air days in winter unless a homeowner lives in an area where the only option for home heat is a wood-burning device. However, under a new district rule effective Nov. 1, homeowners wanting an exemption from the no-burn rule must register their stove or pellet stove with the district to verify it’s a low-emission model certified by the federal Environmental Protection Agency. Contact Denis Cuff at 925-943-8267. Follow him at Twitter.com/deniscuff or facebook.com/denis.cuff. HOW TO GET A REBATE Homeowners can submit applications for rebates to replace fireplaces with cleaner devices either online at www.baaqmd.gov/WoodSmokeGrant or by calling 415-749-5195. Visit the same website for information about rebates Rebates vary by device installed, and can be as much as or less than the cost of the new device installed. The base rebate is $750 to seal and close off an existing fireplace. The rebate is $1,000 for a new gas fireplace insert, and $3500 for an electric heat pump. To seek the rebates, homeowners must live within the air district, which covers seven Bay Area counties and southern portions of Napa and Solano counties.

Money’s Available to Buy But Many Renters Don’t Know It

Posted in Financing & Credit, Working with Clients, by Robert Freedman on March 16, 2017 Millions of households are mortgage-ready but don’t try to buy because they can’t come up with a downpayment. And yet, hundreds of downpayment assistance programs around the country are available and go largely untapped. To be sure, many households won’t qualify for downpayment assistance. They simply earn too much money. But more people than you might realize would qualify if they would only apply. Because in many markets, the allowable income level is pretty high, and we’re not just talking about high-cost markets like San Francisco, where the median home price is about $1 million. There are more than a thousand downpayment assistance programs around the country. Each one is unique, with its own eligibility requirements, home-price limits, and resale restrictions. But these programs also share many features. The disconnect between the millions of households who could buy if they only had downpayment money and the availability of so many programs to help them creates an opportunity for you as a real estate professional. No one is in a better position to connect households with assistance programs than you are. It’s because of this opportunity to expand your market that REALTOR® Magazine hosted a live webcast on April 20. The goal was to let you know how you can find out instantly what programs are available for households in your area. Program experts were Rob Chrane, CEO of Down Payment Resource in Atlanta, and Brenda Small, GRI, associate broker with Keller Williams Capital Properties in Washington, D.C. They walked real estate professionals through the programs available, what they have in common with one another, and how you and your customers can tap into resources in your market instantly. They debunked myths about the programs, too. And they answered questions in real time.