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Housing Armaggedon?!

October 15, 2010

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I don’t know a whole lot about the housing market, but like most other things, I figure such issues are easily understood with a healthy dose of common sense. There’s a blog post story in the Wall Street Journal (yes, I guess even the high-brow WSJ folks blog! lol!) blogs.wsj.com/developments/2010/10/12/are-we-headed-for-housing-armageddon Are We Headed For Housing Armageddon? It’s interesting. In a nutshell, the article describes a new twist in the housing market “crisis”: banks are unable to hold foreclosures due to improperly transferred paperwork from banks to homeowners; Apparently, during the housing boom, some banks were a little sloppy with their paperwork in their eagerness to get lenders. Now that banks want to foreclose for non-payment, homeowners with savvy lawyers claim that the absence of mortgage paperwork absolves them from bank foreclosure. Judges may rule that, due to the absence of proof of original lending agreement paperwork, the banks cannot foreclose on the homes.

Wild!

So the chatter around the water cooler is that this will only prolong the housing market bust. According to Amy Calistri of Street Authority, mortgage debt in the United States fell by $99 BILLION in the first quarter of this year. In the second quarter, it dropped again, half that.

It’s pretty obvious that Americans are not buying new homes! This is good. Seriously. For one, I think our economy relies too much on new construction, particularly when there are billions of older homes that are perfectly suitable for use. All this excessive and new construction causes sprawl, eats up rural resources and creates more debt. I think we should change our attentions away from newnewnew, and begin to recycle the very good homes that exist currently. My home, built in 1855, is a fine example of making something old new again. And every single inspector that has looked at my house raves about the strength of the structure– “They don’t make homes like they used to,” they all say. So all this talk about a “housing armageddon” is, I think, a little overstated. It may be a housing armageddon for the banks, but for the average American and the average traditional American pre-owned home, it’s housing heaven.

Another result of the housing market turned upside down is the apartments industry. Again, according to Street Authority:

But the decline in home buying is starting to trigger an increased demand for rental apartments. Apartment occupancy rates rose to 92.2% in the second quarter of 2010, up from 92.0% in the first quarter according to Reis Inc. Rents are also starting to rise modestly, up +0.7% in the second quarter.

Apartment occupancy rates rose 92% ?!? That’s incredible! This is a radical change in the housing industry in our country. Now, I’m sure not everyone can afford a posh luxury apartment after foreclosing on their homes, right? This opens up an entirely new demographic after the housing boom of the 90s. The “experts” say that the backbone of the American economy is home ownership. I don’t know if this is true– is it? As I have already stated, home ownership requires bank loans. So the backbone of the banking industry is home ownership, to be sure.

I am wary of all the Chicken Littles running around, trying to make us anxious about the “crises” that face us, when in reality, most of the “crises” that exist are for the banks. It’s unfortunate that some folks lose their homes, yes. But as far as ruining our economy– I really wonder if this is true. If anything, Americans are focusing on making more with less (not necessarily a bad thing), and people are looking for apartments (which encourages cities and landlords to clean up and fix up their areas). We are, by nature, a resilient people. We will adapt and adjust to changes. I do not think the housing market shifts constitute the end of the world. Perhaps this is as good a time as any to return to the good old Yankee work ethic:

Use it, wear it out. make it do, or do without.

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Dave Ramsey’s Tips For Renovators

September 28, 2010

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It’s nice to know that all the back-cracking work we’ve been doing on the house provides manifold benefits.

The housing market slump this year really slowed down new construction. As an owner of an old home in the midst of vicious suburban sprawl, I was actually happy to see the new construction slow down. Something similar happened in the late 70s (the economic downturn) after a period of profligate sprawl (in the 50s and 60s), which led to an increased awareness of restoring and renovating existing homes (in the 80s). TV shows like This Old House and Home Again sprouted up from the ashes of a recession. So recessions and slumps are not always bad news. I think it is better to work with what you have rather than create immense waste in building new. Why knock down a perfectly healthy old home, fill up landfills, clogging up rural spaces, and spend millions building new?? The lost art of renovation may be making a comeback.

#1 A New Addition
According to Dave Ramsey (here daveramsey.com/newsletters/online/edition/real-estate-newsletter-september2010?ectid=elprenl_0910_final_online), one of the best returns on your renovation investment is a new addition, such as a bedroom or family room. Such a renovation could give you an 83% return on your cost! I was stunned to read this. For one, I had thought that most homeowners were going “smaller” with their homes, not necessarily adding more square footage (and more maintenance and expenses) to the house.

#2 A New Kitchen
Additionally, the kitchen has always been the prime return investment winner in renovations. I was surprised to see it fall to #2 in Dave’s list (he said that a kitchen re-do can give you about 72% back). I suppose one of the reasons for the lower grade is because kitchens are one of the most expensive areas of the home to renovate. Yes, I would agree. Although, because we did our own work 100% of the time, our return will be much more than 72%. We spent approximately $13,000 to gut and restore the kitchen, dining room, and laundry room… we also insulated these rooms, which make them more energy efficient, and we also redid the entire electrical system and water supply system for the house. Not a bad deal.

#3 The Bathroom
I am not one to splurge on a bathroom. I like it to be a “get in, do your business, get out” kind of room. Dave says that renovators can easily allow the bathroom remodel to “get out of hand.” Appliances and fixtures ARE very expensive, and I guess people are tempted to install things like saunas, whirlpools, towel warmers, etc. I don’t like such luxury, so when we remodel our bathrooms, I don’t expect these to be a problem. But renovating the bathroom came in at #3, which homeowners recouping about 70% of their investment. That’s really still a terrific percentage!

One very important thing to remember when renovating is KNOW YOUR COMMUNITY. If you live in a wealthy area of McMansions, go ahead and build that vaulted wine cellar. But if you live in “middle America” or a small town, you will never recoup your investments in the luxurious hot tubs, custom-made concrete countertops, and silk draperies. I tried to stay as basic as I could with our home. It is so easy to go overboard, especially when the “experts” and magazines are all enticing you to spendspendspend on their expensive products. I tried to keep a balance of getting products I really liked, products we really needed, and staying within the middle-income class of my region. Even so, I do think I splurged a little too much. :-p

And I am gratified to see that all our blood, sweat, and tears actually has value in the community and economy. I knew that our renovations would not only bring us more comforts and energy savings, but that it would boost our home’s value and possible return investment should we ever sell. It’s nice to see this confirmed. 😀

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Buying Better Than Renting

July 24, 2010

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Well, this makes me feel better.

Courtesy of New York Times

Sometimes I could kick myself for buying a 155 year old home. Especially when I have to try and install square sheets of drywall on VERY unsquare ceilings and walls. NOT fun.

The New York Times has a cost calculator at nytimes.com/interactive/business/buy-rent-calculator.html, comparing rental pros and cons with ownership pros and cons. Looks like buying a home gets you ahead in the finances than renting.

But not by much. :-p

Part of the reason for the less than stellar return rate, I think, is the severe drop in housing values and the severe rise in property taxes. I purchased my home for $62,5 over 13 years ago. It is now valued at $87,0 for taxation purposes, but I could never get that amount should I sell it right now. The market is bad, and no one wants a fixer upper. I do renovate it with the expectation that the market will improve, but I renovate mostly because the house needs the improvements, and we want to live comfortably and efficiently. Still, even though I have no intention of selling, it would be nice to know that my home is increasing in value as I improve it….

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Buy A House For $1?!

March 13, 2009

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And pay $100,000 to move it on a barge! Actually, it’s not a bad deal, and not too uncommon. Historic houses are often marketed as free or for a small sum if you pay to move it to your own plot. And even in my own neighborhood, I know of several houses that were jacked up to make headroom for poured concrete basements, and a few that were jacked up and spun around to make the back of the house the front. But I’ve never heard of moving the house by barge!

From the Associated Press:

BARNEGAT LIGHT, N.J. – Sure, housing prices are falling. But how’s this for a bargain for a Long Island, N.Y. couple: An iconic beach house, designed by a world famous architect, for just $1.

The catch? They have to pay at least $100,000 to move it on a barge from the Jersey shore to their home.

But that’s just fine with Robert Gotkin and Deborah Sarnoff, who run a husband-and-wife dermatology and plastic surgery practice in New York. They already live in one house designed by architect Robert Venturi, and plan to use the newest addition as a guest cottage.

The design is very cool– I love the sailboat-shaped window. The house was built in 1967 and sounds like it’s quite quirky. I like homes like that.

“This is a wonderful opportunity, that we can get it of the site safely,” said Denise Scott Brown, Venturi’s wife who designed it with him. “It became a campaign for a wonderful house that was designed with lots of love. It’s very unusual; it looks like a little radio rather than a house.”

…The house, which was removed from its original location several weeks ago and stored in a bay-side marina, was jacked up and lifted onto a huge marine barge Thursday morning. Work crews had hoped to have it on its way by 9 a.m., but they delayed the departure to take advantage of more favorable tides on Long Island on Friday.

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Housing Market Bottoming Out?

February 18, 2009

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We can only wish. Then we’d have nowhere to go but up.

According to Bloomberg, this may be the year the housing market bottoms out. Hmm. I am skeptical; we’ll see. I haven’t seen any moves by anyone to tighten the belt or hit a diet supplements routine. Instead, I still see an awful lot of gorging!

U.S. home prices will reach bottom by the end of the year, concluding a slide that will have cut values 36 percent, Moody’s Economy.com said today.

“Notwithstanding the intensifying economic gloom, the bottom of the housing downturn is within sight,” chief economist Mark Zandi said in a statement today. “Presuming we see strong action by policymakers to help support the economy and the housing market, prices will begin to recover by the end of this year.”

Demand for new and existing homes began to fall in 2005, marking the end of a five-year U.S. housing boom fueled in part by easy credit for subprime borrowers. Existing home prices tumbled from an average high of $230,200 in July 2006 to $175,400 in December, according to data from the Chicago-based National Association of Realtors.

U.S. home prices will fall another 11 percent on average before stabilizing, according to Moody’s Economy.com. The Case- Shiller home price index will fall 36 percent from its 2006 peak to the bottom this year, Zandi’s study said.

About 62 percent of U.S. metropolitan areas surveyed will record double-digit declines in home prices by the end of the slump, according to today’s report. Prices will fall more than 50 percent in former boom areas such as southeast Florida and parts of California, including Riverside.

The rest of the nation is experiencing what we in New York State have been seeing for the past 15-20 years. So here, the housing market decline is not as unbearable… to every cloud there’s a silver lining, I guess… *laughs manically*.

You know, when the American people were clamoring to the government, demanding that the government “create jobs,” I think Americans forgot to tell the leaders– “Uh, we meant create more jobs for AMERICANS.” Because that’s a lot of the problem, here– the outsourcing of everything, everything except retail industry jobs. You just cannot base an economy on “Paper or plastic?” and “Do you want fries with that?” DUH!!!

Anyway, it’s really up to us to make this economy work. Shopping our way out a recession is not going to work– getting out of debt, building savings, and living frugally is what will do it.

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2009 Bathroom Trends

February 17, 2009

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Well, despite gloomy news in the housing market, people still have rickety old houses that need renovating (like yours truly). I’ve been keeping my eye on “trends” for renovations and new construction for several years now, trying to stay slightly ahead of the game; so, when it comes my time to gut my kitchen or bathroom, I’ll be modernized and efficient (and therefore won’t have to re-update in 5 to 10 years like so many of my neighbors do). One thing I have learned is– keep it simple. You can’t go wrong with keeping things simple. I try to think beyond design and make systems and functions simple, too.

According to the UK’s House to Home, the bathroom trends for 2009 are:

  • Natural Beauty
  • Hotel glamour
  • Freestanding baths
  • Shower power
  • Bathroom storage

I like that list (nice and simple!), however it’s missing one thing– a trend toward “universal design.” Universal design is what I am considering to be the ideal standard bathrooms design. With the majority of the populace getting older (Baby Boomers and such), universal design is becoming almost standard in new bathroom design, but it is commonly overlooked in renovation. I am using it in small ways myself now, and intend on going that route entirely when I remodel the bathrooms.

Universal design is kind of like the ergonomics for bathroom accessories. For example, instead of round doorknobs, which are more difficult for older hands to twist and open, use lever door handles. Instead of moulded bathtubs that are integrated into the wall (bathtubs that are very difficult to climb in and out), use kudos showers that have doors, even wider, bi-fold doors,– you can just walk in. Some showers even have stools and should definitely have handles.

Common universal design features:

  • Grab bars in tub/shower and around toilet area
  • Walk-in tubs and/or showers; showers with seats; tub handles placed to the side and not inside the tub/shower
  • Elevated (taller) sinks and cabinets, to eliminate bending to wash hands and face
  • Lever door handles and lever faucet handles
  • Wider doorways and wider tub/shower entrances (36″ wide) to accommodate wider people and/or wheelchairs
  • Taller toilets, or toilets on pedestals, to eliminate bending; elongated toilets instead of round ones

So while I like natural neutral colors, hotel glamour, and “shower power,” I think a trend that should remain consistent and never become outdated is universal design. Don’t overlook this when renovating or building! You will thank yourself when you are older.

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What Your House Looks Like

February 10, 2009

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I found this at Kewl Stuff I Found. So funny, and SO true!!

This is what your house looks like….

…to you:

yourhouse

…to your buyer:

yourhouse1

…to your lender:

yourhouse2

…to your appraiser:

yourhouse3

…to your county tax assessor:

yourhouse4

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Money Does Not a Better House Make

January 21, 2009

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Money doesn’t make you happy. And apparently, money doesn’t build you a better house. I happened across this website, showing the garish and extravagant houses of celebrities. Here’s the Top Ten Ridiculous, Obnoxious, And Just Plain Ugly Celebrity Houses. And I think that statement is an understatement.

There’s something gratifying about knowing that just because a person makes billions of dollars, that doesn’t necessarily mean their houses are pretty or nice. Makes me feel a LOT better, lol!

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And You Thought Your House Was Weird

January 19, 2009

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My 1855 house is badly designed, I think. It has a great center hall style, but after that, the floorplan falls apart. For one, the living room is off to the side in a separate wing, all by itself. The room was cold (until I gutted it and insulated it). And to be in that room, you are separated from the rest of the house. NOT a good idea when you have a bunch of boisterous brandishing toy swords and having “lightsaber duels” in front of your glass-windowed china cabinet in the dining room, lol. And the upstairs bedrooms have a very poor floorplan– three of the bedrooms are small and awkward sizes– 10 x 12, and two 8 x 14. Veyr hard to fit 6-foot-long beds in those rooms, believe me. But the only other bedroom is huge– 15 x 17. That’s too big.

Well, anyway, I;m going on and on because I saw this amazing video about a HUGE underground ant colony. It is WEIRD. Scientists filled the ant holes with tons of concrete, waited for the concrete to dry, and then started digging. What they found was pretty amazing.

Isn’t it wild?!

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Staging Your Home to Sell Your Home

November 21, 2008

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Now that real estate seems to be the hot topic these days (what with the mortgage bust and the major shift in the real estate market), more people are thinking about selling their homes. Now everyone knows that you can’t put your house on the market, fling the doors open, and expect interested buyers to come streaming in and handing you cash. It requires a little more effort than that. The market is a little shaky right now, and the competition is pretty fierce. You want your property to shine above the others. So everyone knows that much. The real question is HOW DO YOU DO THAT?

Have you ever heard of the book, Dress Your House for Success? It was written 20 years ago, a groundbreaking book, way before its time. It’s a book about the art of “home staging,” which is preparing your home to look, smell, and feel attractive to prospective buyers. It was written by Martha Webb, author and home staging expert. I got the chance to ask Ms. Webb a few questions about home staging, especially for the renovator who has an older home. Her answers are very insightful; some surprised me. Here’s the interview:

Mrs. Mecomber: What are the worst things you’ve seen some homeowners do when trying to sell their house?

Martha Webb: Do nothing, or believe that lived in is good enough for selling. Fail to pay attention to the basics – clean, clutter and odor free, in good repair.

Mrs. Mecomber: When I was looking for a house, over decade ago, it seemed that people were not averse to buying a “fixer-upper.” Does this hold true today?

Martha Webb: No, there are so many properties on the market that are phenomenal deals, there isn’t the reason to buy a fixer upper to get sweat equity. Also, today’s buyers (average age 39) have less time and money to fix up a property. With all the competition for buyers, they need only look around the corner for a house that won’t require time, work or money.

Mrs. Mecomber: Do perennial gardens add much to the emotional value of a home? In your opinion, about how much emotional value would a garden (or gardens) have, overall?

Martha Webb: A garden (perennial or well-landscaped) tells buyers that the house has been well cared for. The garden can add to the “homey” feel of a property and may be an added benefit to some; to others, they may not want the work to maintain it. If the gardens exist, sellers should make sure they are well-manicured to add to the charm of the house, not elicit the response of work. If there are not gardens, I would not recommend spending money to install them.

Mrs. Mecomber: What are most prospective buyers looking for the most when walking through a prospective home?

Martha Webb: Research has shown that buyers’ first impression have to do with the basics of cleanliness, clutter and repair, which translate to “well cared for,” “spacious,” and “no work.” They also want the “homey” feel, but are less likely to be able to describe that; they recognize it when they feel it – and that where staging comes in.

Mrs. Mecomber: What are some inexpensive “props” or techniques for staging a home?

Martha Webb: Entry: make sure that you show some elegance or style – possible a half-round table, artwork, a mirror, flowers
Kitchen: show more than an organized space, include a hint of entertaining or family gathering: a cookbook, serving dish, fruit arrangement
Bath: counter the cold of tile with a fabric shower curtain and matching rug, stacked or rolled towels and a packaged spa-like soap or bath product
Bedrooms: add comfort and relation with pillows and throws, a book on a nightstand

I really appreciate Martha Webb taking the time to answer my questions. Someday I hope to sell my own house, and I’ll come back to these tips and the ones in her books.

I’ve been through a lot of homes, and the one thing that strikes me just as much as the appearance of the home is the smell. I have a very sensitive nose (more women than men do, too). If I smell stale cigarettes or mildew or dog, that’s a REAL turn off. You can count on me turning down the house. So I recommend eradicating the sourest smells from the home before showing the home. For other smells, like cooking oil (another smell that makes me wretch), burning toast, or an oddball stinky sneaker that one of the kids left in the front entry, I recommend the new Febreze candle. I have used the Apple & Spice and I am nuts about it. I have four kids, a cat, and a bird in the house. I NEED these candles. They have a special core that freshens the air while the colored section fills the house with frangrance. The Apple & Spice is sooo good, and I love to burn them during the winter months. It just makes the house feel warmer.

I hope these tips help you! And really, even if you aren’t selling your home, you can always do yourself a favor by staging your home for yourself! The holidays are coming up, so this is actually a terrific time to pamper the family and spruce up the place for them.

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