New York Renovator

I still think real estate is the best investment you can make in the United States. I don’t care what the doomsayers are saying about the housing market. The brokers are biting their nails to shreds, worried that they can’t get Americans to buy buy buy this year. I read some news story (sorry, I can’t locate it the exact article now, nuts) that the U.S. housing market is at its worst in decades. But then I read local stories from around the country where their housing market (and economy) is just fine.

Fargo, North Dakota, is actually seeing a boon. usatoday.com/news/nation/census/2011-03-16-north-dakota-census_N.htm USA Today reports that the population and economy has surged to record levels. I’ve read similar stories for a few other areas, too.

But here in the Rust Belt, the economy is poor because of TAXES not because of lack of home buyers. The mathematics of trying to sustain a top-heavy public sector by an over-taxed, aging private sector always pans out to be a negative. It’s still too early to tell if any of these states (New York, Ohio, Michigan, Massachusetts, etc) will really change their ways. So people are “voting with their feet.”

But the folks who are left are snapping up the properties left behind (although, in urban areas, the governments are buying vacant properties). I was recently talking with an acquaintance who has– in the last 5 years— purchased a dozen properties. He’s rented them all out and become a landlord. And he’s been so successful that he no longer needs to work his regular job anymore. That’s pretty neat.

As for me, I’m just “small fry.” I like owning one home (I have enough to do around here!) but if I ever got a windfall with money left over, I’d probably invest in real estate. I’d probably rent it out to tenants or even as a vacation home (according to Forbes, vacation rental properties are VERY hot right now, especially in cities). It’s an interesting shift.

So I don’t give a whole lot of weight to the constant nay-saying that the housing market and US economy (which is built on the housing market) is going under. People are just shifting priorities. People don’t need to constantly build build build new houses. I am very much in favor of making do with the houses we have. So the “house-building boom” of the late 1990s is over. That doesn’t spell the end of the world. There’s a WHOLE market out there of renovators, people who want to fix up their old homes and spark the economy in that way. But sales and income taxes are too high in some areas. Let’s see what happens….

I haven’t heard a peep about the housing market from the media. Why do they go black on so many important issues?

Anyway, I recently read an interesting article at MSN Money about remodeling versus moving. According to the article, “keeping up a home for 30 years may cost you up to four times its purchase price.” I don’t know if that’s true. It definitely isn’t true for me– although we got our old house at a deep discount because it was in such poor shape. But we have done 99.9% of the work ourselves, and have saved a bundle of money so doing.

But it seems that the housing market is still a little slow. Eons ago (so it seems), owning property was THE bets investment you could make in America. Maybe that is still true, but the return on investment seems to be a lot lower the past 20 years. Here in my area, Zillow.com recently hailed an Upstate city as the number 1 place to buy a home, based on affordability and value. But the housing market here is “eh.” Our entire local economy is based on refugees coming in from the Slavic and Asian nations.

How’s the housing market in your area? Lots of “For Sale” signs, lots of foreclosures or empty houses?

Home ownership rates continue to plummet. According to CNBC, Americans just aren’t buying homes so much.

America’s home ownership rate, after holding steady for a while, took a pretty big plunge in Q4, from 66.9 percent to 66.5 percent. That’s down from the 2004 peak of 69.2 percent and the lowest level since 1998.

Homeownership is falling at an alarming pace, despite the fact that home prices have fallen, affordability is much improved and inventories of new and existing homes are still running quite high.

Bargains abound, but few are interested or eligible to take advantage.

What’s even more shocking is that 11% of U.S. homes sit empty.

There were 18.4 million vacant homes in the U.S. in Q4 ’10 (11 percent of all housing units vacant all year round), which is actually an improvement of 427,000 from a year ago, but not for the reasons you’d think.

The number of vacant homes for rent fell by 493 thousand, as rental demand rose. 471,000 homes are listed as “Held off Market” about half for temporary use, but the other half are likely foreclosures. And no, the shadow inventory isn’t just 200,000, it’s far higher than that.

Not sure why, but I can guess. For one, Americans are uneasy about the economy. The government is spending like a MANIAC, China is rising almost as fast as our debt and interest rates… and who is earning enough to pay back those loans?

One of our Upstate cities was listed by Zillow.com as the Number One city in America to buy an affordable home. Everyone up here was practically waving flags: We’re Number One! We’re Number One!

But…. we have the “most affordable” homes in the nation– you mean the lowest priced? Isn’t that, like, bad?! And what good is it getting a cheap home for $25,000 in a city that is near bankruptcy and where property taxes are $7,000 a year?! How can that be a cause for celebration?

Economists and politicians alike go on and on, saying that the home construction and home ownership industry is the backbone of the American economy. So why are the banks and politicians selling Americans so short that we cannot afford the homes?

I don’t like this transition into a society that rents their homes. Property ownership is the backbone of the United States, property ownership gives citizens a vested interest in their community. Whatever happened to Life, LIberty, and the Pursuit of Happiness?

This is the story of our renovation, the toils and victories through a sweltering summer of blood, sweat and tears. Read all the gory details of Part 1, Part 2, and Part 3.

Our kitchen project was finally coming to a close. Yet even now, three months since we moved back in, there are many unfinished projects awaiting me. Now that I am back to a normal schedule with kids’ schooling, my online job, and such, I can only chip away at these remaining projects, slowly but surely. My goal is to batten down the hatches for an Upstate New York winter, and I’ll pick up the hammer and saw again in the spring.

After we tackled the butcher block countertops, we collapsed for a few days. Almost all of the really intense physical labor was done. Except the flooring. We’d installed plywood sub-flooring over the 70s hardboard subfloor over the 50s linoleum over the 1855 pine planks…. thank God, they’d removed the funky 40s carpeting somewhere in there (although dregs of it appeared from time to time as we removed partition walls). I love wood, just LOVE it, but it is so expensive. I decided to go with TrafficMaster allure vinyl planks. It looks like wood– for a second or two, anyway– but it’s durable and easy to install. Cost me a small fortune, though, I’ll tell you what. But I had been waiting SO LONG for a new floor.

Very easy to install. I guess that's why it's so pricey.

It took me about 8 hours (straight) to install the dining room floor, 10 hours to do the kitchen.

Once the floor was done, the room looked like a real kitchen again. We moved in shortly after. Oh, the JOY!

This is our beverage area, which I conveniently tucked under the stairwell. Note the painted pantry shelf to the left. Still has no doors, though...

Our favorite appliance. Oh, how we dreamed for this moment! LOL, six adults in a home make a lot of dishes.

I’d mentioned before about the sink and window as the room’s focal point. I carefully crafted the trim around the window to reflect the home’s Greek Revival architecture. The Greek triangular pediment and fluted trim is repeated throughout the house. I stained this wood extra dark to make it stand out. Cellular blinds soften the hard lines. I need more color and decor here, but all in good time.

2010 was a wild, crazy ride for us.

I’m spending the winter quietly, taking things slower as best I can. I work at home to pay off the kitchen. If we had hired out to have all this work done, the job would have cost us a small fortune. By doing everything ourselves, we saved a ton of money. It was a lot of work, sure, but I think everyone was enriched by the experience, especially my kids. Here’s a quick breakdown of the economics:

According to this chart, we saved over $36,000 by doing this ourselves. That is a HUGE savings! Yes, I took time off from work to work on this renovation. I worked on reduced hours for four months. However, consider this: a kitchen renovation gives you an average of 70% return on the cost of the project, so I basically “earned” $25,200 on the value of the home. That’s more than I make in a year, let alone four months. So even though I’m not seeing a liquid $25,200 cash in hand, it’s part of my real estate investment. It was well worth it, I think, to go reduced hours on my job (with which, I figure, I lost about $2000 income) to earn $25,200 in capital investment on the property. Moreover, improving the electrical and water supply reduces our insurance premium, the insulation in the walls reduces our heating bills,  and everything in general improves the quality of our lives here.

I think my DIY project was worth it. But I’m SO GRATEFUL it’s over!

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.

When I was young– back in the late 70s and early 80s– there was a craze for families to get “back to nature.” Not to be swinging from the trees, mind you, but to leave the dirty urban centers with their high taxes, crime, and chaos, and live free in the wilderness. We moved away from suburbia in the mid-80s, to a very rural parcel of land on top of a mountain. My few years spent there deeply affected my viewpoint of homesteading. My family didn’t go far enough– I would have liked to live an almost sparse, Amish-type of life: devoid of DuranDuran, Cyndi Lauper *shudder*, weight loss products (and public schooling) and such, but my dad was an electronics man with his own shop… and therefore we didn’t live entirely off the land. But they had hopes of building an underground house (my dad was concerned about nuclear war- this was when things between the US and USSR were very heated). I think I would have loved that– a cozy cave to snuggle in!

So I spent a long time gazing at these photos when I found them at Dornob.com. This site is so cool! This is an underground home built in Switzerland, at the foothills of the Alps! Oh it’s so beautiful! But so unconventional!

I wouldn’t mind living in the ground one bit. It’s definitely more temperate. And you don’t have to worry about painting your wood siding every five years. :-p Would you do it?

When I bought this old house, I knew it needed work. I was actually thrilled to get a house that I could do “my” way. I envisioned solid-surface countertops, brass fixtures, a jacuzzi in the Master Bedroom Suite, a Family Room with a great big stone hearth, and solid oak flooring everywhere!

Whoa, Nellie. I have since learned a thing or two. One: There’s NO WAY I can afford that!! And Two: I’d never recoup my investment with such a glitzy upgrade, not in this neighborhood. I live in a depressed area (this is New York) and the average value of homes here (currently) is a miserable $90,000. I got my home for $63,000 twelve years ago. The appreciation STINKS around here. I could never dump $60,000 more into my home and expect to recoup it all, not in this area and certainly not at this time.

When you decide to upgrade, don’t go overboard, don’t overvalue your renovations more than your neighborhood allows. Unless of course, you have tons of money to burn and want to do so for the sheer enjoyment of it. That’s cool. But if you are looking at your property as a partial investment, then it’s not cool to dump a lot of money into your Money Pit.

So now that we have lived here for a few years, I’ve tempered my dreams. I guess you could say that, thanks to experience, they’ve undergone the best weight loss supplement treatment. Skip the Jacuzzi, I’d just like to have ELECTRICITY in the bathroom again. And solid surface countertops for $5,000? No way– give me laminate and I’ll use the rest of the money to plant a flower bed or make a few more windows.

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.