Fargo, North Dakota, is actually seeing a boon. 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. I think he’s even been able to afford a vacation to Maui!

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….

Real Estate Still Best Investment

Original eloquence at New York Renovator.com. This content is copyrighted, so no stealing! Don't make me angry, you don't want to see me when I'm angry!

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, Central New York, Zillow.com recently hailed a local 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. Our situation is a LOT different than, say, La Jolla, Saratoga or De Moines.

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

How’s Real Estate Where You Are?

Original eloquence at New York Renovator.com. This content is copyrighted, so no stealing! Don't make me angry, you don't want to see me when I'm angry!

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? Who can qualify for VA Home Loans? Some folks may want to take advantage of opportunities with Streamline Refinance, but I can certainly understand the general feeling of uneasiness in the nation.

The largest city in my locality, Utica, NY, 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?

Home Ownership Down

Original eloquence at New York Renovator.com. This content is copyrighted, so no stealing! Don't make me angry, you don't want to see me when I'm angry!

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. I would much rather have spent the cash on Black Friday deals, believe me! 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!

My Before, During, and After Story, Part 4

Original eloquence at New York Renovator.com. This content is copyrighted, so no stealing! Don't make me angry, you don't want to see me when I'm angry!

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 Manhattan 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.

Housing Armaggedon?!

Original eloquence at New York Renovator.com. This content is copyrighted, so no stealing! Don't make me angry, you don't want to see me when I'm angry!