Mar 30, 2010
Just Say No to Bidding Wars
Just Say No to Bidding Wars
by Jim Adair
Real estate sales are still booming in urban areas across Canada, as buyers get into the market before mortgage interest rates go up. With rates still hovering at near historic lows, it's a great time to buy. However, it is also creating bidding wars for homes in neighbourhoods across the country, driving prices up and leaving would-be buyers angry and frustrated after they are unable to get the home they want.
Losing a house you had your heart on buying is emotionally draining and it can also be costly if you've spent money on a home inspection and gone to the trouble of getting a certified cheque for the deposit. A recent survey by pollster Harris/Decima, conducted for BMO Financial Group, found that 15 per cent of homebuyers have been in bidding wars, and of those who didn't get the home, 14 per cent say it caused them to overspend on their next offer.
Some bidding wars happen because a particular house strikes the fancy of a number of buyers who love a specific neighbourhood or feature of the home. But encouraging multiple offers on a home is also a marketing tactic used by some real estate agents, who under-price the home and state they will not accept any offers until a specified time. The goal is to get a number of offers simultaneously and take the best one.
In many cases, unsuspecting buyers get excited about buying a home that seems to be in their price range, when it's likely to sell for much more than they can afford. Once buyers discover they have competition for the house, they may already have an emotional and financial investment in the house (if they've paid for a home inspection) and it prompts them to push up their bids. In Toronto, some would-be buyers reportedly sent the sellers photos of themselves and their children, along with flowers and candies, in an effort to boost their offer. This is all great news for the seller, right?
Maybe not. Some agents say that multiple offers don't necessarily net a higher price than if the home had been put on the market at its fair market value in the first place. Often many of the bidders can't afford the home and are only involved because the house was priced so low in the first place.
Others argue that the under-pricing strategy is sleazy and unethical, because the seller has no intention of accepting an offer at the listed price. But real estate agents defend the practice as a way to get the best price for their client, which is their contracted duty. Sellers have the right to list their property for whatever price they wish.
Some of the under-pricing policies are extreme, including listing homes for sale for $1 and waiting for offers. A couple of years ago there was also a controversy in Toronto when an agent complained that "phantom offers" were being invented by agents to make it seem like there was competition for a home when none existed. A Toronto Real Estate Board task force investigated the claims and determined that provincial law had provisions in place to prosecute any agent who was found guilty of this activity.
So if you're shopping for a home and have fallen in love with that impossibly cheap home in a great neighbourhood, how do you know if you should place an offer?
First of all, remember the old adage that if it sounds too good to be true, it probably is. Educate yourself about value of homes in the community by looking at the sale price of comparable homes or finding out from your real estate agent what other homes sold for recently. If it's clear that the house is being underpriced to create multiple offers, you have a choice to make. You can play the game or walk away.
There's a lot to be said for refusing to participate in bidding wars. Normally when you are thinking about buying a home, there's time to look at the place carefully, come back a few times to make sure it's what you're after, compare it to other homes that are on the market, and have a home inspection done on the property. In a bidding war, you may not have time to do any of this. If you are bidding against others, you likely will have to come in with a "clean" offer – meaning no conditions. If there isn't time to get a home inspection done before the offer deadline, you may have to buy without one. Your dream home may have all kinds of hidden problems.
It's also good to remember that bidding wars are not happening everywhere. They are generally confined to the most popular neighbourhoods or condo buildings. There are lots of other great properties available for sale, and although listings were in short supply early in 2010, they are now increasing every month. Look around and you might find something you like even better than this one.
What if you are absolutely sure this is the house of your dreams and you HAVE to have it?
First, before you even start looking, get a preapproved mortgage. Shop around among banks, mortgage brokers and financial institutions to get the best deal, and you'll know exactly how much you can afford to spend and when to say no. Your total housing costs including mortgage payments, property taxes and utility payments should be no more than one-third of your household income.
For the best shot at getting the house, make an offer over the asking price. The more offers that are coming in, the more you'll have to pay. In a bidding war you must make your best offer immediately because you may not get a second chance. Try to meet the homeowner in person at some point and get to know them a little – it can't hurt. Put as few conditions in the offer as possible. Use the closing date that the vendor is seeking. Come up with a hefty deposit, in the form of a certified cheque, to show the vendor you are serious.
In the end, if you don't get the house, just relax and let it go. Don't worry – you'll find another one!
Published: March 30, 2010
Use of this article without permission is a violation of federal copyright laws.
by Jim Adair
Real estate sales are still booming in urban areas across Canada, as buyers get into the market before mortgage interest rates go up. With rates still hovering at near historic lows, it's a great time to buy. However, it is also creating bidding wars for homes in neighbourhoods across the country, driving prices up and leaving would-be buyers angry and frustrated after they are unable to get the home they want.
Losing a house you had your heart on buying is emotionally draining and it can also be costly if you've spent money on a home inspection and gone to the trouble of getting a certified cheque for the deposit. A recent survey by pollster Harris/Decima, conducted for BMO Financial Group, found that 15 per cent of homebuyers have been in bidding wars, and of those who didn't get the home, 14 per cent say it caused them to overspend on their next offer.
Some bidding wars happen because a particular house strikes the fancy of a number of buyers who love a specific neighbourhood or feature of the home. But encouraging multiple offers on a home is also a marketing tactic used by some real estate agents, who under-price the home and state they will not accept any offers until a specified time. The goal is to get a number of offers simultaneously and take the best one.
In many cases, unsuspecting buyers get excited about buying a home that seems to be in their price range, when it's likely to sell for much more than they can afford. Once buyers discover they have competition for the house, they may already have an emotional and financial investment in the house (if they've paid for a home inspection) and it prompts them to push up their bids. In Toronto, some would-be buyers reportedly sent the sellers photos of themselves and their children, along with flowers and candies, in an effort to boost their offer. This is all great news for the seller, right?
Maybe not. Some agents say that multiple offers don't necessarily net a higher price than if the home had been put on the market at its fair market value in the first place. Often many of the bidders can't afford the home and are only involved because the house was priced so low in the first place.
Others argue that the under-pricing strategy is sleazy and unethical, because the seller has no intention of accepting an offer at the listed price. But real estate agents defend the practice as a way to get the best price for their client, which is their contracted duty. Sellers have the right to list their property for whatever price they wish.
Some of the under-pricing policies are extreme, including listing homes for sale for $1 and waiting for offers. A couple of years ago there was also a controversy in Toronto when an agent complained that "phantom offers" were being invented by agents to make it seem like there was competition for a home when none existed. A Toronto Real Estate Board task force investigated the claims and determined that provincial law had provisions in place to prosecute any agent who was found guilty of this activity.
So if you're shopping for a home and have fallen in love with that impossibly cheap home in a great neighbourhood, how do you know if you should place an offer?
First of all, remember the old adage that if it sounds too good to be true, it probably is. Educate yourself about value of homes in the community by looking at the sale price of comparable homes or finding out from your real estate agent what other homes sold for recently. If it's clear that the house is being underpriced to create multiple offers, you have a choice to make. You can play the game or walk away.
There's a lot to be said for refusing to participate in bidding wars. Normally when you are thinking about buying a home, there's time to look at the place carefully, come back a few times to make sure it's what you're after, compare it to other homes that are on the market, and have a home inspection done on the property. In a bidding war, you may not have time to do any of this. If you are bidding against others, you likely will have to come in with a "clean" offer – meaning no conditions. If there isn't time to get a home inspection done before the offer deadline, you may have to buy without one. Your dream home may have all kinds of hidden problems.
It's also good to remember that bidding wars are not happening everywhere. They are generally confined to the most popular neighbourhoods or condo buildings. There are lots of other great properties available for sale, and although listings were in short supply early in 2010, they are now increasing every month. Look around and you might find something you like even better than this one.
What if you are absolutely sure this is the house of your dreams and you HAVE to have it?
First, before you even start looking, get a preapproved mortgage. Shop around among banks, mortgage brokers and financial institutions to get the best deal, and you'll know exactly how much you can afford to spend and when to say no. Your total housing costs including mortgage payments, property taxes and utility payments should be no more than one-third of your household income.
For the best shot at getting the house, make an offer over the asking price. The more offers that are coming in, the more you'll have to pay. In a bidding war you must make your best offer immediately because you may not get a second chance. Try to meet the homeowner in person at some point and get to know them a little – it can't hurt. Put as few conditions in the offer as possible. Use the closing date that the vendor is seeking. Come up with a hefty deposit, in the form of a certified cheque, to show the vendor you are serious.
In the end, if you don't get the house, just relax and let it go. Don't worry – you'll find another one!
Published: March 30, 2010
Use of this article without permission is a violation of federal copyright laws.
Mar 27, 2010
Mar 25, 2010
Mar 24, 2010
REALTOR® News-HUD Attorney Clarifies Add-on Fees
HUD Attorney Clarifies Add-on Fees
Add-on fees have been a source of confusion since a U.S. District Court last year ruled that these fees violate federal law when the bill doesn’t detail specific services for which the fees are being billed.
Recently, Helen R. Kanovsky, general counsel for HUD, released some more detailed guidance about the court ruling. She wrote:
Commissions may be quoted “using a flat fee, a percentage of the sales price, or a combination” — all listed on the revised HUD-1 sheet. But Kanovsky said that if the total charges "exceed the amount of the commission for listing and selling the home that is reflected in the real estate broker's or agent's listing agreement," then HUD has the right "to determine whether additional services were provided" to justify the add-on.
If few or no services appear to have been performed, HUD can consider these charges a violation of the Real Estate Settlement Procedures Act. Such a violation is subject to significant penalties.
Kanovsky also warned against charging fees when there is no contract or other agreement that permits the levying of these charges. For instance, an administrative fee with no contractual language could be considered by HUD as an illegal fee.
Source: Washington Post Writers Group, Kenneth R. Harney (03/20/2010)
Add-on fees have been a source of confusion since a U.S. District Court last year ruled that these fees violate federal law when the bill doesn’t detail specific services for which the fees are being billed.
Recently, Helen R. Kanovsky, general counsel for HUD, released some more detailed guidance about the court ruling. She wrote:
Commissions may be quoted “using a flat fee, a percentage of the sales price, or a combination” — all listed on the revised HUD-1 sheet. But Kanovsky said that if the total charges "exceed the amount of the commission for listing and selling the home that is reflected in the real estate broker's or agent's listing agreement," then HUD has the right "to determine whether additional services were provided" to justify the add-on.
If few or no services appear to have been performed, HUD can consider these charges a violation of the Real Estate Settlement Procedures Act. Such a violation is subject to significant penalties.
Kanovsky also warned against charging fees when there is no contract or other agreement that permits the levying of these charges. For instance, an administrative fee with no contractual language could be considered by HUD as an illegal fee.
Source: Washington Post Writers Group, Kenneth R. Harney (03/20/2010)
Mar 19, 2010
Foreclosure Inventory Is Increasing
Foreclosure Inventory Is Increasing
The inventory of foreclosed homes that banks are sitting on is rising, threatening to push home prices down further in some parts of the country.
Analysts at Barclays Capital estimated that banks and mortgage investors held about 645,800 foreclosed homes in January, up 4.6 percent from December. That is down significantly from the peak of 845,000 in November 2008.
States with the largest number of foreclosures are Florida, Arizona, Nevada, California, and Michigan.
Source: The Wall Street Journal, James R. Hagerty (03/19/2010)
The inventory of foreclosed homes that banks are sitting on is rising, threatening to push home prices down further in some parts of the country.
Analysts at Barclays Capital estimated that banks and mortgage investors held about 645,800 foreclosed homes in January, up 4.6 percent from December. That is down significantly from the peak of 845,000 in November 2008.
States with the largest number of foreclosures are Florida, Arizona, Nevada, California, and Michigan.
Source: The Wall Street Journal, James R. Hagerty (03/19/2010)
Mar 16, 2010
Analysts Say Rates Should Remain Low
Analysts Say Rates Should Remain Low
Projections about where credit rates will go in the next year vary widely, but most mortgage analysts think the effect of the Federal Reserve’s move away from the market won’t be dramatic.
Analysts at Credit Suisse and FTN Financial Capital Markets predict that mortgage rates will stay between 5 percent and 5.25 percent for the rest of the year. Moody's Economy.com projects about 5.7 percent, and Barclays Capital says 6 percent.
“There is a lot of private money on the sidelines waiting to buy mortgage securities once the Fed stops gobbling most of them up,” says Laurie Goodman, senior managing director at mortgage-bond trader Amherst Securities Group.
Source: The Wall Street Journal, James R. Hagerty (03/13/2010)
Projections about where credit rates will go in the next year vary widely, but most mortgage analysts think the effect of the Federal Reserve’s move away from the market won’t be dramatic.
Analysts at Credit Suisse and FTN Financial Capital Markets predict that mortgage rates will stay between 5 percent and 5.25 percent for the rest of the year. Moody's Economy.com projects about 5.7 percent, and Barclays Capital says 6 percent.
“There is a lot of private money on the sidelines waiting to buy mortgage securities once the Fed stops gobbling most of them up,” says Laurie Goodman, senior managing director at mortgage-bond trader Amherst Securities Group.
Source: The Wall Street Journal, James R. Hagerty (03/13/2010)
Mar 15, 2010
Housing Experts Say Real Estate is Recovering
Housing Experts Say Real Estate is Recovering
Some of the nation’s top economists believe the housing market has turned and better days are on the way for the housing industry.
Increases in jobs, credit, and affordable homes will overcome impediments such as rising interest rates, and the expiration of the Federal stimulus program to push the housing market toward recovery, says Dean Maki, chief U.S. economist for Barclays Capital.
“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.
“The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.
Source: Bloomberg, Kathleen M. Howley and Rich Miller (03/15/2010)
Some of the nation’s top economists believe the housing market has turned and better days are on the way for the housing industry.
Increases in jobs, credit, and affordable homes will overcome impediments such as rising interest rates, and the expiration of the Federal stimulus program to push the housing market toward recovery, says Dean Maki, chief U.S. economist for Barclays Capital.
“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.
“The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.
Source: Bloomberg, Kathleen M. Howley and Rich Miller (03/15/2010)
Mar 12, 2010
FHA Head: Don't Raise Down Payments
FHA Head: Don't Raise Down Payments
Now is not the time to raise the downpayment requirement on a Federal Housing Administration loan, warns FHA Commissioner David Stevens.
Stevens, testifying before a committee of the U.S. House, said his agency would probably insure 300,000 fewer home loans per year if the mandatory down payment was raised from 3.5 percent to 5 percent — a 40 percent increase.
Congress has been considering various ways to put FHA on a sounder financial footing. Besides increasing the downpayment requirement, another suggestion under discussion is raising the upfront mortgage insurance premium to 2.25 percent of the loan amount, up from 1.75 percent currently.
The National Association of REALTORS® also opposes the proposal to raise the mandatory down payment for an FHA loan. The FHA remains financially strong because it has taken steps to ensure solid underwriting standards and responsible lending practices, said Charles McMillan, NAR immediate past president, in testimony before the House Subcommittee on Housing and Community Opportunity.
“As the leading advocate for housing issues, NAR believes that one of the best ways Congress can help strengthen FHA is to quickly consider and pass legislation that would make current loan limits permanent,” McMillan said. “It’s important to note that higher balance FHA loans perform better than lower balance ones. While some argue that higher balance loans put taxpayers at risk, such loans actually strengthen the program and reduce risk to the fund.”
Explaining that FHA has played an important role in the recent housing and economic crisis by filing the gap left by private lenders, McMillan said FHA insured almost 30 percent of single-family mortgages in 2009 and more than 50 percent of first-time buyer loans. “Historically, FHA’s market share has hovered between 10 and 15 percent of all loans. And when the private market is strong enough to return, we welcome a reduced FHA market share,” he said.
McMillan said NAR was also concerned that FHA wanted to decrease seller concessions to 3 percent. Reducing seller concessions could put homeownership out of reach for many buyers, he said, because it could require buyers to pay more at closing.
Source: Associated Press, Alan Zibel, and NAR (03/11/2010)
Now is not the time to raise the downpayment requirement on a Federal Housing Administration loan, warns FHA Commissioner David Stevens.
Stevens, testifying before a committee of the U.S. House, said his agency would probably insure 300,000 fewer home loans per year if the mandatory down payment was raised from 3.5 percent to 5 percent — a 40 percent increase.
Congress has been considering various ways to put FHA on a sounder financial footing. Besides increasing the downpayment requirement, another suggestion under discussion is raising the upfront mortgage insurance premium to 2.25 percent of the loan amount, up from 1.75 percent currently.
The National Association of REALTORS® also opposes the proposal to raise the mandatory down payment for an FHA loan. The FHA remains financially strong because it has taken steps to ensure solid underwriting standards and responsible lending practices, said Charles McMillan, NAR immediate past president, in testimony before the House Subcommittee on Housing and Community Opportunity.
“As the leading advocate for housing issues, NAR believes that one of the best ways Congress can help strengthen FHA is to quickly consider and pass legislation that would make current loan limits permanent,” McMillan said. “It’s important to note that higher balance FHA loans perform better than lower balance ones. While some argue that higher balance loans put taxpayers at risk, such loans actually strengthen the program and reduce risk to the fund.”
Explaining that FHA has played an important role in the recent housing and economic crisis by filing the gap left by private lenders, McMillan said FHA insured almost 30 percent of single-family mortgages in 2009 and more than 50 percent of first-time buyer loans. “Historically, FHA’s market share has hovered between 10 and 15 percent of all loans. And when the private market is strong enough to return, we welcome a reduced FHA market share,” he said.
McMillan said NAR was also concerned that FHA wanted to decrease seller concessions to 3 percent. Reducing seller concessions could put homeownership out of reach for many buyers, he said, because it could require buyers to pay more at closing.
Source: Associated Press, Alan Zibel, and NAR (03/11/2010)
Mar 10, 2010
Fewer Sellers Are Cutting Prices
Fewer Sellers Are Cutting Prices
The prices on 19 percent of homes for sale as of March 1st have been reduced at least once, the lowest percentage in the last year, according to Trulia.com.
In October and November, when the market was feeling the effect of the tax credit, 26 percent of sellers cut their asking prices.
“Better pricing is leading to less time on the market, less price reduction, and in a lot of markets we're starting to see bidding wars on lower end properties," said Ken Shuman, spokesperson for Trulia.
Trulia calculates that these U.S. cities experienced the biggest decline in price reductions from Feb. 1, 2010 to March 1, 2010:
Charlotte, N.C.
Colorado Springs, Colo.
Houston
Raleigh, N.C.
Jacksonville, Fla.
Albuquerque, N.M.
Tucson
Omaha, Neb.
San Antonio, Texas
Source: Trulia.com (03/09/2010)
The prices on 19 percent of homes for sale as of March 1st have been reduced at least once, the lowest percentage in the last year, according to Trulia.com.
In October and November, when the market was feeling the effect of the tax credit, 26 percent of sellers cut their asking prices.
“Better pricing is leading to less time on the market, less price reduction, and in a lot of markets we're starting to see bidding wars on lower end properties," said Ken Shuman, spokesperson for Trulia.
Trulia calculates that these U.S. cities experienced the biggest decline in price reductions from Feb. 1, 2010 to March 1, 2010:
Charlotte, N.C.
Colorado Springs, Colo.
Houston
Raleigh, N.C.
Jacksonville, Fla.
Albuquerque, N.M.
Tucson
Omaha, Neb.
San Antonio, Texas
Source: Trulia.com (03/09/2010)
Mar 8, 2010
Sharing Spaces: Architecture Coach: REALTOR® Magazine
Sharing Spaces: Designs That Set Boundaries
The right layout, flexibility, and agreed-on rules can bring family members of multiple generations, or even outsiders, together under one roof.
By Barbara Ballinger | April 2010
Shared living is on the rise, and for many reasons. In some cases, multiple-family generations come back together as boomerang kids return home due to job loss and financial hits. Some families decide to reside among several generations for familial or cultural tradition. Older parents may require greater care and companionship. Or, nonfamily might share space to defray mortgage payments and other expenses.
After all, a single-family home built for a nuclear family with a few children may not fit their needs, since they likely require spaces to share and ones that encourage privacy and a sense of independence.
The more a home can build in flexibility, the better, says Cynthia Cohen, president of Strategic Mindshare, a strategy consulting firm based in Miami. Then, the home can be adapted as the family's needs change.
Finding the Right Space
Chicagoans Susan Yount and husband Michael Pichowsky have mastered well the lessons of successful multiple-generation living. Three years ago the couple became concerned about Michel’s 90-something grandmother and 70-something mother living in a cramped one-bedroom apartment in Brooklyn, N.Y.
Because residing with relatives was part of both family cultures, the younger generation encouraged “the grandmas,” as they collectively call them, to move into a three-story, two-flat they had purchased and which Michael was remodeling.
The older women took the two-bedroom, two-bathroom garden apartment with separate kitchen and entrance, so they could maintain some independence. Meanwhile, the young couple and their now 3-year-old son Dirac settled into a three-bedroom, two-bathroom apartment upstairs, also giving them privacy, plus room to gather everyone together.
Builder Fernando Pages learned these lessons a much harder way. He used to design and build single-family, affordable houses in suburban Los Angeles, but he quickly discovered that many of the Mexican-American buyers who would move in would remodel the homes.
“I studied how they used them and recognized that many Americans may want open floor plans and large master suites, but other ethnic groups want bedrooms of a uniform size and to share bathrooms," says Pages. "Some also wanted outdoor kitchens long before they became a trend; they used their garages too.”
When he relocated to Omaha, Neb., he knew to understand his buyers’ cultural preferences from the get-go, and adapt the floorplans to fit his buyers' lifestyles.
Making the Space Work
No single model satisfies all needs. Iliana Abella, a real estate saleswoman with Greater Miami Investments Inc. in Coral Gables, Fla., receives several buyer requests for home options that build in flexibility. Some young couples seek homes with a cottage in back they can rent to subsidize their mortgage.
“They’re being much more responsible due to the economy,” she says.
Other buyers with bigger budgets favor the area’s larger, older Spanish-style homes with garage apartments, she says.
Creighton Gibson, president of a Home Instead Senior Care franchise in Statesville, N.C., which provides nonmedical in-home care for the older adults, was happy he was able to convert a space to fit his family's flexible needs. His wife's mother lives with them and resides in a spare bedroom. The couple was also able to convert an adjacent bedroom to a sitting room so she would have space to invite friends over to socialize.
Affordable Shared Options
Increased demand has generated affordable, green options too. The Center for Sustainable Development at the University of Texas in Austin has worked with city and community leaders to build green, infill “alley flats” in impoverished city neighborhoods.
“Most represent some sort of intergenerational housing with a separate kitchen, bathroom, living space, and shared garden area, all designed to allow those living together to retain their dignity,” says Barbara Wilson, assistant director. The Center is also working to develop a pattern book of designs that buyers can purchase.
Designer Marianne Cusato, who helped develop the compact, affordable Katrina Cottage after the 2005 hurricane along the Gulf Coast, has designed another small-scale house that offers the option of separate quarters.
Dubbed The New Economy Home, it measures 1,770 square feet, has four bedrooms, three and one-half bathrooms, and offers flexibility to age in place or adjust to economic changes. A first floor bedroom and bathroom have a separate entry to the outdoors and a closet can be fitted with a kitchenette to work for an adult child, older parent, or renter, says Cusato.
Setting Boundaries
While physical separation is essential, clearly defined, articulated rules are also keys to meet expectations and minimize inevitable conflicts that can arise from shared spaces—which can run the gamut from who’s not paying their share to who’s not pitching in enough, says Dr. Scott Haltzman, clinical assistant professor in psychiatry and human behavior at Brown University.
“It’s best if everyone discusses their core values together—what defines them and is most important, such as what makes them feel comfortable at home, rather than just focusing first on how many square feet they need,” says Haltzman.
LEARN MORE
Books from the following experts have more information on this topic:
•Marianne Cusato, Get Your House Right (Sterling, 2008)
•Dr. Scott Haltzman, The Secrets of Happy Families: Eight keys to building a lifetime of connection and contentment (Jossey-Bass, 2009)
•Fernando Pages, Affordable Remodeling (The Taunton Press, 2007)
The right layout, flexibility, and agreed-on rules can bring family members of multiple generations, or even outsiders, together under one roof.
By Barbara Ballinger | April 2010
Shared living is on the rise, and for many reasons. In some cases, multiple-family generations come back together as boomerang kids return home due to job loss and financial hits. Some families decide to reside among several generations for familial or cultural tradition. Older parents may require greater care and companionship. Or, nonfamily might share space to defray mortgage payments and other expenses.
After all, a single-family home built for a nuclear family with a few children may not fit their needs, since they likely require spaces to share and ones that encourage privacy and a sense of independence.
The more a home can build in flexibility, the better, says Cynthia Cohen, president of Strategic Mindshare, a strategy consulting firm based in Miami. Then, the home can be adapted as the family's needs change.
Finding the Right Space
Chicagoans Susan Yount and husband Michael Pichowsky have mastered well the lessons of successful multiple-generation living. Three years ago the couple became concerned about Michel’s 90-something grandmother and 70-something mother living in a cramped one-bedroom apartment in Brooklyn, N.Y.
Because residing with relatives was part of both family cultures, the younger generation encouraged “the grandmas,” as they collectively call them, to move into a three-story, two-flat they had purchased and which Michael was remodeling.
The older women took the two-bedroom, two-bathroom garden apartment with separate kitchen and entrance, so they could maintain some independence. Meanwhile, the young couple and their now 3-year-old son Dirac settled into a three-bedroom, two-bathroom apartment upstairs, also giving them privacy, plus room to gather everyone together.
Builder Fernando Pages learned these lessons a much harder way. He used to design and build single-family, affordable houses in suburban Los Angeles, but he quickly discovered that many of the Mexican-American buyers who would move in would remodel the homes.
“I studied how they used them and recognized that many Americans may want open floor plans and large master suites, but other ethnic groups want bedrooms of a uniform size and to share bathrooms," says Pages. "Some also wanted outdoor kitchens long before they became a trend; they used their garages too.”
When he relocated to Omaha, Neb., he knew to understand his buyers’ cultural preferences from the get-go, and adapt the floorplans to fit his buyers' lifestyles.
Making the Space Work
No single model satisfies all needs. Iliana Abella, a real estate saleswoman with Greater Miami Investments Inc. in Coral Gables, Fla., receives several buyer requests for home options that build in flexibility. Some young couples seek homes with a cottage in back they can rent to subsidize their mortgage.
“They’re being much more responsible due to the economy,” she says.
Other buyers with bigger budgets favor the area’s larger, older Spanish-style homes with garage apartments, she says.
Creighton Gibson, president of a Home Instead Senior Care franchise in Statesville, N.C., which provides nonmedical in-home care for the older adults, was happy he was able to convert a space to fit his family's flexible needs. His wife's mother lives with them and resides in a spare bedroom. The couple was also able to convert an adjacent bedroom to a sitting room so she would have space to invite friends over to socialize.
Affordable Shared Options
Increased demand has generated affordable, green options too. The Center for Sustainable Development at the University of Texas in Austin has worked with city and community leaders to build green, infill “alley flats” in impoverished city neighborhoods.
“Most represent some sort of intergenerational housing with a separate kitchen, bathroom, living space, and shared garden area, all designed to allow those living together to retain their dignity,” says Barbara Wilson, assistant director. The Center is also working to develop a pattern book of designs that buyers can purchase.
Designer Marianne Cusato, who helped develop the compact, affordable Katrina Cottage after the 2005 hurricane along the Gulf Coast, has designed another small-scale house that offers the option of separate quarters.
Dubbed The New Economy Home, it measures 1,770 square feet, has four bedrooms, three and one-half bathrooms, and offers flexibility to age in place or adjust to economic changes. A first floor bedroom and bathroom have a separate entry to the outdoors and a closet can be fitted with a kitchenette to work for an adult child, older parent, or renter, says Cusato.
Setting Boundaries
While physical separation is essential, clearly defined, articulated rules are also keys to meet expectations and minimize inevitable conflicts that can arise from shared spaces—which can run the gamut from who’s not paying their share to who’s not pitching in enough, says Dr. Scott Haltzman, clinical assistant professor in psychiatry and human behavior at Brown University.
“It’s best if everyone discusses their core values together—what defines them and is most important, such as what makes them feel comfortable at home, rather than just focusing first on how many square feet they need,” says Haltzman.
LEARN MORE
Books from the following experts have more information on this topic:
•Marianne Cusato, Get Your House Right (Sterling, 2008)
•Dr. Scott Haltzman, The Secrets of Happy Families: Eight keys to building a lifetime of connection and contentment (Jossey-Bass, 2009)
•Fernando Pages, Affordable Remodeling (The Taunton Press, 2007)
Mar 5, 2010
Foreclosed Borrowers May Get Loans Again
Foreclosed Borrowers May Get Loans Again
Will people who currently face foreclosure or short sales or who walk away from their underwater properties ever be able to get financing to buy another home down the road?
Banks haven’t been very forthcoming on this issue. However, knowledgeable observers of the situation say that while it may take some time, the situation will right itself for most people.
Because bankrupt borrowers have eliminated their debts, they should "constitute attractive fodder for mortgage lenders," says University of Michigan law professor John Pottow, whose specialty is bankruptcy.
As home prices and the mortgage market stabilize, lenders will be motivated to lend to people who previously had financial troubles if they look like they can pay the next time around, says Alan Riegler, a consultant with CCG Catalyst, which advises banks.
"The lender who figures out how to do more of this case-by-case stuff cost-effectively is going to end up ahead of the pack," Riegler says.
Source: Inman News, Matt Carter (03/05/2010)
Will people who currently face foreclosure or short sales or who walk away from their underwater properties ever be able to get financing to buy another home down the road?
Banks haven’t been very forthcoming on this issue. However, knowledgeable observers of the situation say that while it may take some time, the situation will right itself for most people.
Because bankrupt borrowers have eliminated their debts, they should "constitute attractive fodder for mortgage lenders," says University of Michigan law professor John Pottow, whose specialty is bankruptcy.
As home prices and the mortgage market stabilize, lenders will be motivated to lend to people who previously had financial troubles if they look like they can pay the next time around, says Alan Riegler, a consultant with CCG Catalyst, which advises banks.
"The lender who figures out how to do more of this case-by-case stuff cost-effectively is going to end up ahead of the pack," Riegler says.
Source: Inman News, Matt Carter (03/05/2010)
Mar 4, 2010
REALTOR® Magazine-Daily News-Buyers Who Wait May Lose a Lot
Buyers Who Wait May Lose a Lot
Potential home buyers who delay have a lot to lose.
First-time home buyer and move-up tax credits worth $8,000 and $6,500, respectively, expire April 30. Buyers who qualify get a dollar-for-dollar reduction in taxes or a cash payment if they don’t pay enough taxes to cover the credit.
Other factors that should spur buyers:
Low mortgage rates. If the Federal Reserve stops buying mortgage-backed securities at the end of March, 30-year rates will almost certainly rise to more than 6 percent.
Rising prices. About 30 percent of markets are already experiencing price increases. Prices are falling in 12 percent of markets, says Fiserv (but that only helps if you want to live there).
Source: Money Magazine, Beth Braverman (03/02/2010)
Potential home buyers who delay have a lot to lose.
First-time home buyer and move-up tax credits worth $8,000 and $6,500, respectively, expire April 30. Buyers who qualify get a dollar-for-dollar reduction in taxes or a cash payment if they don’t pay enough taxes to cover the credit.
Other factors that should spur buyers:
Low mortgage rates. If the Federal Reserve stops buying mortgage-backed securities at the end of March, 30-year rates will almost certainly rise to more than 6 percent.
Rising prices. About 30 percent of markets are already experiencing price increases. Prices are falling in 12 percent of markets, says Fiserv (but that only helps if you want to live there).
Source: Money Magazine, Beth Braverman (03/02/2010)
REALTOR® Magazine-Daily News-Analysts See Rise in Apartment Construction
Analysts See Rise in Apartment Construction
Developers of apartment buildings are getting back in the game, betting that the improving economy and limited new construction will provide an opportunity for success.
Multi-family housing starts in January rose 9.2 percent, according to the U.S. Commerce Department.
Investors are encouraged by the number of people between the ages of 20 and 34 — prime renting age — which is expected to grow by 5 million over the next decade, says Hessam Nadji, managing director of Marcus & Millichap.
Plus, building costs — including labor, lumber, and concrete — have all fallen over the last two years.
"Apartment REITs (real estate investment trusts) may generate the best property net-operating-income growth that they've seen in a very long time, maybe ever," says Haendel St. Juste, a REIT analyst with Keefe, Bruyette & Woods Inc.
Source: The Wall Street Journal, Dawn Wotapka (03/03/2010)
Developers of apartment buildings are getting back in the game, betting that the improving economy and limited new construction will provide an opportunity for success.
Multi-family housing starts in January rose 9.2 percent, according to the U.S. Commerce Department.
Investors are encouraged by the number of people between the ages of 20 and 34 — prime renting age — which is expected to grow by 5 million over the next decade, says Hessam Nadji, managing director of Marcus & Millichap.
Plus, building costs — including labor, lumber, and concrete — have all fallen over the last two years.
"Apartment REITs (real estate investment trusts) may generate the best property net-operating-income growth that they've seen in a very long time, maybe ever," says Haendel St. Juste, a REIT analyst with Keefe, Bruyette & Woods Inc.
Source: The Wall Street Journal, Dawn Wotapka (03/03/2010)
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