U r b a n T r e k k e r

Weekly Real Estate News Roundup

How to Downsize Your House
Many people are looking to downsize these days, either because they're getting older or they need to reduce the financial burdens of a big house and mortgage. But editing a lifetime's worth of possessions can be difficult.

Where can I find eco-friendly exterior doors that will match my historic home and keep the cold out?
Answer: At least three options come to mind: refinish a salvaged antique door and provide new weatherproofing; make a new insulated door using salvaged wood; or buy a manufactured door made with eco-friendly materials and/or with excellent energy-conserving features.

Pew: Almost half of Americans want to live somewhere else
Living in Las Vegas appeals more to men than women. Affluent adults are twice as likely as poorer folks to want to live in Boston. Young people like big cities such as New York and Los Angeles.

Why are Foreclosure Rates Much Higher in California, Arizona, Nevada and Florida?
On January 15, 2009, RealtyTrac reported that the number of U.S. residential housing units in foreclosure in 2008 increased 81% from 2007 and the overall foreclosure rate was1.84%.

Moody's Predict Housing Bottom
Moody’s Economy.com Chief Economist Mark Zandi is coming out with a new study on the housing market. He’ll discuss it in a conference call with clients on Feb. 5.

Creative New Ways to Buy a Home
Even though mortgage rates are at near 30-year lows, some homebuyers are completely avoiding banks and getting below-market rates--even without credit or income qualification.

Bali's cash property market keeps prices up
Fueled by rising tourism, the property market on the Indonesian island of Bali has been on a roll in recent years, especially at the high end.

Freddie Mac to Start Leasing Foreclosed Homes
Freddie Mac will begin offering leases to renters who face eviction as the result of foreclosure, the company announced Friday.

What Does it Take to Get Buyers Off the Fence
If you would love to purchase a new house but you're sitting on the fence, what exactly would it take to get you to buy?

NEWS FROM AROUND WASH. DC REGION:

• McLean Activists Predict Potential for 'Daily Disaster' on Route 123
• Arlington's Unemployment Still Lowest, Just Not So Low
• Home to Stay
• Magruders Loses Its Lease?
• Poplar Point Developer Pulls Out of Project
• House stimulus bill contains $900M for DC
• Md. transportation authorities defend toll increases
• Study: Transit use, walking spike at region's core
• Property Owners Predicament
• For Arlington Resident, Green is Good
• Belfort Park Task Force Pushes Forward

When Builders Compete, You Win

image: Slate

You see how we are in a different market now? A lineup of builders are competing head-to-head to spur business. Who's not? There are two kinds of promos floating around in this area: 1) low interest rates, and 2) low price guarantee. Amazingly, builders offer truly low interest rates below 'market' rate through 'mortgage rate buy down.'

The lowest out there - lower than Toll Bros. - is M/I Homes. The criteria for their goodies: a credit score of 720, 20% down-payment and max. loan$417,000 (which is conforming). And the home can be yours.

The interest rates lineup:

Toll Brothers 3.99%
They are offering a 3.99 percent interest rate through their TBI Mortgage subsidiary. You have to have 720+ FICO score and put at least 20 percent down, but if you’re buying a Toll Brothers home, and you’ve got the goods, the low rate is yours. (via CNBC)

M/I Homes 3.875%
The fine print:
Based on 30 year fixed rate mortgage with a minimum 20% down payment and a minimum 720 credit score. Maximum mortgage amount is $417,000. Property must be owner occupied and buyer must qualify for the loan program. Rate is subject to change. Financing offered through M/I Financial Corp. MHBR3418

Comstock Homes 4.25%
The Eclipse at Potomac Yard
The fine print: it's pretty loaded..

The lowest price 'guarantee' lineup:
By the way, how do you know if it's really low price (trust me kind of thing? just because..) - unless you do your research or comparables. So, come prepare. Your agent knows what to do.

The Residences at Cameron Station (name your price or make 'reasonable offers' - only three units left they say). The key is 'reasonable,' okay.

Elan condos (Fairfax)
One bedroom from $249,000
Two bedrooms from $379,000

The promo lasts for 12 months. And you can pay your down-payment in 6 mos. after move-in? Hmm. Never seen this kind of promo before!

"And it's all with zero risk, because if we sell the same floor plan to another buyer for a lower price within 12 months of your contract date, we'll refund you the difference!*"

Centerpointe (Fairfax)
Spec home on the market for $450,000. This is a townhome with 2 BR/ 2.5ba, 2 car garage.

The Park at Courthouse (Arlington)
It offers the same buyer's incentive like Elan condos. I think it's by the same builder.
Two bedroom from $499,000.
Two bedroom, 2.5 bath/ den from $599,00.

Okay, when we look at the products lineup above, these guys clearly are in different market. Toll Bros. is on the luxury home market. Don't know how the low interest promo can bring luxury buyers. While M/I Homes have a few communities in Prince William county, Haymarket area in mid-range market. Prices quoted on website from low-$200's to high-$300's pushing $400's. Here is the thing. Prince William county is 'ground zero' for foreclosures. So, home builders in that area really have to make tough choices against banks that owned foreclosed properties. Because banks' owned drag down prices of resale and new home. That's for sure.

The new condo is competitively priced, except for the ones over $500's. The reality is for over $500's condos in this market, they have tough competition from townhouses. These homes are not necessarily located in Arlington, but you can find them somewhere in Falls Church, Fairfax, Alexandria or Washington DC - for under $500's.

So knowing what's available, here's your choice: do you want more space or convenience?

Montgomery County, Md. Tops 'Enlightened' Suburbs

Yup- Montgomery County, Maryland, is the number one 'enlightened' suburbs. Surprise?  The thing Utne Reader says about enlightened is "the stereotype of suburbs sometime selfish and soulless. But, there is a thing or two about spirit and livability."

Not only Mont. County is on top of the list, but it recognizes the fact that the county also has one of the very first 'New Urbanist' communities in Kentlands. (A bit history of Kentlands, here.) This is a bonus: Takoma Park counts as the leftiest burb. Maybe? They should say 'the most progressive burb' in this area. It sounds better..

Here's what Utne Reader says about the County:

A mostly affluent stretch of communities northwest of D.C., it?s home to probably the leftiest ?burb anywhere (Takoma Park) and one of the very first New Urbanist communities (Kentlands). Montgomery County stands out as a national leader in preventing sprawl by preserving thousands of acres of farmland. It has also achieved impressive results on affordable housing by requiring developers to include 15 percent lower-income units in all major projects or subdivisions.

The Top 10 'Enlightened' burbs in the nation:

1. Montgomery County, MD
2. Tempe, AZ
3. Suisun City, CA
4. Shaker Heights, OH
5. Royal Oak, MI
6. Hammond/Whiting/Gary, IN
7. Burlingame/ San Mateo, CA
8. Delray Beach, FL
9. Markham, Ontario, Canada
10. Naperville, IL

So You Want to Buy Foreclosure?

Buying foreclosure a.k.a. bank-owned (REO) can be rewarding. However, unless you're a 'pro' or investor, here are some of the things that you should be aware of:

1. Get your  financing line up. Ocassionally sellers' agents would ask buyers to have pre-approval from a direct lender, i.e. from big banks, and not through a 'broker.' This is because of tightening of financing. Though, you may come prepare with your pre-approval letter, a lot of times the seller wanted you to get a second opinion from their 'preferred lender' - just to make sure you won't have problem to close. As a bonus, the other lender occasionally throws in incentives (i.e. closing cost assistance) - to rope and keep you in.

2. Be patient. It depends which bank you're dealing with, sometime takes less than 48 hours, sometime it takes longer than that. Depends on bank's motivation level. The more motivated they're to sell, the faster the response.

3. As-is condition. You're buying the property as-is, kinda WSWYG (what you see is what you get). If you find no appliances in the kitchen - yes, I see a few of those! - that means you'll have to be ready buying appliances for your kitchen.The price you pay takes into account the fact that there's no kitchen. Although, from time to time we see 'overpriced' bank-owned properties listings. If you see a property that has 'mold' - which is not unusual - usually the listing agent disclose it in the remarks, you gotta to take it as-it-is. Bottom line: the bank doesn't want to do 'any' repairs.

4. Home inspection. You can do home inspection for 'informational purposes only.' If you see something wrong with the property, don't expect that they'd fix it. Again forget about banks doing some repairs.

5. Competition. From working the trenches,  people who are buying foreclosures are either a) to live in it, or b) to rent it out. So, they're either first-time buyers (most of the times) or investors. A few property out there, esp. those that badly need rehab, only want to deal with 'cash' buyers. So first time buyer is out.

6. Bank sales agreement overwrites 'our' regional sales contract. When a bank approves the sale, the bank will send their version of the sales contract that 'overwrites' your original offer. Terms and conditions negotiated prior to their approval. When bank sends your agent back the contract, that means - the contract is already 'ratified.'

7.  Unlike a conventional sale, where agents from both sides can smooth up the deal, in a foreclosure situation, there's no relationships! The "bank" decides whether they want to take your offer or somebody else's. No negotiation. It's all in the numbers. So save some negotiation time of going back and forth - since some banks are slow in making 'that' decision - it's better that you and your agent works out a deal that represents your best-and-highest offer.

8. Don't fall in love with the property.  Use your common sense. Because it may take three, four, or five different contracts before you finally get there. Don't get discouraged if bank rejected your offer the very first time. You will eventually get it. You  just have to be very very patient.

Oh one more thing, please allow yourself time.  And focus. I have been in situations where clients give up buying because their offers got 'outbid' a few times. And they got broken-heart. Got discouraged with the whole thing. Because that means, we have to go back to square one. And start all over again..

The take home message:  via an email from a listing agent.

BUYING A FORECLOSURE IS NOT FOR THE "FAINT OF HEART." IF YOUR BUYER NEEDS A VERY QUICK AND SMOOTH SETTLEMENT ANY FORECLOSURE IS NOT THE RIGHT PROPERTY FOR YOUR BUYER TO CHOOSE. I CAN GUARANTEE THERE WILL BE DELAYS & OBSTACLES THAT WILL STRAIN THE PROCESS; HOWEVER, ONCE WE HAVE A VERBALLY RATIFIED CONTRACT WITH THE BANK YOUR BUYER WILL BE GETTING A VERY GOOD DEAL. NONE OF THIS SHOULD SCARE YOU OR YOUR BUYER. PLEASE STAY FOCUSED AND ENCOURAGE YOUR BUYER TO KEEP IN MIND THE END RESULT; THAT IS, YOUR BUYER WILL BE PURCHASING A PROPERTY FOR THOUSANDS OF DOLLARS LESS THAN THE SIMILAR PROPERTY DOWN THE STREET..

Mortgage Brokers to be Regulated

Yeah, it's long long due. Via NYT.

But other proposals the Obama administration is preparing to make, like tighter federal regulation of mortgage brokers, had been recommended in Mr. Paulson’s blueprint.

They should be 'highly' regulated. Because the guys working the financial services are highly regulated.

Weekly Real Estate News Roundup

17 Living Roofs: the High Tech Green Future of Architecture
We’ve always thought we had roofs covered. They had to be barren, hostile places the rain and the wildlife slid from before they could do any damage. Nature had no place on our roofs.

An Energy Efficient Tiny House that Sets Up in Hours
A Colorado company builds ‘Smart Cabins’ out of Structural Insulated Panels (SIPs) that can be set up in a matter of hours for a sweet off-grid house or weekend getaway.

Second mortgage may derail refinance
Dear Dr. Don,
My first mortgage is a 5/1 adjustable-rate mortgage that will reset in December 2009. I also have a home equity line of credit as a second mortgage.

Don't let energy savings go up and out the chimney
After using these simple and effective ways to cut your energy bills, you can invest a bit more money for even greater savings.

Who Pays America's Highest Property Taxes?
Behind the manicured shrubs and stately single-family homes lining the streets of Garden City, N.Y., a 21,672-person town about 20 miles east of Manhattan, lies a harsh truth--high property taxes.

New Battle Affects Home Values: No Rental Rules
In growing numbers of American towns and subdivisions, that question has become anything but academic, as homeowners associations abruptly ban rentals. Blame it on the huge slump in the housing market.

Eight Tips for Landing a Mortgage
Washington is doing all it can to get money flowing again in the housing sector. At around 5%, 30-year mortgage rates are at levels that haven't been seen in, well, 30 years.

Flood of Foreclosures: It's worse than you think
Housing might be in worse shape than we think. There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market.

Not everyone can refinance to cut mortgage payments
The average interest rate for a 30-year mortgage dipped below 5% this week, a level not seen since the Eisenhower administration.

ADDITIONAL NEWS FROM AROUND D.C. REGION:

• City Culture and Charm in Tai Shan's Back Yard
• Virginia could get up to $800 million for bridges, road maintenance
• Loudoun County Real Estate Price Declines Vary Wildly by Zip Code
• A Rehab Gone Bad
• N.Va Scrambles to Bid on Flood of Fed Stimulus $'s
• Over four times the people and no traffic
• Herndon Wants Say in Upcoming Developments
• Best houses go to buyers in the know
• Isiah Legget endorses light-rail for Purple line
• Hollywood Comes to Washington
• Md. transportation projects to lose $1 billion more
• VRE Lines Up for Stimulus Locomotives

Housing Conditions and Health Effects

Interesting scientific correlation between housing conditions and health effects from the National Center for Healthy Housing (NCHH) and the U.S. Centers for Diseases Control and Prevention (CDC). They teamed up to produced the first U.S. scientific review of healthy homes interventions. 

Via NCHH.

The experts reviewed more than 170 scientific studies of housing interventions that improve asthma and respiratory problems, cancer, injuries, and other health concerns. A few of the interventions determined ready for broad-scale implementation include:

• Lead hazard control to prevent lead poisoning
• Integrated pest management (IPM) to reduce asthma and pesticide exposure
• Comprehensive and tailored home-based asthma interventions
• Active sub-slab depressurization to reduce lung-cancer from radon gas
• Smoke alarm installations to prevent injuries and death from residential fires

For example, let's look at the health effect on the use of  indoor chemical agents that include lead, pesticides, environmental tobacco smoke, carbon monoxide, volatile organic compounds (VOC), radon and others. Volatile organic compounds (VOCs) commonly found in paint, varnish, wax, cleaning, disinfecting products containing particle board and plywood, and - you'll be surprised that air fresheners and some hobby products are also included.

These chemical agents have been associated with "neurotoxicity and developmental disorders, asthma and other respiratory illnesses, and cancer."

Because most homes in the U.S. do not have a planned supply of fresh air delivered to the building space and instead rely on operation of windows and intermittent or inadequate building leakage, indoor airborne contaminants can increase. The absence of smooth and cleanable surfaces can also contribute to increases in pesticide residues, lead contaminated house dust and other accumulated toxicants.

Having good ventilation system in the house is important.

Just think about days when is cold outside and we holed up in the house. Because you're bored, you try to do something, like painting the room or do some cleaning. Even though, the health effects of VOC mixture are varied, an elevated indoor concentration of the mixture may play a role in symptoms known as 'sick building syndrome,' i.e. headaches, fatigue, eye and upper respiratory irritation.

Surprise, surprise - this is the VOC levels - found in homes, via EPA.

Studies have found that levels of several organics average 2 to 5 times higher indoors than outdoors. During and for several hours immediately after certain activities, such as paint stripping, levels may be 1,000 times background outdoor levels.

Suggestions for home improvements that can help reduce exposure to indoor chemical agents include (though the report said that this findings need further research): reduction the use of VOC, garage sealing, particulate reduction by envelope sealing, air cleaners releasing ozone.

For further reading, read full report here [pdf].

Builders' Confidence Hits New Record Low

From NAHB. (h/t MarketWatch)

Concerns about the faltering economy and reluctant home buyers pushed builder confidence in the market for newly built single-family homes down further in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI edged down a single point to a new record low of 8 in January. 

 

“Clearly, conditions in the nation’s housing market aren’t getting any better, and they aren’t going to get any better until the federal government takes substantial action to encourage qualified buyers to get back in the market,” said NAHB Chairman Sandy Dunn, a home builder from Point Pleasant, W.Va. Speaking from NAHB’s annual convention, the International Builders’ Show being held in Las Vegas this week, Dunn noted that “The Obama Administration and the new Congress have a tremendous opportunity and responsibility to enact legislation that can spur home buyer demand and jump-start the national economy.”

This is interesting. Multifamily apartments and developers when speaking to NAHB conference talks about "..how excessive inventory of unsold single family homes and condos on the market putting pressure on market-rate rental communities." Don't get it. What's the rationale?

Thought with foreclosed properties flooded the market, former home owners would flock to rentals, no?

Weekly Real Estate + Inauguration News Roundup

Bailout Is a Windfall to Banks, if Not to Borrowers
At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

You Can Build a House
Home. It’s more than just shelter — it’s a reflection of our values and our lifestyles. It’s our biggest dream and it holds our fondest memories. Often it’s the largest purchase we will ever make.

Eight Increasingly Affordable Home Remodels
Kevin Schroeder, principal of Cutting Edge, a Chicago contractor, met with a prospective remodeling client last week who didn't want to pay more than $60,000 for what Schroeder called a $100,000 project.

How to Choose Non-Toxic Paint and Wallpaper
Many homeowners love do-it-yourself home projects, but are the products we use such as paint and wallpaper, non-toxic and safe?

Cash-out refinancing ofter higher
I am told that a refinance with cash out comes with a higher interest rate than a refinance with no cash out. Is this true?

Turn-Key Solar Village Home Designs
More and more, we're seeing designs that focus on energy efficiency and near zero energy operations.  One company that has such designs is Solar Village, and they're offering Turn-Key Solar Village Homes -- something that I find to be very interesting.

A House is a System
One of the most important ideas to emerge in recent years is the concept that a house is much more than an assemblage of materials.

Prepaying Mortgage May Not Trump Investing
Prepaying a mortgage in these uncertain times sounds perfect. It could shorten the term of the loan and offer a stable return when other investments are losing ground.

ADDITIONAL STORIES FROM AROUND DC REGION:

• D.C. - area foreclosures surge in 2008
• No One Wanted Your Inauguration Sublet? You're Not Alone.
• A Neighborhood to Explore
• An Appraisal Upheaval
• Metro ready for 1.6 million on trains, buses
• No paddling across Potomac to Inauguration
• Manassas Boost Property Tax Break
• Parade Ticket Holders: Get Over Yourself
• If you're coming from Arlington County to Inauguration

Money Savings Tips on Energy

There's a variety of things that you can do to make your house more energy-efficient, depending on your budget. Over at Old House they have a story how 8 home owners save over $12k on energy. I like the whole house fan idea. It's cheap - according to them cost $260 with DIY installation (cost more if you hire a pro) - and a 'short' payback period, like 6 to 8 months.

To start with, here's an online power calculator that you can use to give you an estimate for your electrical bill.

And here's a low-cost and no-cost way to save energy, via EERE.

• Set your thermostat comfortably low in the winter and comfortably high in the summer. Install a programmable thermostat that is compatible with your heating and cooling system.
  
• Use compact fluorescent light bulbs.
  
• Air dry dishes instead of using your dishwasher's drying cycle.
  
• Turn off your computer and monitor when not in use.
  
• Plug home electronics, such as TVs and DVD players, into power strips; turn the power strips off when the equipment is not in use (TVs and DVDs in standby mode still use several watts of power).
  
• Lower the thermostat on your hot water heater to 120° F.
  
• Take short showers instead of baths.
  
• Wash only full loads of dishes and clothes.
  
• Drive sensibly. Aggressive driving (speeding, rapid acceleration and braking) wastes gasoline.
  
• Look for the ENERGY STAR^® label on home appliances and products. ENERGY STAR^® products meet strict efficiency guidelines set by the U.S. Environmental Protection Agency and the U.S. Department of Energy.