Blog • Uncategorized • August 6, 2012

Today’s renters are older with kids

by Dustin Keeth

Today’s renters are older and have children, and they want to rent homes, not apartments. Three million homeowners will become single-family home renters between 2010-2015, estimates CEO John Burns of John Burns Real Estate Consulting, and this presents a huge opportunity for individual investors and firms, reports USA Today.

Private equity firms have begun to invest in the single-family house rental asset category, and they will continue to do so over the next 5 to 10 years. Justin Chang, principal of investment firm Colony Capital, expects to see hundreds of billions invested.

In the first half of 2012, Colony Capital has purchased and converted over 1,000 houses into rental units in Arizona, California, and Nevada with plans to expand into Texas, Georgia, and Florida.

In other U.S. cities, single-family rental growth is pronounced:

Chicago — 40.40%
Dallas — 38.10%
Las Vegas — 66.50%
Phoenix — 69.80%
Seattle — 28.90%

While the single-family rental investment is the fastest growing asset class, according to Colin Weil, co-founder of Waypoint Real Estate Group, it may not stay that way for the long-term. Burns expects that about 70% of those who lose their houses will own again.

Blog • July 30, 2012

Home improvement spending is expected to go up

by Dustin Keeth

The first quarter of 2013 may see double-digit growth in home improvement spending. Brad Tuttle of Time highlights the market conditions that are contributing to the uptick, identified by Harvard’s Joint Center for Housing Studies.

Eric S. Belsky, managing director of the Joint Center, says that “low financing costs, stronger consumer confidence, improving home sales, and the perception that home prices have stabilized in most markets across the country are encouraging owners to start working on the list of home improvement projects they have been putting off.”

Rather than spend on high-end projects, many households are opting for practical revisions and upgrades. Consumer Reports suggests a $1000 bathroom remodel that consists of sensible options such as replacing the vanity, countertop, toilet, faucet, floor or updating lights and hardware. For the kithcen, $5000 can go a long way to cover painting structurally sound cabinets, adding islands or work space, and replacing old appliances and fixtures.

U.S. News rates the best and worst home improvement expenditures based on return on investment. Homeowners should check out Remodeling magazine’s Cost vs. Value Report for 2011 and 2012 before picking up their hammers.

Blog • July 27, 2012

Mortgage debt forgiveness is on the line

by Dustin Keeth

Homeowners who sold their principal residences short or lost them to foreclosure have benefited from the Mortgage Forgiveness Debt Relief Act of 2007. But the law expires at the end of 2012, meaning that those households who experience a short sale, foreclosure, or deed in lieu could receive a tax bill the following year. Wisebread explains how it works:

Typically, the IRS considers forgiven debt up to $2 million as ordinary, taxable income. The lender issues a 1099-C to the borrower for the balance owed, minus what the home was sold for. While the lender will not pursue the borrower for the difference, the IRS may starting in 2013. President Obama’s FY2013 budget proposal includes an extension of the Act through the end of 2014, but only time will tell if it sticks.

The debt forgiveness act was passed in the House of Representatives on a 386-to-27 vote. The National Association of Realtors supported the original bill and plans to advocate for its extension on behalf of homeowners who face financial challenges, according to ProPublica.org. Proponents believe that it is unfair to expect homeowners to pay tax on forgiven debt when they cannot even afford to pay their mortgage without a significant modification. How do you weigh in on the issue?

For specific details on the Mortgage Forgiveness Debt Relief Act, refer to the IRS. Those homeowners with underwater mortgages should consult with experts in the field to determine the best course of action.

Blog • Uncategorized • July 23, 2012

Cities vs. suburbs

by Dustin Keeth

Mortgage loan rates have fallen again. CNN Money reports that the 30-year mortgage dropped to 3.53% from 3.56% over one week ago, according to Freddie Mac’s weekly report. One year ago, the 30-year fixed rate was 4.52%. The 15-year fixed rate also dropped to 2.83% from 2.86%, compared to 3.66% a year before. Low interest rates are available, but some buyers are finding it challenging to secure them with today’s stricter lending practices. Is there a correlation between tighter lending and recent urban growth in the U.S.?

Census data indicates that population in urban centers outpaced suburbs between July 2010 and July 2011 in 27 of the nation’s 51 biggest cities, according to the Wall Street Journal. This trend is the reverse of the steady suburban expansion seen since the 1920s. Is this a short-term gain for cities? Kenneth Johnson, senior demographer at the Carsey Institute of New Hampshire, believes that households are staying in urban areas either because they can’t secure a loan or choose to wait out the recession. He suspects that as housing and job markets mend, more people will migrate out of the cities and into the suburbs.

Some home builders disagree. Firms that used to focus entirely on suburban, single-family units are diversifying by putting up condominium towers in places like New York City, Northern New Jersey, Philadelphia, and Irvine, Calif. Builders are responding to the demand of those residents who want more lifestyle, less commute. Overall, the line between living in the city or the suburb is becoming blurred, especially as urban centers undergo major quality-of-life improvements — safe and efficient public transit systems, lower crime rates, walkability, and cultural amenities.

Blog • July 20, 2012

Have we bottomed out?

by Dustin Keeth

Has the housing market bottomed out? Most economists surveyed by the Wall Street Journal (44 out of 47) agree that it has. Housing price indexes are moving in a positive direction after the housing bubble burst nearly seven years ago.

But the market’s continued recovery is dependent on a few factors, suggests Barry Ritholtz, CEO and Director of Equity Research at Fusion IQ. The shadow inventory, homes that have yet to go through foreclosure, cannot flood the market. Second, consumers need to be able to qualify for mortgages. And third, household income needs to grow if Americans are to spend on housing.

Still, the recent numbers support the growing sentiment that housing has turned a corner.

Nearly 10% more existing homes were sold in May 2012 than in the same month a year earlier.
Inventory of existing homes for sale is at a 6-month supply.
The number of vacant homes has dropped to its lowest point since 2006.
Single-family home construction increased by 26% in May 2012 compared to one year earlier.
Inventory of unsold newly built homes has fallen back to 2005 levels.

Blog • July 16, 2012

List your home the Hollywood way

by Dustin Keeth

“The Spider and the Fly” is a short film produced by Hans Zimmer Studios to showcase none other than a multi-million dollar mansion in Malibu. DeeAnna Staats, owner of Staats & Co., hired the Hollywood company to shoot the short, had it downloaded onto 100 new iPads, and sent them out into the prospective market. The creative and costly use of film to showcase a grand home like the “Carbon Mesa” is not altogether unique. Sellers and real estate agents have utilized photography and video to sell properties for some time. Staats, however, has taken the marketing tactic to a whole new level. Read the full story at AOL Real Estate.

http://youtu.be/Ik0ZF5Lclos

Blog • July 13, 2012

To shingle or not to shingle?

by Dustin Keeth

The Shingle artchitectural style is singularly American and stands in contrast to the nineteenth-century Victorian houses of the same era. The New England school of architecture reacted against the ornamental Victorian revival styles and created a new design that is considered America’s first modern house.

Though it began on the East Coast, the style can be seen across America and especially in the Pacific Northwest and Great Lakes states. While towers, gables, and complex rooflines showcase some flourish, the Shingle style sets itself apart from its Victorian cousins with its streamlined appearance. The small size of the wood shingle made it possible for the architect to create spaces that flowed into each other in one continuous movement.

Better Homes and Gardens showcases a home built in the shingle style, demonstrating that the architectural design translates well in suburbs, cities, and seaside towns. Floor plans tend to be informal, making the style a favorite of homeowners setting out to create the ideal beach or vacation house. From Martha Stewart to Jennifer Lopez, the shingle style is definitely a staying trend. Check out pics of the American Idol judge’s new digs in the Hamptons.

Blog • July 10, 2012

Government watchdog proposes safeguards

by Dustin Keeth

The Consumer Financial Protection Bureau aims to safeguard borrowers from risky mortgages. Just this Monday, the CFPB, the government’s consumer watchdog, made a proposal that includes, but is not limited to, these provisions:

Ban on balloon payments
Prohibition of prepayment fees or fees for modifying or deferring loans
Cap on late fees
Requirement for borrowers to receive homeownership counseling prior to signing mortgage papers

Additionally, new versions of two simplified mortgage disclosure forms have been proposed. The CFPB hopes that the revisions will clarify loan terms and costs so that consumers know exactly what they’re buying into.

The CFPB invites the public to weigh in by viewing the before and after docs at www.consumerfinance.gov. Comments on the forms – Loan Estimate and Closing Disclosure – will be received until November 6.

Blog • July 6, 2012

One square meter of my own

by Dustin Keeth

What could you do with one square meter? Berlin-based architect and founder of Hartz IV Mobel, Van Bo Le-Mentzel, proposes the one-square-meter house. Le-Mentzel conceptualized what is likely the world’s smallest house from his personal experience of living some of his earlier years as a refuge who depended on social housing.

This tiny DIY home measures one square meter and flips on its side for bedtime sleeping. It is assembled from everyday materials and is fully portable. Lo-Mentzel recently said to BMW Guggenheim Lab, “I want to have my own square meter…[where] I decide what happens.”

He hopes that the house can be utilized for mobile shops or offices, providing space to individuals who need respite from their hectic environments. And for those of you who are wondering, one square meter converts to 10.7639 square feet.

http://youtu.be/Okqa7qdAPbo

Blog • July 2, 2012

Seattle’s Great Wheel

by Dustin Keeth

Photograph by Ellen M. Banner, The Seattle Times

Seattle’s newest tourist landmark opened on Friday, June 29, at Pier 57. The Great Wheel towers at 175 feet, weighs 280,300 pounds, and holds 42 climate-controlled gondolas. At full capacity, 252 passengers can catch a 12-minute view over Elliot Bay.

The Great Wheel project was designed to draw the approximately 9.9 million annual overnight visitors to the waterfront. Undeniably, the city’s skyline is changed. While most residents feel positively about the Great Wheel, some are less enthusiastic, reports the Seattle Times. Downtown resident Linda Mitchell feels that the landmark is “a little country fairish.”

Seattle is not alone in its quest to attract more visitors with a high-tech wheel ride. Internationally, the wheel is gaining popularity after 30 years of going out of fashion, says analyst Dennis Speigel, president of Ohio-based International Theme Park Services, Inc. According to Reuters, Staten Island will be getting a 600-foot-tall “observation wheel,” and two new wheels are under discussion in Las Vegas.

Great Wheel tickets are $13 for adults and $8.50 for children 11 and under. Purchase your tickets at the pier or online at www.seattlegreatwheel.com. Military and senior discounts are available.