Some of the best housing deals are on high-end homes, many over $1 million. Some of them need TLC or they aren’t in the most-coveted locations. But there are plenty of desirable properties and lots of sellers who are getting impatient.
Buyers with cash have the best opportunities. Buyers who need a mortgage should move especially quickly. With the Federal Reserve ending its purchases of mortgage securities this month, the mortgage market is likely to rise from its current low level. Even if prices fall further, the rising cost of borrowing could eliminate any savings.
As Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, says, this is a "very good time to be a buyer at the high end."
Source: The Wall Street Journal, Nick Timiraos and James R. Hagerty (03/27/2010)
Monday, March 29, 2010
Sunday, March 28, 2010
Repair or Reduce the Price: a Seller's Dilemma
Inman News
Q: I own a home that I inherited from my grandmother, so I don't owe very much on it ($30,000). I've always kept it up and my grandparents did, too. I'm engaged now and need to buy a bigger home, so I am in the process of selling my house for about $250,000.
The buyer's pest inspection report quoted about $70,000 worth of repairs that needed to be done! Most of that was to replace framing they said was bad behind the stucco. I don't have that kind of money, and I was counting on the money from the sale to put down on my next house. My agent says that any buyer is now going to want the work done or they'll want to pay a lower price, but I can't really afford to do it. What is your advice?
A: Older stucco often has cracks that allow water to breach the surface and rot out the structural framing beneath. Strangely enough, it is often the "pest" inspectors (who, more precisely, actually look for all wood-destroying organisms or conditions, including water and rot) who discover these issues. Be grateful the repairs came to light now, and not later. It may have saved you from years of legal wrangling, although if you weren't aware or on notice of the problem, you couldn't have been expected to disclose it.
Mindset Management
I want you to work on expanding the realm of what you believe is possible in your life and in your situation. You seem attached to getting top dollar without shelling out for repairs, so that you can have the amount you expected to put down on your next home. But you know that objectively it would be unreasonable for this -- or any -- buyer to pay the same price knowing the place needs $70,000 worth of structural work that they were willing to pay before the hidden repairs came to light.
Rather than getting frustrated and stuck spinning these seeming impossibilities in your head, revise your beliefs about what's possible here. I would submit to you that perhaps it is possible for you to afford your next home with less of a downpayment than you expected. (You might buy a lower-priced house, for instance.)
Perhaps it is possible to get the work done for less than the full $70,000, or even to strike a deal with the buyer to cover less than the full cost of the work. Maybe it is possible to find a contractor who will do the work with just a deposit and wait until escrow closes for the remainder of his payment.
Don't assume that you either have to write a check for $70,000 tomorrow or you won't be able to move on. The world is much fuller of possibilities than that, if you flex your thinking. And don't "awfulize" this -- be grateful that you had grandparents who loved you enough and were able to leave you this level of home equity so that you'll have something with which to start your new family's life.
Your agent is correct that now that you are aware of the problem, you will be required to disclose it -- essentially, providing the inspection report -- to anyone whom you contract with to purchase your home. And boy oh boy, at this price point, $70,000 in structural repairs scares potential buyers all the way off -- in a hurry! Unless you want to scrape the dregs of the lowball buyer pool, you should do what you can to make it work with your current buyer, if they're still game.
But, again, you have options. You can offer to actually have the work completed before closing, which also affords you the option of attempting to find a contractor who can do the work for less than the buyer's pest company bid on it, and who will wait to receive their full payment until the transaction closes.
It also avoids any issues getting the home's condition OK'd by the buyer's lender, which is increasingly a problem that causes sales to fall apart.
However, the downside is the possibility that when the contractor opens up the stucco or goes to get permits from the city, more needed repairs come to light, and you've put yourself on the hook for it. If you go this route, make sure you use a licensed contractor and obtain permits for the work -- ask your agent for referrals.
Alternatively, you can negotiate a price reduction with the buyer in consideration of the needed repairs. Everything about this is negotiable, so you might offer some portion of the amount of the repair bid, or all of it.
You might even go so far as to obtain some repair bids from alternative contractors to the buyer's pest company, and use those to justify a price reduction less than $70,000. If you go this route, make sure that you get the buyer's acknowledgment that they are aware of the needed repairs, and add an as-is clause to the contract.
In earlier lending eras, it was possible for the seller to offer the buyer a closing-cost credit, which the buyer would recoup as cash at closing, with the intention that the funds would go toward the repair. So many times these situations ended up with the money going to other things that banks have entirely stopped the practice of allowing buyers to get "cash at closing."
Additionally, home equity lines and funds to repair homes are pretty tough to come by these days. So stay open to an extension of escrow, if the buyer needs it to obtain a rehabilitation loan, like the FHA 203(k) loan. They take longer to close than a normal loan, but are one of the only readily available fund sources for home repairs available on today's market.
Action Plan
1. Talk with your mortgage broker about various downpayment scenarios, to understand how your purchase of your next home will be impacted by a reduction in the net proceeds from this sale.
2. Think flexibly about the possibilities, and discuss the pros and cons of various ways to resolve the repair issue with your agent. They will have ideas and a clear understanding of the pitfalls and need-to-knows about various resolutions in your local area.
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com. ***
Q: I own a home that I inherited from my grandmother, so I don't owe very much on it ($30,000). I've always kept it up and my grandparents did, too. I'm engaged now and need to buy a bigger home, so I am in the process of selling my house for about $250,000.
The buyer's pest inspection report quoted about $70,000 worth of repairs that needed to be done! Most of that was to replace framing they said was bad behind the stucco. I don't have that kind of money, and I was counting on the money from the sale to put down on my next house. My agent says that any buyer is now going to want the work done or they'll want to pay a lower price, but I can't really afford to do it. What is your advice?
A: Older stucco often has cracks that allow water to breach the surface and rot out the structural framing beneath. Strangely enough, it is often the "pest" inspectors (who, more precisely, actually look for all wood-destroying organisms or conditions, including water and rot) who discover these issues. Be grateful the repairs came to light now, and not later. It may have saved you from years of legal wrangling, although if you weren't aware or on notice of the problem, you couldn't have been expected to disclose it.
Mindset Management
I want you to work on expanding the realm of what you believe is possible in your life and in your situation. You seem attached to getting top dollar without shelling out for repairs, so that you can have the amount you expected to put down on your next home. But you know that objectively it would be unreasonable for this -- or any -- buyer to pay the same price knowing the place needs $70,000 worth of structural work that they were willing to pay before the hidden repairs came to light.
Rather than getting frustrated and stuck spinning these seeming impossibilities in your head, revise your beliefs about what's possible here. I would submit to you that perhaps it is possible for you to afford your next home with less of a downpayment than you expected. (You might buy a lower-priced house, for instance.)
Perhaps it is possible to get the work done for less than the full $70,000, or even to strike a deal with the buyer to cover less than the full cost of the work. Maybe it is possible to find a contractor who will do the work with just a deposit and wait until escrow closes for the remainder of his payment.
Don't assume that you either have to write a check for $70,000 tomorrow or you won't be able to move on. The world is much fuller of possibilities than that, if you flex your thinking. And don't "awfulize" this -- be grateful that you had grandparents who loved you enough and were able to leave you this level of home equity so that you'll have something with which to start your new family's life.
Your agent is correct that now that you are aware of the problem, you will be required to disclose it -- essentially, providing the inspection report -- to anyone whom you contract with to purchase your home. And boy oh boy, at this price point, $70,000 in structural repairs scares potential buyers all the way off -- in a hurry! Unless you want to scrape the dregs of the lowball buyer pool, you should do what you can to make it work with your current buyer, if they're still game.
But, again, you have options. You can offer to actually have the work completed before closing, which also affords you the option of attempting to find a contractor who can do the work for less than the buyer's pest company bid on it, and who will wait to receive their full payment until the transaction closes.
It also avoids any issues getting the home's condition OK'd by the buyer's lender, which is increasingly a problem that causes sales to fall apart.
However, the downside is the possibility that when the contractor opens up the stucco or goes to get permits from the city, more needed repairs come to light, and you've put yourself on the hook for it. If you go this route, make sure you use a licensed contractor and obtain permits for the work -- ask your agent for referrals.
Alternatively, you can negotiate a price reduction with the buyer in consideration of the needed repairs. Everything about this is negotiable, so you might offer some portion of the amount of the repair bid, or all of it.
You might even go so far as to obtain some repair bids from alternative contractors to the buyer's pest company, and use those to justify a price reduction less than $70,000. If you go this route, make sure that you get the buyer's acknowledgment that they are aware of the needed repairs, and add an as-is clause to the contract.
In earlier lending eras, it was possible for the seller to offer the buyer a closing-cost credit, which the buyer would recoup as cash at closing, with the intention that the funds would go toward the repair. So many times these situations ended up with the money going to other things that banks have entirely stopped the practice of allowing buyers to get "cash at closing."
Additionally, home equity lines and funds to repair homes are pretty tough to come by these days. So stay open to an extension of escrow, if the buyer needs it to obtain a rehabilitation loan, like the FHA 203(k) loan. They take longer to close than a normal loan, but are one of the only readily available fund sources for home repairs available on today's market.
Action Plan
1. Talk with your mortgage broker about various downpayment scenarios, to understand how your purchase of your next home will be impacted by a reduction in the net proceeds from this sale.
2. Think flexibly about the possibilities, and discuss the pros and cons of various ways to resolve the repair issue with your agent. They will have ideas and a clear understanding of the pitfalls and need-to-knows about various resolutions in your local area.
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com. ***
Saturday, March 27, 2010
Eat, Drink and Be Pretty! April 13 - 18th
6 Days of Fun! Wine, Food, & Music! Celebrating 32 years. Scottsdale Culinary Festival. Read more>>
Friday, March 26, 2010
Disney On Ice: 100 Years of Magic in Phoenix
Join the celebration as 65 of Disney’s unforgettable characters fro, 18 beloved stories come to life in Disney On Ice celebrates 100 Years of Magic! Join the one and only Mickey Mouse, the irresistible Minnie Mouse, Goofy, Donald Duck, Jiminy Cricket, Pinocchio, and all the Disney Princesses in a skating spectacular you’ll remember forever. View the schedule>>
Thursday, March 25, 2010
Social Security underwater
Social Security will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office. Stephen C. Goss, chief actuary of the Social Security Administration, said that while the Congressional projection would probably be borne out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual. The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax. Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances. �€
œWhen the level of the trust fund gets to zero, you have to cut benefits,” Alan Greenspan, architect of the plan to rescue the Social Security program the last time it got into trouble, in the early 1980s, said yesterday.
œWhen the level of the trust fund gets to zero, you have to cut benefits,” Alan Greenspan, architect of the plan to rescue the Social Security program the last time it got into trouble, in the early 1980s, said yesterday.
Interest Rates Edging Up
We had two mid-day rate increases yesterday for conforming and jumbo loans. We have gone from 5% to 5.25% on conforming.
The secondary market on Jumbo is still not in good shape which is causing some of our lenders to move from 80% LTV to 75%.
If you have clients waiting thinking that homes prices may fall further they may lose any of those potential gains by increased interest rate. I will keep everyone posted rates tend to bounce around.
Bob Leahy
Equitable Home Mortgage
Ph 480-502-3524
E-Fax 480-624-3617
bleahy@equitablehomemtg.com
www.bobleahy.net
The secondary market on Jumbo is still not in good shape which is causing some of our lenders to move from 80% LTV to 75%.
If you have clients waiting thinking that homes prices may fall further they may lose any of those potential gains by increased interest rate. I will keep everyone posted rates tend to bounce around.
Bob Leahy
Equitable Home Mortgage
Ph 480-502-3524
E-Fax 480-624-3617
bleahy@equitablehomemtg.com
www.bobleahy.net
Wednesday, March 24, 2010
Applications to Purchase Homes Rise
Applications to Purchase Homes Rise
Mortgage applications for purchases of homes rose 2.7 percent last week on an adjusted basis compared to the previous week, according to the Mortgage Bankers Association weekly survey. However, refinancing activity decreased as rates rose.
On an unadjusted basis, mortgage applications increased 2.8 percent. They declined 15 percent compared to the same week a year ago.
The refinance share of mortgage applications decreased 7.1 percent last week. Overall, the bankers’ applications index declined 3.9 percent compared to the previous week.
Here are the average rates:
* 30-year fixed-rate mortgages increased to 5.01 percent from 4.91 percent.
* 15-year fixed-rate mortgages increased to 4.33 percent from 4.24 percent.
* 1-year ARMs remained unchanged at 6.75 percent.
Source: Mortgage Bankers Association (03/24/2010)
Mortgage applications for purchases of homes rose 2.7 percent last week on an adjusted basis compared to the previous week, according to the Mortgage Bankers Association weekly survey. However, refinancing activity decreased as rates rose.
On an unadjusted basis, mortgage applications increased 2.8 percent. They declined 15 percent compared to the same week a year ago.
The refinance share of mortgage applications decreased 7.1 percent last week. Overall, the bankers’ applications index declined 3.9 percent compared to the previous week.
Here are the average rates:
* 30-year fixed-rate mortgages increased to 5.01 percent from 4.91 percent.
* 15-year fixed-rate mortgages increased to 4.33 percent from 4.24 percent.
* 1-year ARMs remained unchanged at 6.75 percent.
Source: Mortgage Bankers Association (03/24/2010)
Scottsdale #2 in Spending
The Bundle Report for 2010 places Scottsdale #2 out of the top 25 cities in the US for spending. Read more>
Monday, March 22, 2010
An Essential Checklist for Moving into a New Home
March 19, 2010 from SimpleMom.com
Cardboard, bubble wrap, and newspaper. That’s what I’ve been up to my eyeballs in this past week as we’ve slowly been moving in to our new-yet-temporary home. It feels really good to finally be using some of our own stuff again instead of squatting at other people’s homes — but it doesn’t make moving any less chaotic.
My husband and I have moved seven times in seven years of marriage. Two of those moves have been major transatlantic moves, hauling our small smattering of earthly possessions 6,000 miles each way. Two others have been cross-country moves, trekking a moving truck 1,000 miles each way. This is simply to say that we’ve been through most everything when it comes to moving.
Yet each time, I forget about those basic things you want to have on hand that first week, when I honestly don’t know where anything is. Every move I make, I’m reminded of that feeling of chaos, of helplessness, of not being able to do the most basic of things (drink of water, anyone?) without certain items within arm’s reach.
So here’s my list of those absolutely essential things you want to have on hand from Day 1 of moving into a new place. These are the things you’ll want to bring in your first load, and will want to locate easily all throughout the moving process.
Basic to human survival
• water — If you can drink water straight out of the faucet, consider yourself blessed. If you need some sort of filtering system to make it palatable, bring a Brita pitcher. If your water is laced with arsenic, as it was in our most recent host country, then find out STAT how to find water you can drink without poisoning yourself.
• cups or bottles for drinking water
• sippy cups for your little ones
• dried snacks that don’t require utensils
• basic food stuffs — bread, peanut butter, apples, nuts, crackers, granola, yogurt, and milk do the trick for our family.
• nonbreakable plates, bowls, and utensils — It’s nice to not worry about storing your regular dishes somewhere where kids can’t accidentally knock them over (and with boxes everywhere, chances are high). Picnicware is great for this.
• napkins
So that you can actually function
• flashlights
• keys
• cell phones
• a designated spot for flashlights, keys, and cell phones – Amidst the chaos, these things are easily lost. Claim one counter or shelf as the place for all of these things.
• light bulbs
• toilet paper
• money
Cleaning supplies
• paper towels and/or cloth rags
• all-purpose cleaner*
• glass cleaner*
• floor cleaner*
* Shameless plug — I’ve got homemade recipes for these — and tons more — in my ebook
• bucket
• sponges
• broom
• dustpan
• basic towels for the kitchen
In order to spend the night in your new place
• bedding for the kids — pillows, blankets, and some sort of pallet (a mattress on the floor, a sleeping bag, whatever). Include their “thing” they have to sleep with, such as a blankie or stuffed animal. It would be a long night without those in our home.
• curtains for the kids’ room — If your kids wake at sunrise, do your best to outfit their room with curtains as soon as possible.
• jammies for the kids
• change of clothes for the kids — Actually, you might want several changes on hand, if you think they may get messy throughout the day.
• favorite toys and books for the kids — Just a few of their best-loved items to keep them occupied and happy.
• nightlights for the kids — If they need them
• bedding for the adults
• jammies for the adults
• one hand towel per bathroom
• one bath towel per person
• basic toiletries — toothbrushes and toothpaste, soap, and the like
I can’t say we’ve remembered all of this ahead of time for this current move of ours, but we’ve done fairly well. If you’ve got a move on the horizon, perhaps this list will get you going for those first few days of “survival mode” in your new place.
Cardboard, bubble wrap, and newspaper. That’s what I’ve been up to my eyeballs in this past week as we’ve slowly been moving in to our new-yet-temporary home. It feels really good to finally be using some of our own stuff again instead of squatting at other people’s homes — but it doesn’t make moving any less chaotic.
My husband and I have moved seven times in seven years of marriage. Two of those moves have been major transatlantic moves, hauling our small smattering of earthly possessions 6,000 miles each way. Two others have been cross-country moves, trekking a moving truck 1,000 miles each way. This is simply to say that we’ve been through most everything when it comes to moving.
Yet each time, I forget about those basic things you want to have on hand that first week, when I honestly don’t know where anything is. Every move I make, I’m reminded of that feeling of chaos, of helplessness, of not being able to do the most basic of things (drink of water, anyone?) without certain items within arm’s reach.
So here’s my list of those absolutely essential things you want to have on hand from Day 1 of moving into a new place. These are the things you’ll want to bring in your first load, and will want to locate easily all throughout the moving process.
Basic to human survival
• water — If you can drink water straight out of the faucet, consider yourself blessed. If you need some sort of filtering system to make it palatable, bring a Brita pitcher. If your water is laced with arsenic, as it was in our most recent host country, then find out STAT how to find water you can drink without poisoning yourself.
• cups or bottles for drinking water
• sippy cups for your little ones
• dried snacks that don’t require utensils
• basic food stuffs — bread, peanut butter, apples, nuts, crackers, granola, yogurt, and milk do the trick for our family.
• nonbreakable plates, bowls, and utensils — It’s nice to not worry about storing your regular dishes somewhere where kids can’t accidentally knock them over (and with boxes everywhere, chances are high). Picnicware is great for this.
• napkins
So that you can actually function
• flashlights
• keys
• cell phones
• a designated spot for flashlights, keys, and cell phones – Amidst the chaos, these things are easily lost. Claim one counter or shelf as the place for all of these things.
• light bulbs
• toilet paper
• money
Cleaning supplies
• paper towels and/or cloth rags
• all-purpose cleaner*
• glass cleaner*
• floor cleaner*
* Shameless plug — I’ve got homemade recipes for these — and tons more — in my ebook
• bucket
• sponges
• broom
• dustpan
• basic towels for the kitchen
In order to spend the night in your new place
• bedding for the kids — pillows, blankets, and some sort of pallet (a mattress on the floor, a sleeping bag, whatever). Include their “thing” they have to sleep with, such as a blankie or stuffed animal. It would be a long night without those in our home.
• curtains for the kids’ room — If your kids wake at sunrise, do your best to outfit their room with curtains as soon as possible.
• jammies for the kids
• change of clothes for the kids — Actually, you might want several changes on hand, if you think they may get messy throughout the day.
• favorite toys and books for the kids — Just a few of their best-loved items to keep them occupied and happy.
• nightlights for the kids — If they need them
• bedding for the adults
• jammies for the adults
• one hand towel per bathroom
• one bath towel per person
• basic toiletries — toothbrushes and toothpaste, soap, and the like
I can’t say we’ve remembered all of this ahead of time for this current move of ours, but we’ve done fairly well. If you’ve got a move on the horizon, perhaps this list will get you going for those first few days of “survival mode” in your new place.
The Color of the Year? Pantone Says Turquoise!
March 10, 2010 by Melissa Tracey · 6 Comments
Filed under: Home Trends
By Melissa Dittmann Tracey, REALTOR Magazine
So what’s the “it” color for 2010?
According to Pantone, it’s turquoise’s year to shine.
Look for this vibrant blue-green color to pop up in many fabrics, textiles and home interiors this year.
It’s a color that many people respond positively to, according to Pantone, which predicts the hot color each year by surveying designers. Many people associate the color with a pleasant and inviting form of escape, such as a tropical paradise, according to word-association studies.
“With both warm and cool undertones, turquoise pairs nicely with any other color in the spectrum,” according to Pantone. “Turquoise adds a splash of excitement to neutrals and browns, complements reds and pinks, creates a classic maritime look with deep blues, livens up all other greens, and is especially trend-setting with yellow-greens.”
Do you agree? Do you think turquoise is a good color to work into home interiors?
Filed under: Home Trends
By Melissa Dittmann Tracey, REALTOR Magazine
So what’s the “it” color for 2010?
According to Pantone, it’s turquoise’s year to shine.
Look for this vibrant blue-green color to pop up in many fabrics, textiles and home interiors this year.
It’s a color that many people respond positively to, according to Pantone, which predicts the hot color each year by surveying designers. Many people associate the color with a pleasant and inviting form of escape, such as a tropical paradise, according to word-association studies.
“With both warm and cool undertones, turquoise pairs nicely with any other color in the spectrum,” according to Pantone. “Turquoise adds a splash of excitement to neutrals and browns, complements reds and pinks, creates a classic maritime look with deep blues, livens up all other greens, and is especially trend-setting with yellow-greens.”
Do you agree? Do you think turquoise is a good color to work into home interiors?
Real Estate’s Next Big Thing: Walkable Communities
By John Wasik
Mar 22, 2010 9:30 am
Demographics will drive growth of human-scale developments.
To be a savvy investor in US real estate these days, you need to look beyond the business news headlines and target human-scale developments that will grow because of long-term demographic trends.
Human-scale homes and communities feature amenities that you can walk, bike, or take public transit to without getting in a car. I live in such a development in Grayslake, Illinois, where I can walk or ride to Starbucks, the supermarket, bank, dry cleaner, library, and hardware store. I wouldn't want to live anywhere else right now.
You won’t generally find human-scale communities in sprawling urban areas dominated by highways, or what I call “spurbs.” Investing in human-scale development is a relatively new and enlightened way of buying real estate. You may be able to profit in real-estate investment trusts, or REITs, or find communities that feature this kind of construction.
Christopher Leinberger, a research fellow at the Brookings Institution and real-estate developer, says human-scale or "walkable" communities command a premium of 40% to 200 % in cost per square foot over properties in car-centric neighborhoods.
Demographics is destiny when defining the growth of human-scale developments.
Places with sidewalks, bike paths, trails, and public transit will continue to prosper while spurbs will wither. That's because millions of empty nesters among the Baby Boomers -- born from 1946 to 1964 -- are selling their large, four-bedroom-plus suburban family homes and downsizing to condos, town homes, co-ops, and apartments half the size.
While the majority of Baby Boomers won't abandon their suburban enclaves quite yet, their sheer numbers will ensure significant migration to more pedestrian-friendly areas.
There were 52 million Baby Boomers aged 55 or older in 1990. By the end of this year, that number is forecast to grow to about 77 million and to 85 million in 2014, according to the National Association of Homebuilders, a Washington-based trade group.
Empty nesters are often moving to urban enclaves in Brooklyn, Philadelphia, Chicago, Seattle, and Portland, Oregon.
In his research on this subject, Leinberger has found that the supply for these kinds of neighborhoods lags the demand in major cities.
Leinberger estimates that the New York City metro region, with about 20 million people in four states, should have 80 walkable neighborhoods, but only has 21. He said the area could use more areas like downtown Princeton, New Jersey, Washington DC’s DuPont Circle, or Chicago’s Lincoln Park.
Not only do human-scale neighborhoods help you build equity over time, they're better for your health and have lower carbon footprints. Because you're walking or biking to your destinations -- usually within a mile of your home -- you’re getting more exercise and polluting less.
When investing in human-scale areas, it’s not as simple as looking at listings and prices. Urban planners from the “New Urbanist” movement, who focus on building human-scale communities, examine “vehicle miles traveled.” The fewer number of miles you need to spend in a car, the higher the walkability.
One useful human-scale gauge is provided by WalkScore, a service that measures relative walkability (Leinberger is an adviser to the firm). In the New York metro area, for example, the highest-scoring neighborhoods were Tribeca, Little Italy, and Soho. The lowest were Howland Hook, Ardon Heights, and Woodrow.
How can an investor play this next big thing in real estate? One strategy is to buy REITs that favor human-scale developers. While these publicly traded funds of real-estate companies in general have been taking a beating in recent years, they're worth a look.
Buying REITs right now is probably the most challenging play because the market is still troubled. With the industry going through a recession plagued by ballooning foreclosures, a commercial property slump, and tight credit, it’s not known when it will recover, so consider any REIT buy a risky long-term buy and hold. Only invest a small portion of your portfolio in this vehicle -- less than 10% of your holdings.
REITs worth considering include Federal Realty (FRT) and Post Properties (PPS), according to Leinberger.
Looking to relocate? Be prepared to pay a premium for human-scale neighborhoods. While places like Soho and San Francisco’s Chinatown have a high desirability factor, you’ll find few bargains there.
John F. Wasik is a columnist, speaker, and author of 13 books, including The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream.
Mar 22, 2010 9:30 am
Demographics will drive growth of human-scale developments.
To be a savvy investor in US real estate these days, you need to look beyond the business news headlines and target human-scale developments that will grow because of long-term demographic trends.
Human-scale homes and communities feature amenities that you can walk, bike, or take public transit to without getting in a car. I live in such a development in Grayslake, Illinois, where I can walk or ride to Starbucks, the supermarket, bank, dry cleaner, library, and hardware store. I wouldn't want to live anywhere else right now.
You won’t generally find human-scale communities in sprawling urban areas dominated by highways, or what I call “spurbs.” Investing in human-scale development is a relatively new and enlightened way of buying real estate. You may be able to profit in real-estate investment trusts, or REITs, or find communities that feature this kind of construction.
Christopher Leinberger, a research fellow at the Brookings Institution and real-estate developer, says human-scale or "walkable" communities command a premium of 40% to 200 % in cost per square foot over properties in car-centric neighborhoods.
Demographics is destiny when defining the growth of human-scale developments.
Places with sidewalks, bike paths, trails, and public transit will continue to prosper while spurbs will wither. That's because millions of empty nesters among the Baby Boomers -- born from 1946 to 1964 -- are selling their large, four-bedroom-plus suburban family homes and downsizing to condos, town homes, co-ops, and apartments half the size.
While the majority of Baby Boomers won't abandon their suburban enclaves quite yet, their sheer numbers will ensure significant migration to more pedestrian-friendly areas.
There were 52 million Baby Boomers aged 55 or older in 1990. By the end of this year, that number is forecast to grow to about 77 million and to 85 million in 2014, according to the National Association of Homebuilders, a Washington-based trade group.
Empty nesters are often moving to urban enclaves in Brooklyn, Philadelphia, Chicago, Seattle, and Portland, Oregon.
In his research on this subject, Leinberger has found that the supply for these kinds of neighborhoods lags the demand in major cities.
Leinberger estimates that the New York City metro region, with about 20 million people in four states, should have 80 walkable neighborhoods, but only has 21. He said the area could use more areas like downtown Princeton, New Jersey, Washington DC’s DuPont Circle, or Chicago’s Lincoln Park.
Not only do human-scale neighborhoods help you build equity over time, they're better for your health and have lower carbon footprints. Because you're walking or biking to your destinations -- usually within a mile of your home -- you’re getting more exercise and polluting less.
When investing in human-scale areas, it’s not as simple as looking at listings and prices. Urban planners from the “New Urbanist” movement, who focus on building human-scale communities, examine “vehicle miles traveled.” The fewer number of miles you need to spend in a car, the higher the walkability.
One useful human-scale gauge is provided by WalkScore, a service that measures relative walkability (Leinberger is an adviser to the firm). In the New York metro area, for example, the highest-scoring neighborhoods were Tribeca, Little Italy, and Soho. The lowest were Howland Hook, Ardon Heights, and Woodrow.
How can an investor play this next big thing in real estate? One strategy is to buy REITs that favor human-scale developers. While these publicly traded funds of real-estate companies in general have been taking a beating in recent years, they're worth a look.
Buying REITs right now is probably the most challenging play because the market is still troubled. With the industry going through a recession plagued by ballooning foreclosures, a commercial property slump, and tight credit, it’s not known when it will recover, so consider any REIT buy a risky long-term buy and hold. Only invest a small portion of your portfolio in this vehicle -- less than 10% of your holdings.
REITs worth considering include Federal Realty (FRT) and Post Properties (PPS), according to Leinberger.
Looking to relocate? Be prepared to pay a premium for human-scale neighborhoods. While places like Soho and San Francisco’s Chinatown have a high desirability factor, you’ll find few bargains there.
John F. Wasik is a columnist, speaker, and author of 13 books, including The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream.
Sunday, March 21, 2010
Kenny G Friday, March 26 in Phoenix
An evening of romance and rhythm at the J. W. Marriott http://sageconcerts.com
Saturday, March 20, 2010
Take Your Doggy to Dinner
Mingle with other animal lovers on March 27th at the "Woof, Wine, and Dine" dinner benefiting the dog-therapy program at Phoenix Children's hospital. The event starts at 4pm at 1561 W. Las Palmaritas Drive (a private residence), Phonix. Tickets are $100 per owner and dog combo. DineWithYourDog.org
The Musical Instrument Museum to Open April 24th
The piano played by John Lennon when he wrote "Imagine", along with Bob Dylan's harmonicas, guitars from Paul Simon, George Benson and Eric Clapton, and the first Steinway piano ever built, will all be featured. The museum is located at 4725 E. Mayo Boulevard in Phoenix
Friday, March 19, 2010
CNN Money: Greenspan Denies Causing the Housing Bubble
Former Federal Reserve Chair Alan Greenspan, whose policies have been blamed for the economic meltdown of 2008, will present a paper at the Brookings Institution today saying that the low interest rates during his tenure didn’t cause the housing bubble.
"To my knowledge, that lowering of the federal funds rate nearly a decade ago was not considered a key factor in the housing bubble," he wrote in a preliminary copy of the presentation.
"The global house price bubble was a consequence of lower interest rates, but it was long term interest rates that galvanized home asset prices, not the overnight rates of central banks," Greenspan continued.
What did cause the bubble, Greenspan argued, is the explosive growth of developing economies in Asia and other parts of the world.
Source: CNNMoney.com (03/18/2010)
"To my knowledge, that lowering of the federal funds rate nearly a decade ago was not considered a key factor in the housing bubble," he wrote in a preliminary copy of the presentation.
"The global house price bubble was a consequence of lower interest rates, but it was long term interest rates that galvanized home asset prices, not the overnight rates of central banks," Greenspan continued.
What did cause the bubble, Greenspan argued, is the explosive growth of developing economies in Asia and other parts of the world.
Source: CNNMoney.com (03/18/2010)
Wednesday, March 17, 2010
Monday, March 8, 2010
Remember Pischke's in Old Town Scottsdale?
The chef from Pischke's has opened in a new location in Phoenix. It is located in the historical district and it's menu features some of your favorites from Pischke's. The new name is Local Breeze. We have eaten there several times and love it. Just wish it were closer, but certainly worth the trip! Local Breeze
New Restaurant in Old Town Scottsdale
The Cider Mill opened in December and is located on a charming alley off Main Street. Fun place to eat lunch when wandering Old Town with out-of-town guests. Soups, salads, sandwiches and more. Cider Mill
Brighten up dark rooms and it's affordable!
I had an interesting conversation this past weekend with a local home inspector and his wife. They are big fans of Sola Tube Daylighting. Very interesting concept. You can find out more at SolarConceptsAZ
Wednesday, March 3, 2010
Tuesday, March 2, 2010
Spring Training This Month
Enjoy good food, great baseball & idyllic weather
Go to PlayBallInScottsdale.com
Go to PlayBallInScottsdale.com
When is Spring Break?
Do you want to know when the big weeks are? Answer: March 8-22 (especially March 15-19), 2010 with another surge March 29-April 4. Scottsdale is gearing up!! We love our Winter visitors.
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)
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)
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