Modern homeownership

modern homeownership
Modern Homeownership (infographic from California Association of Realtors car.org)

June is National Homeownership Month.  In recognition of modern homeownership, National Association of Realtors President Elizabeth Mendenhall stated in a June 1st press release that “National Homeownership Month is a time to celebrate and promote the modern American Dream of owning a home.  Homeownership changes lives and enhances futures, and many Americans see it as one of their greatest hopes. These individuals are counting on the nation’s 1.3 million Realtors to champion and protect homeownership and help make it more affordable, attainable and sustainable (nar.realtor).”

The NAR provides a history of celebrating modern homeownership which goes back almost a century (nar.realtor).  The roots of celebrating homeownership go back to the 1920’s when local associations would bring together consumers and brokers during “Real Estate Day” events.  In 1955, the National Association of Realtors created a national “Realtor Week” to promote the value of Realtors when buying a home.  The celebration of modern homeownership began in  1976 when “Realtor Week” was changed to “Private Property Week.”  Then in 1986, the celebration was changed to “American Home Week” to promote owning a home as part of the American Dream.  June became National Homeownership Month through a proclamation by President Bush in 2002, which expanded the American Home Week to include HUD initiatives.  Although 2008 was the last official proclamation of National Homeownership Month, it has been observed annually.  However, last year, President Trump revived the annual proclamation recognizing the significance of homeownership.

Although the idea of homeownership hasn’t changed since the 1920’s, many things have.  For example, buying a home is much easier and affordable today than it was then.  You can now search homes from your couch, rather than driving to individual broker offices.  Additionally, low down payments and thirty-year fixed rate mortgages have made modern homeownership a realty for many.

Of course, some things haven’t changed in a century.  A home is still an asset that maintains relative market value.  Given regular cycles of up and down markets, real estate can appreciate over time.  There are also some tax advantages to owning a home (consult your tax preparer).  Furthermore, owning a home stabilizes communities and encourages civic pride, which positively affect home values.

Additionally, there are many social benefits to homeownership.  Studies demonstrate that home owners tend to be more charitable, have an increased connection to their neighborhood, have an increased general positive life outlook, express an increased self-esteem and higher life satisfaction, and be healthier.  Other studies indicate that children living in owner-occupied homes have higher test scores, higher graduation rates, decreased delinquencies, and an increased participation in organized activities.

homeownership rate
Homeownership Rate (census.gov)

The comparisons of the costs of renting vs. the costs of owning a home hasn’t changed over time.  Of course, the debate takes on a different tone depending on the state of the economy.  During the Great Recession, many believed that owning a home was folly.  Even after the recession, many continued to believe that real estate wasn’t a viable investment, while discounting the other benefits of homeownership.  The homeownership rate bottomed to a modern low of 62.9 percent during the second quarter of 2016 (census.gov).  However, homeownership is back in vogue.  Even with increased home prices and mortgage rates, buying a home today can still be less expensive than renting.

Modern homeownership – your home is a silent witness to your life.

You have a relationship with your home.  When you own a home, your relationship with it is intimate and symbiotic, which contributes to an intangible and intrinsic sense of wholeness.

Copyright© Dan Krell
Google+
If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism DetectorDisclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Specialty rooms for all interests

specialty rooms
Home improvement spending is increasing to include specialty rooms (infographic from census.gov)

Prior to the Great Recession, home owner spending for remodeling and renovations was very strong.  Besides remodeling the kitchen and bathrooms, many home owners also created specialty rooms (also known as special function rooms) in their homes.  Specialty rooms such as home theaters and media rooms were not just trendy because they were cool to have in the house, but they also added resale value.  According to Kermit Baker writing for Harvard’s Joint Center for Housing Studies, post-recession home remodeling spending dropped off by as much as 28 percent between 2007 and 2011.  That spending decrease meant that while home owners focused on saving and paying their mortgages, specialty rooms were no longer a necessity.

The return of the specialty room can be measured by the increased home remodeling spending over the past few years.  Specialty rooms are increasingly in demand.  The recent LIRA press release projects that home remodeling will remain strong at least through 2019.  Chris Herbert, Managing Director of the Joint Center for Housing Studies stated:

“Strengthening employment conditions and rising home values are encouraging homeowners to make greater investments in their homes…Upward trends in retail sales of building materials and the growing number of remodeling permits indicate that homeowners are doing more—and larger—improvement projects.”

Prior to the Great Recession, specialty rooms were a must for home owners.  However, many of these specialty rooms were primarily added for display and resale.  Home owners have since moved away from the large gaudy specialty room and are opting for more practical spaces focused on enjoyment and function.

Several years ago, panic rooms were in demand for protection.  It wasn’t just to protect from a home invasion, as portrayed in the movie “Panic Room,” but also to  offer shelter from severe weather.   FEMA even provides information on creating a safe room in your home.

Yes, specialty rooms are becoming popular again, but not in the way they were prior to the recession.  According to the 2017 AIA Home Design Trends Survey (aia.org), creating an outdoor living area is the currently the most popular specialty room today.  The outdoor living area is a way to extend indoor space and amenities (such as kitchen and home entertainment) to your back yard or roof top deck.

But home owners are opting for other specialty rooms too.  Building a fabulous mudroom comes in second in the AIA Home Design Trends Survey.  No longer that meager alcove separating the garage and kitchen, the mudroom has become a multi-purpose functional suite.  Obvious coat hooks, benches, and shoe cubicles are standard.  But mudrooms have become larger to accommodate storage units and desks, typically with high-end flooring and moldings.

Other specialty rooms mentioned in AIA’s survey include the home office and in-law suite.  However, other types of specialty rooms that are popular include fitness rooms and wine cellars.

As the economy improves, home owners have more money to spend on their passions.  Currently, there is a trend to build specialty rooms to help home owners pursue hobbies and talents.  Hobbyists are creating spaces for their collections and interests.  Many home owners are designing dedicated rooms as art studios.  Music lovers and musicians are finding that technology has made the music listening room and recording studio easy and affordable to create in their homes.

Over time, the home has evolved from a Spartan shelter to a space where we relax and express our personalities.  It is likely that specialty rooms will continue to evolve based the home owner’s lifestyle, finances, as well as technology.  Specialty rooms will also vary based on societal norms (consider formal dining and living rooms) and economic conditions.

Copyright© Dan Krell
Google+
If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism DetectorDisclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Home pricing psychology

home pricing psychologyPricing your home correctly is the foundation of a successful sale.  I have often talked about the science and art of pricing a home in various market conditions, but did you know home pricing psychology also plays a role?

With vast amounts of public data available on the internet, you may be tempted to price your home on your own.  However, keep in mind that unverified internet data can be inaccurate or outdated.  Moreover, the most recent sales data may not yet be available on your favorite real estate sites.  Asking a Realtor to help you analyze relevant comparables from the MLS can help you decide on a sales price that is in line with home buying trends.

The science of pricing a home is a straight forward method of analyzing the sale prices of similar neighborhood homes.  The analysis will provide you with a potential sales price range.  When selecting comparable homes, make sure that the homes are similar in style (colonial, split level, rambler, etc.).  Select comparable homes that are similar in size (usually within 15 to 20 percent of your home’s living area).  Also, try to find comparable sales that sold within the last six months to be relevant to current market trends.

The “art” of pricing your home is a process of fine tuning the sale price range derived from comparable homes.  Looking at various factors for each home, you can make adjustments on your calculated sale price range.  Interior differences, such as number of bedrooms, bathrooms, or having a finished basement, can change a sale price significantly.  Likewise, exterior features, such as a deck or fence, can also affect the price.

Let’s talk about your home’s condition.  Whether you like it or not, your home’s condition should be a major factor in determining a sale price.  You should be honest and objective when it comes to your home’s condition.  Have others offer their opinions about necessary updates and repairs.  Are there any comparables that are in similar condition?  You may have to make adjustments to correspond to deferred maintenance and lack of updates.

Home Pricing Psychology

To attract home buyers while trying to get top dollar, you may also have to apply home pricing psychology.  Of course, many of these home pricing psychology strategies are not sound or based on facts.  An example of this is the use of a “totem” price.  A totem price is when the second half of the number is a mirror of the first (e.g., 543,345).  This was a strategy that was highly touted during the “go-go” market of 2005-2006.

Until recently, there hasn’t been much research into the psychological effects of real estate pricing strategies.  An empirical study by Eli Beracha and Michael J. Seiler revealed how sellers can ask for a higher price without turning off buyers (The Effect of Pricing Strategy on Home Selection and Transaction Prices: An Investigation of the Left-Most Digit Effect; Journal of Housing Research; 2015; Vol. 24, No. 2, pp.147-161).  Their study revealed that “just-below” pricing can help you sell your home faster and get a higher price.  Just-below pricing is a strategy that lowers the price by reducing the left most digit by “1.”  However, they suggest that when using the just-below strategy in real estate, it should be rounded to the nearest hundred or thousand.  For example, if you decide on a list price of $450,000, then the rounded-just-below price will be $449,900.

Copyright© Dan Krell
Google+
If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism DetectorDisclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Air conditioning maintenance

air conditioning
Home Cooling (infographic from energy.gov)

Did you know that the first commercial application of air conditioning was in 1902?  And yet, residential central A/C didn’t come into its own until the 1960’s.  According to the US Department of Energy’s History of Air Conditioning, A/C use skyrocketed in the 1970’s.  Since then, systems have become more efficient, such that new air conditioners use fifty percent less energy than units from the 1990’s.  Additionally, new technologies are making A/C units increasingly environmentally friendly.  New developments in air conditioning include non-vapor compression technology, which will be fifty percent more efficient and doesn’t use Hydrofluorocarbons (energy.gov).

Summer is around the corner.  But I would venture to say that many of you already have your air conditioning running.  We take for granted that our home’s air conditioning runs without fail.  But proactive care of your A/C unit will keep it running efficiently while you stay cool through the hottest summer days.  Here are some air conditioning maintenance tips from the US Department of Energy (energy.gov):

Regular maintenance of your home’s air conditioning system will ensure air flow.  Regularly changing air filters can keep your system clean and keep the air flowing.  A clean filter can reduce energy consumption by five to fifteen percent.  Filter change requirements can vary from home to home, due to home conditions.

Over time, the A/C unit’s coils can become dirty, which will reduce its efficiency.  Dirt on the coils can reduce airflow and prevent it from absorbing heat.  The outside condenser coils will likely become dirty from being exposed to the elements.  It’s recommended that the area around the outdoor unit be clear of debris, leaves, and have about two feet of clearance for ideal airflow.  Make sure that the air conditioner condenser drains are not blocked.  A clogged drain can create excess humidity, which can create conditions for mold growth in basements and utility closets.

Window A/C units require maintenance too.  You should inspect the seal between the unit and the window to ensure there are no air leaks.  Window A/C units should be covered during the winter to prevent dirt and debris from penetrating the unit.

Some maintenance requires a qualified HVAC technician.  If you hire a HVAC tech to clean and service your air conditioning, make sure they have a current HVAC license.  Hiring a professional doesn’t have to be expensive, as many HVAC companies run maintenance specials this time of year.  Besides checking the refrigerant in the system, the tech will run a number of diagnostics as well as clean the system if needed.  They will also make necessary repairs, such as sealing leaks.

Air conditioning maintenance assistance programs

If you’re on a modest income and cannot afford to service or upgrade your air conditioning, you may qualify for Montgomery County’s Homeowner Energy Efficiency Program.  The program is in partnership with Habitat for Humanity Metro Maryland, Inc to assess applicants’ eligibility and identify their needs.  According to a Tuesday county press release, “homeowners benefitting from the program will receive free energy-efficiency upgrades to their home which may include attic insulation, upgraded furnace and air conditioning units, water heater replacement, LED light bulbs, a solar-powered attic fan, a programmable thermostat and new appliances.”

The program is open to all Montgomery County homeowners.  Eligibility requirements include; owning and occupying the Montgomery County home for which they are requesting services; they must be a PEPCO customer; and meet income criteria.  For more information see the program website (habitatmm.org/montgomery-county-energy-efficiency-program).

Copyright© Dan Krell
Google+
If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism DetectorDisclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

DIY Do It Yourself

DIY
Do it Yourself projects may need permits (infographic from census.gov)

Home owners are spending more on home improvements.  “Do-it-Yourself” (DIY) projects are becoming popular again.  Besides being inspired by the increasing number of DIY home improvement shows on TV, there are numerous books, online sources and YouTube videos to show a DIYer how to take on almost any project in the home.  Being a DIY is ambitious and exciting, but for many becomes overwhelming and costly.

The notion of DIY is more than just being proud of getting your hands dirty.  For many home owners it’s really about money.  DIYers have a reputation for being thrifty, but a revealing research analysis asserts there’s more to it. Ryan H. Murphy (The Diseconomies of Do-It-Yourself; The Independent Review; Fall 2017; pp.245–255) provides ample evidence that many who engage in DIY have an anti-market bias.  Those who engage in DIY home improvements believe it is a zero or negative sum game, where there is no benefit from money spent on the home improvements.  He concludes that unless home improvement is your vocation, you’re better off sticking to your profession and hiring a (licensed) professional home improvement contractor.

One of the issues that is often noticed with DIY projects is that the result may be substandard.  The home owner may decide that although the project is not completed, it is “good enough” to save time and money.  Sometimes, the “good enough” attitude is evident by jerry-rigged components.  This can obviously be a problem when selling the home.  Home buyers have a keen eye and will be turned off by poor workmanship.  Even if the home buyer misses it, you can count on a home inspector to flag it.

Permits seem to be another issue for many DIYers. Some believe that obtaining a permit (when it’s required) is costly and time consuming.  However, inspectors are getting better at sniffing out unpermitted projects, so it is common for the DIYer to get caught before completing their improvements.

The permitting process may increase the time and cost for your DIY project, but it’s there to assure that buildings and home improvements adhere to the building and zoning codes within the city or county.  Building and zoning codes are devised to help ensure that buildings are safe.  Finishing a project without a required permit can potentially cost you more money and time down the road.

If you are required to get your unpermitted DIY project inspected after completion, don’t be surprised that you may have to make alterations and/ or corrections to your work.  If you built a structure that is deemed unsafe or even encroaches on a neighbor’s property, you may even have to demolish the project and start over.  You may even have to hire contractors to assist you.  If you are selling your home, the home buyer may require you to have your work inspected.  It can be even more costly if the project was completed during past code cycles, because, rather than send county inspectors, you may be required you to hire experts to inspect your work.

If you’re planning a DIY project and not sure if it needs a county or city permit, check with your municipality’s permitting office.  Here in Montgomery County MD, the Department of Permitting Services’ website lists additions and alterations that require permits (permittingservices.montgomerycountymd.gov).  However, if you live in one of Montgomery County’s county’s incorporated cities, your city may have different permitting requirements.

Copyright© Dan Krell
Google+
If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism DetectorDisclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.