Open house and carry on

Open House Still Part of Home Buying Process

open house
Stats from NAR’s Profile of Home Buyers and Sellers 2017 (infographic from nar.realtor)

The tradition of having an open house, like other real estate customs, has recently become a source of debate over its value and effectiveness.  According to Rachel Stults, the tradition began over one hundred years ago when brokers allowed prospective buyers to “inspect” the house by having it open to the public (A Brief History of Opening Our Homes to Total Strangers; realtor.com; April 21st, 2015).  The house was advertised as “open for inspection.”  Of course, it was a much different time. Home buyers were not represented, and there was no home inspection as we know it today.  Hence, the “open house,” as first conceived, served an important function for the both the buyer and the seller.

As the housing industry evolved, visiting an open house morphed into a Sunday tradition.  Open houses were not just for home buyers, as it also became a form of Sunday afternoon entertainment for the general public.  The internet changed the tradition by virtually opening the house to the public through pictures and tours and allowing buyers to identify the specific homes they want to visit.

There is disagreement among real estate agents and other housing experts on the merit and effectiveness of the open house.  Additionally, home buyers have significantly changed how they use the open house over the last two decades.  According to the National Association of Realtors’ Profile of Home Buyers and Sellers (nar.realtor), twenty-eight percent of home buyers surveyed in 1999 indicated they found their home by visiting an open house, compared to only seven percent in 2017.

Adding doubt is a recent study that indicates having a public open house actually decreases the probability of selling a home by about 6.1 percent (Allen, Cadena, Rutherford & Rutherford; Effects of Real Estate Brokers’ Marketing Strategies: Public Open Houses, Broker Open Houses, MLS Virtual Tours, and MLS Photographs. Journal of Real Estate Research: 2015, 37:3, 343-369).  The authors indicated that having a public open house can increase your home’s days on market up to twenty-five days.

Although the open house may have lost its clout as a selling tool, it is still a major aspect of the home buying process.  Open house data from NAR’s 2015 Profile of Home Buyers and Sellers indicated:

-48 percent of all buyers surveyed used the open house as part of their home search process.
-Repeat home buyers are more likely to find their home from an open house compared to first-time buyers.
-The income bracket most likely to frequent an open house has a median income between $250,000 and $499,999.
-Home buyers below the age of 65 (but older than 24) are more likely to frequent an open.
-The Northeast and West regions of the US have more successful open houses.
-Buyers seeking a new home visit open houses more than those seeking a re-sale.
-Couples (married and unmarried) are more likely to visit open houses than single home buyers.
-And, ninety-two percent of home buyers surveyed indicated that open houses were at least “somewhat useful.”

If you decide to have an open house, put away your valuables and medications so as not to tempt thieves who may wander into your home.  Have a discussion with your agent about focusing on selling your home, instead of trying to get more clients.  And finally, don’t distract from your home by having an “event,” which employs food trucks, bounce houses, and other open house gimmicks.

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

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.

Homestead tax credit – are you getting yours?

Homestead Tax Credit
Homestead (infographic from census.gov)

It’s been eleven years since Maryland forced all qualifying homeowners to reapply for the Homestead Property Tax Credit.  Prior to the change in the application, applying for the Homestead Tax Credit was almost automatic for homeowners who claimed a primary residence.  However, many abused the program to get tax credits on non-principal residences by claiming multiple properties or rental properties as their primary residence.  The 2007 change was implemented to reexamine ownership, so as to stop the abuse of the property tax credit program.

The Homestead Property Tax Credit was created to assist homeowners with significant assessment increases on their principal residences.  The credit limits the amount of taxable assessments.  The state requires each county and municipality to limit taxable assessments to ten percent or less.  Most of Montgomery County is limited to the state cap of ten percent.  The Homestead Credit limits the property tax that the homeowner pays to the allowed limit.

According to the State Department of Assessments and Taxation website (dat.maryland.gov), the Homestead Property Tax Credit is granted if during the previous year: the property was not transferred to new ownership; there was no change in the zoning classification requested by the homeowner resulting in an increase value of the property; a substantial change did not occur in the use of the property; the previous assessment was not clearly erroneous; the dwelling must be the owner’s principal residence and the owner must have lived in it for at least six months of the year (including July 1 of the year for which the credit is applicable), unless the owner was temporarily unable to do so by reason of illness or need of special care.

A homeowner who vacates their home for major improvements, or plans to raze the home to build a new home may qualify for the Credit if the following two conditions are met: (1) the property was the homeowner’s principal residence for at least 3 full tax years immediately preceding the razing or starting the improvements; and (2) the building of the replacement home or the improvements must be completed within the next succeeding tax year after the tax year in which the razing or the substantial improvements were commenced.

Since 2007, many homeowners and home buyers have been unaware of the Homestead Tax Credit.  Additionally, since then, many homeowners who may qualify for the Credit did not reapply.  Many homeowners who purchased homes since then have also not applied for the Credit.  Besides being unaware of their eligibility for the Credit, they may not have understood the Homestead Tax Credit and the application process.  But this will change because of two bills passed by the Maryland General Assembly (HB990 Homestead Property Tax Credit Notification on Acquisition of Property, and HB305/SB158 Homestead Property Tax Credit Program Eligibility Awareness).

Beginning July 1st, the State Department of Assessments and Taxation is required to mail a notice about the Homestead Property Tax Credit to individuals who purchase a home.  And effective October 1st, the State Department of Assessments and Taxation is required to identify homeowners who may be eligible for the Homestead Property Tax Credit Program (but failed to apply) and provide information on applying for the Credit with each assessment notice. For more information about your Homestead Property Tax Credit eligibility status and application process, please visit the State Department of Assessments and Taxation website (dat.maryland.gov).

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

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.

Independence, patriotism and homeownership

independence patriotism home ownership
Old Glory (photo from National Park Service nps.gov)

Let’s come together to celebrate our freedom and independence.  Having innate and inalienable liberties is the foundation of this country.  The concept of independence is abstract and usually expressed as intangible actions, such as the freedom from the tyranny of others.  However, home ownership has become an icon of freedom that is tangible and obtainable.

Last month I wrote about a few of the benefits of owning a home as part of the recognition of National Homeownership Month.  Besides being wealthier, home owners tend to be healthier and happier than their renter counterparts.  The history of owning land has been one of wealth and luxury.  Renting on the other hand has been associated transition, difficult times, and a hard life.  This can be traced back to the middle ages, when serfdom was associated with leasing.

How did owning a home become associated with the American Dream?  Richard Mize revealed the truth about the connection in 2013 (Who first dreamed the American dream of homeownership?; The Oklahoman; June 22, 2013; newsok.com).  Mize cites Eric John Abrahamson’s historical biography “Building Home: Howard F. Ahmanson and the Politics of the American Dream” (University of California Press) as the source of the story.  Abrahamson attributes the idea of home ownership as the American Dream to the restructuring of local savings and loans after the depression of 1896.

Building and loan institutions during the 1800’s certainly did not have the technology nor the interconnectedness our modern banking system has today.  In restructuring the financial system after the 1896 depression, local building and loans were organized to form the U.S. League of Local Building and Loan Associations.  The League’s motto was “The American Home: The Safe-Guard of American Liberties.”  According to Mize, this was promoted as the American Dream.

Abrahamson attributed the League’s first president, Seymour Dexter, with equating the idea of home ownership to liberty.  According to Abrahamson, Dexter felt that owning property was a duty.  Dexter believed Thomas Jefferson’s conviction that independent property-owning farmers would “sustain the independence and virtue of the citizenry and the health of the democracy.”  Dexter viewed the industrialization of America as a “challenge to democracy.”  The industrialized worker was much like the serf of the middle ages who rented a home near their job, and owed allegiance only to their employer (landlord), which was viewed as “politically corrupt.”  And to rebuild America of the 1890s, owning a home became portrayed as patriotic and a “civic virtue.”

In 2011, then president of the National Association of Realtors Ronald L. Phipps wrote (Home ownership matters; magazine.realtor; February 1st, 2011):

Our commitment to home ownership is not about simple self-interest. Rather it is about a larger purpose. Home ownership has been part of the American experience since the very first breath of the Republic.  Today, what we need to do as a nation is connect with our truth and our tradition: Home ownership matters.

It’s not only Realtors who promote home ownership but government as well.  Federal and local government programs exist to encourage home ownership through down payment assistance programs, low interest rate mortgages, and even home renovation programs.

As Seymour Dexter of the U.S. League of Local Building and Loan Associations realized, owning a home is an act of independence and patriotism.  It doesn’t only benefit you personally, but it also benefits your community and the economy.  The idea of independence transcends all ideology and can be exhibited by owning a home.

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.

Housing market bubble hyperbole

housing market bubble
Housing Market Snapshot (infographic from nar.realtor)

Timing, as they say, is “everything.”  Predicting the housing market is tricky.  Even the best economists can get it wrong.  Aptly, however, there is that group of naysayers who always believe the homes are overpriced and we are in a housing market bubble status.  And you know what they say about a broken clock, it’s correct twice a day.

There’s no way around it, housing market trends are cyclical.  Eventually, the housing market will crash and home prices will recede.  But, like the phoenix, will again be reborn to go through it’s life cycle.  According to Harvard’s Teo Nicolais (extension.harvard.edu/faculty-directory/teo-nicolais), there are four phases to the housing cycle.  The cycles were described in 1876 by economist Henry George and modernized by Glenn R. Mueller to include recovery, expansion, hypersupply, and recession.  Nicolais predicts that, aside from the occasional slowdown, there won’t be an honest to goodness housing crash until 2024.

You may be saying, “But Dan, the market feels just like the housing market bubble before the last crash.”  And in some respect, you may be correct.  At that time, home sale inventory was low, and home prices seemed on a never-ending climb. However, even though we have similar conditions, the current housing market is in a different cycle than where we were thirteen years ago.

Back in 2005 I reported that the active inventory of Montgomery County single family homes for sale for June 2005 increased to 2,004 units.  Homes were selling at rapid rate, as the number of contracts increase 2.5 percent during June 2005 compared to 2004.  And there was almost a 13 percent price appreciation from the previous year.  The 2005 housing market was clearly in a rapid expansion phase. Oversupply began in late 2006 when Montgomery County single family home inventory hovered around 4,000 units for the better part of the summer and fall.  And of course, the rest is history.

There is some disagreement about the current phase of the housing market.  Some say the market is in the beginning of an expansion cycle, while others (like me) believe we are still in the recovery cycle.  Yes, Inventory is tight.  But as I reported recently, not all homes are selling.  Which is contrary to the expansion of 2005, when it seemed as if all homes sold quickly regardless of condition.  Home prices are increasing, but at a more reasonable rate than they did thirteen years ago.  Although it may feel that houses sell in less than a week, the average days on market for homes that sell is currently 33 days in Montgomery County (according to MLS stats), and 78 days nationwide according to Zillow.

Another factor that is playing into current housing market conditions is mortgage interest rates.  Unlike the housing market bubble of thirteen years ago, interest rates are increasing and is anticipated to help mitigate the home price spikes.

Sure, there are regional markets, such as Seattle and Denver, that lead the country in home price gains (typically double digits).  But most everywhere else, real estate prices are improving gradually.  Moreover, regional markets each have their own hot neighborhoods that grab the headlines too.  Hot neighborhoods tend to be where investors, flippers and first-time home buyers converge.

Is there a housing market bubble?  Are we headed to a market crash like we experienced in 2007? No, at least not in the short term.  More likely, the market may be affected in the near future by a mild (and overdue) economic slowdown.  Unfettered, the housing market will continue its herky-jerky pace.

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.

Basic home repair

basic home repair
Basic home repair tools (infographic from visual.ly)

I often preach about regular home maintenance.  However, home owners should also have basic home repair skills.  Basic repairs are those items that you can do safely, and usually don’t require a professional.  Basic home repair skills are sometimes useful as an emergency stopgap before the licensed contractor can make it to your home.

Basic home repair requires a few tools.  Keep a toolbox well stocked and know where it is so you can easily find it when necessary.  Besides the standard hammer, Philips and flathead screwdriver, your toolbox will need more items depending on your skill level.  If you’re in doubt about your ability to make a basic home repair, call a licensed contractor (you can do more damage if you don’t know what you’re doing).  As a precaution and in case of emergency, you should know where the emergency shutoffs are in your home for water, electric and gas.

One of the first repair skills that I learned as a home owner is how to “snake a drain.”  Bathroom drains, specifically, get clogged with hair and soap.  Chemical products are a common solution, however you should always follow the directions and read the “cautions and dangers.”  Chemicals don’t always work well, however.  If used improperly, chemical drain products can also damage basins and pipes.  Following the instructions, you can easily clear most clogs with a drain snake.  A small drain snake should be part of your tool box. These are cheap to purchase and readily available at the hardware store.

Have you ever needed to change your door locks quickly?  I have, once when a lock failed (the mechanism broke), and another time when someone stole our keys.  Although most locks can be changed out easily with a screwdriver, specialized locks require a locksmith.  Most locksets are designed as components that easily install. However, you should note that standards change over time, so make sure the lockset you purchase is the same size as the one being replaced.

Patching drywall is one of those repairs that is so basic that you can find “how-to” tutorials everywhere.  Basic drywall patching requires a few basic tools, such as a “spackling tool,” utility knife, sand paper and spackle.  Spackling tiny pinholes is easy. However, a larger hole may require some time for the repair as well as the clean-up.  Damage to large areas of drywall will most likely require sections to be replaced.

Can’t find the leak from your sink or tub?  There’s a good chance it’s coming from water that is seeping through old caulking.  Caulk is used as a sealant in plumbing applications.  It seals the fixtures and perimeter of sinks, tubs and shower stalls, which prevents water from trickling through.  As it ages, caulk shrinks and can become brittle, which allows water penetration and leaking.  A tube of caulk should be in your toolbox in case you need it for an emergency repair.  You don’t need a large caulking gun, as caulk is available in many forms, such as squeezable tubes and even tape.

Plastic sheathing and duct tape are both good to have in your toolbox in case of an emergency.  Duct tape, specifically, has many uses and is widely used as an adhesive and sealant.  These two items are useful as a short-term repair for broken windows and doors.  Plastic sheathing and duct tape can easily cover the affected areas until they are replaced, as well as help maintain cooling or heating in the interim.

 

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.