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July 16, 2014November 23, 2021

Reality TV and real estate – is the genre shaping buyer and seller expectations?

Reality TV has been a part of our culture since the 1990’s, and chances are that you’ve watched Reality programming at some time. Reality TV has benefited from the booming housing market of the early to mid 2000’s, when the number of real estate reality shows grew exponentially. Today, real estate related reality TV is prevalent, and you could probably catch one at almost any time of day.

What is it about reality TV, or more specifically – real estate reality TV, that draws us in like a moth to the light? Matthew Wilkinson and Paul Clark suggest in their research (2014. Pay No Attention To The Man Behind The Curtain: The Rejection Of Artifice And The Culture Of Choice. ASBBS E – Journal,10(1),132-143) that our affinity to reality programming is our culture’s desire for “fluid, ambiguous, and amorphous experiences.” And before I embark on their philosophical explanation based on “postmodernism” and its implications, it apparently boils down to our search for “authenticity” and the notion of participation.

Alternatively, Alex Weprin reveals that there is a feeling among programming executives that audiences have become bored by “forced, trite reality shows” and are attracted to TV shows that “feel more ‘real.’” But there’s a limit to “authenticity,” even in reality shows. Weprin quotes Animal Planet President and General Manager Marjorie Kaplan, saying “I don’t know that every nonfiction show is going to be authentic; clearly there is room for wonderfully inauthentic reality TV that we all watch and wink and nod and know is contrived….” (Jan 10, 2010. Cablers target laughs, authenticity, geeks. Broadcasting & Cable).

And why not? “Reality” TV is an escape from monotony and lets us perceive we are participants; real estate reality programming helps us imagine how our homes, our lifestyles could be different. Since the airing of MTV Cribs, we imagined how we could live like celebrities. Home renovation, real estate investing, buying foreclosures, house flipping, luxury homes, and home shopping: there is no lack of real estate related subjects on TV today – and they all seem to make it all look easy and exciting.

But there is a concern by some in the real estate industry that reality TV is doing more than entertaining viewers, it is also shaping consumer expectation. The real estate related reality format is typically a condensed version of the process that highlights only parts of the consumer experience; the portrayed drama in this sub-genre can range from the very subtle to the outrageous.

A recent Realtor® Magazine article highlights professionals’ thoughts on the matter (June 16, 2014. Reality TV Skewing Home Remodeling Picture?); and the consensus is that some consumers demand a similar experience to what they see on TV. Some real estate agents have also expressed concerns about home buyers and sellers whose expectations are not realistic; they want more in an abbreviated span, losing perspective on the elements and time that the home buying and selling process requires.

Maybe the entire genre is misconceived; maybe real estate Reality TV should be more realistic, where the drama is drawn out over weeks and months documenting the excitement and tedium of the real estate transaction. But then again, maybe T. S. Eliot was correct in the characterization (Burnt Norton): “…humankind cannot bear very much reality.” TV may not be genuine about being real, as much as it is about entertainment value.

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By Dan Krell
Copyright © 2014

Disclaimer. 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.

July 9, 2014November 23, 2021

Buying a home – is it a product or service?

If you’re like many home buyers, your home search is focused on a home’s specific features that are limited to your price range. Your search may seem “product” directed, at least initially. And unless you plan to go it absolutely alone; you’re likely to be using a number of real estate related services as well.

Before the multiple list service existed, when card catalogs were used to keep track of homes for sale, real estate listings were proprietary and buyer agency did not exist. Cooperation between brokers was not guaranteed; and as a result, real estate brokers mostly sold their own listings. Because the broker was the source of information about the home, as well as the home sale/purchase process; the real estate broker’s services were perceived to be one and the same as the product (the house for sale).

Today, everyone turns to the internet for answers, which has become the “go to guy” for information. It seems as if the information found on the internet is treated as gospel, even when it is not verifiable. And this is particularly true for real estate. Home buyers, sellers, and owners use the internet to search all types of information including: homes for sale, home values, property tax, and the home buying/selling process.

Like some other service industries, you could say that the internet has contributed in separating the product from the service; consumers are no longer required to go directly to the real estate broker to search for a house or other real estate information, and consequently get their services too. Finding and viewing homes for sale without your agent has become easier; as is selling your home FSBO (for sale by owner). The resulting sentiment is the obvious questioning of the value of the real estate agent.

When asked what an agent can bring to your real estate transaction, the consensus is that they are housing market experts. Real estate agents are invested in knowing local listing and sale activity, as well as networking within the industry to keep on top of the latest trends. They can interpret the home sale data to help you formulate a buying/selling strategy (including price and terms). Experienced agents also typically have developed the ability to easily connect with buyers and sellers having a greater capacity to understand their specific needs to facilitate a smoother transaction. And although agents are often thought of as transaction facilitators; your Realtor® is a fiduciary, obligated to protect and promote your interests (while also obligated to treat all parties honestly). Agents are also required to be up to date on legislation that affects home buyers and sellers, which will help when structuring your transaction, including compulsory disclosures and obligations.

Unlike the consumer experience back in the day when there was little choice in real estate services, you now have the luxury of choice. But choose your agent carefully; agents are not all alike. Recent research indicates that veteran agents positively affect your transaction and are more efficient compared to rookies. Additionally, full-time agents have better outcomes than those who consider themselves as “part-timers.”

Savvy home buyers and sellers benefit from their agents’ experience and commitment. Smart consumers understand that experienced agents offer intangible services such as understanding the nuances of the housing market, as well as having an increased ability to engage the parties in the transaction.

Disclaimer. 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. This article was originally published the week of July 7, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

July 3, 2014July 5, 2019

Homeownership, freedom and independence

While we enjoy the barbecues and fireworks that come along with the Fourth of July Holiday, we might take a moment to think about our freedom and independence. And of course – homeownership is an expression of those liberties which is part of the “American Spirit” that drives us to achieve the American Dream.

The American Dream is not dead, as some will have you believe; the dream of homeownership is like a phoenix that is renewed after the fire, and is resumed by a new generation of home buyers. In his April 2009 Vanity Fair article “Rethinking the American Dream,” David Kamp gave a wide perspective of the American Dream; from its origin to diametrically opposed viewpoints. In his conclusion, Kamp states, “…The American Dream should accommodate the goal of home ownership, but without imposing a lifelong burden of unmeetable debt. Above all, the American Dream should be embraced as the unique sense of possibility that this country gives its citizens—the decent chance, as Moss Hart would say, to scale the walls and achieve what you wish.”

As we emerge from the housing and financial crises, many are discussing the benefits of homeownership once again. Even after the Great Recession, many prefer owning a home over renting. Survey after survey indicates that a majority of respondents positively viewed homeownership as a desire or goal (Rohe & Boshamer, Reexamining the Social Benefits of Homeownership after the Housing Crisis, Joint Center for Housing Studies Harvard University, August 2013).

So what is it about homeownership that makes it an aspiration for so many of us? Besides the fact that we all need a place to live; a home is an asset that has relative value to the housing market at any given time. Housing is also still perceived by many as an investment that can appreciate over a period of time. Additionally, those who have a mortgage on their home may be able to take advantage of the mortgage interest tax deduction (check with your tax preparer).

Home owners are more inclined to maintain their homes and neighborhoods, as well as being invested in protecting their home and community; which may account for lower incidences of reported crime. Besides stabilizing communities, many of these benefits may also account for positively affecting home values.

Additionally, there has been a lot said about the social benefits of homeownership. A National Association of Realtors® blog post by Research Economist Selma Hepp, titled Social Benefits of Homeownership and Stable Housing lists many of the documented social benefits. She cites that home owners tend to: be more charitable; participate more in their community (including voting); have an increased connection to their neighborhood and neighbors; have an increased general positive life outlook; express an increased self esteem and higher life satisfaction; and be healthier.

There are many studies that also indicate homeownership benefits children. Hepp includes some of the benefits of children living in owned homes, which include: lower teen pregnancy rate; higher test scores; higher high school graduation rate; decreased delinquencies; and an increased participation in organized activities.

Although June was officially declared “Homeownership Month” in 2002; July is a more appropriate month because of homeownership’s association with freedom, independence, and the American Dream.

By Dan Krell
Copyright © 2014

June 25, 2014September 2, 2019

Want to increase your home’s value? Don’t use a nuke

A recent blog post titled, “Want to Increase Your Property Values? Try a Nuclear War” caught my attention. Robert Beckhusen & Matthew Gault, in their June 22^nd post on Medium.com discussed a couple of unclassified defense reports on the effects and aftermath of a nuclear war (including the 1965 study “The Effects Of Nuclear Weapons On A Single City”). They discovered that these reports were a morbid reminder of the consequences; one report stated: “In a macabre sense, the surviving population would be individually ‘wealthier’ than before the attack…” because surviving buildings would be more valuable and indirectly increasing the survivors’ per capita wealth.

These reports were speculative, and a conclusion could be that your home’s value could be tied to usability and location; homes in dense urban areas are expected to be valued more. However, as the 1965 report stated, “…any joy among the surviving population may be quite shortlived…” because there is no way to know if the surviving buildings and land are useable (due to radiation or other reasons).

As a means to increase your home’s value, nukes are not the answer. Accepted methods of adding value to your home include home improvements that you might expect: increasing the living space; adding a deck; improving the landscaping; updating the home’s systems; and renovating the kitchen and bathrooms. However, making home improvements do not always give you a dollar for dollar return; and some improvements could even detract from your home’s value too! Remodeling Magazine’s Cost vs. Value Report (costvsvalue.com) can give you an idea of the return on investment (ROI) for improvement projects.

Typically the trends indicate that the ROI of replacement projects are higher than that of remodeling projects. The 2014 Cost vs. Value Report indicates that the top ROI for midrange projects nationally include: installing a new steel entry door; adding a deck; converting an attic into a bedroom; replacing the garage; and a minor kitchen remodel.

Compared to the ROI locally for mid-range projects in the Washington DC region include: installing a new steel entry door; replacing the garage door; adding a deck; minor kitchen remodeling; and installing new vinyl siding.

As you peruse the Cost vs. Value Report, you may notice that a project Cost vs Value ratio can sometimes exceed 100% (recouping more than was spent on the project at resale); this is sometimes attributed to an active housing market, and/or market trends. Overall average home values can affect Cost vs Value trends too. A higher ROI was realized at the peak of the housing market in 2005; and the subsequent decline was most probably due to devalued home prices. And as you might expect, ROI on many improvement projects have increased over the past year because appreciating home values. Also, regional and metro area differences exist on improvement project Cost vs Value ratios because of labor and materials costs. Some experts cite the abundance of workers seeking employment as a reason for decreased labor costs in some areas; while material costs for some projects may be similar, and other project materials are more expensive.

Another consideration when making home improvements is that the ROI and your home’s value can be affected by the quality of workmanship and installation. Hiring reputable and licensed contractors or builders who are familiar with the permitting process as well as building code requirements is always recommended.

by Dan Krell
Copyright © 2014

Disclaimer. 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. This article was originally published the week of June 23, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

June 18, 2014August 11, 2019

Oil prices and housing, is there really a link?

It seems that anytime there is turmoil in the Middle East, there is concern over disrupting the oil supply and spiking energy prices – notably at the gas pump. Spiking gas prices not only makes everything seem more expensive, it has been thought to compel people to re-think their home buying strategies as well. Is the chaos in the Middle East and increasing oil prices coinciding with a shift in home sale trends?

Gregory White, of Business Insider (businessinsider.com), stated that “The simple reason why a rise in crude prices could tank the housing market is that it has done it before.” This is not a recent story; no, White wrote this in a March 6^th 2011 piece titled: “Barclays On How The Oil Price Spike Could Crash The Housing Market Again.” The article was a brief commentary on Luca Ricci’s (who was at Barclays at the time he was quoted) analysis of the possible consequences of the surge in oil prices to the U.S. housing market.

Ricci was quoted to say, “The main effect is on consumption via gasoline and energy prices. As consumption generally accounts for 60% of GDP, the effect is large. In oil exporters this effect will be offset by windfall revenues from the higher oil prices, so the overall effect is unclear. In our view, the oil price increase in 2008 significantly contributed to the recession and the financial crisis in the US, which then spread globally. By raising CPI inflation, it reduced real disposable incomes and, hence, the purchasing power of the average households, leading to a contraction in real consumer spending and lowering the ability to repay mortgages.”

Indeed, a 2008 sharp increase in gas prices and road congestion was a factor for many to re-think their home location. It was not only those living in suburbia whose idea of an ideal home shifted toward saving fuel costs; home buyers at that time, who did not put their housing search on hold, looked for a home that was closer to their work or easily accessed some form of mass transit. A National Association of Realtors® (realtor.org) study reported that 28% of home owners surveyed indicated that high fuel costs were a decision to sell their home, while 40% of home buyers surveyed indicated that high fuel and commuting costs offset the higher home prices closer to the city center.

How much could you save by moving closer to your office? Based on the Washington Metropolitan Area Transit Authority Savings Calculator (WMATA.com), eliminating 20 miles of daily driving can save over $224 per month or $2,688 per year (estimates at the date of this article). And if gas prices peak like they did in 2008, savings from curbing your driving could be double – or more!

However, while the immediate focus may be on saving on energy costs, urban living could have a trade off in higher property taxes and housing costs. And as much as increasing oil and gas prices may have an indirect effect on the housing market, the urbanite trend may be more about convenience and a healthier living style rather than saving money on gas and commuting costs. Nonetheless, the urban living trend surged in 2010, when sales soared in planned walkable communities with embedded shops and services. Market demands resulted in suburban renewal, where planned urban villages were built (and are being built) in convenient locations; which have also become destinations for the community’s restaurants, shops and offices.