Real Estate News and Commentary

December 2, 2010October 5, 2019

Are Mice Seeking Shelter in Your Home?

by Dan Krell © 2010
www.DanKrell.com

If you’ve owned a home, chances are you’ve encountered a critter or two that did not belong inside. Every Season seems to have its pests: during spring you might be battling bugs that are associated with gardens; ants seem to rule during summer; spiders and other outdoor bugs try to migrate indoors as the temperature starts to change in the fall; and of course as fall turns to winter, rodents- mostly mice – seek shelter and food within our homes.

Although mice live outdoors, they will try to enter our homes when the temperature begins to change; because like you and me, mice are not typically comfortable in very cold weather. Of course, mice can enter your home anytime; however, as the weather drops, their attempts to go inside may increase. Mice can easily find their way into your home through the smallest cracks and crevices, and can quickly scoot into an open door or window. Because of their skeletal-muscular structure, mice are known for squeezing through cracks the size of a pencil; it’s important to be wary because even the smallest crevice could be an entry point for a mouse. Common entry points may include basement windows, dryer vents, pipes, cracks in foundations and garage doors.

Although mouse proofing can be done any time of year, why not before winter begins? You can begin your “mouse proofing” by inspecting the exterior of your home: check all windows and doors to ensure there is a good seal when closed (especially in the basement) and there are no gaps around the frames; any holes in the foundation or around conduits should be professionally sealed; remove any debris from the home foundation (including firewood, building materials, and trash bags) that may allow mice (and other rodents) to nest. Mice are very good climbers and have been known to enter a home through entry points several feet off of the ground.

Just because you do not see a mouse inside your home, it may not mean they have not infiltrated your asylum. Signs that mice may be in your home may include droppings (in and around the pantry) as well as gnawed boxes and food. Unfortunately, some homeowners rebuff these signs as something other than a mouse. If you suspect there is a mouse in your house, some experts recommend “testing” for rodents; the test may include placing some peanut butter in suspected areas overnight to see if it is eaten.

Once inside your home, mice will make themselves at home. They will nest and breed in some of the most unsuspecting places; between floorboards, in walls, inside storage boxes, and believe it or not – inside couches!

Traps and baits are most often used to reduce mouse activity from a home. The most common traps are snap and glue traps. Because baits are toxic and can dangerous to humans and pets, a licensed professional pest control company should be hired to apply bait to ensure it is applied safely. Many experts recommend taking precautions (such as using a breathing apparatus and/or sanitizers) because mice can carry disease (including the Hantavirus) as well as other pests (e.g., ticks).

To reclaim your home from mice, hire a licensed professional pest control company to remove them and advise you on the cleanup of droppings and carcasses.

Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 29, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

November 23, 2010October 5, 2019

FSBO is changing along with the housing market

by Dan Krell © 2010
www.DanKrell.com

It is often said that “if you want it done right, do it yourself.” Like most idioms, this saying probably originated in a simpler time when most people could actually do it all by themselves. In a society where most people don’t cook for themselves anymore, no one really expects that they would or could do everything on their own- except when it comes to real estate.

“Doing it right” does not usually top the home owner’s list for selling their home by owner. Even though half of “for sale by owner” (FSBO) sellers knew the home buyer, the National Association of Realtors® Profile of Homebuyers and Sellers 2010 (NAR; 2010) indicates that the top reason for selling by owner is not having to pay a broker commission.

The NAR has claimed that as the housing market declined the number of FSBOs have also declined, which might be due to market conditions. As market conditions changed, selling a home required more than just a sign in the yard; this can be observed by the many agents who have resorted to wide ranging and comprehensive sales tactics (do you remember when you could sell a home with just a sign in the yard?).

Characteristics of home owners who sell on their own have also changed dramatically from just a few years ago. Besides increasingly occurring in suburban areas, NAR’s 2010 edition of Profile of Homebuyers and Sellers describes the FSBO to be more likely single and have a below median income. This has changed from the 2008 edition where FSBOs were older and had a high income. One reason for the change may be due to changing financial conditions; home owners who are facing financial challenges may be looking to increase their net by cutting out real estate agent commissions. This could be supported by the data indicating that many FSBOs have had a high sense of urgency in their sale.

It’s not surprising that a majority of FSBO sellers claimed that the most difficult task in selling their home was getting the price right. Pricing the home correctly is important because it can not only affect your bottom line, but can determine if your home languishes on the market or sells. Even though real estate agents are typically better at pricing a home (which is supported by the 2003 National Association of Realtors® Profile of Buyers and Sellers statistic that FSBO sales net less for sellers compared to agent assisted home sales), FSBO sellers have caught up with the times and are now seeking assistance from flat fee brokers.

Another change is seen in how the internet is used. Slightly over one-quarter of FSBOs used the internet several years ago, while recent surveys indicate about 41% of FSBOs now advertise on the internet. This may be due to more FSBO sellers seeking flat fee broker services; consequently, the number of flat fee MLS brokers has dramatically increased in recent years too. Some of these flat fee brokers also offer a-la-carte services, which assist sellers in many aspects of the home sale.

As the housing market has changed, it appears the FSBO has changed too. In addition to changing characteristics, the average FSBO seller behavior has changed to include professional assistance they need to sell their home “on their own.”

Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 22, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

November 17, 2010October 5, 2019

National Flood Insurance Program; extension and reform

On September 30th, the National Flood Insurance Program was extended for one year, as President Obama signed S.3814; the “National Flood Insurance Program Re-extension Act of 2010”. The one year extension is the longest over the last two years, when the program has been extended for multiple brief periods. Delays in program funding have mostly been due to debates over the program’s financial status

After hurricane Betsy ravaged the gulf coast in 1965, Congress realized that there was a need for affordable, widely available flood insurance. Since 1968, the National Flood Insurance Program (NFIP) has been offering insurance coverage for home owners, renters and businesses. The NFIP offers coverage for floods that are associated with hurricanes, tropical storms and heavy rains, which is often not included in a standard home owner’s insurance policy.

Although not every home owner chooses to purchase flood insurance, mortgage lenders will require home owners to be covered if their home is located in a flood plain. Insurance experts recommend all home owners to be prepared by assessing risk and consider purchasing flood insurance; affordable coverage can help reduce the heartache and financial loss in the event of a flood.

Unfortunately, many area home owners wouldn’t think twice about flood insurance because flooding is not often seen as a threat. However, some home owners will often seek to purchase coverage when it is too late – when a weather emergency is imminent. For many Rockville residents, memories are still fresh of evacuations due the danger of Lake Needwood’s Dam breaking.

Without the NFIP, many home owners who live in flood plains would be exposed to additional risk while home purchases in those areas would be significantly curtailed. The debate over the beleaguered program’s financial viability is at the heart of the reform debate. The NFIP has been financially stressed since the hurricane season of 2005. The last reform of the NFIP was undertaken in 2006 at the heels of Hurricane Katrina and Rita’s devastation of the Gulf Coast, when NFIP combined claims from Katrina and Rita exceeded the total NFIP claims prior to those hurricanes.

Industry groups such as the National Association of Realtors (NAR) and the Property Casualty Insurers Association of America (PCIAA) have been calling for reforms to the NFIP. While both the NAR and the PCIAA are calling for increased coverage (to increase home owner involvement and contribution to the program), the PCIAA is also calling for modern flood maps, subsidy phase outs, sensible rates, among other program modifications.

FEMA, the federal agency that administers the NFIP, has been undergoing a three phase plan to reform the program. To involve concerned groups such as NAR and PCIAA, FEMA announced public meetings to be held on December 2nd in Washington, DC and December 9th in Denver, CO. The meetings will provide an opportunity for interested parties to hear reform policy and updates, as well as ask questions and offer feedback.

Since its inception, the NFIP has not only provided home owners and businesses with an alternative to disaster relief; it has also engaged communities across the country (including many local communities, towns, and cities) in flood plain management and flood awareness and preparation. You can visit smartflood.gov for more information about your flood risk and preparation recommendations.

Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 15, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

November 10, 2010October 5, 2019

The next real estate boom is already here

by Dan Krell © 2010

A couple of years ago, I wrote an article about a future real estate boom that would occur as suburbanites would seek out urban homes. As I discussed in my May 2008 article, peak gasoline costs and increased traffic compelled many to seek housing closer to their employment; as well as being close to metro and mass transit. A recent Brooking Institution report appears to agree with my premise, and expands on the idea of urbanite living with a focus on sustainable and walkable neighborhoods.

The November 2010 article titled “The Next Real Estate Boom” (Leinberger & Doherty; The Brookings Institution) discusses how baby boomers and their children have been increasingly seeking out housing that is close in vicinity to commercial spaces, mass transit, and easily traversable by foot (walkable). The article discusses how the development of high density neighborhoods will once again spur on real estate growth, and ultimately forge a new economy in the United States.

Although, Leinberger & Doherty proclaim that the great recession was the climax for the change from suburban to urban lifestyles; the trend has been increasing for the last two decades, but actually had roots much earlier with planned communities such as Columbia and Greenbelt (MD). And although his first planned walkable community of Cross Keys (in Baltimore) came to fruition in the 1960’s, there is no mention of James Rouse in the Leinberger & Doherty report. It must also be pointed out that recent planned local communities such as King Farm and the Kentlands were built in the spirit of walkable and sustainable communities.

The trend, as Leinberger & Doherty discuss, is toward shifting from sprawl to revitalization. However, urban renewal has gone through many cycles and forms of re-development in many cities; from the revitalization of New York City in the 1950’s, by Robert Moses who seemed to transform the city single handedly, to the revitalization of Baltimore’s Inner Harbor in the 1970’s;

Notably, the May 20th signing of the Sustainable Communities Tax Credit by Governor O’Malley highlights the focus on revitalization. The tax credit expands the current tax incentive beyond historic properties so development is encouraged to renew and revitalize existing local communities.

A prime example of what Leinberger & Doherty describe is the redevelopment of the North Bethesda corridor along Rockville Pike (MD 355). The White Flint Partnership has been advocating and promoting the revitalization of this community to become one of Montgomery County’s newest walkable and sustainable neighborhoods. The project is transforming the area into high density living with adjacent commercial development that is described by the developers as sustainable, accessible, safe, connected, and containing an abundance of green spaces.

Additionally, market demands have and will transform existing neighborhoods to become the walkable and sustainable communities that are becoming vogue. And it may be that suburban renewal will become the trend in the near future, as isolated sprawling communities will eventually transform into smaller versions of Leinberger & Doherty’s vision.

Maybe the point is not to transform all communities into the high density, walkable communities that exist in mid-town Manhattan, but aim higher in community planning. Their description of a high density urban utopia appears healthy for residents, due to increased physical activity (i.e., walking); and healthy for the environment, due to green and sustainable buildings as well as reducing car emissions.

Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 8, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

November 3, 2010October 5, 2019

Home sellers and sale prices; what is the data saying?

by Dan Krell © 2010

As the housing market goes into a third year of turmoil, you have to wonder how area home sellers are coping with a prolonged challenging housing market. One indicator to consider is the home seller’s price expectation versus what home buyers are willing to pay; which is the list price as compared to the actual sale price of a home.

Before we check out the percentage of list price received at settlement, let’s review how home sellers may have become used to consistent and significant home price appreciation. One indicator to consider is the House Price Index (HPI), which is used by the Federal Housing Finance Agency (FHFA) to indicate changes to residential home prices. The HPI is the percentage home value change relative to the prior year; the HPI indicated in this column is for the local Metropolitan Statistical Area (MSA) of Bethesda – Rockville- Frederick.

During the 1990’s home price appreciation was sluggish at best and did not have significant quarterly appreciation until the late 1990’s. The HPI indicated that area home prices depreciated in Q4 1990 and Q1 1991. However through Q3 1992 to Q3 1997, home prices were mixed; there were eight quarters of depreciation and ten quarters of appreciation of less than 1%. The last two years of the decade showed increasing appreciation when the HPI ranged from 2.25 to 3.63; then a significant appreciation for Q3 and Q4 of 1999 when the HPI exceeded 5.

But oh the 2000’s! If you compare the sluggish housing appreciation in the 1990’s to the seemingly ever increasing market in the 2000’s, it appears to be a stark contrast. The 2000’s saw quarterly appreciation through the second quarter of 2007. During the beginning of the 2000’s, the HPI increased the first eight quarters from 6.76 to 13.82. Then from Q4 2003 through Q2 2006, the HPI did not fall below 12 and had four quarters when the HPI was above 20 (yes, there was annual appreciation over 20%)!

Historically, area housing prices have not been affected by economic turmoil as much as it has recently. Even during recessionary periods in the 1970’s and the 1980’s, the HPI was negative for no more than four consecutive quarters (for example: Q4 1982 to Q3 1983). Unfortunately, recent housing prices have had a negative HPI for thirteen consecutive quarters (since the second quarter of 2007).

Thirteen consecutive quarters equates to just over three years of home price depreciation for the local MSA. So, just how well are home seller’s acclimating to the new housing market?

According to single family home data collected and reported by the local MLS, Metropolitan Regional Information Systems, Inc. (MRIS), Montgomery County home sellers received a price shock in 2007 and 2008; sellers received about 92% of list price in 2007 and about 89% of list price in 2008. Since then, Montgomery County home sellers seem to have adjusted to the market as indicated by more recent percentages of list price received at settlement, which appears to have returned to pre-crisis levels (about 94% or more of list price).

Now that the housing market changes are no longer dramatic, most home sellers have accepted the nature of the housing market and price their homes accordingly. For those who haven’t yet accepted the new housing market, you may be in for a (price) shock.

Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 1, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.