home owner Archives - Page 9 of 16 - Real Estate News and Commentary

June 30, 2017November 23, 2021

Healthy home trend trumps green initiative

Green building practices have been the trend for new homes over a decade. Housing experts have touted the benefits of green building as environmentally friendly and money saving. Health experts have also proclaimed the benefits of green home designs. However, a revealing exposé in Remodeling Magazine discusses the health dangers of living in a green design and/or energy efficient home. There is a healthy home trend that is trumping the green initiative.

The need for a healthy home

To describe how a green home’s air can become dangerous over time, Marisa Martinez uses the analogy of opening up the air-tight sealed bag of clothes from last summer and getting a whiff of the stale, plastic air (Breathing Easy: An Introduction to Healthy Homes; remodeling.hw.com; June 22, 2017). Martinez discussed how builders and home owners have focused on reducing environmental impacts of their home and neglected the health effects from the new building directives.

Green building and efficient home designs focus on reducing system operating costs by increasing the structure efficiency, thus reducing the impact to the environment. One of the outcomes of such a building design is having an air tight home. The air-tight feature is to ensure that there is minimal energy loss from escaping air. Owners and occupants of green homes are becoming ill because homes are air-tight. The lack of proper ventilation and the decreased breathability of a home can make the inside air become stale. And, over time, the buildup of interior pollutants can make the home toxic.

Increasing the awareness of green and efficient homes was a reason for the mandatory utility disclosures when selling a home in Montgomery County. This requirement was enacted in 2008 as a compromise from a proposed mandatory energy audit.

“According to Montgomery County Bill 31-07, enacted into Montgomery County Code Real Property 40-13b earlier this year, a home seller must provide potential home buyers the last twelve months of utility bills and information approved by the Montgomery County Department of Environmental Protection (DEP) about home efficiency improvements including the “benefit of conducting a home energy audit” before entering into a sales contract.”

Additional potential hazards can be encountered when renovating a green designed home because the air-tight feature can cause air pollutants to accumulate inside the home. Materials in new carpets, flooring (finished wood or vinyl), and paints can produce toxic off-gases that are not ventilated out of the home. Dust from drywall and other building materials pose a health hazard as well.

Martinez’s exposé flies in the face of research hyping the health benefits of green homes. One of the flaws of the these studies is that the health outcome comparisons of occupants of conventional built homes and green designated homes typically focused on new homes. The air quality issue that Martinez points out should be studied in older green and efficient homes, where the indoor air has had time to “mature.”

The green home movement was supposed to give us environmentally friendly, efficient homes that were also supposed keep us healthy. But the trend from green and efficient building is now transforming to a focus more on healthy home environments with an emphasis on good indoor air quality. Martinez stated that the good indoor air quality can be achieved by continuously exchanging the indoor air with conditioned outdoor air. There are physical and environmental benefits of a healthy home, which include increased emotional well being and reduced respiratory distress.

Leading the effort to educate the housing industry and consumers on healthy home environments is Bill Hayward. In an interview in Builder Magazine (Advocating for Fresh Air in Homes; builderonline.com; September 29, 2016) he discussed his journey in creating Hayward Healthy Homes after realizing his home was making his family ill. Hayward stated “Thirty percent of the population has allergies and is physically affected by the indoor air quality. The worst air that Americans breath right now is the air within their house.” More information and a free guide on creating a healthy home can be obtained from Hayward Healthy Home (haywardhealthyhome.com).

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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.

June 16, 2017July 14, 2019

Homeownership crisis?

The housing market made significant strides last year with regard to home sales and home prices. However, even with housing’s good news, the homeownership rate continues to be at generational lows. Economists and real estate professionals are stumped. Is there a homeownership crisis?

The homeownership rate for the first quarter of 2017, reported by the U.S. Census Bureau (census.gov), was 63.6 percent. This is a slight improvement from homeownership rate recorded in 2016. However, in their analysis, the Census Bureau stated that when the rate is adjusted for “seasonal variation,” there was no statistical difference from the 63.5 percent rate recorded in the last quarter of 2016.

The homeownership rate peaked at 69.2 percent in 2005, but has steadily declined since the Great Recession. Industry experts have been flummoxed as to why there have not been more home buyers taking advantage of historically low interest rates in an upward economy. (Freddie Mac reported last week that the national average interest rate for a 30 year fixed rate mortgage was 3.94 percent; freddiemac.com). Even mortgage lending has become looser, as some mortgage companies have rolled out low and no-down payment programs in recent months.

A homeownership crisis in the making, why is there lack of interest in homeownership? A recent study co-sponsored by the Fisher Center for Real Estate and Urban Economics, UC Berkley and the Rosen consulting Group (Hurdles to Homeownership: Understanding the Barriers; June 2017) asserted to have the answer to this question. According to a NAR press release (realtor.org), the study was announced this month in honor of National Homeownership Month, and presented at the National Association of Realtors Sustainable Homeownership Conference.

The authors discussed regulatory issues that has hindered housing and mortgage lending. They also identified issues affecting would-be home buyers, which include: student debt; availability of mortgages; housing affordability; low home sale inventory; and “post-foreclosure stress disorder.”

You may already have heard much about regulatory issues, consumer debt, mortgages, affordability, and low housing inventory. But, what is “post-foreclosure stress disorder?” The Rosen Consulting Group coined the phrase to give a name to the concept of perceived home buying risks derived from a financial crisis.

Even though a number of consumer surveys continue to indicate a strong positive sentiment towards homeownership, the authors point to post-foreclosure stress disorder as a major influence on home buying decisions. They believe that many individuals have been directly and indirectly affected by the Great Recession, and therefore have changed their behaviors based on perceived financial risks. And the greater the financial risk, the greater the caution exercised. They claim this is confirmed by a Federal Reserve survey where 80 percent of respondents indicated they would like to own a home someday, but only one in six who were financially able to purchase a home felt that renting was the best choice for now. The authors stated that although the trauma of the Great Recession will fade over time, they assert the need to rebuild confidence in homeownership benefits.

Post-foreclosure stress disorder may account for a decline in the homeownership rate, but this is not a homeownership crisis. It is shift in values and a major shift in lifestyles. Surveys have indicated that millennials are expected to be the largest group of homebuyers, but many millennials don’t want to be anchored by owning a home. They want to be able to take advantage of global opportunities without the burden of having to sell a home. There is a shift away from the old standard of being house-centric to mobility.

By Dan Krell
Copyright© 2017

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September 30, 2016December 13, 2022

Mortgage modification future

CoreLogic’s (corlogic.com) latest monthly foreclosure report indicated a continued downward trend. In fact, July’s national foreclosure inventory rate of 0.91% was the 57^th consecutive month (almost 5 years) with a lower number of foreclosures nationwide. Even the current 2.9% national rate of home owners considered “seriously delinquent” is also lower from last July. (Maryland’s foreclosure inventory and seriously delinquent rates are higher than the national average at 1.2% and 4.1% respectively.) All thanks to mortgage modification and foreclosure alternatives.

Frank Nothaft, chief economist at CoreLogic, contributed the decline of foreclosure inventory to a combination of loan modification, foreclosures, and a strong housing market. Additionally, he stated that “The U.S. Treasury’s making home affordable program has contributed to the decline through permanent modifications, forbearance and foreclosure alternatives which have assisted 2.5 million home owners with first mortgages at risk since 2009.”

In the immediate aftershock of the foreclosure and subsequent financial crises, which began almost nine years ago, the government stepped in to help out at risk home owners. The rollout of HAFA, HARP, and HAMP was bumpy and it took time for the programs to work efficiently. Of course, these programs were not intended to continue on forever, and in fact were supposed to end several years ago. Fortunately, Congress, the Treasury and the FHFA have recognized the need for continued assistance and extended the programs. Providing foreclosure alternatives and mortgage modification reduces vacant homes, bolsters communities, and helps maintain a healthy housing market.

Although these mortgage assistance programs were intended to be temporary, it’s clear that a permanent solution is necessary. The notion that a foreclosure crisis won’t or can’t happen again is naïve. Historically, housing downturns and recessions are cyclical. And when an economic decline occurs, a home owner assistance program should be available to provide borrowers with alternatives to foreclosure.

The Federal Housing Finance Agency (FHFA.gov) announced in an August 25^th press release that HARP will be extended through September 2017. But that will be the end of Home Affordable Refinance Program (HARP) as we know it, because a new program is slated to begin October 2017. The new program is to be a streamlined version that will also allow those whose mortgages exceed Fannie and Freddie’s loan limits to refinance.

FHFA stated that specifics for the HARP replacement will be released as the rollout date approaches. However, it is anticipated that the program will not require a minimum credit score; will not place limits on the borrower’s debt-to-income ratio; nor will it limit the mortgage to a maximum loan-to-value. And unlike many refinance programs, an appraisal may not be required. And improving from the HARP program, there won’t be cut off dates, and borrowers can use the program multiple times.

The Home Affordable Modification Program (HAMP) unfortunately is slated to conclude at the end of the year without a viable replacement. However, the Mortgage Bankers Association have stepped in to create a streamlined solution to fill the gap. A September 23^rd press release (MBA.org) announced its successor to HAMP: “One Mod: Principles for Post-HAMP Loan Modifications.”

J. David Motley, CMB Vice-Chairman of the Mortgage Bankers Association, stated, “With Treasury’s HAMP program soon coming to an end, we all recognized that investors, borrowers, and servicers need a replacement program that provides clarity and simplicity to homeowners experiencing difficulty maintaining their mortgage payments…One Mod could meet that challenge by providing affordable and sustainable payment structures that improve the likelihood of success for participating borrowers.“

Original published at https://dankrell.com/blog/2016/09/30/mortgage-modification-future/

By Dan Krell
Copyright © 2016

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September 10, 2016July 12, 2019

Home price impact of power lines and cell towers

Anyone who has bought or rented a home has been told about lead paint, radon, and maybe even asbestos, as well as other potential hazards in the home. But what about potential hazards brought about by technology, how do they affect home prices? Many shirk away from homes that are close to power lines or cell towers because of health concerns; while some are repelled by the aesthetics. Regardless, there’s probably a home price impact when in close proximity to power lines and cell towers.

What is considered to be necessary for modern living, power lines and cell towers are fundamental to our lives. And although many are wary of the health effects from living nearby these devices; they will still have wi-fi, and a microwave oven in their home, and they probably also use a cell phone. All of which emit similar types of radiation.

According to the American Cancer Society (cancer.org), the type of radiation emitted from power lines and cell towers are non-ionizing radiation, like the electronic devices mentioned above. Non-ionizing radiation does not remove particles from atoms, nor does it directly change DNA. Power lines emit ELF (extremely low frequency radiation), which is a lower energy radiation than visible light and infrared.

Cell towers, on the other hand, emit radiofrequency (RF) radiation that is between FM and microwaves. Although very high levels of RF can be damaging to body tissue, the American Cancer Society website states that cell phones and towers emit RF at much lower levels (of course, one should not stand next to a cell tower). More about power lines, cell towers, and health concerns can be obtained from the American Cancer Society website.

What is the home price impact when you sell your home?

Findings of a 2005 study conducted by Bond & Wang (The Impact of Cell Phone Towers on House Prices in Residential Neighborhoods. The Appraisal Journal. Summer 2005.) indicated that about 40% of the control group were concerned about health effects of living in close proximity to a cell tower; which compared to 13% of respondents already living nearby a cell tower. Nevertheless, both groups were highly concerned about future property values: 38% of the control group would lower asking price by as much as 20%; while almost two-thirds of the respondents living close to a cell tower would lower the home price by as much as 19%. Certainly you can see that there are concerns that may have a home price impact.

Maybe a home price impact is minimal. Roddewig & Brigden’s review of the research into property values surrounding power lines was enlightening (2014. Power Lines and Property Prices. Real Estate Issues, 39(2),15-33.). They stated that the appraisal industry does not automatically reduce prices just because of a property’s proximity to a power line, even though there has been history of concern over the environmental impacts. And caution home owners, buyers, and real estate professionals to not substitute opinion for analyses of actual home prices.

They concluded that if there is a home price impact, it is a small reduction. They explained that “the real estate appraisal profession has been studying those prices since the 1960s. Some of the many published studies have found adverse impacts to property prices and values while others have found no impact or statistically insignificant impacts despite media attention given possible health effects of exposure to EMFs.”

Roddewig & Brigden also found that the long history of research suggests that negative impacts on property values from power lines can be limited by proper “land use planning and subdivision layout procedures.”

Original published at https://dankrell.com/blog/2016/09/10/home-prices-power-lines-cell-towers/

By Dan Krell
Copyright © 2016

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August 26, 2016November 23, 2021

Radon is everywhere – testing is not

Montgomery County MD is implementing two controversial bills. New county recordation tax rates. And – Radon is everywhere, but new law falls short to protect county residents.

Effective September 1^st, increased recordation tax will be collected in Montgomery County. The rate for the first $500,000 will be $8.90 per $1,000. The rate for any amount exceeding $500,000 will be $13.50 per $1,000. The individual primary residence exemption is also increased from $50,000 to $100,000. Read more about the controversy here.

Recordation tax is an excise tax that is collected for the “privilege” of recording an instrument in the land records. Of course, transfer tax is collected when a home is sold; and is also collected when a mortgage is refinanced.

Effective October 1^st radon testing is compulsory for homes that are sold in Montgomery County MD (however, the law lists exemptions). The seller must test, or allow the buyer to test radon levels in the home. The radon test must not be older than one year from the closing date. Both the buyer and seller must receive the radon report. If radon levels are above the EPA recommended action level of 4 picocuries per liter, then an estimate must be obtained from a licensed contractor to reduce level to 2 picocuries per liter. Read more about the controversy here.

Radon is a toxic, radioactive gas that is formed by the natural breakdown of radium. Radon seeks its way to the surface as an odorless, colorless, and tasteless gas. A 1999 National Academy of Sciences report (The Biological Effects of Ionizing Radiation, The Health Effects to Indoor Radon) indicated that radon causes up to 22,000 lung cancer deaths per year. As there are no immediate symptoms of radon exposure, the only way to know if a building has high levels of this gas is to test for it.

Radon is everywhere, but testing is not. Although the radon testing law is well intentioned, it misses the mark on comprehensive radon testing, education and awareness.

First, the law may unintentionally provide a false sense of security to home buyers. By requiring the test by the sale, it suggests to home buyers that the initial radon test (when the home is purchased) is the only test needed. In fact, the EPA recommends radon testing every two years. Homes with low radon levels may change over time to have increased levels, and vice versa. Additionally, the self-testing conducted by home owners may not be accurate (or worse, may be intentionally erroneous). Consequentially, home buyers should hire a qualified expert to test the home regardless of home seller provided test results.

Second, it must be asked as to why only require testing for single family home sales? Radon is everywhere. The radon law should have been more comprehensive to also include radon testing every two years for single family rental units, schools, and public buildings.

And finally, the law should have provided for consumer education much like the EPA lead paint pamphlet (Protect Your Family From Lead In Your Home) that is required for home sales and rentals. Likewise, why not provide to consumers the EPA pamphlet “Home Buyer’s and Seller’s Guide to Radon” (epa.gov/sites/production/files/2015-05/documents/hmbuygud.pdf)?

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