Missing pieces to a housing recovery

by Dan Krell
DanKrell.com
© 2012
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Home salesAs the housing market expectantly slows for the winter months, we can start reflecting on this year’s housing statistics.  Home sale figures appear to point to a year ending slightly better than last.  But it may be that local home sale stats may not best those posted during the 2009-2010 period.  It appears that there are missing pieces to the housing market, which if not put into place, could result in a new real estate norm.  Let’s take a look at the puzzle…

First, the National Association of Realtors® (Realtor.org) reported that national pending home sales have been elevated most of the year; and although national existing home sales have increased during October, the numbers fluctuated throughout the year.  Of course, trying to determine the local state of housing through the national market snapshot may be like trying to see a local road map by looking at the solar system; but there is truth to what NAR Chief Economist Lawrence Yun described as “…rising consumer confidence about home buying…”

Second, New home sales have increased compared to last year.  Although the existing home sales statistics reported by the NAR may have co-mingled some new home figures in the data (due to the methodology), the U.S. Census Bureau (census.gov/construction/nrs/) reports new home sales.  Not surprisingly, October new home sales increased about 17% compared to October 2011, and 2012 year to date new home sales increased about 20% compared to 2011.

A forthcoming piece to the puzzle, which may likely be reported in the latter weeks of December, is that November was another positive month for real estate.  And more importantly – November may have been a brilliant month locally.  A preliminary analysis of Montgomery County MLS (Metropolitan Regional Information Systems, Inc.) home sale figures (all inclusive) point to a marked sales volume increase in November compared to November 2011, as well as an increase in the average monthly home sale price (dankrell.com/realestate).

AnotNew Home Salesher piece to the local real estate puzzle is home buyer behavior.  Home buyers in the market are increasingly demanding about what they are getting for their money.  Given the lack of home listings in the resale market (down about 27% from 2011 year to date through October for Montgomery County single family homes: gcaar.com), combined with variances in home sale prices and the cost for renovations and updates on many homes; home buyers perceive value in purchasing new homes compared to buying a resale in today’s market.  This is an unacknowledged reason for the surge of new home sales this year, and why new home builders have rebounded before the resale market.

The missing pieces to improving the resale market are inventory and home prices.  As mentioned, a lack of home inventory continues.  If resale inventory were to match those of previous years, it stands to reason that resale inventory would also increase.  Inventories are lackluster most likely because many home owners have put their selling plans on hold until they are convinced that home prices have stabilized.

It’s welcome news that the 2012 housing market is slightly better than the 2011.  And although the landscape of the local market has improved, home sale figures are not much better than those posted during 2009-2010.  If resale inventory does not increase, the resale market of 2013 will probably be much like that of 2012.

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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 December 3, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

Need to know when buying a new home that is built in Maryland

by Dan Krell © 2012
DanKrell.com

New HomesIn today’s housing market, chances are that you may looking to buy a new home rather than a resale;

be prepared and know what you can reasonably expect from the home builder, as well as understanding how to resolve problems with the builder.  Whether or not you have a licensed real estate agent representing you in the transaction; the Maryland Office of the Attorney General Consumer Protection Division provides consumers guidance, pertinent information and other resources to dealing with a home builder and buying a new home built in Maryland.

Unfortunately, many home buyers believe they do not need representation when buying a new home.  Because the new home builder reps are often friendly, helpful and may appear to be on your side in the transaction; it is understandable how a home buyer may misconstrue the home builder’s sales persons’ loyalties.  However, home buyers must recognize that the builder’s sales people represent the home builder.

Before engaging a home builder and their sales people, you should check out whether or not the home builder is registered with the Home Builder Registration Unit.  Additionally, unless the home builder hires a licensed real estate agent to represent them, the home builder’s sales reps must also be registered with the Home Builder Registration Unit.

Before entering into a contract with a home builder,

you might consider reading the consumer information booklet that home builders are required to provide consumers before entering into a new home sales contract.  The booklet is provided by the Home Builder Registration Unit of the Maryland OAG Consumer Protection Division and discusses: choosing a builder, the contract, how your deposit is protected, custom home contracts, construction of your home, and resolving problems.

The Maryland OAG Consumer Protection Division oversees a Home Builder Guaranty Fund “that allows consumers to seek compensation for losses resulting from an act or omission by a registered builder who constructs a new home for a consumer.”  You may seek compensation from the guaranty fund if your home builder is registered with the Home Builder Registration Unit and you entered into a contract for a new home built in Maryland after January 1, 2009.

New HomesPayments from the Home Builder Guaranty Fund are to cover actual loss that result from “an act or omission by a registered builder as determined by the Consumer Protection Division or a court of competent jurisdiction…”  The Guaranty Fund is not meant to cover such items as: attorney fees, punitive damages, interest, court costs, personal injury, or subsequent damages.  The “actual loss” that is covered refers to “the costs of restoration, repair, replacement or completion that results from the incomplete construction of a new home, a breach of an express or implied warranty, or a failure of the builder to meet certain construction standards or guidelines.”

Guaranty Fund claims must be made “within 2 years after the consumer discovered or should have discovered the loss or damage or within 2 years after the new home warranty expires, whichever comes first. If the consumer files a claim against the home warranty plan, he or she must file the claim against the Guaranty Fund within 4 months after that claims process is exhausted.”

For further information on the Home Builder Registration Unit, consumer information booklet, and the Home Builder Guaranty Fund – visit the Maryland OAG Consumer Protection Division website on home builders (www.oag.state.md.us/Homebuilder/index.htm).

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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 September 17, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

It’s time to buy a new home

new homes for sale

The time may be right for you to buy a new home this spring. Low interest rates and reduced prices, combined with builder incentives may make a new home a viable option that many home buyers have forgotten about.

Home builders that survived the culling of the market decline have sought out ways to make homes more affordable. Going with the new trend, some home builders are offering more efficient floor plans, as well as more cost efficient building processes.

Modular homes seem to be more prevalent these days as custom home builders seek to reduce costs to the buyers as well as increasing floor plan flexibility and construction quality. The reason why many home builders are turning to modular designs may be that the modules are built in a controlled environment, which increases quality while reducing weather related delays and damage. In a typical plant, manufactured and modular housing fabrication quality specialists constantly monitor fabrication to ensure the final product meets or exceeds all codes, which is unlike on-site construction where inspections can be random and inconsistent.

One attraction to buying a new home is that everything is new! Along with the new, one expects warranties. Make sure you discuss the warranties that are provided with your purchase with your builder and Realtor®. It is typical for new appliances, fixtures and flooring to have limited manufactures warranties, so make sure you receive all paperwork related to those items.

Additionally, most builders offer a warranty as well; the warranty is most likely guaranteed by a third party. According to a homebuyer’s booklet offered by the Maryland Attorney General’s Office Consumer Protection Division, a home builder warranty in Maryland must include at a minimum: “any defects in materials or workmanship for one year; any defects in the electrical, plumbing, heating, cooling and ventilating systems for two years (not to exceed the period of the manufacturer’s warranty); and defects to any load-bearing structural elements for five years.” The booklet recommends that you contact the third party guaranteeing the warranty, to check if the builder is in good standing.

Although a home may be new, it does not guarantee that it is perfect when delivered to you. It is common to conduct a “final walkthrough” with a builder representative to check the systems and to identify any defects that may need repair or correction. Builders will ask for a “punch list” of items that need correction.

Former president of the American Society of Home Inspectors, Frank Lesh, was on record as saying that “Even new homes have defects that only a professional can detect…” He stated that a home inspector can help ensure that a new home’s major systems (roof, foundation, electrical, plumbing) “are functioning properly and safely before moving in”… “Because many items can’t be inspected after a house has been built, homeowners should consider having a series of phased inspections conducted at key milestone markers. ASHI encourages homebuyers to consider an inspection at the following times: prior to foundation pour; prior to insulation and drywall; prior to the final walkthrough.” (ashi.org)

If you’re considering buying a new home, consider visiting new home resources offered by the National Association of Home Builders (nahb.org) and the American Society of Home Inspectors (ashi.org), as well as the homebuyer’s booklet offered by the Maryland Attorney General’s Office Consumer Protection Division (http://www.marylandattorneygeneral.gov)

By Dan Krell
Copyright © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.