Living Here Houses In Winter Wonderlands
“It snows almost every day here and when we look out the windows, the conifers are draped in white, and it seems as if we’ve walked into a postcard.”'
As told to BETHANY LYTTLE
Published: December 28, 2007
Don: It snows almost every day here and when we look out the windows, the conifers are draped in white, and it seems as if we’ve walked into a postcard. From the great room with its huge fireplace, we will often see elk grazing.
It’s been three and a half years since we bought this lot, which is in a community called Suncadia. And it’s been a lot of hard work to get the house built, but it’s been worth it. Our lives have been on the desert side of Washington state along the Columbia River where we farm. When you live in a desert area, you miss the snow and the trees. Some people long for a vacation where it’s sunny and warm. We look forward to the snow.
Some people know the town of Roslyn from the television show “Northern Exposure.” It’s a great location. We’re close enough to the Pacific Ocean to get large amounts of snow at a time, and we’re on the east side of the Cascades, so the views are spectacular. And there’s a purity to the environment that’s hard to describe.
During the holidays, we entertain a lot and the house, which is timber frame, was designed with seven master suites. During the day, everyone congregates to go skiing, snowboarding, snowmobiling or walking in the woods, but at night when it’s time for bed, everyone has a cozy, private place to retreat to.
Monday, December 17, 2007
"LIFE IS NEVER BORING...BUT SOME PEOPLE CHOOSE TO BE BORED." Wayne Dyer Yet even if Traders had wanted to be bored last week, the financial markets had other plans. Volatility reigned supreme, with large swings throughout the week in Stocks, Bonds, and home loan rates — and once the smoke cleared, home loan rates were slightly worse than where they began the week.
What caused all the volatility? You name it — continuing concerns on the liquidity and stability of the financial markets; the Federal Reserve at work, cutting the Fed Funds and Discount Rates by .25% and the opening of a new auction facility; a red hot Retail Sales Report; and last but certainly not least, the Producer and Consumer Price Indices both showing inflation to be much higher than expected.
The big mover was the Fed rate cut of .25%, which was a disappointment to the financial markets, as a deeper cut was hoped for. The reaction was very negative for stocks, as the fear of a recession amidst the current credit crunch grows. There are increasing concerns that the Fed is not getting ahead of this problem.
But it is not an easy job for the Fed because they may be fighting a possible recession with a hand tied behind their back...this is due to higher levels of inflation. Surely inflation is still at reasonable levels, but even a little stronger inflation can take a major toll on our lifestyle over time. High levels of inflation have caused unrest, revolt, poverty and wars. It is possible that the Great Inflation of 1920 in Germany eventually led to WWII. During that time, prices rose over an almost unimaginable 1000 times a year! Savings were wiped out and imagine this...the cost of a loaf of bread went from 20 Marks to 20,000 to 20,000,000. And in Mexico, hyperinflation caused a crisis in the peso that has led to extreme levels of poverty. Of course, the US is nowhere close to this type of problem, but inflation is a very serious issue. And with the current rate of inflation in the US ticking higher and towards the upper range of acceptable limits, additional Fed cuts would push inflation even higher. So should the Fed risk a recession to protect against inflation or move to avoid recession and risk inflation? This will likely be one of the hotter economic topics of 2008.
What caused all the volatility? You name it — continuing concerns on the liquidity and stability of the financial markets; the Federal Reserve at work, cutting the Fed Funds and Discount Rates by .25% and the opening of a new auction facility; a red hot Retail Sales Report; and last but certainly not least, the Producer and Consumer Price Indices both showing inflation to be much higher than expected.
The big mover was the Fed rate cut of .25%, which was a disappointment to the financial markets, as a deeper cut was hoped for. The reaction was very negative for stocks, as the fear of a recession amidst the current credit crunch grows. There are increasing concerns that the Fed is not getting ahead of this problem.
But it is not an easy job for the Fed because they may be fighting a possible recession with a hand tied behind their back...this is due to higher levels of inflation. Surely inflation is still at reasonable levels, but even a little stronger inflation can take a major toll on our lifestyle over time. High levels of inflation have caused unrest, revolt, poverty and wars. It is possible that the Great Inflation of 1920 in Germany eventually led to WWII. During that time, prices rose over an almost unimaginable 1000 times a year! Savings were wiped out and imagine this...the cost of a loaf of bread went from 20 Marks to 20,000 to 20,000,000. And in Mexico, hyperinflation caused a crisis in the peso that has led to extreme levels of poverty. Of course, the US is nowhere close to this type of problem, but inflation is a very serious issue. And with the current rate of inflation in the US ticking higher and towards the upper range of acceptable limits, additional Fed cuts would push inflation even higher. So should the Fed risk a recession to protect against inflation or move to avoid recession and risk inflation? This will likely be one of the hotter economic topics of 2008.
Wednesday, December 12, 2007
Cost vs. Value
When It Comes to Remodeling, It’s What’s Outside That Counts, Realtors® Report
WASHINGTON, December 03, 2007 -
Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report. Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades.
The most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale. Wood deck additions and wood window replacements also returned more than 80 percent of costs, at 85 percent and 81 percent, respectively. On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.
“The results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “Realtors® know what attracts buyers in their local markets and can help your house put its best façade forward, so to speak – it’s another way Realtors® add value to the real estate transaction.”
The 2007 Remodeling Cost vs. Value Report compares construction costs with resale values for 29 midrange and upscale remodeling projects comprising additions, remodels and replacements in 60 markets across the country. Data are provided for nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 10th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as Realtors® provided their insight into local markets and buyer home preferences within those markets.
Four new projects were added this year: the aforementioned wood deck addition, a back-up power generator, and both a midrange and upscale garage addition. Nationally, the back-up power generator only returned 58 percent of the investment on resale, although the return was highest in the West South Central region, which comprises Arkansas, Louisiana, Oklahoma, and Texas, at 68 percent. Buyers in the Pacific region of Alaska, California, Hawaii, Oregon and Washington value their garages: The midrange garage addition returned nearly 70 percent nationally but 88 percent in this region, while the upscale garage addition returned approximately 65 percent nationally but 78 percent in this area.
Homeowners in the Pacific region could also expect to see some of the highest percentages of remodeling expenses returned at resale, with 13 of the 29 projects returning 90 percent or higher of project costs. Homeowners in the East North Central region of Illinois, Indiana, Michigan, Ohio and Wisconsin might expect some of the lowest returns; only one project – upscale fiber cement siding – returned more than 80 percent upon resale (82 percent of costs recouped), while nine projects returned less than 60 percent of project costs.
The least profitable projects were a back-up power generator, sunroom addition, and home office remodel. The back-up power generator returned the lowest percentage of initial cost in the East North Central, New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), Pacific, and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.
Sunrooms are least popular in the East South Central (Alabama, Kentucky, Mississippi and Tennessee), Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming), and West South Central regions. Home office remodels return the lowest percentage of project costs in the Middle Atlantic (New Jersey, New York and Pennsylvania) and South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) regions.
Gaylord explained that the resale value of any given remodeling project depends on a variety of factors. “When considering a remodeling project, particularly with an eye toward resale, it’s important to evaluate your home’s current condition, how the project will change the existing space in your home, as well as how your remodeled home will compare to other homes in your community,” said Gaylord.
“For example, using a breakfast nook to expand the kitchen seems like a good use of space, but using the same space to add a first-floor bathroom in an older home that doesn’t have one will draw more buyers,” Gaylord said. “Realtors® see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area.”
Results of the report are summarized in the December 2007 issue of REALTOR® Magazine.
WASHINGTON, December 03, 2007 -
Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report. Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades.
The most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale. Wood deck additions and wood window replacements also returned more than 80 percent of costs, at 85 percent and 81 percent, respectively. On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.
“The results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “Realtors® know what attracts buyers in their local markets and can help your house put its best façade forward, so to speak – it’s another way Realtors® add value to the real estate transaction.”
The 2007 Remodeling Cost vs. Value Report compares construction costs with resale values for 29 midrange and upscale remodeling projects comprising additions, remodels and replacements in 60 markets across the country. Data are provided for nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 10th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as Realtors® provided their insight into local markets and buyer home preferences within those markets.
Four new projects were added this year: the aforementioned wood deck addition, a back-up power generator, and both a midrange and upscale garage addition. Nationally, the back-up power generator only returned 58 percent of the investment on resale, although the return was highest in the West South Central region, which comprises Arkansas, Louisiana, Oklahoma, and Texas, at 68 percent. Buyers in the Pacific region of Alaska, California, Hawaii, Oregon and Washington value their garages: The midrange garage addition returned nearly 70 percent nationally but 88 percent in this region, while the upscale garage addition returned approximately 65 percent nationally but 78 percent in this area.
Homeowners in the Pacific region could also expect to see some of the highest percentages of remodeling expenses returned at resale, with 13 of the 29 projects returning 90 percent or higher of project costs. Homeowners in the East North Central region of Illinois, Indiana, Michigan, Ohio and Wisconsin might expect some of the lowest returns; only one project – upscale fiber cement siding – returned more than 80 percent upon resale (82 percent of costs recouped), while nine projects returned less than 60 percent of project costs.
The least profitable projects were a back-up power generator, sunroom addition, and home office remodel. The back-up power generator returned the lowest percentage of initial cost in the East North Central, New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), Pacific, and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.
Sunrooms are least popular in the East South Central (Alabama, Kentucky, Mississippi and Tennessee), Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming), and West South Central regions. Home office remodels return the lowest percentage of project costs in the Middle Atlantic (New Jersey, New York and Pennsylvania) and South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) regions.
Gaylord explained that the resale value of any given remodeling project depends on a variety of factors. “When considering a remodeling project, particularly with an eye toward resale, it’s important to evaluate your home’s current condition, how the project will change the existing space in your home, as well as how your remodeled home will compare to other homes in your community,” said Gaylord.
“For example, using a breakfast nook to expand the kitchen seems like a good use of space, but using the same space to add a first-floor bathroom in an older home that doesn’t have one will draw more buyers,” Gaylord said. “Realtors® see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area.”
Results of the report are summarized in the December 2007 issue of REALTOR® Magazine.
Monday, December 10, 2007
What's In and Out for Home Buyers
Mark Nash, author of four real estate books including “1001 Tips for Buying and Selling a Home”, has completed his annual survey of 886 real estate agents in all fifty states in the U.S. and the eight provinces of Canada. “What’s in, What’s out with Homebuyers” illuminates what’s popular with home buyers, and what can sour them. Compiled annually from-the-trenches, it offers a spectrum of tips that cover deal and design no-no’s for home sellers and buyer must-haves.
What’s In
- Home buyers. What goes around comes around. Relegated during the boom years to bidding wars, over-full-price offers and new construction lotteries, buyers rule in 2008, and know it. With swelling inventories, they are looking for newly updated kitchens and baths, pristine conditions, and a perception of value.
- Destination bathrooms. The master bath has evolved into the home getaway with multiple task areas. Freestanding or “throne” bathtubs (bath thrones) in the center of a soaking room, multiple flat screens TV’s, and wireless Internet so you don’t miss anything as you move from bathing to grooming to lounging. They are outfitted with serving bars featuring wine coolers, espresso machines, and grazing snacks. There is also a burgeoning need for in-home hair salons.
- Short Sales. Home owners who have over-extended themselves financially are increasingly looking to their mortgage holder to accept less than is owed on their property. Some mortgagee’s will accept less than is owed through a short sale, in place of taking ownership of a home back through foreclosure.
- Pet showers. The kitchen or work sink is out for the dog bath. Dedicated dog showers are an emerging trend. Be it in a mud or utility room, garage corner or basement, dog lovers want a place to clean their favored pooch after a visit to the neighborhood dog park. Common dog showers feature a 3′ x 3′ shower base, surrounded by ceramic tile 4′ up the wall. Pet showers are all about the convenience for Fido to step in, and eliminate the master’s need to lift.
- Home elevators. The boomers want their vertical palaces with elegant min-elevators. No more unsightly and very 1970s chair-on-the-rail-system for these financially flush, forward-thinking home buyers.
- Outdoor living spaces that look interior. Massive, soaring “statement” fireplaces of cut stone, heated (think bathroom floors) flooring and walkways, entertaining sized custom kitchens, and indoor-looking artwork, fabrics, and finishes, but ones that can stand up to the elements.
- Down payments. Sexy home mortgages are out. Those who underwrite home loans are looking for substance from potential home buyers. Substance equates into disciplined savings and credit scores.
- A home’s carbon footprint. Manufactured homes, reused construction materials, and energy-friendly mechanical systems and appliances all reduce the need for fossil fuels. Home buyers are asking about how their potential new home can save the planet. It’s more than a trend, it’s a convenient truth.
- Monitoring and controlling with hand-held devices. Forgot to turn off the coffee maker, close/open the blinds, and turn the heat down or the air conditioning up? The latest in technology that utilize hand-held devices to open or close the blinds, turn on or off lights, or let Fido out the electronic pet door, around the corner or across the country.
- Floating Homes. Not just in Sausalito. If your hood has calm protected waters, you’ll soon have floating homes, those that look like conventional, soil-situated structures. From Louisiana to Vancouver, floating homes are at the top of must-have lists for those looking for a primary home to be lifestyle oriented. Plus, watching sunsets are a more enjoyable and greener alternative to lawn mowing.
- Concealed appliances. Buyers bypass matching cabinet panels that are used to disguise the ubiquitous refrigerator and dishwasher. Hinged and pocket doors are the latest way to integrate visually those boxy necessities and make the kitchen more non-traditional and less functional looking.
- Non-smoking Homeowners Associations. Who knew that some Homeowner Associations are rewriting by-laws and declarations to include those unit owners are not allowed to smoke inside their homes? Smoke-free common areas in addition to building-code-required ventilation systems and fresh-smelling hallways have taken precedence over individual’s rights to light up in their recliner.
- Off-grid homes. Solar panels, windmills and inverters are here to stay, in a big way. With brown-outs and power line-damaging storms on the increase, buyers in 2008 will ask for hybrid home-energy options, even being partially off-grid beats getting expensive power from coal-fired utilities, to these eco-energy users.
What’s Out
- Unrealistic home sellers. These relics of another time and market missed the cocktail party chat and water cooler angst by the transitional sellers of 2007. Cautions included: pricing their home right, consider home-sale contingencies, and offer closing cost givebacks. Hear-no-evil-sellers were overlooked by buyers who pined for reality minded ones. Because if sellers were flexible with buyers needs, buyers bought.
- Living rooms. The great room has replaced the living room in American residential culture. Informal lifestyles with eating, cooking and living spaces combined so family members and visiting friends can congregate together through various activities has conquered the forced museum. In viewing homes with buyers, I see the ex-museum used as work-out spaces, home offices, craft or hobby places, and I’ve seen more than once, the coveted living room with nothing more than a pool table as its solitary focus.
- Empty for sale homes. Buyers thought people “lived” in houses, but after seeing one-quarter of the homes they viewed empty, they wondered. Even though staging was the buzzword, getting that right was prickly in 2007. Those leftover silk flowers, the left behind mis-matched furniture, and the one-off design-show decorating scheme were buyer no-no’s. Neutral palettes, personal objects, thoughtful furniture rental, and something in the refrigerator says to buyers, maybe a person lives here.
- Double-digit home value appreciation. For now, the home as “get-rich-quick” investment is over. We’re back to pre-boom norm of housing or shelter. Flat or low single-digit appreciation in most markets in 2008.
- “Order-taking” real estate agents. The hive during the boom years was real estate, and multitudes of the dot-com-busted became the worker-bees of real estate sales. Everyone and anyone got licensed and into the frenzy. Little did they know that seasoned (pre-boom), full-time, professional agents possessed ready, willing and able buyers, knew how to sooth seller’s anxieties, and produced the fifth highest year in real estate sales in 2007.
- McMansions. Size doesn’t matter if it’s not well finished. A large voluminous home whose best attribute is the square-footage is waning. Home buyers are looking for quality, not quantity in 2008. After all, who has the money to replace the faux-hardwood floors, builder grade carpet and fiberglass bathtubs?
- Obese ceiling heights. It’s cheaper to go up than out. That’s been the thinking anyway as of late in residential design. Buyers have finally said enough, they prefer ceilings between nine and eleven feet. Anything more, especially in a smallish (under 10′ x 12′) room is waste. If you can’t add a loft in a soaring room, “down size me” height-wise, buyers say.
- Pioneering locations. Buyers have moved away from take-a-chance-hoods. Pioneering or off the beaten path areas were once the hot bed of potential appreciation. However, buyers in 2008 have returned to the tried-and-true address, keeping resale desirability firmly in mind when making a purchase.
- Balconies as a marketing gimmick. Functional outdoor space, not the anorexic appendage hanging off the building, is what buyers crave in outdoor space for 2008. Real balconies have room for a grill and a comfortable table and chairs. People love the outdoors and want to use it, but not only as a solo experience.
- Option ARMS (Adjustable Rate Mortgage). Buyers have heard that these loans usually have only one option; foreclosure. Used by the rich for short-term financing, they were re-packaged to buyers who wanted to qualify for the highest loan amount. Negative amortization is the harsh reality of Option ARMS. Home buyers should run, not walk, if these words are proposed as a financing option.
- Pre-construction pricing on new construction. Builders who are plunging ahead with new projects in 2008 will be better off with one pricing model from beginning to end, and eliminating their “everything’s an upgrade” mentality.
What’s on the Way Out
- Mosaic tile. Once deemed the ultimate in tile, now considered a very personal design commitment to the previous owner. The cost and waste to remove intricate mosaic is over-whelming to buyers, especially if it is has been recently installed. Even the most expensive, but not agreeable, tile could kill an otherwise acceptable property.
- Retro-1970s chic. Trend-obsolescence by buyers in 2007 was rampant. Loving the retro-seventies was easy, but hearing horror stories from would-be sellers about the market’s hesitance to buy a design white-elephant, made more main stream kitchens and baths a sensible decision. As one Gen X buyer said to me; “I love the dark espresso colored shag carpeting, but, I know my decorating needs will change, I want an interior that will transcend trends.” I replied, “You’re looking for a ‘transcendent look” and her response: “exactly.”
What’s In
- Home buyers. What goes around comes around. Relegated during the boom years to bidding wars, over-full-price offers and new construction lotteries, buyers rule in 2008, and know it. With swelling inventories, they are looking for newly updated kitchens and baths, pristine conditions, and a perception of value.
- Destination bathrooms. The master bath has evolved into the home getaway with multiple task areas. Freestanding or “throne” bathtubs (bath thrones) in the center of a soaking room, multiple flat screens TV’s, and wireless Internet so you don’t miss anything as you move from bathing to grooming to lounging. They are outfitted with serving bars featuring wine coolers, espresso machines, and grazing snacks. There is also a burgeoning need for in-home hair salons.
- Short Sales. Home owners who have over-extended themselves financially are increasingly looking to their mortgage holder to accept less than is owed on their property. Some mortgagee’s will accept less than is owed through a short sale, in place of taking ownership of a home back through foreclosure.
- Pet showers. The kitchen or work sink is out for the dog bath. Dedicated dog showers are an emerging trend. Be it in a mud or utility room, garage corner or basement, dog lovers want a place to clean their favored pooch after a visit to the neighborhood dog park. Common dog showers feature a 3′ x 3′ shower base, surrounded by ceramic tile 4′ up the wall. Pet showers are all about the convenience for Fido to step in, and eliminate the master’s need to lift.
- Home elevators. The boomers want their vertical palaces with elegant min-elevators. No more unsightly and very 1970s chair-on-the-rail-system for these financially flush, forward-thinking home buyers.
- Outdoor living spaces that look interior. Massive, soaring “statement” fireplaces of cut stone, heated (think bathroom floors) flooring and walkways, entertaining sized custom kitchens, and indoor-looking artwork, fabrics, and finishes, but ones that can stand up to the elements.
- Down payments. Sexy home mortgages are out. Those who underwrite home loans are looking for substance from potential home buyers. Substance equates into disciplined savings and credit scores.
- A home’s carbon footprint. Manufactured homes, reused construction materials, and energy-friendly mechanical systems and appliances all reduce the need for fossil fuels. Home buyers are asking about how their potential new home can save the planet. It’s more than a trend, it’s a convenient truth.
- Monitoring and controlling with hand-held devices. Forgot to turn off the coffee maker, close/open the blinds, and turn the heat down or the air conditioning up? The latest in technology that utilize hand-held devices to open or close the blinds, turn on or off lights, or let Fido out the electronic pet door, around the corner or across the country.
- Floating Homes. Not just in Sausalito. If your hood has calm protected waters, you’ll soon have floating homes, those that look like conventional, soil-situated structures. From Louisiana to Vancouver, floating homes are at the top of must-have lists for those looking for a primary home to be lifestyle oriented. Plus, watching sunsets are a more enjoyable and greener alternative to lawn mowing.
- Concealed appliances. Buyers bypass matching cabinet panels that are used to disguise the ubiquitous refrigerator and dishwasher. Hinged and pocket doors are the latest way to integrate visually those boxy necessities and make the kitchen more non-traditional and less functional looking.
- Non-smoking Homeowners Associations. Who knew that some Homeowner Associations are rewriting by-laws and declarations to include those unit owners are not allowed to smoke inside their homes? Smoke-free common areas in addition to building-code-required ventilation systems and fresh-smelling hallways have taken precedence over individual’s rights to light up in their recliner.
- Off-grid homes. Solar panels, windmills and inverters are here to stay, in a big way. With brown-outs and power line-damaging storms on the increase, buyers in 2008 will ask for hybrid home-energy options, even being partially off-grid beats getting expensive power from coal-fired utilities, to these eco-energy users.
What’s Out
- Unrealistic home sellers. These relics of another time and market missed the cocktail party chat and water cooler angst by the transitional sellers of 2007. Cautions included: pricing their home right, consider home-sale contingencies, and offer closing cost givebacks. Hear-no-evil-sellers were overlooked by buyers who pined for reality minded ones. Because if sellers were flexible with buyers needs, buyers bought.
- Living rooms. The great room has replaced the living room in American residential culture. Informal lifestyles with eating, cooking and living spaces combined so family members and visiting friends can congregate together through various activities has conquered the forced museum. In viewing homes with buyers, I see the ex-museum used as work-out spaces, home offices, craft or hobby places, and I’ve seen more than once, the coveted living room with nothing more than a pool table as its solitary focus.
- Empty for sale homes. Buyers thought people “lived” in houses, but after seeing one-quarter of the homes they viewed empty, they wondered. Even though staging was the buzzword, getting that right was prickly in 2007. Those leftover silk flowers, the left behind mis-matched furniture, and the one-off design-show decorating scheme were buyer no-no’s. Neutral palettes, personal objects, thoughtful furniture rental, and something in the refrigerator says to buyers, maybe a person lives here.
- Double-digit home value appreciation. For now, the home as “get-rich-quick” investment is over. We’re back to pre-boom norm of housing or shelter. Flat or low single-digit appreciation in most markets in 2008.
- “Order-taking” real estate agents. The hive during the boom years was real estate, and multitudes of the dot-com-busted became the worker-bees of real estate sales. Everyone and anyone got licensed and into the frenzy. Little did they know that seasoned (pre-boom), full-time, professional agents possessed ready, willing and able buyers, knew how to sooth seller’s anxieties, and produced the fifth highest year in real estate sales in 2007.
- McMansions. Size doesn’t matter if it’s not well finished. A large voluminous home whose best attribute is the square-footage is waning. Home buyers are looking for quality, not quantity in 2008. After all, who has the money to replace the faux-hardwood floors, builder grade carpet and fiberglass bathtubs?
- Obese ceiling heights. It’s cheaper to go up than out. That’s been the thinking anyway as of late in residential design. Buyers have finally said enough, they prefer ceilings between nine and eleven feet. Anything more, especially in a smallish (under 10′ x 12′) room is waste. If you can’t add a loft in a soaring room, “down size me” height-wise, buyers say.
- Pioneering locations. Buyers have moved away from take-a-chance-hoods. Pioneering or off the beaten path areas were once the hot bed of potential appreciation. However, buyers in 2008 have returned to the tried-and-true address, keeping resale desirability firmly in mind when making a purchase.
- Balconies as a marketing gimmick. Functional outdoor space, not the anorexic appendage hanging off the building, is what buyers crave in outdoor space for 2008. Real balconies have room for a grill and a comfortable table and chairs. People love the outdoors and want to use it, but not only as a solo experience.
- Option ARMS (Adjustable Rate Mortgage). Buyers have heard that these loans usually have only one option; foreclosure. Used by the rich for short-term financing, they were re-packaged to buyers who wanted to qualify for the highest loan amount. Negative amortization is the harsh reality of Option ARMS. Home buyers should run, not walk, if these words are proposed as a financing option.
- Pre-construction pricing on new construction. Builders who are plunging ahead with new projects in 2008 will be better off with one pricing model from beginning to end, and eliminating their “everything’s an upgrade” mentality.
What’s on the Way Out
- Mosaic tile. Once deemed the ultimate in tile, now considered a very personal design commitment to the previous owner. The cost and waste to remove intricate mosaic is over-whelming to buyers, especially if it is has been recently installed. Even the most expensive, but not agreeable, tile could kill an otherwise acceptable property.
- Retro-1970s chic. Trend-obsolescence by buyers in 2007 was rampant. Loving the retro-seventies was easy, but hearing horror stories from would-be sellers about the market’s hesitance to buy a design white-elephant, made more main stream kitchens and baths a sensible decision. As one Gen X buyer said to me; “I love the dark espresso colored shag carpeting, but, I know my decorating needs will change, I want an interior that will transcend trends.” I replied, “You’re looking for a ‘transcendent look” and her response: “exactly.”
Tuesday, December 4, 2007
Despite Builder Incentives-Sales Stay Flat
WASHINGTON, D.C. - Builder confidence in the market for new single-family homes remained unchanged in November due to continuing mortgage market problems, a substantial inventory overhang and ongoing concerns about the effects of negative media coverage, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The November HMI held even with October's upwardly revised 19 reading, its lowest point since the series began in January of 1985.
"Consistent with what builders said in last month's survey, many are reporting that their special sales incentives are having limited success in terms of getting buyers in the door," said NAHB President Brian Catalde, a home builder from El Segundo, Calif. Of particular concern, he noted, is that negative media reports are dissuading buyers and fueling unrealistic expectations regarding home price discounts.
"To be more specific," Catalde said, "builders are worried that the national media has tended to report negative housing stories as if there is one real estate market, when, in fact, there is no such thing - all housing markets are local. As a result, some healthy markets are being unfairly impacted by this negative media coverage."
"The message from today's report is that builders do not see any significant change in housing market conditions as compared to last month," said NAHB Chief Economist David Seiders. "While they continue to work down inventories of unsold homes and reposition themselves for the market's eventual recovery, they realize it will be some time before market conditions support an upswing in building activity - most likely by the second half of 2008."
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
In November, the index gauging current sales conditions for single-family homes remained flat at 18, while the index gauging sales expectations for the next six months declined a single point to 25. The index gauging traffic of prospective buyers rose two points to 17.
Regionally, the HMI results were mixed, with two regions reporting modest HMI gains and two reporting slight declines. The HMI for the Northeast gained one point to 27 and the HMI for the West gained three points to 18. Meanwhile, the HMI for the Midwest declined one point to 13 and the HMI for the South declined two points to 19.
"Consistent with what builders said in last month's survey, many are reporting that their special sales incentives are having limited success in terms of getting buyers in the door," said NAHB President Brian Catalde, a home builder from El Segundo, Calif. Of particular concern, he noted, is that negative media reports are dissuading buyers and fueling unrealistic expectations regarding home price discounts.
"To be more specific," Catalde said, "builders are worried that the national media has tended to report negative housing stories as if there is one real estate market, when, in fact, there is no such thing - all housing markets are local. As a result, some healthy markets are being unfairly impacted by this negative media coverage."
"The message from today's report is that builders do not see any significant change in housing market conditions as compared to last month," said NAHB Chief Economist David Seiders. "While they continue to work down inventories of unsold homes and reposition themselves for the market's eventual recovery, they realize it will be some time before market conditions support an upswing in building activity - most likely by the second half of 2008."
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
In November, the index gauging current sales conditions for single-family homes remained flat at 18, while the index gauging sales expectations for the next six months declined a single point to 25. The index gauging traffic of prospective buyers rose two points to 17.
Regionally, the HMI results were mixed, with two regions reporting modest HMI gains and two reporting slight declines. The HMI for the Northeast gained one point to 27 and the HMI for the West gained three points to 18. Meanwhile, the HMI for the Midwest declined one point to 13 and the HMI for the South declined two points to 19.
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