Summer is often the time when people undertake home improvement projects, DIY or otherwise. Over the weekend, I had a friend ask me to visit the house her daughter bought last year, to see what I thought the value of the upgrades would be. In addition, at my own house, we are in the middle of what I'm calling The Big Repair, where workmen seem to be there every day, and all the things that were new 22 years ago, or new with our "new" kitchen 15 years ago, are starting to fray, break, or wear out.
When I talk to my friends, or my husband, I basically say that homeowners should do what they want, what they can afford, and what they need, without expecting too much in the way of a monetary return. If something gives you joy every day (see Spark Joy for more on this concept), then why not go for it? Very few projects raise the market value in the amount that they cost, and most are simply to keep the property current. Some additions and changes are quirky enough, due to the taste or needs of the owner, that they add nothing, or possibly even subtract value.
But does that mean that The Big Repair should stop? No way! You live in your home, and anything that you would have to do to sell it, you may as well do now, so as to reap the benefits from it. Anything that you don't need to do, but that you want and will use (think pool, porch, garden pergola, fire pit as examples) and you can afford, are no different than what you might spend on a vacation. And why not have as much fun at home as you could somewhere else??
Showing posts with label homeowners. Show all posts
Showing posts with label homeowners. Show all posts
Monday, August 15, 2016
Thursday, February 26, 2015
Renting vs. Buying
By now, many people know that New Haven has the lowest apartment vacancy rate in the country. What people may not realize is that, consequently, rents have gone up faster than they have in most other places. So, rents in our area have risen over 50% in the past ten years, while home prices are still 20% lower than they were in 2007.
When experts talk about the benefits of homeownership, most people assume that tax benefits, forced savings, appreciation, etc. that are being discussed. What is now also true is that renting can now be so costly that the price of an apartment has become a deterrent to saving for home purchase. In fact, it can almost seem as though there are two divergent paths, where renters must stay renting, and purchasers are better off if they keep buying.
We shouldn't give out the same old advice, without looking at the updated case for buying now, if you can. There was always an argument that went something like "you have to get on the merry-go-round, so that you can take advantage of the ride up in prices". It may now go more like this: "You need to get on the ride before the cost of sitting on the sidelines becomes prohibitive, preventing you from ever being able to buy a ticket for the ride."
All renters should carefully do the math, and make the appropriate decision for their circumstances, but that decision may not be the obvious one.
When experts talk about the benefits of homeownership, most people assume that tax benefits, forced savings, appreciation, etc. that are being discussed. What is now also true is that renting can now be so costly that the price of an apartment has become a deterrent to saving for home purchase. In fact, it can almost seem as though there are two divergent paths, where renters must stay renting, and purchasers are better off if they keep buying.
We shouldn't give out the same old advice, without looking at the updated case for buying now, if you can. There was always an argument that went something like "you have to get on the merry-go-round, so that you can take advantage of the ride up in prices". It may now go more like this: "You need to get on the ride before the cost of sitting on the sidelines becomes prohibitive, preventing you from ever being able to buy a ticket for the ride."
All renters should carefully do the math, and make the appropriate decision for their circumstances, but that decision may not be the obvious one.
Tuesday, November 15, 2011
Help from the Government?
President Obama has proposed some new rules that would allow homeowners to refinance in many cases where that has not been possible up until now. The main hurdle has been the appraisal--often, homeowners who have the ability to pay have not been able to take advantage of lower rates, because their homes are "underwater" (worth less than the mortgage, or worth less than the amount that they could refinance for). His proposal would allow homeowners who are current on their mortgages, and have been for the last six months, to refinance without an appraisal (it does say "in most cases", and I'm not sure what that means). His stated goal is to lower people's monthly payments and free up the extra cash to circulate into the economy and improve sales of other goods and services.
I see two problems with this. One is that such homeowners would be allowed to convert their loans, at their option, into 15-year mortgages. Since such a move would raise, rather than lower, their payments, I fail to see where the extra cash goes into anything except a different loan. Secondly, the idea that banks are being told to refinance without qualifying appraisals seems ironic. Isn't that supposedly how we got into this recession in the first place? So, we tell them to make loans that don't meet the criteria that we just tightened? And, if those loans go bad, and we can't blame the banks and their greed, whom do we blame?
It's clearly frustrating for good credit risks to lose out on lower rates because they are paying their mortgages regularly, and I understand that. Somehow, though, the whole program has the ring of having started with some White House staffer complaining about not being able to refi his/her house, and then letting policy people hash out a compromise so that the banks would be happy with the result. It seems to me that we have done that too often already.
I see two problems with this. One is that such homeowners would be allowed to convert their loans, at their option, into 15-year mortgages. Since such a move would raise, rather than lower, their payments, I fail to see where the extra cash goes into anything except a different loan. Secondly, the idea that banks are being told to refinance without qualifying appraisals seems ironic. Isn't that supposedly how we got into this recession in the first place? So, we tell them to make loans that don't meet the criteria that we just tightened? And, if those loans go bad, and we can't blame the banks and their greed, whom do we blame?
It's clearly frustrating for good credit risks to lose out on lower rates because they are paying their mortgages regularly, and I understand that. Somehow, though, the whole program has the ring of having started with some White House staffer complaining about not being able to refi his/her house, and then letting policy people hash out a compromise so that the banks would be happy with the result. It seems to me that we have done that too often already.
Monday, March 14, 2011
Statistics from the Region
It's tempting to make you all guess about market trends for 2010, but it would be hard for me to collect the responses in a timely way, so I guess I will just tell you. The latest Commercial Record shows that, for year over year sales from 2009 to 2010, New Haven County as a whole was down almost 8% in the number of sales. For the immediate towns, Guilford, Madison, North Haven, and Bethany had an increase from the prior year. Guilford and Madison were each up 9%, while the other two had smaller increases.
Surprisingly, the median prices were almost identical in 2009 and 2010, with 2010 coming in at 0.8% less. I expect that most of you would have guessed that prices fell about 10%, so the fact that they actually fell less than one percent is very good news. Of course, as I've often pointed out, this is not an apples-to-apples comparison, so it's probably true that only the best houses sold, meaning that most homes would have sold for less in 2010 than in the prior year. As I've discussed in earlier posts, East Rock and Spring Glen did go up in price, showing the "Yale" effect most strongly. North Branford, with 24% fewer sales, had an increase of 10%, and Milford, Wallingford, and Woodbridge had smaller increases. New Haven as a whole crept up 1%.
It is important to recognize, as the issue said in another article, that this is the sixth year in a row that sales have declined. Since prices have also been declining for most of that period, the total decline is larger than what is listed for last year. And, since most homeowners looking to sell haven't been in the market for some time, those yearly decreases can really add up.
However, the fact that we are not in freefall is very good news, and the spring is still ahead of us. Anything could happen, but we're hoping for recovery mode to kick in strongly!
Surprisingly, the median prices were almost identical in 2009 and 2010, with 2010 coming in at 0.8% less. I expect that most of you would have guessed that prices fell about 10%, so the fact that they actually fell less than one percent is very good news. Of course, as I've often pointed out, this is not an apples-to-apples comparison, so it's probably true that only the best houses sold, meaning that most homes would have sold for less in 2010 than in the prior year. As I've discussed in earlier posts, East Rock and Spring Glen did go up in price, showing the "Yale" effect most strongly. North Branford, with 24% fewer sales, had an increase of 10%, and Milford, Wallingford, and Woodbridge had smaller increases. New Haven as a whole crept up 1%.
It is important to recognize, as the issue said in another article, that this is the sixth year in a row that sales have declined. Since prices have also been declining for most of that period, the total decline is larger than what is listed for last year. And, since most homeowners looking to sell haven't been in the market for some time, those yearly decreases can really add up.
However, the fact that we are not in freefall is very good news, and the spring is still ahead of us. Anything could happen, but we're hoping for recovery mode to kick in strongly!
Tuesday, February 15, 2011
Making Connecticut Business Friendly
Many people don't understand the connection between a business-friendly climate and housing prices. Connecticut is a good example of it. We have ranked dead last among the fifty states in job creation over the past twenty years--for those of you who are counting, that's far longer than the current recession. We export college students, young people, all kinds of people. They go where the jobs are. Lots of you will know where those places are, because it's where your children live.
Without new jobs, there aren't people coming into the state, or staying in the state, to buy homes. Therefore, there isn't a growing market, and there are no buyers for those homes vacated by others who leave, or who downsize, or who transition into assisted living. That also means that new construction competes with existing housing, since relocated homeowners who buy new homes therefore don't buy current ones. All of this explains why low job growth is bad.
But why is it bad? To begin with, we in the Land of Steady Habits tend to believe that everyone wants to live here, and therefore we don't have to make it attractive to do so. We also tend to believe that businesses need to be here. That's true in some cases--like a local real estate firm, or a utility--but is clearly not the case in manufacturing and in more other industries than you would think. So we don't push our lawmakers and state and local officials to do more to attract and retain business. Yes, we want to keep those big defense contracts. But most of the jobs are in small businesses and start-ups. That's where the NIMBY (not in my back yard) folks, the preservationists, the anti-big box protesters, and the knee-jerk city planners and economic development departments lose the race for jobs. Of course, those same people often decry the increases in taxes, but without seeing the connection.
What can you do? Ask your municipality and state officials to be kind to business. Don't jump on the bandwagon to avoid personal tax increases by loading up corporate taxes. Don't let local planning and zoning processes become obstacle courses. Try to think about all sides of the issues. And vote for those who do.
Without new jobs, there aren't people coming into the state, or staying in the state, to buy homes. Therefore, there isn't a growing market, and there are no buyers for those homes vacated by others who leave, or who downsize, or who transition into assisted living. That also means that new construction competes with existing housing, since relocated homeowners who buy new homes therefore don't buy current ones. All of this explains why low job growth is bad.
But why is it bad? To begin with, we in the Land of Steady Habits tend to believe that everyone wants to live here, and therefore we don't have to make it attractive to do so. We also tend to believe that businesses need to be here. That's true in some cases--like a local real estate firm, or a utility--but is clearly not the case in manufacturing and in more other industries than you would think. So we don't push our lawmakers and state and local officials to do more to attract and retain business. Yes, we want to keep those big defense contracts. But most of the jobs are in small businesses and start-ups. That's where the NIMBY (not in my back yard) folks, the preservationists, the anti-big box protesters, and the knee-jerk city planners and economic development departments lose the race for jobs. Of course, those same people often decry the increases in taxes, but without seeing the connection.
What can you do? Ask your municipality and state officials to be kind to business. Don't jump on the bandwagon to avoid personal tax increases by loading up corporate taxes. Don't let local planning and zoning processes become obstacle courses. Try to think about all sides of the issues. And vote for those who do.
Monday, April 13, 2009
More on the Market
I just gave a press interview on the results of the first quarter in our area. Those results were dreadful. Very little sold, and what sold did so at lower prices. The activity has picked up since then, although those sales won't show up until the second quarter.
What is interesting to those of us in the business, who believe that we are bumping along the bottom, is to guess when the bump will start trending up. Units always increase before prices, and, while prices may continue to go down for a while longer, units should begin to increase. Once activity improves, pent up demand for new housing may cause houses to flood the market, as homeowners seek to trade up or down. That increase in supply will satisfy the still anemic demand for some time to come.
The lesson here is that there is a window, which has already opened in East Rock and Spring Glen, where those contrarians who seek to sell in the face of awful media reports have gotten or are getting surprising high prices. Not much was on the market, and people who needed to be in place for jobs beginning in the summer or fall, or those who needed to move for one reason or another, were competing for just a few houses. Multiple offers, many over the asking price, were common. That may change as people have more choices.
A word to the wise: He who hesitates is lost. List now.
What is interesting to those of us in the business, who believe that we are bumping along the bottom, is to guess when the bump will start trending up. Units always increase before prices, and, while prices may continue to go down for a while longer, units should begin to increase. Once activity improves, pent up demand for new housing may cause houses to flood the market, as homeowners seek to trade up or down. That increase in supply will satisfy the still anemic demand for some time to come.
The lesson here is that there is a window, which has already opened in East Rock and Spring Glen, where those contrarians who seek to sell in the face of awful media reports have gotten or are getting surprising high prices. Not much was on the market, and people who needed to be in place for jobs beginning in the summer or fall, or those who needed to move for one reason or another, were competing for just a few houses. Multiple offers, many over the asking price, were common. That may change as people have more choices.
A word to the wise: He who hesitates is lost. List now.
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