When Prices of Homes with Pools Take a Dip

A study led by Brigham Young University assistant professor of economics Jaren Pope shows that buyers will pay more for a home with a swimming pool in August, with these residences selling for an additional 0.22 percentage points on average during the summer months. That translates into an extra $4,000 on a $1 million property.

However, homes with swimming pools sell for 0.15 percentage points less than the base line when they go into contract in January.

The study involved over 4 million transactions in 27 states between 1998 and 2008, focusing on homes sold at least twice during the study period.

Pope says early spring is the best time to list a home for sale, although it depends on how hot or cold the local market is. Sellers whose homes are on the market in the winter should keep their pools clean and use Christmas lights and heaters to make the space attractive despite the temperature.

 





Source: Wall Street Journal (03/15/13) P. M12; Tanaka, Sanette

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

Are Banks Easing up on Mortgage Standards?

A very tight mortgage lending environment “promises improvements this year as the drivers of tough credit standards reverse,” according to Moody’s Analytics ResiLandscape Report. Still, lending will remain tight by historical standards, the report notes.

Tight underwriting conditions have been one of the main obstacles to a housing market recovery. But the credit agency says that those conditions began to ease somewhat this year and likely will continue to do so.

“Rising house prices give lenders more breathing room to extend credit,” the analysts at Moody’s noted.

Over the past year and a half, large lenders have loosened up or, at least, held standards stable on prime loans for mortgage originations, according to the Survey of Senior Lending Officers.

Aiding lenders’ confidence is that mortgage delinquencies have fallen to pre-recession rates.

“Being right-side up on the mortgage improves a borrower’s credit profile. It also lowers the risk of default and increases the likelihood of trade-up buying,” according to Moody’s report.

Mortgage supply will remain constrained, but “improved consumer credit quality combined with steady growth in jobs, low mortgage interest rates and modestly rising house prices makes it clear that more households will be able to qualify for a mortgage,” Moody’s said. “Greater credit availability will, in turn, help drive stronger home sales and stronger price appreciation.”

 




Source: “Slight opening of credit spigot aids housing outlook,” HousingWire (March 4, 2013)

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

Buyers Value Storage Space, In-Law Suites

Purchasing a home is an important life decision, and many factors can influence the home choices buyers make.

The National Association of Realtors® released its 2013 Profile of Buyers’ Home Feature Preferences. It looks at the features buyers prefer when it comes to purchasing a home, including regional differences, as well as factors such as geography, demographics and household composition. The survey captures buyers who purchased a home between 2010 and 2012.

Buyers in the South, including Fla., for example, predictably prefer air conditioning. Compared to other areas, many Southern state buyers also seek out a home less than five years old on a wooded lot.

“Deciding where to live comes with a lot of options, but buyers quickly realize that some features are more important than others when it comes to choosing the right house for them,” said NAR President Gary Thomas.

Geography and demography strongly influence what buyers value in a home. The typical recently purchased home was 1,860 square feet built in 1996. Repeat buyers, buyers of new homes, married couples and families with children typically purchased larger homes.

First-time buyers and single women tended to buy older homes. The typical buyer purchased a home with three bedrooms and two full bathrooms. Slightly over half of the homes purchased were on a single level.

Other findings

• While more than three-fourths – 78 percent – of all buyers purchased a home with a garage, garages were more popular among new-home buyers, Midwesterners and suburbanites.

• Forty-one percent of homes purchased had a basement, but this feature was more popular among buyers in the Midwest and Northeast.

• Southerners typically bought the largest home at 2,000 square feet. Those in the Northeast followed closely behind with a typical home purchase of 1,850 square feet.

• Among buyers 55 and older, 42 percent considered finding a single-level home very important, compared to just 11 percent of buyers under age 35. Single women also placed higher importance on single-level homes, while single men wanted finished basements.

• Both single men and married couples placed higher importance on new kitchen appliances.

• Among all 33 home features in the survey, central air conditioning was the most important to the most buyers; 65 percent of buyers considered this feature very important.

• The next most important feature was a walk-in closet in the master bedroom; 39 percent of buyers considered this feature very important. Closely behind that was a home cable-, satellite TV-, and/or Internet ready, as well as a master bathroom.

• When it came to actually buying a home, among buyers who considered central AC and cable-, satellite TV-, and/or Internet ready very or somewhat important, 94 percent bought a home with these features. The next most common feature was an eat-in kitchen; 89 percent of buyers who thought this was important purchased a home with an eat-in kitchen.

• Buyers value some features so much that they are willing to spend more money to have them. Sixty-nine percent of buyers who did not purchase a home with central AC would be willing to pay $2,520 more for a home with this feature.

• Sixty-nine percent of buyers who did not purchase a home with new kitchen appliances would be willing to pay $1,840 more for a home with this feature.

• A walk-in closet in the master bedroom was the third most common feature on which buyers would spend more. Sixty percent of buyers who did not purchase a home with a walk-in closet would be willing to pay $1,350 more for a home with this feature.

• The features on which buyers placed the highest dollar value were waterfront properties and homes that were less than five years old. Thirty-two percent of buyers would be willing to pay a median of $5,420 more for a home on the waterfront, and 40 percent of buyers would be willing to pay a median of $5,020 more for a home that was less than five years old.

• The rooms buyers were willing to pay the most for were a basement and an in-law suite. Thirty-three percent of buyers would be willing to pay a median of $3,200 more for a home with a basement, and 20 percent of buyers would be willing to pay a median of $2,920 more for a home with an in-law suite.

• When it came to rooms that buyers want in a home, 55 percent of buyers thought it was very important to have a living room, although buyers in the Northeast placed more importance on a home with a dining room. Buyers aged 55 and older placed more importance on a bedroom on the main level of the house. Buyers aged 35 to 54 placed more importance on a laundry room, while those with children placed more importance on a family room.

• The two most common rooms buyers were willing to spend more for were a laundry room and a den/study/home office/library. Sixty-three percent of buyers who did not purchase a home with a laundry room would be willing to pay $1,590 more for a home with this room. Forty-four percent of buyers who did not purchase a home with a den/study/home office/library would be willing to pay $1,920 more for a home with this room.

• 97 percent of recent buyers were satisfied with their home purchase.

• Within three months of a home purchase, 53 percent of buyers undertook a home improvement project. The typical buyer spent $4,550 on various projects. Of those who did a home improvement project, 47 percent worked on the kitchen; 44 percent redid a bathroom; 41 percent added or replaced lighting; and 37 percent added or replaced appliances.

In October 2012, NAR, working with a private firm, surveyed a sample of households that had purchased any type of residencal real estate during 2010 to 2012 and still owned the property.

NAR sells the 2013 Profile of Buyers’ Home Feature Preferences. Members pay $14.95 and non-members pay $49.95. It can be ordered on NAR’s website.







 



© 2013 Florida Realtors®

Study Shows Home Preferences of Millennials

The Millennial generation is showing a preference for fixer-upper houses over the “cookie cutter” luxury homes their parents’ generation tended to desire, according to a national survey by Better Homes and Gardens Real Estate.

About one in three 18-to-35 year olds recently surveyed say they prefer a “fixer-upper” home with minimal repairs needed. Forty-seven percent say they would be more likely to handle home maintenance jobs themselves over calling in a professional for help. What’s more, 72 percent of Millennials consider themselves handy, earning the nickname the “Fix-It Generation,” according to the survey.

They also aren’t looking for big, luxury homes like their parents, and they don’t mind if a home is smaller, as long as it’s unique, the survey showed. Forty-three percent say they want a home that is more customized and different – less “cookie cutter.” They expect each room in the house to fit their lifestyle.

Also, 56 percent say that home technology capabilities are more important than a house with great curb appeal. Sixty-four percent of Millennials said they wouldn’t even consider living in a home that doesn’t have the latest tech capabilities. Eighty-four percent say that technology is essential for their new home, with the most sought-after tech in the home being an energy-efficient washer and dryer, a security system and a smart thermostat.

“It’s critical that real estate professionals understand what embodies a quintessential home for the millennial generation, which vastly differs from the traditional norms of generations before them,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. “Understanding technologies to communicate with this generation is now only one piece of the puzzle for agents; ‘smart’ technological capabilities must now be ingrained into the home itself.”

 





Source: Realogy

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

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Young Adults’ Finances May be Hard to Repair

Young generations were badly hit in the recession, and it could have widespread effects on their lives, from delaying homeownership to starting a family and even retiring one day.

A new study from the Urban Institute shows that those under the age of 40 have accumulated less wealth than their parents did at the same age. That coincides with a time when the average wealth of Americans has doubled over the last quarter-century, according to the study.

“In this country, the expectation is that every generation does better than the previous generation,” Caroline Ratcliffe, an author of the study, told The New York Times. “This is no longer the case. This generation might have less.”

Young adults are facing stagnant pay, a tough job market, soaring student loan debt and some who did own a home may have faced lost equity or even foreclosure during the housing crisis.

Will younger adults ever be able to catch up?

According to the Urban Institute study, if a person delays buying a home to age 40 instead of age 30, that alone could result in a $42,000 loss in home equity by the time that person reaches age 60.

Still, “strong and sustained job and wage growth would cure many of the ills facing younger workers,” The New York Times reports. “But their delayed or diminished wealth accumulation might still have a lasting impact on their finances.”

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Source: “Younger Generations Lag Parents in Wealth-Building,” The New York Times (March 14, 2013)

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

Home is Where the Tax Breaks Are - 7 Tips

While economists and investors can debate whether buying a home is still part of the American dream, it’s undeniable that the tax code remains highly favorable to people who own instead of rent.

Whether you were a first-time buyer, a longtime homeowner who refinanced or a seller, there are a host of important deductions available.

The easiest way for a family to get more than just the standard deduction is to claim tax breaks related to a house. Charitable deductions or a smattering of health care costs might not get you above the $5,950 deduction for individuals or the $11,900 mark for married couples. But a few of these big-time breaks in housing can push you over the top and result in a much bigger refund.

The downside is no more simple tax returns since you’ll have to itemize. But the money you’ll get back makes it worthwhile.

Here are seven important tax tips for homeowners:

• Mortgage interest is your best friend. Taxpayers collectively get roughly $100 billion annually in mortgage interest breaks. If you bought a home or refinanced in the last few years, the savings are even more significant, as more than half your monthly payment goes toward interest.

• Mortgage insurance is still deductible. There were fears that the deduction for personal mortgage insurance would fall victim to fiscal fights in Washington. However, Congress left it in place. That’s a huge boon to lower-income homeowners who often can’t afford a big down payment and must pay private mortgage insurance until they have at least 20 percent equity in their homes.

• Taxes are tax deductible. It sounds odd and is frequently overlooked, but homeowners can deduct their local and state property taxes on federal tax returns. There also may be special property tax benefits for lower-income homeowners based on your state or municipality of residence, so look into further breaks specific to your community.

• Qualified renovations count. Fixing a leaky faucet or putting crown molding in the living room is not tax deductible. But there are a number of items in the tax code that allow for tax breaks and credits. A host of items covered under residential energy efficiency can provide tax relief, including new solar panels or certain water heaters. There are also deductions available for home office improvements, as well as for medically necessary changes, such as an entry ramp or a handicap-accessible bathtub.

• Unqualified renovations can count later. While that addition might not be “necessary,” the expense could be an important part of reducing your tax burden when you sell. This is especially noteworthy in hot real estate markets or for homeowners sitting on big property appreciation. The IRS allows you only $250,000 of tax-free profit when you sell a primary residence, but you can deduct any renovations that boosted your home’s value from any total profit to get under that threshold. Find those receipts if you’re sitting on a big profit and planning to sell.

• Claim selling costs. If you sold a home in the past year, costs including title insurance, advertising and real estate broker fees can be claimed. You can claim certain repairs to reduce capital gains on the sale, presuming they were made within 90 days of sale and clearly for the intent of marketing the property.

• Don’t forget moving expenses. If you bought a home in 2012, there’s a chance you did so because of a job-related move. If this is the case, you may be able to deduct some expenses, provided you have the receipts. You must have moved 50 miles or more, and the reasons for your move can’t be personal.

 










Copyright USA TODAY 2013; Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks.