The Government Shutdown and the Real Estate Market: What You Need to Know

It’s bound not to be good news, but it’s important to know how bad the news is and why. At this point, most experts agree that the shutdown has caused more fear than actual harm, but if this continues that could soon change.

1If you have ever gone through a real estate transaction, and certainly recently, you know how much paperwork is involved. Thus far, mortgage lenders and title have found ways to keep things running fairly smoothly, but with the Federal Housing Authority running on a severely restricted staff and the IRS unable to provide financial documents agents need to close transactions, things are going to get trickier. Along with the potential for failed closings due to inability to obtain necessary documents from government entities, with Fannie Mae & Freddie Mac unavailable, banks are using their own capital and they can only continue to do this for so long.

However, since the last government shutdown lasted only 21 days, there is little we can surmise about what would happen to the market should this one continue for an extended period of time. Again and with all of this said, for now the shutdown is having more of a mental impact on people than a concrete one. However, with the past fragility of the market and the encouraging rebound we’ve been seeing of late, the sooner everyone gets back to work, the better. So keep calm, carry on, and cross your fingers.

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Cooking Up More ROI in Your Kitchen

With so many buyers at-the-ready, how do you make sure your home is prepped to fetch top dollar and bring you the most nesting satisfaction? Of all the remodeling options out there, revamping your kitchen can be key to sprucing up your home.

1Here are a few tips to ensure you know what you’re doing before you dive in:

1)     Set your budget at 10-15% of the value of your home. This prevents skimping but also the far more dangerous potential for overspending.

2)     In a room that has you working so hard, make sure your lighting is working for you. Kitchens that are under- or over-lit can affect not only the look and feel of the kitchen but also its functionality. Under-cabinet lighting to help illuminate prep work and recessed lights and pendants can liven up eating spaces.

3)     Keep it buyer-friendly. We all have our own tastes when it comes to colors and patterns but that means so do buyers; avoid anything that’s too vibrant or eclectic so you don’t turn off potential buyers should you be selling or decide to do so in the future.

4)     Think practical. Counter space is critical in your kitchen. Take the time to really understand the flow of cooking processes so you know you’ve made the most user-friendly kitchen possible.

5)     Backsplashes are a no-brainer – easy to clean, a useful aesthetic accent and generally a great way to top off the interior of your kitchen.

Even in a market as hot as this one, you want to make sure you’re giving your home the best chance to sell for what it’s worth. Here at Encore Custom Homes, we have trusted vendors and years of experience with this kind of work so should you find yourself wondering how to spruce up the culinary center of your home, we’re always here to help.

 

Amenities Making a Comeback

And the good housing news continues. According to Mortgage News Daily, “The American Institute of Architects (AIA) is seeing an improving market reflected in the size and amenities Americans now expect in both new homes and when they remodel” (see article).

Here are a few ways that what homeowners are expecting to see in homes is changing:

1)     Bigger is better! Higher prices per square foot equals more square feet.

2)     Outdoor spaces are seeing a renewed focus. What’s on the outside is as important as what’s on the inside.

3)     Open-space layouts and single-floors are trending. This makes it easier to make outside spaces flow indoors and add to the versatility of the home.

1The types of amenities are also changing. Again, the focus on outdoors means that spaces that allow for a healthier lifestyle are in high demand – less wine cellars or mud rooms and more gyms and yoga rooms.

Since it’s not just important to have more amenities, but ones that are desirable in today’s market, we recommend getting in touch with us to discuss what kinds of upgrades are going to bring your home the most value as we continue to keep our finger on the pulse of the market.

Bringing the World Home in the Northwest

We know the market is back, and no less so in the Northwest. Foreclosures are at their lowest levels in seven years (read article) and international investors are flocking to the West coast to take advantage of the hot market. In particular and certainly noticeable in our area, “Chinese buyers accounted for 18% of the $68.2 billion that foreigners spent on homes during the 12 months ended March 31, according to the National Association of Realtors” (see article).

1For Asian buyers, homes in the U.S. are a sign of status and wealth. It’s also used for many children of Asian families to live locally while studying at American universities. The Eastside is particularly attractive for such overseas buyers given our stunning environs, mild climate, top notch education institutions and ease of international travel.

So what does this mean for you and your home? Should you be considering selling or remodeling, it’s important to keep in mind that your target audience will increasingly consist of these overseas buyers and that means tailoring your spaces to broader tastes. There is tremendous opportunity for home sellers and investors looking for custom built homes to capitalize on this trend and further enrich and strengthen our local housing market. A globally expanding buyer pool will surely be a boon as we look to sustain the health of our markets locally.

Remodel 101: Going Green

Bellevue couple built green for themselves and to teach others

Rebecca Teagarden | Seattle Times | May 14, 2013 | link

SEATTLE — Before she got into the construction business 41 years ago, Donna Shirey was a teacher.

Turns out, she still is.

The Shireys, Donna and her husband, Riley, have long believed that sustainable building is smart building. And in 2005 they decided to go for it: build the greenest, most affordable, healthy, comfortable and quiet home possible on the shore of Lake Sammamish in Bellevue, Wash. The Shireys would be their own client, and they would open the house to anybody who wanted to come have a look, from construction to completion.

Its sustainable credentials are many: photovoltaic panels, solar hot water, tankless water heater, hydronic radiant heating, heat-recovery ventilator, living roof, recycled-content tile, salvaged-wood flooring, metal roof, local materials, rainwater collection using a 3,000-gallon cistern, small footprint, wind turbine, five-star Built Green rating. More.

The more the merrier, is how they look at it. Why, Shirey (who’s fond of such construction bon mots as “build tight; ventilate right,” and “use built-ins, not furniture”) has lived all of her years in a sustainable frame of mind.

“My parents went through the Depression; my dad was a butcher in Cleveland. We saved and recycled everything,” she says. “You never knew what you were going to need.”

The Shireys completed the place they call “the Zero Energy Idea House” in 2009. Most recently it and the couple’s Florida home were featured in the book “Prefabulous + Almost Off the Grid” by Sheri Koones. (Fun fact: Robert Redford, who wrote the preface, worked as a roustabout in the oil fields south of Los Angeles as a teenager.)

Koones tells us that houses use about one-third of all the energy in America. But for 80 percent of the year, the Shirey home requires no energy to operate. And each year Puget Sound Energy has sent the Shireys a check for about $650 for power returned to the grid.

The home is contemporary but made comfortable with fat alder trim and bright, cheerful (no VOC) paint. Rooms (two bedrooms, 2 ½ baths) are no larger than needed. The living room is a conversation-inducing 11 feet by 12 feet. The home steps down the lake’s-edge hillside, from TV loft upstairs to the bedrooms below the main living space.

Interior designer Autumn Donovan helped inside, working with the Shireys’ “recycled” furniture — pieces they already owned. “Those chairs over there?” Shirey says, pointing to the living room. “I’ve had those since 1982. We just got them recovered.”

That kind of ethic is evident all around. “There’s always something people can do,” Shirey says, “whether they’re building a new house or have an existing one.”

Love it or list it?

Move-Up Or Remodel? How Do You Decide?

Huffington Post | May 15, 2013 | link

The signs have been there for a while. You walk in the house and a flood of toys clutters your path or your kids are wedged like sardines into a single bedroom. Your home office is more like a home closet. At odd moments, you catch yourself dreaming wistfully of another bathroom or find yourself watching marathons of “Love It or List It.” Maybe it’s time to move, but you aren’t sure if it is time to leap.

With all the talk of a seller’s market many people are considering listing their homes. March data from realtor.com showed that many of the 146 markets monitored have experienced an increase in list price year over year. Spring homebuying season is in full swing and while getting a loan is still a challenge, there are some signs that banks are easing their requirements just a bit. The New York Times reported that some credit unions are offering 100 percent financing in areas where home values have stabilized or are rising and overall those with an average or even slightly below average credit situation have a better shot than they have in years.

Things are also changing on the remodeling side. People are far more prudent today than they were during the housing bubble where extravagant renovations were more the norm. Today’s remodel is a different from the luxury remodels of a few years ago. Homeowners still want to renovate but they are often smarter about it with an eye toward finding a balance between livability and resale value. A recent Marketwatch story on the rise in remodeling projects noted that owners are often choosing more simple projects, doing mini-remodels rather than expensive total renovations.

Here are a few questions to ask yourself as you consider the remodel or move conundrum.

1) Do you love your neighborhood?
It’s important to think about your house frustrations and your neighborhood as two separate things. Take the house out of the equation for a moment. How do you feel about the neighborhood? Is it convenient to your job and places you like to go? If you have kids do they love their school, do they have a lot of friends nearby? Do you have lots of ties to this particular neighborhood? How long have you lived here? Are you ready for a change? If you remodel your house it should be a decision based on the fact that you plan to spend a lot more time in the home rather than planning to move soon.

2) What needs to be changed?
How drastic a remodel would it take for you to be happy in your home? Is there room to add on or to reutilize existing space such as finishing a basement, attic, or screened-in porch? If you are looking at adding on a room that is generally a significant expense and one that may not be worth it in the long run. In Remodeling Magazine‘s Cost vs. Value report for 2013, an attic bedroom costs an average of $47,919 and has a 72.9 percent return on investment whereas a master suite addition costs $101,873 and offers only a 63.2 percent return on investment. A bathroom addition with an average cost of $37,501 only brings $20,569 in returns.

3) Will you need even more space soon?
Are you planning to expand your family? Is it your dream to work from home? Is a family member taking up a hobby that needs a lot of room? It’s impossible to predict the future but if you think you may need even more space in a year or two it may be time to start looking for something that will accommodate your upcoming needs rather than attempting a remodel. This is a good conversation to have with the whole family.

4) How’s the market in your area?

If you were to sell now would you be able to make money that you could put toward the purchase of another home? How much equity do you have in the home? One reason that many people are facing this decision currently is that interest rates are still low making now a good time to buy a home. You may want to bring in a realtor to do a market analysis. The realtor can tell you what your home should be listed for and can let you know about other homes on the market in the area. Right now some markets are experiencing low inventory so it can be a good time to list.

Low inventory also means that good homes that list at a fair price are snapped up quickly so if you decide to list you need to be aware that your home might sell quickly and that as a buyer you could be facing potential multiple offer situations. You can use the realtor.com data portal to check out what the median price, total listings, and age of inventory in 146 markets. This can give you an idea of what you might be facing if you put your home on the market.

Making this decision requires a lot of number-crunching. Bringing in a contractor to advise you on the cost of your potential remodel and working with a realtor on a potential sale will give you the data you need to decide whether it’s time to stay or go.

Remodel 101: We’re on your side

Builder Confidence Improves in May

RIS Media | May 15, 2013 | link

contractor on construction site [1]Builder confidence in the market for newly built, single-family homes improved three points to a 44 reading on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for May, released recently. This gain, from a downwardly revised 41 in April, reflected improvement in all three index components – current sales conditions, sales expectations and traffic of prospective buyers.

“Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” notes National Association of Home Builders (NAHB) Chairman Rick Judson, a home builder from Charlotte, N.C. “This is definitely an encouraging sign even amidst rising challenges with regard to the cost and availability of building materials, lots and labor.”

“While industry supply chains will take time to re-establish themselves following recession-related cutbacks, builders’ views of current sales conditions have improved and expectations for the future remain quite strong as consumers head back to the market in force,” says NAHB Chief Economist David Crowe.

Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “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 conditions as good than poor.

All three HMI components posted gains in May. The index gauging current sales conditions increased four points to 48, while the index gauging expectations for future sales edged up a single point to 53 – its highest level since February of 2007. The index gauging traffic of prospective buyers gained three points to 33.

Looking at the three-month moving averages for regional HMI scores, no movement was recorded in the Northeast, Midwest or South, which held unchanged at 37, 45 and 42, respectively. Only the West recorded a decline, of six points to 49 in May.