‘Tiny Condos’ Draw Millennials to Ownership

‘Tiny Condos’ Draw Millennials to Ownership. Image courtesy of mapichai / FreeDigitalPhotos.net

Real estate developers are hoping to entice young professional renters into home ownership by wooing them with tiny, more affordable condos.

Downtown Washington, D.C. serves as one example of the tiny condo movement’s gain in momentum.

“They definitely notice it’s smaller, so it is an explanation; it takes a little bit of an adjustment,” says Chris Ballard, principal at McWilliams/Ballard, a marketing firm that works with the Peterson Cos., the developer of Ontario 17, a new condominium building in D.C.’s Adams Morgan neighborhood. The building’s tiny studios are just 380 square feet and cost $275,000 – which is about half the neighborhood’s median price. The building, which is not yet finished, is already about 70 percent sold.

“Things are getting smaller, and people are starting to understand,” says Laina Lee, one of the sales managers at Ontario 17. “About 80 percent of all our buyers, including our studios and our one-bedrooms, have all been first-time home buyers.”

Many young professionals are battling historically high rents that have made it difficult for them to save for a down payment to break into home ownership.

Ballard says it’s cheaper to buy at Ontario 17 than to rent in D.C.’s booming rental market.

“We’re definitely getting a consumer that’s priced out of the market,” Ballard says. “They look at older resales, and now they get to come and look at something that is brand new, and so that’s a great difference, when you’re comparing a 1970s build, older-type condominium with something that’s brand-new with all new fit and finish.”

At Ontario 17 in D.C., within 380 square feet, the studio units have a bed that pulls out of the wall, a dining table that pulls down from a hanging picture frame, a sofa that is built into the bottom of the bed, high-end kitchen appliances that are slightly smaller to fit the space, and in many cases a small terrace as well.

Source: “Wooing Millennials to Buy Condos: Really Tiny Condos,” CNBC (Sept. 29, 2015)

Are Higher Home Prices Spooking Buyers?

Are Higher Home Prices Spooking Buyers? Image courtesy of franky242 / FreeDigitalPhotos.net

Contracts to buy homes dropped nationwide in August, as home prices continued to inch upward, the National Association of REALTORS® reports. Modest increases in pending home sales in the West were offset by declines in all other regions last month.

Pending Home Sales By Region

• Northeast: pending home sales dropped 5.6 percent to 93.3 last month, but remain 8.9 percent above a year ago.
• Midwest: pending home sales were down 0.4 percent to 107.4 in August, but are 6.5 percent above August 2014 levels.
• South: pending home sales dropped 2.2 percent to an index reading of 121.5, but are 4.1 percent above year ago levels.
• West: pending home sales increased 1.8 percent in August to 104.9, and are 7.6 percent above a year ago.

 

NAR’s Pending Home Sales Index – a forward-looking indicator based on contract signings – retreated 1.4 percent in August to a 109.4 reading. Despite the drop, pending home sales remain 6.1 percent above August 2014 levels.

Buyer demand is continuing to outpace the housing supply and it’s also prompting home prices to increase in many markets across the country, says Lawrence Yun, NAR’s chief economist.

“Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” Yun says. “Even with existing-housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago.”

Yun predicts that sales will maintain their current pace in the months ahead. But, he cautions, there are several headwinds that could impact housing.

“The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being,” Yun says. “Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales.”

Still, NAR says the national median existing-home price will likely rise 5.8 percent this year, reaching $220,300. Also, existing-home sales likely will rise 7 percent to around 5.28 million – 25 percent below the prior peak set in 2005.

Source: National Association of REALTORS®

4 Costly Mistakes When Building New

4 Costly Mistakes When Building New. Image courtesy of adamr / FreeDigitalPhotos.net

When building a new home, home buyers may quickly find themselves over-budget and over-stressed. U.S. News & World Report recently highlighted some of the most common financial mistakes when building a new home:

1. Don’t overbuild. “I meet potential clients in my office almost weekly who tell me, ‘We built a 6,000 square-foot home, but now we’re dying to downsize to something smaller,'” says Andy Stauffer, owner of Stauffer and Sons Construction, a homebuilder in Colorado Springs. “Most families don’t even need 5,000 square feet, and a home as small as 2,500 or 3,000 square feet won’t feel small if it’s designed properly. A larger house is just more expensive and harder to maintain and clean. According to the National Association of Home Builders, a custom home in the U.S. costs an average of $105 per square foot to build. That means by eliminating even 500 square feet in a home that you don’t need, you’ll save over $50,000.”

2. Consider the resale value at the beginning. “It’s simply a fact of life. Most of us don’t know for sure where we’ll be in 10 or 15 years, as much as we’d like to think we do,” Stauffer says. “I recently spoke to a real estate agent who had some clients that built a five-story custom home. They loved it, but when it was time to sell, they had to drop the price by tens of thousands of dollars and sell at a significant loss because nobody wanted to buy a five-story home and walk up and down the stairs all day long. So build your dream home, but don’t make it a nightmare for someone else.”

3. Weigh the upgrades. Buyers may have to teeter on too conservative or not conservative enough when choosing their extras. “You will be surprised at how quickly a $200,000 home becomes $400,000 in upgrades,” Joan Fradella, a family mediator in West Palm Beach, Fla., who built a new home in 1998 told U.S. News & World Report.

Brian Brunhofter, president of Meritus Custom Builders in Chicago, says buyers need to carefully consider what upgrades are must haves. “For example, carpet can always be switched out to hardwood floors later, but a full basement is something you should decide on now,” he says. That said, some buyers may want to do some of those upgrades now while lending is relatively inexpensive at the moment. As long as you don’t go overboard, it may “be much more economic to stretch and plan for those features in your budget now,” he says.

4. Monitor the progress. “Visit the site during construction,” advises Nicole Cannon, a resident architect in Los Angeles. “Make sure things are matching your expectations and ask questions if they don’t. The worst option is to remain quiet and end up with something that you are unhappy with or have to pay to fix after the fact.”

Source: “8 Financial Mistakes to Avoid When Building a New Home,” U.S. News & World Report (Sept. 25, 2015)

The Top Exterior Finishes for New Homes Are…

The Top Exterior Finishes for New Homes Are… Image courtesy of duron123 / FreeDigitalPhotos.net

Vinyl is the clear champ when it comes to the most widely used exterior on new homes, shows Census Bureau’s Survey of Construction and an analysis by the National Association of Home Builders.

In 2014, the latest data available, vinyl (including vinyl-covered aluminum) was the most commonly used wall material at 29 percent, followed by stucco and brick or brick veneer at 23 percent each, and fiber cement siding at 18 percent.

Vinyl siding is the most popular exterior material in five out of the nine census divisions, with the Middle Atlantic and New England areas having the highest prevalence at 76 percent and 72 percent, respectively. In the East and North West Central divisions, vinyl accounted for more than 50 percent. In the South Atlantic, however, vinyl was used in 36 percent of new single-family homes started in 2014.

But other exterior materials can be more common in different regions of the U.S. For example, stucco was the most popular exterior wall material in the Mountain and Pacific divisions at 55 percent and 52 percent, respectively. About 40 percent of homes started in the Pacific used fiber cement siding. In the East and West South Central divisions, brick or brick veneer were popular choices, with at least 59 percent of new single-family homes started in 2014 using it as the primary exterior material.

Source: “Vinyl Is the Most Widely Used Exterior for New Homes,” National Association of Home Builders Eye on Housing blog (Sept. 23, 2015)

Home Values Pull Up in More States

Home Values Pull Up in More States. Image courtesy of fantasista / FreeDigitalPhotos.net

Home values in 29 states and the District of Columbia are within their historically normal range, according to Freddie Mac’s latest housing index.

The Multi-Indicator Market Index now stands at a value of 81, indicating a national housing market that is on its outer range of stable activity. The MiMi has improved 6.17 percent year-over-year and has rebounded 37 percent since its all-time low in October 2010. Still, the index remains significantly off its high of 121.7.

The MiMi bases the stability of housing markets on home-purchase applications, payment-to-income ratios, proportion of on-time mortgage payments, and local employment. The states with the highest MiMi values are California, District of Columbia, Hawaii, Montana, North Dakota, and Utah. Forty-six of the 100 metro areas the MiMi analyzes also have values in the stable range, with Fresno, Calif.; Austin, Texas; Honolulu; Salt Lake City; and Los Angeles among the top performers.

“Nationally, all MiMi indicators are heading in the right direction for the second consecutive month and improving more than 6 percent from the same time last year,” says Len Kiefer, Freddie Mac’s deputy chief economist. “Florida has some of the most improving housing markets in the country, largely a reflection of more borrowers becoming current on their mortgage payments as the local employment picture improves and house prices rebound. The one area of the country that has been slow to respond has been the Northeast. However, we’ve started to see these housing markets turn around, especially in Pennsylvania, Connecticut, New Hampshire, Vermont, and Maine.”

Many markets in the Northeast are still weak, Kiefer says, but “they’re steadily trending in the right direction, and their pace of improvement is accelerating. Overall, the West remains especially strong, with many markets posting double-digit growth in their MiMi purchase-applications indicator compared to a year ago and helping to keep the country on pace for the best year of home sales since 2007.”

Source: Freddie Mac

In Winter, These Housing Markets Are Hot

In Winter, These Housing Markets Are Hot. Image courtesy of Claire Louise / FreeDigitalPhotos.net

As temperatures cool, many housing markets across the country also see a thaw in sales. In fact, 80 percent of U.S. counties see a slowdown in the time it takes to sell a home starting in September, according to realtor.com®. But a few markets buck that trend.

In some markets, the cold weather heats up home-buying, such as in Colorado’s San Miguel County, a locale nestled in the Rocky Mountains. Telluride, Colo., sees its median days on the market drop significantly after the fall season and the market usually has its fastest performance in December.

Other housing markets like Tucson, Ariz. in Pima County; Meagher County in Montana; and Catron County in New Mexico also tend to perform strongly in the winter months, according to a new analysis by realtor.com®.

In some of the nation’s hottest areas, the housing markets actually improve in the fall. For example, Arizona’s Yuma County – where temperatures hit an average high of 107 degrees Fahrenheit in July – sees its median days on the market increase in June and August.

Areas in Louisiana, Florida, and Georgia – where temperatures mostly remain mild throughout the year – also tend to see home sales perform strongly in the winter. In Baton Rouge, La., the prime home-buying season tends to kick off in September and lasts until November.

“It’s a function of how accommodating the weather is, rather than a straight relationship to temperature,” says Jonathan Smoke, realtor.com®’s chief economist. “Think about how half of the country can have severe winter weather, and how disruptive snow and ice are on real estate. You can’t see it, you can’t build, you can’t inspect, you can’t move.”

Severe weather can dampen the mood among buyers for real estate. In New York’s Onondaga County, homes tend to stay on the market twice as long in the winter as in the summer, according to realtor.com®.

Source: ‘Where to Find the Hottest Markets in the Coldest Months of the Year,’ realtor.com® (Sept. 21, 2015)