Category Archives: Real Estate Market Trend

A Continuing Shortfall of Homes

We can only get to an ideal market with an uptick in new construction.

Unfinished New Construction Framing

The first half of the year looked strong, with home sales and prices rising moderately on top of the gains experienced in 2015. Though prices will continue to rise, sales in the second half face more challenges. That’s because too few homes are available to keep up with demand. Total inventory on a year-over-year basis fell 6 percent in July, the 16th consecutive monthly decline. The supply level hit 4.7 months. In contrast, when home prices were falling several years ago, the supply hovered between 10 and 12 months.

The most recent housing crisis was the result of a collapse in demand, which led to depressed home prices and rising foreclosures. The next housing “crisis” will be due to a collapse in supply.

As employment strengthens, more households would like to buy, but there aren’t enough homes for sale. Home prices are rising at a higher rate than incomes are growing. While income has ticked up a percentage point or two, home prices have been growing by 5 or 6 percent a year. That in turn is creating an affordability crisis. Somewhat paradoxically, the home ownership rate—at 63.5 percent of households—is at a 50-year low even though mortgage rates, at about 3.5 percent, are also at their lowest level over the same time period.

Looking ahead, new-home sales will rise in the second half of the year as builders boost construction. We expect between 700,000 and 800,000 single-family starts in the year ahead. That’s a marked improvement from just a few years ago, when housing starts were a fraction of the historical norm. Still, we need about 1.5 million starts annually because of the country’s expanding population. In the meantime, affordability issues will likely hurt existing-home sales. That’s even more likely to be the case if interest rates start edging up. Only when supply reaches closer to six months—our definition of a balanced market—will we see the best of all worlds: rising new-home sales, rising existing-home sales, rising home prices, and a rising home ownership rate.

Credit to Lawrence Yun
Chief Economist and Senior Vice President of Research at the National Association of REALTORS®
homes for rent, homes for sale,
homes for rent, homes for sale, newstarrealty.com
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Why the Word ‘Green’ Doesn’t Really Matter

Just as real estate professionals are struggling to understand what defines advances in efficiency and smart-home technology, appraisers are also working to help define and quantify what this trend means for home sales now and in the near future.

eco1

Today, more and more homes are being built or retrofitted as “green” or “high-performance” properties. But what exactly qualifies a home as truly green, and how are these new features recognized in the marketplace? Real estate professionals, appraisers, and even some home owners are asking these questions, and The Appraisal Foundation is attempting to answer them as part of a five-year partnership with the U.S. Department of Energy.

What Exactly Is a Green Home?

Simply put, a green or high-performance home is one designed to use less energy or water or improve indoor air quality. However, just because a home has new windows or low-flow water features doesn’t make it automatically “green” or “high-performance.” Such descriptors are usually reserved for properties that have a combination of a wide variety of features.

The spectrum of energy-efficient characteristics a home may possess can make the appraisal process complicated. A number of rating and certification systems have emerged in recent years that can help identify these types of properties. However, ratings can’t catch everything; most residential properties currently have green or high-performance elements that haven’t been documented by such programs and therefore may be difficult to identify. This makes a real estate professional’s communication with an appraiser even more vital in such transactions.

For homes with green or high-performance features, appraisers need to answer more than just the simplistic question of whether they are green or high-performance homes. They want to understand the features that make it green or efficient. They also need to know how green the property is relative to what buyers in this particular marketplace are expecting.

This is why the actual terms “green” and “high performance” are not the most important concern. Instead, the appraiser’s job is to note the features a property has, understand how the market values those features, and determine whether those features have any particular relevance to their appraisal assignment.

echo house metaphor made in 3d software

How Do Appraisers Recognize These Features?

Appraisers might identify the high-performance features of a property through a wide variety of sources: the review of building plans and specifications, permits, MLS information, and interviews with property owners and occupants, among others. Appraisers may also observe green features first-hand when inspecting a property. They might also look at third-party sources, including ratings and certifications from Energy Star (administered by EPA), LEED (from the U.S. Green Building Council), and HERS (conveyed by Residential Energy Services Network professionals).

One major challenge for appraisers in this situation is the lack of verifiable data about energy efficiency. Although the fundamental appraisal process is no different for a green home, many MLSs and other data sources were designed a long time ago, before there was a way to convey accurate or complete information regarding a home’s energy-efficient features. However, because green homes have become more prominent in recent years, many MLSs are updating their systems to ensure this type of information is being captured and accurately reported. Appraisers all around the country are working with agents and brokers in an attempt to identify the type and extent of data that will help facilitate smooth transactions.

In the interim, this challenge for the appraiser may offer an excellent opportunity for the real estate professional. Providing crucial information about a property that might otherwise be unavailable to the appraiser may not only assist in facilitating the immediate transaction, but could also pay future dividends by helping to create more informed and knowledgeable appraisers and a more complete MLS database.

Does Green Mean Dollars?

While a home with photovoltaic solar electricity might be at the top of some buyers’ wish lists, others may not be quite as enamored. In some markets green homes are all the rage, while others may be quite tepid about such upgrades.

But that’s the way it is with many other home features, and it’s important that appraisers can recognize and account for them properly in order to develop credible opinions about value. At the end of the day, it’s the buyers and sellers who determine how much any particular feature contributes to a home’s value. For a successful transaction, it’s important that the appraiser and real estate professional are on the same page with consumers.

 

Credit to David S. Bunton
President of The Appraisal Foundation

Mr. Bunton has served as the senior staff member of The Appraisal Foundation since May of 1990. As President, he is the chief executive officer of the Foundation. Prior to joining The Appraisal Foundation, he served as the Vice President of Government Affairs and Communications for the Federal Asset Disposition Association. He also previously served as a legislative assistant in the U.S. Senate for eight years and was a Congressional Chief of Staff in the House of Representatives for four years. Mr. Bunton holds a BA degree in Government and Politics from the University of Maryland.

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5 Ways to Green Up Your Business

green

Go green and you’ll see more green. Taking measures to make your brokerage more resource conscious and sustainable will result in positive results for your body, your company, and your community. Check out these simple actions we took at my brokerage, TrailRidge Realty in Boulder, Colo., and you’ll see how easy it can be to start implementing a green plan at your office today.

1. Go Digital
What to limit paper waste? There are so many digital platforms available today for document storage that keeping paper files in the office seems like the work of ancient times. Most systems include backup, encryption, and two-step verification for security. Our office uses Google Apps for Work, which provides built-in security to keep out unwanted hackers. We are also subscribe to Google Vault, which automatically backs up all the files my brokerage has stored in Google Drive as well as all company e-mails for up to 10 years. Not only does that protect us against hackers and computer or server malfunctions, but if we accidently delete something important, we can pull it from “the Vault.” Everything is saved in the cloud for longer than we would ever need, and it only costs each user in our office $10 per month. It’s a great service to offer your agents, a huge time saver, and it keeps the cost of paper and printing to a minimum. We no longer have the need for a mega printer that requires a costly maintenance plan.

2. Be Smarter About Property Brochures
While we’re cutting down on paper, let’s examine why we think buyers and sellers want it so much. Agents typically place brochures inside sellers’ homes and on for-sale signs outside. These documents are always the last thing to be replenished, and if there is a price reduction, it can be the devil’s work to remember to make updates – and that leaves the seller feeling their listing is being neglected. The simple solution is to ditch the stack of brochures in favor of just one piece that displays the property website and an invitation to text or e-mail for more information. We usually place a laminated brochure on the for-sale sign in front of the property, and another inside for showings and open houses. We use TrustyText and create a distinct text code for inside the house and a different code outside. That way we can guess if the person requesting information has an agent (inside the house) or is a passerby outside reading the sign who may need an agent. This method helps make sure buyers get the most up-to-date information, sellers aren’t sitting around waiting for replacement brochures, and our company is able to respond accordingly to potential client requests.

3. Turn Off Your Computer
Optimize those computer settings. No machine needs to be left on while you or your agents run out to show a house or see a client. But that doesn’t mean you’ll remember to turn it off before you leave. Check the energy-saving settings to make sure your computer turns fully off after a certain amount of time without use. When printers and computers are on standby they continue to draw power. Consider using a power strip for all devices, including the computer, cell phone charger, speakers, etc. That way you can switch off the power strip without unplugging everything, ensuring that no extra power is being consumed while you are away.

4. Don’t Let Single-Use Coffee Pods Take Over the World
It’s been reported that almost one in three American homes now has a pod-based coffee maker. Imagine how that statistic might increase if we add in all the real estate offices that use these single-cup machines. Reports say that more than 3 million disposable coffee pods are used daily. Let’s just imagine what that does to landfills. And most people don’t think about where those plastic pods are made. A quick Google search showed me that the coffee might be placed inside the receptacle here in America, but the plastic mold is likely made overseas. That’s a lot of traveling and even more energy wasted so that we can make one single cup of coffee. Leading the way, Hamburg, Germany has banned single-use coffee pods from government buildings. Let’s follow their example in our real estate businesses and homes. Please, brew drip coffee in your offices and encourage your agents to bring in reusable mugs. Better yet, give them all company-branded travel mugs so they can take their coffee (and your logo) into the field.

5. Can You Walk To Work?
Even though environmentalists suggest that working from home is the greenest alternative to a commute, I know this isn’t possible for many real estate professionals. While it works for some, I can say that my level of success doesn’t happen working at home. I operate an office in the heart of our community and neighborhood – I also chose a location for TrailRidge Realty that’s close enough to home so that I can walk to the office. At first I thought it might disrupt my day if a client called and needed to see a house while I was walking to or from the office. However, I find that it takes about 20 minutes total to walk home and get my car if needed, which is easily factored into my commute. I’m reducing my carbon footprint, spending less on gas, and burning more calories all at once.

 

Credit to Leanne Goff

Leanne Goff is the broker-owner of  TrailRidge Realtyin Boulder, Colo. She was named Distinguished REALTOR® in 2015 and given the President’s Award in 2013 by the Boulder Area REALTOR® Association. Leanne also completed her master’s degree in real estate through REALTOR® University in 2016.

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