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2010: The Year of the First-Time Buyer?

According to the Chinese calendar, 2010 is the Year of the Tiger. But in real estate, 2010 may come to be known as the “Year of the First-Time Home Buyer.”

Mark Zandi, chief economist at Moody's Economy.com, says there will be 1.84 million homes sold to first-time home buyers in 2010, compared with 1.73 million in 2009.

These buyers will invariably make some mistakes that they will come to regret a few years down the road, some experts say, including failing to use a real estate professional to help them manage the transaction.

Real estate professionals have the time and the knowledge to sift through thousands of listings, creating market analyses to judge pricing and other key features, points out Ray Boss Jr., a practitioner with RE/MAX Realty Group in Maryland.

"I would want someone who is going to look out for my interests first and foremost," says Boss. "Someone who knows the contracts, who has experience negotiating, and who can walk me through the entire process smoothly — step by step — and make sure I get the house that's right for me."

Source: U.S. News & World Report, Kimberly Castro (02/18/2010)

RISMEDIA, February 13, 2010—The Alliance to Save Energy offers the following no-cost/low-cost energy efficiency tips for homeowners across the country who are looking to reduce their home heating costs while maintaining comfort.

Conduct a “draft check.” Your heating dollars could be going out your windows, doors and electrical outlets. Check for air leaks throughout your home; check around doors, windows, fixtures, electrical outlets, wiring, plumbing and fireplace dampers. Draft-proofing is the least expensive energy efficiency investment with the biggest payoff.

Plug those air leaks. Seal leaks between doors or windows and their frames with weather stripping and between window frames and walls with sealant or caulk.

Install door sweeps on the insides of exterior doors. Cold air can seep in under doors. Solution: Door sweeps are cheap and keep the draft out. No sweeps available? Even a rolled up towel or blanket will help. And consider twin or dual draft guards on both sides of doors where you feel drafts.

Open curtains and other window treatments on your west- and south-facing windows during the day to allow sunlight to naturally heat your home, and close them at night to make it harder for warm air to escape. If you are purchasing new drapes, consider an insulated lining, which reduces both heating and cooling bills.

Freezing by your windows? If that’s the case, and you’ve already plugged window leaks and can’t afford new high-efficiency windows, consider purchasing a kit containing sheets of plastic film to tape over the insides of your windows. Use a hair dryer to create a tight fit.

Consider insulating drafty electrical outlets. Use light switch foam insulation pads and wall jack foam insulation pads on outlets on colder exterior walls.

You’re not in the South Seas. Don’t turn up the heat so high that you can be comfortable dressed in a T-shirt and going barefoot. Even when indoors, dress for winter weather and layer clothing so that you can keep the thermostat at a reasonable yet comfortable temperature. It’s a good time to wear those sweaters you received as holiday gifts.

Consider a space heater for the room where you spend a lot of time. But keep in mind that this makes sense from an energy standpoint only if you reduce heating in other rooms.

Keep furnace filters clean. Check and change your filter every month during heavy-use winter months to assist air flow, so your system doesn’t have to work harder to keep you warm.

Seal your heating and cooling ducts. In a typical house with a forced air system, about 20% of the air that moves through the duct system is lost due to leaks, holes and poorly connected ducts. Sealing and insulating ducts increases their efficiency, lowers home energy bills and can often pay for itself in energy savings. Insulate ducts in unheated areas such as attics, crawlspaces and garages with duct insulation that carries an R-value of 6 or higher. Also, a well-designed and sealed duct system may make it possible to downsize to a smaller, less costly heating and cooling system that will provide better dehumidification.

Let a programmable thermostat “remember for you” to lower the heat while your home is empty and/or overnight to reduce heating costs by up to 10%- and allow you to come home and wake up to a toasty, comfortable house.

For more information, visit www.ase.org.

Short-Sale Incentives Start April 5th

Potential buyers of short-sale homes might consider waiting until April 5th before making a formal offer.

That’s the date the federal government will begin offering lenders financial incentives to hasten the process. Under the new rules, banks will seek a BPO before the property is listed for sale and let the sellers know a minimum number they are willing to accept. If the sellers bring a buyer with a good offer, the lender must accept it within 10 days.

Not all sellers are eligible for the program, dubbed the Home Affordable Foreclosure Alternatives (HAFA), but enough are that it is probably worth waiting.

Source: The Wall Street Journal, June Fletcher (03/19/2010)

RISMEDIA, February 11, 2010—(MCT)—Frugality. That’s been the buzzword of the Great Recession. Sliding home values, stumbling stock portfolios and a shaky job market brought with them a consciousness about spending that many of us misplaced during years of consumer overindulgence. Americans responded to the crisis by buying less, clipping coupons more and increasing savings to 4.8% of disposable income in December 2009, up from near zero before the recession.

In the past year, blogs about frugality went viral. Everyone from Oprah to President Barack Obama joined the frugality parade. Now a new term is marching through the blogosphere: frugality fatigue. But I’d argue that if frugality is done right, there should be no such thing.

Being frugal doesn’t mean being stingy, miserly or downright cheap. The true spirit of frugality is to be mindful of how you use your limited resources. To be prudent with your money. To buy the best of what you need but no more. To avoid waste.

That’s why the new frugality aligns so well with the growing interest in living green, argues American Public Media’s economics expert Chris Farrell in his new book, The New Frugality. “A sustainable sensibility both saves money and does good,” writes Farrell, who also writes a column for the Star Tribune.

The new frugality also means embracing a “margin of safety” in your money life, he says. Spend less than you make. Have months’ worth of salary set aside in a savings account. Never charge anything you can’t afford to pay off at month’s end. That’s the new frugality.

But even more than smart saving and spending, to me the new frugality is freedom. By saving money and keeping life simple, a job loss or a drop in income doesn’t create an immediate catastrophe. Low expenses mean having the freedom to take a needed break after a layoff, or to choose a job with more than compensation in mind. The fewer expenses you have, the more you can spend on things that matter to you—family, hobbies, charitable causes.

I was taught early to manage credit, and I inherited a deal-seeking gene from my father. I hate waste. I hate clutter even more. My family deliberately keeps expenses low. We’re staying in our 1,400-square-foot house with three kids and a big dog because it’s close to our workplaces and we could afford the mortgage on one income, with some sacrifice. A bigger house would mean a bigger mortgage payment, more electricity to heat it, more stuff to fill it. Upsizing would probably move us farther from our jobs, making it harder to remain a one-car family. Longer commutes and higher expenses would translate into less time spent with our children and fewer family vacations. Keeping our footprint smaller is good not only for our family, and for the environment, but also for the community because we can donate more to organizations who are doing good work in Haiti or feeding the hungry here in town.

Living a frugal life is a work in progress, filled with compromise and contradiction.

Coming of age in a keeping-up-with-the-Joneses era, it can be hard to shun super-sizing for sustainability. I spend hours per month poking through real estate listings because I still can’t quash my dream of a Brady Bunch house on a super-sized lot, even though I know staying put is a good choice—even with the $6,500 repeat home buyer tax incentive.

I occasionally confuse frugal with cheap. And too much focus on saving money can mean wasting another finite resource: time.

I know living this way is impossible for some. It’s hard to raise a family on a single income these days. Many people are locked into high expenses, and most won’t walk away from an overpriced mortgage, even if it eats up most of their paycheck. But if you can afford to live frugally, the troubles of others in recent years make it crystal-clear that living frugally is a smart choice.

(c) 2010, Star Tribune (Minneapolis)

Distributed by McClatchy-Tribune Information Services.

World's Most Beautiful Cities

Choosing the world’s most beautiful cities is a subjective enterprise. To identify urban areas where the architecture and the locale are both stunning, Forbes magazine turned to world-renowned architects. Here are their top choices:

• Paris
• Vancouver, Canada
• Sydney, Australia
• Florence, Italy
• Cape Town, South Africa
• San Francisco
• Chicago
• New York City
• London
• Cambridge, England
• Tokyo

Source: Forbes, Tim Kiladze (01/22/2010)

Secure a Lender Quickly for Tax Credit

Home buyers who are eager to close the deal before the tax credit expires should be prepared to deal only with lenders who will respond to the need for speed.

Even buyers without A-plus credit should be able to get a loan. "If you go to enough lenders, you can typically get a loan even with a low credit score. The terms, of course, are not as attractive," says Spencer Rascoff, chief operating officer of Zillow.com.

Another possibility is to propose a lease-purchase deal or land contract to the seller. If the deal is structured properly, both buyer and seller could walk away winners.

Source: CNNMoney.com, Jean Chatzky (02/15/2010)

RISMEDIA, January 28, 2010—(MCT)—New-home buyers responded to the tough times in 2009 by opting for smaller houses, driving down the average size of a house built in the United States for the first time in 27 years.

Data recently released by the National Association of Home Builders (NAHB) found the average size of a new home that was completed in 2009 fell to 2,480 square feet from 2,520 square feet in 2008. The last time the average completed-home size fell by a statistically significant amount was 1982.

“You’ve heard the mantra ‘downsize me’ and ’small is the new big?’ Well, last year was definitely a downer,” said Carol Lavender, president of Lavender Design Group, a residential design firm in San Antonio, Texas.

Homeowners surveyed by Better Homes and Gardens magazine said downsizing was becoming a bigger priority: 36% said in November 2009 that they expected their next home to be “somewhat smaller” or “much smaller” than their current home versus 32% who said that in 2008. “Not surprisingly, we see a ‘cents and sensibility’ approach when it comes to buying or improving a home, with practicality and price being the top priorities,” said Eliot Nusbaum, the magazine’s executive editor of home design.

While the small-house movement in the United States has been gaining steam for a number of years, the recession has accelerated it and home builders have responded.

“The era of easy money is over. You really have to think before you go out and decide you need that five-bedroom, five-bath home,” said Rose Quint, the NAHB’s assistant vice president for survey research. “Couple that with the energy cost concerns of consumers today and I think we will continue this trend. Houses will not shrink drastically, but they will shrink.”

Although actual square footage of homes didn’t fall until 2009, the percent of homes with four or more bedrooms in them has been falling since 2007, NAHB data show. And in 2009, the number of homes with three or more bathrooms fell for the first time since 1992.

Two other trends in home construction are contributing to the declining square footages: The prominence of first-time buyers in the housing market and the increasing number of households with members 55 and older who are buying homes.

First-time buyers, driven into the market in good part by the availability of an $8,000 tax credit, are more likely to compromise on home size in exchange for a lower price. And the 55-plus crowd tends to purchase single-story homes, which generally are smaller because of the land costs that favor the more-efficient two-story plans.

“Barely over half of new homes today are built with two stories or more,” Quint said. Two-story homes peaked at about 55% of the market in 2006. For 2010, home builders say they will focus on lower-priced models and smaller homes. More than 95% of builders surveyed by NAHB in January said that was the way they saw their business evolving this year.

The penchant for smaller homes will necessitate some design changes. Builders, attempting to respond to those consumer demands as well as hold the line on prices, told the NAHB surveyors that they were most likely to include these features as standard in their houses this year:

-Walk-in closets in the master bedroom.
-Laundry rooms.
-Insulated front doors.
-Great rooms.
-Energy-efficient windows.
-Linen closets.
-Programmable thermostats.
-Energy-efficient appliances and lighting.
-Separate shower and tub in master bathrooms.
-Nine-foot ceilings on the first floor.

Among the things that builders said they were least likely to add to houses in 2010:

-Outdoor kitchens.
-Outdoor fireplaces.
-Sunrooms.
-Butler’s pantries.
-Media rooms.
-Desks in kitchens.
-Two-story foyers.
-Eight foot ceilings on the first floor.
-Multiple shower heads in the master bath.
-Smaller kitchens.

“You can see that builders are concentrating heavily on energy-saving features,” Quint said. “But a lot of the luxury items are on the chopping block or on hold as builders try to lower costs.”

(c) 2010, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.