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Many Americans have embraced the investor role in real estate, hoping it will fund their future retirement. First-time investors are taking the strategy of buying foreclosed homes at super low rates and turning them into rental properties to increase cash-flow now and hopefully later too.

“The typical small-size mom-and-pop investor has two or three properties, looking at it as an income supplement with the possibility of being able to sell at some point when prices rise enough for them,” says Lawrence Yun, chief economist of the National Association of REALTORS®.

“I’d rather buy real estate than gamble on the stock market or get almost no return from putting my money in a bank,” Barton Wallace, a real estate investor who owns four rental properties in Hingham, Mass., told Reuters. “I don’t have any problem getting tenants.”

The rental market has been performing strongly: Average U.S. rents have soared, according to MPF Research. Meanwhile, the vacancy rate has dropped to a 10-year low.

To fund their purchase, these first-time investors are tapping retirement accounts and transferring their cash into self-directed Individual Retirement Accounts, which allow them to invest and then funnel the returns back into the accounts.

source:  Bloomberg


A popular child’s prayer states, “If I should die before I wake. . . .” As adults, humans tend to avoid the subject of death, particularly their own. A noted attorney, however, not only encourages Texans to contemplate their own mortality but says it’s necessary to ensure the related paperwork is in order.

“A little advance planning can save your loved ones unnecessary grief when you die, said Judon Fambrough, attorney with the Real Estate Center at Texas A&M University. “End-of-life decisions are best made before health and managerial problems arise.”

For decades, Fambrough has written about the consequences of dying without adequate paperwork to protect assets. His 1980 publication Texas Wills was one of the Center’s most popular reports ever. Today, he’s reminding people there are critical before-death documents, too.

“The time to decide how your assets and healthcare will be managed if you become incompetent or are unable to make your own decisions is now,” said Fambrough. “It’s not just for the elderly.”

“Let’s say you become incompetent at age 50 and still have assets that need to be managed. Your family will have to get a court-appointed guardian to make decisions on your behalf. That’s an expensive, time-consuming process that could be avoided with a durable power of attorney.”

Fambrough said there are five end-of-life documents everyone should consider:

  • powers of attorney,
  • living wills,
  • medical powers of attorney,
  • do not resuscitate (DNR) orders, and
  • anatomical gifts.

The attorney discusses all five in “Last ‘Writes’,” an article (publication No. 2055) in the January issue of Tierra Grande magazine, the Center’s quarterly periodical.

He also wrote an in-depth report, End-of-Life Documents, (No. 2044) also published in January. Not only does he describe the documents, but he includes sample forms for each.

“Everyone dies sooner or later, but there were nearly 80 million baby boomers born. They are, or soon will be, retired. I was thinking of them when writing these articles,” he said.

Fambrough’s articles answer such questions as: Before signing one of the documents, what options do you have?

Do you need a power of attorney?

Should it be durable?

What are the alternatives?

Who can make medical decisions on your behalf? What happens if you divorce the person you designate as your agent?

“The time to read about and understand the various death-related documents,” said Fambrough, “is before an attorney puts a form in front of you and says, ‘sign here.’”

source:  Texas Real Estate Center


The foreclosure picture continues to brighten, as the number of foreclosures dwindle across the country.

Foreclosure inventory dropped 27 percent in February while completed foreclosures fell by 15 percent year-over-year, according to CoreLogic’s National Foreclosure Report, released Tuesday. Even bigger: Foreclosures have plunged 67 percent from the peak reached in September 2010.

The number of mortgages in serious delinquency also has dropped – a good sign that foreclosures will continue to fall. Overall, delinquent mortgages dropped 19 percent in February year-over-year. About 4 percent of mortgages are now in serious delinquency (90 days or more past due).

"Fewer Americans are seriously delinquent in paying their mortgages, which in turn is reducing the foreclosure inventory across the country as a whole," says Anand Nallathambi, president and CEO of CoreLogic.

The foreclosure inventory represented 1.4 percent of all homes with a mortgage nationwide in February.

Still, "while the drop in the share of mortgages in foreclosure to 1.4 percent is a welcome sign of continued recovery in the housing market, the share remains more than double the 0.6 percent average foreclosure rate that we saw during 2000-2004,” says Frank Nothaft, chief economist at CoreLogic.

Five states alone accounted for nearly half of all completed foreclosures nationally in February. Those five states with the highest number of completed foreclosures for the 12 months ending in February 2015 were:

  1. Florida (110,000)
  2. Michigan (50,000)
  3. Texas (34,000)
  4. California (30,000)
  5. Georgia (28,000)

Meanwhile, the following states had the highest foreclosure inventory (as percentage of all mortgage homes):

  1. New Jersey: 5.3%
  2. New York: 4%
  3. Florida: 3.4%
  4. Hawaii: 2.8%
  5. District of Columbia: 2.6%

source:  CoreLogic February 2015 National Foreclosure Report


Buy land, advised Mark Twain; they’re not making it any more.

In fact, land is not really scarce: the entire population of America could fit into Texas with more than an acre for each household to enjoy. What drives prices skyward is a collision between rampant demand and limited supply in the great metropolises like London, Mumbai and New York. In the past ten years real prices in Hong Kong have risen by 150%. Residential property in Mayfair, in central London, can go for as much as £55,000 ($82,000) per square metre. A square mile of Manhattan residential property costs $16.5 billion.

Even in these great cities the scarcity is artificial. Regulatory limits on the height and density of buildings constrain supply and inflate prices. A recent analysis by academics at the London School of Economics estimates that land-use regulations in the West End of London inflate the price of office space by about 800%; in Milan and Paris the rules push up prices by around 300%. Most of the enormous value captured by landowners exists because it is well-nigh impossible to build new offices to compete those profits away.

The costs of this misfiring property market are huge, mainly because of their effects on individuals. High housing prices force workers towards cheaper but less productive places. According to one study, employment in the Bay Area around San Francisco would be about five times larger than it is but for tight limits on construction. Total up these costs in lost earnings and unrealised human potential, and the figures become dizzying. Lifting all the barriers to urban growth in America could raise the country’s GDP by between 6.5% and 13.5%, or by about $1 trillion-2 trillion.

It is difficult to think of many other policies that would yield anything like that.

Two possible solutions, better zoning and land taxes are easy to impose. But there are logistical hurdles, such as assessing the value of land with the property stripped out. The politics is harder still. But politically tricky problems are ten-a-penny. Few offer the people who solve them a trillion-dollar reward.



American’s thirst for smart home technology is growing, with more home owners seeking greater control of their home’s appliances, lighting, and systems. Indeed, more than 70 percent of about 2,000 adults recently surveyed say they wish they could just control something in their home from their mobile device, according to survey by Lowe's.

What do they most want to be able to do? The survey showed respondents wanted to be able to adjust the thermostat, turn on the lights, or start the coffee pot before they get out of bed.

Besides added convenience, 40 percent of adults surveyed say they believe a smarter home would help them trim costs and save money on their utility bills. Sixty-two percent said they find smart home systems are most beneficial for monitoring safety and security.

So with the technology pool in the smart home arena ever-expanding, what’s holding back adoption rates? 

The top considerations holding back respondents from purchasing such products were cost or fees (56 percent); ease of use (13 percent), and security (11 percent). Americans are more than twice as likely to prefer a do-it-yourself solution, without a monthly fee, over a professionally installed/monitored system with a monthly service fee, according to the survey.

“In general, Americans feel positively toward products that will make their homes safer, more energy efficient, and easier to manage,” says Kevin Meagher, Lowe’s vice president and general manager of Smart Home. Lowe’s offers Iris, a single user interface that allows home owners to control several aspects of their home from connected devices. “People want DIY solutions that are simple and affordable,” Meagher said about the survey results.

source:  Lowe’s


Nearly one-third of new construction projects in the United States qualify as "green," up from 2 percent nine years ago, according to McGraw-Hill Construction.

The green category is obtained by becoming LEED-certified.

LEED, which stands for Leadership in Energy and Environmental Design, is the building rating system developed by the U.S. Green Building Council in 1998 to encourage environmental awareness. Becoming certified can add almost 4.7 percent to the cost of a project, according to studies by the University of Michigan.

For more information on rising LEED certifications in Texas see "LEEDing the Way to a Greener Future."

source:  Realtor Magazine



The decision on whether to renovate or relocate in retirement can be complex and emotional. A recent report revealed that as people edge towards retirement age, the more they value the emotional connection to their home rather than the financial value.

The Merrill Lynch and Age Wave report asked 3,600 people if they planned to stay in their homes after retirement. 36 percent of those surveyed said that they would. Most respondents planned to stay put because they felt a strong connection to their home and their neighborhood, and had relatives and friends living in the area. This echoes a recent report from Bankrate that showed as people approach retirement age, they become less enthusiastic about relocating.

Reports have shown a lack of affordable housing options for baby boomers, and a lack of overall housing inventory remains a problem in many areas of the country. These factors, paired with an emotional attachment to a home, means many close to retirement age are choosing to stay put and renovate their homes. The remodeling industry is seeing an increase in business, though many nearing retirement age are choosing to focus on small remodeling projects.

Still, the decision to remodel can be stressful and emotional, so experts suggest a disciplined approach.

"Write down your wish list," says Kevin Anundson, president of the National Association of the Remodeling Industry. "Decide how much you want to spend and see how far down [on the list] you can get. Pretend like you've got all the money in the world," he adds. "How would you change your house? That really frees up the mental limits you put on yourself."

After meeting with remodeling experts, architects, real estate pros, and financial advisors, these remodeling guidelines should be considered:

  • Think about how long you plan to stay in the home and spend the money that's comfortable to continue to enjoy living there.
  • Consider the potential consequences of the remodeling plan, so remodelers don't have to go back and fix previous jobs.
  • Talk to a local real estate professional who knows the neighborhood and can advise on features that are currently in demand for potential buyers.
  • Focus on features that will improve the curb appeal and the overall value of the home.

source:  New York Times and REALTOR® Magazine Daily News


Home prices can influence a home owner's child's future income, according to a new study by the Federal Reserve Bank of Boston.

Researchers found that when households included a 17-year-old, they saw a 1 percent rise in home prices that year that led to about 0.9 percent higher annual income for that child later in life if the parents owned the home, according to the study published in the Journal of Urban Economics. On the other hand, if the parents were renters, a 1 percent rise in home prices resulted in 1.5 percent lower annual income for the child.

"If home prices are rising, parents who are home owners may have additional resources to finance a child's higher education, either because they feel richer or they can borrow against the home’s equity," Maria Jose Luengo-Prado, a senior economist at the Federal Reserve Bank of Boston, says about the report. "This may allow their children to attend college or attend a higher-ranked [more expensive] school. On the other hand, the effect of rising house prices for parents who are renters is the opposite. Rising housing prices often mean higher housing costs. Rents go up. They may also need to save more money for a down payment to buy a house in the future."

source:  Wall Street Journal


An aging population will be the leading issue defining real estate for the next ten to 30 years, according to the Counselors of Real Estate (CRE).

When asked to identify the top issues that will define the industry in coming decades, the counselors listed issues with strong interrelationships and that were common across industries:

  1. Aging population
  2. Funding public employee retirement systems
  3. Student debt burdens
  4. Infrastructure funding and U.S. competitiveness
  5. Changing office and retail demand
  6. Real estate capital markets liquidity
  7. Global change and uncertainty
  8. Integration of sustainability
  9. Low cap rates
  10. Civil discord and political gridlock

"The aging of the population will broadly and dramatically affect the real estate markets from housing, retail sales, health care, and the myriad of factors that define the success of different geographic areas," said a CRE news release. " Aging will most directly affect the demand for real estate but will have scores of less direct impacts, such as potential capital impacts, as the pensioners by the scores of millions move from being net contributors to net users of capital."

source:  Counselors of Real Estate


Not all home improvements are created equal. Even in a seller’s market, it’s important that you make the right investments that will yield higher returns. Here are the top 10 home improvement myths so you can stop believing in them.

1. Any remodeling project will add value to your home.

While many remodeling projects will add value to a home, some can be seen as a negative by future buyers. For instance, combining two smaller bedrooms to create one larger bedroom may better fit one homeowner’s lifestyle today, but it may cause the home to lose value in the eyes of a future buyer who needs the two separate rooms.

2. Buying the highest-quality materials attracts more buyers.

Installing high-end materials may seem like a wise decision, but it can backfire. For instance, using the most expensive tile in a bathroom may create an impressive appearance, but value-conscious buyers may opt for a more affordable home if the seller has over-improved compared to others in the neighborhood.

3. Adding square footage always adds value.

A better way to think about this statement is to insert the word useable into the sentence. Finished attics and basements – even if considered liveable by local standards – may not be attractive to a buyer if they are not finished to the same standards as the rest of the home.

4. Colors and textures – safe and simple is better.

Keeping a home “vanilla” so buyers can choose their own style and décor might be a safe bet, but it ignores the fact that most buyers just don’t have the ability to visualize the home differently. Without splashes of color and mixtures of texture, sellers can lose value to others that have taken the time to consult with an interior designer.

5. Inside improvements are better than outside improvements.

Not necessarily. If a home’s exterior has been neglected or doesn’t offer a good curb appeal, a buyer might stop there – and then the seller’s efforts on on the inside may not net them any more dollars. To get the biggest bang for their remodeling buck, sellers should start from the outside and work their way in.

6. Adding a bedroom is better than adding a bathroom.

It depends on the starting point. If a seller only has one or two bedrooms to start with, adding a bedroom before adding a second bath is probably a wise choice since most buyers are more attracted to three-bedroom homes. On the other hand, if the home already has three bedrooms and only one bath, the sellers’s next investment should probably be in a new bathroom.

7. Paint hides a multitude of sins.

Dry rot? Fungus damage? Mold problems? Carpenter ants? Termite issues? Nothing a can of paint can’t fix, right? Wrong! Not only does this practice violate disclosure laws in most states, it can set sellers up for liability after the sale, as most buyers will want the sellers to foot the bill for these hidden issues.

8. Converting a garage to living space is a great trade-off.

Nope. A garage conversion is almost always viewed negatively by future home buyers unless the sellers replace the lost garage with another parking and storage space of equal size.

9. Sellers can save money by doing improvements themselves.

For some homeowners, wiring a new lighting fixture or plumbing a new dishwasher is a no-brainer, but for others it may end up costing more later if they have to have the work redone by a professional. Another consideration is local and state laws regarding remodeling work: In many states if a buyer has purchased a home to remodel and resell, they must either hold a contractor’s license or hire a contractor to do the work for them.

10. Pools add value to your home.

This is only true in areas where pools are must-have amenities. In most areas of the country, pools have more limited appeal – and the idea of maintaining a pool for ten months out of the year when it can’t be enjoyed won’t appeal to most buyers.

Knowing these top home-improvement myths will allow you to help your seller clients choose the right remodeling projects. But don’t stop there. To keep your pulse on the amenities that are coveted most in your market, talk to local remodeling professionals, contractors, and home-improvement specialists on a regular basis.