HOME WITH A VIEW? WHAT’S IT WORTH TO YOU

#HomeWithAView #HouseWithAView #RealEstate #HomePrices
The three most important things to consider when buying real estate, as the axiom goes, are location, location and location.
A house with a view of mountains, water, city lights etc., though everyone would like to have one, comes with a price.
Marilyn Lewis discussed this in an article for Nedwallet.com. It was also published in the April 16, 2018, edition of The Atlanta Journal-Constitution.
“Views are actually really difficult to quantify,” Lewis quotes Andy Krause, principal data scientist at Greenfield Advisors, a real estate research company.
A view is somewhat subjective, Lewis quotes Krause. There are, for example, lake “view” locations, which are different from, lake “front” locations. They also come at different prices.
There are city view locations, vs. panoramic city view locations, which allow you to see different parts of the city from every window in the house.
Then, there are views from different places. In Manhattan, a place that overlooks green space, say Central Park, costs much more than a green-space view in the countryside, Lewis quotes Mauricio Rodriguez, a real estate expert who chairs the finance department at Texas Christian University’s Neeley School of Business.
So, pricing a view is the difficult part. Here’s what Lewis attributes to Krause’s automated valuation models:
• Add 5 to 10 percent for a home on flat ground, with an unobstructed view of an open space or a park. If an identical home is worth $500,000 elsewhere in Seattle, this view could boost the price to $525,000 to $550,000.
• Add 10 to 30 percent for a home part way up a hill with a partially obstructed water view over neighbors’ rooftops. The degree of obstruction will vary the price.
• Add 30 to 50 percent if the above view is unobstructed.
• Add 50 to 75 percent for a hilltop home with an unobstructed cityscape or open-space vista.
• Add 75 to 100 percent for an unobstructed big-lake or ocean view.

In short, you have to decide, when buying a house, how much you are willing to pay for a view, particularly in expensive housing markets.
Also, if you have a location with a view, you need to find out whether that view is protected, the article says. In other words, if someone will one day be allowed to build something in front of you that will obstruct, or obliterate, your view, that’s worth less than a view that is protected.
The article also advises homebuyers to look for bargains, like a house in which a wall covers a nice view, or adding a deck to take advantage of the view. Those can be fixed with a remodel that will cost you less than the new value of your house.
All this comes down to money. We all want a nice view, but many are not willing to pay for it. Perhaps, instead of settling for less than you want, you need to find a way to make more money. There are many ways out there to do that, without interfering greatly with what you are doing now. To check out one of the best such vehicles, message me.
Regardless of what your situation is, if you are looking for a home, know how much you can reasonably afford. Also, look for homes in nice locations or neighborhoods, even without great views.
Remember, too, that a house is a house. A home is what you make it.
Peter

ECONOMY AFFECTS MILLENNIALS’ HOMEOWNERSHIP

#HomeBuying #homeownership #millennials #RealEstate
Contrary to what one might think, millennials actually want to buy houses.
But, the economy is stopping them from doing so, in significant numbers.
As with previous generations, they believe owning is better than renting.
“We’re wasting money where we are right now,” said Chris Eidam, 27, who lives with his girlfriend near Bridgeport, Conn. “We just take our rent and we throw it away. That money doesn’t go to anything,” said Eidam, who was quoted in an article on the subject buy Agnel Philip for Bloomberg News. It was also published in the Jan. 1, 2018, edition of The Atlanta Journal-Constitution.
The article points out that stagnating wages, rising housing costs and lack of supply are hindering first-time home buyers.
Still, the article says, for two straight quarters, homeownership rate among those 35 and younger has increased.
But, these are not their parents’ times. Decades ago, a lender would look at a young person that had a steady job, figure out what payments they could afford and determine whether they could buy a certain house. The lenders actually bet on a person’s good name and reputation and loaned them the money.
Today, lending restrictions are stricter. Buyers, sellers and real estate agents, too, have to hope that the agreed upon price meets the lender’s appraisal. Often, the appraisal comes in less than the agreed-upon price, prompting sellers to back out of the deal. Lenders have encouraged appraisers to be strict, to come in less than the fair market value.
Secondly, today’s young folks don’t have the job security that their parents often did. If their parents worked at, say, the local phone company, and had a decent wage, the lender could look at that as an income unlikely to go away. Today, no job is “secure,” and paychecks could dry up just like that. Lenders don’t really want to own real estate and, during the recession, that real estate often came back to lenders worth less than the money owed. Some of that can be blamed on homeowners playing fast and loose with home equity, but that’s another story.
In the overall scheme of life, stricter lending standards may be a good thing. But to those wanting to buy their first home, they are a detriment.
Lending standards have relaxed some in recent times, the article says, but younger folks are carrying record levels of student debt and can struggle to qualify, according to the article.
Home building today is also geared more toward high-end homes, and away from so-called starter homes, the article says.
Still, the experts, according to the article, believe the home-buying market among millennials will equal, or come close to, that of their parents decades ago, the article quotes Ralph McLaughlin, chief economist at Trulia.
So what is a young person, or young couple, that wants to buy a home, to do? First, figure out what you can afford. Don’t expect your first house to be perfect, especially, as the article points out, if you expect to change jobs, or move away from your location. You can always trade up, or remodel, later.
If your income, debt load etc. is making home buying difficult, look for a vehicle that can augment your income by devoting a few, part-time, off-work hours a week. There are many, non W-2 vehicles out there to do that. To check out one of the best, message me.
Finally, if you see a house you can afford, and you are reasonably happy with the location, overlook any cosmetic deficiencies. You can fix those eventually with time, patience and elbow grease. Remember, too, that perfect houses, like perfect people, don’t exist. Every house will have something about it you don’t like. Don’t dismiss good deals out of hand over something you can ultimately fix.
Remember, too, that homeownership is not for everyone. It may have been part of the American Dream, but it’s no sin not to own. Owning your own home comes with great responsibility. If you don’t want or need that, rent, and invest in other things. In short, do the math, figure out the kind of life you want and proceed accordingly.
Peter

HOW MUCH HOUSE SHOULD YOU BUY?

#housing #RealEstate #OverHoused
Buying a house is never easy, unless you are, say, an investor paying cash.
Most homebuyers need a mortgage, and getting qualified for one is a process.
Peter Dunn, a financial planner, says many people are “over-housed.” It’s a concept of paying too much money for housing, in relation to one’s income. In some areas, housing prices are over the top, and one cannot help paying too much for a house.
But some over-housing is self-inflicted, Dunn says. He wrote about over-housing in a column in the Jan. 18, 2016, edition of USA Today.
He cites the example of Mark and Jennifer, a Midwestern couple in their mid-40s, who decided 11 years ago to build their “family home.”
Mark and Jennifer knew they were pushing the limit of what they could afford, but the bank approved them for a loan. That gave them reassurance, Dunn writes.
“Things spiraled out of control from there,” Dunn quotes Jennifer.
When housing bubbles burst, it’s the over-housed folks who get slammed first. Are you over-housed? Here are Dunn’s pitfalls: if you’ve dumped everything into a house, and have no emergency fund, you could be in trouble. There are also the realities of increased utility costs, home maintenance, homeowners insurance, property taxes etc. If you didn’t budget for those increases, you could be in trouble.
Mark and Jennifer’s home was 2,000 square feet bigger than their previous home. Their utility costs were much higher and, after two homeowners insurance claims, their premiums went through the roof, Dunn writes. Their tax assessment was based on the value of the land alone. When the structure was added, their tax bill tripled, Dunn writes.
Worse yet, the couple hasn’t saved a dime for the future, Dunn writes. If you’ve given up vacations, new clothes and dining out to live in your new home, you are probably OK, Dunn writes. If you’ve given up your current and future stability, you’re in trouble, he says.
Dunn’s rule of thumb: don’t let the bank tell you how much house you can afford. Being house-rich and cash-poor is not a good situation, especially if housing values plummet, as they did in 2008. Your house is a significant investment, but don’t rely on the equity in it to secure your future. You need to be saving and investing regularly.
The folks who have a comfortable retirement are those who lived BELOW their means, and socked money away. If you buy or build a house, make sure your mortgage payment and other expenses leave a portion of your paycheck left over to save and invest.
Taking vacations and dining out occasionally are nice, too, but saving and investing for retirement are a priority.
Of course, there are ways to earn extra money so you can live in that dream house. For one of the best, visit www.bign.com/pbilodeau. You’ll see stories of people who bought their dream home, but not until they had the money – often the cash – to do it.
Remember, too, that homeownership is not for everyone. Though the American Dream may dictate that one owns his own home, give some thought to the life you want to lead before deciding to buy or build. That house could own you, in more ways than one.
In short, do the math before buying or building a home. Make sure the house doesn’t eat too much of your net worth. If you tap out your emergency fund for that down payment, it could come back to bite you.
Just because you think you CAN swing it, doesn’t mean that you SHOULD.
Peter