Exterior Renovations to Boost a Home’s Value

Exterior Renovations to Boost a Home’s Value

Replacing the roof may be the most important upgrade your client can make to the exterior of his or her home, according to the National Association of REALTORS®’ 2017 Remodeling Impact Report. The report takes a look at the cost of the most common exterior and interior renovation projects and gauges how appealing they are to home buyers at resale.

REALTORS® ranked new roofing, vinyl windows, and garage door as the three exterior projects that have the most appeal to buyers. Based on the potential for return-on-investment, the following exterior projects offer the best chances for the biggest returns at resale, according to the report.

New roofing

• Cost estimate: $7,500
• REALTORS®’ estimated cost recovered: $8,150
• Percent of value recovered from the project: 109%

New garage door

• Cost estimate: $2,300
• REALTORS®’ estimated cost recovered: $2,000
• Percent of value recovered from the project: 87%

New fiber-cement siding

• Cost estimate: $18,000
• REALTORS®’ estimated cost recovered: $15,000
• Percent of value recovered from the project: 83%

New vinyl windows

• Cost estimate: $18,975
• REALTORS®’ estimated cost recovered: $15,000
• Percent of value recovered from the project: 79%

New steel front door

• Cost estimate: $2,000
• REALTORS®’ estimated cost recovered: $1,500
• Percent of value recovered from the project: 75%

New vinyl siding

• Cost estimate: $13,350
• REALTORS®’ estimated cost recovered: $10,000
• Percent of value recovered from the project: 75%

New fiberglass front door

• Cost estimate: $2,700
• REALTORS®’ estimated cost recovered: $1,800
• Percent of value recovered from the project: 67%

New wood windows

• Cost estimate: $35,000
• REALTORS®’ estimated cost recovered: $20,000
• Percent of value recovered from the project: 57%

—REALTOR® Magazine

Buy vs. Rent Index Still Leans Toward Buy

Buy vs. Rent Index Still Leans Toward Buy

Which is better for your clients: accumulating wealth through home equity or renting and investing their savings? That’s the fundamental question that the quarterly Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index aims to answer.

After examining 23 of the country’s largest metro areas in the second quarter, home buying still tops renting—but only slightly, and that has to do with prices.

The Detroit, New York, and St. Louis metro areas were the only ones where homeownership trended more favorably than renting. Meanwhile, the indices in the other 20 metro areas on the list moved toward renting to varying degrees, with some cities moving just marginally and others moving more dramatically in that direction.

Four cities are tipping into rent territory of the index—Miami, Pittsburgh, Portland and Seattle—namely because home prices have risen too high too quickly. Only two cities, Dallas and Denver, saw record index scores favoring renting. But William G. Hardin, index co-creator and director of the Hollo School of Real Estate at Florida International University, notes that housing development has not kept up with the massive job growth in these markets. That may change when development catches up, he says.

“While the trend is definitely in the direction of renting, many markets, namely in the Midwest, remain comfortably in buy territory,” says Eli Beracha, co-creator of the index and associate professor at FIU. “Prices in these markets should continue to rise without worry of overheating.”

Metro areas are scored between 1 and -1, with 1 strongly favoring renting, and -1 favoring homeownership, based on home price appreciation, rents, mortgage rates, and other investment data. The score for the U.S. as a whole (-.065 in the second quarter) could indicate housing prices continuing to rise, according to Ken Johnson, a real estate economist at FAU’s College of Business who also helped create the index. He adds that the data is comparable to 1999 levels. As the score moves closer to zero, that means there’s less difference between renting and ownership in terms of wealth accumulation. S&P CoreLogic Case-Shiller 20-City Home Price Index also recently showed an average annual increase in home prices of 5.7 percent, a level not seen since 2007.

Read the full index report and download your city’s data.

Source: Beracha, Hardin & Johnson Buy vs. Rent Index, September 2017, Florida Atlantic University and Florida International University

4-Bedroom Houses to Lose Favor

4-Bedroom Houses to Lose Favor

Millennials’ desire for smaller homes may have a big impact on the future demand of some of the most popular homes today.

Young adults are getting married later in life, they’re delaying their first home purchase (often due to student loan debt) by up to seven years in some cases, and they’re also having children later in life.

The U.S. fertility rate has plunged to its lowest level since the Centers for Disease Control began tracking such data more than a 100 years ago. From 2011 to 2015, the number of 30- to 34-year-olds without children at home increased by 4 percent, according to Census data. Among 25- to 29-year-olds, the number increased by more than 5 percent.

What does this mean for housing? For millennials who remain childless, a large house with four or more bedrooms likely will no longer be as in demand. Households without children tend to prefer smaller homes, condos, or townhouses near city amenities rather than an oversized single-family home.

“The fact that we’re having smaller-size families I think naturally means that the demand for smaller-size housing would get greater interest than before,” Lawrence Yun, chief economist for the National Association of REALTORS®, told The Washington Post.

As baby boomers enter retirement and their adult children move out, many are expected to choose to downsize too. Economists predict that could add increased pressure to the market for smaller two-bedroom condos and townhouses.

Yet, the new-home market is staying focused on building bigger rather than smaller. Ninety percent of new single-family homes had three or more bedrooms in 2016.

Source: “One Big Reason Millennials Want Smaller Homes – And It Could Change the Housing Market,” Apartment Therapy (Sept. 25, 2017) and “Adults Who Opt Not to Have Kids Cause Ripple Effects in U.S. Housing Market,” The Washington Post (Sept. 14, 2017)

Ways to Make Your Listing Look Bigger

Ways to Make Your Listing Look Bigger

Décor choices can have a big impact on how large or small a home appears. Professional home stagers chime in with some tips on how to show off square footage, even when space is tight.

1. Remove heavy drapes. Leave windows bare or hang sheer linen curtains. The space will feel brighter, and “you’ll extend the view to the outdoors, which will automatically make your space feel larger,” home staging expert Lori Matzke told realtor.com®.
2. Go monochrome. Painting ever single room in the same color can help lengthen a smaller space. It “prevents your space from feeling choppy and gives it more of a continuous feel,” Matzke says. Furnishings and accessories should also be monochrome. Reduce contrasting colors whenever possible, says Justin M. Riordan, founder of Portland, Ore., and Seattle-based Spade and Archer Design Agency. “If you have a room with taupe walls, walnut floors, a brown sofa, and milk-chocolate pillows—all various names for medium brown—the edges of each item will be less defined and, in turn, be perceived as taking up less space,” Riordan says.
3. Remove rugs. “The more you break up the flow of your flooring, the smaller your space will feel,” Matzke says. Limit rugs to only one or two main areas, such as under the dining table. Also, small rugs can dwarf a space, so when you do use them, make sure they aren’t too tiny.
4. Add mirrors to rooms. Mirrors can help make a small room appear larger by reflecting more natural light, Bee Heinemann, marketing director and interior decorating expert at Vänt Wall Panels told realtor.com®. Consider placing a mirror next to or directly across from a window to add more depth to the room.
5. Raise the bar (in the bathroom). Place shower curtains and window treatments higher up on the wall. “Hang it as high as you can,” Heinemann says. “Doing so gives the illusion of higher ceilings and greater space.”

Source: “14 Sneaky Staging Tips for Selling a Small Home,” realtor.com® (Sept. 6, 2017)

Housing Predictions for 2018

Housing Predictions for 2018

New homes are expected to be a “primary driver of sales in 2018,” as 1.33 million housing starts are predicted next year—up from 1.22 million in 2017, according to Freddie Mac’s September Outlook report, which gauges future real estate activity. Total home sales are expected to increase about 2 percent from 2017 to 2018, according to the report.

Economists also predict that the uptick in housing starts, coupled with a moderate increase in mortgage rates, will help slow the run-up in home prices next year. Freddie Mac forecasts a 4.9 percent increase in home prices in 2018, lower than the 6.3 percent growth seen so far this year. Mortgage rates also are up from near-record lows in 2016, prompting predictions that refinancings will fall to 25 percent of mortgage activity in 2018—the lowest share since 1990, according to Fannie Mae.

Still, homeowners likely will continue building equity next year. In the second quarter of 2017, the dollar volume of equity cashed out was $15 million, up $1.2 million from the first quarter. As home prices rise, cash-out activity has been rising, too.

“The economic environment remains favorable for housing and mortgage markets,” says Freddie Mac chief economist Sean Becketti. “For several years, we have had moderate economic growth of about two percent a year, solid job gains, and low mortgage interest rates. We forecast those conditions to persist into next year.”

Source: “Looking Ahead to 2018,” Freddie Mac Outlook (Sept. 21, 2018)