You’re Not Investing in Real Estate?

Most real estate professionals are independent contractors, which means they’re largely on their own when it comes to putting money away for retirement. One way to prepare for the future is to buy investment property. Having an appreciating asset like that gives you something to sell when you’re no longer working, but only about 30 percent of REALTORS® own investment property.

That’s one reason why NAR will be making it a priority in the coming year to help educate its members about ways to prepare for retirement.

The association launched a class earlier this month on working with real estate investors and becoming one on your own. And going forward, it will offer other resources.

“We find that our members work very hard for 30 years and in the end they don’t have anything to show for it,” NAR President Bill Brown says. “That’s why we’d like our members to start thinking about the future now.”

NAR’s effort on retirement is a top story in the latest Voice for Real Estate news video. The video also looks at the recent jump in mortgage interest rates. Although they’re still historically low, they are moving up quickly. After being at around 3.5 percent for many months, over the last few weeks they’ve risen to about 4 percent. That’s driven in part by a rise in bond yields, which are pricing in anticipated stimulus action in Washington under a new Administration and Congress. “Any time interest rates rise, it is a hindrance to home buying,” says NAR Chief Economist Lawrence Yun.

Yun thinks that will be partly offset by positive growth stemming from any stimulus effect of the federal policy changes (like reduced taxes, deregulation, and increased infrastructure spending). Also working in favor of today’s market is relatively strong job and wage growth. As long as these indicators stay positive, negative effects of higher rates will be offset to a degree.

The video also looks at what is expected to happen in Congress over the next month, during the lame-duck session, as lawmakers finalize last-minute legislation. NAR Deputy Chief Lobbyist Jamie Gregory says the agenda will likely be minimal, focused mainly on passing a short-term measure to fund the federal government until lawmakers and the Administration start tackling big-ticket items early next year like tax reform and reform of the secondary mortgage market.

The video also looks at what coming tax reform could look like for commercial real estate. Among other things, look for changes to be proposed for the expensing of business interest, treatment of carried interest, 1031 tax-deferred exchanges, and depreciation of property assets. Also, look for broad reductions in tax rates and more infrastructure spending.

Also covered in the video is a look at a bifurcation in commercial real estate markets, with smaller markers continuing to see increased transactions while in larger markets transactions are slowing down.

—By , REALTOR® Magazine

More Tiny Neighborhoods Are Coming

More Tiny Neighborhoods Are Coming

Tiny homes are still mostly illegal in the majority of the country since they don’t tend to meet municipalities’ zoning and building standards. But more cities are looking to change ordinances to pave the way for entire tiny home neighborhoods.

Tiny homes are usually between 200 to 600 square feet. They can be on wheels or on a foundation. They tend to be more affordable than traditional homes. However, the growing movement of tiny homes is often centered more on the idea of simplifying your life and even sustainability.

Tiny home neighborhoods are springing up in areas like Texas, Florida, and Colorado. For example, in Spur, Texas, town officials changed ordinances in 2014 in order to make claims to “America’s first tiny house friendly town.”

“Most of America is struggling with affordability,” Alexis Stephens of Tiny House Expedition told CNNMoney. “We can activate existing land and create housing that is affordable by design.”

In Spur, tiny home residents are able to buy land in the city to build on.

“This is a fairly new concept in the tiny house world: ownership of a house and land in a subdivision,” says Danny Schallenberg, a tiny house builder and developer in Spur. About a mile from the downtown, there will be an entire area for tiny homes that will sit on two acres with 22 homes, priced between $30,000 to $50,000.

In Rockledge, Fla., plans for another tiny home community consisting of 13 homes is currently underway, after city officials made a change to its zoning laws.

Source: “Tiny Home Living Is Having a Moment,” CNNMoney (Nov. 14, 2016)

Ready to Sell More New Homes?

Ready to Sell More New Homes?

More single-family and multifamily homes are entering the pipeline. Housing starts increased 25.5 percent in October, reaching a seasonally adjusted annual rate of 1.323 million, the Commerce Department reported Thursday. It is the highest pace since August 2007.

Single-family housing starts zoomed to a nine-year high in October, reaching a rate of 869,000.

The higher-than-expected gain across all regions of the country “reaffirms our view that steady improvement in the housing market is likely to continue over the next two years,” Rob Martin of Barclays Bank PLC told The Wall Street Journal.

The multifamily market, which can be volatile, posted a whopping 74.5 percent month-over-month gain in October as apartment and condo construction ramped up, the Commerce Department reports.

Permits — a sign of future construction — were also up in October, albeit more modest. Building permits for multifamily and the single-family new housing market increased 0.3 percent to a seasonally adjusted annual rate of 1.229 million, which is the highest pace in nearly a year. Permits for single-family homes rose 2.7 percent in October to a rate of 762,000.

“Both single-family and  multifamily starts now stand well above the pace implied by permits, and a correction over the next couple of months is inevitable,” says Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Source: “U.S. Housing Starts Jump 25.5% in October,” The Wall Street Journal (Nov. 17, 2016)

How to Tell If a Home Has Lead Paint

How to Tell If a Home Has Lead Paint

If your buyers are looking at older homes, remind them to check whether any lead paint is present inside the home and still needs to be removed. Lead was a popular ingredient used in house paint for years until scientists discovered that it could lead to a range of health problems, particularly in children, including anemia, seizures, and even death.

Since 1978, the federal government has banned the sale of lead-based paint. But even homes built after 1978 may contain lead-based paint. “Many painters loved lead-based paint” because it tends to be glossier and hold color better, says home inspector Welmoed Sisson with Inspections by Bob in Maryland. “Once they learned the ban was going into effect, many of them stocked up on a cache of lead-based paint.” Sisson says he knows of inspectors who have found lead-based paint in homes built in the 1990s.

So, are there any telltale signs of lead paint? The naked eye won’t detect anything definitive, but “when the paint deteriorates, it creates a pattern that looks like scales,” Sisson says. “It’s actually called ‘alligatoring.'” Also, Sisson urges buyers to investigate closets, along baseboards, and basement window sashes to make sure painters didn’t try to cover up the peeling paint with a new coat.

A better way to know for sure is to test the walls with a paint testing kit available at local hardware stores. The kit prompts you to rub a solution on the walls. If the solution turns pink, it’s an indicator you have lead. (Note: The solution stains walls if it turns pink, so don’t do this if you’re just looking at a home for sale.) But the tests only discover lead at the surface, and it may not reveal if the lead-based paint had been covered up by new paint.

A home inspector can provide a thorough, more precise test for that. But you may have to request it. Certified lead inspectors also can be found in your location on the lead abatement page of EPA.gov.

“When lead is suspected, inspectors use an X-ray to look through the paint layers to the base wood of the wall,” Sisson says. “X-rays can’t pass through lead, so it is easy to spot.” If lead is discovered in a home, a certified inspector will need to remove it. The cost could be about $8 to $15 per square foot, or an estimated $10,000 on an average-size home.

Source: “Does Your Home Have Lead Paint? How to Find Out,” realtor.com® (Nov. 14, 2016)

Does the Marble Test Really Work?

Does the Marble Test Really Work?

A viral video recently showed a marble rolling on an uneven floor inside a luxury apartment building in San Francisco called the Millennial Tower. This summer, residents there learned that the structure, which had been constructed on bay mud, had sunk a total of 16 inches and is leaning at least 2 inches.

But can rolling a marble test really reveal if your listing has this kind of a problem?

“The marble is a good way to demonstrate the floor is not level, but not to tell if this means there is a problem,” says Bill Neal, a structural engineer in Vernon, Conn.

Instead, there’s a different tool you’ll need. “Put a 4-foot-long level on the floor. Ideally, when the level is level, the end should not be more than an eighth of an inch off the floor. If it’s a quarter inch or more, the house definitely should be checked,” Neal says.

An uneven floor could indicate a structural problem or possibly poor workmanship, Neal says.

But don’t let a little marble get buyers bent out of shape. “The truth is, all floors are going to be a little bit unlevel,” says Mayer Daham, a real estate developer in Los Angeles. “If you can notice your building is dipping, that’s not acceptable. Between one room and another, if a marble rolls, you’ll survive.” After all, a marble could roll from room to room because of different finishes on the floor.

Joel Goodrich, a San Francisco-based luxury real estate adviser, says experts can help put things in perspective. “The real value and importance of having a professional inspector or structural engineer inspection is that they can say whether the settling is active (i.e., worsening) or cosmetic (i.e., not structural, but a function of the age of the building),” he says.

Marble roll in Millennium Tower from Frank Jernigan on Vimeo.

Source: “Does the Marble Test for Floors Really Work? Try It, but Keep a Level Head,” realtor.com® (Nov. 15, 2016)