Downside to Buying in a Gated Community

Downside to Buying in a Gated Community

Homes in gated communities command a much higher price — nearly $30,000 on average — than other properties, according to a new study published by the American Real Estate Society. However, the added costs of upkeep for amenities may offset some of that premium.

Home buyers are likely willing to pay more for homes in a gated community because of perceived benefits such as greater privacy, homeowner’s associations with tighter controls on maintenance and home design, and added security against crime. But the extra amenities a gated community offers may not be as desirable. The study found the presence of amenities such as clubhouses, community swimming pools, and tennis courts can actually reduce the sales price of a home in a gated community by about $19,500.

“Additional maintenance costs associated with these amenities often outweigh their benefits, and it appears that while a gate has value, additional neighborhood amenities do not always provide additional value,” notes Mark A. Sunderman, who conducted the study published by ARES in the Journal of Real Estate Research. “From the perspective of both the buyer and the seller, this information should help each to better price property. A good understanding of what adds value and what does not should help create increased marketability of gated homes.”

Source: Florida Atlantic University

Home Ownership by Age 25? It’s Possible

Home Ownership by Age 25? It’s Possible

Despite being saddled with student debt and dealing with the repercussions of the 2008 financial crash, it’s still possible to become a home owner by age 25.

In order to accomplish the goal of owning a home, 26-year-old Emily Brown decided early on that she wanted to manage her finances carefully and live on her own terms. “I wanted a game plan, not living paycheck to paycheck,” she recently told CNN Money.

Brown’s advice to other young people wanting to buy property is simple: “Work hard, save a lot, and buy property you can afford.”

In addition to having purchased a home at age 25, Brown has paid off a large portion of her student loans and has begun depositing money into both 401(k) and IRA accounts.

While only about 20 percent of Americans own homes by age 25, Brown beat the odds by purchasing a “fixer upper” duplex in the suburbs and extended the lease to a prior tenant who pays $900 a month, enough to cover her mortgage.

After attending college during the 2008 financial meltdown, Brown was determined to hold herself to a rigorous standard, which allowed her to begin saving early. She drives a 2009 Ford Escape SUV with a dent in the side, firmly regiments the money she spends on recreation, and makes deposits into her IRA account religiously.

Brown opened her IRA account when she was only 18-years-old and worked at a local ice cream shop. Throughout college, she worked multiple jobs and paid internships, the monetary yields of which she funneled into her IRA.

Since graduating in 2012, Brown has worked as an accountant full-time. She contributes 6% of her $50,000 a year salary to the account, and her company matches it.

Even seasoned professionals are impressed by Brown’s frugality and discipline.

“She’s my idol,” said Yvette Butler, president of Capital One Investing. “I wish more of us started saving for retirement at 18.”

Source: “How I bought a house at age 25,” CNN Money (May 6, 2016)

Get Ready for a Baby Boomer Sell-Off

Get Ready for a Baby Boomer Sell-Off

Baby boomers and others aged 55 or older, comprising up to several million current home owners, say they plan to move to rental units in the next few years, according to Freddie Mac’s newly released 55+ Survey of housing plans and perceptions of those born before 1961.

An estimated 6 million home owners and nearly as many renters prefer to move again and rent at some point, the survey shows. More than 5 million say they are likely to rent by 2020.

“When a population this large expects to move into less expensive rental housing, we have to expect it will create significant new pressure on both the supply and cost of existing affordable rental housing,” says David Brickman, executive vice president of Freddie Mac Multifamily.

Seventy-one percent of nearly 6,000 home owners and renters surveyed say they plan to rent their next home. The top factors that they say are “very important” in influencing their next move are: affordability (60 percent); amenities needed for retirement (47 percent); living in a community where they are no longer responsible for caring for the property (44 percent); and being in a walkable community (43 percent).

Respondents also say they don’t want to move far next time they move. Thirty-one percent say they would likely relocate to a different neighborhood in the same city, while 23 percent say they would like to move to a different property in the same neighborhood. Eighteen percent say they would like to move to a different city in the same state and 24 percent would move to a different state.

Nearly six out of 10 of the 55-plus renters surveyed say they prefer to either move closer to their families or in with them. Hispanic single-family renters were most likely to say they would like to move closer to family, while Asian-American renters were the most likely to say they plan to move in with their adult children one day.

Source: Freddie Mac

A Tiny Controversy Brews Over Tiny Homes

A Tiny Controversy Brews Over Tiny Homes

The tiny home movement is gaining steam. These small housing options are being featured on TV shows touting the cost and environmental benefits, and more buyers are being swayed to go small. But now cities are sparring over which one has earned the title as tiny house capital of America.

The Gazette recently bestowed that honor to its local city of Colorado Springs. However, some in the tiny-home movement were quick to counter that Northern California and Portland, Ore., are the true epicenters of tiny-home living.

“There are many more people who have lived in [Northern California and Portland],” couners Elaine Walker, one of the founders of the American Tiny House Association. “Colorado is pretty new” to the tiny house movement.

Portland says it boasts the first tiny-house motel called Caravan. Colorado Springs has one too: WeeCasa in Lyons, Colo.

There may even be more competing tiny-home capitals popping up, Mark Stemen, a professor at California State University, Chico, who teaches courses on tiny homes, told realtor.com®.

“I’m seeing them up and down the West Coast,” he says. “Everyone wants to be the capital.”

Other cities like Seattle, Austin, and Asheville, N.C., also have growing tiny-home movements, Walker says.

Tiny homes are generally 500 square feet or less — only a fraction of the typical U.S. home size of about 1,500 square feet.

Source: “Tiny Homes Spark a Big Controversy,” realtor.com® (June 27, 2016)

Beware of These Home Inspection Red Flags

Beware of These Home Inspection Red Flags

A home inspection not only allows buyers to learn more about their home, it also helps them uncover any potential problems.

Curbed.com recently featured a 14-point checklist to help home buyers during a home inspection. Here are a few items they suggest to investigate further during a home inspection that will give your buyers more confidence in moving forward.

HVAC system. Home inspectors will make sure the home’s heating, ventilation, and air-conditioning system is working, and they should also be able to estimate how long the home air conditioning condenser (the outside unit) should last too. They just need to check the serial number, says Nigel Turner with Total Home Inspection Services in West Milford, N.J. Many condensers last 12 to 15 years before needing replacement.

Water drainage. “The biggest issue of any home is always going to be water disbursement,” Turner told Curbed.com. “There’s the potential for damage to the foundation. If water is found to be in the vicinity of the house, you want the water to flow away from the house, not towards it.” Home inspectors who use an infrared camera may be able to uncover potential water damage that lurks beneath the surface of a home too.

Roof. Learn how old it is and any potential issues, particularly if anything that you may have to one day bring up to code. Roof problems are responsible for 39 percent of home owners insurance claims, according to data from Trulia.

Oil tank. Even if the house is heated with gas, it’s still important to check and see if there’s an oil tank on the property in case it once was heated by oil. A tank may still be present. Certain areas require the oil tank to be removed. Others may have just been filled with sand and gravel. Make sure you find out and to ensure it hasn’t leaked into the ground. “Make sure we sweep the whole property,” Elice Shikama of RE/MAX in Franklin Lakes, N.J., told Curbed.com. “Because sometimes sellers think they only have one. They could have multiple underground tanks.”

Chimney. “Chimneys can be a very costly enterprise, if there’s damage to the chimney lining on the inside, if the masonry around the chimney is faulty, corroded, or whatever it might be,” Turner says.

See the entire 14-point checklist that Curbed.com offers for home inspections.

Source: “Home Inspections 101: What to Look Out For,” Curbed.com (June 21, 2016)

Good Time to Lock in Mortgage Rates

Good Time to Lock in Mortgage Rates

Borrowing costs stayed low for yet another week for home buyers and refinancers. The 30-year fixed-rate mortgage continues to hover near its lowest average in three years.

“Mortgage rates have been slow to adjust to the 10-year Treasury yield, which has increased 12 basis points since last week,” says Sean Becketti, Freddie Mac’s chief economist. “This week’s survey shows the 30-year fixed rate inching up to 3.56 percent, only 2 basis points above last week’s average. The low rates continue to be good news for the housing market, as existing home sales rose 1.8 percent to a 5.53 million seasonally adjusted annual rate in the month of May — the highest level since February 2007.”

Freddie Mac reports the following national averages with mortgage rates for the week ending June 23:

• 30-year fixed-rate mortgages: averaged 3.56 percent, with an average 0.6 point, rising from last week’s 3.54 percent average. A year ago, 30-year rates averaged 4.02 percent.
• 15-year fixed-rate mortgages: averaged 2.83 percent, with an average 0.5 point, increasing from last week’s 2.81 percent average. A year ago, 15-year rates averaged 3.21 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.74 percent, with an average 0.5 point, holding the same average from a week ago. Last year at this time, 5-year ARMs averaged 2.98 percent.

Source: Freddie Mac