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Homeownership

Loftium trades a fat down payment for a spare bedroom made available for Airbnb

(REAL ESTATE NEWS) Loftium will help you out with a down payment on your first home if you turn your spare bedroom into an AirBnB and millennials seem open minded about this option.

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Homeownership may not be such a distant dream for renters hoping to buy one day. Seattle-based startup Loftium has devised an alternative approach to obtaining a down payment on a house: Airbnb a bedroom in the house for up to three years.

For buyers who have been pre-approved by a lender, Loftium will pay up to $50,000 on a down payment on a house.

The home must be the primary residence of the homeowner, so Loftium is not available for purchase as an investment property, per their eligibility FAQ.

In exchange for the dough, Loftium requires home buyers to sign a service contract agreeing to list a spare room on airbnb.com for 12-36 months, depending on the loan amount and rental price, and split the profits 70/30 with Loftium. The idea is to generate a passive income stream for the homeowner to help with monthly payments on the home.

While Loftium does take a cut of the Airbnb profits, they are in no way a co-owner of the home. If you purchased a home through them, it’s yours and yours alone – “like it should be,” the website declares.

There are a couple of caveats, and I mean, if someone is handing you $50,000 to help you buy a house, it would make sense to look into the conditions of ownership.

For instance, the Loftium home owner must be a good Airbnb host. So no sabotaging the listing by making the space sound like Shawshank, no making guests feel awkward or unwelcome, and listed rooms must be furnished with at minimum: a queen-sized bed (or larger) with mattress and frame, a chair, a desk or bedside table, and a lamp.

All other stipulations would be the same for any other Airbnb host.

This may sound a little insane, maybe even a little desperate to anyone who has successfully managed a down payment on a house to share the space with strangers for an agreed upon time, but this is exactly the boost many renters need to overcome the down payment hurdle. And Millennials are already primed for this sharing economy and are open minded to the arrangement.

Loftium co-founder Yifan Zhang believes that within the next five to ten years, prospective home buyers will have three standard options for coming up with a down payment: save, ask the parents to help out, or sign up for Loftium. Based on early interest, likely from those signing up for quotes and votes for their city (more on that), Zhang expects business to scale quickly.

So far, Loftium is only available in Seattle as a beta test for the service. There have already been successful homeowners in this brand new program, one of which had the clever idea of finding a place with a mother-in-law quarters to rent out as her listed space/bedroom, and Loftium is currently offering 50 down payments initially this fall in the Seattle area.

The plan is to eventually expand into Chicago and Washington D.C., but interested renters have the option of submitting votes for their city. As of publication, Austin is currently sitting around 4,000+ votes.

There will be some obstacles for particular cities that will prevent Loftium from setting up shop, such as city legislation that prevents people from renting out rooms in their homes, but I suspect that with the rise in popularity of alternative approaches to homeownership coupled with the demand of travelers seeking to rent out a shared space, this could absolutely change over time.

The service sounds almost too good to be true, and it will be very interesting to hear the success, or even horror stories, of how these contracts will play out, but I believe others will jump on board to offer something similar.

Take heed millennials, homeownership is within reach!

Ashe Segovia is a Staff Writer at The American Genius with a Bachelor of Arts in Communications from Southwestern University. A huge film nerd with a passion for acting and 80’s movies and synthpop; the pop-cultural references are never-ending.

Homeownership

What can you expect with property values in 2018?

(REAL ESTATE NEWS) Although property values fluctuate depending on location, we can spot regional trends to showcase what 2018 has in store.

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MID mortgage interest deductions existing home sales

One question property owners and potential buyers are constantly asking as 2017 winds down is: What can I expect with my property values for the next year? While there may be no crystal ball for property values, there are certainly trends that can be helpful in making decisions in the New Year.

According to data analysis on property value trends from the National Association of Realtors (NAR) using federal American Community Survey (ACS) numbers, good things are in store for property owners and hypothetical buyers.

“Using data from the American Community Survey (ACS), we can analyze the gains and losses of property values over time,” Michael Hyman, research data specialist for NAR said. “Looking at the 2005 – 2016 period, the figures point to trends, which vary by region and state.”

Using data from the ACS from years 2005 to 2016, NAR found only a few states for this 11-year period are showing property value stagnation or devaluation. More specifically, property value growth was the strongest in the Southern region. The Northeast had the weakest growth in property values.

NAR’s regional analysis of the of Northeast, Midwest, South, and West goes further in the weeds to describe what types of value trends are occurring. The South’s lead on property value growth is lead by Louisiana, with a ratio of 57 percent price growth with four percent average annual price growth. This finding falls in lockstep with the idea that many property flippers that are now turning their attention to Louisiana (specifically Baton Rouge).

In contrast to the South, the Northeast (which normally has the slowest price growth) had one of the biggest losers in terms of price trends, with Rhode Island’s value dropping 11 percent, and negative one percent change annually. If your eye is on the Northeast at any cost, Pennsylvania is your best bet, with a 40 percent price growth and 3 percent annual growth.

But the big winner in the property growth trends? The Midwest’s North Dakota, with a whopping 106 percent increase in price growth and 6 percent growth annually. The big loser for this time frame is Nevada, with negative 16 percent growth and a decrease of one percent annually.

While this data can’t guarantee that any current or future property venture will turn profitable, it can highlight some areas of interest. It’s no crystal ball, but it can give you a great perspective on future property value forecasting.

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Homeownership

Experts, politicians say improving homeownership will be complex

(REAL ESTATE) As tax reform remains hotly debated, experts and politicians discuss the way forward to protect homeownership, and thus the economy.

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jeb hensarling on homeownership

The consensus is that if more Americans can sustainably buy homes, the economy and taxpayers will benefit.

As the nation’s homeownership rate hovers around a 50-year low, it’s time to acknowledge and start addressing the range of issues suppressing the market today, according to individuals at a Realtors and S&P event this month.

“When there is no hope for owning real property, we are taking a huge step backwards for the future of our country,” said Senator Heidi Heitkamp (D-ND) in her opening remarks.

Politicians and industry experts at this event outlined a number of key issues that need to be addressed to improve homeownership rates and market stability in the U.S: Buying incentives, student loan debt, and affordability.

But most of all, it’s important that the complexity of the housing market never be ignored. There’s not just one issue to be addressed, or a single solution that will fix it all.

For example, leading up to the 2007 housing crash, home buyer enthusiasm peaked as mortgage rates were low and investment return rates high. It was an environment that many Americans felt was too good to pass up.

Many also feared getting priced out of the market if they didn’t buy right away and take advantage of the current market state, a phenomenon dubbed “buyer’s panic,” according to economist Dr. Robert Shiller. Shiller noted that public sentiment about the risks of home buying peaked in 2006, but homes were still bought left and right.

Chairman Jeb Hensarling (R-TX) of the House Financial Services Committee observed that sustainable homeownership plays a key role in protecting the overall economy, citing the “unsustainable housing finance rollercoaster” that caused the Great Recession, a “lost decade” of lost economic growth.

“The lesson is clear: Housing unsustainability doesn’t just create unaffordability,” stated Rep. Hensarling. “It can create economic catastrophe.”

Overall, interest rates and tax law aren’t the only market drivers, something industry leaders should keep in mind as tax reform legislation enters the House and the economy continues to slowly bounce back from the Great Recession.

Post-recession debt burdens aren’t helping the nation’s homeownership rate, either. Student loan debt is suppressing young adult homeownership in particular.

“Eventually, time will start to soften the impact of those high student loans,” Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, explained during a panel. “Jobs are coming around, wages are picking up.” But this is not to say the issue isn’t having real ramifications right now.

For those struggling to repay student loan debt, homeownership is simply not an option right now, according to Jessica Lautz, managing director of survey research and communication at NAR.

Meanwhile, many who are managing their student loan debt well aren’t in position to buy a home, either, a trend also identified by the National Association of Realtors 2017 Profile of Home Buyers and Sellers.

Another panel comprised of Dr. Lawrence Yun of NAR, Alex Nowrasteh of the Cato Institute, and Boyd Campbell of Century 21 discussed affordability concerns involving the supply and demand issues facing the housing market today.

Debt burdens aside, homeownership is just becoming too expensive for many Americans. “Prices have risen roughly 40 percent in the past five years, while people’s income has risen at a much slower rate,” Yun said. “This rise in prices forces an affordability concern.”

This particular issue isn’t just a real estate matter. The labor market plays a role as college-educated workers are priced out of areas where the job market is strong but housing prices are high.

As the number of families buying their first single-family homes remains well below the 50-year average, conversations about the range of issues impacting the housing market must continue.

“Prospective homebuyers face headwinds from the market, in the halls of Congress and in their own family’s budgets,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor and CEO of RE/MAX Boone Realty. “We can’t solve them all, but we know more can be done to smooth the way for creditworthy borrowers who want to own a home.”

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Homeownership

Preparing your clients for a long-distance move

(REAL ESTATE) You’re a community resource, even when a client is looking to move far away – here’s how to help prepare them.

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moving boxes move

A local move is never easy, but when moving across the country, it becomes a lot more complicated. The internet has made it easier to research utilities, communities and services.

But when you have clients who are preparing to move out of the area, you might want to make sure they are aware of these six mistakes that commonly occur.

1. Falling for a moving scam.
Rogue operators often give cost estimates sight unseen. Make sure clients know that this is a red flag. This publication of the Federal Motor Carrier Safety Administration is a good place to start.

2. Waiting until the last minute
Many people put off doing the research to move and be ready. Don’t make that mistake. Start packing early. This gives time to purge and pack. Label all boxes as you go. Have a timeline that shows when the moving company will pick up belongings, when the new place will be ready and where to stay in between.

3. Paying for clutter to travel across the country
The moving company charges for weight and size of goods. Purge the clutter and unused items from the house before the move to avoid adding extra charges to the move.

4. Setting up utilities in your new home
There are so many details to manage before the move, it can be easy to overlook this step. Moving into a home without electricity or water can be trying.

5. Forgetting to cancel services at the old home
The landscaping service, pest maintenance company, or pool person may not realize the family moved. Don’t run up unnecessary charges by neglecting to cancel these services.

6. Getting too stressed
Moving across country should be an adventure. Sure, there is going to be stress. Remind your clients to manage their stress and make the most of their last days in the community with friends and family. With careful planning, everything will go much smoother and this can happen.

You don’t have to credit anyone, just have your own materials prepared for clients moving long distances – you’re the ultimate resource and the community relies on you, even when they’re leaving!

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