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Homeownership

Which remodeling projects increase a home’s value the most?

(HOMEOWNERSHIP) Knowing which projects to tackle when a home is being put on the market can save a lot of wasted effort and money.

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Remodeling projects that boost a home’s value

If you’re looking to help your clients to identify which projects to tackle before putting their home on the market, look no further: the National Association of Realtors surveyed thousands of real estate agents, industry professionals, and consumers on interior and exterior house remodeling projects — these are the best projects for upping a home’s value before listing it on the market, ranked on the most value and cost recovery a homeowner can get.

  • Refinishing hardwood floors. Start from the bottom to earn top dollar. Refinishing floors transform a home from worn-out and aging to vibrant and inviting, and only costs about $2500 according to the National Association of the Remodeling Industry (NARI). The project also increases a home’s value by that same amount, meaning a homeowner can recover 100 percent of the costs. Pretty sweet deal.
  • Upgrading insulation. Because it’s what’s inside that counts. This project costs about $2100 based on NARI Remodeler’s estimate, and increases a home’s value by $2000 according to Realtors surveyed. That’s a 95 percent cost recovery.
  • Adding new wood floors. If you don’t have wood floors to refinish, add them in! This costs about $5,500 according to NARI Remodelers, and the increased sales value is $5000–a homeowner can recover 91 percent of costs from a new wood floor addition.
  • Replacing HVAC system. A new HVAC system adds energy efficiency and refreshes the entire home, and NARI Remodelers estimate doing so costs $7000. The increased value for sellers is $5000 according to NAR REALTORS, meaning an easy breezy 71% cost recovery for homeowners.
  • Converting a basement into a living area. Not only is this cost and space efficient, it’s also undeniably trendy. A basement makeover costs about $36,000 according to NARI Remodelers estimate, and increases value for sellers by $25,000 according to Realtors surveyed. That comes out to a cost recovery of 69 percent.

Which projects are the most costly?

In case you’re curious, these are some of the most expensive remodeling projects:

  • New master suite. More like master $$$uite — this costs about $112,500 with a cost recovery of 53 percent.
  • Converting an attic into a living area. Cute idea, but also a $65,000 one with a 61 percent cost recovery. One might say the price is through the roof.
  • Complete kitchen renovation. This project costs an estimate $60,000 with a 67 percent cost recovery. Even more if you want to throw in a brick oven, and you probably do.
  • New bathroom. With an estimated cost of $50,000 and a 52 percent cost recovery, make sure you aren’t flushing money down the drain with your bathroom addition!

These trends change over the years, so make sure your knowledge is up to date locally since we all know local trends trump national. Hopefully today you’ve garnered some ammo to help clients better understand how to improve their home’s value!

#Remodeling

Helen Irias is a Staff Writer at The Real Daily with a degree in English Literature from University of California, Santa Barbara. She works in marketing in Silicon Valley and hopes to one day publish a comically self-deprecating memoir that people bring up at dinner parties to make themselves sound interesting.

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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