Archives for January 2013

Exterior Projects Provide Biggest Return on Investment


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Home owners looking for the most return on their investment when it comes to remodeling should consider exterior replacement projects. According to the 2013 Remodeling Cost vs. Value Report, REALTORS® rated exterior projects among the most valuable home improvement projects.

“REALTORS® know that curb appeal projects offer great bang for your buck, because a home’s exterior is the first thing potential buyers see,” said National Association of REALTORS® President Gary Thomas, broker-owner of Evergreen Realty, in Villa Park, Calif. “Projects such as siding, window and door replacements can recoup more than 70 percent of their cost at resale. REALTORS® know what home features are important to buyers in your area and can provide helpful insights when considering remodeling projects.”

According to the Cost vs. Value Report, REALTORS® judged a steel entry door replacement as the project expected to return the most money, with an estimated 85.6 percent of costs recouped upon resale. The steel entry door replacement is the least expensive project in the report, costing little more than $1,100 on average. A majority of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects; all of these are estimated to recoup more than 71 percent of costs.

Three different siding replacement projects landed in the top 10, including fiber cement siding, expected to return 79.3 percent of costs, vinyl siding, expected to return 72.9 percent of costs, and foam backed vinyl, expected to return 71.8 percent of costs. Two additional door replacements were also among the top exterior replacement projects. The midrange and upscale garage door replacement were both expected to return more than 75 percent of costs.

According to the report, two interior remodeling projects in particular can recoup substantial value at resale. A minor kitchen remodel is ranked fifth and is expected to return 75.4 percent of costs. Nationally, the average cost for the project is just under $19,000.

The second interior remodeling project in the top 10 is the attic bedroom, which landed at number eight and tied with the vinyl siding replacement with 72.9 percent of costs recouped. With an average national cost of just under $48,000, the attic project adds a bedroom and bathroom within a home’s existing footprint. The improvement project projected to return the least is the home office remodel, estimated to recoup less than 44 percent.

The 2013 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels and replacements in 81 markets across the country. Data is grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 15th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood, LLC, was completed in cooperation with NAR and REALTOR® Magazine.

REALTORS® provided their insights into local markets and buyer home preferences within those markets. The 2013 national average cost-to-value ratio rose to 60.6 percent, ending a six-year decline. The ratio represents nearly a three-point improvement over 2011-2012. Lower construction costs are the principal factor in the upturn, especially when measured against stabilizing house values. In addition, the cost-to-value ratio improved nationally for every project in this year’s report and is higher than it was two years ago for both remodeling and replacement projects.

“A REALTOR® is the best resource for helping home owners decide what improvement projects will provide the most upon resale in their market,” said Thomas. “Each neighborhood is different, and the desirability and resale value of a particular remodeling project varies depending on where you live. When making a home remodeling decision, resale value is just one factor that home owners should take into consideration. Consult a REALTOR® to make sure you are making the best decision.”

Most regions followed the national trends; however the Pacific region, consisting of Alaska, California, Hawaii, Oregon and Washington, once again led the nation with an average cost-value ratio of 71.2 percent, due mainly to strong resale values. The next best performing regions were West South Central, South Atlantic, and East South Central. These regions attribute their high ranking to construction costs that were lowest in the country. While still remaining below the national average, most remaining regions showed strong improvement over last year. These are Mountain, New England, East North Central, Middle Atlantic, and West North Central.

Results of the report are summarized on NAR’s consumer Web site, which provides information on dozens of remodeling projects, from kitchens and baths to siding replacements, including the recouped value of the project based on a national average.

To read the full project descriptions and access national and regional project data, “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

What Will the New ‘Normal’ for Housing Be?

Property_Prices.jpgMortgage giant Fannie Mae recently offered some predictions of what the housing market’s “normal” will look like in the next two years.

In its report, “Transition to ‘Normal’?”, Fannie says while the housing market has shown improvement, uncertainty remains over both the economy and the real estate market.

“Our forecast is that 2013 and 2014 will exhibit below-potential economic growth,” according to the white paper. “This is despite the fact that we expect the housing rebound will continue and that the economy will benefit from the gradual increased growth of U.S.-based manufacturing, as well as the expansion of domestic energy production.”

The following are some of the projections Fannie made in its report:

  • Mortgage rates to stay low: Fannie Mae expects mortgage rates to remain low over the next few years. The mortgage giant expects rates will increase to no more than 4.2 percent by the end of 2014.
  • FHA loans may get more expensive: More costs may be assigned to Federal Housing Administration loans.
  • Refinancing drops: The boom in refinancing may have peaked last year with slower activity projected this year. “We expect 2012 to be seen as the high watermark for refinances and 2013 as the first of several transition years as the housing finance market transitions back to a more normal balance between purchase and refinance activity.”
  • Foreclosures continue to fall: Fannie expects foreclosures to continue to decline from their peaks as more alternatives to foreclosure are pursued.
  • Housing starts to rise: Fannie Mae predicts that housing starts will increase 23 percent in 2013 — which would be 60 percent more than the record low in 2010. Fannie expects housing starts won’t reach sustainable levels until 2016.
  • Mortgage originations grow: “Given our expectations of continued improvement in housing starts, home sales, and home prices in 2013,” Fannie Mae writes, “we project that purchase mortgage originations will rise to $642 billion from a forecast of $518 billion in 2012.”

Source: “‘Normal’ Housing Market May Not be What it Used to Be,” Realty Times

Garage Converted into an Apartment (9 Photos)

Garage-converted-into-an-apartmentFrench photographer Jeremy Buchholz, not having the money to buy an apartment in Bordeaux, the city, but found an original way. He bought an abandoned garage and turn it into a shelter. He now has an apartment of 41 square meters in the center of the city.Garage-converted-into-an-apartment-001









Are you pouring money down the drain?


Home improvement is paying off

remodel_thumb.jpgHomeowners can expect to earn back a larger percentage of the money invested in home improvement and remodeling projects for the first time since 2006, according to The 2013 national average cost-value ratio went up to 60.0%, which is a three-point increase over 2011-2012.

The Pacific region led the way with an average cost-value ratio of 71.2%, credited to strong resale values. West South Central, South Atlantic, and East South Central followed, primarily because construction costs were lower in these regions compared to the rest of the nation. But return on investment for remodeling really depends on the type of project that is undertaken.

Homeowners might expect to retrieve higher percentages with the following projects, according to House Logic.

  • Steel entry door– National average: $1,137; value at resale: $974; 85.6% of investment recouped
  • Fiber-cement replacement siding — National average: $13,083; value at resale: $10,379; 79.3% recouped
  • Wood deck — National average: $9,327; value at resale: $7,213; 77.3% recouped
  • Garage door — National average: $1,496; value at resale: $1,132; 75.7% recouped

The Joint Center for Housing Studies of Harvard University credit the upswing in home improvement projects to retiring baby boomers, who are retrofitting their current homes to age in place. In 2011, homeowners over 55 accounted for over 45 percent of all remodel spending. Additionally, the more than one million distressed properties that sold in 2011 added $10 billion to home improvement sales, according to Eric S. Belsky, managing director of the Joint Center. Belsky anticipates even more spending this year with the approximately “three million…foreclosures and short sales in the pipeline.”

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What’s Behind Falling Housing Inventories?

orange-county-housing-market_thumb.jpgHome prices are increasing across the country as the number of homes for-sale continues to fall. But at a time when buyer demand is picking up, why is inventory still so low?

Inventories fell to 1.82 million at the end of last year, a 21.6 percent drop from one year earlier, the National Association of REALTORS® reports.

The Wall Street Journal recently highlighted several reasons behind the dropping inventories, including:

  • Sellers hesitant to sell: About 22 percent of home owners with a mortgage are still underwater, owing more than their home is currently worth. Home owners don’t tend to sell unless a life-changing event occurs when they’re underwater because they don’t want to take a loss on the sale of their house. CoreLogic data shows that inventories are the most constrained in areas with the highest number of underwater borrowers.
  • Not enough equity to trade up: Often times, home owners rely on the equity from their home to make a down payment on their next home. With fewer home owners seeing equity in their houses, they may not have enough money to move into a pricier home, which is constraining the would-be “trade up” buyer from moving.
  • Investors continue to snatch up properties: Investors are snapping up properties, but they’ve changed their strategy from past years, which is also constraining inventories. Now they’re holding onto properties and turning them into rentals instead of rehabbing properties and flipping them for profit. This is keeping fewer homes on the market.
  • Banks are slowing down foreclosures: Banks have new rules to meet with the foreclosure process, and it’s causing them to move at a slower pace in foreclosing on homes. Banks also are showing a preference for short sales and loan modifications, which are curbing the number of foreclosed homes on the market.
  • Builders are doing less building: Housing starts were at record lows from 2009 through 2011 so there’s less inventory being added to the market. A rebound in the new-home market has only recently started to occur.

Source: “Six Reasons Housing Inventory Keeps Declining,” The Wall Street Journal