Gerry Wolff




When Buying, Selling and Renovating, it’s an Animal House, Say Realtors®

WASHINGTON (February 13, 2017) — When making decisions about buying, selling or renovating their homes, Americans, by and large, take their pets' needs into account, according to a new report from the National Association of Realtors®. The 2017 Animal House: Remodeling Impact report found that 81 percent of respondents said that animal-related considerations play a role when deciding on their next living situation.

"In 2016, 61 percent of U.S. households either have a pet or plan to get one in the future, so it is important to understand the unique needs and wants of animal owners when it comes to homeownership " said NAR President William E. Brown, a Realtor® from Alamo, California and founder of Investment Properties. "Realtors® understand that when someone buys a home, they are buying it with the needs of their whole family in mind; ask pet owners, and they will enthusiastically agree that their animals are part of their family."

In fact, according to the survey, 99 percent of pet owners said they consider their animal part of the family, and this becomes apparent in the sacrifices pet owners are willing to make when it comes to buying and selling homes. Eighty-nine percent of those surveyed said they would not give up their animal because of housing restrictions or limitations. Twelve percent of pet owners have moved to accommodate their animal, and 19 percent said that they would consider moving to accommodate their animal in the future.

Realtors® who were surveyed indicated that one-third of their pet-owning clients often or very often will refuse to make an offer on a home because it is not ideal for their animal. Realtors® also noted that 61 percent of buyers find it difficult or very difficult to locate a rental property or a homeowners association that accommodates animals.

When it comes to selling, 67 percent of Realtors® say animals have a moderate to major effect on selling a home. Approximately two-thirds of Realtors® say that they advise animal owning sellers to always replace thing in the home damaged by an animal, have the home cleaned to remove any animal scents and to take animals out of the home during an open house or showing.

Nearly half of all survey respondents, 52 percent, indicated that they had completed a home renovation project specifically to accommodate their animal. Of those who undertook projects, 23 percent built a fence around their yard, 12 percent added a dog door and 10 percent installed laminate flooring. Ninety-four percent of consumers indicated that they were satisfied with their renovation; 58 percent indicated they have a greater desire to be at home and 62 percent enjoy spending more time at home since completing their renovation.

When it comes to the enjoyment homeowners gain from these projects, fencing in a yard and installing laminated floors rated highest, both receiving Joy Scores of 9.4; Joy Scores range between 1 and 10, and higher figures indicate greater joy from the project. Adding a dog door came in a close second with a Joy Score of 9.2.

A majority of surveyed animal owners, 83 percent, indicated that they own a dog, which helps explain the overwhelming popularity of dog-related renovation projects. Forty-three percent of those surveyed said they own a cat, 9 percent own a bird, reptile, amphibian, arthropod, small mammal, or miniature horse, 8 percent a fish and 5 percent own a farm animal.

NAR members were also surveyed about their relationships with animals, with 80 percent of Realtors® considering themselves animal lovers and 68 percent indicating that they have pets of their own. Twelve percent of Realtors® surveyed volunteer for an organization that helps animals, and 21 percent plan to volunteer in the future.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.



HUD Lowers FHA MIP by a Quarter Point

Daily Real Estate News | Monday, January 09, 2017

Mortgage insurance premiums on FHA-backed loans will be lower by 25 basis points on loans endorsed starting January 27, the federal government announced today.

“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” Julian Castro, secretary of the U.S. Department of Housing and Urban Development, announced today.

NAR President Bill Brown praised the move. “Dropping mortgage insurance premiums will mean a lot more responsible borrowers are eligible to purchase a home through FHA,” he said. “That puts more money in the fund to protect taxpayers, and it puts more families in homes so they can live out the American dream.”

The new premium schedule, which takes effect for residential mortgage loans that have an insurance endorsement date on or after January 27,  is expected to save the average home buyer $500 a year in insurance costs.

In its announcement, HUD said the reduced premiums reflect the healthy state of HUD’s mutual mortgage insurance fund, which is the agency’s principle fund for insuring FHA mortgages. “We’ve carefully weighed the risks associated with lower premiums with our historic mission to provide safe and sustainable mortgage financing to responsible homebuyers,” said Edward Golding, HUD principal deputy assistant secretary for housing. “This conservative reduction in our premium rates is an appropriate measure to support [home buyers] on their path to the American dream.”

Under the new schedule, a home purchase with a base loan amount of up to $625,000, with an 85-percent loan-to-value ratio and a 30-year loan term, will require an annual mortgage insurance premium of 55 basis points, down from 80 basis points.  A 15-year loan of that same amount and with a 90-percent LTV ratio will require an MIP of 25 basis points, down from 45. Access the full schedule.

NAR is calling on FHA to take even more steps to help home buyers, including eliminating FHA’s “life of loan” mortgage insurance requirement, which forces borrowers to maintain mortgage insurance regardless of their equity position. Borrowers with traditional mortgage insurance can typically extinguish their mortgage insurance once they reach 20 percent equity in the property. “Our work continues, but we’re encouraged by today’s announcement,” Brown said.

—By Robert Freedman, REALTOR® Magazine


Millennials more willing to buy those fixer-uppers


NEW YORK – Jan. 18, 2017 – Millennial first-time homeowners are showing more willingness than previous generations to complete do-it-yourself projects around the house or wait until they can afford to make the improvements they desire, a new survey by Better Homes & Gardens magazine finds. Fifty percent of those surveyed said that their current home required some degree of repair or remodeling at the time they moved in.

Only 50 percent of first-time millennial homeowners say they are willing to spend top dollar to get exactly the features and quality they want in a home, the survey showed.

"These first-time millennial homeowners are focused on building equity, not debt," says Jill Waage, editorial director of Digital Content and Products at Better Homes & Gardens. "They are strong believers in being able to afford their dreams as they achieve them and not over-stretch themselves."

Eighty-five percent of first-time millennial homeowners say they view homeownership as a sound investment.

Their housing wish-list is for a mid-sized home (about 2,000 square feet) with a renovated kitchen and bathroom, as well as a deck or patio space.

The DIY projects that landed the highest on their to-do lists are installing light fixtures and tile, and painting walls, the survey found.

"Millennials and millennial 'firsts' [first-time homeowners] are paving their own paths in homeownership based on their own budgets, timeline and needs," Waage says. "These 'firsts' are replacing big-budget homes and expensive renovations with patience, frugalness and practicality."

Source: "Millennials Patient, Thrifty When It Comes to Homeownership," RISMedia (Jan. 11, 2017 
© Copyright 2017 INFORMATION, INC.


Where land surpasses property values


WASHINGTON – Jan. 17, 2017 – In some markets, the land is more valuable than the home that stands on it.

Case in point, in San Francisco's Sunset District, a fire destroyed a home for sale leaving it inhabitable. Despite that, last February, the home sold quickly for just under $1 million. Seven months later, the home was transformed into a four-bedroom home and sold for $1.77 million.

In San Francisco, land is a premium, and buyers often pay more for the land than the home is actually worth.

"Over time, the physical structure usually depreciates in value, while land appreciates," notes in a recent article. "That's because the property is in limited supply. Developers can stack more homes onto lots by building high-rises, but they can't produce more land. And that's why the value of land naturally goes up when population growth creates more demand."

Lincoln Institute of Land Policy data provides a snapshot of the 10 housing markets where land comprises more than half of a home's total value. The majority of the cities are in California, where buildable land tends to be scarcer. For example, in San Francisco, the average home value was $1.35 million in 2016. But about $1.09 million of that was attributed to the cost of the land, or 81 percent of the total price, the study found. On the other hand, in St. Louis, Mo., land is only about 10 percent of a home's total value.

Here are the cities where land costs exceeds property values by the highest amounts:

  • San Francisco, Calif.: 81%
  • San Jose, Calif.: 77%
  • Santa Ana, Calif.: 76%
  • Oakland, Calif.: 71%
  • Los Angeles, Calif.: 71%
  • San Diego, Calif.: 66%
  • Boston, Mass.: 60%
  • Miami, Fla.: 54%
  • Seattle, Wash.: 53%
  • Portland, Ore.: 51%

Source: "Not Dirt-Cheap: 10 Cities Where Land Is Worth More Than the Home on It," (Jan. 11, 2017)
© Copyright 2017 INFORMATION, INC.


Builders return to once-abandoned projects


NEW YORK – Jan. 16, 2017 – The supply of buildable lots is shrinking. That has prompted home builders to return to the abandoned lots left behind during the housing crisis in efforts to revive dwindling inventories of homes for-sale, The Wall Street Journal reports. A surplus of vacant lots and half-built subdivisions still remains across the country, serving as reminders of when the housing boom took an abrupt halt.

Nearly two-thirds of builders reporting low to very low supply of available lots in their markets, according to a survey conducted last year by the National Association of Home Builders. The supply of vacant developed lots has dropped by more than 20 percent across more than 80 major U.S. markets since 2011, according to Metrostudy, a housing research firm. Notably, markets like Nashville, Tenn., and Charlotte, N.C., have seen inventories of vacant lots plunge by more than 40 percent over the past five years.

Shortages have caused median single-family-home lots to surge to record highs of $45,000 last year, according to NAHB data.

In Cobb County, Ga., a subdivision known as Cameron Springs had become a place of dying landscape and plagued with abandoned lots that were left behind in the 2000s. Only a fraction of the homes that were to be built had been. Investment firm Drapac Capital Partners purchased the 101 remaining lots in the neighborhood for $375,000. The firm spent $550,000 to finish half-built lots as well as upgrade the pool and clubhouse. It hoped the renovations would be enough to attract homebuilders back to the neighborhood and to finally finish it.

The firm's gamble paid off. Drapac received 12 bids in the summer of 2016 for the neighborhood. It eventually sold to D.R. Horton for $6 million.

"I think they're all panicking," Sebastian Drapac, chief operating officer of Drapac Capital Partners, told The Wall Street Journal. "They're trying to get lot positions wherever they can."

Some developers and investors are changing the name of developments to remove any stigma left behind from the abandoned neighborhoods. Drapac Capital Partners, for example, tweaked the name of the neighborhood from "Brightwood – Established 2007" to "Brightwood on the Lake, Est. 2016."

Source: "With Lots in Short Supply, Builders Revive Abandoned Projects," The Wall Street Journal (Jan. 3, 2017)
© Copyright 2017 INFORMATION, INC.


Solar energy at turning point as costs drop


GREENSBORO, N.C. – April 19, 2016 – The Rev. Nelson Johnson knows regulators don't like the $20,000 solar panel system on the roof of his Faith Community Church in Greensboro, North Carolina. But the minister says he's willing to go to court to protect it.

"This is something that just makes moral sense, spiritual sense and financial sense," Johnson said. The sun, which God has given everybody, shouldn't just enrich powerful utility companies, he said.

Sunny Southern states have plenty of solar energy potential, and utilities across the region have begun to build large solar projects as the technology's price has dropped. But few homes and businesses sport solar panel systems largely because states in the region haven't embraced policies that support a residential market.

Utility companies say residential solar systems like Johnson's cost them money because solar owners pay less in monthly electricity bills yet expect their utility to step in and deliver power whenever their system doesn't. Solar advocates, on the other hand, say residential solar systems save utilities money by taking pressure off the electrical grid.

The solar system on the broad, flat roof of the nondenominational Faith Community Church was put there by NC WARN, an environmental advocacy group, to challenge state regulators. The group owns the system and charges the church for the electricity it produces – an ownership structure that is popular in other states but illegal in North Carolina.

Just seven states, all below the Mason-Dixon Line – Alabama, Florida, Kentucky, North Carolina, Oklahoma, South Carolina, and West Virginia – ban such third-party power purchase agreements, according to the North Carolina Clean Energy Technology Center at NC State University. Alabama, Georgia, Mississippi and Tennessee don't have rules governing how utilities reimburse customers for the excess electricity they generate.

Advocates like Johnson are pushing policymakers to create a friendlier environment for solar power, and several states have begun to do so. But utilities, worried that they may be crowded out, are pushing back.

"It's not really about solar at all," Duke Energy Corp. spokesman Randy Wheeless said of the partnership between Faith Community Church and NC WARN. "It's more about someone trying to set themselves up to be an electric utility when they're not."

Up and coming sector

Less than half a percent of the U.S.'s electricity comes from solar power. However, the sector is growing rapidly. Two-thirds of all solar photovoltaic installations in the country went online in the past three years, according to the latest data from the Solar Energy Industries Association and GTM Research, a firm that analyzes the electricity industry.

Utility-scale solar farms and solar thermal projects comprise about 60 percent of the nation's solar capacity. But small-scale solar is also catching on. By the end of 2014, some 600,000 U.S. homes and businesses had a solar system, according to GTM Research.

And the South is a good place for solar. Thanks to close proximity to the equator and lack of cloud and snow cover, more radiation from the sun hits states like North Carolina and Georgia than, say, upstate New York (although less than the desert Southwest). The U.S. Department of Energy calculates that both states receive 5-5.5 kilowatt hours of solar energy per meter per day, compared to upstate New York's 4-4.5.

Solar power only recently became low-cost enough to compete with other energy sources in the South, said Lauren "Bubba" McDonald, a member of the Georgia Public Service Commission. "What's making it happen is the technological advancement in solar energy – the panels, the price. That's what's making the difference."

In 2013, McDonald and his fellow regulators asked Georgia's major investor-owned utility, Georgia Power, to start planning more solar projects.

Nationwide, policymakers have used financial incentives and regulation to propel utility-scale construction and create a rooftop solar market. Federal and state tax credits, for instance, have made solar investments attractive.

As of October, 29 states required utilities to generate a certain share of their electricity from renewable sources such as solar power, hydropower and biomass, according to the NC State clean energy center. North Carolina is the only Southern state to have such a requirement, excluding Texas in the Southwest. It requires that by calendar year 2018 at least 0.2 percent of electricity sales to retail customers must come from solar.

North Carolina currently ranks fourth in the nation for total installed solar capacity – driven overwhelmingly by utility-scale projects – and investor-owned utility Duke Energy is planning more solar projects there, in South Carolina and in Florida.

The residential model

While utility-scale solar is spreading in the South, residential solar isn't. Just 7 percent of North Carolina's solar capacity comes from small-scale installations.

Small systems remain too expensive for most homeowners and businesses. Cheap electricity from fossil fuels and nuclear power gives property owners less reason to buy a system, and state laws haven't opened the door to the kinds of third-party ownership arrangements offered by companies like SolarCity Corp. and Sunrun Inc.

An analysis of data from solar panels representing four-fifths of U.S. solar capacity in 2014 found that almost two-thirds of residential solar systems were owned by a third party.

SolarCity's most popular option is called a power purchase agreement, and it works like this: The company installs a solar system on a customer's property, for no money down, and commits to maintaining the system over the length of the 20-year contract.

The company pockets tax credits for the installation, sells the customer the electricity (usually at a lower rate than she'd pay her utility) and sells excess electricity back to the grid. If all goes well, the customer saves money and the company makes money.

"It's the kind of business that people in business school dream about," said Richard Sedano of the Regulatory Assistance Project, a nonprofit that advises public officials on the power sector.

But no Southern state has lined up all the incentives and regulations needed for the model to work, said SolarCity spokeswoman Suzanne Merkelson. "It all has to be economically efficient. So you sort of have to have the right recipe to get the meal cooking," she said.

Georgia legalized third-party ownership of solar systems last year. But the state doesn't have a statewide mechanism, called net metering, for reimbursing customers for excess electricity generation. Florida allows net metering but not third-party ownership. South Carolina, one of the seven states that prohibits third-party power purchase agreements, passed a law in 2014 that allows customers to lease solar panels.

Florida also raises property taxes on buildings that install solar systems, making it harder for property owners to justify the investment, according to SolarCity.

The fight over rooftop solar

A small but vocal set of advocates – including pastors, environmental activists and tea party conservatives – are calling on lawmakers to let residential solar systems proliferate.

"I believe solar equals freedom. I believe that the [utility] monopolies in Georgia violate the U.S. Constitution," said Debbie Dooley, a tea party activist who championed Georgia's third-party ownership law. Ideally, she said, she'd like homeowners to be able to sell electricity to each other.

But utilities often have the upper hand in policy conflicts across the South.

Last year, a coalition of environmental and libertarian groups, Floridians for Solar Choice, launched a ballot initiative that would have lifted all kinds of restrictions on rooftop solar. It would have allowed third-party ownership and prevented utilities from charging system owners additional fees.

Utilities, in response, backed a rival ballot initiative that emphasized the right to own or lease a solar panel but also the right governments have to regulate solar ownership.

Screven Watson, a Democratic political consultant working on behalf of the utility-backed initiative, says it would allow regulators to protect consumers from solar installation scams. "We have seen evidence of unscrupulous practices in the solar industry already in Florida."

The coalition's initiative didn't gather enough signatures to qualify for the ballot this year. The utilities' did.

Last spring, North Carolina state Rep. John Szoka, a Republican, tried to legalize third-party ownership through his Energy Freedom Act. "If you can generate some of your own energy, why not?" he said.

Szoka tried to convince his colleagues that residential solar could introduce beneficial competition into markets currently monopolized by companies like Duke Energy. But he had little success, he said. The bill never made it out of committee, and he doesn't think it will move forward this session.

Asked about the company's position on his bill, Szoka said: "Duke is like any other corporation. They need to maximize profits for shareholders."

Wheeless, the Duke spokesman, said the company would have been more likely to back Szoka's bill if it had addressed several related issues, such as the state's expired renewable energy tax credit, or how utilities would interact with a rooftop solar market.

The company supported South Carolina's comprehensive 2014 solar legislation, Wheeless noted. And he pointed to Duke's new small-scale solar programs in the Palmetto State, which include customer rebates for homeowners who buy solar systems.

Now it's up to regulators to decide whether Faith Community Church's solar panel system breaks state law. Regardless of the North Carolina Utilities Commission's decision, Johnson is bracing for competing lawsuits from Duke and NC WARN. "We're happy to be an advocate for this," he said.

In the meantime, he'll keep talking about solar and its benefits. In a few weeks, he'll meet with about 20 other area faith leaders who are interested in building a solar farm.

Copyright © 2016, Sophie Quinton.


U.S. home construction tumbled in March


WASHINGTON (AP) – April 19, 2016 – Construction of new homes fell in March by the largest amount in five months, with weakness in all regions of the country except the Northeast.

Home construction dropped 8.8 percent to a seasonally adjusted annual rate of 1.09 million units, the Commerce Department reported Tuesday. It was the third decline in the past four months and left construction at its slowest point since October.

Applications for permits to build new homes, a good indicator of future activity, dropped 7.7 percent in March to an annual rate of 1.09 million units.

Construction activity has been volatile this year, dropping in January and March but posting a 6.9 percent rise in February. Housing construction has been helping fuel the overall economy, and economists expect the sector to rebound in the coming months.

Construction of single-family homes declined 9.2 percent in March to a seasonally adjusted 764,000. Apartment construction was down 7.9 percent to a rate of 325,000 units.

The overall drop of 8.8 percent was the biggest one-month decline since a fall of 11.3 percent in October.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday was unchanged at a reading of 58 in April, reflecting an overall optimistic outlook for new homes as the industry heads into the all-important spring sales season.

By region of the country, construction jumped 61.3 percent in the Northeast in March, following a big drop in February. Sales were down in all other areas, led by a 25.4 percent fall in the Midwest, a 15.7 percent drop in the West and an 8.4 percent decline in the South.

Copyright © 2016 The Associated Press


How to be a buyer in a sellers’ market


CHICAGO – April 18, 2016 – In a seller's market, homebuyers must be willing and able to act fast to snag the home they want. This spring, areas across the country have a limited number of homes for sale.

To help buyers succeed, created a cheat sheet for surviving a seller's market:

  • Be on call. "If you're only looking now and then when it's convenient, you're probably wasting your time," says James Malmberg, a real estate professional in Sherman Oaks, Calif. He suggests treating house hunting like job hunting. If someone calls with a lead, follow up promptly to gauge whether it could be a good fit – and don't linger.
  • Bring the paperwork. To be taken seriously, buyers would be wise to get a mortgage pre-approval letter as well as a "proof of funds" form from their bank to show they have enough to cover a downpayment. They'll be able to act quicker when they do find the right house.
  • Limit the contingencies. In a seller's market, buyers may need to drop some of the contingencies to score the house. Sellers prefer the fewest number of hurdles to closing as possible. If your buyers come in with several contingencies – such as "if" they secure financing – sellers are more inclined to bypass their offer and take another with less hassle. Also, "don't waste your time lowballing a seller," advises Sean Kelley, a real estate professional with Howard Hannah in Pittsburgh, Pa. "Always put in an aggressive offer."
  • Cast a wide net. Search for homes outside prime locations if faced with limited or high-priced choices. Buyers need to carefully consider what they're willing to compromise on. "Sometimes properties sit, even in a seller's market, because of a problem that is scaring other buyers away," such as some renovation work that may need to be done, Malmberg says. Those "flaws," however, might not be a big deal to your buyers. "Finding a house this way can also cut down on the amount of competition you will face," Malmberg adds.

Source: "Surviving a Seller's Market: The Ultimate Cheat Sheet,"® (April 7, 2016)

© Copyright 2016 INFORMATION, INC.


Gen X homeownership likely to stay low


NEW YORK – April 15, 2016 – Generation X suffered the most compared to any other age segment during the housing crisis, and they're still in the process of recovering. In fact, homeownership rates will likely stay low for Generation X – those born between 1965 and 1984 – for years to come, according to a study by the Harvard Joint Center for Housing Studies.

Generation X was one of the most successful generations in terms of homeownership rates back in 2004, but they dropped to the least successful by 2015.

In 2004, Gen Xers – aged 25 to 34 at the time – had a homeownership rate of 49.5 percent, the highest compared to any other group at that age, according to U.S. Census data. But last year, the homeownership rate for the now 35-to-44-year old age group fell to a more than three-decade low of 58.5 percent.

Baby boomers, who entered the housing market prior to the housing crisis in the early 2000s, have fared better in the aftermath than Gen Xers.

Generation X "came into the market at precisely the wrong time," says Rick Sharga, executive vice president at, an online real-estate brokerage. "We've effectively wiped out a group of homeowners who historically would have been on their second or third properties by now."

As a result, housing analysts largely center their talks on the millennials born between 1985 and 2004. Generation X tends to be ignored.

Generation X has around 83 million people; millennials have about 87 million. By 2025, millennials are expected to grow to 93 million due to immigration, but the population of Generation X is expected to stay the same. As a result, housing analysts are betting that the millennials will have the largest impact on the housing market.

However, the housing market may need Gen Xers. As Generation X continues to recover from the housing crisis, fewer middle-aged buyers are trading up with their homes; and that is contributing to the severely limited inventory of homes available for sale.

Source: "Housing Bust Lingers for Generation X," The Wall Street Journal (April 9, 2016) [Log-in required]

© Copyright 2016 INFORMATION, INC.


Tech firms relocating as Silicon Valley grows costly


SAN FRANCISCO – April 15, 2016 – For the past few years, Silicon Valley has been the darling of the American tech industry. In 2015, San Francisco and the surrounding area had some of the highest-priced office rents in the country (and office rents continue to soar) while experiencing the highest demand from technology sector tenants.

But as new tech players continue popping onto the scene facing low office space supply and sky high rents, are they seeing greener grass outside the Valley?

Over the past decade, technology giants, including Apple, Google, Amazon, Facebook, Twitter, Netflix, Tesla and Uber, enjoyed free reign of the San Francisco Bay area office market. Venture capital poured in. Freshly minted millionaires launched new start-ups and entrepreneurs passionate about technology looked for more office space as their firms expanded.

Fast forward to the present. The average rent per sq. ft. for San Francisco office space in February 2016 was $99.42, marking a 102.4 percent year-over-year increase, according to online real estate database LoopNet. During the same period, the amount of available office space dropped by more than 21.0 percent. And 2015 brought record employment to California, mostly in tech sector office jobs. In the same year, San Francisco was cited as one of the most expensive cities in the U.S., according to the Council for Community and Economic Research. Tech giants are driving much of that momentum, as the biggest names in U.S. technology call the San Francisco Bay Area home.

"In the Northern Peninsula and the Valley, in the last quarter or so, Apple has expanded by another 1 million square feet. Google has leased over 500,000 square feet, and they have entered into additional building purchase agreements. Palo Alto Networks has expanded by 300,000 square feet. Facebook has taken on 200,000 square feet," executives with office REIT Boston Properties noted in the company's fourth quarter 2015 earnings report.

Technology-firm led growth in established tech hubs may be slowing down, however.

"The tech sector has been so strong over the past 36 to 48 months. Can this be sustained? There is the possibility of pullback. Venture capital funding has slowed down considerably, the IPO market is more cautious and corporate bond yield spreads have widened," notes Alan Pontius, senior vice president in the commercial property group of brokerage firm Marcus & Millichap.

Slowing demand from tech tenants is the greatest source of risk to office and multifamily property owners in San Francisco, Silicon Valley, Seattle, New York and Los Angeles, according to Fitch Ratings, which classified the tech sector as "cooling" in a recent report.

But what about markets that are just emerging as potential tech hubs?

Tech expands to new cities

Office developers are now looking outside of the San Francisco area for new project opportunities. One example is Fremont, Calif. "Because of the growth in Palo Alto, there is movement out of the core and into secondary and tertiary markets, where developers are setting up tech parks," says Jerry Hoffman, president of Hoffman Strategy Group, an urban retail and integral use consultant.

Across the office sector in general, Fitch expects tech-oriented sub-markets will outperform in 2016. Major ratings agencies and data firms cite 2016 as a strong year for both central business districts (CBDs) and suburban office real estate. But where are technology start-ups planting roots today?

In simplest terms, technology firms are moving to the Midwest and the Southwest to enjoy lower office rents and more affordable housing for their workers. Those that wish to stay on the West Coast are moving north to Portland, Ore., or south to Los Angeles. These movements are even spurring spin-off market names such as "Silicon Prairie," "Silicon Desert," "Silicon Mountains," "Silicon Forest" and "Silicon Beach."

Consultants and brokerage firms in these emerging tech markets see two new trends in office space preferences. The first is the adaptive reuse of older buildings, such as factories and older grocery store spaces, into creative office hubs. Another is construction of new buildings offering more open layouts and communal workspaces.

"There is a fundamental shift underway in the way people use their office space," says Jay Chernikoff, founder and CEO of DeskHub, a provider of shared office space. Chernikoff notes that new developments in Scottsdale, Ariz., incorporate larger sheets of glass with higher sight lines to allow more light along with removal of interior walls.

"In the Phoenix market, we are seeing developers target this type of demand with projects incorporating larger floorplates, higher ceilings and indoor/outdoor connectivity—all in amenity-rich environments," says Tiffany Winne, senior vice president and branch manager of the Phoenix office of commercial real estate services firm Savillis Studley. Hoffman is seeing development trends of adaptive reuse and new development incorporating communal space also occurring in Missouri and Nebraska.

Copyright © 2016 Penton Media, Diana Bell


Buyers need a Realtor to compete in seller’s market


WASHINGTON – April 14, 2016 – With demand exceeding supply in markets across the U.S., homebuyers may face an uphill battle to find the perfect home this spring.

Total housing inventory at the end of February was 1.88 million existing homes available for sale – 1.1 percent lower year-to-year and at 4.4 month supply at the current sales pace (4.5 months in Florida), which is below the six-month supply that most experts consider a balanced market between buyers and sellers.

"When there is more demand than inventory, homes sell quickly, prices rise and bidding wars can start," says National Association of Realtors® (NAR) President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. "A Realtor with an ABR (Accredited Buyer's Representative) designation is a homebuyer's upper hand; they understand local markets and can negotiate on behalf of their buyer-clients."

Salomone says, "Buying a home is often one of the biggest decisions of a person's life, and having a Realtor in their corner is the ultimate advantage. They are there to guide consumers through the complexities of this life-changing transaction."

NAR's 2015 Profile of Home Buyers and Sellers asked recent homebuyers what they look for when deciding on a real estate agent: 53 percent said someone who could help them find the right home to purchase, and 12 percent said someone who can help them negotiate the terms of sale. The report found that homebuyers look at a median of 10 houses before deciding on one to purchase, and the typical search lasts 10 weeks.

"Having a real estate expert with specific knowledge of the local market and purchase process can mean the difference between a homebuyer getting that 10th house and having to search for another," says Salomone.

In 2016, the ABR designation celebrates its 20th anniversary, with over 28,000 ABR designees. Realtors with the designation have completed advanced training in representing the specific needs of buyers and have specialized training for finding buyers the right home in a seller's market.

© 2016 Florida Realtors®  


The 1960’s ranch home? It’s back.


LOS ANGELES – April 14, 2016 – One-story ranch houses, once overlooked in favor of two-story homes, are back in buyers' good graces. In fact, single-story homes are becoming so coveted in some markets that it's prompted bidding wars for limited supplies.

"You see this cycle," says Alan Hess, an architect and author of a 20th-century home design book called "The Ranch House." "Many types of buildings will be popular for a while, then go into decline, get torn down, then inevitably there is a return of interest. The ranch house is now on the upswing in that cycle."

Two-thirds of homebuyers (64 percent) say they prefer a single-story home, according to a housing preference study released by the National Association of Home Builders. Broken out by age, 35 percent of millennials say they prefer a single-story home, 49 percent of Gen Xers, 75 percent of baby boomers and 88 percent of seniors.

Yet despite the high demand for ranch homes, builders continue to largely favor constructing houses with two stories. Analysts say it's because two-story homes can be built on smaller lots at a time when the costs of land are escalating. The trend is particularly evident in Southern California, the birthplace of the ranch style home, which is seeing skyrocketing land costs.

"With the new developments, they're two stories," says Manny Fierros of Ontrac Real Estate in Whittier. "When you're able to find something with a good-sized lot, and a single story, that's what's attracting buyers."

Source: "All the Rage Before Disneyland Was Built, Iconic Ranch House Back in Demand," The Orange County Register (April 11, 2016)

© Copyright 2016 INFORMATION, INC.


Feb. single-family construction at 8-year high


WASHINGTON (AP) – April 4, 2016 – U.S. construction spending fell in February by the largest amount in three months. Weakness in nonresidential construction and government offset the strongest month for home construction in more than eight years.

Construction spending fell 0.5 percent in February following a 2.1 percent January gain, the Commerce Department reported Friday. Spending declines on construction of factories, communication facilities and other nonresidential activities fell by 1.3 percent in February. Spending on government projects was down 1.7 percent.

Those declines overshadowed a solid 0.9 percent rise in home construction, which pushed that sector to the highest point since October 2007.

Home construction has been a bright spot for the economy, growing at a sizzling 10.1 percent rate in the fourth quarter. Analysts are forecasting housing will remain strong this year.

The economy rose at a moderate rate of 1.4 percent in the October-December quarter. Many economists believe overall growth accelerated only slightly in the January-March period, although they expect growth to accelerate as the year progresses.

The dip in activity in February left construction spending at a seasonally adjusted annual rate of $1.14 trillion.

Government building activity dropped 1.7 percent, with spending by state and local governments declining 1.8 percent while federal construction spending was unchanged.

Construction activity for all of 2015 showed a 10.6 percent increase to $1.1 trillion, the highest annual level for spending since 2007.

A home construction boom peaked in 2006. But after the housing bubble burst, construction activity fell for the next five years. Construction spending has been rising since 2012.

AP Logo Copyright © 2016 The Associated Press, Martin Crutsinger. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  


Reports criticize Fannie, Freddie oversight


WASHINGTON – March 30, 2016 – A trio of reports from the watchdog for the Federal Housing Finance Agency (FHFA) are critical of the regulator's oversight of various initiatives.

One of the three reports focuses on FHFA's oversight of Fannie Mae and Freddie Mac's compliance with conservatorship directives.

As of October 2015, FHFA has issued 231 conservatorship directives since Fannie and Freddie were forced into conservatorship in 2008.

FHFA is being evaluated in the report for oversight of the government-sponsored enterprises' compliance of the directives from Jan. 1, 2013, through June 30, 2014.

The report, FHFA's Oversight of the Enterprises' Implementation of and Compliance with Conservatorship Directives During an 18-Month Period, along with the other two reports, was published on Monday by the Federal Housing Finance Agency Office of Inspector General.

The OIG noted that in 2011 and again in 2013, the then-FHFA inspector general testified before the Senate that FHFA had not proactively overseen GSE compliance with the directives to ensure that their purposes were achieved. The latest review found that little had changed.

FHFA has exercised very limited oversight of the GSEs' implementation of and compliance with its directives, the report said. FHFA didn't actively oversee GSE efforts to implement or comply with directives. It also failed to test compliance after a directive had been issued.

"We determined that, in large measure, FHFA, as conservator, exercised little oversight of the enterprises' compliance with conservatorship directives and relied on the enterprises to self-report concerns, questions, and operational issues with implementation and compliance," the OIG stated. "During the review period, we found that one enterprise shared compliance reports for each quarter with FHFA on the status of directives, but those reports were of very limited value because of their inaccuracies and incomplete information. The other enterprise provided no written directive compliance reports to FHFA."

The second report from the OIG, Review of FHFA's Tracking and Rating of the 2013 Scorecard Objective for the New Representation and Warranty Framework Reveals Opportunities to Strengthen the Process, reviewed FHFA's effectiveness in its efforts to track, rate and assess GSE performance on developing a plan to conduct up-front quality-control reviews on the revised representation and warranty framework. It also reviewed FHFA's assessing the GSEs' execution of the new model and use of tools to identify defective loans.

"We found that FHFA's records of the tracking and rating process were imprecise and unclear," the report stated. "The records contained internal inconsistencies and did not clearly reflect when targets were modified or deferred, or what actions were required to meet the target. We found that these records can create the mis-impression that work had been completed when, in fact, it had been modified or delayed. We also found that the agency did not consistently communicate guidance to the enterprises in writing."

The OIG made several recommendations, which FHFA accepted and reportedly took steps to address.

The third report, FHFA Should Map Its Supervisory Standards for Cyber Risk Management to Appropriate Elements of the NIST Framework, was critical of the regulator's guidance on how the GSEs, including the Federal Home Loan Banks, should address cyber threats.

Although FHFA is not among the five financial regulators that make up the Federal Financial Institutions Examination Council, FHFA's director is a voting member of the Financial Stability Oversight Council – as are the FFIEC bank regulators.

In 2015, the FSOC recommended that financial institutions utilize the National Institute of Standards and Technology Framework for Improving Critical Infrastructure Cybersecurity.

It also recommended that the regulators map their existing regulatory guidance to appropriate elements of the NIST framework and encourage consistent cyber security standards – which FHFA has not done.

"We found that FHFA's guidance is far less prescriptive and far more flexible than the guidance adopted by FFIEC and its federal regulatory members," the OIG wrote.

The OIG noted that FHFA maintains that its flexible guidance is more appropriate for the GSEs – something that is contrary to the conclusions reached by FFIEC regulators.

The OIG is recommending that FHFA implement FSOC recommendations – which FHFA accepted.

Copyright © 2016 Mortgage Daily. Distributed by Tribune Content Agency, LLC.


A big market niche: City dwellers moving to suburbs


NEW YORK CITY – March 29, 2016 – City dwellers confronted with a lack of space and high costs are moving to the suburbs. But it can be an adjustment. To make the transition easier, some real estate firms offer seminars and bill themselves as "suburb specialists" to help buyers make a decision.

In New York, real estate professionals are teaming up with suburban agents to offer seminars and "immersive tours" of the suburbs, The New York Times reports. The seminars dive into the concerns of families who are hesitant about leaving the city and offer step-by-step guidance on how to make the jump to suburbia.

"I've been referring to these people as reluctant urban defectors, because they don't want to leave," says Oliver Gold, a sales associate at Douglas Elliman who with a business partner created custom tours of the suburbs for city clients. "It's a real weighing of the pros and cons: 'Can I live in that three-bedroom, fourth-floor walk-up with one bathroom, or do I want to make the move?' … I tell everyone that brings this up to me, 'We don't revoke your citizenship when you go to the suburbs. You're allowed back.'"

A real estate advisory firm called Suburban Jungle also works with those who live in the city to help potential buyers find the right suburb to fit their lifestyle. The service expanded last year beyond just New York with offices now in San Francisco and Chicago.

Clients who take part fill out questionnaires, which include questions like:

  • Where did you grow up?
  • What did you love/hate about each place?
  • What's your ideal commute?
  • What things are most important to you in a community?

Participants are then assigned a "suburb strategist," who works with them and suggests towns to explore. The service is free and clients are later referred to real estate professionals in the town they choose. (Suburban Jungle receives payment from a portion of the commission if the referred agent then sells a home.)

However, some real estate professionals offer their own events or seminars specifically catered to city dwellers being priced out of the city and unsure where to move. Some agents talk about their own experience moving from city to suburb to help others make the adjustment.

"The overall message: Life isn't so terrible in the 'burbs," The New York Times writes. "In addition to highlighting the better real estate values, each broker emphasized the cultural attractions, farmers' markets and culinary options of their respective neighborhoods."

Source: "From the City to the 'Burbs, Step-by-Step," The New York Times (March 25, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD


Neighborhoods can’t do much about sober-living homes


BURBANK, Calif. – March 29, 2016 – Burbank residents were faced with the sobering reality on Thursday that city officials cannot do much to prevent or regulate small group homes, including sober-living facilities, operating in the city.

More than 40 residents gathered in a meeting room at the Community Services Building and heard city officials and an attorney explain that state and federal regulations limit any actions a local agency can take against such facilities.

Barbara Kautz, an attorney specializing in land-use law who was hired by Burbank in 2014 to clarify the city's housing definitions, told residents that, in most cases, the city must treat licensed and unlicensed group homes the same way it treats single-family homes.

This is due, in part, to the federal Fair Housing Act, which prohibits housing discrimination based on disability, ethnicity or other criteria, Kautz said.

Under federal law, a disabled person is someone who is either physically or mentally impaired. It also includes recovering drug and alcohol users, Kautz said.

During the past two years, Burbank residents have expressed concerns about sober-living facilities setting up shop in their neighborhoods, fearing that recovering drug addicts and alcoholics would negatively impact their standard of living.

On Thursday, residents said they were baffled to hear that most people looking to establish a sober-living facility are not required to get a permit from the city to operate.

Kautz said that the only time such a facility would need a permit is if the group home had seven or more residents in one home. She said zoning amendments or ordinances that are aimed at controlling or preventing group homes cannot be implemented because they could be cited as discriminatory toward disabled persons and could open the city to lawsuits.

In 2015, the city of Newport Beach, Calif., paid a $5.25-million settlement after a seven-year legal battle between three group homes, according to the Daily Pilot, a community newspaper in the area.

Attorneys for the facilities argued that Newport's ordinance, which required group homes housing seven or more people to obtain a permit to operate, was approved to make it nearly impossible to provide housing for recovering addicts.

Kautz said Burbank cannot restrict how far group homes are from single-family homes, limit the number of people in a group home or impose any law that specifically targets group homes.

Burbank's main option to crack down on illicit group homes is to clarify the definitions of a single-family home, boarding house, care facility (licensed and unlicensed sober-living facilities), supportive housing and transitional housing.

The goal is it to make it easier to differentiate between a facility that is or is not operating lawfully, Kautz said.

City staff and Kautz are working on revised definitions of group homes, which will be up for review by the Planning Board at a future meeting.

Copyright © 2016 the Burbank Leader (Glendale, Calif.), Anthony Clark Carpio. Distributed by Tribune Content Agency, LLC.  


Builders: 25% of new-home costs stem from regulations


WASHINGTON – March 28, 2016 – Citing an acute shortage of affordable rental housing and severe regulatory burdens that drive up the cost of single- and multifamily housing for homebuilders and consumers alike, the National Association of Home Builders (NAHB) called on Congress to pursue regulatory reforms that would improve affordability and promote new development.

Testifying before the House Financial Services Subcommittee on Housing and Insurance, Granger MacDonald, a homebuilder from Kerrville, Texas, and first vice chairman of NAHB, told lawmakers that home building is one of the U.S.'s most heavily regulated industries.

"Government regulations account for 25 percent of the cost of a new single-family home," said MacDonald. "The regulatory burden includes costs associated with permitting, land development, construction codes and other financial hindrances imposed on the construction process. Oftentimes, these regulations end up pushing the price of housing beyond the means of middle-class working American families."

NAHB actively opposes new regulations from the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency, the Federal Emergency Management Agency and other agencies that could drive up the cost of housing. Specifically, regulations on energy codes, waters of the U.S., OSHA's crystalline silica permissible exposure limit and the U.S. Department of Labor's persuader rule and new joint employer standard are a few of the regulatory issues that homebuilders say they face on a daily basis.

MacDonald also raised concerns that the U.S. Department of Housing and Urban Development's forthcoming regulation to implement the new Federal Flood Risk Management Standard will have a negative impact on the cost and availability of multifamily projects. Without maps of the regulatory floodplain, builders and developers using HUD products and programs will face unnecessary uncertainty as they plan multifamily projects.

Another factor driving up the cost of affordable housing construction, NAHB said, is Davis-Bacon Act mandates on federal construction projects that hinder the government programs' goals by creating additional layers of bureaucracy and costs.

"NAHB strongly opposes the mandatory use of Davis-Bacon prevailing wage rates and requirements," said MacDonald. "As this law is currently enforced, it is artificially driving up construction costs on apartment communities that include HUD financing, and the compliance burdens are creating barriers to entry for small mom-and-pop subcontractors to work on these projects."

While NAHB urged Congress to pursue regulatory reform, MacDonald commended the committee for its work on the Housing Opportunity Through Modernization Act of 2016 (H.R. 3700). The bill, which passed the full House earlier this year, would reduce inefficient and duplicative requirements that have made many of the HUD and rural housing programs burdensome.

MacDonald also called on lawmakers to continue their support of successful housing programs, such as the Low Income Housing Tax Credit, and urged them to support full funding for rental housing programs such as the Housing Choice Voucher Program, Project-Based Section 8 Rental Assistance and the HOME Investment Partnership Program.

© 2016 Florida Realtors®


Still-low interest rates bring a resurgence of refinancing


PHILADELPHIA – March 23, 2016 – Continuing low interest rates for 30-year mortgages – now hovering at 3.75 percent – may be sparking a new wave of refinancing.

Interest in refinancing is created by the power of suggestion – when a homeowner sees opportunity, said Jerome Scarpello of Leo Mortgage Inc. in Ambler.

"I took an application last week, and the borrower said, 'My brother told me rates are down, and this is a good time to refinance," Scarpello said.

Another borrower applied for a 20-year term – lowering the duration of the mortgage as well as the interest rate, he said. Currently, a popular choice is the 15-year mortgage, with rates being offered below 3 percent, Scarpello said.

"When I started in 1987, someone told me you have to lower your rate at least 2 percent for it to be worth it," he said. Today, "I believe you should re-coup your costs in two years – plus or minus – for it to be worth it."

No big increases in interest rates are on the immediate horizon.

"Absolutely," said Fred Glick, chief executive of U.S. Loans Mortgage Inc. in Philadelphia, when asked whether he had seen an uptick in refis. "The rates, along with the lifting of program restrictions in the aftermath of the 2008 [economic] crisis, has helped propel people into exploring refinancing."

Mark Zandi, chief economist at Moody's Analytics in West Chester said, "We are estimating $850 billion in refinancing in the first quarter, at an annual rate – up from $750 billion last year. As long as fixed rates remain below 4 percent, refi activity should remain strong."

In 2015, refinancings made up half of all mortgage applications. This year, Sean Becketti, chief economist at Freddie Mac, the government-sponsored mortgage-loan giant, expects them to be 40 percent of the total.

That's because the pool of borrowers who haven't yet refinanced their mortgages is getting smaller, Becketti noted. "I think we will see refis in the neighborhood of 2014 [$500 billion], but less than last year."

The "wild card," he said, "is that we are seeing more cash-out refis, not ones to lower rates, especially among borrowers in areas of the country with homes that have more equity."

Kristin Reynolds, an economist at IHS Global Insight in Lexington, Mass., said, "March continues to be stronger than last year, as mortgage rates have declined relatively steadily year-to-date."

In its most recent weekly tab of refinance applications, however, the Mortgage Bankers Association of America noted Wednesday that the numbers had dipped by 3 percentage points.

The Federal Reserve's March 16 decision to keep interest rates unchanged "may help refinancing in the near term," Reynolds said, though the stage is set for a June boost in the federal funds rate.

Most industry observers had predicted that fixed mortgage-interest rates would increase in 2016 rather than decrease. One reason for the prediction

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