For the Love of a Country House

For New Yorkers — a city of renters with apartments that are usually just barely big enough to accommodate their lives — a vacation home is not always just a house.

Sometimes, it’s more like a long-distance lover, the kind you only see when the weather is nice and no one has to go to work in the morning. Or maybe it’s a favored child, lavished with attention and worry.

If you don’t own the place where you live during the week, the vacation retreat becomes the final destination. A proper dining room, even one that’s two hours away, means you have space to host Thanksgiving dinner, plus you have enough rooms for your in-laws to spend the weekend. Soon enough, that scrappy cabin in the Catskills starts to house not just the trinkets collected during three-day weekends, but the memories that make a life.

“Because we live in small places, this is where we sleep, this is where we work, but it isn’t where we live,” said Kathy Braddock, a managing director of the New York City office of William Raveis. “We Live, with capital letters, in our country home. It’s where the kids spread out. It’s where they can run. It’s where we can actually live like, quote unquote, normal people.”

Which is how you might find yourself driving from your co-op loft in SoHo to your three-bedroom farmhouse in Cold Spring, N.Y., to retrieve a pair of misplaced tap shoes the night before your son’s dance recital. When your life is spread between two worlds, “nothing is where you put it, and in this case it’s 70 miles away,” said Jennifer Keller, who drove upstate to fetch those taps for 11-year-old Max Schoenstein last spring.

It’s not always love at first sight, though. Ms. Keller, a stay-at-home mother, wasn’t even looking for a vacation house romance when her partner, Richard Schoenstein, a lawyer, suggested the idea a decade ago. She had grown up in the city; to her, Central Park was all the open space anyone could need.

But Mr. Schoenstein, who grew up in the suburbs of Cleveland, couldn’t imagine raising children on concrete and splash pads alone. “We had a baby and something in him said, ‘If you have a baby and you don’t own grass, then you’re not doing a good job,’” Ms. Keller said. (The couple has since had a daughter, Audrey Keller, 5.)

So they bought the house and Ms. Keller, despite herself, fell in love as the house grabbed hold of not just misplaced shoes, but family memories. Now she worries about what will happen when they eventually leave the farmhouse — because love affairs do end. (Let’s face it: The long-term commitment is with the apartment in the city, which comes with a super who handles all the repairs.)

“It’s just a little bit heartbreaking,” Ms. Keller said. “Emotionally, the story is: I didn’t want you, now you’re here, and when I sell you I’m going to be sad.”

Sometimes a country house is the fun extrovert in your life, the one everyone wants to be around. Kathy Kemp lives with her husband, Tom Hughes, and their 12-year-old son, Jack Hughes, in a tiny rent-stabilized apartment in the East Village. The old farmhouse, with a barn overlooking the Delaware River in Halcottsville, N.Y., that they bought in 2005, is where the family can exhale.

“Our son is over six feet tall, our dog is over 35 pounds,” said Ms. Kemp, a clothing designer who owns Anna, a store on Christopher Street. “Everything is much larger, much faster than we expected.”

Mr. Hughes, 53, a writer, spends summers upstate with Jack, and Ms. Kemp, 53, comes up for the weekends. In the country, neighbors drop by unannounced and city friends come up to stay for long weekends, a luxury that isn’t possible in a tiny apartment where even the art on the walls has to be curated so as not to “take up too much visual space,” Ms. Kemp said.

The first few years they owned the house, as they would drive up from the city Ms. Kemp would wonder what had happened while she was away, like the house had a secret life. “Was it still there? Did we have heat?” she recalled. “Would there be a ghost?”

There was no ghost, and instead the family’s life migrated north. Years spent at summer camp means Jack has a circle of upstate friends. And a few years ago, the parents of one of his city friends coincidentally bought the house across the street in Halcottsville. “We have different lives in the city and the country,” Ms. Kemp said.

A second home is ultimately an escape hatch, the fun alternate existence where there is no daily grind and you can imagine a life of sleepy Sundays with birds, not car alarms, chirping in the morning. It can be tempting to shower it with attention and money.

Tom Postilio, 48, and Mickey Conlon, 42, rent a one-bedroom apartment in Midtown Manhattan that Mr. Conlon describes as “just a nice hotel room.”

Rather than buy a more inviting apartment, the couple, Douglas Elliman brokers who have a roster of clients that includes Barry Manilow, Joan Collins and Liza Minnelli, decided to splurge on a weekend house.

After six years and almost $6 million, they are nearly finished building an 11,000-square-foot house on a two-and-a-quarter acre parcel in Nissequogue, N.Y., overlooking the Long Island Sound. The lavish spread has six bedrooms, five fireplaces, a library, a banquet-style dining room and a conservatory with a Murano glass chandelier from the 1940s. Mr. Conlon describes the space, with its antique black-and-white-tile marble floors and a carved wood ceiling, as “Gatsby-era Long Island.”

Their extravagant investment begs the question: Why spend six years building a weekend palace when you could buy a pretty nice apartment in the city, where you actually live? It comes down to what you get for the money.

“In an urban market where space is at a premium, I think the second home, in terms of its personal attention, is distorted,” said Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers and Consultants. “You’re making up for the shortcomings of your primary residence by being perhaps more aggressive in modifying your second home.”

Or maybe you’re just never home in the city. Mr. Conlon and Mr. Postilio work long hours and mostly use their apartment as a way station to eat and sleep between other engagements. It’s not a space they care about much. The house on the North Shore of Long Island, though, is the opposite: a glamorous fairy-tale destination.

“We think of our lives in New York as a stream of consciousness,” Mr. Conlon said. “And this house adds punctuation.”

View full article here at NY Times.

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Watch for Asbestos When Renovating Older Homes: You May Be at Risk

As a homebuyer, it’s easy to understand the appeal of investing in an older home. After all, it’s the perfect opportunity to tackle a few DIY projects and renovations to give the place the custom touch you’ve always imagined. Although this can seem like an exciting endeavor, new owners may get ahead themselves without realizing their house may be harboring toxins from decades ago.

It’s important to understand the dangers of asbestos during home improvement projects and how to reduce exposure risks.

Measuring Your Risk

Asbestos is a natural silicate mineral that was revolutionary for the building trade until its carcinogenic nature was discovered. This toxin was once widely-used by the construction industry due to its resilience and ability to withstand chemicals and high temperatures. Although its health risks were discovered as early as the 1920s, the United States continued producing, importing and manufacturing asbestos-containing consumer products for decades.

Researchers concluded in 1960 that asbestos exposure could cause a wide range of long-term diseases, including asbestosis, lung cancer, and the often fatal form of cancer known as mesothelioma. As more tradesmen came forward with asbestos-related illnesses, this mineral became known as a primary source of occupational cancer.

The mineral is heavily regulated today, but millions of people are still vulnerable to exposure due to its expansive use in residential homes and buildings.

Asbestos is only considered dangerous when contaminated materials have been worn down or damaged which unfortunately, is a standard part of most renovation or remodeling work.

Any sanding, grinding, sawing, drilling, buffing, or physical impact may cause these fibers to become airborne and easily ingested or inhaled by anyone in the general proximity.

What Homeowners Need to Know

Asbestos is nearly impossible to identify on your own because it’s often mixed within building products, but it is possible to identify a hazardous situation and take appropriate preventative action.

Before getting involved with any sort of home improvement project, you should always double-check that your property has been recently inspected by a trained professional. This simple step is especially important if you reside in a home built more than 40 years ago and has visible signs of aging. This bit of precaution could save you from developing an asbestos-related illness years later.

You should be aware of common products that have a history of containing the toxin and monitor their condition for any sort of wear and tear. Keep an eye on old insulation, ceiling tiles, vinyl flooring, joint compounds, door gaskets, furnaces, roof shingles, electrical wiring, fireproof products, and more.

Asbestos is known to be a significant threat when it is “friable,”  meaning it can be easily crumbled or crushed by hand. Spray-on insulation and spray-on ceiling textures are prime examples of products that once contained friable asbestos and have been found within residential homes today.

Unlike floor tiles and cement that must endure long-term deterioration before asbestos fibers are loosened, the slightest amount of pressure can instantly release these fibers, allowing them to be carried throughout the air and dust indoors.

Do not panic and try to remove any materials you think are toxic, as this will only do more harm than good.

Instead, block off the area and avoid any activity, including sweeping or vacuuming, which can exacerbate the situation and cause toxic dust and debris to travel even further throughout the house.

Restrict anyone from going near the area until a professional can take samples to confirm it contains asbestos. If the toxin is present and appears to be hazardous, the licensed professional can safely remove the toxin from your home.

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Portland Now Generates Electricity From Turbines Installed In City Water Pipes

You’d be forgiven if the phrase “Portland goes green with innovative water pipes” doesn’t immediately call to mind thoughts of civil engineering and hydro-electric power. And yet, that’s exactly what Oregon’s largest city has done by partnering with a company called Lucid Energy to generate clean electricity from the water already flowing under its streets and through its pipes.

Portland has replaced a section of its existing water supply network with Lucid Energy pipes containing four forty-two inch turbines. As water flows through the pipes, the turbines spin and power attached generators, which then feed energy back into the city’s electrical grid. Known as the “Conduit 3 Hydroelectric Project,” Portland’s new clean energy source is scheduled to be up and running at full capacity in March. According to a Lucid Energy FAQ detailing the partnership, this will be the “first project in the U.S. to secure a 20-year Power Purchase Agreement (PPA) for renewable energy produced by in-pipe hydropower in a municipal water pipeline.”

As the video explains, Lucid Energy’s system isn’t affected by the sort of external conditions (namely: the weather) upon which other renewable energy sources–like solar and wind power– are reliant. Nor does the technology, completely ensconced within a pipe, have adverse effects on a surrounding environmental ecosystem, as an exposed hydroelectric dam might.

Fast Company points out that, in order to be cost and energy effective, Portland’s new power generators must be installed in pipes where water flows downhill, without having to be pumped, as the energy necessary to pump the water would negate the subsequent energy gleaned. However, Fast Company also notes that the system does more than simply provide electricity: It can monitor both the overall condition of a city’s water supply network as well as assess the drinking quality of the water flowing through it.

According to Lucid Energy’s FAQ, the partnership between the company and the city of Portland is currently finishing its “commissioning” phase, in which the system–particularly the aforementioned monitors and sensors–is put through rigorous final-stage testing. Once fully operational, the installation is expected to generate $2,000,000 worth of renewable energy capacity over twenty years, based on “an average of 1,100 megawatt hours of energy per year, enough electricity to power up to 150 homes.” The money generated will be split among the project’s investors, as well as will be used to recoup the cost of construction, and ongoing upkeep of the system. After 20 years the Portland Water Bureau will have the right to own the entire project and all subsequent energy and profit generated by it.

Using green tech to generate power and revenue from an existing municipal resource? Now all Portland needs to do is put a bird on it.

Read the full article here at Good Money

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How to Market a House Without a Garage

Garages haven’t always been part of the American home. In fact, it wasn’t until Ford Motor Co. started mass-producing the Model T in 1913 that small detached sheds were built on properties that had enough land to protect these new contraptions, according to Scott Sidler, licensed contractor and author of The Craftsman Blog. As the size and number of cars increased, so did the sheds. Eventually, these structures were integrated into the home-construction process, in part to make access easier.

In the 1980s, garages grew larger to keep in scale with emerging McMansions. Some were finished with heating, painted floors, windows, and storage. And in the most extreme cases, they were converted into living space, which meant cars again had to be parked elsewhere.

Now demand for a garage is decreasing with an emphasis on dense infill developments, walkable neighborhoods, and more car- and ride-sharing options. Chicago sales representative Jennifer Ames Lazarre with Coldwell Residential Brokerage recently listed and sold two high-end city homes without garages, each priced over $2 million.

Other priorities will sometimes trump demand, too. Recent research from realtor.com® pointed out that for parents of school-age children, high-performing educational institutions win out over a garage.

However, it’s still rare to find buyers who completely eschew them, though the data is scant. A recent poll conducted by Houzz found that only one in 10 respondents said they don’t need a garage. A few years earlier, the National Association of REALTORS®’ 2013 Home Features Survey found that 78 percent of homeowners had a garage and that the feature is more popular among buyers of new homes and suburban and Midwestern homeowners.

Sales associate Katie Horch, ABR, SFR, with Keller Williams Realty in Medford, N.J., thinks the importance of a garage depends on an area’s inventory and buyer motivation. “Some are fine without it,” she says. Others “don’t even use it for their cars but as a space to store things.”

On the flip side, there are plenty of buyers who will avoid a listing without a garage, even if the location, price, and everything else about the house meets their approval. “They think, ‘Uh oh, no garage’ and move it to the bottom or off their list,” says Libbe Pavony, a real estate salesperson with Houlihan Lawrence in suburban Briarcliff Manor, N.Y.

Real estate salesperson Steve Kempton with RE/MAX Community in Williamstown, N.J., is still looking for a buyer for a house he listed more than 70 days ago that has a garage that was converted to a recreation room. “It’s hard even to get buyers in. But there’s not much we can do since the seller feels the garage is an improvement rather than deterrent and doesn’t want to convert it back,” he says.

Similarly, Jennifer Roach, salesperson with Premier Sotheby’s International Realty in Sarasota, Fla., has a $1.2 million listing in her city’s historic district that she says probably hasn’t sold because its detached garage was converted to a guest cottage. The house has been listed since the end of March. She cautions homeowners that such an improvement represents a “gamble.”

Whether you’re selling a historic home that never had a garage, one on a tight lot where there isn’t room, or one where the space has been converted, you can use a multistep marketing approach to help widen the buyer pool. Here’s how to proceed:

Study the neighborhood to find out how prevalent garages are. In areas where garages are less common, salespeople can play up that fact. Few homes in the two historic areas near downtown Salem, Mass., have garages, and most lots are too small to build them, says Ryan Guilmartin, SRS, salesman with Keller Williams Realty in nearby Beverly. “About 95 percent of the houses don’t have garages, and the few that do are much more expensive, so we emphasize the savings,” he says.

In Albuquerque, N.M., the small houses in the walkable downtown area were built in the 1920s. Often, the original one-car garages have been converted to living space through the intervening years, says Jessica Beecher, owner of RE/MAX Select in Albuquerque. She says buyers familiar with this neighborhood, or urban areas in general, are typically not bothered by the situation. “For many relocating from bigger, not more expensive, cities, it’s usually not an issue since many are accustomed to not having a garage and parking on a street or paying for a parking garage,” she says. However, buyers not familiar with this part of town are disheartened by the difficult search for even a one-car garage. Beecher says they usually end up buying in another neighborhood where they can find a house with an attached two-car garage.

Price the listing competitively. Be sure to compare apples to apples—if you look at comparable houses without garages, you’ll get a lower listing price and appraised value than those with garages. How much less depends on the importance of this feature in the area. In Roach’s Sarasota neighborhood, most homes are built with garages since buyers want to protect their cars from the sun and oxidizing salt, have a place to store their beach gear, and protect their possessions from vandals if they head north for an extended period. Therefore, she says the absence of a garage can decrease the appraised value by as much as 20 percent. But those who’ve been priced out of certain neighborhoods may find the savings appealing.

Read the full article here at Realtors Magazine.

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Portland Neighborhoods by the Numbers 2018: The Suburbs

Welcome to our annual reference guide to 125 Portland neighborhoods and suburbs. Last year, two-thirds of Portland metro area markets clocked double-digit one-year median price changes. That hotness still holds in 2018. (Even as the fever breaks, just a bit, in the city of Portland, where prices rose just a median five percent.) From Cornelius to Wood Village, Beaverton to Scappoose, we crunch the numbers on 30 cities.

Methodology

Neighborhoods

Boundaries represent records maintained by the city as of January 2018. Boundary conflicts were resolved for statistical purposes only. Due to overlap between certain neighborhoods, boundary definitions may vary occasionally across categories. With the exception of the area unofficially (but universally) known as Dunthorpe, unclaimed sections of Multnomah County were excluded.

Real Estate

2017 data from the Regional Multiple Listing Service with analysis by the Center for Spatial Analysis and Research at Portland State University’s Department of Geography. Figures were rounded for legibility.

People

Data from the US Census Bureau’s American Community Survey 5-Year Estimates, released December 2017. The ACS data are estimates only and accuracy varies by attribute.

Rent Costs

Calculated from all renter-occupied units, estimated median rent is not adjusted for unit size or number of occupants. Figure includes estimated monthly utility costs.

Median Income

The Census defines household as including “all the persons who occupy a housing unit as their usual place of residence.” Thus this estimate includes living situations ranging from individuals to large households.

Crime

Portland neighborhood crime data reflects 2017 data provided by the Portland Police Bureau. For cities, crime data reflects 2016 and was sourced from the FBI. As of press time, 2016 crime data was not available for the cities of Maywood Park, Troutdale, West Linn, Wood Village, and unincorporated Sauvie Island. Nonviolent crime includes burglary, larceny (theft), and vehicle theft. Violent crime is defined as aggravated assault, arson, homicide, rape, and robbery. Crimes per 1,000 figures are based on reported incidents of both nonviolent and violent crime. Many factors can influence the crimes-per-1,000 figure and can sometimes complicate meaningful neighborhood comparisons (e.g., commercial districts, or neighborhoods with high traffic and low population density).

Read the full article here at Portland Monthly.

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The Incredible Shrinking Home

HomeWorld’s annual Generational Marketing Report in the August 6 issue examines how the downsizing of American homes across generations is reshaping housewares design, development and marketing.

Among the indicators of this small space living and design convergence is escalating demand for and creation of space-conserving, multi-functional and convertible housewares— from countertop cooking appliances to task furniture to tableware.

This year’s report looks at overall housing trends influencing the market; and how small space living is impacting design trends in home goods.

NEW YORK— The small space living trend has been hailed by the industry as the Millennial/Baby Boomer tie that binds. One is aging into homeownership looking for starter homes and access to urban markets while the other is experiencing “empty nesting” and looking to downsize.

This small space living trend has impacted product development across a number of housewares categories, and trends within the housing market over the past two years have pointed towards an uptick in smaller housing after years of decline.

According to the Census Bureau, new single-family houses less than 1,400 square feet that were sold in 2017 rose from 17,000 to 21,000. In addition, single-family homes between 1,400 and 1,799 square feet that were sold in 2017 rose from 79,000 to 90,000.

Rose Quint, avp/survey research at the National Association of Home Builders, added that about 12% of single-family starts in the last year and a half are townhouses.

“The share of townhouses declined substantially during the recession, but it has come back up because they are a good bridge between renting and buying. That is part of the reason that the overall average home size has declined over the last two years, because we see more construction of these kinds of homes,” she told HOMEWORLD BUSINESS®.

However, while demand for smaller spaces is on the rise, housing trends have revealed somewhat unexpected demographic preferences within that market.

Millennials remain a powerhouse in terms of buying potential within the housing market due to their sheer size and age range, but the group overall has not settled into smaller apartments and the urban centers that build them as readily as was previously expected.

“We are seeing that Millennials and first time homebuyers are actually both being pushed to the suburbs because they offer more affordable properties. We do see first time home buyers are typically purchasing a single family detached home. It might be a little smaller, but it is a very traditional home,” said Jessica Lautz, director of demographics and behavioral insights, National Association of Realtors.

According to market research firm The AIMsights Group, 54% of all buyers purchase homes in the suburbs. Of those, 57% are Millennials, ages 36 and younger.

“The stereotype of Millennials as urban hipsters does not match up when it comes to home ownership and this new life stage,” said Marsha Everton, principle, The AIMsights Group.

When it comes to Millennials, a number of factors have impacted housing purchases and preferences. Affordability, for example, for this demographic is the name of the game, Lautz said, and has impacted the group’s ability to purchase high-priced urban housing.

Some experts have also noted that Millennial homebuyers, many aged over 30, may be looking to have children in the near future. Millennial first-time homebuyers would be remiss not to consider more traditional suburban housing that could accommodate a larger household a few years down the road at a similar or even lower pricepoint than urban housing offers.

At the same time, Baby Boomers are also disproving assumptions made of them within the housing market. According to Everton, this group is showing more enthusiasm for “aging in place” rather than selling suburban homes and moving into urban communities.

“They look at downsizing, but the costs are more than they want to pay, particularly when it comes to cash flow,” Everton said.

While 15% of Millennials and 15% of Generation X are purchasing in urban centers, Lautz noted that the Silent Generation, ages 72 to 92, are in fact the demographic to watch. “What I find interesting is that the oldest generation is purchasing single-family detached homes at lower rates and they are purchasing condos and townhouses at higher rates. They want a smaller space and are not wanting the upkeep of a larger home,” she said.

However, while these demographics may not be purchasing the apartments expected of them, purchases of smaller single-family homes still open up opportunities for the industry where renovations can be a key instigator for housewares purchases.

According to Everton, 42% of all homebuyers are Millennials, 31% of homebuyers are Generation X and Baby Boomers account for 16% of homebuyers. And, homebuyers are also home renovators, with 73% of buyers renovating.

“And we make purchases of items that work and fit in our renovated space,” she said.

Another key change in the housing market that could have positive implications for the housewares industry is the growth of U.S. households over rental demand.

According to the Joint Center For Housing Studies at Harvard (JCHS), after a decade of soaring rental demand, growth in the number of renter households slowed from 850,000 annually on average in 2005 to 2015 to just 220,000 in 2015 to 2017. And, the number of owner households rose 710,000 annually on average in the past two years.

As renters become homeowners, an opportunity for the industry arises. Most consumers are more inclined to purchase housewares when they feel their surroundings are permanent. In addition, new homeowners are more likely to be gifted a wide range of housewares for the home and kitchen.

When it comes to designing housewares for smaller spaces regardless of housing type, the Millennial and Baby Boomer generations currently lead household growth, and are two of the current generations to watch especially as their housing preferences continue to evolve.

Read full article here at Home World Business

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We Asked: How Is The Homeownership Crisis Affecting You?

People from nearly every state in the country responded to a request from NPR on social media to tell us about their experience trying to buy a home. From urban metro areas to distant suburbs, there were common themes of rising home prices coupled with limited options.

In a series of stories NPR has reported on a variety of factors that are contributing to this new housing crisis: a construction labor shortage, rising costs of building materials, a shortage of undeveloped land, and an increasing amount of regulation that limits housing development.

Among the many responses we received to our questions, the vast majority reported being unable to find a home that was affordable. Some had been searching for the right home for years. Others had given up the search, or moved to a new state to find the exact same housing market they’d tried to escape from.

While a six-figure household income might appear to make homeownership a guarantee, the rising cost of homes kept many in that income bracket shut out of the market.

That’s not so surprising when you consider that the median price for a new home in the U.S. is above $300,000.

With a lack of new, affordable homes, respondents said they looked for lower-priced, older homes. But those homes often need renovations or upgrades that add to the total cost of the home.

It was common to hear that homes without updates for decades were selling for the same prices as homes that had already been renovated. Many people could not justify paying the high prices asked for outdated homes.

Many respondents from all over the country described bidding wars against other prospective buyers. This led to homes selling above asking price, oftentimes to buyers who had the cash to buy the homes in full.

Respondents who had to finance their new home simply couldn’t compete with cash buyers. Many described having homes literally bought out from under them as they toured homes with Realtors.

The suburb, long the place where more affordable homes could be found, is making way for housing that is even more remote. But buyers had to decide whether housing affordability was worth spending hours a day driving to and from their jobs.

For those who did end up buying a home, there was a universal sense of luck and relief. Unless prices begin to drop, from increased housing supply or some other cause, many respondents were unsure how they would be able to get into homeownership.

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Wallpaper for the Fifth Wall: A Modern Fix for Popcorn Ceilings?

Some home designers want to make a bigger statement with the ceiling, and they’re turning to wallpaper to do it. Wallpaper is once again growing in popularity for walls, and some designers are now experimenting with it to dress up the ceiling too.

Some designers are using it to transform a ceiling’s living space with wallpaper in minimalist designs or in metallic. It can add texture and certainly some drama to a space.

Some designers are using floor-to-ceiling wallpaper all in the same print. Others may have the walls all painted white or a light color and then use a wallpapered ceiling to jazz up the room. Faux tin on the ceilings can be a way to create a statement ceiling too.

Use with caution, however: A dark or bold of wallpaper could make a ceiling appear lower.

But for spaces that can pull it off, a wallpapered ceiling can look chic. Plus, if you have a listing with dreaded popcorn ceilings, this can be a way to give the ceiling a modern, yet less expensive update. Check out some of these examples from designers at Houzz.

View the full article here at National Realtors Association
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Study Says: It’s Easy to Get a Mortgage Again

For many, the path to becoming a first-time homeowner is an uphill climb. Student debt, low wages, high housing prices, and massive down payments can mean putting home-owning dreams on the back burner. But a new report provides a flicker of light for wannabe home buyers: It’s getting pretty easy to land a mortgage again, regardless of these hurdles.

People with higher levels of debt are getting approved for mortgages—and with lower down payments, too, says a new analysis from Core Logic, a real estate data and analytics firm. The study states that 20 percent of all conventional conforming mortgage loans (aka the ones that can be purchased and guaranteed by the federally-owned mortgage companies Fannie Mae and Freddie Mac) are now going to traditionally “risky” borrowers (or those with large income-to-debt ratios of 50 percent). Additionally, conventional purchase loans with a down payment of less than 5 percent (compared to the standard 20 percent down) are now making up 9 percent of all these loans, compared to just 2 percent in 2014.

Now, if you’ve already paused at the word “easy mortgage,” don’t necessarily think we’re gearing up for another great economic disaster (thought experts have said there could be a new recession coming in the next couple of years). If you remember the Great Recession of 2008 (or you’ve recently streamed “The Big Short” on Netflix), you know these easy mortgages were one major cause in millions of people losing their jobs, banks needing bailouts, and stock markets across the globe crashing.

Unlike the time leading up the to 2008 recession, today’s borrowers must provide full documentation of their income and ability to repay the loan. The study also states that the average credit score for homebuyers to get a mortgage remains at 755—unchanged in the past year. This means that they’re fiscally responsible candidates, they just might have a little more risk than the banks have previously been comfortable with.

This may have something to do with the overall housing market slowing, too. It seems to be that the banks are realizing that there aren’t that many viable mortgage candidates left that can hit all the marks. So if they want to keep selling mortgages (and profiting off of them), they’re going to loosen up their restrictions. Still confused? Think of it this way, with a Tinder metaphor: For the past decade or so, banks have been mostly swiping right on objective hotties. But they’ve done that for so long that their Tinder feeds are now only showing still conventionally attractive, very date-abe people (the horror). Now, while they’ve usually swiped left on these people, they’re all of a sudden DTF (down to finance, that is).

Now, before you jump into a big bank’s king-sized bed, you need to ask whether this is financially beneficial for you, too. Easier mortgages are still fraught with risk, so it’s important to look at your financial situation before you decide to go out and apply for a mortgage.

For those who can afford the monthly mortgage, but not so much a 20 percent down payment, these smaller down payment mortgages might not be worth it, regardless if it’s “easy” or not. “It does call into question how much of a safety buffer exists,” says Douglas Boneparth, president of Bone Fide Wealth, a financial advisor firm geared towards millennials. If the mortgage you can now be approved for would max out your monthly budget or come at risk of adding money to your long term savings, you should probably keep renting.

Whitney Morrison, a certified financial planner in Austin, Texas, echoes this statement, noting that even if your monthly mortgage payment is lower than rent in your area (and you have a low down payment), it will still take, on average, between two and four years (and more than 18 years in places like New York City) to break even on a home. That means when you factor in the down payment, closing costs, taxes, and other fees, your overall monthly cost, coupled with the equity you’ve appreciated, only actually becomes equal to renting after a couple of years (or maybe even decades). In short, if you’re looking for a way to save money on housing, these easy mortgages aren’t exactly an easy way to save cash.

But, as with anything financial, there is no one-size-fits-all answer: A lower down payment mortgage could be a great thing for you, especially if owning a home is a priority. If you have enough money in the bank and would prefer not to fork over more of your cash to the bank for a low-rate mortgage, then it would make sense to take advantage of one of these easier mortgages, says Boneparth. If homeownership is not your main priority—but you’re interested in a long-term investment that will pay dividends, there might be better options for you out there.

So what’s the final answer to the question, “Easy Mortgages: Good or Bad?” TLDR: It largely depends on your particular situation and priorities, and you may want to talk to a financial planner about your options.

 

View the full article here at Apartment Therapy

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Can’t afford a bigger home? Try renting out the one you have

Today’s housing market is so competitive and pricey that even those homeowners who might want to move up to a larger home are staying put. They either can’t find or can’t afford what they want. A new strategy, however, is becoming increasingly popular — in order to afford that new home, keep the old one.

The number of investor-owned properties continues to rise, but the “investors” are not all big companies or landlords with multiple properties. More and more, they are just current owners using today’s very lucrative rental rates to pay for a bigger home.

Liz and Kevin Chamberlain, both in their mid-30s, needed more space than their Washington, D.C., home could offer, after the birth of their first child. They thought about renovating, but the cost to expand was incredibly high, and the footprint of their Capitol Hill row house was limited anyway. Their neighborhood, however, is commanding very high rents.

“We ran the numbers. I literally made a spreadsheet and ran all the different options,” said Liz, who purchased the Capitol Hill home several years ago, before she was married. “It made the most financial sense for us to keep our house in D.C., rent it out and buy here.”

Liz and Kevin bought a larger home with a big yard just outside D.C. in Cheverly, Maryland. She says many of their friends are doing the same thing as their families expand.

“It was great for us because we were going to be happier here in a bigger space,” she added.

Liz and Kevin had already saved money for a potential renovation, so they just used that for the down payment on the second home, and lenders today are becoming increasingly flexible with investment home mortgages. They have to be, because higher interest rates have left them with much less refinancing business. They need to make that up somewhere.

“They’re looking at the possibility of making more loans,” said Lawrence Yun, chief economist at the National Association of Realtors. “Several years ago, during the depths of the housing crisis, they would have been extremely strict, but now they are looking at the rental income as a mitigating factor for carrying two mortgages.”

Strategy offers dual benefits

Some Realtors are actually recommending the strategy to their clients, as the housing market becomes increasingly competitive and more and more potential move-up buyers feel priced out.

Not only do homeowners like Liz and Kevin get the rental income to help cover both mortgages, they will also continue to see price appreciation on their old home, which they would have lost had they sold it. Demand for rental homes is so strong in their neighborhood, and in most urban areas today, that they were not at all concerned with finding a renter.

The median price of a home sold in June hit another new high, according to the National Association of Realtors, and the supply of listings available continues to hover near record lows. Demand for housing, both owned and rented, is extremely high, given the improvement in the economy and the job market. That means both rents and home values are unlikely to falter.

Millennials, the largest generation, are finally forming households at an ever-increasing rate, moving out of their parents’ basements or out of shared living situations. Because they were delayed by the recession, many looking for single-family homes are older and married, but there are precious few starter homes for sale. Single-family rentals are therefore a hot commodity.

Of course, for current homeowners, becoming a landlord does add both liability, risk and potential headaches. Some may opt to use a rental company to handle the management of the property, including collecting rent and doing repairs, but that cuts into monthly profits.

“Certainly having an umbrella policy is a really good idea to make sure you’re covered insurance-wise,” advised Liz. “And then I do think living in the house, and really knowing it and making sure it’s in good shape before you leave and rent it out, is probably one of the best things you can do.

View the full article here at CNBC

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