Should I Move or Remodel?

Posted inSelling by Tara Sharp
Windermere Blog
 

There are a number of things that can trigger the decision to remodel or move to a new home. Perhaps you have outgrown your current space, you might be tired of struggling with ancient plumbing or wiring systems, or maybe your home just feels out of date. The question is: Should you stay or should you go? Choosing whether to remodel or move involves looking at a number of factors. Here are some things to consider when making your decision.

 

Five reasons to move:

1. Your current location just isn’t working.

Unruly neighbors, a miserable commute, or a less-than-desirable school district—these are factors you cannot change. If your current location is detracting from your overall quality of life, it’s time to consider moving. If you’re just ready for a change, that’s a good reason, too. Some people are simply tired of their old homes and want to move on.

2. Your home is already one of the nicest in the neighborhood.

Regardless of the improvements you might make, location largely limits the amount of money you can get for your home when you sell. A general rule of thumb for remodeling is to make sure that you don’t over-improve your home for the neighborhood. If your property is already the most valuable house on the block, additional upgrades usually won’t pay off in return on investment at selling time.

3. There is a good chance you will move soon anyway.

If your likelihood of moving in the next two years is high, remodeling probably isn’t your best choice. There’s no reason to go through the hassle and expense of remodeling and not be able to enjoy it. It may be better to move now to get the house you want.

4. You need to make too many improvements to meet your needs.

This is particularly an issue with growing families. What was cozy for a young couple may be totally inadequate when you add small children. Increasing the space to make your home workable may cost more than moving to another house. In addition, lot size, building codes, and neighborhood covenants may restrict what you can do. Once you’ve outlined the remodeling upgrades that you’d like, a real estate agent can help you determine what kind of home you could buy for the same investment.

5. You don’t like remodeling.

Remodeling is disruptive. It may be the inconvenience of loosing the use of a bathroom for a week, or it can mean moving out altogether for a couple of months. Remodeling also requires making a lot of decisions. You have to be able to visualize new walls and floor plans, decide how large you want windows to be, and where to situate doors. Then there is choosing from hundreds of flooring, countertop, and fixture options. Some people love this. If you’re not one of them, it is probably easier to buy a house that has the features you want already in place.

 

Five reasons to remodel:

1. You love your neighborhood.

You can walk to the park, you have lots of close friends nearby, and the guy at the espresso stand knows you by name. There are features of a neighborhood, whether it’s tree-lined streets or annual community celebrations, that you just can’t re-create somewhere else. If you love where you live, that’s a good reason to stay.

2. You like your current home’s floor plan.

The general layout of your home either works for you or it doesn’t. If you enjoy the configuration and overall feeling of your current home, there’s a good chance it can be turned into a dream home. The combination of special features you really value, such as morning sun or a special view, may be hard to replicate in a new home.

3. You’ve got a great yard.

Yards in older neighborhoods often have features you cannot find in newer developments, including large lots, mature trees, and established landscaping. Even if you find a new home with a large lot, it takes considerable time and expense to create a fully landscaped yard.

4. You can get exactly the home you want.

Remodeling allows you to create a home tailored exactly to your lifestyle. You have control over the look and feel of everything, from the color of the walls to the finish on the cabinets. Consider also that most people who buy a new home spend up to 30 percent of the value of their new house fixing it up the way they want.

5. It may make better financial sense.

In some cases, remodeling might be cheaper than selling. A contractor can give you an estimate of what it would cost to make the improvements you’re considering. A real estate agent can give you prices of comparable homes with those same features. But remember that while remodeling projects add to the value of your home, most don’t fully recover their costs when you sell.

 

Remodel or move checklist:

Here are some questions to ask when deciding whether to move or remodel.

1. How much money can you afford to spend?

2. How long do you plan to live in your current home?

3. How do you feel about your current location?

4. Do you like the general floor plan of your current house?

5. Will the remodeling you’re considering offer a good return on investment?

6. Can you get more house for the money in another location that you like?

7. Are you willing to live in your house during a remodeling project?

8. If not, do you have the resources to live elsewhere while you’re remodeling?

 


Posted on July 16, 2013 at 10:48 pm
Debi Bloomquist | Posted in Economics, Home Finances, Homeowner News, Real Estate, Uncategorized |

Buying a House: The Cost If You Waited

by THE KCM CREW on JULY 8, 2013 · in FOR BUYERSPRICING

We often talk about the potential cost of waiting to buy a home. Today, we want to look at the actual cost for someone who waited over the last year. We used a 10% increase in house values as prices have gone up by double digits in the country on average. We looked at approximate mortgage rates last year compared to this year. Here is the impact on a monthly mortgage payment (principal and interest):
 

 


Posted on July 11, 2013 at 10:24 pm
Debi Bloomquist | Posted in Economics, Home Finances, Homeowner News, Real Estate |

June Statistical Update

Prices continue to rise throughout Snohomish County. County-wide prices are up 18% year-to-date and up almost three percent in the month. The month's supply of inventory increased to 1.4 months, which is still the lowest ever for any June in the last 10 years.  If you've been thinking of selling, this may be the perfect time.  Contact me so you can find out what's selling in your area. 


Posted on July 10, 2013 at 11:28 pm
Debi Bloomquist | Posted in Economics, Real Estate |

Mortgage Interest Rates: Where Are They Headed?

by The KCM Crew on July 1, 2013 · in For Buyers

Today’s $20,000 question is…Where are mortgage rates headed in the near future? Most believe the rapid rise in rates experienced over the last month will not be sustained and that they will level off into a range between 4% and 5%.

When recently asked, Zillow’s director of Mortgage Marketplace, Erin Lantz suggested:

“It is impossible to predict. However, we expect there to be a lot of volatility, probably between 4.5% to 5%.”

In Bankrate.com’s Mortgage Rate Trend Index last week, 20% of the experts said rates would go up this week, 30% said rates would go down and 50% said they would remain unchanged.

What about going forward?

Doug Duncan, chief economist for Fannie Mae recently addressed where mortgage rates may eventually end up:

“I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.”

Why wouldn’t the Fed be troubled? They have artificially kept rates low in order to stimilate the economy. As economic indicators begin to show signs of a recovery, the stimulus will be pulled back and rates will rise.

Frank Nothaft, Freddie Mac’s VP and chief economist confirms this:

“As the economy continues to improve, we expect to see continued upward movement in long-term interest rates.”

Buckle in!! The rollercoaster ride will probably continue.


Posted on July 2, 2013 at 4:23 pm
Debi Bloomquist | Posted in Economics, Home Finances, Homeowner News, Real Estate |

How to beat the summer heat inside older homes

Originally published Friday, June 14, 2013 at 8:01 PM

In an older home, the attic may have little insulation. Over time, what is there may have been disrupted, providing leak points where warm air escapes in the winter and hot air gets in during the summer.

 
HomeWork

Q: Why is my older home so hot?

A: This question comes up a lot, especially with older homes. In most cases, older homes are poorly insulated.

Energy codes have gone through many changes over the years, making homes more energy efficient. A well-insulated home holds in warmth during cold weather and keeps out the heat on hot days.

Current codes require the entire exterior wall cavity to be filled with insulation, including insulated headers over doors and windows, but this has not always been the case.

In an older home, the attic may have little insulation. Over time, what is there may have been disrupted, providing leak points where warm air escapes in the winter and hot air gets in during the summer.

Also, your attic may not have attic venting. Substandard venting leaves the hot air that collects on warm days to take the path of least resistance out, which may be down into the house.

Windows are often another weak point. It is possible your home might still have single-pane windows as opposed to the double and even triple-pane windows on today’s market.

There are several remedies, depending on the design of your home and the budget you have. A good first step would be to consider an energy audit to help you identify problem areas. Some utility companies provide the audits for no or very low cost so it would be worth checking with your local company.

Seattle City Light customers can find information about its audit program at

Puget Sound Energy customers can find information on its website, pse.com/savingsandenergycenter/ForHomes/Pages/HomePrint.aspx.

Some of the steps that can help keep your older home cool:

• Plant shade trees or vegetation to keep the strongest sun rays from heating your home.

• Provide awnings, trellises or other built structures outside to keep the sun from beating down on your windows.

• Consider replacing single-pane windows with double or triple pane with argon/insulated windows to minimize heat transmission. Windows can also be tinted to reduce solar-heat gain. If you choose to replace your windows, an added benefit is you can seal any gaps where leakage might be occurring during installation.

• It is difficult to add insulation to walls, but many times attic space can be easily accessed to blow in additional insulation. Also, attic vents can be installed to help the heat escape, since heat rises and will collect in your attic. Another often effective measure is to install an attic fan that is connected to a thermostat. It will help push hot air out of the attic.

• If exterior doors are the source of your leak, new caulking to seal or weather stripping could help you keep your home cooler in the summer and warmer in the winter.

• Whenever possible, take advantage of cross-ventilation by opening windows on opposite ends of the house to increase airflow. This is especially effective if you keep the house closed during the hottest parts of the day and open windows as the temperatures drop.

• Ceiling fans are effective for circulating the air, but even fans you get at the drugstore can help and they get quieter and more energy efficient every year.

• If you are thinking about getting a window unit or free-standing air-conditioners, try to shop for them offseason before demand and prices spike.

 

Jamie Hsu, Lakeville Homes, is a member of the Master Builders Association of King and Snohomish Counties’ Remodelers Council and provided the information contained in this article. If you would like more information or have questions about home improvement send them to homework@mbaks.com. Sorry, no personal replies. Always consult local codes and contractors.

 


Posted on July 1, 2013 at 11:12 pm
Debi Bloomquist | Posted in Economics, Home Finances, Home Improvement, Homeowner News, Real Estate |

Buying a House? 3 Reasons to Do it Now!

by The KCM Crew on June 24, 2013 · 

 

AddressHere are three great reasons to consider buying a home today instead of waiting.

1.) Prices Will Continue to Rise

Standard & Poors recently upgraded their 2013 forecast for the S&P/Case-Shiller Home Price Index to an 11% year-over-year increase from their original 8% projection.

The Home Price Expectation Survey, which polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts, projects a 22.3% appreciation in home values over the next five years. The bottom in home prices has passed. Waiting no longer makes sense.

2.) Mortgage Interest Rates Are Increasing

As reported by Freddie Mac, interest rates for 30-year fixed-rate mortgages have risen about 1/2 percentage point over the past several weeks.

The National Association of Realtors, the Mortgage Bankers Association and Fannie Mae are calling for interest rates to rise by approximately an additional ½ percentage point by this time next year. Some are trying to minimize the impact of higher rates. For example, Freddie Mac in their June U.S. Economic and Housing Market Outlook stated:

“At today’s house prices and income levels, mortgage rates would have to be nearly 7 percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.”

However, an increase in rates will impact YOUR monthly mortgage payment. Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3.) It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

 


Posted on June 25, 2013 at 8:31 pm
Debi Bloomquist | Posted in Economics, Homeowner News, Real Estate |

Real Estate ‘A Tremendous Buy’: CEO

Published: Tuesday, 18 Jun 2013 | 1:15 PM ET
By: | Online Producer CNBC.com
 

Supply shortages and interest rates will continue to be positive for the real estate market, Colony Capital CEO Tom Barrack said Tuesday.

"Look, it's a tremendous 'buy,' he said. "The good news for the home builders is they start planning profitability five years ago."

On CNBC's "Fast Money," Barrack said that the market was still hot.

"Demand is exponential," he said. "Affordability at the entry level may get hit a little bit, but traditional rates on 30-year fixed-rate mortgage, which has been the best investment for Americans, has always been in the 6s for the last 10 or 15 years."

Interest rates on a 30-year fixed-rate mortgage were below 4 percent this week.

Barrack sounded bullish across the real estate spectrum.

"The supply is so dismal in every category, in every category of home building, in every category of rental," he said. "We bought 13,000 houses. We're renting them in 21 days."

Multifamily units were seeing rents higher by 15 percent over the last 12 months, he added.

As the rate of foreclosures on approximately 6 million homes in the United States speeds up, the demand for rentals for 6 million families would also rise, Barrack said.

"Housing today is not a bubble," he added. "There may be a bubble in the Fed, which is necessary to make what's happening happening, a slow, soft increase in jobs and predictability. Housing is the best buy for the average American because they can vote with their feet. You can get a Fannie or Freddie loan, even on a second house, and if you have a FICO score and a $20,000 down payment, you can be in business."

 

 

 

 

 

 

 


Posted on June 21, 2013 at 10:22 pm
Debi Bloomquist | Posted in Economics, Real Estate, Uncategorized |

Until Mortgage Rates Hit 10.5%, Buying A Home Will Still Be Cheaper Than Renting


By Jed Kolko, Trulia Chief Economist on  Forbes.com
6/14/2013

The recent rise in mortgage rates has made buying a house a little more expensive: the increase in the 30-year fixed rate over the past month from 3.4% to 3.9% (Freddie Mac) raised the monthly payment on a $200,000 mortgage by $56, or 6%. However, because mortgage rates are still near long-term lows, and because prices fell so much after the housing bubble burst and remain low relative to rents even after recent price increases, buying is still much cheaper than renting. That means that the recent jump in rates doesn’t change the rent-versus-buy math much.

Rates are likely to keep rising, but how far must rates rise before buying a home starts to look expensive relative to renting? To answer this, we updated our Rent vs. Buy analysis with the latest asking prices and rents from March, April, and May 2013. Following our standard approach, we calculated the cost of buying and renting for identical sets of properties, including maintenance, insurance, taxes, closing costs, down payment, sales proceeds, and, of course, the monthly mortgage payment on a 30-year fixed-rate loan with 20% down and monthly rent. We assume people will stay in their homes for 7 years, deduct their mortgage interest and property tax payments at the 25% tax bracket, and get modest home price appreciation (see the detailed methodology and example here). Here’s what we found:

Buying remains cheaper than renting so long as mortgage rates are below 10.5%. At 3.9%, the current 30-year fixed rate according to Freddie Mac, buying is 41% cheaper than renting nationally. With a 5% mortgage rate, buying is still 34% cheaper than renting nationally. Mortgage rates would have to rise a huge amount – to 10.5% – to tip the math in favor of renting, which isn’t impossible. Rates were that high throughout the 1980s, but have been consistently below 10.5% since May 1990.

Each local market, of course, has its own mortgage rate “tipping point” when renting becomes cheaper than buying a home. At 3.9%, buying is cheaper than renting in all of the 100 largest metros, which means the tipping point is above 3.9% everywhere. The tipping point is lowest in San Jose, which would tip in favor of renting if rates reach 5.2%. It’s between 5% and 6% in San Francisco and Honolulu, and between 6% and 7% in New York and Orange County, CA.

10 Metros with the Lowest Mortgage-Rate Tipping Point
# U.S. Metro Mortgage rate below which buying is cheaper than renting
1 San Jose, CA 5.2%
2 San Francisco, CA 5.4%
3 Honolulu, HI 5.8%
4 New York, NY-NJ 6.8%
5 Orange County, CA 6.8%
6 Los Angeles, CA 7.5%
7 San Diego, CA 7.5%
8 Ventura County, CA 8.0%
9 Sacramento, CA 8.0%
10 Oakland, CA 8.2%

But for 78 of the 100 largest metros, the tipping point is 10% or higher. In fact the tipping point is above 20% in Cleveland, Memphis, Detroit, and several other metros in the Midwest and South.

10 Metros with the Highest Mortgage-Rate Tipping Point
# U.S. Metro Mortgage rate below which buying is cheaper than renting
1 Detroit, MI 35.8%
2 Memphis, TN-MS-AR 21.0%
3 Gary, IN 20.8%
4 WarrenTroyFarmington Hills, MI 20.2%
5 Toledo, OH 20.1%
6 Cleveland, OH 20.0%
7 Dayton, OH 19.2%
8 Grand Rapids, MI 18.4%
9 Akron, OH 17.4%
10 Kansas City, MO-KS 16.9%

Of course, the tipping point also depends on how long you plan to stay in your next home (we assume 7 years) and whether you itemize your deductions (we assume you do). For instance, if you don’t itemize, or if the mortgage interest and property tax deductions were eliminated entirely, buying would still be 29% cheaper than renting at a mortgage rate of 3.9%, and the tipping point when renting becomes cheaper than buying would be 7.5%.

But just because buying is cheaper than renting, it doesn’t mean you can buy. Lots of people who want to buy don’t have the downpayment or can’t get a mortgage. Even people who can swing it financially might not be able to buy right away, before rates rise further, because they might not find the home they want quickly with inventory still so tight.

So if the recent increase in mortgage rates doesn’t change the rent-versus-buy equation substantially, why does it matter? The main effect is to reduce the demand for refinancing. Unlike homebuying, refinancing is a relatively straightforward financial decision: although refinancing has upfront costs, refinancing doesn’t require finding a home, thinking hard about your lifestyle, or moving. Since rates have been low for so long, many people who were able to refinance, already have. As a result, the demand for refinancing is now dropping.

For people who haven’t yet refinanced – and for people looking to buy – rising rates do make housing more expensive. Rates are now on the rise and are likely to keep rising, thanks to the strengthening economy and the Fed eventually trying less hard to keep rates low. But it will take big rate increases to turn off prospective homebuyers. At today’s prices and rents, rates would have to rise to levels we haven’t seen in 20 years before renting is cheaper than buying a home on average across the country.


Posted on June 19, 2013 at 11:02 pm
Debi Bloomquist | Posted in Economics, Homeowner News, Real Estate |

More homes listed anew; prices up 16 percent

 

Published: Friday, June 7, 2013

By Kurt Batdorf

EVERETT — Median sales prices on homes and condominiums in Snoho­mish County jumped by $40,000 in May from a year ago, due in no small part to the continuing decline in active listings.

New listings rose from 1,258 in May 2012 to 1,564 this May, an increase of 24 percent, but total active listing volume of 1,777 single-family homes and condos was still down by more than 25 percent year over year, Northwest Multiple Listing Service data released June 5 showed.

“There are still homeowners who want or need a higher equity position in order to sell their home, so they may continue to wait and watch,” said Dan Gunderson, broker with Windermere Everett.

That reluctance helped drive up median prices for homes and condos across the county by more than 16 percent, from $245,000 to $285,000. Median prices in the Bothell-Clearview-Maltby area were the highest in the county at $400,000, up 23 percent from $325,000 last May.

Closed sales rose from 1,000 to 1,310 units, an increase of 13.1 percent.

“We currently have significantly less inventory of bank-owned and short-sale properties,” Gunderson said. “New construction is currently about 15 percent of the inventory and we would like to see it at 20 percent. Supply is certainly a driver of the increased property values. Affordability, low interest rates and the job market in this region are contributing to the increased value as well.”

Ed Wendling, with Wendling Real Estate Services at Windermere Real Estate GH LLC in Edmonds, noted a number of drivers in the continuing price run-up.
Distressed properties, defined as short sales or lender-owned, accounted for 39 percent of closed sales at the end of the first quarter of 2013, down from 48 percent of the total market in 2011, Wendling said.

“Nondistressed sellers have the choice to sell, but many fear with the low inventory they will be unable to find a good replacement home and could be caught in the cold if their home were to sell quickly,” he said.

There is another segment of sellers who are on the cusp of being solvent with their home’s value.

“They are not delinquent and have strong desire to move but would have to bring money to closing in order not to be short,” Wendling said. “This would not allow them the necessary down payment for their next home so they need to sit on the sidelines waiting for home prices to rise.”

Across the rest of the 21-county Northwest MLS service area, inventory showed signs of improving with the addition of 11,445 new listings during May, the highest number since April 2010. May’s total outgained the year-ago figure of 9,861 new listings for a 16 percent improvement.

The increased inventory is “cooling some buyers,” said George Moorhead, managing broker at Bentley Properties in Mill Creek and a member of the MLS board of directors.

“We also have buyers who are stepping back as they are frustrated with current inventory and multiple offers going well above asking price,” he said.

That shows in the county’s MLS numbers of pending sales for May. They fell from 1,579 homes and condos to 1,487, a decrease of 5.8 percent.

“It has been refreshing to see more listings coming on the market, but with overall inventory remaining low, the competition among buyers is still fierce for homes that are priced properly,” said Northwest MLS director Kathy Estey, the managing broker at John L. Scott in downtown Bellevue.

Well-priced homes continue to draw multiple offers and sell at a brisk pace around Western Washington as buyers react to recent upticks in interest rates and asking prices, MLS brokers said.

“The economy has picked up to a level allowing home owners to feel financially secure,” Wendling said. “Together with the lack of inventory, pent-up demand and interest rates at historic lows, still below 4 percent, there are simply more buyers than sellers.”

Moorhead said increased activity is noticeable, with mixed outcomes.

“We are seeing multiple offers at 5 to 12 percent over list price in highly sought after areas,” he said. “But there are other homes on the market that are not selling, with no real reason why.”

Estey said recent interest rate increases are “adding fury to the already frenzied buyers who must finance their purchase.”

Federal officials have downplayed rising interest rates. In a recent interview, Frank Nothaft, Freddie Mac’s chief economist, addressed the issue.

“While this may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks,” he said in a published report. “The rates are also lower today than they were a year ago at this time.”

Kurt Batdorf: 425-339-3102; kbatdorf@heraldnet.com.


Posted on June 10, 2013 at 10:08 pm
Debi Bloomquist | Posted in Economics, Everett, Real Estate, Uncategorized |

A Real Estate Conversation

by THE KCM CREW on MAY 24, 2013


Posted on June 4, 2013 at 5:45 pm
Debi Bloomquist | Posted in Economics, Homeowner News, Real Estate, Uncategorized |