Category Archives: Highlands, NC Real Estate

Buy-a-Home vs. Rent-a-Home Choice has Great $ Impact

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11-5-rentorbuyThe answer to the question about whether any individual or family would be better off if they rent or buy a home can differ depending upon when the question is posed as well as the particulars of the available properties in either category. Even when the financial calculations make it clear that to buy a home in Highlands would result in significant savings, it’s possible that credit problems or simple cash inaccessibility render the choice moot—for the moment, anyway.

The reason a family budget is universally recognized as the single best way to get a handle on finances is because if you don’t know how much you’re spending in any given area, you won’t know when it needs to be curtailed. Given the size of monthly rent or mortgage outflows, it’s a pretty good idea for anyone with a long term outlook to know what the rent vs. buy a home tradeoffs are. The answer to that can be spectacular enough that a change in plan is called for.

For some time, one of the national real estate web sites—Trulia—has posted a calculator that yields an approximate answer to the rent or buy question. It is aimed at metro areas only, and concedes it’s at best an approximation, but when you enter “US Average” for the location, it comes up with a percentage difference. Right now, for the U.S. median home price of $180,800 and median rent price of $1,545, “buying a home” comes up as 44% cheaper than renting!

Now, there are a whole bunch of assumptions that should have us taking that answer with a shaker or two of salt. This assumes, for instance, that were you to buy a Highlands home with the national parameters you would be the happy beneficiary of “today’s mortgage rate,” which Trulia presents as 3.6%. Yes, this rate is actually being offered in some places to borrowers with spotless credentials, but counting on it would be iffy for most folks. Yet if you substitute 3.9%, buying a home is still 43% cheaper; a 4.2% loan makes the answer 41% cheaper.

Likewise, because the tax advantage gained when you buy a home is so stark, your income tax bracket can tip the buy vs. rent comparison greatly. If you move down from the assumption of a 25% tax rate (seems unlikely for the $180,000 median home buyer), even with a 15% tax rate, buying is 41% cheaper.

Sooooo, it looks like it’s always a very good idea to buy a house instead of renting it, right?

Wrong! The most important factor is the one that makes the most sense: “how long you intend to live there.” Its starting point assumption begins at 7 years. Move that down to 3 years and—all else being equal—the calculator comes up with buying being only 19% cheaper. Assume 2 years, and the buy vs. rent answer is that the costs are about the same. And at 1 year, renting is 37% cheaper than buying!

The precision of these percentages are unlikely to be spot-on for any given local individual or family, but the answers are probably useful anyway. It does indicate that for anyone planning on staying put locally for at least 3 or 4 years, taking a closer look at the rent a home/buy a home financial impacts will be worthwhile. I can help with current realistic Highlands specifics, so why not give me a call?

Chance Highlands Open House Visits can Spark Interest

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More than one Highlands home sale has resulted from a couple’s chance encounter with a Highlands open house. It still happens that they just drop in on the spur of the moment.

“Oh look! They’re having an open house down the street!” turns into curiosity, then interest, excitement—and ultimately, a life-altering change in where they call home.

Today that still happens, but a good deal less frequently than in the past. Part of the reason is the demotion of the open house in the pecking order of Highlands real estate strategies. At this point, a Highlands open house is simply never the central element in a home’s marketing blitz. The web has seen to that.

Let’s face it: if you can visit any listed home via its online virtual tour, the whole idea is that it requires a fraction of the time and effort an in-person visit takes. A home’s virtual tour is where you’ll head first. If you are aware of a Highlands open house scheduled for the weekend, chances are you may also check it out online first. If you like what you see there, you might even be tempted to call your agent or email the selling agent to schedule a private showing. Getting there ahead of the masses can give you an edge if the property draws a crowd.

If the online media (including the rapidly-expanding mobile universe) weren’t so ubiquitous, it’s a cinch we’d be seeing a whole lot more ‘Open House’ signs just driving around Highlands. But it’s not a completely extinct phenomenon.

For the house hunter who is just initiating the effort—anyone who suspects that a less virtual, more three-dimensional excursion is the best way to get a feel for what’s out there—look for notices in the newspaper classifieds, and even check the old-fashioned places—like grocery store bulletin boards. And Sunday is still the day you’ll find the most “Open House” signs in Highlands front yards—as well as their cooperative neighbors’ corner lot lawns.

Open houses can offer a leisurely weekend way to wade into this fall’s residential offerings, but for those who have advanced to a stage where a more concentrated and efficient effort is called for, there’s no substitute for the assistance of an experienced town real estate agent. And there is also no need for such a substitute—I’m right here, ready for your call!

Reverse Mortgage Pitches Draw Consumer Group’s Ire

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10-30-reversemortgageWhenever the words “reverse mortgage” are uttered, any Highlands TV viewer immediately makes the connection with one of several celebrity spokesmen who blanket the airwaves with commercials touting the concept. If you listen carefully, those reverse mortgage ads do actually describe the product with legal accuracy. If you have the standard degree of sales resistence most of us have developed after years of exposure to Madison Avenue pitches, you probably guess that instead of relying solely upon the celebrity spokesman’s trustworthiness, you’d better investigate further before running out and applying. Most people do.

So it was surprising when the government’s Consumer Financial Protection Bureau found it necessary to issue a special advisory on the subject. Potential Highlands reverse mortgage applicants—that is, Highlands homeowners who meet the minimum age requirement of 62 ½—were warned “not to be deceived” by the “late night TV ads that seem too good to be true.” Without quibbling with the CFPB about when those commercials appear (you can see them almost any time after about 3 p.m.), it is easy to see how they might create broadly mistaken impressions on at least two counts. And it’s too bad, because although a reverse mortgage can be a useful instrument, it really can have nightmarish consequences for someone who doesn’t fully understand the concept and its ramifications.

The warnings were the result of the consumer watchdog organization’s focus group study that showed many viewers coming away with misimpressions following screenings of the ads. Many did not understand that a reverse mortgage is a loan. Others got the impression that a reverse mortgage is a government benefit—and worse, some thought it guaranteed that consumers could stay in their homes for the rest of their lives.

The fact is, these loans are simply a specialized way seniors can tap into their home’s equity: the value that has built up over the years. It’s true that they are designed so that the homeowners do not have to repay the loan until he or she passes away, sells or moves out—but it’s no guarantee that other factors (like taxes, homeowner’s insurance, and maintenance expenses) might not still cause a default should the borrower run out of money.

There are other fine print details that are not mentioned in most of the ads…and they’re every bit as important as the terms of any loan. Among those that are barely touched upon are the fact that there are costs and interest provisions attached to reverse mortgages—and the CFPB finds them to be relatively expensive.

Most Highlands homeowners are probably skeptical enough of any “too good to be true” pitch to automatically take a harder look—especially when it involves their Highlands home’s equity. If you have questions about financial matters having to do with that equity, your best bet is to discuss the details with a trusted financial advisor or a federally-approved housing counselor. And for any other questions about Highlands real estate, you needn’t hesitate to give me a call!

Highlands Listings Fare Best with Sparkling Vocabularies

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10-23-listingsIf 90% of home buyers use the internet at some point in their search, the percentage who go to the Highlands listings has to be close to the same ballpark. It’s hard to imagine anyone NOT wanting to take at least a peek at the current listings. Even if they have already settled on a target property, curiosity would send most of us to check out the way it’s described in its Highlands listing.

When you begin your house-hunting project online, the chances are you just scan the listings’ major features to narrow down the candidates, leaving out the majority of the finer details until later. Some of that information might turn out to be decisive—but most likely not until you’ve settled on the major contenders, and possible already toured them in person.

What can be more important than you’d think might be the descriptive language that describes the overall property: the ‘blurb’ that’s up there at the top of Highlands listings. Just as a good salesman in any field strives to present the most attractive facets of their product, a Highlands listing’s descriptive paragraph can be as important as the glamour photo that accompanies it.

In pursuit of facts that might support that idea, Zillow’s writer Catherine Sherman took a look at some research that dissected the language used in some 24,000 listings. They all resulted in sales—but some brought higher sale prices than did others. Her summary of the findings is pretty interesting:

Luxurious, Captivating, Impeccable (and Spotless) were among the adjectives that appeared most often in listings that resulted in above-average sale prices. That stands to reason: adjectives pointing to higher-end features would be apt to set a superior tone.

Less obviously, some of the nouns that accompanied larger price tags were Basketball, Pergola, and Granite. “Granite” will surprise no one who has been exposed to home design over the past 20 or 20 years—granite counters are the default go-to material that’s come to symbolize quality in kitchen décor. And pergolas are landscaping plusses…

But…“Basketball”?

Apparently for lower-priced homes with listings that mention ‘basketball,’ selling prices are 4.5% more than expected. You have to suspect that the word gives some color to a run-of-the mill listing—yet I’d be surprised if just setting up a hoop over the garage door made much of an impact. When Author Sherman writes “Among lower-priced homes…an indoor basketball court is a huge selling point,” I have to think, “DUH!” How many Highlands listings for lower-priced homes have indoor basketball courts (or bowling alleys or soccer stadiums, either)?

More practically, Upgraded and Updated were listing words that coincided with slightly higher sale numbers—at least in mid-priced homes. And Gentle was a surprising winner, too, as in “gentle rolling hills.”

I think ‘gentle’ highlights the most important take-away that I believe is relevant and true. Thoughtfully composed, accurate descriptions are what give Highlands listings a working advantage over cookie-cutter summaries—especially those weighed down by cliché-studded vocabularies. I work hard to insure that my clients’ online presence stands out from the crowd. If you plan to be listing a Highlands property soon, I hope you will give me a call to demonstrate what I mean!

Highlands Fixer-uppers can also have the “Wow Factor”!

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You know what the “wow factor” is for any Highlands home that’s for sale—it’s the extra something that’s highly desirable and unique to the property. It could be a three-story entry hall, or a game room that’s large enough for a pool table and a conversation pit. It might be a home theater with four stepped rows of velvet-upholstered movie house seats. It might be a bricked backyard barbecue arena, with a step-down standing pit which puts the Chef of the day at eye level with the seated guests.

And you also know what a Highlands fixer-upper is. It’s any Highlands property that is up for sale at a bargain price due to maintenance that is left for the new owner to worry about. A Highlands fixer-upper is an opportunity for prospective buyers to become owners of homes that would otherwise be out of their price range. Fixer-uppers attract prospects who are ready to dig into projects that take varying degrees of elbow grease, imagination—and also some extra cash.

There’s an element of risk that’s usually attached to a fixer-upper, because any major maintenance or remodeling project can run into unknown snags. So fixer-upper buyers should also possess some degree of courage!

Sooooo, what in the world could the “fixer-upper wow factor” mean?

For one thing, any Highlands home that’s listed for sale that has the ‘fixer-upper wow factor’ is a rare bird indeed. It is, as the title conveys, a residence in need of restoration—but which also has a design element (or elements) which are uniquely captivating. For prospective buyers who find those features intriguing, such a property can prove pretty irresistible. The price puts it within reach—and the design is better than anything they had been hoping to find!

In other words, a home that has the ‘fixer-upper wow factor’ is, potentially, a trap.

This is not to say that such a property cannot be a true bargain; lucky find; etc. Indeed, for the right buyer, it certainly can be. The caveat is that a fixer-upper with wow factor features can lure in prospects who aren’t really prepared for the ‘fixing up’ part. If they lack the extra funds it may take to bring the property back up to snuff—or lack the know-how, patience, or time such a project requires—they might be charmed into biting off more than they can chew. With indigestible results: a perpetually-unfinished property characterized more ‘yccch’ than ‘wow.’

Luckily, most prospective buyers who fall into this category get over the wow factor after a second or third visit—or after a discussion with their Realtor®—or after taking a look at the home inspector’s report. For those who are ready to dig into the fixer-upperness, they can end up with a wow of a home…at a wow of a price!

There aren’t a surplus of Highlands fixer-uppers with wow on the market right now—but when you take today’s mortgage interest rates into account, there are plenty of wow-producing good bargains: call me!

Highlands Mortgage Availability has Improved with Time

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10-16-15-mortgageWhenever an unplanned and unwelcome financial situation develops, a Highlands mortgage-holder can find himself or herself in the onerous position of being unable to keep up with the monthly home loan payments. If the unhappy situation continues long enough, the likely result is a foreclosure or short sale. In addition to losing the property, the impact on personal credit then takes years to undo. That means it takes that much longer for a consumer to acquire a new home and start to build equity again.

Here as elsewhere, there were a raft of such Highlands mortgage defaults following the global financial meltdown. Even those who had no trouble servicing their area mortgages could have suffered when they found that falling property values prevented them from refinancing—even when the purpose was to improve their property. Although those events happened years ago, it’s only now that their aftereffects are finally working their way out of the system.

A recent article in NMP—the national Mortgage Professional’s magazine—delved into the changing status of those who lost homes in the turndown. The details they researched are interesting in themselves—details that are bound to have an impact on Highlands residential sales.

First off is the fact that enough time has elapsed for those who weathered a short sale or foreclosure to begin to return to eligibility. They’re called “Boomerang Buyers”—and nationwide, there are estimated to be 7,300,000 of them! In 2016 alone, more than a million will become eligible to return to the home-buying market. According to NMP, “they’re returning to the market in droves.” The hardest-hit states were Nevada, Florida and Illinois—but there are plenty of Boomerang Buyers scattered across the rest of the nation.

The improving mortgage eligibility landscape extends beyond those who suffered the actual loss of their homes. To the more than 7 million “distressed” homeowners whose properties are still underwater (those who owe more than market value), the government’s HARP 2 program is one possible remedy. Its guidelines encourage lenders to relax the loan-to-value caps that had prevented refinancing for many of those homeowners. Reports are that it has already resulted in an increase in such refinances.

Other program combinations are helping loan originators and Realtors® get more bank-owned homes back into homeowners’ hands. These are properties that make up the ‘shadow inventory’ of unsold homes, many of which have fallen into disrepair. Because of that, they’ve been difficult to finance—and therefore difficult to sell. Through FHA 203K and Fannie Mae’s Homestyle® renovation mortgages, more ambitious prospective owners—including investors—are discovering they now have mortgage options that can put those fixer-uppers within reach.

For those who have previously found it problematic to secure a Highlands mortgage with acceptable terms, it may be worth looking into today’s improved financing alternatives. Especially with mortgage interest rates at the levels we’re seeing this fall, what you find may be a pleasant surprise—one that puts you into the house of your dreams. Call me to discuss first steps!

Owners of Highlands Rental Properties Benefit from U.S. Trends

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10-16-15-rentalThe outlook for owners of Highlands rental properties has been buoyant for some time, but last month a widely-publicized report added to the long range outlook. The study presented multiple scenarios in which demand is likely to outpace the supply of rental properties in the U.S., creating a market bound to reward their owners. Not such good news for tenants, though—or, as The Wall Street Journal summarized, “Renting is unlikely to get easier anytime soon.”

The report, which was issued by Harvard University’s Joint Center for Housing Studies and the affordable-housing organization Enterprise Community Partners, focused on the growing number of U.S. households for whom rent payments present a ‘growing burden’ in terms of the percentage of income they comprise.

According to the study, nationwide, rents have continued to grow faster than incomes over the last 15 years, hindering affordability. Added to that, many federal housing subsidies have been cut in recent years. One result is that the number of households who pay more than half their income to rent is estimated at 11.8 million—three million more than in 2000.

“Renters Will Continue to Struggle for the Next Decade, Harvard Study Says” was the headline that topped Laura Kusisto’s WSJ article summarizing the report. Although the study found that some factors contributing to the rise were due to temporary economic conditions that are unlikely to continue, other demographic factors will persist. Growth in groups of those in their mid-20s to mid-30s and in the Hispanic population (both groups “tend to be disproportionately renters”) have added to demand for rental housing. At the same time, the private sector has had difficulty producing profitable housing “that is affordable to lower- and moderate-income families.”

The trend might slow and even reverse should incomes begin to outpace rents—but the overall effect might have marginal results. One expert is quoted as saying that even a full decade of solid income growth would likely produce little change in the number of severely burdened households.

One nay-saying group to challenge that outlook is the Mortgage Bankers Association, which in August concluded that Americans will form “at least” 10 million new owner household in the next decade. Such growth would be expected to ease pressure on rental stocks, lightening demand enough to slow rental price escalation.

Whichever group is right, it’s evident that the owners of Highlands rental properties currently stand to benefit from some of the economic currents that continue to garner headlines. That’s the kind of incentive that interests the investment-minded—and if that sounds like you, why not give me a call to review some of the rental properties in Highlands currently listed for sale?

Cost of Living Here in Highlands is Downright Attractive

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Being able to work within a realistic family budget has become an increasingly important part of modern living for many Highlands residents. Highlands’s cost of living may not have been exploding —but most people are keeping an eye on it anyway.

The lingering effects of the last decade’s financial dislocations—combined with the slow-motion recovery from the Great Recession—have made monitoring expenses a practical necessity. The wolf doesn’t actually have to be at the door for that more cautious attitude to have developed. Consumer optimism may be on the rise, but it’s a pretty gentle incline. In any case, it does seem that spending on frivolous knickknacks is becoming a rarer diversion.

Into that general climate comes last week’s news item. It’s one that could bring some of the more frugal Highlands residents a slight degree of comfort, in that it has to do with the exorbitant cost of living in places other than Highlands. The news comes by way of global financial services giant UBS—the Swiss multinational which is the largest wealth management firm anywhere, period. It’s also an outfit that is not well known for its modesty: the UBS website’s “About Us” tab points to themselves as being the Best Bank in Switzerland and the Best Global Bank, in that order.

BloombergBusiness quotes them as having announced the statistics for the cost of living in cities across the globe. They emerged with the finding that there are three cities that are clearly at the head of the pack.

No one in Highlands could be too surprised that two of them are in Switzerland (Zurich and Geneva). The two are said to “top the list of the world’s most costly cities.” Back in January, the Swiss central bank scrapped its currency ceiling, which has since caused its currency, the franc, to leapfrog to record heights against the Euro (and, we are left to assume, the dollar—and all the others).

In a horizontal bar chart “based on the cost of a basket of 122 goods and services” that accompanies the article, we find that Zurich is the most expensive place on Earth, closely followed by Geneva and the third city. But further reading reveals that this presentation is highly suspect. It must be some kind of Swiss pride in being a really really expensive place to live, since City Number Three turns out to be an even more really really expensive place—if you take rent into account! And why wouldn’t you take rent into account?

And the third city is not even in Switzerland!! It’s right here in the good old U.S. of A!

Where else but …The Big Apple! San Franciscans have a legitimate beef with their verdict, but they’d have to take it up with UBS (who apparently doesn’t get out to the West Coast often). All they know is that a two-bedroom apartment in NYC averages $4,320 a month—compared with a paltry $2,390 in Zurich. The basket of goods and services (it runs to about $3,500 per month in each of the three cities) gets drowned by that Manhattan rent tsunami.

It’s almost enough to make any Highlands resident feel much better about our local cost of living—and our Highlands real estate bargains, too, of course. Call me for more about those!

Off-Market vs. Off the Market: Tricky Real Estate Distinction

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The Highlands real estate listings consist of the lineup of Highlands homes that are currently “on the market.” They’re for sale. Offered to buyers. Available for purchase. “On the market” is a straightforward real estate term; end of discussion.

So, you’d think that “off the market” should be equally unequivocal, and it would be, if it weren’t for “off-market,” with which it’s easily confused. And then there’s the fact that what actually happens after a formerly listed property goes off the market can result in a several different outcomes.

Sounds like a dose of contradictory Highlands real estate jargon—but it can be sorted out with a little determined effort. Here goes:

In real estate, off the market denotes a property that was listed in the past but currently pulled from the market. It no longer appears in the updated Highlands real estate listings, either because the owner has decided not to sell, or because the property is now in the process of being purchased (so more buyers don’t need to be recruited). When phrases like ‘under contract’ appear in a listing, it has the effect of being off the market at the moment, though interested buyers might keep an eye on it in case the sale doesn’t go through. An owner might withdraw a home if they now believe the market is not active enough to warrant more effort at this time, or because some event has caused them to decide to keep the house.

Off the market, in today’s web-centric real estate reality, is not quite as cut-and-dried as in former eras. Because the Internet never seems to forget anything, an off-the-market property may still pop up onscreen when buyers search for new Highlands homes for sale (particularly when some of the national sites don’t promptly remove outdated listings). Your Highlands Realtor® can keep you up-to-date on the current status of any local property.

On the other hand, Off-market is sometimes used as a synonym for “off the market,” but can be used by some national websites for upcoming properties that are being marketed, but have not yet been listed. More often, off-market is used to denote a property that is for sale but will not be advertised publicly. Since such a property isn’t entered into the Highlands listings at all, most potential buyers will be unaware that it’s available. You might think this is a nutty way to try to sell a home, but there can be good reasons. Celebrity owners may be in a constant battle to stay out of the public limelight, and therefore resort to an arrangement (formal or informal) with a broker to discreetly market their home. Later news will say something like, “Janet Showbiz sold her 18 bedroom Bel-Air estate off-market for $11 million.” Some extremely high-end real estate offerings are offered quietly to other brokers. This is sometimes called a ‘pocket listing.’ When successful, it results in an off market sale.

You don’t have to be a celebrity to want to discreetly search for—or sell—an area home. If you are beginning to think over your area real estate options, whenever you call me for a no-obligation consultation, it will always be treated with complete confidentiality.

Highlands Mortgage Interest Rates Reflect Fed Funds News

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10-2-mortgage interestThe way the media treated last week’s federal funds rate announcement by the Federal Reserve Board was a convincing demonstration of how much importance is placed on that singular piece of the financial puzzle. That rate may not be directly tied to Highlands mortgage interest rates, but since it determines lenders’ borrowing costs, its effect is considerable.

For many years now, Highlands mortgage interest rates have been comfortably nestled near the bottom of their historical range. Many Highlands homeowners have enjoyed the resulting low monthly payments on their mortgages. Highlands home sellers have likewise benefitted from home loan interest rates that make their properties more affordable than would otherwise be the case.

Real estate repercussions are a major part of the reason that the Fed’s announcement, which came midday last Thursday, had the national media holding its collective electronic breath. With ten minutes to go, one cable network talking head could add little illumination. “Wall Street will be watching the announcement very closely,” was her understatement. Channel flipping with five minutes to go, viewers found the streaming banner at the bottom of one network trumpeting BREAKING NEWS…BREAKING NEWS… before the fact. On CNBC, “the most highly anticipated announcement in years” was awaited by four commentators who had the unhappy challenge of predicting the decision mere seconds before the fact. Above the ever-moving streams of real-time data (oil was down, the stock markets up) panelists chattered about China (“it’s big and mysterious”), inflation targets (“missed again”), and optimism (“a rate hike won’t hurt the economy, it will help”). Only if the Fed “saw something down the road,” it was agreed, would they not raise rates. Then, just 5 seconds to go…then-

The Fed left rates unchanged.

The most highly anticipated announcement in years was, er, the same one it’s been making since 2008.

Citing concerns over global this and financial that, the Fed said they were going to be monitoring them. The economy expanded at a moderate pace, and housing improved moderately, they said. But since global conditions might cause trouble…

The media’s excitement level flat-lined within minutes. “The markets are not panicking,” said a gentleman in a snappy suit. He looked irritated. “I blew it,” said another, who moments before had thrown in with the majority predicting a rate rise. “They cited uncertainty,” he frowned; then blurted, “The Fed is the biggest source of uncertainty!”

The stock markets didn’t react at all at first. Later, they closed mixed.

The next day, mortgage interest rates crept downward.

What seemed to be an excitement bust for the media was good news for many of the viewers. When the Fed funds rate continually hovers close to zero, there’s ample reason to suspect that Highlands mortgage interest rates might stay put for a while. TheStreet website later reported that they expected rates to rise a bit before year’s end. Given the recent record of expert predictions, it might be safer to stand behind one with a better chance of success: the next Fed announcement, I predict, will be the most anticipated announcement in years.

Meantime, if you have been mulling over whether to take advantage of the current balmy mortgage interest environment, I hope you’ll give me a call!