Archive for September, 2008
Not Everyone Deserves to Own a Home
September 30th, 2008 categories: Home Buyers, Real Estate Market
Amidst all the coverage on the bailout bill, I can’t help but think about what got us here in the first place.
I don’t want to discuss the legislative or regulatory failures because there are plenty of people out there doing a much better job than I ever could. Read Barron’s A Memo Found in the Street for example.
I think the crisis is much simpler than that and a direct result of the flawed belief that everyone deserves to own a home and certainly the flawed practices by government and businesses to promote the heck out of homeownership as the attainment of the American Dream.
Prior to 2008, Realtors, mortgage lenders and elected officials alike (see Business Week’s article on the Clinton administration’s National Homeownership Strategy) reveled in the glory of record homeownership levels - 69% at the peak in 2004-2006 - and made every attempt to make homeownership easier via 100% downpayment programs, tax breaks and lax lending standards (see Wall Street Journal article from 2005 Mortgage Lenders Loosen Standards - note that they mention Countrywide and Washington Mutual). I, too, am guilty of the above.
The chart below is courtesy of Hoover Institution:
I won’t deny that homeownership is very fulfilling and can be financially rewarding.
A Joint Center on Housing Studies report in 2001 reviews studies that show that homeownership has many positive effects on society but also predicts that making homeownership more accessible may have the unintended consequences of increased rates of foreclosure which would be more detrimental to society.
“Public policy that encourages homeownership has often been justified by claims that it has a variety of benefits both to both individuals and to society. Considerable, although not irrefutable, evidence exists for several of those claims. Given these benefits, there is justification for public policies that encourage and support homeownership.
The research on the impacts of homeownership also suggests that these benefits may not accrue to all homeowners. The possibility of these negative impacts suggests that those involved in promoting homeownership should be careful not to oversell homeownership, particularly among those who are less likely to be successful homeowners.
Recent public policy has been focused on making homeownership available to lower-income families. Although this is clearly an important and worthy goal, not everyone is capable of becoming a successful homeowner. Homeownership counseling may help lower-income homebuyers be successful homeowners, but at this point there is very little research evidence on this topic. Caution should be exercised in encouraging homeownership among those with a relatively low probability of success. Encouraging persons to buy homes that they end up losing would do them a great disservice.”
But the reality is that many people aren’t financially, physically or emotionally capable or responsible enough to own real estate.
Merriam-Webster’s Online Dictionary defines the word “deserve” as follows:
“to be worthy, fit, or suitable for some reward or requital”
It’s time that we return to the belief that homeownership is a reward for hard work.
Rather than making it easier for people to buy homes by lowering the bar, how about we try to help people reach the bar by promoting saving for a downpayment, promoting good credit behavior, or talking about alternate entries to the market such as buying a multi-family.
For related posts:
It’s Those Mortgage Guidelines, Stupid
The New Housing Bill’s Impact on Home Buyers
Just How Did We Get Into This Mortgage Mess?
| Discussion: 2 Comments »
CT Mill Rates for Hartford County- Updated 2008
September 25th, 2008 categories: Central Connecticut News & Information
This should be an accurate list of mill rates for Hartford County towns. As always, verify the rate directly with the local assessor.
The following towns have special tax districts.
| Discussion: 2 Comments »
The Great Baby Gate Debate - Balancing Safety And Selling Your Home
September 24th, 2008 categories: Home Sellers, Pets & People
I was attacked by a baby gate. Last week at a showing in Glastonbury, I lead the charge up the stairs ahead of my clients. File in hand, I was met by one of those complicated baby gates. I tried to remain composed but I couldn’t get it open - do I push then lift or lift then push?. Standing at the top of the stairs, with my clients trapped behind me, I threw my file down and tried to pry it open.
Feeling the pressure from the audience and my fear of enclosed areas, I pushed and lifted with my weight in every combination possible and finally the gate released and I fell forward, just catching myself. This isn’t the gate but this one has growled at me before.
Baby gates are hard to navigate for Realtors, they create clutter, and make a small hallway feel even smaller. During a showing they are just in the way and aren’t actively keeping anything in or out.
What do you do if you have pets or kids you need to keep out of an area while you’re living in the house and selling it?
I’ve used this particular baby gate for the last year, and can comfortably say that it balances the two. It fully retracts so when you don’t need it (showings, open house, inspection or just running up and down the stairs with laundry), it rolls away like a shade. And it’s safe to use on stairs.
I purchased two gates from One Step Ahead last year and after daily use, they are holding up very well, containing both my toddler and three dogs. They’re pricey, trickey to install and there is a technique to getting it open but if you have kids or pets and are trying to sell, think about upgrading to a retractable baby gate.
For related posts:
The Home Sellers Five Step Guide to Selling With Pets
Five Perfectly Good Reasons to Get a Comparative Market Analysis of Your Home
Don’t Believe the Feedback - Why Agents Showing Your Home Won’t Tell You the Truth
| Discussion: 2 Comments »
How to Avoid Beer Goggling Your Next Home Purchase
September 22nd, 2008 categories: Home Buyers
You’re up late one night, cruising the Internet on Realtor.com. After looking at house after house, one in particular catches your eye.
You forward the listing to your agent and demand a showing the next day - “I must see this house!”
You walk through the home and the online pictures don’t do it justice.
A gracefully bending stone driveway, new “period” custom kitchen cabinets, master bathroom tile that actually sparkles it’s so clean and the living room furniture is perfectly arranged with a soft cashmere throw tossed neatly across the sofa. The fireplace invites you home with its crisp crackle.
The house even smells good - not Glade Plugin or potpurri good - but fresh, airy, clean people good.
You decide to write up an offer. A good offer - not full price but pretty good.
Almost teasing you, the home sellers counter at a slightly higher price. You don’t want to appear too eager so you think about it for an hour and accept.
The perfect house is yours…almost. All that stands between you and perfection is the inspector.
While you accompany the inspector through the home at least a week after your first encounter with it, you and he discover some flaws. A crack here, a missing GFCI outlet there, a CAIR system that doesn’t actually cool.
Like waking up after a long night at a bar with a hangover, you slowly come out of your mania induced haze to realize the person sleeping next to you is not quite as attractive as you remembered or hoped (I do not speak from personal experience).
Welcome to reality. And for many home buyers, reality can be frightening and stressful when they’ve just found out their “perfect house” has a few zits.
No home is perfect. Not even new construction. Not a home lived in by the most meticulous of individuals. Period.
When you take off a home’s makeup - the decor, the ambiance, the lighting, your mood, and the subtle persuasion by a skillful agent, a home looks very different under the microscope of a home inspection.
The only way to avoid the shock and disappointment is to prepare yourself early on and bring along an agent with a critical eye.
At your first rendezvous with said “perfect house,” avoid looking at the makeup. While it feels better to fall in love with your home, a more prudent approach would be to walk through it looking for potential areas of concern, such as:
Are the mechanicals up to date and have they been serviced recently?
When were the major items last upgraded? Roof? Septic? Siding? Windows?
Any dampness in the basement? Or minor evidence of water leaks?
Do doors and windows open and close properly?
Any major cracks in the foundation?
Has the home been vacant for any period of time?
Many of these answers can be found in the home’s disclosures but some may only be answered with a closer look.
Don’t wait for the inspector to reveal that your home may have some flaws because you may be setting yourself up for some heartache.
For related posts:
Home Buying 101: Get a Home Inspection
| Discussion: 2 Comments »
It’s Those Mortgage Guidelines, Stupid
September 22nd, 2008 categories: Real Estate Market
I admit that I want to believe lower mortgage rates are going to bring more buyers into the marketplace. It’s a silly dream, I guess. Dan Green on The Mortage Reports Blog has a great visual explanation of how interest rates are irrelevant in the housing market when lending guidelines are restricted.
The point he makes is far reaching - even when interest rates are low, lenders are tightening lending guidelines (your income, your debt-to-income ratio, credit) so that people who were able to borrow money 4-5 years ago can no longer qualify to borrow (no refinancing, no selling and buying something else) and that new borrowers are being locked out of the market place. There is the possibility that lending guidelines will get even tighter.
| Discussion: 1 Comment »
