Energy-efficient homes seem to sell faster, fetch higher prices,0,111611.story
Original Post Date: August 28, 2011

By: Kenneth R. Harney

Home energy efficiency and sustainability have been major policy priorities for the Obama administration, but lurking in the background are two consistent questions: Beyond the documentable savings on utility bills, do such steps add to the resale value of a home? And do they make it easier or faster to sell your property?

Housing groups and housing officials say that definitive statistical data covering multiple regions of the country are scarce. But some localized research projects in Oregon, Washington and California offer promising hints.

In a study covering existing and new houses sold from May 2010 through April of this year, the Earth Advantage Institute, a nonprofit group based in Portland, Ore., found that newly constructed homes with third-party certifications for sustainability and energy efficiency sold for 8% more on average than noncertified homes in the six-county Portland metropolitan area. Existing houses with certifications sold for 30% more.

The raw sales data in the study were provided by the Portland Regional Multiple Listing Service. “Certified” houses were defined as those carrying Energy Star or LEED for Homes designations or Earth Advantage home certifications. (LEED stands for Leadership in Energy and Environmental Design.) The latest study was the fourth in an annual series conducted by Earth Advantage, each of which has shown clear price premiums for certified houses.

But officials caution that using average sales prices pulled from MLS data without trying to measure “comparable” homes against one another directly may not be conclusive. For instance, newly constructed certified houses may be more expensive to start, and existing certified homes may be larger and more likely to be in higher-cost neighborhoods where homeowner adoption rates for energy-efficiency measures are higher.

Nonetheless, said Dakota Gale, Earth Advantage’s manager of sustainable finance, looking back at four years of studies, “we can still see a consistent trend that third-party certification continues to result in a higher sales price, even during the past year when home sales were down.”

A study conducted two years ago by the institute in Seattle and Portland identified what may be another plus: Homes marketed with energy-efficiency certifications appear to sell faster on average than those without. The study tried to come up with rough comparability in appraisal terms between certified and noncertified properties, and it found that in Portland, certified homes spent 18 days less time on the market after listing than noncertified counterparts. In both Portland and Seattle, researchers documented price premiums — 9.6% in Seattle, 4.2% in Portland — in a statistical analysis with a 95% confidence level.

A recent study on houses in San Diego and Sacramento published by the National Bureau of Economic Research took a different tack: When you install photovoltaic solar panels on your roof, how much do you get back in market resale terms, beyond monthly energy savings?

Researchers examined a sample of home sales in the $500,000 range in both metropolitan areas between 2003 and 2010 and found that, on average, solar panel installations cost owners $35,967. But with federal and state subsidies, the net average cost came down to $20,892. This net expenditure, in turn, yielded an increase in appraised value by $20,194 — a 97% rate of recovery on the investment.

Though less than 100%, the rate is much higher than most home improvements in the most recent “Cost vs. Value” study conducted by Remodeling magazine — well above major kitchen and bathroom renovations.

Kevin Morrow, senior program manager for green building at the National Assn. of Home Builders, says that although many newly constructed homes come with energy and sustainability certifications, banks don’t necessarily recognize their value when it comes to providing mortgage money.

For example, bank underwriters often do not include reduced monthly utility costs in the household income/household expense ratios that affect the maximum mortgage amounts available to buyers.

“The case needs to be made” to lenders, he said, “that, hey, these houses will cost less to operate, so they should be worth more.”

Morrow added that appraisers are part of the issue as well if they don’t have the training to recognize and credit extra value to houses that have money-saving solar installations, geothermal heating and cooling, Energy Star appliances, water conservation features and other green improvements.

The Appraisal Institute, the largest group representing that industry, says it has sponsored “green” appraisal courses for 2,300 appraisers during the last two years. It says it strongly supports efforts to better incorporate energy and environmental factors into mortgage underwriting and home valuations, including a possible congressional mandate requiring it.

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Forget the Market. Buy a House
Original Post Date: August 18, 2011

By: Jilian Mincer

With the Dow Jones Industrial Average down more than 400 points today, and many market experts predicting more volatility ahead, some advisers are recommending their clients put some of their cash to another use: To buy that house or summer home at the shore.

Potential homebuyers certainly have plenty of incentives: Home prices are still way down in many parts of the country, and mortgage rates are nearing their all-time lows. Consider: The benchmark 30-year fixed-rate mortgage fell 1 basis point this week, to 4.45 percent — just a few basis points above the record low hit in October 2010, according to the national survey of large lenders. Freddie Mac, meanwhile, reported today that the 30-year fixed-rate mortgage averaged 4.15% for the week ended Aug. 18, its lowest reported rate in 50 years.

Another reason to act now, say experts: While the recent passage of the debt deal is likely to keep mortgage rates low for now, homebuyers could soon find themselves with fewer incentives once the details of the debt deal are ironed out.

Lawmakers have been debating a simpler tax system with lower tax rates and fewer tax breaks that could include reducing the generous mortgage tax deduction as part of the long-term spending cuts that must be agreed on this fall.

Of course, buyers still need significant down payments, stellar credit and job security, but if “you’re financially prepared to do so, it’s a great time to buy a house,” says Greg McBride, senior financial analyst at “Affordability is tremendous, and if you’re in a position where you have the financial security that others are lacking, you’re in a great position to grab a good deal.” Rebecca Hall, a financial planner in Reston, Va., said several of her clients have decided to buy second homes instead of putting more money in the market. “People don’t view real estate as volatile as the market,” says Hall. “Housing prices go down, but people aren’t on-line looking at it every day,” she says. “You view housing as a much longer term investment so it’s a little easier to handle [the volatility].”

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Sell or Stay and Pay for Repairs?
Original Post Date: August 12, 2011

By: June Fletcher

Q. I bought a three-bedroom house in 1998. It needs work, but because I am 60 years old and on disability, I can’t pay for it. I’d like to move to a condo or apartment with less upkeep. The house is worth about $60,000 now, and I have $9,000 left on the mortgage, which will be paid off in two-and-a-half years. Can I get my equity out? Besides selling, do you have any other suggestions?

–Shreveport. La.

A. If you sold for $60,000, you’d have to pay the lender the $9,000 you still owe, plus closing costs, which will include a real estate commission, which typically runs from 5% to 7% of the sales price (though this is negotiable), as well as title insurance, taxes and various fees.

Under Louisiana law, you would also have to complete a property disclosure statement that includes any problems you know about with respect to the property, including the plumbing, sewer, drainage, foundation, heating, air-conditioning and roof. That doesn’t mean that you can’t put your house on the market as-is, but you can expect that the buyer will have a property inspection done and will try to negotiate either a lower price or a credit to cover the cost of the repairs.

Before you sell, interview three real estate agents who have had success selling homes in your area and ask them to do a comparative market analysis of your home. They should all be able to give you an estimate of what you should expect to net from the sale. Be sure to ask if they know of any investors who are buying in your area. Although you might get a discounted price, most investors don’t shy away from homes that need work—they make their living fixing up homes and selling them for a profit.

To make your home more attractive to conventional buyers, I also suggest that you offer a home warranty to buyers that will cover the cost of the repair or replacement of major systems; although it will cost between $300 and $600, this is less than it will likely cost to do the repairs before selling. Generally, the cost for the warranty is taken out of the proceeds at the closing, so you won’t have to pay for it out-of-pocket.

However, as I’m sure you’re aware, the real estate market remains at or near the bottom. So you can’t expect to sell for top dollar right now. Also, keep in mind that if you buy a condo, you will have to budget for association fees, which usually go up as the facilities age. Similarly, you can expect apartment rents to rise over time.

As you are nearing the end of your mortgage, you should at least consider if it makes sense for you to wait to sell until the market improves. If the only reason that you want to move now is because you can’t afford to make repairs, look into programs that provide free or low-cost home repairs to those who meet certain income limits. Check out for a list of organizations that can help.

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Mortgage rates keep dropping,0,3354983.story
Original Post Date: August 12, 2011

By: E. Scott Reckard

Mortgage rates are continuing to fall amid economic uncertainties and a sagging stock market, with the 30-year home loan available this week at an average 4.32% — the lowest fixed rate of the year, according to mortgage company Freddie Mac.

The typical rate for a 15-year fixed mortgage was 3.5%, Freddie Mac said Thursday — the lowest since Freddie began tracking it in 1991.

Despite 30-year rates averaging about 4.5% and the cheapest housing prices in eight years, home lending has slipped this year to the lowest level since 1997.

But with rates near record lows, the Mortgage Bankers Assn. says loan applications have spiked more than 20% because of the latest surge in refinancings.

The increase occurred despite a slight decrease in applications to buy homes. Refinance applications were up by 30%, the trade group said Wednesday.

Greg McBride, senior analyst for rate tracker, said people with large mortgages in expensive markets like California should feel a particular sense of urgency if they are considering refinancing.

As a result of the credit crisis, the limit for a conforming loan — one that can be backed by Freddie Mac and or Fannie Mae — was increased to $729,750 in the most expensive regions to support the housing market. That increase is set to expire Oct. 1, when the conforming loan limit will fall back to $625,500.

Loans higher than the conforming limit, known as jumbos, are available — but rates have been running at least half a percentage point more than for conforming loans. And as McBride pointed out, people refinancing into a jumbo loan are required to have more equity in their homes, typically 25% or 30% instead of the 20% requirement on smaller mortgages.

For someone refinancing a $700,000 loan, “It means you’ve got to get the loan closed by the end of September before the goal posts move,” McBride said.

Freddie Mac surveys lenders early each week, asking them what conforming loan rates they are offering to borrowers with good credit and 20% down payments or, in the case of refinancings, at least 20% equity in their homes.

The borrowers in the latest survey would have paid 0.7% of the loan amount in upfront lender fees and discount points, along with additional payments for appraisals, title insurance and other third-party costs, Freddie Mac said.

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