New home buyers want efficiency…not luxury.

The National Association of Home Builders recently surveyed nearly 400 home builders to determine what home buyers are looking for when purchasing a new home. The trends have changed dramatically from luxury to “functionality.”

This new functionality trend is geared towards efficiency of resources and time. Gone are requests for: outdoor kitchens, main floor level carpeting, jacuzzi bath tubs, laminate countertops, media rooms, outdoor fireplaces, outdoor kitchens, large foyers etc. The average home buyers are not looking for these “luxury” items because they are costly and unnecessary. The new trends include: large walk in closets, functional laundry rooms, energy efficient windows, programmable thermostats, all wood flooring, extra space, garages and of course the beloved granite countertops.

In addition, home buyers must consider the boomerang children, aging parents and other care givers so there is a need for extra bedrooms. The aging parents will need higher toilet seats and step free showers and handrails. America please prepare for the multigenerational family! With the disparity of incomes and increase in cost of higher education families of all ages must live together. This is quite common in other parts of the world. Even if the first time home buyer can scrap up enough money to purchase a home it is set aside for the down payment not an outdoor kitchen.

We live in a new era folks so it is important to know your client. If they need to renovate suggest they put their money towards these “upgrades” and not a great patio or jacuzzi tub.


Incarceration and the effect on society….part 1

I am veering off of my usual topic today due to the rioting and protests taking place in Baltimore, MD. My blog isn’t directly related to what has recently taken place there but it did make me thing about incarceration in general.  My MSAC degree has allowed me to spend time with some offenders and I have a perspective that many people do not agree with. I feel that any criminal act directed towards children needs to be punished severely. I am talking about SERIOUS sexual, physical and emotional abuse. I am talking about drug dealers selling product to children.

The dramatic rise of incarceration has been unprecedented. Rising incarceration produces less effect on crime reduction and these diminishing returns hit the US hard economically. Crime (and punishment) is expensive  and I feel that many non-serious and non-violent crimes for punishment can be removed. Draconian penalties do nothing but cost our society a lot of money. Americans who cycle in and out of prison have no skills or anything to fall back on once they are released. What do these minor offense prisoners do when released? They are likely to turn to dealing drugs, commit robbery, prostitute etc. because very few people will hire them. It is my opinion, that people like Sheriff Arpaio only shame the prisoners but do little to prepare them to integrate back into society. The American justice system needs to make changes. The huge amount of money we spend housing non-serious and non-violent offenders is a waste of resources. It is irresponsible when we have people without healthcare in our country.

tent city

Is it a good time to buy with all the residential vacancies?

Calculated Risk blogger Bill McBride questions the accuracy of information the Census Bureau provided for the Q1, 2015 Residential Vacancies and Homeownership report. Bill suggests that the survey may show a trend in homeownership vacancies rate and rental vacancy rates but questions the accuracy of the survey.

As a real estate professional I definitely see a trend in the Washington DC area in regards to homeownership and vacancy rates. In my neighborhood alone there are countless homes for sale and many of them are vacant. My neighbor has been trying to rent her home out but may be forced to attempt to sell it. If she decides her only alternative is to put her home on the market then she is competing against newer properties listed for about the same price. As I stated in my last blog, the Washington DC area hasn’t had much upward price movement in the past year. Having one of the highest Median Index value in the country it naturally has upward price resistance. Does this mean this is a good time to purchase a house? In my opinion, even though the market is for lack of a better word saturated, yes it could be because there is long term interest rate pressure and inflationary pressure so the real buying power is still quite good in the Washington DC market.


Source: Bill McBride: 2015

HVS: Q1 2015 Homeownership and Vacancy Rates

by Bill McBride on 4/28/2015 01:45:00 PM

The Census Bureau released the Residential Vacancies and Homeownership report for Q1 2015.

This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn’t rely on the absolute numbers.  The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn’t use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.
Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate decreased to 63.7% in Q1, from 64.0% in Q4.

I’d put more weight on the decennial Census numbers – and given changing demographics, the homeownership rate is probably close to a bottom.
alt=”Homeowner Vacancy Rate” v:shapes=”_x0000_i1025″>The HVS homeowner vacancy was unchanged at 1.9% in Q1.

Are these homes becoming rentals?

Once again – this probably shows the general trend, but I wouldn’t rely on the absolute numbers.

The rental vacancy rate increased in Q1 to 7.1% from 7.0% in Q4.

I think the Reis quarterly survey (large apartment owners only in selected cities) is a much better measure of the rental vacancy rate.

The quarterly HVS is the timeliest survey on households, but there are many questions about the accuracy of this survey.

blog 4 picture


Case-Shiller released their information about the housing price index for February, 2015 which revealed that the price of homes rose 4.8 percent from February for the 10 city composite vs. the 4.3 percent in January and 5.0 percent for the 20 city composite vs. 4.5 percent in January. National index illustrated a gain of 4.2 percent from year to year which is weaker than the 4.4 percent ascertained in January.

Just last week the National Association of Realtors (NAR) reported an increase in prices in February and March. The growth in price ending in March, 2015 was 7.8 percent after rising in 7.2 percent in February and 5.2 percent in January. The data from Federal Housing Finance Agency (FHFA) showed a gain of 5.4 percent for the year ending February 2015 after having a gain of 5.1 percent for the year ending in January 2015.

All of the other price measures with the exception of Case-Shiller demonstrate a National index accelerating in pace for growth from January to February and the NAR data projects the future increase of acceleration into March. Of the twenty cities Case-Shiller closely tracked only three cities failed to see accelerated prices and each of these three cities are seeing healthy rates price growth: Portland (percent 7.1 percent to 7.3 percent), San Diego (4.7 percent from 5.1 percent) and Las Vegas (5.8 percent from 6.0 percent). Low inventory coupled with strong buyer demand and relatively low new construction are driving prices up, keeping it a sellers market in those cities.

Potential buyers and sellers will need to factor the trends in their local market in relation to the national numbers.

Fastest overall growth rates ending in February 2015:

Denver (10 percent)

San Francisco (9.8 percent)

Miami (9.2 percent)

Dallas (8.6 percent)

In contrast the slowest year over year growth:

Washington DC (1.4 percent)

Cleveland (2.3 percent)

New York (2.5 percent)

NAR reports the median cost of homes that sold, while Case-Shiller uses results of a weighted repeat sales index as well as public records data that tends to have a lag in reporting. To make up for the lag Case-Shiller based data on a three month moving average. Due to this difference NAR’s data on median home prices lead Case-Shiller and in conclusion the NAR data projects a pick up in prices to be seen in the upcoming months.

What does this data mean in Washington DC? DC hasn’t had a lot of upward price movement in the past year. Could that mean that upward price pressure is coming this year? Is this a good time to buy? Sellers in the weaker market do not have as much power to demand higher prices for their homes.

nar median sales price

New home sales remain stagnant…rise of the multi-generational family.

New home sales continue to remain in a stagnate slump. One of the major issues is that new construction sales are oriented to an economy that suggests the family income is rising. If this were actually the case the increase in income could support the newly constructed higher priced homes. In my community, new home sales target first time home buyers. Unfortunately, you will find that first time home buyers have many more financial debt and lack of resources than their parents had. Many older adults are forced to live at home with their parents. Multi-generational households are on the rise due to lack of financial resources to make a decent living and live independently. In my opinion, this is not a bad thing because having family support can be beneficial to raising kids, preserving global ecosystem and helping mom and dad when they are elderly. In fact, this is common practice in many other parts of the world.  Everything has gone up in price: higher education, automobile purchases, food, healthcare etc, and the United States of America are ignoring the lack of wage increase. In order to keep a monthly house payment affordable it is necessary to keep monthly payments static. Most first time home buyers bring minimal down payments to the table and this is compelled because Americans don’t make enough money to save for purchasing new homes.

My next blog will expound on the topic on new home sales and the slump they remain in.

…it does not occur by happenstance

Even when I do foolish things I always do them with enthusiasm! At times, my enthusiasm isn’t visible but it is always there looking for opportunity in order to meet my full potential in life. Enthusiasm is the electricity in life that spells the contrariness between mediocrity and accomplishment. Admittedly, there are times when I must pretend to be enthusiastic in order to keep it a habit.

Faith, family, food allergy awareness, life coaching and real estate are my passions…I come alive when speaking about these things because I have been blessed to have them in my life and it drives my enthusiasm for everything I do, at every moment I do it. I give 100% effort no matter what in order to unlock the key to my full potential in life. My commitment to focused effort, well-informed planning and excellence leads to productivity…it does not occur by happenstance.