Thursday, August 26, 2010
Associated Press business staff
NEW YORK -- Mortgage rates fell to the lowest level in decades for the ninth time in 10 weeks as concerns grow that the economy is weakening.
Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year fixed loan was 4.36 percent this week, down from 4.42 percent last week. That's the lowest since Freddie Mac began tracking rates in 1971.
The average rate on 15-year fixed loan dropped to 3.86 percent from 3.90 percent the previous week. That's the lowest on records starting in 1991.
Rates have fallen since spring as investors shifted money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
The low rates have fueled borrowers to refinance their home loans. Refinancing is at its highest level since May 2009 and made up 82.4 percent of all new loan activity.
However, low rates haven't budged home sales, Those have been stymied by high unemployment, slow job growth and strict credit standards, and have dropped sharply since the expiration of home-buying tax credits in April.
To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
Average rates on five-year adjustable-rate mortgages were unchanged at 3.56 percent. Rates on one-year adjustable-rate mortgages fell to an average rate of 3.52 from 3.53percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 a point for 30-year and 1-year mortgages. They averaged 0.6 of a point for 15-year and 5-year mortgages.
Thursday, August 26, 2010
Thursday, August 19, 2010
Tremont Valley Turnaround: New Townhomes Aim to Bridge the Gap Between Trendy Tremont and its Wilder Side
On a sunny June morning, the clatter of construction rings out across a once-forgotten Tremont hillside as crews finish up four new townhomes in time for the summer home-buying season.
This part of Tremont used to be famous for much less desirable activities. Up until a few years ago, car thieves dumped stolen vehicles here and set them on fire. The street was home to one of the largest illegal cockfighting rings in Ohio until the city came in and tore the coops down in 2006, when a raid rescued more than 400 chickens.
David Sharkey, a former resident of West 12th Street and one of the developers of the Tremont Valley Townhomes, remembers when West 11th was something of a walk on the wild side.
“I used to walk across the pedestrian bridge over the highway to get to Lincoln Park,” says Sharkey. “Heading back home, I never knew what I’d find when I got to the other side.”
Even then, it was obvious to Sharkey that the location had tremendous potential, if the land could be assembled into a contiguous site. This part of West 11th Street is close to the heart of Tremont and offers unobstructed views of the Cuyahoga Valley and Tremont Field.
Today, West 11th is the site of the new Tremont Valley development, which broke ground earlier this year. The project aims to bring affordable townhouse living to Tremont’s south side. So far, the developers have built one four-unit building, and one townhouse is sold.
“Tremont is a very popular place to live, and it’s well known for the Tremont Art Walk and as the home of Michael Symon’s Lolita,” says Sharkey. “We have an opportunity to create a substantial new community of homeowners on West 11th, and to connect this area with central Tremont.”
“With the creation of the dog park at Tremont Field, improvements to the park itself, and the promise that the Towpath Trail will eventually run right in front of the townhomes, we knew it was time,” he adds.
The Tremont Valley Townhomes are being developed by David Sharkey and Keith Brown, the principals of Progressive Urban Real Estate, a real estate brokerage with offices in Ohio City and Cleveland Heights, as well as David Fragapane of Civic Builders LLC in Tremont.
The project, which fits in with the community redevelopment plan for the Tremont neighborhood, has received support from the local block club, Tremont West Development Corporation and Ward 3 Councilman Joe Cimperman.
“The area in and around Clark Field is the next big thing in Tremont,” says Chris Garland, Director of Tremont West Development Corporation. “The Tremont Valley Townhomes are a key part of the redevelopment that’s taking place there.”
Village Capital Corporation (VCC), a nonprofit lender whose mission is to help revitalize the neighborhoods of Cleveland by lending to catalytic projects, provided the construction financing. Cleveland Action to Support Housing (CASH), a nonprofit organization, partnered with VCC to lower the interest rate on the construction loan. This subsidized rate increased the lender’s confidence in the project and helped make it possible for the developers to break ground. The total cost of the first four-unit phase is approximately $650,000.
“We’re confident that we’ll sell more units over time, but due to the low interest rate, we can afford to float the debt for now,” says Sharkey. “This is only possible because of the involvement of CASH. It’s tough right now, but we know we’ll be successful over time.”
The townhomes are priced from $180,000 and offer one- and two-car garage units. The project is set against a steep hillside, a natural feature that presented a design challenge and required additional retaining walls. Building the units against this backdrop, however, also offered an opportunity, opening up space for small yards. The rear patios are nestled into the blooming hillside. The fronts of the units have broad second-story decks with quintessentially Tremont views of trees, parkland and steel mills.
The townhomes’ narrow footprint, Sharkey says, is no deal killer – the units offer a surprising amount of space. The first floor has an open floor plan, with a handsome kitchen that opens up to a great room. The second floor has two bedrooms, including a large master with a spacious closet. The two car garage units have two full baths on the bedroom level, while the one car units have a single bath with shower and bathtub.
All of the units offer 15 year 100% tax abatement on the improved value of the property, and include a one year builders’ warranty.
Sharkey is a realist about the market, but he claims the project will succeed because of location, design, and price point. “There isn’t much new construction available in Tremont at this price,” he says. “These townhomes offer a lot of value for the money.”
Thursday, August 12, 2010
Interested in Purchasing Investment Property? Tips to Get You Started
How to find good investment property
If you're cut out for it, life as a landlord can be quite profitable. But success isn't assured. Here's what you need to know before diving in.
By Liz Pulliam Weston
The idea of owning rental real estate seems to be gaining popularity as investors tire of the swoops and swoons of the stock market. As I pointed out in a separate column, not everyone has what it takes to be a landlord. But those who do may find rentals to be a good way to build wealth.
Once you've made the decision to buy rental property, your real work begins. Finding a profitable rental property usually takes time, connections and plenty of research.
Here's what you need to know to get started:
Know your time horizon
As with any other investment, you should have a good idea how long you plan to own a rental property before you buy it, says Robert Cain, publisher of the Rental Property Reporter newsletter.
The longer you plan to own the property, the more you'll probably need to invest in maintenance, repairs and improvements, Cain said.
"If you're keeping it for 20 years, at some point you're going to be putting a new roof on that property. You're going to be putting in new appliances and doing some major repairs," Cain said. If you're only planning to own a property for five years, by contrast, you'll probably want to avoid making any major improvements unless you're sure you can recoup the cost with a higher sale price.
You also may face more investment risk with a shorter time horizon. Although your rental will almost certainly appreciate over 20 years, it could easily lose value in the next five, particularly if you're buying in an overheated market. You'll need a bigger potential annual return to make up for that risk.
For many small investors, long-term ownership makes the most sense, said Pat Callahan, an attorney, landlord and founder of the American Association of Small Property Owners. You'll have plenty of time to ride out any swings in the market, and rental income can make a nice supplement to your day job. Find enough rental properties, and being a landlord may become your day job.
Develop a network
Experienced landlords find their properties in a variety of ways. Some hunt for foreclosures, making friends with city hall clerks or bank employees who know which properties are about to be sold. Some run ads in local newspapers. Others work with real estate agents who keep their eyes peeled for possible buys.
Several landlords recommended joining a local landlord or property owner's association to make contacts. Callahan's Web site offers links to local groups, as does the National Real Estate Investors Association.
"When you begin to own rentals, all the other investors start coming out of the woodwork," said Sean Hoppe, a landlord in Pottsville, Pa., who owns 11 properties. "Through investor meetings, networking, etc., I can find out what is for sale."
You also can try approaching landlords directly to see if they're willing to sell, by calling the numbers listed on rental ads in the classifieds, by cruising neighborhoods looking for "for rent" signs or by talking to any landlords you know personally.
That's how Bob, who asked that his last name not be used, bought his rental property near Albany, N.Y. The landlord of the three-unit building where Bob had rented for 15years was tired of the hassles and ready to sell.
"We love (the area) and jumped at the chance to buy it," Bob said.
So far, Bob and his wife have been pleased with their purchase. They raised rents and required security deposits, which caused the property's less desirable tenants to leave. He also has a backup plan for the building in case he starts to feel like the prior owner.
"If being a landlord got to be too big a hassle," Bob said, "we would just get rid of the tenants and make it our own place."
Get your finances in shape
The better your credit, and the less credit card and other consumer debt you have, the better your prospects for getting a decent loan, Callahan said. Lenders usually require bigger down payments, higher interest rates and generally stronger finances when you're buying rental property. That's because they know people are more likely to default on investment property than they are on their own homes.
Landlords say it also pays to have a substantial cash reserve left over after buying a property.
This can help pay for unexpected repairs and vacancies. Although there are few rules of thumb, setting aside at least one month's rent for each unit is a good start. CPA Paul Berning suggests having a line of credit, secured either by the property or your own home, to cover larger costs.
You also should make sure you can save enough for retirement and other goals before investing in rental real estate. While rental income can supplement your retirement kitty, most people shouldn't count on it to replace other investments or allow themselves to be entirely exposed to the whims of the local real estate market. Rents and property values can fall as well as rise, and those who are adequately diversified with investments in stocks, bonds and cash will be better able to endure the bad times as well as the good.
Avoid overpaying
As one experienced landlord put it: "You make your profit when you buy a property, not when you sell it." Pay too much, and you'll never recoup as much as you could have had you driven a better bargain.
The rental real estate market is generally tougher on investors who overpay than on homeowners who do the same thing, several landlords said. While a home is often an emotional purchase, which can lead to "I must have it!" offers and bidding wars, most landlords look strictly at the numbers to see if their investments will pay off. If you pay too much for a rental, you can't count on a "greater fool" coming along later to bail you out.
Not overpaying can be tough in a hot market, however. Apartments in New York, for example, currently sell at a 60% premium over their "inherent" value. In other words, they're selling for much more than the income streams the apartments generate, according to Reis, a national real estate research firm. In San Francisco and Los Angeles, the premium is 10%.
Some landlords use formulas, such as not paying more than six to eight times the rents they expect to make the first year. Others try to estimate what the property could be worth after needed repairs and upgrades are made, and they don't pay more than 70% of that price, less the cost of those repairs, CPA Berning said.
Every real estate market is different, however, and these formulas may not work in your area.
What's key is to make sure your rental income will cover your out-of-pocket costs, Berning said. That includes the mortgage payment on the property, as well as taxes, insurance, maintenance, repairs and a vacancy rate of around 5%. (If you have five units, for example, you should expect at least one unit to be empty three months each year. Here's the math: 5 units times 12 months equals 60; 60 times .05 is 3.)
If you can at least break even, you'll be able to profit from any price appreciation as well as from tax breaks available to rental property. Cain's Web site sells software to help you make these calculations.
When crunching the numbers, you should know that there's a big difference in how repairs and improvements are treated for tax purposes. You can typically deduct the cost of a repair, such as patching a roof or fixing a leaking pipe, on your tax return for the year in which the repair is made, Berning said.
Replace that roof or those pipes, however, and it's typically considered an improvement, which means the cost can't be deducted. Instead, it's added to the amount you paid for the property to determine your tax basis when you sell. The higher the basis, the lower your taxable profit. But if you have to wait 20 years after making a major improvement to recoup any of the cost for tax purposes, you may think twice about buying a property that needs a lot of upfront work, Berning said.
Longtime landlords say all this work pays off in profitable properties that build their net worth while providing a steady income stream. Callahan, whose family started investing in rental real estate in the 1940s, says it's a way of life she recommends.
"It doesn't matter if you're a professional or a laborer," Callahan said. "It's the equal-opportunity wealth builder."
If you're cut out for it, life as a landlord can be quite profitable. But success isn't assured. Here's what you need to know before diving in.
By Liz Pulliam Weston
The idea of owning rental real estate seems to be gaining popularity as investors tire of the swoops and swoons of the stock market. As I pointed out in a separate column, not everyone has what it takes to be a landlord. But those who do may find rentals to be a good way to build wealth.
Once you've made the decision to buy rental property, your real work begins. Finding a profitable rental property usually takes time, connections and plenty of research.
Here's what you need to know to get started:
Know your time horizon
As with any other investment, you should have a good idea how long you plan to own a rental property before you buy it, says Robert Cain, publisher of the Rental Property Reporter newsletter.
The longer you plan to own the property, the more you'll probably need to invest in maintenance, repairs and improvements, Cain said.
"If you're keeping it for 20 years, at some point you're going to be putting a new roof on that property. You're going to be putting in new appliances and doing some major repairs," Cain said. If you're only planning to own a property for five years, by contrast, you'll probably want to avoid making any major improvements unless you're sure you can recoup the cost with a higher sale price.
You also may face more investment risk with a shorter time horizon. Although your rental will almost certainly appreciate over 20 years, it could easily lose value in the next five, particularly if you're buying in an overheated market. You'll need a bigger potential annual return to make up for that risk.
For many small investors, long-term ownership makes the most sense, said Pat Callahan, an attorney, landlord and founder of the American Association of Small Property Owners. You'll have plenty of time to ride out any swings in the market, and rental income can make a nice supplement to your day job. Find enough rental properties, and being a landlord may become your day job.
Develop a network
Experienced landlords find their properties in a variety of ways. Some hunt for foreclosures, making friends with city hall clerks or bank employees who know which properties are about to be sold. Some run ads in local newspapers. Others work with real estate agents who keep their eyes peeled for possible buys.
Several landlords recommended joining a local landlord or property owner's association to make contacts. Callahan's Web site offers links to local groups, as does the National Real Estate Investors Association.
"When you begin to own rentals, all the other investors start coming out of the woodwork," said Sean Hoppe, a landlord in Pottsville, Pa., who owns 11 properties. "Through investor meetings, networking, etc., I can find out what is for sale."
You also can try approaching landlords directly to see if they're willing to sell, by calling the numbers listed on rental ads in the classifieds, by cruising neighborhoods looking for "for rent" signs or by talking to any landlords you know personally.
That's how Bob, who asked that his last name not be used, bought his rental property near Albany, N.Y. The landlord of the three-unit building where Bob had rented for 15years was tired of the hassles and ready to sell.
"We love (the area) and jumped at the chance to buy it," Bob said.
So far, Bob and his wife have been pleased with their purchase. They raised rents and required security deposits, which caused the property's less desirable tenants to leave. He also has a backup plan for the building in case he starts to feel like the prior owner.
"If being a landlord got to be too big a hassle," Bob said, "we would just get rid of the tenants and make it our own place."
Get your finances in shape
The better your credit, and the less credit card and other consumer debt you have, the better your prospects for getting a decent loan, Callahan said. Lenders usually require bigger down payments, higher interest rates and generally stronger finances when you're buying rental property. That's because they know people are more likely to default on investment property than they are on their own homes.
Landlords say it also pays to have a substantial cash reserve left over after buying a property.
This can help pay for unexpected repairs and vacancies. Although there are few rules of thumb, setting aside at least one month's rent for each unit is a good start. CPA Paul Berning suggests having a line of credit, secured either by the property or your own home, to cover larger costs.
You also should make sure you can save enough for retirement and other goals before investing in rental real estate. While rental income can supplement your retirement kitty, most people shouldn't count on it to replace other investments or allow themselves to be entirely exposed to the whims of the local real estate market. Rents and property values can fall as well as rise, and those who are adequately diversified with investments in stocks, bonds and cash will be better able to endure the bad times as well as the good.
Avoid overpaying
As one experienced landlord put it: "You make your profit when you buy a property, not when you sell it." Pay too much, and you'll never recoup as much as you could have had you driven a better bargain.
The rental real estate market is generally tougher on investors who overpay than on homeowners who do the same thing, several landlords said. While a home is often an emotional purchase, which can lead to "I must have it!" offers and bidding wars, most landlords look strictly at the numbers to see if their investments will pay off. If you pay too much for a rental, you can't count on a "greater fool" coming along later to bail you out.
Not overpaying can be tough in a hot market, however. Apartments in New York, for example, currently sell at a 60% premium over their "inherent" value. In other words, they're selling for much more than the income streams the apartments generate, according to Reis, a national real estate research firm. In San Francisco and Los Angeles, the premium is 10%.
Some landlords use formulas, such as not paying more than six to eight times the rents they expect to make the first year. Others try to estimate what the property could be worth after needed repairs and upgrades are made, and they don't pay more than 70% of that price, less the cost of those repairs, CPA Berning said.
Every real estate market is different, however, and these formulas may not work in your area.
What's key is to make sure your rental income will cover your out-of-pocket costs, Berning said. That includes the mortgage payment on the property, as well as taxes, insurance, maintenance, repairs and a vacancy rate of around 5%. (If you have five units, for example, you should expect at least one unit to be empty three months each year. Here's the math: 5 units times 12 months equals 60; 60 times .05 is 3.)
If you can at least break even, you'll be able to profit from any price appreciation as well as from tax breaks available to rental property. Cain's Web site sells software to help you make these calculations.
When crunching the numbers, you should know that there's a big difference in how repairs and improvements are treated for tax purposes. You can typically deduct the cost of a repair, such as patching a roof or fixing a leaking pipe, on your tax return for the year in which the repair is made, Berning said.
Replace that roof or those pipes, however, and it's typically considered an improvement, which means the cost can't be deducted. Instead, it's added to the amount you paid for the property to determine your tax basis when you sell. The higher the basis, the lower your taxable profit. But if you have to wait 20 years after making a major improvement to recoup any of the cost for tax purposes, you may think twice about buying a property that needs a lot of upfront work, Berning said.
Longtime landlords say all this work pays off in profitable properties that build their net worth while providing a steady income stream. Callahan, whose family started investing in rental real estate in the 1940s, says it's a way of life she recommends.
"It doesn't matter if you're a professional or a laborer," Callahan said. "It's the equal-opportunity wealth builder."
Thursday, August 5, 2010
Go Green: Reduce Air Pollution - and Save Money - While Mowing Your Lawn
Mowing the lawn is a weekly chore for many this time of year. What you probably don’t realize is that your gas-powered mower is also contributing to bad air quality, right there in your own backyard. Until recently, gas-powered lawn mowers were not required to regulate emissions. The good news is that new regulations and a selection of greener alternatives can help you do your part to reduce air pollution so close to home.
Gas powered lawn equipment produces roughly 5% of the air pollution generated in America—that’s quite a lot for such a little engine. The exhaust sends tiny particles into the air creating conditions that are especially unhealthy for young children or anyone with a respiratory illness or disease. Fumes from the engine also contribute to the formation of ground level ozone and smog, another hazardous air pollutant. A study conducted at the University of Florida in 2005 found that gas-powered mowers cause as much as 1,500 times more carbon monoxide, 31 times more nitrogen oxides and nearly 20 times more carbon dioxide than mowers powered by electricity. New regulations will go into effect in the next two years that will reduce emissions from newly-built models, but gas powered mowers aren’t your only option.
Electric mowers also generate pollution but at drastically lower levels and not in your backyard. Electric mowers are more expensive than their gas-powered cousins, but they are a lot less expensive to operate and maintain. An electric mower will cost you about $5 a year to operate, which is the cost of electricity to power or charge the mower. If you opt for the more convenient cordless electric mower, you should know that the rechargeable battery contains lead and should never end up in a landfill. Fortunately, there are many resources available for recycling rechargeable batteries of all shapes and sizes.
For ease of operation, electric wins hands down. It starts with the push of a button and you never need to fill up the gas tank or replace the oil. Most come with a mulching feature and some models have the ability to add on accessories for trimming or edging. The electric mower is lighter than its gas-powered alternative and it’s much quieter too. But the biggest benefit is that you’ll be inhaling the sweet smell of freshly-cut grass instead of pollution-causing gas fumes.
Of course, a human-powered reel mower is the greenest option of all and is a practical solution if you have a small area to mow. Today there are many styles to choose from; some even include an attachment to catch grass clippings.
When it’s time to choose your next mower, do your part and select a model that won’t add to the air pollution problem near your home, your neighborhood or around the planet.
2010, The Charlotte Observer (Charlotte, N.C.).
Thursday, July 29, 2010
Blast from the Past – Vintage Appliances Add Unique Twist in Today’s Kitchens
By Jamie Knodel
July 24, 2010 — Long before granite and stainless steel dominated kitchens, chrome mixed with high-gloss, playful color was the look. These kitchens and their appliances of years past have droves of fans. The owners of vintage appliances are a proud lot, quick to show off a refrigerator’s special features, discuss the steps they take to keep a stove shiny or share a charming story about a previous owner.
Many aren’t afraid to fiddle with this or that part to get their equipment back in prime working order, and the ones who leave repairs to the experts have had little trouble finding a professional to get their appliances humming once more.
While all of the vintage appliances we found are in older homes, there are plenty of collectors who put vintage appliances or reproductions in new construction.
Meet three homeowners who live with appliances that have sailed past the half-century mark.
A red showstopper: 1950s-era Chambers high-back stove
The proud owners: Van and Elsa Moushegian of northwest Dallas
Its colorful past: When the Moushegians bought their house, the seller was sure to tell them about how, when he was a boy, his father gave his mother the stove to mark a special occasion. The seller had moved the stove to a couple of other houses throughout the years, but didn’t have a spot for it in his next home, so it stayed and became the Moushegians’.
Bells and whistles: Instead of four burners, the stove has three. In the place where the fourth would go is a deep well, which works like a built-in slow cooker.
“I’ll do tamales or beans in there,” Elsa says. “I can put them in before I go to bed and cook them overnight or start cooking them before I go to work in the morning.”
There’s also a broiler and griddle. The oven has a retained-heat cooking option that the Moushegians rave about. After preheating the oven at a very high heat, such as 500°F, they’ll put a roast or some other type of meat in and keep it on for about 20 minutes before turning it off. The meat stays in the oven and the door stays shut for several hours. “Steam comes out when you open the oven,” Van says. “Because it’s so well-insulated, it all comes out steaming and super tender.”
Up and running: “The real beauty of the stove is the way that it’s so easy to clean—it all comes apart easily,” Van says.
Sticking with vintage: “The first time I saw it, I thought it was just decoration. I didn’t realize it would still work,” Elsa says. Once she started cooking on it, it was love. “It cooks better, and I’m happier with this stove than I was my previous modern one.”
Pretty in pink: 1956 or ’57 General Electric refrigerator and oven
The proud owners: Lee and Melissa Higginbotham of northwest Dallas
Its colorful past: Lee Higginbotham inherited the pink appliances when he bought the 1957 house from a friend’s grandmother in the ’80s. It was a model home when the neighborhood was first developed. The pink sets the tone of entire kitchen; Melissa’s mother, an artist, painted the cabinets to complement the pastel appliances.
Bells and whistles: “It was the latest and greatest that 1957 had to offer,” Lee Higginbotham says. The refrigerator features a foot pedal beneath the door that opens the door for cooks who have their hands full. The pastel appliance, complete with turquoise lining, has a copper lazy Susan for shelves, and the shelf height is adjustable.
Up and running: Though the oven is 30-50 degrees off and its clock no longer works, the Higginbothams have learned to adjust. The fridge, which Lee’s partial to, has required only normal maintenance, he says. That includes defrosting it every so often and cleaning the back coils.
Sticking with vintage: Lee says he’ll cry when the fridge no longer works. He keeps an even older fridge, which isn’t running, in case he needs to mine it for parts for his beloved pink GE.
History’s in the bag: 1950s-era Electrolux pull canister vacuum and 1954 O’Keefe & Merritt stove
The proud owners: Mitchell and Kristen Kauffman of Lakewood, Texas
Its colorful past: The 500 series stove, which is white with yellow knobs and handles, was in the 1920s East Dallas bungalow when the Kauffmans moved in 15 years ago. The vacuum’s been in the family since Kristen’s grandmother owned it.
Bells and whistles: The maker of the vintage vacuum, Electrolux, keeps up with the Kauffmans and calls to schedule regular in-home tune-ups and to sell replacement bags. The Electrolux folks have replaced the vacuum’s retractable cord.
The stove, with a couple of storage drawers, electrical outlets and a lamp on the high back, also features a griddle. There’s also a “grillevator,” which lets you adjust how close you want your broiler pan to the flame. Under each burner is a crumb tray that slides out from the front for easy cleanup.
Up and running: “The inner workings of a stove haven’t changed much in the last 50 years,” Mitchell says. Anything that has gone wrong with the stove has been easy to fix.
Sticking with vintage: Vintage goes with the look of the Kauffmans’ bungalow, and while there have been plenty of updates, they like the way their vintage appliances fit in. “At the end of the day, you’re just cooking over a flame,” says Mitchell, a restaurateur. “There’s not much difference cooking over a flame coming out of a Viking vs. a flame coming out of my O’Keefe & Merritt.”
(c) 2010, The Dallas Morning News.
By Jamie Knodel
July 24, 2010 — Long before granite and stainless steel dominated kitchens, chrome mixed with high-gloss, playful color was the look. These kitchens and their appliances of years past have droves of fans. The owners of vintage appliances are a proud lot, quick to show off a refrigerator’s special features, discuss the steps they take to keep a stove shiny or share a charming story about a previous owner.
Many aren’t afraid to fiddle with this or that part to get their equipment back in prime working order, and the ones who leave repairs to the experts have had little trouble finding a professional to get their appliances humming once more.
While all of the vintage appliances we found are in older homes, there are plenty of collectors who put vintage appliances or reproductions in new construction.
Meet three homeowners who live with appliances that have sailed past the half-century mark.
A red showstopper: 1950s-era Chambers high-back stove
The proud owners: Van and Elsa Moushegian of northwest Dallas
Its colorful past: When the Moushegians bought their house, the seller was sure to tell them about how, when he was a boy, his father gave his mother the stove to mark a special occasion. The seller had moved the stove to a couple of other houses throughout the years, but didn’t have a spot for it in his next home, so it stayed and became the Moushegians’.
Bells and whistles: Instead of four burners, the stove has three. In the place where the fourth would go is a deep well, which works like a built-in slow cooker.
“I’ll do tamales or beans in there,” Elsa says. “I can put them in before I go to bed and cook them overnight or start cooking them before I go to work in the morning.”
There’s also a broiler and griddle. The oven has a retained-heat cooking option that the Moushegians rave about. After preheating the oven at a very high heat, such as 500°F, they’ll put a roast or some other type of meat in and keep it on for about 20 minutes before turning it off. The meat stays in the oven and the door stays shut for several hours. “Steam comes out when you open the oven,” Van says. “Because it’s so well-insulated, it all comes out steaming and super tender.”
Up and running: “The real beauty of the stove is the way that it’s so easy to clean—it all comes apart easily,” Van says.
Sticking with vintage: “The first time I saw it, I thought it was just decoration. I didn’t realize it would still work,” Elsa says. Once she started cooking on it, it was love. “It cooks better, and I’m happier with this stove than I was my previous modern one.”
Pretty in pink: 1956 or ’57 General Electric refrigerator and oven
The proud owners: Lee and Melissa Higginbotham of northwest Dallas
Its colorful past: Lee Higginbotham inherited the pink appliances when he bought the 1957 house from a friend’s grandmother in the ’80s. It was a model home when the neighborhood was first developed. The pink sets the tone of entire kitchen; Melissa’s mother, an artist, painted the cabinets to complement the pastel appliances.
Bells and whistles: “It was the latest and greatest that 1957 had to offer,” Lee Higginbotham says. The refrigerator features a foot pedal beneath the door that opens the door for cooks who have their hands full. The pastel appliance, complete with turquoise lining, has a copper lazy Susan for shelves, and the shelf height is adjustable.
Up and running: Though the oven is 30-50 degrees off and its clock no longer works, the Higginbothams have learned to adjust. The fridge, which Lee’s partial to, has required only normal maintenance, he says. That includes defrosting it every so often and cleaning the back coils.
Sticking with vintage: Lee says he’ll cry when the fridge no longer works. He keeps an even older fridge, which isn’t running, in case he needs to mine it for parts for his beloved pink GE.
History’s in the bag: 1950s-era Electrolux pull canister vacuum and 1954 O’Keefe & Merritt stove
The proud owners: Mitchell and Kristen Kauffman of Lakewood, Texas
Its colorful past: The 500 series stove, which is white with yellow knobs and handles, was in the 1920s East Dallas bungalow when the Kauffmans moved in 15 years ago. The vacuum’s been in the family since Kristen’s grandmother owned it.
Bells and whistles: The maker of the vintage vacuum, Electrolux, keeps up with the Kauffmans and calls to schedule regular in-home tune-ups and to sell replacement bags. The Electrolux folks have replaced the vacuum’s retractable cord.
The stove, with a couple of storage drawers, electrical outlets and a lamp on the high back, also features a griddle. There’s also a “grillevator,” which lets you adjust how close you want your broiler pan to the flame. Under each burner is a crumb tray that slides out from the front for easy cleanup.
Up and running: “The inner workings of a stove haven’t changed much in the last 50 years,” Mitchell says. Anything that has gone wrong with the stove has been easy to fix.
Sticking with vintage: Vintage goes with the look of the Kauffmans’ bungalow, and while there have been plenty of updates, they like the way their vintage appliances fit in. “At the end of the day, you’re just cooking over a flame,” says Mitchell, a restaurateur. “There’s not much difference cooking over a flame coming out of a Viking vs. a flame coming out of my O’Keefe & Merritt.”
(c) 2010, The Dallas Morning News.
Wednesday, July 21, 2010
A Potential Cure for the Appraisal Blues
A potential cure for the appraisal blues
By Ken Harney
WASHINGTON - Picture this: You've signed a contract to sell your house. Your buyers say they've nailed down the right mortgage. All is well. But then the appraisal comes in low - $25,000 to $50,000 under what was agreed in the contract.
The lender insists on cutting the mortgage amount to reflect the lower appraised value. You refuse to negotiate anywhere near the price indicated by the appraisal, and suddenly - poof! The whole deal is off. You, the buyers and the realty agents involved are all left sputtering over the appraisal that scuttled the transaction.
This scenario is not unusual in many markets across the country, say homebuilders, realty agents and appraisers. One little-publicized reason why: Lenders unilaterally may be lowering the numbers on the appraisals submitted to them in order to avoid accusations that the loans they sell to giant investors Fannie Mae or Freddie Mac are based on inflated appraisals - even slightly inflated. Such value inflations can expose lenders to dreaded "buyback" demands, forcing them to repurchase loans at huge costs.
The vice chairman of the National Association of Realtors' Appraisal Committee, Frank K. Gregoire of St. Petersburg, Fla., says it's a widespread problem - large numbers of legitimate home sales "sabotaged by lenders and underwriters arbitrarily reducing the value estimate" provided by the appraiser.
Typically, Gregoire says, the lender orders a low-cost electronic valuation - based on publicly available statistical data with no on-site inspections - to review the accuracy of what was submitted by the appraiser. If there's a discrepancy between what the computer says and the appraiser's report, the lender's underwriters sometimes simply cut the number - even if this means knocking the real estate transaction off track. Or they demand an immediate explanation from the appraiser.
But all this may be about to change. Effective Sept. 1, Fannie Mae is prohibiting lenders who sell it loans from changing appraisers' numbers. In guidance issued June 30, Fannie Mae said lenders must contact appraisers to "resolve" any disagreements about the valuation. If that's not possible, they should order a second appraisal - not just chop the value supporting the real estate contract.
Appraisers applauded the new rule. "This is huge," said Gary Crabtree, president of Affiliated Appraisers of Bakersfield, Calif., and a member of the national government relations committee of the Appraisal Institute, an industry group. Pat Turner, an appraiser in Richmond, Va., said Fannie's new requirement "is great news for consumers" because loan underwriters hundreds of miles from the property "no longer will be able to change the appraiser's valuation" simply because they pulled a lower number off a computer.
Turner said these electronic models "are often inaccurate," and provide no information on property condition. He said an appraisal completed recently in Virginia was challenged by a review company based in California using a proprietary electronic valuation system. The reviewer wanted to know why Turner hadn't used a specific property in the area as a "comparable" in doing his appraisal on the house. Turner checked out the suggested "comp," and it turned out to be a vacant lot, worth far less than the house - not a true comp "by any stretch of the imagination."
Fannie Mae's new guidelines also attempt to clarify other issues that have arisen during the past year, including the widespread use of inexperienced appraisers who are unfamiliar with local market conditions. Realtors, builders and mortgage brokers have complained to Congress that rules adopted by Fannie Mae and Freddie Mac in 2009 encouraged lenders to use "appraisal management" companies to value properties.
Those companies, in turn, often pay appraisers deeply discounted fees - half off traditional prevailing rates in some cases - and require them to complete their assignments far faster than normal turnaround times. Critics have charged that low-budget appraisers working for management companies frequently travel long distances to do their valuations, have minimal access to local realty data, and make excessive use of foreclosures and short sales as comparables - thereby depressing the values of non-distressed sales in the area.
Fannie's letter attempts to clarify its "appraiser selection" standards. Tops on the list: Appraisers should be experienced, "have the requisite knowledge" about local market conditions, plus access to all local data sources. Fannie also emphasized that the demonstrated experience of an appraiser should always trump fees or turnaround times - a clear swipe at management companies who literally bid out their work on the latter two criteria.
Asked whether Freddie Mac plans to issue similar rules on appraisal quality standards, a spokesman said "we're definitely looking at it."
• Write to Ken Harney at P.O. Box 15281, Chevy Chase, MD 20815 or via e-mail at kenharney@earthlink.net.
© 2010, Washington Post Writers Group
By Ken Harney
WASHINGTON - Picture this: You've signed a contract to sell your house. Your buyers say they've nailed down the right mortgage. All is well. But then the appraisal comes in low - $25,000 to $50,000 under what was agreed in the contract.
The lender insists on cutting the mortgage amount to reflect the lower appraised value. You refuse to negotiate anywhere near the price indicated by the appraisal, and suddenly - poof! The whole deal is off. You, the buyers and the realty agents involved are all left sputtering over the appraisal that scuttled the transaction.
This scenario is not unusual in many markets across the country, say homebuilders, realty agents and appraisers. One little-publicized reason why: Lenders unilaterally may be lowering the numbers on the appraisals submitted to them in order to avoid accusations that the loans they sell to giant investors Fannie Mae or Freddie Mac are based on inflated appraisals - even slightly inflated. Such value inflations can expose lenders to dreaded "buyback" demands, forcing them to repurchase loans at huge costs.
The vice chairman of the National Association of Realtors' Appraisal Committee, Frank K. Gregoire of St. Petersburg, Fla., says it's a widespread problem - large numbers of legitimate home sales "sabotaged by lenders and underwriters arbitrarily reducing the value estimate" provided by the appraiser.
Typically, Gregoire says, the lender orders a low-cost electronic valuation - based on publicly available statistical data with no on-site inspections - to review the accuracy of what was submitted by the appraiser. If there's a discrepancy between what the computer says and the appraiser's report, the lender's underwriters sometimes simply cut the number - even if this means knocking the real estate transaction off track. Or they demand an immediate explanation from the appraiser.
But all this may be about to change. Effective Sept. 1, Fannie Mae is prohibiting lenders who sell it loans from changing appraisers' numbers. In guidance issued June 30, Fannie Mae said lenders must contact appraisers to "resolve" any disagreements about the valuation. If that's not possible, they should order a second appraisal - not just chop the value supporting the real estate contract.
Appraisers applauded the new rule. "This is huge," said Gary Crabtree, president of Affiliated Appraisers of Bakersfield, Calif., and a member of the national government relations committee of the Appraisal Institute, an industry group. Pat Turner, an appraiser in Richmond, Va., said Fannie's new requirement "is great news for consumers" because loan underwriters hundreds of miles from the property "no longer will be able to change the appraiser's valuation" simply because they pulled a lower number off a computer.
Turner said these electronic models "are often inaccurate," and provide no information on property condition. He said an appraisal completed recently in Virginia was challenged by a review company based in California using a proprietary electronic valuation system. The reviewer wanted to know why Turner hadn't used a specific property in the area as a "comparable" in doing his appraisal on the house. Turner checked out the suggested "comp," and it turned out to be a vacant lot, worth far less than the house - not a true comp "by any stretch of the imagination."
Fannie Mae's new guidelines also attempt to clarify other issues that have arisen during the past year, including the widespread use of inexperienced appraisers who are unfamiliar with local market conditions. Realtors, builders and mortgage brokers have complained to Congress that rules adopted by Fannie Mae and Freddie Mac in 2009 encouraged lenders to use "appraisal management" companies to value properties.
Those companies, in turn, often pay appraisers deeply discounted fees - half off traditional prevailing rates in some cases - and require them to complete their assignments far faster than normal turnaround times. Critics have charged that low-budget appraisers working for management companies frequently travel long distances to do their valuations, have minimal access to local realty data, and make excessive use of foreclosures and short sales as comparables - thereby depressing the values of non-distressed sales in the area.
Fannie's letter attempts to clarify its "appraiser selection" standards. Tops on the list: Appraisers should be experienced, "have the requisite knowledge" about local market conditions, plus access to all local data sources. Fannie also emphasized that the demonstrated experience of an appraiser should always trump fees or turnaround times - a clear swipe at management companies who literally bid out their work on the latter two criteria.
Asked whether Freddie Mac plans to issue similar rules on appraisal quality standards, a spokesman said "we're definitely looking at it."
• Write to Ken Harney at P.O. Box 15281, Chevy Chase, MD 20815 or via e-mail at kenharney@earthlink.net.
© 2010, Washington Post Writers Group
Thursday, July 15, 2010
What Was the Real Impact of the Housing Tax Credit?
Home buyer tax credit fails as a turbocharger for Savannah market
By Adam Van Brimmer, Savannah Morning News, Ga.
Hindsight reflects poorly on Version 2.0 of the federal homebuyer tax credit.
The credit -- established Nov. 6, 2009, and redeemable for up to $8,000 off the income taxes of first-time homebuyers and $6,500 for eligible repeat buyers -- failed as a turbocharger for the local housing market.
The credit expired April 30, although buyers with homes under contract as of that date have until Sept. 30 to close and occupy the new residence.
All but a few of those deals are complete. And the numbers lead local real estate professionals to use words like "bust," "flop," and "disappointment" to describe the credit's impact.
Sales of single-family homes, modulars, townhouses and condos through the first six months of 2010 were flat compared with the same period in 2009, when only first-time buyers were eligible. And many of those buyers waited until late summer and early fall to take advantage of that initial program.
But proponents of the credit point to what the statistics and hindsight fail to show: How much worse the housing market might have been without the incentives.
Treading water is better than drowning, they say, and if the credit kept the market afloat, then it was far from a failure.
Labels like success and failure aside, the credit's impact -- and the factors behind it -- demonstrate housing's economic complexity.
A sensible idea
Extending and expanding the tax credit seemed logical last fall.
The initial program for first-time buyers carried the market in 2009. First-timers accounted for as much as 70 percent of home purchases nationwide last year.
Locally, the percentage of first-time buyers was lower, but not by much. Exact figures are not available, but financing data for local sales reveals more than 50 percent of purchases made last year were secured using FHA and VA loans, which require little money down and are the loans of choice among first-time buyers.
Extending the credit for those predominantly young buyers meant more new blood for the market -- vital considering the number of homeowners who lost their houses to foreclosure and became renters last year. The more first-timers buying now, the earlier they will shop for bigger or better houses and aid the market down the road.
Plus, a good percentage of first-timer buyers purchased newly constructed homes, helping homebuilders weather the recession.
Expanding the credit to include repeat or "move-up" buyers would further stimulate the housing market, proponents claimed, especially in higher-priced neighborhoods. The first-time buyers gobbled up houses priced under $200,000 -- the so-called "starter homes" -- but the initial tax credit did little to boost activity outside that price point.
Offering a $6,500 incentive to current homeowners would expand the credit's impact to include the higher-priced addresses, the thinking went. Young families are always looking to trade in their two-bedroom for a three- or four-bedroom or move into a better school district.
An expanded credit would do for the market what shifting from second gear into third does for a car.
Bumps in the road
Yet the tax credit's ability to accelerate the local housing market depended on the navigation of several obstacles.
-- Labor market growth. Unemployment needed to shrink and employed Americans had to feel more secure in their jobs. Job insecurity is synonymous with financial uncertainty. Few make six-figure purchases when wondering from where their next paycheck may come.
-- Increased demand. For move-up buyers to move up, most needed first to sell the homes they currently owned.
-- Continued first-time buyer interest. First-timers would buy the homes the would-be repeat buyers were selling and keep the homebuilders busy and the market growing.
The Savannah area fell short on all fronts. Unemployment remained above eight percent. Would-be repeat buyers struggled to sell without significantly cutting their prices, and lower prices meant less equity to invest in an upgrade.
As for the first-timers, their numbers dropped precipitously. FHA/VA-backed purchases were down 24 percent in the first six months of 2010 versus 2009.
Many local real estate professionals believe the reason for the drop was the initial tax credit, which was scheduled to expire Nov. 30 until the government extended it, coaxed many spring 2010 buyers to purchase early to ensure themselves of the $8,000 bonus.
Lingering effects
The focus now shifts to the credit's impact on the Savannah market post-deadline.
Just as the initial credit borrowed first-time buyers from spring 2010, the expanded credit may have stolen move-up buyers from the second half of this year.
The number of pending deals has dropped since the credit's contract deadline on April 30. But there are extenuating circumstances that could help the market maintain its current levels and possibly even grow:
-- Mortgage rates: Stock market uncertainty has led to heavy investment in the bond markets, which in turn have kept mortgage interest rates down. Interest rates are tied to bond yields, and the higher the demand for bonds, the lower the yields.
The average 30-year fixed rate currently stands at 4.62 percent after hitting record lows last week. Each tenth of a point change in interest rate equates to thousands of dollars over the life of a loan.
For example, a borrower would pay about $17,000 less in interest on a $200,000 loan at 4.6 percent than he would on the same loan at 5 percent.
-- Home prices: Sluggish sales have kept prices in check as well. The overall average sales price for the first six months is unchanged from a year ago, although prices are down significantly in several Savannah neighborhoods.
Single-family homes on the Southside are down 10 percent, West Chatham has seen a 3 percent decrease, and Skidaway Island is off by 9 percent.
And overall, prices are down more than 10 percent from where they were through the first six months of 2008, which marked the eve of the housing slump locally.
Local real estate professionals agree a housing recovery here goes deeper than a tax credit. A strengthening economy and all that comes with it -- more jobs, more retiring baby boomers, more tourism and ports activity -- will be the spark for the housing market.
By Adam Van Brimmer, Savannah Morning News, Ga.
Hindsight reflects poorly on Version 2.0 of the federal homebuyer tax credit.
The credit -- established Nov. 6, 2009, and redeemable for up to $8,000 off the income taxes of first-time homebuyers and $6,500 for eligible repeat buyers -- failed as a turbocharger for the local housing market.
The credit expired April 30, although buyers with homes under contract as of that date have until Sept. 30 to close and occupy the new residence.
All but a few of those deals are complete. And the numbers lead local real estate professionals to use words like "bust," "flop," and "disappointment" to describe the credit's impact.
Sales of single-family homes, modulars, townhouses and condos through the first six months of 2010 were flat compared with the same period in 2009, when only first-time buyers were eligible. And many of those buyers waited until late summer and early fall to take advantage of that initial program.
But proponents of the credit point to what the statistics and hindsight fail to show: How much worse the housing market might have been without the incentives.
Treading water is better than drowning, they say, and if the credit kept the market afloat, then it was far from a failure.
Labels like success and failure aside, the credit's impact -- and the factors behind it -- demonstrate housing's economic complexity.
A sensible idea
Extending and expanding the tax credit seemed logical last fall.
The initial program for first-time buyers carried the market in 2009. First-timers accounted for as much as 70 percent of home purchases nationwide last year.
Locally, the percentage of first-time buyers was lower, but not by much. Exact figures are not available, but financing data for local sales reveals more than 50 percent of purchases made last year were secured using FHA and VA loans, which require little money down and are the loans of choice among first-time buyers.
Extending the credit for those predominantly young buyers meant more new blood for the market -- vital considering the number of homeowners who lost their houses to foreclosure and became renters last year. The more first-timers buying now, the earlier they will shop for bigger or better houses and aid the market down the road.
Plus, a good percentage of first-timer buyers purchased newly constructed homes, helping homebuilders weather the recession.
Expanding the credit to include repeat or "move-up" buyers would further stimulate the housing market, proponents claimed, especially in higher-priced neighborhoods. The first-time buyers gobbled up houses priced under $200,000 -- the so-called "starter homes" -- but the initial tax credit did little to boost activity outside that price point.
Offering a $6,500 incentive to current homeowners would expand the credit's impact to include the higher-priced addresses, the thinking went. Young families are always looking to trade in their two-bedroom for a three- or four-bedroom or move into a better school district.
An expanded credit would do for the market what shifting from second gear into third does for a car.
Bumps in the road
Yet the tax credit's ability to accelerate the local housing market depended on the navigation of several obstacles.
-- Labor market growth. Unemployment needed to shrink and employed Americans had to feel more secure in their jobs. Job insecurity is synonymous with financial uncertainty. Few make six-figure purchases when wondering from where their next paycheck may come.
-- Increased demand. For move-up buyers to move up, most needed first to sell the homes they currently owned.
-- Continued first-time buyer interest. First-timers would buy the homes the would-be repeat buyers were selling and keep the homebuilders busy and the market growing.
The Savannah area fell short on all fronts. Unemployment remained above eight percent. Would-be repeat buyers struggled to sell without significantly cutting their prices, and lower prices meant less equity to invest in an upgrade.
As for the first-timers, their numbers dropped precipitously. FHA/VA-backed purchases were down 24 percent in the first six months of 2010 versus 2009.
Many local real estate professionals believe the reason for the drop was the initial tax credit, which was scheduled to expire Nov. 30 until the government extended it, coaxed many spring 2010 buyers to purchase early to ensure themselves of the $8,000 bonus.
Lingering effects
The focus now shifts to the credit's impact on the Savannah market post-deadline.
Just as the initial credit borrowed first-time buyers from spring 2010, the expanded credit may have stolen move-up buyers from the second half of this year.
The number of pending deals has dropped since the credit's contract deadline on April 30. But there are extenuating circumstances that could help the market maintain its current levels and possibly even grow:
-- Mortgage rates: Stock market uncertainty has led to heavy investment in the bond markets, which in turn have kept mortgage interest rates down. Interest rates are tied to bond yields, and the higher the demand for bonds, the lower the yields.
The average 30-year fixed rate currently stands at 4.62 percent after hitting record lows last week. Each tenth of a point change in interest rate equates to thousands of dollars over the life of a loan.
For example, a borrower would pay about $17,000 less in interest on a $200,000 loan at 4.6 percent than he would on the same loan at 5 percent.
-- Home prices: Sluggish sales have kept prices in check as well. The overall average sales price for the first six months is unchanged from a year ago, although prices are down significantly in several Savannah neighborhoods.
Single-family homes on the Southside are down 10 percent, West Chatham has seen a 3 percent decrease, and Skidaway Island is off by 9 percent.
And overall, prices are down more than 10 percent from where they were through the first six months of 2008, which marked the eve of the housing slump locally.
Local real estate professionals agree a housing recovery here goes deeper than a tax credit. A strengthening economy and all that comes with it -- more jobs, more retiring baby boomers, more tourism and ports activity -- will be the spark for the housing market.
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