Americans Have Fallen in Love With Real Estate Once Again

Some wealthy Americans today have speculated that buying real estate in this economy can actually turn around to be a huge financial investment in the long run. But how many average home-owning Americans could agree to that? With the housing markets going up one minute and down the next who’s to say that you’ll get the price you’re asking for when you sell your home or the buy for the offer you put on the house.  Many Americans put their money in stocks and bonds when they look to invest. But real estate has opened a new door of opportunity for many to hopefully make a return off their initial purchase because some believe the investment is greater when you own it. There may be healthy argument here folks. First, let’s start and address what appears to be the fact: only small groups of Americans today actually seek buying real estate as means for an actual financial investment while many others seek home owning as a life-long investment for their families and generations to come.  For those who seek to buy and invest in real estate must also be careful because of the constant changes in housing markets. Their ROI can often be greater than the return on the asset. In the article below, CNN”s Christopher Matthew explains why real estate has become a new trending topic for many Americans and is warming many up to the idea of buying again.** Jumoke Akiosi.

Americans Have Fallen in Love with Real Estate Once Again

 SOURCE: Christopher Matthews CNN Money

FORTUNE -- As the real estate market recovers, so does America's faith in housing as an investment.

According to a Gallup poll released Thursday, a plurality of Americans now think of real estate as the "best" long-term investment, followed by gold, stocks and mutual funds, savings accounts/CDs, and bonds:

If one assumes "best" to mean the investment that offers the highest return, then Americans have things backwards. Real estate, on average actually returns very little when adjusted for inflation. Robert Shiller -- the economist famous for helping to create the widely cited Case-Shiller housing index puts it like this:

Home prices look remarkably stable when corrected for inflation. Over the 100 years ending in 1990 -- before the recent housing boom -- real home prices rose only 0.2 percent a year, on average. The smallness of that increase seems best explained by rising productivity in construction, which offset increasing costs of land and labor.

And since 1990, housing has continued to be a middling investment, when you take into account the bursting of the real estate bubble:

When adjusted for inflation, the average house has appreciated little since 1987. The picture looks a lot different for the other investments Gallup asked about it in its polls. The S&P 500, for instance, has produced an inflation-adjusted annual return of 6.32% since 1929, while investing in government debt would have returned roughly half that figure. Gold, interestingly enough, has performed pretty well on an inflation-adjusted basis, averaging a 4.12% return per year since the end of the Bretton-Woods monetary order in 1971.

If you break down the Gallup data into income groups, the answers are even more revealing. For one, wealthy Americans are more likely to pick stocks as the best investment than any other income group. This makes sense, as investing in the stock market is -- as the above data shows -- the best way to become wealthy.

Secondly, it appears as if people are likely to say investments they own are the "best." According to the Gallup report:

Upper-income Americans are much more likely to say real estate and stocks are the best investment, possibly because of their experience with these types of investments. Upper-income Americans are most likely to say they own their home, at 87%, followed by middle (66%) and lower-income Americans (36%). Gallup found that homeowners (33%) are slightly more likely than renters (24%) to say real estate is the best choice for long-term investments.

So wealthy Americans are the most likely to understand that stocks provide the best chance for a higher return, but they are also not free of the tendency to think that the thing they are doing (in this case, owning a home) is the intelligent thing to do.

Of course, this analysis takes for granted the idea that "best" necessarily means the investment that is most likely to make you the most money. There are, of course, other reasons why people might decide to invest in real estate. While it theoretically might make sense for an investor to rent his home and plow the money he saves on taxes, mortgage interest, and maintenance into the stock market, such a strategy might not work in the real world. First of all, people have limited time: They're going to spend a lot of energy choosing a good place to live, and might not also have the time to wisely manage securities investments too. Secondly, owning a home is a great way to force yourself to save money, as each mortgage payment is something you have to make, lest you risk losing your home.

Either way, if you decide to put your extra cash into real estate for these reasons, you should be aware that this is the reason you're doing it. As long as you don't expect your home to make you a lot of money on an inflation-adjusted basis, invest away.

MAKE THESE UPGRADES TO SAVE ENERGY & BOOST YOUR HOME'S RESALE VALUE

As the temperature continues to fluctuate this Spring, we want to share some ways on how you can keep your energy costs down and keep more money in your wallet.

Source:  Realty Times Staff

Most homeowners would benefit from a home energy audit, especially those with older homes. An audit will uncover where your home is wasting energy and how to best remedy the situation. Remodeling your kitchen, bathroom or living room may add to your home’s resale value, but the following energy-efficient upgrades add value and save you money on your monthly utility bills - and you'll help the environment, too.

Replace Windows & Roofing

If you have old, drafty windows with loose frames or gaps that let conditioned air escape, you're losing money. Replace them with energy-efficient windows. You will improve your indoor comfort and reduce heating and air conditioning costs. In addition, window treatments can keep you cooler in summer and warmer in winter. The U.S. Department of Energy (DOE) reports that treatments such as awnings and blinds reduce solar heat gain by as much as 77 percent, and shutters and storm panels reduce heat loss in winter.

The same principle applies to your roof. A new, properly installed roof will lower your energy costs and increase your home's resale value, according to Champion Home Exteriors. Make sure you use a reliable contractor who knows how to properly ventilate the attic, or you risk mold and premature peeling of interior paint and wallpaper.

Seal & Insulate

Take the time to seal your home's walls, windows, vents and any other cracks or gaps, and consider adding insulation, too. Not only does this improve comfort and save on utilities, but it also reduces outside noise, prevents an inflow of dust, pollen, insects and debris, and provides better humidity control. Brett and Elna Wells of Shelbourne, Vermont, told Mother Earth News how they added 19 inches of insulation in their attic and added foam sealant around their foundation, and not only did they lower their energy consumption, but they received a $2,900 rebate from their electric utility, too.

Replace Siding

One of the home improvement projects with the best return on investment is replacing your current siding with new vinyl siding, according to Remodeling Magazine's Cost vs. Value Report. It provides a whopping 78 percent return on investment. To realize savings on your energy bill, make sure the contractor uses ENERGY STAR-rated underlayment and corner wrap to protect your home from moisture.

Get an Energy-Efficient Furnace

Linda Barnwell is a certified eco-broker with the real estate franchise company Keller Williams. She told Fox News that an energy-efficient furnace will boost energy savings and a home's resale value. Airtight homes with newer furnaces are what homebuyers are looking for, and it can even drive the outcome of a real estate deal. Sellers whose homes have furnaces that are 20 or 30 years old may see sales negotiations stall, or buyers may demand you replace the furnace as a condition of the sale.

If a professional home energy audit isn't possible, try using an energy saving calculator from the DOE.

Tired of of having to repair your furnace or insulate your home? Looking for a way out of your hold home & into a new one? Let us help you! We can answer any question about your real estate struggles. Give us a call today! (301) 467-1622

Attic Renovation Tips

Spring has finally arrived and its time to do some Spring cleaning. Having difficulty deciding what to keep or what to throw out? Let us help you with some helpful tips from our trusted home inspector, Rocky Banks.

Many are already planning to renovate their attic as they start to build their budget for home renovations. Renovating your attic is a financially smart decision and can be an inexpensive way to add living space to your home. These six tips will help you plan for and overcome many of the challenges of remodeling an attic into living space.

Plan carefully. 
Remember that the order in which inspections must be obtained will dictate your schedule. Think through every aspect of both the design and the project, consider possible challenges, and devise plans to overcome each challenge.

 Design the space for the type of room. The way you design and remodel the space will vary with the uses you plan for the finished room. For example, a bedroom may have different requirements than a playroom.

Plan access to the new room(s) carefully. Creating access to the new space is challenging in some homes. If you are trying to reduce costs for your project, you will want to find and construct the stairs in the best point of access and in a way that involves the least modification of the existing structure. You will also need to check local building codes with reference to exit points.

Decide how you will work with the slope of the roof. This is an important aspect of planning, and it will affect your cost and the appearance and functionality of the new room. Do you want a pitched or a cathedral ceiling? How will you construct it? How will you install adequate insulation?

Remember that ventilation and insulation are critical. Remember that heat rises. Attics can become very warm. You will need to plan for adequate ventilation and insulation to keep the room comfortable without drastically increasing your heating and cooling costs.

Plan for wiring and plumbing well in advance. Electrical wiring and plumbing can present unique challenges in attics. You will need to ensure that the flooring does not rest on any wires. A bathroom will cost less if placed in close proximity to another existing supply and drain line. If you are planning to finish or remodel your attic into living space, careful planning and attention to the unique challenges presented by the space will be essential. You can expect to gain valuable living space as well as some increase in the value of your home.

 For more tips on attic renovation, please call your local Pillar To Post office or inspector. Rocky Banks Rocky.Banks@pillartopost.com www.pillartopost.com 1-301-455-5994

Not interested in renovating your home because of the maintenance? Are you thinking its time to find your dream home? Let us help you! Give us a call at 301-437-1622.

Adjustable-Rate Mortgages (ARMs) Making Comeback

If you bought a home in Bethesda, Rosemary Hills, or Chevy Chase back during the financial crisis, you may have financed with an adjustable-rate mortgage or ARM. In subsequent years, these loans fell out of favor with most buyers for their higher risk and higher default rate. But, says an article on the New York Times web site, these loans have been “revamped” and are making a comeback, having removed things like “teaser” rates and “option” features where borrowers start off paying less and then pay more as the loan continues.

Unlike a fixed-rate loan with its unchanging interest rate, an ARM starts out at one rate but adjusts, usually once a year, at a capped rate based on its interest-rate index. Typically the adjustment is 2 percent up or down, and the total increase amount is capped generally at around 6 percent above the initial interest rate.

ARMs most in demand right now are the “5/1” and “7/1” where rates are fixed for either the first five or seven years and then adjusted each year after at a capped rate. For homeowners who want to sell or refinance after five or seven years, the adjustable-rate mortgage can save a lot of cash, as starting interest rates are generally one to one and one-half percent lower than the 30-year fixed loan rates.

For example, a 5/1 ARM for a $500,000 loan at 3.5 percent saves $42,507 in the first five years before adjustment compared to a 30-year fixed-rate loan at 5.25 percent. The 7/1 ARM saves $38,330 in its first seven years.

Although there are now more lenders offering ARMS, getting them still might be difficult. Fannie Mae has decreed that borrowers must qualify on either the starting rate plus two points or on the full index rate tied to the loan, whichever is higher. Just as with conventional loans, good credit will help in qualifying for an ARM.

When deciding about an adjustable-rate mortgage, think both short-term and long-term. If you’ll likely be selling or refinancing after five to seven years, an ARM could make the most sense. If you’re in your home for the long term, take a good look at the increase structure and cap amounts so you don’t end up paying more than you can afford. It’s all in how the numbers meet your needs.

Contact me, Mynor Herrera, today for expert help buying or selling in the DC, MD, & VA areas! I also specialize in Bethesda and Chevy Chase, as well as the sub-divisions of Rosemary Hills, Rock Creek Forest, East Bethesda & Whitehall Condominium.