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How much is your home worth? You might be surprised at some of the indicators that determine a home’s value, covered by Yuqing Pan in this article from realtor.com.
Home buyers and owners want to know which way prices are heading. Are valuations heading up, up, up, making it the perfect time to buy? Or are they beginning a precipitous decline from their peak – making it high time to sell? To read the tea leaves, they might focus on the latest jobs reports, check out what’s going on in other markets, or scrutinize the writings of economists.
But insights can be found in the most unusual places – such as on a grocery run, or at the gas pump. We’ve rounded up eight surprising indicators of change in home prices. Do they play a role in pushing the numbers skyward or down into the dirt? Or are they false prophets? We’re here to help you sort it out!
Gas prices. Sure, it feels fantastic to fill up your car with gas for just $35 when it used to cost almost $50. But if you’re looking to buy a home, the financial benefit of cheap gas might be overrated – as gas prices fall, home prices inevitably go up. And homes sell faster, too, which takes a toll on available inventory. For every $1 decrease in gas prices, home prices increase by roughly $4,000 and the average time to sell a property decreases by 25 days, according to a study by Longwood University and Florida Atlantic University. Lower gas prices lead to increased consumer confidence and more disposable income for potential buyers, Longwood professor Bennie Waller explains.
Sports facilities. Walking distance to the big game? Score! Living near a stadium clearly is not a hard sell for sports fans, but even those without an obsessive rooting interest in the local teams should pay close attention if there’s a major sports facility nearby. Moving a residential housing unit one mile closer to a professional sports facility increases its value by $793. But the effect disappears after four miles, according to researchers at the College of William and Mary and University of Alberta, who extracted property data within 5 miles of every NFL, NBA, MLB, and NHL facility in the U.S. So sidle up to that stadium – just be sure you have a dedicated parking space.
Temperature change. Global warming affects not only nature, but also our daily lives and housing decisions. The National Association of Realtors looked at home prices and temperature change over the past four years and found what seemed to be a negative correlation between temperature increase and housing prices. Out of the 82 markets studied, those with the highest gains in housing prices typically had a small increase in temperature (up to 2 degrees Fahrenheit). For example, in Atlanta, GA, the temperature increased 1 degree while house prices increased 78%. But markets where the temperature rose more than 3 degrees did not experience significant price gains, such as Little Rock, AR.
Highways. Is it a good idea to live close to the highway? Yes … and no. It depends on just how close we’re talking. A case study of the Superstition Freeway (U.S. Route 60) corridor in Mesa and Gilbert, AZ, showed that single-family homes within 0.5 miles of the freeway were adversely impacted. But the negative impacts were more than offset by housing price appreciation in the surrounding areas. Average sales price appreciation for homes within 5 miles of the freeway (including negatively affected properties) was higher than the whole metropolitan area. So while you probably don’t want to buy right by an exit ramp, easy access to a transportation corridor is definitely a strong selling point.
Nearly half of the people who are renters in the U.S. are struggling to afford their monthly payments, according to Harvard’s Joint Center for Housing Studies, and highlighted in this CNN Money article from Kathryn Vasel.
Experts generally recommend keeping your housing costs around 30% of your monthly income. But the number of “cost-burdened” tenants – those who spend more than 30% of their income on rent – rose to 21.3 million people last year, according to Harvard’s Joint Center for Housing Studies.
Of those, more than 26% are “severely cost burdened” and spend more than half of their income to cover rent.
Here’s the problem: rents are increasing much faster than wages. Inflation-adjusted rents increased 7% from 2001-2014 while household incomes dropped 9%, the report showed. At the same time, rising demand for rental units has pushed the national vacancy rate to a 30-year low, driving prices even higher.
“These trends have led to record numbers of renters paying excessive amounts of income for housing, with little prospect for meaningful improvement,” the report said. The median rent for a new apartment climbed to $1,372 last year, a 26% increase from 2012.
While low-income households are the most likely to have a hard time making ends meet, middle-income households are increasingly struggling to make rent.
“It was adverbs and adjectives galore.” That’s how an economic research analyst at Realtor.com described the property descriptions of luxury homes in a recent analysis. In this article, Stefanos Chen of The Wall Street Journal looks at how property listings change based on the price of the home.
To sell the priciest homes in the country, some real-estate pros try their hand at prose.
An analysis of listings language by website Realtor.com found that the higher the home price, the more flowery the verbiage in the property description.
“Majestically poised along the shimmering Gulf of Mexico,” begins the 222-word real-estate listing for a $10.9 million beach home in Sarasota, Fla. It also cites the “unique harmony” of this “haven of serenity” suitable for “undisturbed reflection.”
The listing scored at a 12th-grade reading level based on the Flesch-Kincaid scale, an algorithm first applied to school-grade levels in the 1970s.
Mel Goldsmith, an agent with Michael Saunders & Co., had an in-house marketing team write the Sarasota listing. “They know how to use the buzzwords,” he said.
For its analysis, Realtor.com took a random sample of roughly 1,000 listings across the U.S. in November. To see the differences on two ends of the real-estate market, about half of the homes in the analysis were listed for $10 million or more. The rest were for homes listed at $750,000 or less.
Here’s an excellent read from Kendal Perez, writing for U.S. News, about the importance of scaling back on gift giving and spending more quality time together during the holidays.
One of the busiest shopping holidays is nearly upon us, with near-constant speculation about who has the best deals on this year’s hottest gifts. Witnessing this spectacle can zap the holiday spirit from even the most festive person.
“To me, the meaning of the holidays is to be thankful for what we have and be close to family,” says Dan Nainan, a former Intel engineer and current comedian and actor in New York City. One year, Nainan and his family decided not to buy gifts for one another. “It reduced so much stress,” he says, and since then he hasn’t purchased anything for anyone.
This response to the holiday season may seem extreme to some, but to those leaning toward a more minimalistic lifestyle, it offers a deep sigh of relief during a season where stress and anxiety can be suffocating. Minimalism represents a budding movement that, while meaning different things to different people, often results in fewer possessions and more time to focus on what the individual deems most important. While some embrace Nainan’s approach of opting out of gift exchanges altogether, others choose instead to take a more mindful approach to holiday spending.
Cait Flanders, blogger at BlondeOnABudget.ca, has been exploring minimalism over the past several years, whittling down her possessions and even launching a budgeting planner influenced by the lifestyle, called Mindful Budgeting. When it comes to the holidays, Flanders says she loves giving gifts but wants to be sure the product will be used and valued before purchasing. “I’ll typically buy my niece and nephew books, games or puzzles we can do together,” she says. “Or I’ll ask their mom what they actually need and get them that.”
“Last year was the first year my whole family embraced a minimalist Christmas,” Flanders says. “We woke up, cooked a big breakfast together, then spent a couple hours at the beach with our dogs.” Flanders acknowledges this as a big departure from previous years, when it was all about spending money on stuff and unwrapping presents. “It was so refreshing to not have our day focused around gifts, and instead just spend time together.”
Philanthropic gifting can serve as a gateway to help family and friends understand minimalism, especially during the holiday season. Ramon Khan, blogger at LiveSimplyNatural.com, pleaded with his family to stop buying him gifts. “It was hard for them to break the tradition,” he says, “but then I got the idea of giving our dedicated gift funds to families in need.” Khan says this idea was key to getting his family to quit buying unnecessary items for each other and use their money toward a greater cause.
There are tons of ways to clean a lampshade. But there’s a good chance you haven’t tried them because lampshades are one of those blind spots when it comes to cleaning routines (aka everybody forgets about them).
Let’s change that! Here’s the best way to clean a lampshade based on the lampshade material and the type of dust or grime that’s on it:
Consider wearing gloves while cleaning lampshades. This will eliminate the risk of transferring oily fingerprints.
To Remove Dust from a Lampshade…
You can dust any lampshade with a microfiber cloth or a paintbrush. This will bring the dust to the table and surrounding area where you can finish the job with a vacuum or dusting pan.
If there are any weird crevices you’re having trouble reaching, try a can of compressed air. You can also use your vacuum with the dusting brush attachment, but try this carefully and make sure the suction isn’t too strong, otherwise you could warp the shade.
When cleaning a shade with a dusting brush attachment, do not touch the shade with the attachment because you may transfer old dust or grime to the shade. Hold the attachment one inch from the shade and the suction will still function.
To Remove Stains from a Lampshade…
For fabric or plastic lampshades, if the stain is minor oil or grease based, baking soda is the gentlest solution. You want to cover the stain with a centimeter-thick layer of baking soda. (To do this, position the lampshade on its side.) Let the baking soda sit for five minutes and then brush it away – it should soak up the majority of the stain.
If the stain is not oil-based, try a magic eraser. Gently rub the stain with the eraser and hope that it brings the fabric back to new.
If that doesn’t work, you can wash your shade by hand. Fill your tub or sink (if it is big enough to rest the shade on it’s side) with lukewarm water. Add a couple drops of mild laundry detergent and mix the water until it bubbles. Rest the shade in the water on its side and roll the shade around.
Numerous studies show that managing money can be the most divisive issue between couples, whether married or living together. One might be a spender; the other, a saver. Those opposing ideas of money can make finance one of the most difficult and potentially explosive topics for couples to discuss, leading to disharmony over spending.
“Talking about money doesn’t come naturally,” says Jane Honeck, author of “The Problem With Money? It’s Not About the Money!” “Even though most people’s parents talked to them about money, few parents teach their children about the beliefs and values of money management.”
“When we come together as a couple, we arrive from different money perspectives. … At the end of the day, money communication is difficult and leads to more challenging money issues,” Honeck says.
That is particularly true when it comes to how couples deal with arguments over money. Fighting fair is the recipe to coming out of a money argument in 1 piece, yet many people don’t do it.
To manage money, couples must understand each other’s ideas about finances. While money doesn’t buy happiness, there is a strong correlation between happiness and “the degree to which our financial decisions and behavioral choices are in alignment with our deepest values,” says Susan Buniva, a therapist in Richmond, Virginia.
“For couples, it is a process of discovery, both individually and collectively, that allows us to live with more synchronicity and happiness,” she says.
To see a complete view of the financial world from your partner’s viewpoint, ask open-ended questions, says Lynn Ballou, managing partner of Ballou Plum Wealth Advisors LLC in Lafayette, California. She recommends asking questions like:
When couples come to Honeck for money coaching, she starts by talking about their personal ideas about money management. She asks them to talk about how money was used in their parents’ home and the financial ideas they were taught or observed as children.
But simply talking about each other’s history may not be enough. “Ask a lot of questions of each other about why you have the history and habits you have,” Ballou says.
If these conversations reveal that you and your partner aren’t compatible in dealing with money, consider reaching out to a financial counselor. “Once there is respect, acceptance and the ability to work as a team, then it’s a matter of deciding if you are in agreement about where you are going,” Ballou says.
Debt counseling may be a good option if you and your significant other continually find yourselves in situations like this: You both have a lot of credit card debt. One of you wants to open a new account and consolidate the amount on 1 card at a lower interest rate. But the other person would rather set up a strict budget and make monthly payments on the cards.
The recent surge in demand for rental living in the U.S. won’t just be a 2016 story, according to researchers at the Urban Institute, and housing experts expect that the costs of renting will continue to increase. Here’s the story from Andrea Riquier of MarketWatch.
Demand for rental housing, already elevated in the aftermath of the financial crisis, is only going to grow. That’s going to pressure prices even higher.
More than 1.25 million new households will be formed in 2016, as the economy and job market heat up, according to CoreLogic Chief Economist Frank Nothaft. That’ll take place even as rental vacancy rates hover near 20-year lows, Nothaft wrote in CoreLogic’s 2016 Outlook for Housing.
From 2010 to 2030, there will be five new renters for every three new homeowners, they wrote in a June research report, and many of them will be cost-burdened, meaning they’ll spend more than half their incomes on rent.
The Urban Institute warns of “tough times ahead” for renters. Urban’s analysts believe there will be 6.5 million more renter households in the next ten years, and what it calls “cost-burdened” renters will grow to nearly one-third of the total, or 4 million.
That assumes rents rise about 3% annually as incomes grow 2%. The cost of rent has risen 3.7% in the last twelve months, and wages, adjusted for inflation, have grown 2.4%.
CoreLogic recently released the results of its 2016 Outlook for Housing, predicting another year of growth for the U.S. housing market. In this article, Brena Swanson of HousingWire.com highlights some of the details of the report.
“As we approach the start of 2016, the consensus view among economists is that economic growth will continue, and the U.S. will enter an eighth consecutive year of expansion in the second half of next year. Most forecasts place growth at 2 and 3 percent during 2016, creating enough jobs to exert downward pressure on the national unemployment rate,” said Frank Nothaft, senior vice president and chief economist at CoreLogic.
Nothaft predicts that housing can expect to see these five features next year:
Interest rates will increase. Homeowners who have adjustable-rate mortgages or home-equity loans will most likely see a rise in their interest rate because the Federal Reserve is expected to raise short-term interest rates approximately one percentage point between now and the end of 2016. Fixed-rate mortgages will also rise, perhaps up one-half of a percentage point between now and the end of 2016, reaching 4.5% for 30-year loans. Despite this increase in interest rates, mortgage rates will remain historically low.
Household formations will significantly add to housing demand. More than 1.25 million new households will be formed in 2016 due to improvements in the labor market and lower unemployment rates. These new household formations will increase housing demand, specifically in the rental market.
Home sales and home prices will likely increase. Overall purchase demand may lift 2016 home sales to the best year since 2007. Nationally, home prices will likely rise at a quicker rate than inflation, but not at the same rate as last year. The CoreLogic Home Price Index showed a year-over-year increase of 6% in the last 12 months; however, 2016 is only expected to see increases of 4%-5%. This increase in home sales and home prices can be attributed to the improved economy, which has enhanced homeowners’ feelings of financial security.
After several years of staying in place, moving to a new home is back in style for retirees. This U.S. News article from Tom Sightings explains some of the reasons why.
During the recession of 2008 and for a long time afterward, moving dropped off the map, especially for people who were retiring. For some years after the recession began, according to the Brookings Institution, both Florida and Nevada actually suffered out migration – not because so many people were moving out of these states, but because nobody was moving in.
For half a decade retirees stayed close to home. They couldn’t sell their house, so they couldn’t move. Many people were forced to retire early, which meant their finances were even more stressed. Many baby boomers also still had kids in school, and so they didn’t want to move anyway.
But now things have changed. Moving is back in style. In addition to new retirees, there is a backlog of people who retired a few years ago who now want to move out of big expensive states and into warmer, less expensive states.
The traditional retirement havens in Florida and Arizona still pull in many retirees. Last year the Phoenix metropolitan area topped the list of cities gaining population among people 55 and older. Tampa, Orlando and Jacksonville were in the top ten. But the Carolinas are also drawing their share of retirees, and a lot of retiring baby boomers are setting off for smaller cities like Nashville or Austin.
Here are some of the reasons retired people are now moving:
They can finally sell their home. The real estate market suffered a historic slump during the Great Recession, and it has been slow to make a comeback. But now both sales and prices have returned to more normal levels, meaning people in California and the Northeast – and even in the Midwest to a lesser degree – can finally sell their homes. Fewer people are underwater on their mortgage, which means they have more equity, while mortgage rates are still low and credit is easier to obtain.
It’s cold. Global warming may have brought a marginal rise in temperatures worldwide, but that’s cold comfort for those who see the outside thermometer stuck at 20 degrees. The unusually cold and snowy winters of the past two years only add to the motivation of retirees to find a more comfortable lifestyle in a warmer climate. A desire for healthier lifestyles also prompts people to seek out a climate where they can hike and bike and play outdoor sports all year round.
They’re going to move anyway, so they might as well go someplace nicer. Many boomers are moving not to retire, but to take advantage of late-in-life job opportunities. They have been downsized from their full-time careers, and are now looking at lower paying, but also lower pressure jobs outside major metropolitan areas. Along with low-powered jobs or part-time positions, they’re looking forward to gaining more leisure time and paying less “overhead” for their lifestyle.
