New Home Market Reflects Shifting U.S. Patterns

For decades, the three-bedroom house has been a cornerstone of the American dream. Now, as with the rest of the nation, our area’s real estate profile for new single family homes seems to be changing. And last year we may well have reached a turning point in the national new home market: now four bedrooms seems to have become the new norm!

 Last year, a full 48% of new homes—nearly half—were built with at least four bedrooms. That’s quite a jump when you compare it with just four years earlier: in 2009, the figure was 34%. We asked ourselves why the nation’s preferences would have undergone such a sizable shift. A little research revealed some likely answers—and some interesting history behind them.

  The Rise of Bigger Homes

The footprint of the average new home built in the U.S. went Yeti in a very short time. In the late 1940s, Postwar America began producing single family homes on a massive scale—with an average size of about 750 square feet. As the economy expanded, so did house sizes until by 1973 the three-bedroom home dominated the new home market (Evansville included). By 2013, average new home sizes had reached 2,701 square feet according to the Census Bureau.

It may seem counter-intuitive, but at the same time the number of bedrooms was increasing, the size of the American household was heading in the opposite direction. The 3.6-person average of the 1940s had, by 2013, contracted to 2.58. That means the living space for each individual had grown by 80%!

House Sizes Shrink, Then Expand Again

In 2009, as a side-effect of the last decade’s real estate market downturn, single family home sizes had retreated by about 6%. But now the economy’s slow recovery has reversed the reversal. According to the most recent report from the National Association of Home Builders, the average size of a new home built in 2013 was 2607 square feet— a 300-square foot increase over just two years earlier.  

Fewer New Buyers = Bigger Homes

One of the reasons for the new home market shift toward larger four-bedroom designs can be ascribed to a decrease in the number of first-time homebuyers. Largely due to previous tightening in lending criteria and rising mortgage rates (both trends have at least momentarily stalled in the new home market), the smaller homes favored by first-timers claimed a proportionately smaller chunk of the market.

It’s hard to avoid the general conclusion that what were once considered luxurious additions are effectively today’s norm. The en-suite bathrooms, two-car garages and even three-bedroom homes that would have been out of reach for most of the new home buyers of the past are practically standard fare in 2014. But another fact is that every area differs from every other. If this has you wondering how your home compares with what today’s buyers are looking for in your own neighborhood—why not give me a call? You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Tradeoffs for Remodeling vs. Moving to a New

Last week’s Rasmussen Reports survey reported that the majority (52%) of Americans consider their home to be a family’s best investment at the same time that the number of people who are choosing to remodel their home is on the rise. According to the Houzz & Home survey, the number of people who planned improvement projects rose a dynamic 12 % last year. Of those, 40% wanted to remodel their home or build an addition.  

While remodeling may be becoming more popular, there are still plenty of advantages to the alternative route: purchasing a new home in. Here are some of the pros and cons of each route:

• Before you start your remodeling project you should take a personal inventory. Do you have the experience and skills to manage the project…and is the prospect appealing? Remodeling your home will require that you deal directly either with tradesmen, contractors, architects— or the whole bunch! It may be the greatest advantage to purchasing a new home: getting the additional space and amenities without the work.
• The loss of privacy during a remodeling project is not something to be underestimated. Depending upon the scope of the project, it may be months before the dust settles and you have the house to yourself again. There is also the inconvenience of not having access to multiple areas of your home while work is proceeding
• For most of us, there really is no place like home. If you’re like me, even when you’ve been on a terrific vacation, eventually you begin to yearn for the comfort and familiarity of your good old home base. Although one or two irksome features of your current house make moving seem like a no-brainer…before you commit to a move, be sure that you really want to leave. History, a sense of community, and the roots you’ve established in your current neighborhood are all reasons to opt for a remodel rather than a new home.
• Selling your existing home and buying a new home is a sizable financial commitment. Moving costs, transaction fees, commissions and taxes are part of the equation to weigh against remodeling costs. A sharp pencil is definitely in order before the dollars and cents can be realistically reckoned—particularly if your finances have improved, and the remodel is meant to bring your home up to an improved standard of living.

The danger lies in overcapitalizing a property in a location where the resale won’t support the expense. Even a great home will still fetch a price that’s relative to other properties in the neighborhood, obliterating the wished-for ‘investment’ value of extensive remodeling.

While it’s important to be informed about the factual tradeoffs of your decision, it’s likely the end choice will also be influenced by what just feels right—as it should be. Whether you’re considering a remodel or a purchase, if you’d like to run some numbers, call me today for a confidential price evaluation! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Simple Steps to Reduce Your Mortgage Costs

Mortgage rates may rise or fall this spring (lately they seem to be falling!)—but that needn’t prevent you from saving even more money when it’s time to structure your own mortgage. The underpublicized fact is that mortgage rates are only one of the factors that affect how much you wind up paying. No matter what happens to mortgage rates in 2014, here are some keys to making mortgage decisions that result in significant savings:

Tailor the term

Evaluate your budget and see whether it is possible to increase the amount of your monthly payment. By increasing monthly repayments, you reduce the term of your mortgage. Over the course of the loan, this can save tens of thousands of dollars.

Refinance for five years instead of two

The interest you pay on a refi loan isn’t the only cost. The origination and other fees can easily end up costing four figures. It’s a numbers game: simply calculate the anticipated savings from refinancing, then subtract the amount of the fees. The difference tells you your net savings…and demonstrates why one of the easiest ways to grow those savings is to refinance less frequently.

Change to biweekly  

Changing to biweekly payments instead of monthly payment can save you more than small change. The reason is on the calendar: there are 52 weeks in a year, but only 12 months. If you make 26 1/2 payments every year, that equates to 13 monthly payments. It’s a stealthy way to make an additional month’s payment every year without really noticing it. When choosing a loan, opt for one where the bank allows you to choose biweekly payments (as long as they don’t want to charge an additional fee). Also request that the extra payments be deducted from the principle.

Improve your credit score

On this count, every mortgage guru sounds like a broken record. Although the average quoted mortgage rate may rise or fall, that’s not necessarily the rate that you pay. Your FICO score is the primary determinant of your mortgage rate. The difference between a good FICO score and a bad one can be significant, so get a copy of your credit card record and challenge any damaging inaccuracies. Lenders want to see a long history of paying on time with a mixed use of credit.

 Mortgage rates will almost certainly increase in the future because they’re still well under historical averages. But there are plenty of steps you can take to cut thousands of dollars from your ultimate mortgage costs. And if you are ready to buy a house in this spring, contact me today—I’m ready to show you what’s coming up at your price point! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Five Useful To-do's After Buying a Home

Buying a home in Evansville is sort of a modern day adventure. At first there’s the intrigue of figuring out the advantages and disadvantages between the neighborhoods and listings competing for your attention; then there are all the challenging, sometimes exhausting—then, ultimately, exhilarating steps that lead to home ownership.

But even after the previous owner has handed over the keys, there’s more to come: a few extra steps new homeowners can decide they wish to take. Here are five of those—things you can choose to do after buying a home:
#1 Change the Locks  

Who knows how many people have a copy of those keys?  It’s a good idea to change the locks on all exterior doors, because it’s not just the previous owners who have had access to the property; there may also have been guests or tradespeople with access to the keys. By installing new locks, you can be sure that you are complete control of the keys to your new home.
#2 Have the House Cleaned

While the previous homeowners are obliged to leave the home in reasonable condition (usually “broom clean”), consider scheduling a professional cleaning crew before you move in. If your budget and schedule allows, it can be a plus to know some serious deep cleaning has been performed on counters, plumbing fixtures, carpets, etc.
#3 Smooth Transfer of Utilities

After buying a home, it’s usually possible to transfer utilities into your name without having to live through a break in service. Contacting all utility companies ahead of time will ensure that the transfer is orderly and scheduled in a manner that will be convenient to your move. It’s also an opportunity to be sure that utility bills have been fully paid before closing on the property.

#4 Store the Settlement Papers

At the end of the process of buying a home, a host of details come fast and furious, making it doubly easy to misplace things—even important things, like copies of the papers you execute  during settlement. Later, when it’s tax time (or in the future should you sell the property), you’ll save yourself a lot of desperate rummaging if you’ve prepared a secure place to keep them from the start.

#5 Take Photos of Your Household Items

It’s important to keep an accurate list of your household contents in the case of theft, fire or other mishap—records to act as verification of your belongings and their condition. Buying a home is the perfect time to take that inventory. Go from room to room snapping digital pictures of everything you own. It will never get easier!

Like anything worth doing, buying your new dream home probably came with its own set of stresses. But it should stand as one of the most rewarding financial moves you will ever make. If you’re thinking of buying or selling a home in Evansville this spring or summer, do give me a call! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Spring Market Tempts Some to Sell Their Rental Property

It’s one of the skills a successful local rental property investor needs to cultivate: if or when to sell. With property prices on the rise, some Evansville landlords may in fact be asking themselves whether now is the time to cash in. Especially for most everyone whose rental property investment was made during the last few years, it’s already been a profitable gambit. According to the Case Schiller Index, by last year’s close, property prices across the nation had risen at the fastest rate in the previous nine years.

But if—and then when—to sell a rental property can be a tough call. As a relatively illiquid investment, it takes a great deal more commitment than the decision to sell a stock or cash in a bond. But sometimes there are circumstances that can make the decision a little easier. For instance:

-Cash flow
One clear reason why you might choose to sell is if the rental property is losing money. The rental may have been vacant for too long, or the rent level may not have been sufficient to cover expenses. In many cases, other real estate investors will be willing to lose money in the short term on a property they believe will appreciate in the future. It’s also possible that a full-time rental property professional may be able to tap economies of scale that are not possible for every individual investor.

-Greener pastures
Your rental property may be doing fine—making money and showing substantial value growth—but now an unusually promising alternative investment has appeared. With the strong spring market, it may make sense to sell now to reinvest the profits elsewhere.

-Taxes

Everyone’s tax situation is different, and the tax environment is subject to change. Even if that weren’t the case, there are some years when personal finances mean that a sale would be a much better idea than others. As with any substantial financial decision, your accountant or other financial advisor will have the relevant input.

-Landlorditis
Being a landlord is not for everyone. Sometimes a professional property manager can alleviate nearly all the stress for an investor who doesn’t relish the vocation, but even then, there can be other chores: bookkeeping, manager management, a leak-through of tenant personality issues…that prompt a landlord to decide he or she would rather direct energy elsewhere. Opting for more passive forms of investment is always a possibility.

Our area has already benefitted from some of the fruits of the national real estate recovery – but that alone doesn’t answer whether this spring is an opportune time for you to consider selling your area rental property. We currently face a shortage of listings and there are many buyers and investors in the market. Call me today for a comprehensive property evaluation—the key piece of information that will help you decide! You can reach me on my cell phone

812-499-9234 or email Rolando@RolandoTrentini.com

Beyond Spring Cleaning: Inexpensive Renewal Ideas

With spring in the air, you don’t have to have your home for sale to catch the spring cleaning bug. Whether or not you’ve been cooped up inside for a longer-than-usual siege of the wintertime blues, as soon as the weather turns the corner, there seems to be a natural urge to open the windows and start freshening your place up.

Spring also brings the traditional hot selling season, and if you’re among those getting ready to list your own home for sale to take advantage of it, you’ll want to add extra attention to the traditional cleanup. Home for sale or not, you can channel some of your annual sprucing-up energy with one of these light renovation ideas. Each can add new zest to your living areas without breaking the bank:

·         If you want to liven up your kitchen or bathroom but don’t want to shell out for the full cost of replacing the cabinets or doors, consider what simply changing the hardware would do. Take a trip to the hardware department, pick out a sample knob or pull, then test what the change would look like. Sometimes this simple transformation adds a surprising degree of sparkle!

·         If your lighting fixtures are looking a bit dated and dingy, one simple fix is to buy new lampshades. Replacing a whole lamp is expensive and often unnecessary—and new shades can make a much more resounding impact, anyway. If you are planning to put your home for sale on the market anytime soon, best opt for white or cream. Keeping the look bright yet neutral gives you a proven selling advantage.

·         In any room where years of wear and tear have created smudges that no amount of elbow grease can remove, think about painting with a change of color.  It may be a bit more ambitious and costly, but whether you hire pros or do it yourself, the result can make you feel like you’re in a whole new home. As with the lampshade selection, resist the temptation to get overly exuberant and creative: choose neutral color combinations. 

·         If new furniture is not yet called for (or beyond this year’s budget), consider calling in the pros for some upholstery cleaning; then adding new accent pillows.  If your existing pillows are in good shape, sometimes just a few new pillow covers can freshen up a room’s whole look. Designers sometimes recommend picking just one bright color and keeping with it throughout the house.

You don’t have to be planning to list your home for sale in Evansville to make 2014’s spring cleaning efforts a self-satisfying success. And if you’re planning to list, I have a host of other preparation tips…and a marketing plan designed to bring top results! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Evansville Real Estate News Letter for April 2014