Author Archives: Robert Paul

About Robert Paul

Robert is a realtor in Bedford NY. He has been successfully working with buyers and sellers since the early 1980's. His local area of expertise includes Bedford, Pound Ridge, Armonk, Lewisboro, Chappaqua and Katonah. When you have a local real estate question please call 914-325-5758.

Regulation is 24.3 Percent of the Average New Home Price | Katonah Real Estate

An NAHB study shows that, on average, regulations imposed by government at all levels account for 24.3 percent of the final price of a new single-family home built for sale.  Three-fifths of this—14.6 percent of the final house price—is due to a higher price for a finished lot resulting from regulations imposed during the lot’s development.  The other two-fifths—9.7 percent of the house price—is the result of costs incurred by the builder after purchasing the finished lot.

Reg Post 01NAHB’s previous 2011 estimates were fairly similar, showing that regulation on average accounted for a quarter of a home’s price.  However, the price of new homes increased substantially in the interim.  Applying percentages from NAHB’s studies to Census data on new home prices produces an estimate that regulatory costs in an average home built for sale went from $65,224 to $84,671—a 29.8 percent increase during the roughly five-year span between NAHB’s 2011 and 2016 estimates.

Reg Post 02In comparison, during that time, disposable income per capita in the U.S. increased by 14.4 percent.  In other words, the cost of regulation in the price of a new home is rising more than twice as fast as the average American’s ability to pay for it.

The above estimates are based largely on questions included in the survey for the March 2016 NAHB/Wells Fargo Housing Market Index, combined with long-run assumptions about average construction times, interest rates, profit margins, etc.  The survey questionnaire and an appendix describing each additional assumption and the data on which it’s based can be found in the full study.  The full study also contains substantial additional detail on the different types of regulatory costs and where and how they impact the development-construction process.

 

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http://eyeonhousing.org/2016/12/top-posts-of-2016-regulation-is-24-3-percent-of-the-average-new-home-price/

Average Boston-area rent falls for the first time in almost 7 years | Bedford Hills Real Estate

Boston, Mass - 06/20/2016 - Construction workers work on the Pierce apartment under construction at corner of Boylston and Brookline Streets in Boston, Mass, June 20, 2016. (Keith Bedford/Globe Staff)

After years of going up, rents in Boston’s super heated real estate market may have finally reached a peak.

Data released Thursday show that apartment rental prices fell slightly at the end of 2016 — the first drop since 2010 — amid a surge of new buildings that have opened in Boston and neighboring cities such as Cambridge, Chelsea, and Somerville.

The decline was modest, just 1.7 percent — or $36 a month on the average lease of $2,038, according to the rental-tracking firm Reis Inc. But it was the latest and clearest sign that the flood of construction in Boston is putting a lid on prices, at least at the upper end of the market.

“When you put that much supply on the market, you’re going to disrupt the equilibrium,” said Sue Hawkes, chief executive of Collaborative Cos., a real estate marketing firm in Boston. “That’s what’s happening.”

During the first nine months of 2016, more than 5,100 apartments, most renting for top dollar, opened in the heart of the Boston area. Another 7,200 are under construction in Boston alone, according to city figures.

While rents may no longer be uniformly escalating, city apartments remain unaffordable for many people, something unlikely to change over the next few years.

Only New York City and San Francisco have higher average rents than Boston.

Still, the expanding supply of rental units is clearly having an effect on the balance of supply and demand, according to Hawkes.

That means renters —at least well-heeled ones — can be choosers for a change.

To woo tenants, some landlords of new luxury buildings are offering free rent for a month or more, covering brokers’ fees and dangling gift cards or other goodies in front of prospective tenants.

But those kinds of perks aren’t available to the majority of renters, especially outside of the immediate Boston area. In parts of the region where there hasn’t been as much construction, rents continue to climb — in some places, far faster than in the market as a whole.

In Malden, for instance, rents are up 5 percent over the last year, according to separate data from the website ApartmentList.com.

Rents in Allston/Brighton and Mission Hill have climbed about 8 percent over the same period, said Ishay Grinberg, president of the Somerville-based website RentalBeast.

“People are getting priced out of downtown,” Grinberg said. “But all it’s doing is pushing rents up higher in areas that may have been slightly less desirable a couple of years ago.”

Over the last year, large apartment buildings have opened up in Chelsea and Quincy, Jamaica Plain, and Dorchester. In Brighton, a wave of new projects is getting underway, and renting at a brisk clip.

In November, Hamilton Co. opened a 49-unit building on Malvern Street in Allston, with two-bedroom units starting at $2,500 a month — less than half the going rate at new complexes in the Seaport District. It was nearly full in a week.

“That’s a very good sign for a working-class building,” said Hamilton’s president, Carl Valeri.

But the demand is also leading to a surge in land and construction prices in Boston’s outer neighborhoods. That’s putting financial pressure on projects that are aiming for a modest price point. If developers believe they won’t hit their projected rents when they open in two years, they might pull back on construction projects, said Travis D’Amato, a broker who specializes in multifamily investments at the real estate firm JLL.

“We are at an inflection point in the market,” D’Amato said. “If construction costs continue to rise and rents don’t continue to rise, we could see some slowdown in development.”

So far, there’s little evidence of that happening.

A number of major projects in outlying neighborhoods — such as the 650-unit Washington Village development near Andrew Square — are poised to get underway later this year.

More proposals, such as a plan to build 680 graduate student-oriented apartments on the grounds of St. Gabriel’s Monastery in Brighton, are going through the city’s approval process.

If those projects come to fruition, rents should eventually flatten in the outlying neighborhoods, just as they appear to be doing downtown, said Sheila Dillon, the city’s housing chief.

“What’s playing out is, really, exactly what we want,” Dillon said. “We want to see investors continue to build housing, and that’s taking pressure off the existing housing stock.”

Meanwhile, the market for high-end living downtown will soon face more tests.

Two huge rental buildings, 832 units in all, are set to open this spring in the Seaport.

In addition, a 585-unit complex in the South End is under construction, and a 45-story apartment tower is planned to break ground soon atop the Government Center Garage.

Builders who have recently launched downtown apartment projects say they’re not worried. Avalon North Station, a 38-story tower that opened in November, has leased 85 of its 503 units. That’s an impressive showing, especially during the holidays, said Scott Dale, senior vice president of development for the developer, Avalon Bay.

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http://www.bostonglobe.com/business/2017/01/05/average-boston-area-rent-falls-for-first-time-almost-years/2JMoK39bFND08wKhQT2BnM/story.html?s_campaign=email_BG_TodaysHeadline&s_campaign=

Zillow 2017 real estate predictions | Bedford Real Estate

This year is nearly over, and 2017 will being in just a few short weeks. As the year comes to a close, predictions for next year are pouring in.

It’s hard to say what the new year will bring with the newly-elected President-elect Donald Trump. Zillow points out in its predictions how some of his policies could affect housing next year.

Here are Zillow’s six predictions for 2017:

1. Cities will focus on denser development of smaller homes close to public transit and urban centers.

2. More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.

3. Rental affordability will improve as incomes rise and growth in rents slows.

4. Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.

5. The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing — putting them further from adequate public transit options.

6. Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.

U.S. EPA settles with firm for failure to protect residents from lead-based paint | Bedford Corners Real Estate

The U.S. Environmental Protection Agency announced a settlement with Powerstar Home Energy Solutions for failing to comply with federal lead-based paint rules at several residential properties in Southern California.  The company will pay a civil penalty of $11,429.

Powerstar has also agreed to spend about $34,000 to purchase equipment to test blood lead levels in children. Blood lead analyzers will be donated to ten community health clinics in San Bernardino and Orange counties. The analyzers measure lead in blood samples and give results in as little as three minutes, allowing immediate follow-up by health care providers. The clinics will receive enough kits to test 480 children.

“Children are highly susceptible to lead-based paint and symptoms are not easily recognized,” said Alexis Strauss, EPA’s Acting Regional Administrator for the Pacific Southwest. “This settlement will give hundreds of families the opportunity to have their children tested, giving parents the information they need to protect their loved ones.”

Powerstar Home Energy Solutions, a trade name of Smithlum & Friend, Inc., is headquartered in Anaheim and offers residential coatings and window replacements. In 2014, EPA found the company violated EPA’s Renovation, Repair and Painting rule by renovating five homes built before 1978 in the cities of Anaheim, Brea, Chino and Redlands without following practices required to reduce lead exposure. The company failed to:

  • Become certified by EPA to perform residential work;
  • Distribute the “Renovate Right” brochure to educate occupants about lead-safe work practices;
  • Keep complete records documenting whether the work followed lead-safe practices.

Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips. When companies fail to follow lead-safe practices, the resulting lead dust and chips can contaminate home surfaces. Contractors who disturb painted surfaces in pre-1978 homes and child-occupied facilities must be trained and certified, provide educational materials to residents, and follow safe work practices. The U.S. banned lead-based paint from housing in 1978 but EPA estimates that more than 37 million older homes in the U.S. still have lead-based paint.

Though harmful at any age, lead exposure is most dangerous to children because their bodies absorb more lead, and their brains and nervous systems are more sensitive to its damaging effects. Babies and young children can also be more highly exposed to lead because they often put their hands and other objects that can have lead from dust or soil on them into their mouths. The effects of lead exposure can include behavior and learning problems, slowed growth, hearing problems, and diminished IQ.

Often lead poisoning occurs with no obvious symptoms, so it may go unrecognized. Parents or caregivers who think their child has been in contact with lead should notify their child’s health care provider who can help decide whether a blood test is needed or recommend treatment.

EPA enforces the federal Toxic Substances Control Act and its Renovation, Repair, and Painting rule and the lead-based paint Disclosure Rule. The Renovation, Repair, and Painting rule protects residents and children from exposure to lead-based paint hazards from activities that can create hazardous lead dust when surfaces with lead-based paint are disturbed. The Disclosure Rule requires those who sell or rent housing built before 1978 to provide an EPA-approved lead hazard information pamphlet, include lead notification language in sales and rental forms, disclose any known lead-based paint hazards and provide reports to buyers or renters, allow a lead inspection or risk assessment by home buyers and maintain records certifying compliance with applicable federal requirements for three years.

 

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https://www.epa.gov/newsreleases/us-epa-settles-anaheim-home-improvement-firm-failure-protect-residents-lead-based-paint

Facebook CEO smart house | Chappaqua Real Estate

Facebook CEO Mark Zuckerberg gave users a unique look into his home, as part of an explanation of his custom-made artificially intelligent assistant.

Building on Facebook’s internal technology for Messenger app building, Zuckerberg made an iPhone app, Jarvis, to connect the smart devices and phones around his home, similar to Amazon’s Echo. In explaining his progress in the app, Zuckerberg somewhat jokingly revealed some of the quirks of his lifestyle with his wife, Priscilla Chan.

For instance, Jarvis wakes Zuckerberg’s daughter, Max, up to a Mandarin lesson, thanks to Facebook’s visual face detection which determines when the infant is awake. This same technology helps Zuckerberg recognize who’s ringing his doorbell, he said.

We also know Zuckerberg has a pretty extensive set of Spotify playlists and someone in the family may be an Adele fan.

Zuckerberg also showed an interface to request a clean gray T-shirt — his signature look — from what he called a rigged-up ” T-shirt cannon.” He has also ginned up a special 1950’s-era toaster “that will let you push the bread down while it’s powered off so you can automatically start toasting when the power goes on.”

Creating the assistant was one of Zuckerberg’s yearly resolutions, which have also included running a mile a day, reading a new book every other week and learning Chinese.

This year’s challenge was aimed to help him learn how powerful AI can be with 100 hours of work, he wrote. For instance, Zuckerberg said that he realized texting Jarvis — especially if he was away from his home or in the middle of a task — was often more valuable than voice commands alone. That, Zuckerberg said, falls in line with trends he’s seen on Messenger and WhatsApp, where texting is growing more quickly than voice calls.

However, Zuckerberg said, with the voice bot, he learned to consider it a presence that responded more quickly and empathetically.

“It can interact with Max and I want those interactions to be entertaining for her, but part of it is that it now feels like it’s present with us,” Zuckerberg wrote. “I’ve taught it fun little games like Priscilla or I can ask it who we should tickle and it will randomly tell our family to all go tickle one of us, Max or Beast. I’ve also had fun adding classic lines like ‘I’m sorry, Priscilla. I’m afraid I can’t do that.'”

Zuckerberg said he found little bugs that showed how far AI systems are from being generalized for a wide variety of requests.

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http://www.cnbc.com/2016/12/19/how-the-other-half-lives-mark-zuckerbergs-life-inside-his-bespoke-smart-house.html?__source=newsletter%7Ceveningbrief

Fight Brewing Over the Mortgage-Interest Tax Deduction | Armonk Real Estate

A tax-reform proposal by House Republicans that would make the mortgage-interest deduction moot for most Americans is starting to set off alarm bells across the housing, lending and real estate industries.

The right to take a deduction for interest paid on your mortgage has always been a political third rail, and the reforms introduced last June would not directly eliminate the write-off.

Instead, the Better Way tax-reform “Blueprint” of Speaker Paul Ryan and his cohorts would make the deduction irrelevant for about 95 percent of homeowners. By “doubling the standard deduction that taxpayers receive…most people would have no need to take the mortgage interest deduction,” according to National Mortgage News.

The specific language in the Better Way says: “This Blueprint will preserve a mortgage interest deduction for homeowners. …For those taxpayers who continue to itemize deductions, no existing mortgage will be affected by any changes in the tax code. Similarly, no changes will affect re-financings of existing mortgages. But just as importantly, because of the other provisions included in the new tax system, far fewer taxpayers will choose to itemize deductions, with the vast majority of taxpayers finding they are better off by taking advantage of the larger, simpler standard deduction instead.”

Before the election, when it did not look as though Republicans would control both houses of Congress and the White House, the future of the Blueprint seemed far from certain, and even given the GOP sweep in Washington, it is nowhere near a done deal.

But National Mortgage News says the National Association of Homebuilders, the Mortgage Bankers Association and the National Association of Realtors (NAR) have all woken up to what they see as an “indirect threat” to the mortgage-interest deduction.

National Mortgage News quoted Lawrence Yun, chief NAR economist, as a warning against any moves that might derail the housing recovery. “Even a discussion of mortgage interest deduction is counterproductive right now,” he said.

A spokesperson for the NAR said Yun was unavailable to expand on that view given that under the Blueprint, most homeowners would still get the same break on their taxes.

But homebuilders, lenders and realtors may have more to worry about than House Republican attempts to neuter the mortgage-interest deduction.

In a CNBC interview on Nov. 30, Steve Mnuchin, Trump’s nominee for Treasury Secretary said in the context of a discussion on tax reform: “…We’ll cap mortgage interest but allow some deductibility.”

CNBC real estate reporter Diana Olick explained later that “The mortgage interest deduction is already capped at loans up to $1 million if you’re married and filing jointly and at $500,000 if you file separately. That said, the median price of a home in the United States is just more than $200,000, so not a lot of people make it to that cap.”

But, she added, the mortgage-interest deduction is seen as a key selling point for the housing industry and therefore is “a hot potato that lawmakers really don’t want to touch.”

 

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http://www.thefiscaltimes.com/2016/12/16/There-s-Big-Fight-Brewing-Over-Mortgage-Interest-Tax-Deduction

Mortgage rates average 4.20% | North Salem Real Estate

 

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates moving lower for the first time in ten weeks.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.20 percent with an average 0.5 point for the week ending January 5, 2017, down from last week when it averaged 4.32 percent. A year ago at this time, the 30-year FRM averaged 3.97 percent.
  • 15-year FRM this week averaged 3.44 percent with an average 0.5 point, down from last week when it averaged 3.55 percent. A year ago at this time, the 15-year FRM averaged 3.26 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.33 percent this week with an average 0.4 point, up from last week when it averaged 3.30 percent. A year ago, the 5-year ARM averaged 3.09 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quote
Attributed to Sean Becketti, chief economist, Freddie Mac.

“The 30-year mortgage rate fell this week for the first time since the presidential election, dropping 12 basis points to 4.20 percent. This marks the first time since 2014 that mortgage rates opened the year above 4 percent. Despite this week’s breather, the 66-basis point increase in the mortgage rate since November 3 is taking its toll — the MBA’s refinance index plunged 22 percent this week.”

Builder Confidence Begins Year on a High Note | South Salem Real Estate

Builder confidence in the market for newly-built single-family homes jumped seven points to a level of 70 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest reading since July 2005.

The increase in market confidence follows the November election results, increasing hopes among home builders and other stakeholders in the residential construction industry that the incoming administration will reduce costly regulatory burdens, particularly for small businesses. Research from NAHB published earlier this year indicated that for home builders, such regulatory costs have risen by more than 29% over the last five years.

While the significant increase in builder confidence for December could be considered an outlier, the fact remains that the economic fundamentals continue to look good for housing as we head into 2017. And the rise in the HMI is consistent with recent gains for the stock market and consumer confidence. At the same time, builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted healthy gains in December. The component gauging current sales conditions increased seven points to 76 while the index charting sales expectations in the next six months jumped nine points to 78. Meanwhile, the component measuring buyer traffic rose six points to 53, marking the first time this gauge has topped 50 since October 2005.

Serious Delinquency Rates Improve Across Most Household Debts | Waccabuc Real Estate

A recent release by the Federal Reserve Bank of New York indicates that, in aggregate, 90 or more day delinquency rates are falling on most household debt products. However, serious delinquency on student loans remains elevated while a greater portion of auto debt held by households with low credit scores is entering serious delinquency. The results indicate that household balance sheets are likely improving on balance but some concerns persist.

As the figure below illustrates, the majority of consumer loan types have seen the share of balances 90 or more days delinquent fall from their cycle peaks. The proportion of credit card debt 90 or more days past due has dropped to 7.1 percent 6.6 percentage points below its peak in 2010, 13.7 percent. The percentage of mortgage debt has dived 7.3 percentage points to 1.6 percent while the portion of 90 or more days late home equity lines of credit has fallen from 4.9 percent to 2.0 percent.

presentation1

Although credit card debt, mortgages, and home equity lines of credit have trended downward since reaching their cycle peaks, the share of student loan debt 90 or more days delinquent jumped in 2012 to 11.7 percent and has remained near this level in subsequent years.

Interestingly, the 90 or more day delinquency rate on auto debt followed the same pattern as credit card and mortgage debt, declining in the years immediately after reaching its peak. However, since 2014, the proportion of auto loan debt 90 or more days delinquent has held steady. More precisely, the percent of auto loans 90 or more days delinquent has trended up slightly since the middle of 2014.

Additional analysis by the Federal Reserve Bank of New York indicates that, after declines from their cycle peaks, the flow of auto debt into 90 or more day delinquency has been generally flat for households with a 620 and above. However, as shown in the figure below which was reproduced from the blog post linked to above, the flow of auto loans into 90 or more day delinquency has increased noticeably for consumers with a credit score below a 620.

presentation2

More precisely, the flow of auto debt flowing into 90 or more day delinquency for those with a credit score between 620 and 659 rose a bit in 2014 before returning in 2015. In addition, there has been a very slight upward trend in the flow of auto debt into 90 or more day delinquency by borrowers with a credit score between 660 and 719 and a small uptick over 2016 in the flow for consumers with a score between 720 and 759.

 

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http://eyeonhousing.org/2016/12/serious-delinquency-rates-improve-across-most-household-debts/

Americans Move Less and Impact the Economy Less | Cross River Real Estate

The median tenure homeowners plan to stay in their homes soared with the housing recession in 2008 for good reasons. Millions of owners were underwater and millions more lacked the 20 percent equity need to sell their home.  Many facing the need to move for job or space reasons found it easier to move and keep their old home to rent out.  Thus was born the phenomenon of “accidental landlording”.

The housing economy has changed dramatically.  Values have almost regained their peaks at the top of the housing boom, far above the levels of 2008.  Yet owner tenure has not changed and repeat buyers’ expectations today are twice as long as actual tenure ten years ago.  Are longer tenures now locked in stone?

One of the leading motivations to move—change in employment—is also changing. Workers stick with the same job longer today than they did 10, 20, and 30 years ago.  U.S. workers had an average job tenure of 4.6 years in 2012, the last year for which figures are available—that’s up from 3.7 years in 2002 and 3.5 in 1983, according to the Bureau of Labor Statistics. The trend holds up within almost every age and gender category—so it cannot be explained away by women’s increased presence in the workplace, or people working past traditional retirement age.

First-time buyers now expect to live in their homes 15 years or longer 2016-10-27_9-19-07

Another contributing factor could be the popularity of “aging in place” among the Boomer generation.  More and more elderly are staying in their family homes rather than downsizing, or moving to retirement communities or rentals.  According to AARP, 87 percent of adults age 65 plus want to stay in their current home and community as they age. Among people age 50 to 64, 71 percent of people want to age in place.

The Recession Changed Ownership Patterns

According to a new analysis by economists at the National Association of Realtors, in 1985, the median tenure for sellers remaining in their home was five years, the lowest in since NAR started tracking the data in the 30-year period. From 1987 to 2008, the median tenure for sellers was a steady six years throughout the course of about a 20-year period. The only exception was in 1997 when the median tenure jumped up one year to seven years for sellers.

As the U.S. housing market entered the recession, the median tenure for sellers began to rise—seven years in 2009, eight in 2010, and to nine years in 2011 where it has remained steady through 2015. The only exception is in 2014 when the median tenure for sellers reached an all-time high at 10 years, but came back down to nine last year. Thus market changes in the last decade have caused sellers to remain in their homes longer, increasing the median number of years in the home by 50 percent more than they did 20-30 years prior.

In 2006, first-time buyers reported that their median expected tenure was just six years and nine years for repeat buyers, the lowest since we started collecting the data for both buyer types. For repeat buyers, that bumped up to 10 years in 2007, 12 years in 2009, and then up to 15 years in 2010 where it has remained steady for the past six years. For first-time buyers, the median expected tenure in the home jumped to 10 years in 2008 where it has remained ever since.

It is no surprise that repeat buyers expect to remain in their home longer than first-time buyers. It is interesting, however, to see that first-time buyers in 2006 expected to sell in just six years. Fast forward a decade to 2015 and first-time buyers expect to sell in almost double the amount of time.

Economic Implications of Longer Tenure

Significantly longer ownership tenure means that homes will change hands less frequently, which hasmajor economic implications:

  • Volumes of transactions will fall for real estate brokers and lenders.  The coming of age of the Millennial generation could theoretically offset the effects of longer tenure except that the first symptom of extended tenure could be the chronic shortage of inventories over the last two years that has plagued home sales and limited opportunities for Millennials to buy;
  • Demand for remodeling and renovation will increase as owners choose to fix up their current homes rather than sell them.  Increased home repair will create new business for Home Depot and hardware stores.

 

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http://www.realestateeconomywatch.com/2016/10/americans-move-less-and-impact-the-economy/