Location, location, location! What does it mean?

By Jay Ovalle. http://jayovalle.wordpress.com/ 

“In a home, the site is what matters.”  Lao Tse, “Tao Te Ching” (400-600? B.C.).  Although Lao Tse was making a spiritual point, the metaphor evidently was already in use in the literal sense.  I am sure, very far back, our hairy ancestors had to deal, on a daily basis, with the question of where to locate their temporary shelters.  The proximity to resources, the danger of predators or unfriendly “neighbors” made the consideration of location the oldest and most important criterion in choosing a site for a home.

These days there are no wild beasts roaming around, and unfriendly neighbors don’t really arm themselves to take over your home, but today as eons ago, the value of a location remains central to the value of your home.  When a new home is built, the builder will set a premium for the best locations and a discount for the worst, such as a lot backing to a busy street.  Location, as used in this context, is a very broad term that may include living in a particular city, neighborhood, or a school district. The consideration of location may also include your access to resources, work and transportation.

The choosing of any location is a decision consistent with each and every buyer’s unique circumstances. I remember a client who did not mind buying a home that faced busy 7th Avenue in downtown Phoenix. She said the noise and bustle reminded her of Chicago and that it was very comforting to her.  However, the important thing for homebuyers to remember is that, the better the location the better the investment.  A desirable location is always in demand and your home may sell faster and have a better resale value.

The City

In selecting a city you may want to know its demographics, resources, general plan, main industries, job opportunities, schools rating, property taxes and so many other facts that may be of importance only to you. 

The Neighborhood

Next you must consider a neighborhood.  You may want to know its boundaries and what lies adjacent to it that may diminish its value (Google it).  You may not want to live next to a dairy farm, a smoke stack, a city waste dump, within the noise boundaries of an airport or backing to an obsolete trailer park.  You should check and search online for crime statistics of the area, and for the location of sex offenders in the area as well. 

With gasoline over four bucks a gallon, distances have become very important. Is there easy access to major highways?  How far do you have to drive to work, to the supermarket, to the mall, the airport, downtown, and other amenities?  Is mass transit an available option? I helped a buyer who actually visited the local grocery store, strip malls, a restaurant and the mall, and later decided it was not where she wanted to live.  If you have children, is it a family-friendly neighborhood? Are there lots of  children? Are the schools close? How are they rated? Are you close to the bus stop? Any parks or green areas nearby?

After the vicinity, the pride of ownership should be the most telling clue about a neighborhood. If everyone is taking care of their homes it will help maintain values.  In this regard I must mention the often-despised HOA (Homeowners Association). They enforce the developer’s “CC&R’s” (Covenants, Condition and Restrictions), a document detailing the obligations and rules by which you will abide to be a member of the neighborhood.  Rebels and advocates of free expression don’t do well here.  But a frequent omission in discussing the rules is that they were put in place to extend the vision of the builder and its architect.  Their holistic approach supercedes anyone’s right to express their individual taste.  This integration adds a reliable measure of value to the neighborhood, where you would expect an “enforced” and permanent pride of ownership.  The cons can usually be traced to self-managed (vs. professionally managed) associations made of community volunteers who run for office and are summarily elected with a small participation from the whole. These volunteers are in effect running the neighborhood on your behalf the best they can.  So read the CC&R’s before you buy in one of these subdivisions.

The Home

Now lets talk about the location of the home within the neighborhood or subdivision.  You may not care about some of the following negatives for varied reasons, but when selling, you will narrow the pool of buyers willing to accept a negative location.  Like I said before, these lots originally were sold cheaper as less desirable locations. You got a fair deal when you purchased, and when selling, you must pass it on.  The most objections I hear are:

Backing or facing to a busy street or highway.  Noise, pollution and safety are the obvious concerns.  The worst location being on the corner of two or three busy streets.

Orientation of the home. Here in Arizona’s hot weather a North/South orientation is preferred.

Power lines. Whether on the back or front of the home, they are considered an eyesore, not to mention the perception that electromagnetic fields are a hazard to human beings.

Backing up to commercial or industrial property. Again, noise and safety.

Lack of privacy. Backyard or/and pool face two story home(s).

Being at the end of a street “T.” Oncoming traffic that is more evident in the evenings.

Pests. Scorpions, rats and pigeons can be a localized hazard.

Fissures and Subsidence.  A problem the Valley is facing in some areas as we deplete ground water.  After it is drained, the soil compacts and gives away creating fissures and sink holes.

After finding a home in a great location, you are now ready to buy.  First you must talk to your immediate neighbors-to-be; ask them what they think of their neighborhood.  Neighbors will tell you things about the neighborhood in a more objective way because they’re not selling you anything. In the process you will get acquainted and conclude they could be wonderful neighbors to have.

 

 

 

Is The Bailout Of Homeowners Facing Foreclosure Really Immoral?

I know beforehand that I will be a voice in the wilderness. Carnal use of the word aside, I can’t see how “immoral” applies to the effort to try to help a tiny percent of Americans whose only sin was to want to own a home.  This is America.  In America we are threaded together by want.  Want what your neighbor’s got or better.  It is Consumerism in its distilled form.  It is the engine, the soul, that powers Capitalism. 

Let’s see. The last time I looked up the word immoral it meant: corrupt, wicked, evil, unchaste, impure, reprehensible, unworthy and many other synonyms too many to mention here.  But is this effort really immoral because it was so easy to get a mortgage when the market was hot, because we didn’t read the small print, because we weren’t able to foresee the downturn, because we used our equity to buy more stuff that, in turn, kept the engine humming, or because we were plain greedy?  It is the American way.  We were just being ourselves, a country of spendthrifts with a negative saving rate.

I read with dismay that in a recent poll conducted by CNN/Money,  48% of Americans —and the number is still growing — believe that homeowners in trouble should not be bailed out.  Congress is also split on the issue, with most Republicans opposing such legislation and Bush promising to veto it.  In SmartMoney Jonathan Hoenig argues, among many things, that:

“...the real reason to oppose a bailout isn’t that it’s impractical, but that it’s immoral.”

He goes on:

“In America, we have the right to “life, liberty and the pursuit of happiness,” but not the guarantee we can live in the four-bedroom Colonial that’s priced way beyond our means. It might sound cold, but homeowners who can’t pay their mortgages should not expect to be able to keep their homes.”

Well, I agree that it is very American to have free-markets were businesses compete with minimal government  interference, as it is the responsibility of these business to bear the cost of high risk investments gone sour.  While we all embrace the free-market idea, the spirit of Adam Smith is nowhere to be found when it comes to government bailouts. 

Let’s review some of these. In 1971 Congress passed a $250 million loan guarantees to prop Lockheed Martin, which eventually recovered and merged with Martin Marietta in 1995.  Chrysler in 1979 was virtually bankrupted and was rescued by Federal Government Guarantees totaling $1.2 billion.

In the early 1980s the Federal Government bailout of the Savings and Loan industry ultimately cost the taxpayers  $125 billion.  I think we are still paying for this one.

In 1984 the FDIC and the Federal Reserve rescued Continental Illinois Bank.  In 1991 the Bank of New England was quietly funneled a billion dollars  by the U.S. Treasury to boost its liquidity.  In 1998 the Federal Reserve orchestrated a bailout of Long Term Capital Management Hedge Fund at the tune $3.6 billion.

In 1995 President Clinton went to Mexico’s aid after a rapid devaluation of the peso, persuading countries and banks to lend the country $50 billion guaranteed by the U.S.

In 1998 the U.S. and the International Monetary Fund bailed out  South Korea. Total package $57 billion plus an additional $10 billion in emergency aid.

In the days after the attacks in 2001, the airline carriers estimated that losses would come to $24 billion as people elected not to fly. Congress quickly authorized $5 billion in cash infusions to shore up the industry, with the funds apportioned according to each carrier’s size. Then it followed with $10 billion in loan guarantees and set up a government compensation fund for victims of the attacks.

In an opinion column The National Review quotes. Scott Garrett (R-N.J.), one of the very few members of Congress questioning the federal bailout of Bear Stearns:” Government isn’t supposed to be in the business of picking winners and losers,” Garrett remarked in a phone interview while en route to Washington from New York. “But here we are. Hardly anyone seems to mind.”

Given the well documented pattern of moral hazard among corporations, banks and even countries, it is hard to understand the harsh feelings being generated against Lilliputians homeowners in financial distress. There are approximately 102 million homes in the USA and a little over 1.5 million are in trouble with their mortgages. Approximately a third of these are small investors and there will be no help for them. The plan (H.R. 5830: The FHA Housing Stabilization and Homeownership Retention Act) that just passed Congress approval yesterday, will only back loans to re-structure existing loans on principal residences and lenders will have the option to participate.  It is $300 billion in guarantees over the next 4-5  years.  I understand the Congressional Budget Office estimates such a measure would end up insuring approximately 500,000 borrowers. Estimated cost to taxpayers: $2.7 billion!

So what’s the big deal?  Considering the planned $300 billion in subsidies to rich farmers, the annual $8 plus billion in amoral subsidies to oil companies or the $ 50 billion a year we give away to other countries, most of which don’t even like us or the $3 trillion for the war ( 1 trillion still unacounted for), or the crushing national debt at $9.2 trillion, the $2.7 billion over 4 years for helping fellow Americans, is just less than pocket change.

 

Preparing Your Home For Sale

Finally you’ve made up your mind to sell your home. You glance around with a fresh feeling of detachment and realize that the word “style” hardly applies anymore to the eclectic mount of stuff you have accumulated over the years. Instead, if drab can more easily describe your surroundings, you begin to wonder if potential buyers could leave with a positive impression of your home. Guilt dribbles with the acknowledgement of your loving neglect. After you run out of space for your mental inventory of all things that could be improved: you panic!

You think you may get lucky and find another fellow procrastinator that would fall in love with your home as is…very unlikely. So where do we start? Grab pencil and paper and start a list at the front of your home. First impressions (curb appeal) will be created there. Remember that you’ll never get another chance to make a first impression. And a first impression is what counts! Follow these simple tips and create a competitive edge that may help you sell your home more quickly.

• Pay special attention to the landscaping. Trim, cut, mow, reseed, rake, blow, clean, and haul are some verbs that aptly describe what it takes to get the job done. Paint or polish the front door, make sure doorbell is working properly, wash the mailbox, keep the porch or entrance swept and get an attractive mat for people to wipe their feet. Remove and replace dead plants. You may want to add some flowers. Pots near the front door make an inviting visual welcome to the home.

• You may also want to paint eaves and trims if weathered. Chipped paint may be an issue if buyer is obtaining FHA or VA financing, especially if the home was built prior to 1978, when paint used to contained lead.

• Inside go for an “all-season cleaning.”

• Start by airing the home. Most people are turned off by even the smallest odor. Odors must be eliminated, especially those caused by dogs and cats; soiled diapers and/or cigarettes.

• Wash all windows in the home, inside and out. Consider removing your sunscreens to let in more light.

• If it has been more than a year since the carpets have been cleaned, now is the time to do it. Bare floors should also be waxed or polished.

• Put bright light bulbs in every socket made for a bulb. Buyers like bright and cheery.

• Start packing. Clean out closets, cabinets and drawers. Closets should look like they have enough room to hold additional items. Get everything off the floor and don’t have shelves piled to the ceiling.

• Make sure rooms are not overcrowded with furniture. Select pieces that look best, and store the rest. The same goes for the items on your walls. Minimal is the keyword here.

• Keep the kitchen sparkling clean. Make sure all appliances are clean at all times. Straighten cupboards that appear cluttered and keep floor gleaming.

• Bathtubs, showers and sinks should be freshly caulked. The grout should be clean and in good condition. There should be no leaks in the faucets or traps.

• If you have limited counter space in the kitchen, keep unnecessary items put away.

• Keep children’s toys out of the front yard, walkways and porch.

On the other hand, if your are considering selling your outdated home in the near future, you may want to update or remodel it.  According to Remodeling magazine, exterior updates and replacements brought the highest return on the investment. For more details on Cost vs. Value in your particular market, follow the above link.

US Home Prices Roller Coaster

Everyone loves to talk about real estate.  The underlying psychophysiology of this habitual behavior probably has something to do with two things. First,  with the ingrained belief that that’s what the proverbial “American Dream” is all about: Owning a piece of America.  The staking of a miniscule territory one can claim one’s turf; one’s stake in the system, so to speak.  Secondly, to most people, buying a home is the largest transaction ever — and sometimes most traumatic  — of their lives.  So no wonder why, wherever I go, as soon as I mention that I am in real estate, the conversation invariably veers to what I do for a living. (In this market the question nowadays is blunt: “How are you making a living?”) 

Unlike a doctor or a lawyer, I never prod anyone to stop by my office to discuss his or her concerns.  Simply and willingly I join with interest and answer all questions.  Most want to know how to time their sale or purchase as not to lose money on their investment. I try to explain that buying a home to live in is not really an investment.  The best you can hope for is to break even. If the market is such that you have to sell low, it is also true that you can buy low.  If you can sell high, you probably will have to buy high. An addtional consideration is usually ommited from these scenarios: Inflation. It devalues your investment over time.  Buyers and sellers don’t realize that over the long term the price of their homes fluctuates in cycles, just like everything else.  I could plot for you a long chart full of numbers that will show historically the ups and downs of home prices, adjusted for inflation. But the other day, while surfing the web, I found this animation that will give you a fun visual understanding of these cycles. ( Watch the bottom right hand corner as the years change.)

Here is a positive article to help put things into perspective.  It was published in the AZ Republic in December’s Broker Corner.

Norman Rockwell, the iconic American painter, had it right!  He created literally hundred of paintings picturing the essence of American life, most about our homes.  Somewhere along the way we began thinking of “homes” as just “houses” – another commodity to be “flipped”, collateralized, and bartered like stocks and bonds. 

We hear the din about our “national housing market” and assume that includes our local market.  The Valley of the Sun has profound “pocket markets”.  Taking averages or median prices leads us to such fallacies as comparing price per square foot between divergent areas irrelevant to each other like Paradise Valley and Queen Creek.  That’s like dressing for national weather; it means little or nothing locally, we’ve been drowned in meaningless statistics.  But, the realities of our local housing market remain, if house prices are down by 8% in the past 12 months according to the Case-Shiller index, but up by a net 80.2% between 2002 and 2007, it left homeowners with most of their paper gains intact. 

Furthermore, houses have some obvious and unique benefits:  sheltered capital gains, liberal income tax deductions for interest and property taxes and leveraged appreciation. A REALTOR® can do the research necessary for you to make an informed decision based on your housing needs and long term investment potential. Although houses are still an important financial asset, the predominate reason for American’s “home-hunger” is in danger of being lost.  We need to get back to considering the most basic of human desires, shelter for our families. We can’t afford to underestimate the joy of owning a home, the sound and warmth of a crackling fire on a cold winter night, the fragrance of dinner cooking in the kitchen, the gathering of family and friends at the holidays.  A home is more than just a house, it is the place where memories are made and cherished for a lifetime.  Norman Rockwell had it right; the American Dream is still homeownership.

Mission Valley

When I got started in this business, out of the innumerable choices, one builder stood out in my mind as I was impressed by the quality and the effort they put into offering a flexible product; always a notch above the competition. Universal Development Corporation, (UDC) was a builder with a tradition of innovation and exceptional community design.

I thought I should begin this blog with the story of a UDC neighborhood that I know too well: my own. Mission Valley lies on the North East corner of Alma School Rd. and Elliot Rd. and its outer northern edge hugs Summit Place as it connects one road to the other. It was developed by UDC Homes and was completed approximately twenty-seven years ago. After finishing Fountain of the Sun, a retirement community in East Mesa and their first project in the East Valley, UDC began the development of this subdivision in Chandler.

The project started in 1980 — with the models located on the first cul-de-sac on Bentrup, just West of Iowa St. — and it was totally completed by 1983. The subdivision consists of 263 lots: 227 single level and 36 two-story homes ranging approximately from 1800 to 2900 sq. ft. It is interesting to note that UDC certainly made lots of accommodations regarding the size of the homes and additional alteration to the standard floor plans and elevations. Two hundred and seventeen feature a swimming pool on over-sized lots by today’s standards. The homes are all block construction, with 2-car garages and UDC offered the choices of shingles, partial tile and flat roofs.

All of the lots concede a short easement for the isles dedicated for trash collection, a small but practical feature we enjoyed by spearing us a second waste basket (not to mention all the rubbish we stick in the dumpsters that otherwise would have to be hauled away). And the one thing I loved the most: No homeowners association. However, this has never been a problem as most owners preserve the original desert motive imparted by the builder and most still committed to the original palette of light browns and beige.

There are five floorplans with several variations in the number of bedrooms, size and elevations, Each floorplan had three nominal elevations. Here is a slide show of all of the floorplans and elevations:

My wife and I live in a San Gabriel model and it remains my all time favorite UDC floor plan. I love the ample foyer that joins the flowing space of the living room, formal dining room, and as you continue, the four bedrooms (mine has the three bedroom plus the den option) that come together in a very wide hall. There is no interruption proceeding to the kitchen and family room, which are so smartly hidden and concealed out sight when one answers the front door. The wall-to-wall windows in the living room and kitchen/family room give these areas a bright and open feeling of a more contemporary home. Throughout the years UDC made many modifications to most of their floor plans and even dropped some of them, but the San Gabriel remained essentially one of their most popular designs that was later copied by so many other builders.