Tuesday, December 31, 2013

Does it make dollars (and sense) to fix up your house before selling?

As the real estate market gains momentum and people start thinking about selling in the spring, a common question is: "What’s the payoff on fixing things around the house before we put it on the market?" 

The last thing you want to do is undergo extensive repairs that cost you money – and valuable time, only to find you don’t recoup that cost once the house sells.  Then again, leaving obvious fixes left undone can turn buyers off, and drastically reduce the price of any offers that come in.  So what’s the happy medium?  Here is our expert opinion on what fixes will add bang for the buck once you sell – and what to leave off your To Do list. 

The reality is that a declining market in the period between 2007 and 2012 drove all housing prices down.  As a function of increased inventory – including plenty of foreclosures and short sales – people got less money back from remodels and repairs they put into their homes, too.  The good news is that remodeling costs have dropped 10-15% in the last 5 years, too, even as the cost of building materials has risen 17%. 

But there are smart ways to “spit shine” the look of your house, focusing on signature and most-viewed areas that will yield you the most money back when offers come in. 

Try to understand it from a buyer’s eye; when they first walk in, their eye takes it all in as their mind categorizes each detail into positive, neutral, and negative features.  If you have a woefully outdated bathroom, for instance, that may trigger the thought that it needs to be updated – causing them work, and taking money off their offer price.  If they walk in and that same bathroom is newly remodeled with high-end tile, fixtures, and decorations, that would be a positive factor that might put you ahead of the competition, and if it was clean and new but with nothing fancy, a neutral factor.

At the very least, you want to eliminate the negative factors that will ding your asking price.  Those include health and safety items – like a leaky roof, overburdened electrical panel, or bad smoke detectors, which will all be flagged in a home inspection, anyway. 

So what repairs will yield you the best return on investment?

That’s easy -  focus on the kitchen and bathrooms as your remodeling priority.


-Fix any broken doors or tracks on cabinets and drawers.  If they are outdated but functional, consider having them painted.  Lay down new wax paper in the bottoms. 
-Modernizing lighting by installing a cool new fixture over the sink doesn’t cost much.
-Replace old tile or cheap linoleum countertops, possibly with granite (ask your realtor if that surface is recommended.)
-Add a nice new sink faucet and fixtures.
-A hanging pot rack or wine rack is a great signature piece.
-Retile the floor with nice, big, earth tone tiles to get rid of old 6” tiles or linoleum.  Laying them down in a diamond formation – instead of square – looks great, too.
-Paint the walls a neutral color with satin or eggshell paint.


-If the toilet works fine, just put a new seat and lid on it.
-Replace your shower curtain with a nice new one.
-Install a new mirror and medicine cabinet and also replace your sink with a new, modern sink and vanity set.  The sink area is where people look first and spend the most time in the bathroom, and they have great deals on sets that come with a nice faucet and fixtures as well.
-Install new earth tone large tiles on the floor.  This is especially easy since the bathroom floor doesn’t cover a lot of surface area. 
-While you’re at it, take down your towel racks and TP holders and replace them with nice new ones.
-Pop in a cool signature lighting fixture over the sink.
-Paint the walls in a soft, neutral color with satin or semi-gloss, and your bathroom is ready!

Here are a few ideas for other areas of the house that won’t cost much:

-Add new high wattage light bulbs to illuminate the house well, especially dim areas.
-Take down old wallpaper, that’s always a no-no.
-Take down paintings or decorations (except for a mirror or two) and fill the nail holes with spackle, sand to smooth, and paint over them.
-You don’t need to paint the whole inside of the house, but do cover any brightly-colored rooms or high-traffic areas with a new coat of paint in a light, neutral color.
-If the outside doesn’t need new paint, a good power washing is a great way to make it look better.
-Paint your front door with a shiny, traditional color – like red or black – and remove any screen doors over it. 
-The garage door also looks better with a coat of paint, and if it needs it, think about painting the trim only (if you can get away with it) just on the front of the house.
-Clean your windows well, inside and out.  This is a great alternative to replacing them, which can be very expensive.
-Hire a stager if your realtor recommends.  Usually this pays off the best with high-end listings.
-Sprucing up the landscaping is one of the best and cost-efficient ways to improve the curb appeal of your home.  Make sure to weed, prune, lay down some fresh stone or mulch in beds, and plant nice flowers in the front yard, especially on the way to the front door.
-Pools, hot tubs, decks, garage additions, or trying to enclose and winterize patios and sunrooms never pays off when selling a home.
- Get your carpets professionally steam cleaned unless they are really bad and in need to replacement.
-Same thing, you can have someone refinish real hardwood floors, which will make them sparkle.

The repairs that give you the best % payback:

-Exterior siding – adding nice fiber-cement siding to the exterior of a home instead of repainting pays back 78% of the cost.  However, this may differ depending on what part of the country you live in and you never want to stick out in the neighborhood (have siding when everyone else has stucco, etc.)
-Replacing an old or shabby front door pays by 73% of the cost.
-A reasonable kitchen remodel yields a 72.1% return on investment.
-Putting in a new garage door will pay back around 71.9% of the cost. 

We hope the information helps!  Remember to call us if you have any questions about selling your home or what to fix up before it goes on the market.

Tuesday, December 24, 2013

The spirit may be the same, but the world celebrates Christmas much differently.

The children here believe in a Saint Nicholas who delivers their presents, but this one rides a horse.  So it’s a tradition to leave hay, carrots, and water outside the house on December 6 for Saint Nic’s horse.

The Christians in China, who celebrate Christmas, decorate their homes with ornate paper lanterns, all lit up for the big day.  The Chinese version of Santa Claus is called Dun Che Lao Ren.

Santa Claus is called Julemanden and his elves are Juul Nisse, but they live in the attic of their homes, not the North Pole.  Children leave out rice pudding and saucers of milk for them, not cookies.

In France, Santa is known as Pere Noel and is always attended by Pre Fouettard, who keeps the list of who has been good and bad for him.  Pere Noel comes to deliver small gifts to the children on December 6 and then returns with more on Christmas day, but the adults wait until New Years Day to open theirs.

The exchange and opening of presents doesn’t happen until January 6, the day believed to be when the Wise Men reached the baby Jesus.  Instead of Santa, the Italians have La Befana, a women who gives gifts to those who have been good and punishes bad children, based on the woman who refused to help the Wise Men with food and shelter.

In India they decorate their houses with lights on windowsills, a star hung outside, and strings of mango leaves.  The tradition is to make thali, a sweet holiday dessert, and give it to friends and neighbors.

Christmas is a huge celebration in this part of Africa, with preparations and festivals for many weeks beforehand.  Everyone tries to get home by December 24 to visit their ancestral birthplace.  Huge feasts of goat, mangoes, cashew fruits and chicken stew are prepared, and a mango, guava, or cashew tree in the center of the courtyard is decorated with lights and paper ornaments. 

Mexicans call Christmas, Navidad, celebrated for nine days with Las Pasadas.  They follow a tradition of dressing like Mary and Joseph and going door-to-door reenacting events of the Bible, when there was no room, and then celebrating with food, song, and a Pinata for the children.  Finally, on the ninth night, they are told yes, there is room for Mary in the stable, and everyone heads to church to celebrate.

The Netherlands
Santa Claus is known as Sinterklaas and rumored to originally come from Sweden by boat, after starting out on December 6th in Spain.  Sinterklaas goes house to house on horseback delivering gifts, and fills the children’s shoes that are put out with candy and nuts by Christmas morning.

The Japanese are not a Christian nation, but celebrate a form of Christmas with the giving of gifts.  But their Santa Claus-like figure is Hoteiosha, who is a priest that delivers the presents.

The Russians used to celebrate Christmas with great glee before the revolution of 1917, carrying sticks with stars on the end on the streets, representing the Stars of Bethlehem.  After it became the Soviet Union, religion was banned so the traditions went dormant for many decades.  But now, they’ve been reintroduced with slight differences – Saint Nicholas is now known as Grandfather Frost and wears blue, not red, and they decorate a tree and celebrate on New Years Day.

Santa Claus is actually called Tomte, who is a gnome that emerges from under the floor of the house or barn, carrying a sack of presents for the kids.  Tomte rides a sleigh but it’s pulled by a goat, not reindeer.  

Wednesday, December 18, 2013

A Snapshot of International Real Estate Prices.

We spend a lot of time focusing on housing prices in the United States – and rightfully so with the roller coaster we’ve seen over the last 10 years.  But I came across some interesting information about real estate prices around the world that I thought you’d get a kick out of.  Is Canada the most overvalued real estate in the world?  Can you buy a whole compound in beautiful Panama for $300,000?  Why are so many retirees moving to places in Latin America and Asia to retire?  Let’s find out.

As I started doing my research, I quickly realized that even finding usable data on international housing would be a challenge – you have different currencies to convert, cost of living adjustments, and even different lending and banking standards to compare.  But in the end, this is the consensus:

In the last few years, there is no sign of a global uptick in housing prices.  However, of course we have many different countries and even micro-markets within nations to consider.  Ireland, Greece, Spain, and Portugal have seen large declines in their real estate prices, possibly because if their faltering economies (for the latter three) and their relative de-value against the Euro.

At the same time, Brazil and Germany have seen the biggest price increases in real estate. That makes sense, too – Germany’s economy is rock solid, and Brazil is booming and looking forward to an influx of tourists, soccer fans, and investors with the 2014 World Cup this summer.

I found plenty of graphs produced by fancy economists, like these that show that prices are up in France and slightly in Great Britain, but falling in Spain and plunging like a stone in Ireland.

Or, the (Inter)National Housing Affordability Index, which shows that Australia, Canada, New Zealand, the UK, and our own USA are the highest priced nations for housing, but Hong Kong takes the prize with off the chart housing expenses.

And how year over year, housing and real estate prices rose in about half the countries surveyed, but fell in the other half.

Ultimately, those stats are hard to put in context – and a little deceiving.  Remember that real estate prices in the main cities and popular urban areas are always way higher than in rural areas.  So, there is no clearer illustration of real estate prices abroad than if we look at actual properties.  Here are a few examples of what you could buy in foreign countries if you had $300,000 cash ready to spend (and a bag packed and passport ready.)

Panama City, Panama.
$315,000 will get you this 3 bedroom, 3 ½ bath garden-like compound in the jewel of Central America.  It’s only minutes from beautiful San Carlos beach and has granite countertops, a two-car garage, and located in a gated community with a pool, tennis courts, etc.  No wonder why Panama is one of the fastest-growing destinations for U.S. retirees!

Tuscany, Italy
For $281,708, you can purchase this 2 bedroom, 1 full bath, 1,722 square foot, 2-story home that’s actually part of a renovated monastery.  The outside is crafted with stone and the inside has a living room with an open fireplace, dining room, room for your wine cellar, a terrace, and a private courtyard. 

Ha Long Bay, Vietnam.
$320,000 goes a long way in Vietnam, but the picturesque and very-safe Communist country is still ultra-crowded, meaning that housing standards are always smaller.  Still, for that price tag you can get a luxury apartment in the BayView Towers, a 30-story high rise with infinity pool, skyrise, playground, and shopping mall!  The apartments have 3 bedrooms, 2 ½ baths, a full kitchen and a smaller half kitchen for the inlaws, and 1,800 square feet – GREAT size in Vietnam.  Oh, and by the way, the coast of Vietnam offers some of the most breathtaking and fun beaches and cultural activities.

Fabregues, France.
$265,000 - $310,000 will get you a “Bon jour” to the neighborhood at the Village Center Le Domaine Du Golf, which has 2 bed, 1 bath apartments and also smaller units.  Of course a swimming pool and golf course for residents is never too far off.

Buenos Aires, Argentina. 
Argentina’s capital city has been called the Paris of South America, yet with their own financial problems, prices have plummeted for over a decade.  $255,000 will get you a 2 bedroom, 2 bath, 800 square foot apartment in the bustling city center near the arts, museum, and the historic Teatro Colon.  Buenos Aires has become a huge home-buying destination for U.S. citizens recently.

Phuket, Thailand. 
$291,000 will bet you a fantastic apartment home right next to the beach on Thailand’s largest island, Phuket.  It’s world-renowned for it’s incredible beaches like Kp Phi Phi, Ko Samui, and Ko Phangan (they film a lot of movies there, like Leonardo DiCaprio’s The Beach.)  You’ll be able to jump into a post card beach any time you like but your 1,700 square foot home will also have a pool if you want to keep the sand out of your sheets.  Thailand is one of the hottest retirement destinations for Americans with its tropical climate, perfect beaches, low cost, and safety.

Ruijing, China.
Ruijing, China.
China’s economy is exploding, and with over a billion people, or about 1/6 of the world’s population, you could imagine how high real estate prices are.  But THIS is crazy! - $284,000 will buy you a tiny but functional 2-bedroom 268 square-foot apartment!  That’s over $1,000 per square foot!

Vancouver, Canada.
Vancouver, Canada.
Our friendly neighbors to the north have their own housing affordability issues, and cities like Vancouver are perpetually on the Most Expensive Real Estate List.  $300,000 will get you a mobile home, or a cruddy 700 square-foot apartment on the outskirts, but, believe it or not, that price tag won’t get you into even ONE single family, detached home in that area!  A new report reveals that Vancouverites spend an astounding 45-93% of each paycheck toward house payments! 

Tokyo, Japan.
Tokyo, Japan.
The economy of Japan has been one of the most volatile in the world since the 1980’s, but with a super-dense population and strong industry, housing in the biggest metropolitan city is always at a premium.  This year, average prices for a new condo construction rose to $6,931 per square meter (10.7 square feet to a square meter,) $3,039 per square meter for an existing condominium, and land at about $2,066 per square meter.  That means a modestly-sized brand new condo could cost you well over $1 million U.S. dollars! 

Monday, December 16, 2013

Year-end real estate report for Placer County, California.

As 2013 comes to a close, it's time to take a statistician's look into the real estate numbers in our own Placer County, California.  

These numbers are compiled from TrendGraphix, Inc. and span September 2012 into November, 2013, and the December information will be tallied and updated soon.  

What does this add up to?  A healthy, appreciating market, with high demand and an increase in supply.  Listings are selling quickly and for full price or above, when priced correctly to start.  That is important, because there were a large number of houses sitting on the market and left unsold.  The market is seeing plenty of inventory, so it's a great time to buy while rates are still low, before demand increases and prices escalate in the spring and summer of 2014.  

Average Price for Sales and Listings.
Summary:  The average active listing price is up 3.3% and the average sold price up 15.5% over one year.

Average Price per Square Foot.
Summary: There is a 19.6% increase in average price per square foot.

Number of Homes For Sale, Pending, and Sold.
Summary: The number of homes for sale are up 40.8%, pending are up 2.6%, and homes sold are down 25.6%

Average Days on Market and Sale Price Compared to Listing Price.
Summary: The average combine days on market are down 21.6%, while the percentage of sale prices versus original listing prices is down .01%

Months of Available Inventory.
Summary: There is a 85.7% increase in the number of months of inventory available on the market.

The Alfano Group Real Estate is happy to help you if you have any questions about the Placer County real estate market, or if you'd like to see what your home is worth.

Look for a release of the Sacramento real estate numbers next week.  

Wednesday, December 11, 2013

A shocking look at the U.S. rental housing crisis.

An unexpected casualty of the mortgage bust and recalibration has emerged – the rental market.  The cost to rent a property is skyrocketing, and at the same time supply is shrinking.  It’s a new problem, as prior to 2008 home ownership levels were at all-time highs, thanks to loosening lending standards and a rapidly appreciating real estate market.  But since the crash more than 4 million families have lost their homes to foreclosure, pushing those former-owners into the rental market.  There are now 43 million rental households in the United States, totaling about 35% of all homes, the highest level in over a decade. 

Tightening supply and driving up demand, many of the affordable single family residences and properties have been snatched up by big investors, who had the cash to capitalize on a down market.  It’s believed that more than 3 million single-family residences are now investor-owned. 
However, increase in demand for rentals isn’t only due to the real estate crash, but the economy as a whole.  As U.S. workers faced their fears about unemployment, layoffs, and lost confidence, banks tightened their vaults, making it harder to get a mortgage loan.  The result was an accelerated wave of those who wanted to rent, not own homes.
In fact, for the 25-54 age group, basically prime working years, the adjusted cost of renting is the highest since they started tracking those statistics in 1970.  The cost of renting a home is far outpacing inflation and real wages.  This recipe of increased demand and inflated prices means that many families struggle with housing costs.

Currently, 50% of all renters pay more than 30% of their income to rent.  That’s a marked increase from only 18% of renters paying more than 30% of their income a decade ago.  30% is also the accepted barometer for housing affordability. 

The problem is even worse for those on the lower end of the economic scale, and an astounding 30% of renters pay at least 50% of their income to housing costs!  According to U.S. Department of Housing and Urban Development, the average hourly wage among all renters is $14.32, yet it takes at least $18.79 to afford an apartment at fair market rent.  The Fed calls reports that the ratio of rental costs to disposable income is the worst level since the Great Depression.  

The numbers hold little reason for future optimism - over the past five years, median household income has fallen every year after adjusting for inflation, to the point where Americans earn about what they did in 1996.
"We are in the midst of the worst rental affordability crisis that this country has known," said Shaun Donovan, U.S. Secretary of Housing and Urban Development.
What do these numbers mean to you, the average consumer?  Quite simply, buy a house if you can – the long term aggregate costs will be profoundly lower than renting, and additionally, if you have the means, buy a rental property.  The numbers are all in your favor.