Housing Trends • September 27, 2017

10 Home Projects That Need a Pro

by Windermere Colorado

If you are working on a DIY remodel, deciding whether to call in a specialty contractor to perform a specific task comes down to several areas you’ll need to consider:

Skill. Do you have the necessary skills to build a sound structure, and do it safely?

Scale. Is the size of the project one that you can handle in a reasonable amount of time?

Cost. When factoring in the value of your own time, can the project be completed for less cost by a professional? Do you have the tools you need?

Aesthetics. Can you finish the project attractively enough that you’re not sacrificing resale value? Would a rough grout joint or wallpaper seam bother you?

Learn more about the specific problem areas that often require professional help below.

Contractor 1: Weber + Studio Architects, original photo on Houzz

1. Structural elements. Beams, footers, headers etc. — these are the unglamorous and often hidden parts of a home that are critical to its long-term stability and safety. Don’t take chances with structural components. Everything should be drawn or approved by an engineer, whose specifications should be followed to the letter.

Contractor 2: Re:Vision Architecture, original photo on Houzz

2. Electrical. Here’s another one where safety and skill intersect. Poor wiring can be a safety hazard — just because you were able to wire something up and it worked, doesn’t mean you haven’t created a safety hazard. If you aren’t confident you have the knowledge to perform the needed work and assess the implications of your work on the rest of the circuit and panel, call in a professional.

Contractor 3: Jeffrey Dungan Architects, original photo on Houzz

3. Roofing. Here’s a good example of a project where even if you feel you have the skills to perform the task safely and properly, you may not be able to complete the project in a short enough period of time to avoid exposing your home to damage from rain. If you can’t get your roofing project done in a couple days, don’t start it. Even professionals can underestimate the time a project will take to complete, so you may want to double your estimate.

4. Plumbing. A clogged drain line and a faucet that needs to be replaced are tasks that you know you can complete. Before you do either yourself, though, think about the true cost.

What is your time worth? Do you have the tools? If you end up renting a drain snake from the home center that doesn’t work when you get it home, and you need to make another trip before you even clear the drain, you may lose much of a precious Saturday.

Contractor 4: Buckminster Green LLC, original photo on Houzz

5. Insulation. Certain types of insulation, such as spray foam, should be left to the professionals. Many people assume that installing batt insulation like fiberglass is an easy project, but there is a lot of room for error here. If you leave gaps you can create spots that draw heat and moisture into your walls — a bad combination. Even if you do the job well, it’s messy work. Plus, insulation contractors get a much better deal on the material costs than you would, offsetting the labor savings of a DIY project.

6. Carpentry. Even if you have the skills to complete the project, professional carpenters will have the tools and experience to get the job done quickly. If you are trying to complete the project on a part-time basis, remember to factor in setup and cleanup time. Working a full day is often much more efficient than an hour here and there.

Contractor 5: Ike Kligerman Barkley, original photo on Houzz

7. Masonry. This is one that bridges all four factors — if there is a structural component to the masonry project (and there usually is), safety is a concern. The scale of projects involving stone, brick and concrete can be deceiving. Make sure you know what you’re getting into. Wrestling a heavy stone into place and making it look good takes years to master. When you factor in all of this, the cost of paying for good work can be a bargain.

8. Wallpaper. There isn’t much room for error here. You have to get it right the first time. You’re drawing attention to the wall by dressing it up, so it had better look good. You wouldn’t pay an arm and a leg for a beautiful fabric and then make a sloppy-looking dress, so don’t buy a gorgeous paper and put it up with misaligned seams and bad corners.

Contractor 6: Buckminster Green LLC, original photo on Houzz

9. Tile. The pace of tile installation is slower than that of wallpaper, and there is a lot of contemplation that goes into a good tile installation. If you aren’t experienced, you may discover something you should have thought about when it’s too late. You also want to prep correctly. Tiles are all different and require different approaches to installation. Your DIY tile floor may look good when it’s done, but can you be sure it will hold up and not crack in a year or two? If you are confident about that, go for it. If not, call a professional.

10. Painting. I know, it sounds ridiculous — if you can’t paint, what DIY project can you do? Keep in mind, I’m not here to stop you from painting your own house. Just consider that a good, lasting paint job takes a lot of prep work. Sometimes this can involve wall repair, scraping paint (which can be a health risk if it’s lead paint), priming and caulking over old finishes with various products. Depending on what you’re working with, you may need someone with more experience to help.

By Kenny Grono, Houzz

For Sellers • September 26, 2017

Selling Your Home: The Impact of Staging

by Windermere Colorado

How can you make your home more attractive to potential buyers? The answer is with some “home staging”. According to the Wall Street Journal, implementing some basic interior design techniques can not only speed up the sale of your home but also increase your final selling price.

It all comes down to highlighting your home’s strengths, downplaying its weaknesses, and making it more appealing to the largest pool of prospective buyers. Staging an empty house is also important to help buyers visualize how the spaces would be used, and to give the home warmth and character.

Cohesiveness Is Key

Make the inside match the outside. For example, if the exterior architectural style of your house is Victorian or Craftsman Bungalow, the interior should be primarily outfitted with furniture styles from essentially the same era. Prospective buyers who like the exterior style of your home are going to expect something similar when they step inside. If the two styles don’t agree or at least complement each other, there is likely going to be an immediate disconnect for the buyer. Contact your agent to help determine the architectural style of your home and what makes it unique.

There is always room for flexibility. Not all your furnishings need to match, and even the primary furnishings do not need to be an exact match to the architectural style of your home. To create cohesion, you simply need to reflect the overall look-and-feel of the exterior.

The Role of Personal Expression

Every home is a personal expression of its owner. But when you become a seller, you’ll want to deemphasize much of the décor that makes a place uniquely yours and instead look for ways to make it appeal to your target market. Keep in mind, your target market is made up of the group of people most likely to be interested in a home like yours—which is something your agent can help you determine.

Your Goal: Neutralize and Brighten

Since personal style differs from person to person, a good strategy to sell your home is to “neutralize” the design of your interior. A truly neutral interior design allows people touring the house to easily imagine their own belongings in the space—and to envision how some simple changes would make it uniquely their own.

In short, you want to downplay your own personal expression, while making it easy for others to mentally project their own sense of style on the space. Ideas include:

Paint over any bold wall colors with something more neutral, like a light beige, a warm gray, or a soft brown. The old advice used to be, “paint everything white,” but often that creates too sterile of an environment, while dark colors can make a room look small, even a bit dirty. Muted tones and soft colors work best.
Consider removing wallpaper if it’s a bold or busy design.
Replace heavy, dark curtains with neutral-colored shear versions; this will soften the hard edges around windows while letting in lots of natural light.
Turn on lamps, and if necessary, install lighting fixtures to brighten any dark spaces—especially the entry area.
Make sure everything is extremely clean. You may even want to hire professionals to give your home a thorough deep clean. Remember, the kitchen and bathrooms are by far the two most important rooms in a house when selling, so ongoing maintenance is important.

The Importance of De-Cluttering

Above all, make sure every room—including closets and the garage—is clutter-free. Family photos, personal memorabilia, and collectibles should be boxed up. Closets, shelves, and other storage areas should be mostly empty. Work benches should be free of tools and projects. Clear the kitchen counters, store non-necessary cookware, and remove all those magnets from the refrigerator door.

The same goes for furniture. If removing a chair, a lamp, a table, or other furnishings will make a particular space look larger or more inviting, then by all means do it.

You don’t want your home to appear cold, unloved, or unlived-in, but you do want to remove distractions and provide prospective buyers with a blank canvas of sorts. Plus, de-cluttering your home now will make it that much easier to pack when it comes time to move.

Where to Start

Contact your agent for advice on how to most effectively stage your home or for a recommendation on a professional stager. While the simple interior design techniques outlined above may seem more like common sense than marketing magic, you’d be surprised at how many homeowners routinely overlook them. And the results are clear: staging your house to make it more appealing to your target buyer is often all it takes to speed the sale and boost the price.

Economics 101 • September 25, 2017

Should You Wait out the Housing Market?

by Windermere Colorado

The housing market is remarkably tight across the U.S., and you may be wondering if you should wait for home prices to slow before making your move. Windermere’s Chief Economist, Matthew Gardner, shares why waiting could end up costing you more money in the long run.

For Buyers & Sellers • September 24, 2017

How to Avoid the Most Common Buying/Selling Mistakes

by Windermere Colorado

Your Home is an Investment

There’s nothing more exciting, rewarding, and fulfilling than buying a home. However, it’s a complex transaction, and there are a number of steps along the path that can confuse, betwixt, and befuddle even the most seasoned buyers and sellers.

How can you avoid those potential pitfalls and common mistakes? Look to your real estate professional for advice and keep these guidelines in mind:

BUYERS:

#1 Review your credit reports ahead of time

Review your credit report a few months before you begin your house hunt, and you’ll have time to ensure the facts are correct, and be able to dispute mistakes before a mortgage lender checks your credit. Get a copy of your credit report from Experian, Equifax, and TransUnion. Why all three? Because, if the scores differ, the bank will typically use the lowest one. Alert the credit bureaus if you see any mistakes, fix any problems you discover, and don’t apply for any new credit until after your home loan closes.

#2 Get pre-approved

Before getting serious about your hunt for a new house, you’ll want to choose a lender and get pre-approved for a mortgage (not just pre-qualified—which is a cursory review of your finances—but pre-approved for a loan of a specific amount). Pre-approval lets sellers know you’re serious. Most importantly, pre-approval will help you determine exactly how much you can comfortably afford to spend.

#3 Know what you want

You and your real estate agent should both be clear about the house you want to buy. Put it in writing. First, make a list of all the features and amenities you really want. Then, number each item and prioritize them. Now, divide the list into must-haves and really-wants. A good place to start is the “HUD Wish List,” which is available online for free at http://www.hud.gov/buying/wishlist.pdf

#4 Account for hidden costs

In addition to the purchase price of the home, there are additional costs you need to take into consideration, such as closing costs, appraisal fees, and escrow fees. Once you find a prospective home, you’ll want to:

Get estimates for any repairs or remodeling it may need.
Estimate how much it will cost to maintain (gas, electric, utilities, etc.).
Determine how much you’ll pay in taxes monthly and/or annually.
Learn whether there are any homeowner or development dues associated with the property.

#5 Get an inspection

Buying a home is emotionally charged—which can make it difficult for buyers to see the house for what it truly is. That’s why you need impartial third parties who can help you logically analyze the condition of the property. Your agent is there to advise you, but you also need a home inspector to assess any hidden flaws, structural damage or faulty systems.

#6 Evaluate the neighborhood and location

When house hunting, it’s easy to become overly focused on the number of bedrooms and bathrooms, the condition of the home and its amenities while overlooking the subtleties of the surrounding neighborhood. Take time to check crime reports, school options, churches and shopping. If schools are a key factor, do more than simply research the statistics; speak with the principal(s) and chat with the parents waiting outside.

SELLERS:

#1 Avoid becoming emotional or sentimental about the sale

Once you decide to sell your house, it’s time to strip out the emotion and look at it as a commodity in a business transaction. If you start reminiscing about all the good times you had and the hard work you invested, it will only make it that much harder to successfully price, prepare, and market the home.

#2 Fix problems (or price accordingly)

Homes with deferred maintenance and repair issues can take far longer to sell and can be subject to last-minute sale-cancellations. These homes also often sell for less than their legitimate market value. If you simply can’t afford to address critical issues, be prepared to work with your agent to price and market your home accordingly. The great thing about the Windermere Certified Listing, is that we will provide a 5-point pre-inspection for you at no cost! This will help you identify current or potential problems in your home before ever hits the market!

#3 Don’t overprice your home (and/or refuse to negotiate)

Getting top dollar is the dream of every seller. But it’s essential that you let the market dictate that price, not your emotions or financial situation. Allow your agent to research and prepare a market analysis that factors in the value of similar homes in the area, and trust those results. Check out our Insiders’ Guide to Selling Your Home (without any stress or surprises!) for more tips and tricks on pricing your home!

#4 Use quality photos

The vast majority of prospective buyers today search for homes online first. In order to make a good first impression, you need a wealth of high-quality photos of your home and surrounding grounds. You may also need to consider professional staging in order to position your home in the best possible light for prospective buyers.

The process of buying or selling a home can have plenty of twists and turns, but with some smart decision making, you can avoid the most common mistakes and pitfalls.

Windermere’s Certified Listings are supplied with a complete professional photography package. These vivid and beautiful images are designed to sell homes. Professional real estate photography is proven to increase showings and lead to faster sales.

Housing Trends • September 23, 2017

Seven Trends That Will Define the Home of the Future

by Windermere Colorado

As sophisticated as homes are today, experts predict they’ll be far more so in the not-too-distant future— especially when it comes to their use of technology. Included are seven evolutionary trends that many expect to define the home of the future.

#1: Faster home-construction

Today, it takes somewhere between 18 months and two years to design and build your custom dream home. In the foreseeable future, experts predict that timeline will be slashed to six to nine months.

Architects will use immersion technology to not only develop plans faster, but also enable you to “walk” through a three-dimensional representation of the house and experience what it will be like to live there. Changes to the layout could be incorporated with a few clicks of the keyboard and mouse.

And, instead of delivering raw materials to the construction site and having workers cut and assemble them to match the plans, about 70 percent of the cutting and assembling work will take place in a precision-controlled factory environment. Once the foundation is ready, the pre-constructed walls, floors and roof will be delivered in “folded” sections, complete with windows, doors, fixtures, and even appliances, already installed.

#2: Alternative building materials and techniques

One of the big breakthroughs in home construction coming in the near future will be the use of steel framing in place of lumber.

Steel is not only stronger (able to withstand a 100-pound snow load, 110 mile per hour winds and significant earthquakes), it’s also far more eco-friendly than most people think (manufactured from up to 77 percent recycled materials) and much less wasteful (typical lumber framing generates 20 percent waste, while steel framing generates just two percent).

Other innovative home-building materials moving towards the mainstream include:

Wall insulation made of mushroom roots (it grows inside the air cavity, forming an air-tight seal).
Panels made of hemp and lime.
Windows made from recycled wood fiber and glass.
Recycled-glass floor and counter tiles.
Reclaimed wood (beams and flooring re-milled and repurposed).

#3: Smaller homes with inventive layouts

The optimum home size for many Americans has been shrinking, and experts predict it will shrink more in the future. But it will feel bigger than it is because the layout will be so practical.

The driving forces behind the small-house movement (millennials purchasing their first home and baby boomers looking to downsize) aren’t interested in formal dining rooms, home offices, guest quarters and other spaces that have only one use and are only occasionally occupied. And they certainly aren’t interested in formal entries, high ceilings and three-car garages. They want an informal house layout, with flexible, adaptable spaces that can be used every day in one way or another.

Many of these homes will also feature a second master bedroom, so parents, children and grandparents can all comfortably live under one roof.

#4: Walkable neighborhoods

Even today, homebuyers are willing to give up some of their wants for a new house in order to get a location that’s within walking distance to stores, restaurants and other amenities. In the future, that trend is expected to only grow stronger.

#5: The net-zero house

For some time now, homeowners and homebuilders have both been striving to make the structures where we live more energy-efficient (green housing projects accounted for 20% of all newly built homes in 2012). But in the future, the new goal with be a net-zero home: A home that uses between 60 to 70 percent less energy than a conventional home, with the balance of its energy needs supplied by renewable technologies (solar, wind, etc.).

Essentially, these are homes that sustain themselves. While they do consume energy produced by the local utility, they also produce energy of their own, which can be sold back to the utility through a “net metering” program, offsetting the energy purchased.

#6 High-tech features

The technology revolution that’s transformed our phones, computers and TVs is going to push further into our homes in the not-too-distant future.

Examples include:

Compact robots (similar to the Roomba vacuum) that will clean windows and more.
Video feeds inside the oven that will allow you to use your phone to check on what’s cooking.
Faucet sensors that detect bacteria in food.
Blinds that will automatically open and close depending on the time of day, your habits and the amount of sun streaming through the windows.
Refrigerators that will monitor quantities, track expiration dates, provide recipes, display family photos, access the Web, play music, and more.
Washers and dryers that can be operated remotely.
Appliances that will recognize your spoken commands.
Heating and cooling systems that automatically adapt to your movements and can predict your wants.

#7: A higher level of security

In the future, home will continue to be a place where we want to feel safe and secure. To accomplish that, you can expect:

Sensors that can alert you to water and gas leaks.
Facial recognition technology that can automatically determine whether someone on your property is a friend or foe.
A smart recognition system that will open the garage door, turn off the security system, unlock the doors and turn on the interior lights when it senses your car approaching.
The capability to create the illusion that you’re home and moving about the property when you’re actually someplace else.

This is no pipe dream

Many of these products, processes and strategies are already in use. Some are still being tested. And others are only in the incubator stage. But in the not-too-distant future, experts believe they’ll all be available to homeowners across the country.

For Buyers & Sellers • September 22, 2017

Downsizing: 5 Things to Consider

by Windermere Colorado

Senior Couple Looking to Downsize

Downsizing is on the minds of many homeowners today. Some are ready to retire. Others want to live more simply. Many want to save money and say goodbye to home maintenance. If you can relate to any of those sentiments, ask yourself these five questions:

Have you done the math?

The financial savings that can be generated by downsizing can be significant – especially as they add up over time. Boston College Retirement Center (an independent, reliable resource) makes calculating this savings a snap.

Have you researched elder-care options?

Many homeowners hold on to their current home longer than they should because their parents / parents-in-law may need to come live with them in the future. While a noble gesture, there are many excellent elder care living options available today. Often, all it takes is a tour of those facilities to realize that your loved one may actually be happier, and far better served, in a place devoted to their care and happiness.

Have you considered off-site storage?

You don’t need to immediately discard a big chunk of your belongings in order to downsize. In fact, trying to do so in one fell swoop only creates stress. Most people find it works much better to move some of their belongings into off-site storage for six months. During that time, you can gradually incorporate some of those items into your new living arrangement, and slowly figure out what to do with the others.

How do you feel about sharing costs and decision-making?

Townhomes and condominiums are popular downsizing options. But both require that you share the decision-making and expenses associated with any maintenance and improvement projects. If you’re a people-person, agree with the old adage that two heads are better than one, and you like the idea of sharing the cost/responsibility for expensive repairs, you’ll enjoy condo living. If not, this may not be the best option for you.

Have you consulted with a real estate agent?

Many homeowners don’t think to consult with a real estate agent until they’ve made the decision to downsize. This leads to guesstimating about some of the most important factors. The truth is, your real estate agent is someone you want to talk with very early in the decision-making process.

Economics 101 • September 5, 2017

Housing Supply is an Issue that Will Not Improve Any Time Soon and Here’s Why

by Windermere Colorado

There are two common concerns about the housing market that one hears from both consumers and real estate professionals alike. First, they question whether or not we are on the brink of another housing bubble, and second, they want to know why there aren’t more homes for sale.

I don’t plan on addressing the concern regarding a housing bubble in this article except to say that we are not currently in “bubble” territory, although affordability does concern me immensely. Today I would like to concentrate on the second question about the lack of homes for sale.

According to the National Association of REALTORS®, there were 1.96 million homes for sale in the United States in May 2017. When adjusted for seasonality, this falls to just below 1.9 million which is essentially the same level we saw back in 2000.

Now consider that the country has added over 21 million new households during that same time period, and you can see why this is so troubling. It is worth noting that many of these new households did move into rental properties, but this still leaves the U.S. with a substantial housing shortfall, which explains why demand for homes is so high.

With the shortage of homes for sale, you would normally expect builders to meet this pent-up demand with new construction housing but, unfortunately, this has not been the case. In fact, new single-family housing starts are running at about 800,000 (annualized), and I believe we need starts to come in at over 1 million to satisfy demand – especially as older Millennials start to create households of their own and begin thinking about buying instead of renting.

We therefore have a quandary. Trust in the housing market has clearly returned, but there are not enough homes to meet the demand of buyers, and when a buyer does find a home, they are met with very stiff competition, which is driving prices increasingly higher.

So why are we in this position and how do we get out of it?

In reality, there is no single reason for the situation we are in today. Rather it is a number of factors that, when combined, suggest to me that the market will not return to equilibrium any time soon.

The first reason for the shortfall is purely demographic. As “Boomers” age, they are not following the trends of previous generations. Many are staying in the workforce far longer than their predecessors, and, as they are postponing retirement, they do not feel compelled to downsize. In fact, almost two-thirds of Boomers plan to age in place and not move even after retirement. Without this anticipated supply of homes from downsizing Boomers, there aren’t enough homes for move-up buyers, which in turn limits the supply of homes for first-time buyers.

Secondly, as a nation we just aren’t moving as often as we used to. When I analyze mobility, it is clear that people no longer have to relocate as frequently to find a job that matches their skill set. There has been a tangible drop in geographic specificity of occupations. Where we used to move to find work, this is no longer as prevalent, which means we are moving with less frequency.

Thirdly, as mentioned earlier, builders aren’t building as many homes as they could. This is essentially due to three factors: land supply/regulation, labor, and materials. The costs related to building a home have risen rapidly since the Great Recession, and this is holding many builders back from building to their potential. Furthermore, in order to justify the additional costs, many of the homes that are being built are larger and more expensive, and this is no help for the first-time buyer who simply can’t afford a new construction price tag.

Fourthly, while the general consensus is that home prices have recovered from the major correction that was seen following the recession, this is actually not the case in some markets. In fact, there are 32 U.S. metro areas where home prices are still more than 15 percent below the pre-recession peak. As equity levels remain low, or non-existent, in these markets, many would-be sellers are waiting until they have sufficient equity in their homes before putting them on the market.

And there is still one more issue that is certain to become a major factor over the next few years: interest rates.

Imagine, if you will, the country a few years from now when interest rates have normalized to levels somewhere around 6 percent. Now consider potential home sellers who are happily locked in at a mortgage rate of about 4 percent who are considering their options. Will they sell and lose the historically low rate that they currently have? Remember that for every 1 percent increase in rates, buyers can afford 10 percent less house. If they don’t HAVE to sell, their thoughts may lead to remodeling rather than moving. I think that this is a very reasonable hypothesis which could lead us to see low inventory levels for a lot longer than many think.

With little assistance from the new home market, I believe we will suffer from low inventory levels until well into 2018.

Our best hope for a more balanced market lies with builders, so hopefully they’ll be allowed to do what they do best – build more homes.

Economics 101 • September 4, 2017

How Homeownership Impacts the U.S. Economy

by Windermere Colorado

Windermere’s Chief Economist, Matthew Gardner, explains how a strong, stable housing market is critically important to the overall U.S. economy.

Housing Trends • September 3, 2017

6 Ways to Personalize a White Kitchen

by Windermere Colorado

White-on-white kitchens have been a classic look for many years. Why does this trend endure? For starters, white connotes cleanliness, makes small spaces appear larger, and brightens rooms that are naturally dark.

Although many all-white kitchens are just lovely, some can appear a bit stark or cold. To help clients warm up their white, I recommend a variety of strategies, such as mixing metals and adding contrasting paint, fabric or wood. Read on for inspiration for personalizing your white kitchen so that it stands out from the crowd.

White Kitchen 1: Allard Ward Architects, original photo on Houzz

1. Warm metal accents. Copper, bronze, brass and polished nickel are just a few of the metals that can warm up an all-white kitchen. The gold sconces above the window and the white pendant lights, with their subtle hint of gold, add warmth and a touch of luxury to this all-white kitchen.

White Kitchen 2: GIA Bathroom & Kitchen Renovations, original photo on Houzz

2. Color and metal. Moving beyond metallics alone, a single contrasting color when combined with metals can create drama in a white kitchen. In this photo, a modern white kitchen intermingles black pendants and countertops with gold seating. This combination contributes to the room’s sleek contemporary look.

White Kitchen 3: Orchid Newton Ltd, original photo on Houzz

3. Wallpaper. I love wallpaper, especially in kitchens. Wallpaper can introduce color, movement and dimension to a white kitchen. When applied to a lone wall, wallpaper can create a dynamic focal point, as shown in this photo. The bright white cabinets and crisp white walls are softened by the shades of blue in the fish swimming on the side wall. This kitchen’s under-the-sea motif is enhanced by the blue tile on the back wall and the sea urchin-shaped pendant lights.

White Kitchen 4: IS Architecture, original photo on Houzz

4. Colorful island. Wood-stained islands often appear in white kitchens because of the richness and contrast they bring. This kitchen shows a creative alternative, pairing a chartreuse island with a chartreuse Roman shade. Together they lend a whimsical, personalized feel. To give your white kitchen a personal touch, consider painting your island your favorite color.

White Kitchen 5: Mosaic del Sur, original photo on Houzz

5. Tile rug. Layering in a rug is a great way to introduce color and texture to an all-white kitchen, but some clients worry that a rug could be an added source of dirt as well as a possible tripping hazard.

This clever kitchen resolves both issues with a tile rug instead of a fabric one.

White Kitchen 6: Hindley & Co, original photo on Houzz

6. Backsplash. A tile backsplash also can bring color and texture to your white kitchen. But who says a backsplash must be tile? This kitchen has a counter-level window in lieu of a tile splash. The window faces a luscious succulent garden, thus creating a green vista for an otherwise monochromatic kitchen.

For Buyers & Sellers • September 2, 2017

Why Owning a Home is Such a Smart Investment

by Windermere Colorado

Home Ownership a Better Investment

After succumbing to the “Great Recession” ten years ago, the stock market has made a comeback. So, does that mean you should forget about buying a new house and invest in stocks instead? The answer to that question, say experts, depends on your investing savvy, your financial discipline, your age, and your current financial situation.

The first question you need to ask yourself is, “Am I disciplined enough to invest in stocks?” According to two professors who recently studied 30 years of personal-finance performance, you need to be someone with exceptional financial discipline if you want to earn real money in the stock market. Or, you could simply buy a house.

When you buy real estate, the down payment and monthly mortgage payments force you to set aside a significant amount of your earnings on a regular basis. It’s automatic. But if you can’t summon the same discipline to invest that same amount of money in the stock market on an equally regular basis, then stocks are probably going to be a losing proposition, according to the professor’s study.

“We find that if people don’t invest all the money, actually about 90% of the time, you’re better off buying real estate,” says Professor Eli Beracha, co-author of the study.

Other issues that make stock investing risky

Investing guru James Altucher wrote a column in The Wall St. Journal titled, “8 Reasons You Stink at Trading Stocks.” In it, he argues that most non-professionals don’t have the investing savvy required to be successful in the stock market. Here are a few telling excerpts:

“Nine out of 10 people think they are above-average drivers. Nine out of 10 people think they are above-average investors. Both are mathematically impossible.”
“Most people sell at the bottom and buy at the top—the opposite of what you want to do as an investor—because they let emotions get in the way of patience and strategy.”
“It’s really hard to own stocks. It’s not just picking a stock and watching it go up 1,000%. It’s buying it and sometimes watching it go down 80% before it ends up rising 20% above your purchase price. It’s waiting. It’s patience. Psychology is at least 80% of the game. And knowing when to sell? Even harder.”

Age matters

When you’re young, many financial advisors encourage investing in things like individual stocks. With a long career ahead, you have time to wait for any bad investments to turn around before you may really need the money. But once you’re a little older, with a family, and starting to focus on your financial future, that’s when advisers recommend you buy things like real estate—a conservative investment with a long history of stable, predictable earnings.

The type of loan you choose also makes a difference

If you want to both own a home and invest in stocks, consider a 30-year home loan, which will significantly reduce your monthly payments and leave you with extra money for playing the market. (Just remember the tradeoff: You’ll end up paying thousands of dollars more in interest over the life of the loan.)

If you don’t have a burning desire to play the stock market, choose a 15-year home loan. You’ll pay less interest over the life of the loan, you’ll build equity faster, and, obviously, you’ll be mortgage-free 15 years sooner.

The tax advantages of owning real estate

As a homeowner, you’re entitled to a bevy of tax benefits you don’t get as a stock investor. You can deduct your mortgage interest and property taxes from your annual tax return. Plus, depending on your circumstances, you could also get a deduction or credit for any home-office expenses, moving expenses, capital gains, any “points” used to lower your interest rate, and more.

One caveat: investing in real estate takes time

No matter what some of those reality TV programs show, buying a home should not be viewed as a get-rich-quick scheme. But if you think you’re ready to put down roots for as long as seven years, chances are very good that any home you purchase will appreciate significantly during that time (even if the economy runs into some bumps along the way).

The non-financial benefits

Of course, not all of the benefits of owning a home are financial. For most Americans, their home is a source of tremendous pride, comfort, security and freedom. Most of us also use our homes to showcase our personality, through paint colors, furnishings, landscaping, yard signs, holiday decorations and so much more.

Yes, the stock market is on an upswing currently (depending on the week), but if you want an investment with a long-term track record of consistent returns—plus tax breaks and a variety of personal perks—you may want to buy a home instead.

If you have questions about the buying or selling process, or are looking for an experienced agent in your area, connect with us here.