Housings Impact on the Economy

When economists talk about the housing industry, many don't realize the many other industries impacted by housing's ups and downs.  Here (courtesy of the KCM Blog) is a breakdown on theeconomic impact of the average home sale.

Recently the research team at the National Association of Realtors (NAR) looked at studies done by the Bureau of Economic Analysis, the Census Bureau, Macroeconomic Advisors and the Joint Center for Housing Studies at Harvard. After reviewing the data, they determined the total economic impact of a typical home sale in the United States is an astonishing $56,464.

Here is the breakdown of their report:

Economic Contributions are derived from:

▪                Home construction

▪                Real estate brokerage

▪                Mortgage lending

▪                Title insurance

▪                Rental and Leasing

▪                Home appraisal

▪                Moving truck service

▪                Other related activities

When a House is Sold in the United States:

$14,958 – Income generated from real estate related industries

$5,647 – Additional expenditure on consumer items such as on furniture, appliances, and paint service

$3,509 – Expenditure on remodeling within 2 years of purchase

It generates an economic multiplier impact. There is a greater spending at restaurants, sports games, and charity events. The size of this “multiplier” effect is estimated to be: $11,575

Additional home sales induce additional home production. Typically one new home is constructed for every 8 existing home sales. Therefore, for each existing home sale, 1/8 of new home value is added to the economy which is estimated in the U.S. to be: $20,775

When you add the numbers up it comes to over $56,000!

Expert Advice Does Not Mean Perfect Advice by THE KCM CREW on MAY 16, 2013

Don’t be afraid of those two words-expert advice. Remember:

• An expert doesn’t mean you’re going to give perfect advice.
• An expert means you’re going to give excellent advice.

Here’s the difference:

If you go to a doctor with a serious illness, she can’t tell you how it’s all going to wind up in the end. She can’t know for sure. Therefore, she can’t offer perfect advice.

However, your doctor can only give you excellent advice. She can tell you about your illness and your options, whether it be surgery or medications. She can also explain what she believes to be the best option for you based on your history, symptoms, and overall health. Ultimately, though, you’re going to make the final decision of whether you go through with the treatment plan.

Once you make that decision, your doctor will take you by the hand and walk you down the road to recovery. She will explain to you that there might be adjustments that need to be made to the treatment plan, because no one can know for certain how things will turn out.

She might have to adjust your medications or increase or decrease your treatment schedule. But every step of the way, she’s there with you, helping you get to your ultimate goal. This is called excellent advice. (By the way, does this sound like what we do with our clients?)

Similarly, if you went to an attorney, he can’t tell you how the case is going to end up or how the judge or jury will rule. That would be perfect advice. What an expert attorney can do is explain your options. He might pick one or two he believes to be the best ones to pursue. He will then leave you to make the decision on which option you want to take. Once you decide, he will help put a plan together based on the facts at hand. He will help you get to the best possible resolution of the case. And along the way, he’ll make whatever changes are needed. This is excellent advice. (Again, does it sound similar to how we help our clients?)

Your role as a real estate professional is similar to the role of the doctor and lawyer. You can’t give buyers or sellers perfect advice because you don’t know what’s going to happen—you can’t know the future. However, you can give excellent advice based on the information and situation at hand. You can guide them through the process and help them make the necessary changes along the way. And that’s exactly what your clients want…and deserve!

Today’s post is an excerpt from our newest eGuide, Real Estate’s New Market Reality, which explains how the role of the real estate professional has changed and what you can do to successfully help more buyers and sellers. You can download the entire eGuide at www.NewMarketReality.com. – The KCM Crew

Housing Recovery A Return To 'Good Times'

According to Broderick Perkins writing for Realty Times, the housing recovery comes with an economic boost, more jobs and higher incomes, but it can also help create a higher level of "good times" in the neighborhood. Housing isn't just a cornerstone for the economy it also plays a major role in weaving a tighter-knit social fabric for America.Housing, including shelter itself, household operations, insurance, fuels and utilities, water, sewage and trash services and furnishings, among other expenditures, account for about 40 percent of the Consumer Price Index, an index of consumer expenditures, according to the Bureau of Labor Statistics.   Consumer spending is the fuel that powers the nation's economy and with home buying comes millions of jobs for workers who build the homes and others who keep them standing. Beyond the builders and the contractors, residential real estate is an industry with a virtual A-Z (real estate agents to Zip-Lock bag makers) support system of workers in virtually every walk of life. And it doesn't stop there. Among homeowners, housing also has a very strong social component, something you can't put a price on, according to the California Association of Realtors (CAR). Among other findings, studies reveal: Children of homeowners tend to be better math and reading students. Homeowners are more politically active and vote more. Homeowners are more civic and spend more time volunteering. Homeowners are healthier. They report a higher quality of life, less stress and higher self esteem. Click here to read this article and watch the video on both the economic and social benefits of homeownership and the Housing Recovery

What's behind the curtain?

You’ve made an offer on a house and now it’s time for the home inspection.  You have hired a licensed inspector to carefully inspect the house and find those issues that may be a determinant in whether or not you will move forward with the sale.  You’re there and walk through the property with the inspector.  He/she points out interesting aspects of the property, things you should be aware of and potential problem areas.  His written report, which you receive a few days later, includes all that you saw during the inspection.  The closing date is scheduled.  You arrive at the now vacant house for your final walk through and - oh no!  There are things that the inspector didn’t find!  A big hole in the bedroom carpeting!  Burn holes in the bathroom linoleum!  What to do?  The lawyers agree to an adjustment at the closing and you are truly happy with your new home.  Now - what did we learn from this?  Look behind the curtain!  Lift up the area rugs!  Someone may be living there, but they’re not leaving those curtains.  Maybe it’s hiding a rotten windowsill.  Be nosy and protect yourself.  Even with a home inspector, it’s still caveat emptor - buyer beware!

Utility Lines

I’m sure this is not a situation that is unique to Martha’s Vineyard; it may just happen here more often.  Utility lines.  Who owns them?  You might assume your local utility company NStar or National Grid, and in many cases that will be true.  But, and I know this from personal experience, this may not be the case.  A couple of years ago, the power went out on our street.  Calling NStar revealed that the power coming into our home was provided by NStar but on a line that was privately owned, by us!  A call to a private electrician resulted in a long process (2 days with no running water, power, etc.) of them tracing the line with detectors and then finding the break.  Once the repair was done and we had power on, we had a large(!) bill to contend with - $5500!  It then fell upon us to collect a pro-rata share from our neighbors who are also on this line.  We don’t have a road association and, in the end, most of our neighbors came through with their payment in a timely way.  I contacted NStar to see if they would like to take over the line and the response was - no.  Our line doesn’t feed any areas other than our dead end private road, so no thank you.  The electrician told us to expect more outages as the line, which is now 30 years old, continues to show its age by failing at the deteriorating couplings.  The price to replace the line?  Over $10,000!  What does this have to do with real estate?  Well, if you’re buying a home - ask the question - Are the utility lines that service this property privately owned?  If the answer is yes, then there are more questions to be asked and answered.  How many properties are serviced by this utility line?  How old is the equipment?  Is there a road association that collects money for outages and repairs?  This is one more question to ask an owner when they are offering their property for sale and you are interested in buying it.  Be informed.  

Vacation Home Sales Rise in 2012

Vacation Home Sales Rise in 2012

Secrets of successful home buying and selling.

There are many "secrets" to a successful, stress-reduced and happy real estate deal.  Here are a few that quickly come to mind.  Feel free to share with others.

1.  Put it on the market now!  The election is over, the holidays are now memories and that pent up desire/need in homebuyers in your market is heating up!  Buyers are on-line, reading and making plans to put their buying plans into gear.  Be there in front of them when they're ready, which is now!

2. Prepare your home.  Try to see your home in the eyes of the buyer walking in.  Are they going to buy your home because of the family photos?  No.  Will they notice if the front door latch doesn't work or that tub grout is moldy-looking?  Yes!  They are at the bones of your house and how you've cared for it.  Most people can look beyond "decorator" wall colors (you might consider a coat of paint - it's the cheapest home improvement you can make) and see the bones but how have you cared for your home?  Fix the things you can and have a professional discuss any major items that you should tackle before selling.  Many major improvements do not have a dollar to dollar return on investment, so do those for your own use and enjoyment.  Some improvements do pay back - consider those.  And CLEAN, CLEAN, CLEAN!  That means outside as well.

3. Use a Realtor.  Selling homes is our business, our career.  We have the tools and expertise to get you the best price in the shortest amount of time.  Experience shows that homeowners realize (even after paying a commission) a higher net result from the sale of their home when they used a Realtor.  Additionally, real estate agents work on a contingency basis - they only get paid for their myriad services when they are successful in selling your home.  Think of all the expertise you get and the assistance you get when you hire a professional.

4. Stage and De-clutter.  Rooms look smaller when they are filled to the brim with furniture and decorative items.  Keep it simple is a worthwhile axiom to remember when putting your home on the market for sale.  Piles of books and magazines, too many appliances and kitchen gadgets, refrigerator magnet collections, etc. are all distracting to the eye of the buyer.  If you don't have a good idea about how to "stage" your home, ask your Realtor, a professional stager, or buyer a couple of home decorating magazines and cull ideas from there.  The house needs to look like it could be anyone's home.  Granted, you still need to live there while it's on the market, but once you've done the initial work of staging and de-cluttering, it will be easy enough to maintain.

5. Price is Everything.  You've heard the axiom in real estate - "location, location, location".  Not true,  Location is just one aspect of your property.  The price, however, says it all.  It reflects the location, condition, and the current economic climate.  If it's priced top high, it won't sell.  When pricing your home, consider the true costs involved with continuing to carry those costs over time.  If it costs $4000 per month for your mortgage, heating, cooling, etc. and you've priced your home $50,000 over market, it will take how many months to reach that difference?  Something serious to consider.

6. Know your town.   When buying you need to know your new town's amenities and what you can expect as a return on your investment.  Your real estate professional is one good source, but also check out the local town hall, their website and other, unbiased websites, such as www.city-data.com.  This site offers info on everything from population, median income level, school rankings, etc.  Remember, a return on your investment in real estate is great, but don't forget the use and enjoyment that owning gives to you and your family.  It's one investment that you can sleep in!

7. Use Your Real Estate Pro.  Some of the terms used in real estate can be a bit confusing, so here is the story on representation.  Listing agents represent the sellers of the properties you look at.  Buyer agents represent you, the buyer.  They are responsible to treat your personal information as confidential, to ferret out the information on a property that would persuade you (one way or the other) to purchase, to provide you with comparable sales information on the property you are interested in and more.  Some listing agents can also represent buyers on the same property.  They then must limit the degree of consultation they can offer both you and the seller.  For that reason, many agents stick to one "side" or the other.  Massachusetts law requires that a real estate agent disclose this relationship at your first face-to-face meeting.

8. Surf the Web.  The web has surpassed signs as the number one tool used by buyers to find property.  In some markets (like Martha's Vineyard) for sale signs are not permitted in all areas.  Some neighborhood associations also prohibit them.  Statistics show that fully 93% of all buyers start their property search on the internet.  Most MLS (multiple listing services) offer agents listing syndication, meaning that their listings are posted on various websites that offer real estate listings, such as Zillow, Trulia or Realtor.com.  Most agencies also have their own website that highlights not only their office listings but the listings within their market area.

9. Prioritize your Needs and Shelve the emotion.  Have you watched those real estate shows that feature first time homebuyers and their long list of "must haves"?  They all seem to get a reality check by the end of the show.  How?  By deciding what are truly "must haves" and what are "it would be nice" items.  There are many aspects to purchasing property in addition to the price.  Neighborhood, schools, condition, size, style, etc.  It goes on and on.  If you put too many parameters on your wants/needs, you'll have fewer options to choose from.  Secret: Most agents believe that "buyers are liars".  What does that mean?  You say what you want/need and then buy something totally different!  That would be a reason why your agent shows you properties that don't match your needs/wants.  So shelve the emotion.  That euphoric feeling won't stay around for long if you buy with rose colored glasses on.

10. Breathe!  Your real estate professional is here to make this as pleasant and informative a process as possible.  So, get in the market!