Tuesday, October 30, 2007

Will a poor housing market lead to an equally poor season for Christmas sales?

According to the latest news, including that at Bloomberg.com at there are indications that home prices seem to have dropped to there lowest point of the last six years.

Home values in 20 U.S. metropolitan areas slid 4.4 percent in the 12 months that ended in August, according to the S&P/Case-Shiller home-price index.

Will consumers will put a brake on holiday spending this year (as their confidence is lower as well, according to the latest reports)? The latest news could trigger a recession or sharply increase the risk of one.

On a related note, while doing a report on holiday gifts and retail prices for another publication, I noted that stores seemed overstocked with items in my area (midwest) and prices were generally higher for holiday items than last year but sales weren't exactly brisk (yet). The International Council of Shopping Centers and UBS Securities LLC last week reduced their October chain-store sales forecast as merchants dropped prices to attract buyers.Target Corp. last week lowered its October sales forecast and Wal-Mart Stores Inc., the world's largest retailer, cut prices on 15,000 items for the holidays.

As noted in the Bloomberg report, there are other factors at play when it comes to consumer spending and confidence in both the housing market and the general economy, including rising prices for fuel (ours jumped more than 50% last winter) and a decline in property prices. In Indiana, homeowners are reeling in the wake of a sudden and sharp rise in property taxes but that situation is still developing and being debated.

``Housing is clearly the root of the problem," as noted by Carl Riccadonna, an economist in New York at Deutsche Bank Securities Inc. (Bloomberg report online).

Fed officials and Treasury Secretary Henry Paulson aren't exactly optimistic, believing that the housing slump has further to go. Near-record inventory levels suggest sellers will continue to lower prices, posing a threat to consumer spending because homeowners will have less equity to borrow against.

Fifteen cities showed a year-over-year decline in prices, led by a 10 percent drop in Tampa, Florida, and a 9 percent decline in Detroit. The area showing the biggest gain was Seattle with a 5.7 percent increase.

``The outlook for sales heading into the holiday season looks gloomier than a year ago,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``With the surge in oil prices likely to soon push up gasoline and home-heating oil prices, more consumers are likely to be forced to curb their holiday shopping.''

Saturday, October 20, 2007

How We Redecorated Our Kitchen for Less than $1000

Like so many, I've lusted after granite countertops and stainless-steel appliances but had to face the fact that we'd have to compromise, deeply, to get a temporary kitchen face lift. Our budget? A mere $1,000, an amount that is less than the price of many refrigerators or cooktops or ovens. But even on this relatively small budget our kitchen went from dark to dazzling, light and bright. People said it looked like a brand new kitchen. Best of all, the tips we used could work in nearly any home.


STEP ONE: We looked at a ton of magazines to see what we liked and how much it cost. You can get current issues of magazines online or for free while browsing in the library. You can make copies of pages that appeal to you.
Cost: less than $10.00, thanks to some we purchased and some we got from friends after they'd finished looking at them as well as our public library, a great resource.

STEP TWO: We paid a home stager a mere $50 to suggest paint colors to replace the colors on the outdated wall coverings and cabinets. She even gave us actual paint chips and color names and told us how to rearrange our kitchen furniture, replace lighting and direct attention to the window and view of the woods outside (a major focal point). A home stager, by the way, is someone who generally helps prospective home sellers freshen up tired homes for very little money. We weren't planning to sell but we were on a tight budget so this worked out well.

Cost: $50.00 and worth every dollar.

STEP THREE: If you don't have a focal point in your kitchen, decide on one. Maybe it will be a great window view or simply an arrangement of paintings on the wall. But every room needs a focal point. The good news is that you don't have to spend a fortune to get one. A few inexpensive paintings or prints arranged artfully on a wall across from your kitchen table can be a good start. Or an attractive window treatment that draws attention to your window view.

Cost to decide on focal point: $0 plus the advice of the home stager.

STEP FOUR: Clear off all the shelves and get rid of all the clutter, if only "temporarily". You can't see the actual "bones" of your kitchen

Cost: our time.

STEP FIVE: We replaced our sink with a new sparkling one:

Cost : 190.00

STEP SIX - We stripped the wallpaper and painted the walls and cabinets ourselves:

Cost: less than $100.00 Bought wallpaper on sale, got paint on sale too. Yes, our time is worth money but we donated that to the cause :) But allow time for this. It took an entire weekend, from Friday night to Sunday evening.

STEP SEVEN: Laminate flooring - $300.00

STEP EIGHT: New accessories but only a few, Here is where the home stager came in handy again, suggesting the trends that would help us make the most of our limited budget. She found us trendy candles and new artwork and prints at a fraction of retail.

COST: Less than $50.00. We used what we had, mostly. We discovered that a plant and a bowl of fruit are very attractive as a centerpiece in any room, including the kitchen.

STEP NINE: We changed our habits. NO clutter remains for more than 24 hours (yes, that is hard to do). We keep the table set because it is pretty hard to pile up clutter on a kitchen table that is always set for meals. Plus, it simplifies things at dinner time. If you don't like the idea of having your plates sitting around all day, turn them face down till dinner time. No dust, no dirt to worry about.

Cost: An Attitude Change, not painless, but nearly so.

Final result? Better than we'd ever hoped! Gone were the dark wood cabinets, replaced by bright, glossy white paint. Along with the new flooring, sink and restaging of the room, we felt we had a brand new kitchen. We're still saving for those granite countertops and stainless steel appliances but we're more than satisfied by what we achieved within the limits of our budget. We expected a minor redo and got the look of a new kitchen.

Tuesday, October 16, 2007

Renovating? Live in a Home build before 1978? Protect Yourself against Lead Paint Exposure!

According to a study conducted by Angie's List (http://www.angieslist.com) in cities across the nation, 51 percent of poll respondents who were surveyed nationwide live in a home built prior to 1978.( leadsafety.angieslist.com/index.htm )They also contacted nearly 200 painters, remodelers and home improvement stores to find out if they offer proper advice and/or follow lead-safe work practices in homes where they're working. Roughly one-third gave info that could be harmful to children! That's right - one out of every three.

It is no secret that lead paint has been getting a lot of attention in the news these days, including recent articles about toys imported from China that made it into some major stores or other venues. But studies conducted by the company and others indicate that a significant number of people are not always aware of the continued and very real dangers of lead paint on the actual structure of consumers' homes (around windows, on walls, etc). But how many people realize that their own homes could be sources of lead contamination, no matter how nice the neighborhood?

What you need to know:

1. Determine for sure if you live in a house that was built before 1978 - or used paint or materials that were manufactured before then. Homeowners may know this information but if you rent, don't assume - ask. Also be aware that if you live in a home built before 1960, the odds are high that lead-based paint was used at some point and may still be lurking, perhaps under wallpaper or other coats of paint. Paint chips and flakes, so any lead paint on the walls poses a potential risk.

2. Be aware that those most at risk are younger than seven years of age. The risk of lead poisoning on developing brains is brain damage, permanent loss of IQ, learning disabilities and a possible link to lack of impulse control and violence. The damage to young brains can be permanent if proper treatment isn't given as quickly as possible. So be vigilant, informed and act on the information!.

3. Realize that the symptoms of lead poisoning are not always obvious. A blood test from your local health department or a trusted doctor can assess whether you or your child is at risk or has already been exposed to high levels.

4. Know what lead sources you are most likely to encounter and which are most likely to put you or your family at risk. These include lead dust in your home during renovations or stripping of wallpaper and old paint and lead in bare soil around older homes. Lead can remain in the soil and essentially be invisible. Unfortunately, children playing on floors can get lead dust on their toys, blankets, clothes and hands. The amount of dust considered unsafe for kids is very minute, about the size of a small packet of sweetener sprinkled over an area about one-third the size of a football field www.epa.gov/lead/pubs/leadinfo.htm#facts
The main sources of dust are deteriorated paint, most often found around windows and doors (areas of high usage and frictions) and lead soil tracked in from outdoors. Remodeling activities that disturb paint will create dust that will create a hazard for young children.

6. If you want peace of mind, the only way to know for sure if your house has lead hazards is to have a lead risk assessment performed by a trained and licensed professional, or a clearance examination after work that disturbs lead-based paint has been done. Otherwise, assume old paint contains lead and take precautions accordingly.

7. Never presume or assume that your contractor knows about the dangers of lead-based paint. If you are hiring a contractor to do work that will disturb paint, make sure to ask them what they will do to protect your family from lead dust. If they say it's not a problem, without giving valid reasons or if they are clueless about the ages and dates of homes that could be at risk, play it safe - don't hire them. Ask questions to make sure they know how to work with lead paint safely, and that they will have an independent clearance examination after the work is done to confirm that the house meets federal standards for lead.

8. Considering a DIY job (do it yourself)? Be sure to learn about and use the right techniques. You can get HUD's safety tips free at

9. Finally, don't break the law! If you are selling or renting your home, you must pass on to potential buyers or tenants any information you have about lead in your home.

Monday, October 8, 2007

When Your Home Doesn't Sell: Becoming a Landlord - One Person's Experience

(used by permission of the author Sherry W)
From Would-Be Seller to Landlord: How I Made the Transition
My husband and I recently found ourselves in quite the pickle. After spending six months crammed into our lovely, but small two-bedroom townhome with two growing (and noisy) children, we decided it was time to move. The little house is beautiful, - updated with granite, stone-tile flooring and shiny new fixtures - and our agent was confident that it would sell quickly whenever we were ready to make a move. We did some casual real estate shopping and were delighted to come upon something just perfect for our family this past February. We acted quickly, and within just a few days, secured financing. Just a short thirty days later, we closed on our new home and moved. That part of the process was simple, and we were delighted with how smoothly things had progressed. We stretched our legs in our new home and relished the extra space.

Then, we placed our competitively priced townhome on the market and waited for a bite. We waited, and waited, and then waited some more. Sixty days and one extreme low-ball offer later, we dropped the asking price and waited some more. No dice. Our agent held open houses, advertised in the local papers and made calls to friends, but nothing happened. I conducted a little research on my own, and determined that two bedroom units simply weren't moving in my area. So, we sighed, dropped the price yet again, and waited some more.

Unfortunately, the mortgage crisis hit, and within a month, the market here was flooded with bank-owned properties. I discovered that regular sellers can't hope to compete with bank-owned property sales, so my husband and I sat down one evening recently and weighed our options: Either drop the price to pull even with bank-owned offerings (which would have meant taking a significant loss), or offer the home as a rental property.

For us, the decision was a relatively easy one to make. Here are the reasons we decided to make our foray into the world of being a landlord:

Positive Cashflow
During the six months that our home was on the sales market, we suffered through paying a double mortgage. Although we've been blessed with the financial resources to afford such a predicament, our savings were on the verge of being sapped dry and the stress was becoming more than bothersome. Despite the fact that our tenants don't pay enough in monthly rent to cover our entire note, it's certainly better to have some money coming in than none at all. We get enough to cover our interest and HOA payment each month, and we absorb the principal and property tax portions of the bill. In addition, our tenants pay all of their own utilities, so we were able to stop picking up the tab for water and electric each month as well.

Vacant No More
Although our old home is located in a very good, low-crime neighborhood, we didn't like the idea of it sitting empty. Vacant homes tend to look less presentable than filled spaces, since regular weekly cleanings don't generally take place and cobwebs tend to show up and flourish.

Free Improvements
Perhaps our tenants are unusual, but they've taken it upon themselves to make improvements to the home without asking us for assistance. They've painted and put up new fixtures and shades, and are doing an excellent job of maintaining the yards. When we do attempt to sell again, their unsolicited efforts will go a long way toward helping us achieve a good sale price.

Of course, if you decide to go the rental route, you do have to be careful. Here are some tips that might be helpful.

Ask a pro
A lot of property owners try to save a few bucks by renting out their own homes, but it's not something I would advise. Work with an experienced real estate agent who specializes in rentals, or hire a property management company to handle the details. It'll cost you fifty to a few hundred dollars each month, but it'll also save you a few hundred headaches. Your agent or management company will handle the details for you, from showing the home to potential tenants, to checking references, to running credit reports, to taking care of the legal aspects of your lease. If you don't relish the idea of being awakened at 2 AM to fix a leaky toilet, definitely hire a property manager.

Check those references
If despite my suggestion above you're still planning to go the do-it-yourself route, be sure to check references. You'll want at least two personal references who can vouch for the prospective tenant's character, as well as the contact information for one or two former landlords who can tell you about their cleanliness and treatment of former homes. And of course, check credit, too!

Advertise, Advertise, Advertise
This should go without saying, but advertise! Many renters in my area find homes on Craigslist.org, so take a half an hour and write a good ad for your home, and then post it there.

Price Middle-of-the-Road
Think of the Three Bears: Too hot, too cold, and just right. If the price is too high, potential tenants will feel the burn and pass by your listing without a serious look. If the price is too low, they'll likely wonder what's wrong with the place, and they'll be more likely to notice each and every flaw when they visit. Do some research on similar rentals in your area, and go for a middle-of-the-road monthly figure.

Allow Pets
Many landlords won't allow pets, so people with furry friends have fewer options when it comes to potential homes. If your home is large enough and you're comfortable with it, allow dogs or cats. Be sure to collect a separate pet deposit if you do, though - you'll definitely want to professionally clean the carpets after your tenants move out.

We still hope to sell next year after our tenants' six-month lease expires, but I hope this advice is of use to someone out there.