Real Estate

2020-winter-millenials-vs-baby-boomers

Millennials vs. Baby Boomers: The Great Housing Market Debate

An ever-evolving housing market is something everyone in the real estate industry can expect and agree on. Lately, however, there’s a debate surrounding the current buyer-seller stalemate, for lack of a better phrase, and who, exactly, is to blame. Is it those pesky millennials? Or, perhaps, the baby boomers? The National Association of REALTORS® defines […]

An ever-evolving housing market is something everyone in the real estate industry can expect and agree on. Lately, however, there’s a debate surrounding the current buyer-seller stalemate, for lack of a better phrase, and who, exactly, is to blame. Is it those pesky millennials? Or, perhaps, the baby boomers?

The National Association of REALTORS® defines millennials and baby boomers in their 2019 Home Buyers and Sellers Generational Trends Report as follows:

  • Older millennials were born between 1980
    and 1989
  • Younger millennials were born between
    1990 and 1998
  • Older baby boomers were born between
    1946 and 1954
  • Younger baby boomers were born between
    1955 and 1964

Each side agrees on one thing: The housing market is changing. The debate centers around which generation is to blame for the negative experience many are having with the buying and/or selling process. On one side, millennials apparently aren’t buying homes. What gives? On the other hand, baby boomers apparently don’t want to sell their homes. Huh?

Let’s dive into the details and act as a referee.

Share of Buyers And Sellers By Generation

2020-winter-chart-shares-of-buyers-sellers-by-generation

The chart above shows that millennials are buying, and baby boomers are selling. The issue, however, is this: Neither side is doing enough buying or selling. So, what’s the deal? Let’s start with millennials.

According to Business Insider, housing prices are one of the reasons why millennials may not be buying houses as their predecessors did at their age: “Housing prices have soared by nearly 40 percent in the past three-plus decades, far outpacing wage increases and making homeownership much more of a challenge for today’s buyers… While traditionally renting an apartment or house while saving up to buy your own residence was once a logical approach, since the 1960s, average rental rates have increased by 46 percent, meaning just affording a rental is harder than ever, let alone saving up to buy.”

Rising prices and low inventory are being seen right here in the Lehigh Valley. Local housing prices hit an all-time record this past July. The Median Sales Price reached $222,000, beating out June’s record of $216,500.

Factor in the student loans that are hitting millennial’s wallets with gusto, and it’s no wonder they’re struggling to achieve the dream of homeownership. According to the Home Buyers and Sellers Generational Trends Report, 47 percent of younger millennials have student debt at a median of $21,000, while 42 percent of older millennials have student debt at a median of $30,000.

Money (or lack thereof) is one of the main inhibitors that keep millennials from buying and owning homes. That’s pretty obvious. But there are other things to consider, like the general habits and trends of the millennial generation.

Buyers Who Have Student Loan Dept

2020-winter-chart-age-of-homebuyer

As each decade comes and goes, so do trends and cultural movements. The millennials who can afford to buy a home, according to another Business Insider article, don’t want to buy the big houses that baby boomers (the ones who are selling) are offering up.

“Most millennial homebuyers are looking for smaller, more manageable properties than the mini-mansions so popular a generation before,” Business Insider said. “And they like sleek, simple interiors. The result is a steep drop in the value of many of the homes baby boomers are now hoping to sell as they downsize after emptying the nest or retiring.”

Millennials are also deviating from the traditional timeline in which previous generations sought to get married, buy a house, have children, and so on and so forth. The Washington Post described it as “postponing key traditional inflection points that stimulate homebuying.” Thus, millennial home buying statistics are down compared to previous generations that followed a more “traditional” timeline.

As for baby boomers, the main argument going around, according to news outlets like CBS News, is they’re refusing to sell their homes, whereas previous generations often downsized once they reached a certain age.

“Boomers are healthier and working longer than previous generations, which means they aren’t yet ready to sell their homes and strike out for retirement developments,” CBS News reported. “And some may not want to sell their homes because they then must jump into the homebuyers’ market, which is suffering from low inventory and high prices.”

Some baby boomers are even deferring retirement, according to USA Today. “Many boomers are staying in their longtime homes and communities because they’re deferring retirement,” the news outlet said. “About 20 percent of Americans 65 and older are working or looking for jobs, up from 12.1 percent in 1996, Labor Department figures show.”

If baby boomers are physically able to continue making money, then why not? It makes sense for baby boomers who still have kids at home who can’t afford to move out due to today’s high rent and home prices, as well as mounting student loan debt. According to CBS News, “More than one-third of adult children between the age of 18 to 34 are living with their parents. That may make it tougher for the parents to decide to sell, especially in expensive markets where their children might have difficulty finding affordable homes.”

USA Today lists these other possible reasons why baby boomers aren’t selling:

  • Plans to downsize in the future (like when they’re 80 years old).
  • Housing supply shortage keeping them from finding smaller homes with smaller prices.
  • Mortgages are paid off, so why sell?
  • Focused on upgrading their homes, not downsizing them.

With each side of the debate having its own reasons for not buying and not selling, how can anyone choose a side to blame and pick on? Each side is deviating from previous buying and selling trends and, therefore, creating a new housing market.

So, what can you do if you’re a millennial or a baby boomer looking to enter the housing market (we’re also looking at you, Generation X, Generation Z, and everyone before, after, and in between)? You can find yourself a REALTOR®. From honest representation and clear communication to cooperative involvement with other REALTORS®, our members are educated, equipped, and ready to serve you.

When you’re looking for a trustworthy, knowledgeable guide through the property-buying or selling process, no one else can offer the service of a certified REALTOR®. To find your REALTOR®, visit www.GreaterLehighValleyRealtors.com, and utilize the “Find a REALTOR®” search in the middle of the page.

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The Forecast

Just over a year ago, the month of November brought our area a snowstorm, a weather pattern called a nor’easter.  The forecasters told all of us it was coming.  The television was alive with color-coded spinning swirls, and the weather forecasters were vivaciously sending the message… forces outside of our control are on the way; […]

Just over a year ago, the month of November brought our area a snowstorm, a weather pattern called a nor’easter.  The forecasters told all of us it was coming.  The television was alive with color-coded spinning swirls, and the weather forecasters were vivaciously sending the message… forces outside of our control are on the way; be ready.

The storm came. 

Inches of snow, piles of snow landed quickly.  In a single moment, people and their cars were stuck in place. Some were stuck for under an hour, and some were stuck for hours and hours.  Some handled the situation with grace and patience, while others dealt with the situation with contentment.  Some went out of their way to help their fellow man while others managed to help only themselves.  Some, given the circumstances, behaved with common sense, while others clearly did not.

Whether spectator or participant, everyone reached a meeting of the minds on one single solitary notion…. where were our services?

Why wasn’t the road prepped in advance with that top-secret mixture that eats away the bottom of our cars?  Why weren’t the plows circulating to scrape up the very first flake that tried to accumulate on the surface of our causeways?  Why weren’t we given the clearest straightest possible path to our desired destination?

It’s not the early 1900’s it’s the early 2000’s; we have the best-looking color-coded spinning swirls ever imagined, and yet everyone was stuck.

Have you thought about the fact that each and every one of those fighting the nor’easter spectate or participate within our local real estate market in very much the same way?  During a real estate transaction, we see examples of grace, patience, contentment, help, and hopefully common sense; moreover, the same fundamental expectation for services is in place.

The current market has fewer homes for sale than buyers who are looking to buy them.  Multiple offers are commonplace. Supply is lower than demand driving the value of homes higher through competition.

Housing is strong.

In the year 2020, information, data, and reports about the real estate market will be found everywhere and in bulk. Advertising apps wear service as their mask and rest assured the industry will continue to make things appear like the path is easily traveled, with the touch of a finger.

More colored circles than ever.

Still, negotiations need to take place, the inspections have to be scheduled, title insurance needs to be cleared, and financing must be handed over timely, all on a silver platter and at the right temperature.

That means people need services. Who preps the path; before the buyer or seller finds themselves in the thick of it?  Who plows the way while the struggle takes place?  So, they don’t get stuck, so they get home safely; we do.

For almost 40 years, Mortgage America has provided Local Loans for Local Homes.

Conventional, FHA, VA, USDA, swing, bridge, construction, first-time buyer with assistance programs that reduce the burden of seller assist, no down payment options, and jumbo loans with attractive rates and terms.  We directly underwrite and service your loan.  The majority of our approvals are issued without the need for the buyer to sell their home before they buy.

At Mortgage America, time is taken to ensure you can focus on negotiations without fear of the unknown.  Many of our employees have been with us for over 30 years.  Our average closing occurs within 35 days, we often close in just eight days, and we wire the money to the title company early.

Pennsylvania Housing Finance Agency ranks us #1 in the State Pennsylvania year after year after year.

What apps don’t tell you is that a home purchase is negotiated 3 times.  One is at the start, twice during inspections and third at the final walkthrough prior to closing.  All the while, it’s the Real Estate Broker/Agent who will oversee every single aspect, speaking with the 15- 20 different people who work independently of one another; to consummate the transaction.  The Real Estate Broker/Agent keeps all of that functioning properly (they prep and plow daily) so that you can’t get stuck.

Seller’s, it’s a very good time to sell.  Marketing times are measured in days, not weeks.  Call a real estate agent today. They know the local market…they’ve seen the inside of the homes you are considering.  They compare them to others by actually walking through them… their experience provides the leadership, guidance, and a multitude of talents the colored circles can only aspire to achieve.

A new year is upon us.  Make the resolution to call a Real Estate Broker and Mortgage America.  We won’t just give you the forecast; we’ll provide the actual services that ensure you weather any storm.

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Calling All Homebuilders: The Lehigh Valley Housing Market Needs More Supply

The Greater Lehigh Valley REALTORS® (GLVR) reported August data showed another impressive summer month, but also showed how new construction could greatly improve the real estate market – both locally and nationally. “As the summer draws to a close, multiple opposing factors and trends are competing to define the direction of the real estate market,” […]

The Greater Lehigh Valley REALTORS® (GLVR) reported August data showed another impressive summer month, but also showed how new construction could greatly improve the real estate market – both locally and nationally.

“As the summer draws to a close, multiple opposing factors and trends are competing to define the direction of the real estate market,” said GLVR CEO Justin Porembo. “Despite the Federal Reserve lowering its benchmark interest rate, resulting in 30-year mortgage rates declining to 2016 levels, the lack of affordable inventory and the persistence of historically high housing prices have led to lower-than-expected existing home sales.”

Low inventory numbers impact the nation’s overall economy, according to Lawrence Yun, chief economist for the National Association of REALTORS®. “A boost to home building would greatly improve economic growth,” he said. “More free-market prices on construction materials without government interference about where homebuilders have to get their supply will also help produce more and grow the economy. The housing industry cannot grow without more supply.”

That said, as many homeowners refinanced their homes to take advantage of declining interest rates, consumer confidence in housing was reported to be at historically high levels.

“Our real estate professionals continue to monitor the market for signs of imbalances,” said GLVR President Carl Billera. “Although the inventory of affordable homes at this point remains largely stable, it is stable at historically low levels, which may continue to push prices higher and affect potential buyers.”

Notable market stats for August

New Listings decreased 9.8 percent to 1,014. Pending Sales were up 14.1 percent to 856. Inventory levels shrank 22.4 percent to 1,737 units, leading to a Months Supply of Inventory that dropped 25.0 percent to 2.4 months.

Prices continued to gain traction. The Median Sales Price increased 4.8 percent to $220,000, coming in just below July’s record-setting Median Sales Price of $222,000. Days on Market was up 3.2 percent – just a one day difference – to 32 days.

In Carbon County, the Median Sales Price dipped to $130,500. Closed Sales and Pending Sales climbed to 74 and 80, respectively. There was a decrease in Inventory, which came in at 334 units.

More on the Lehigh Valley’s Market Trends

As the premier source of real estate information in the Lehigh Valley, the Greater Lehigh Valley REALTORS® is pleased to provide in-depth data on the housing market. The research is collected from its Multiple Listing Service (MLS) that compiles data from over 2,500 REALTOR® members. Visit www.GreaterLehighValleyRealtors.com and visit the “Market Trends” page to learn more.

For the most current and accurate data, contact a REALTOR®.

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fall-2019-kre-development

Lehigh Valley: HOTTER THAN EVER – The Lehigh Valley is Booming!

With a nationwide trend for living in neighborhoods where you can “walk to” shopping, eateries, and transit, everything old is new again. From baby boomers who grew up on the outskirts of Philadelphia who are moving back to revitalized urban-suburban cities like Bethlehem, Allentown, Easton, to the money-conscious millennials who find added lifestyle value and […]

With a nationwide trend for living in neighborhoods where you can “walk to” shopping, eateries, and transit, everything old is new again. From baby boomers who grew up on the outskirts of Philadelphia who are moving back to revitalized urban-suburban cities like Bethlehem, Allentown, Easton, to the money-conscious millennials who find added lifestyle value and benefits cities have to offer; developers are jumping on board to meet the challenge.

We also live in a world where e-commerce and consumer demand for overnight shipping has facilitated the need for storing goods and warehouses are popping up throughout the Lehigh Valley. Many properties currently used for farming were zoned for Industrial Uses decades ago, increasing their value in a competitive market. Since these vast parcels can accommodate the new mega warehouses that have grown from thousands of square feet—to millions, e-commerce, manufacturing and distribution giants including Amazon, Walmart, UPS, Fed Ex, and QVC/HSN, have already taken a piece of the pie in the Valley. This has also created jobs, and since people like to live near their workplace, it has created a demand for housing, single-family as well as apartments, in and out of the cities.

Since the Lehigh Valley offers close proximity to a large network of major roadways and interstates, it benefits both industry and residential communities, not to mention the need for retail and service space, medical facilities, school expansion, transit, and other community amenities.

To get a better comprehension of the project types being driven in response to economic development and lack of residential inventory, here are a few examples of projects Maser Consulting is engineering:

 

SunCup, City of Bethlehem
JVI, LLC

This manufacturing facility is located on Easton Road in the City of Bethlehem and includes the initial construction of a 178,579 sf manufacturing building on a 13.65-acre site. This project is located on a Brownfield that formerly was used by Bethlehem Steel and Mineral Fiber Specialties.  SunCup employs 53 employees for each shift and produces beverages for Institutional users.  Deliveries to this site utilize tractor-trailer deliveries from a PennDOT Highway and by train via a rail spur extension from the adjacent Lehigh Valley Rail Management line.

 

Lehigh Hills Apartments
The KRE Group

To meet the need for upscale residential apartments in the Lehigh Valley, The KRE Group is proposing to add to their existing portfolio of apartment developments with the upcoming construction of the Lehigh Hills project in Upper Macungie Township.  The KRE Group has developed similar projects at Madison Farms in Bethlehem Township and Spring View project in South Whitehall and Upper Macungie Townships. The 50+ acre site, currently being used for agriculture, is slated to contain a total of eight buildings (7 apartment buildings and a clubhouse) with 273 apartment dwelling units with typical appurtenant site improvements.  The proposed recreation amenities include a clubhouse, fire pit, tot lot, community gardens, dog run, pool, and open space areas.  The site was developed utilizing a conservation design approach and preserves 30 acres of woodlands, wetlands, and steep slope areas.

Conclusion

Different factors historically push urban sprawl and demographics. In today’s world, it’s technology, automation, and demand. According to the Lehigh Valley Economic Development Corporation (LVDEC), the Lehigh Valley region “…is one of the fastest-growing industrial markets in the country.” It is geographically positioned in the right place at the right time to reap the benefits that growth will continue to bring.

 

**************************

 

Bio:     C. Richard Roseberry, PE, AICP
Principal/Geographic Discipline Leader, Civil/Site
Maser Consulting P.A. 

Mr. Roseberry has over 30 years of extensive experience in Municipal and Private Development engineering services. His diversified expertise in civil engineering includes roadway and utility design; site layout; permitting; sanitary sewer collection systems and rehabilitation; stormwater management; zoning and land use planning.

Mr. Roseberry is a certified instructor for the Pennsylvania Municipal Planning Education Institute, a Certified Public Works Manager, Licensed Wastewater Collection System Operator, LEED Green Associate, and is a licensed professional engineer in New Jersey, Pennsylvania, Delaware, West Virginia, Massachusetts, and Connecticut.

 

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fall-2019-sold

Recession Proof Real Estate In a Year of Major Volatility is Anything Recession-proof?

Real estate investing CAN be recession-proof, believe it or not.  When choosing the right property, you need to take every detail into account.  Ask yourself these questions first… Why are you buying this? Do I expect passive income, retirement income, flip income, first home, second home, and at any point can the property be rented?  […]

Real estate investing CAN be recession-proof, believe it or not.  When choosing the right property, you need to take every detail into account.  Ask yourself these questions first… Why are you buying this? Do I expect passive income, retirement income, flip income, first home, second home, and at any point can the property be rented?  If the property has the ability to be rented easily at an affordable monthly rate and you are in the positive after all mortgages, insurance and taxes are paid, then you may pass GO.  (I mention this because situations change and there could be a time where you are unable to sell it, but the property would do fantastic as a rental)  Does the property need repairs and how much in repairs?  Have the major systems been replaced recently, such as the roof, furnace, and windows?  If the amount of repairs are minimal and all you need are some carpet, paint, and cosmetics, then this paves a positive path for you regardless of the reason you are purchasing.

What about the purchase price? Of course, that is the most important piece to all of this! Are you buying in the height of the market and paying a high premium, or are you buying on a downswing of the market?  To be honest what it really means is that when you buy real estate in a seller’s market and are paying a higher price than in a down market, you need to be mindful of why you are purchasing it and when you plan to sell the property.  If you plan on holding this property for some time and are going to rent it, remember your mortgage balance will be paid down through the rent you charge.  If you are planning to live in the home and sell in 5 or 10 years, you will need to sell it in a market identical to when you purchased it, if you bought it at a premium price, this is why timing is everything.  Keep in mind there are opportunities in every market, you just need to find them!  I have heard this saying over the years, and it does resonate with anything you invest in…. Buy Low, Sell High or Buy High, Sell High, simple concept right?

How is real estate recession-proof?

You need to be aware of your financial position with any purchase in real estate and always prepare for a market swing, if you do this you CAN create a recession-proof real estate. Yes, there will always be a fluctuation in the value, but if the property can be rented, you are still in the positive.  As you rent the property over several years and your mortgage balance is paid down, you will also have equity in the property.  If you purchased the property to live in or as a rental and you updated the property with your own money or the money you made as profit that will help gain equity in the property when you sell it at a later date.  If you purchase the property in a dip in the market and the value doubles when you sell in the right market, you again are in the positive.  It is all about how you purchase the property, that you make an educated decision and have a professional alongside you to guide you through the process.   Even in an upswing, you can make money in real estate.  Full disclosure you can make mistakes and lose money in a down market, which should not happen.  I will be honest and say it is not for everyone, and HGTV makes it look super easy!

At the end of the day always make decisions with your eyes wide open, educate yourself, choose your position wisely, and await the positive outcome!

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Lehigh Valley’s Economic Renaissance Continues at Remarkable Pace

As Network magazine celebrates its fourth anniversary, I couldn’t help but reflect on how much the Lehigh Valley economy has grown and changed, even in just four short years. Those of us who live and work here in the Lehigh Valley are already well aware that the region has experienced a major growth spurt in […]

As Network magazine celebrates its fourth anniversary, I couldn’t help but reflect on how much the Lehigh Valley economy has grown and changed, even in just four short years.

Those of us who live and work here in the Lehigh Valley are already well aware that the region has experienced a major growth spurt in recent years. In fact, this year we were ranked one of the top five fastest-growing regions of our population size in the entire United States, and the single fastest-growing region of our size in the Northeast for the third straight year.

That’s according to Site Selection magazine, which ranks states and metropolitan regions based solely on the number of development projects, amount of economic investment, and job creation during the previous year.

There were 25 major projects that met Site Selection’s criteria last year. Only the much larger Northeast metros of New York City, Pittsburgh, Philadelphia, and Boston had a larger number, and Boston only narrowly edged us out with just six more projects.

Lehigh and Northampton are two of only 20 growing counties of 67 in Pennsylvania. In the last five years, the population of 18- to 34-year-olds has grown by more than 5%. That age group now comprises 42% of the workforce in our two counties.

We are outpacing Pennsylvania in that demographic. Bethlehem’s millennial generation population is 31.1%, Easton’s is 30.5%, and Allentown’s is 28.2%. That means all of our cities have much greater 18- to 34-year-old populations than Pennsylvania’s population of 22.4%.

If you want another indication of how much the Lehigh Valley has grown in recent years, just take a look at how different today’s regional economy looks compared to only four years ago, when Network magazine released its first issue.

The Lehigh Valley’s gross domestic output (GDP), a measurement of a region’s economic output, is currently at $40.1 billion, a record high number in our region’s history. That’s higher than the entire states of Vermont ($27.4 billion) and Wyoming ($34 billion).

It’s also a roughly 25% jump from four years ago when the regional economy was at $32.1 billion. It has grown each year since then.

Much of our economic growth has been driven by our thriving manufacturing sector, which currently makes up $7.4 billion – or 18.4% – of the Lehigh Valley’s overall $40.1 billion GDP. Four years ago, the manufacturing sector had a regional GDP of $5.6 billion, which made up 17.4% of the overall regional economy at the time.

The Lehigh Valley’s population today is 672,907, compared to 650,507 four years ago, and the population between ages 18 and 34 have risen from 139,501 to 144,522 in that time. We have 326,832 jobs in the regional economy today, compared to 304,699 four years ago, and the number of manufacturing jobs in the Lehigh Valley has risen from 30,599 to 33,725 in that time.

Our unemployment rate today is about 3.9%, compared to 5.5% four years ago. The median household income of the Lehigh Valley has increased from $57,288 to $62,507 over four years, and our industrial market has grown from a total inventory of 103 million square feet to 121.7 million square feet in that same time period.

By nearly every measure, the economic renaissance of the Lehigh Valley and its cities continues at a remarkable pace. What’s happening here is unique. Most importantly, ours is not a story of one sector, one industry one city or one county. It’s a story of balance and diversity.

I look forward to seeing what the next four years bring, and beyond.

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summer-2019-navigating-sellers-market

Navigating and Negotiating In a Seller’s Market

Buying in a seller’s real estate market can be daunting. With the possibility of high competition for properties, it can be difficult to determine what might put your offer ahead of others. Below are tips on how to negotiate should you be looking to buy a home in a seller’s market. Sellers have the upper […]

Buying in a seller’s real estate market can be daunting. With the possibility of high competition for properties, it can be difficult to determine what might put your offer ahead of others. Below are tips on how to negotiate should you be looking to buy a home in a seller’s market.

Sellers have the upper hand when it comes to selling in a seller’s market. Buyers can’t be too choosy, especially when the competition is high. If you’ve found a house and there are multiple offers, don’t make demands that will make a seller turn down your offer. If a seller has made it clear that the appliances are not staying, don’t demand them. If there are cosmetic things you don’t like, don’t make the sale contingent upon those items being fixed. A Realtor will be able to offer advice on ways to make your offer more attractive to a seller.

Prices can get crazy in a seller’s market as well, but do not get drawn into an unrealistic price. Remember, even when home inventory is limited, other homes are or will become available. While there are several online programs to instantly provide a ‘Market Price,’ these draw from general information and can be wildly inaccurate. Make sure your Realtor does a market analysis for each home prior to submitting an offer.   There may be a sensible reason to raise your offering price, as well as a good reason to back off. Your agent can factor in expected changes to the area as well as which homes in the area are comparable and which are not.

When it comes to buying or selling a house, finances are a huge part of both transactions. Whether you’re looking to sell or looking to buy, knowing your current financial situation is vital to your next steps.  When it comes to buying a property, getting pre-approval for a mortgage is a must, and it’s an absolute must in a seller’s market. You want to be able to negotiate and close quickly. Having a pre-approval letter from a reputable mortgage lender when making the offer shows you’re serious and ready to make a deal. The letter should indicate the lender has already received and approved your credit history and verification of income. It should have only limited conditions, such as ‘continued level of income of buyer’ and ‘satisfactory appraisal of property.  Money talks when it comes to real estate. If you’re serious about a property, larger earnest money shows the seller you’re serious and already have money on hand. It makes your offer more appealing!

If you currently own a home, one of the first steps you should complete is researching the equity in your current home. You’ll want to know how much your home will sell for in your real estate market. Don’t be afraid to have an inspection done to understand what repairs or work may need to be done on your house as this will help you understand how much you may need to deduct from the possible sale price or any concessions you may need to make for a future buyer.  If you have a mortgage loan, you will absolutely want to know how much equity you have in your home. The equity that has built up could be enough for a down payment on another home. It’s important to remember, though, that any equity is only accessible after closing.

Finding a home when inventory is low can be a difficult task. If you’re on the hunt for a home and live in a city with a competitive real estate market, make the challenge a little less difficult by being prepared!

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2019-middle-neighborhood

Middle Neighborhoods

The “middle neighborhood” is found in most legacy cities –defined by the Legacy Cities Partnership as those “located in the Great Lakes and Northeast region, with over 50,000 residents that have lost 20 percent or more of their population since the mid-century.”  There are 48 of these cities across the United States, including like Detroit, […]

The “middle neighborhood” is found in most legacy cities –defined by the Legacy Cities Partnership as those “located in the Great Lakes and Northeast region, with over 50,000 residents that have lost 20 percent or more of their population since the mid-century.”  There are 48 of these cities across the United States, including like Detroit, Baltimore and the even the cities of the Lehigh Valley.  Each of these cities has a “middle neighborhood,” characterized by decent, but older housing, low crime rates, and that historically housed the working and middle-class residents that contributed to the fabric of the larger city.  They are typically composed of single-family residences with an occasional small shop on a corner and are likely what comes to mind when we think of the small city, urban living in the middle of the last century.  There is nothing particularly distinctive about these areas. They are neither the most distressed in a city nor the most affluent, hence, their name.  Upon closer inspection, these neighborhoods have some great assets: many are walkable to shopping areas, have parks and green space and are near good community schools.  All of these elements harken back to a time where cars were less prevalent, walking distance to amenities was key, and people valued the neighborliness and familiarity of their community.

Despite their lack of distinct identity, these neighborhoods remain critical to a city’s success and overall stability. These properties have provided a relatively stable tax base for city operations, for despite overall population losses in legacy cities, middle neighborhood populations have remained fairly flat.  Because of their important economic contribution to their city, these neighborhoods are becoming a focus of urban planners as cities are observing their historically stable tax base becoming a bit less reliable.  Perhaps there has been an uptick in foreclosures and sheriff sales in the area. Maybe more children are qualifying for free or reduced lunch at the area school. A drive down the streets may reveal a number of homes that need repair.  There may even be an abandoned house on the once bustling block.

These areas are frequently surrounded by more distressed neighborhoods which puts residents on alert for any signs of bleed-over onto their streets. Many middle neighborhood homeowners are still financially able to make a choice as to where they live, unlike residents of truly distressed areas of cities, and many decide to leave as indicators of further neighborhood decline appear. Longtime residents may be observing a shift away from a middle-income neighborhood to a moderate income one, and any perceived negativity can result in a panic for homeowners who may decide it’s time to sell their home before conditions worsen. The more properties there are for sale, the lower the prices are pushed, artificially deflating the value of these homes.  Older homeowners are unlikely to have disposable incomes to invest in older homes, many of which need substantial upgrades and maintenance, making them unappealing to potential homebuyers.

People with less disposable income for upkeep and maintenance purchase these now-affordable homes, defer the much-needed maintenance and continue the cycle of decline. Homeownership rates in these areas are decreasing disproportionately to national and regional averages, while the rate of rental properties is increasing.  Moreover, property values in these neighborhoods are fairly low to average in comparison to other areas in the legacy cities where they are located, but costs to rent these very same properties are quite high, making the homes very attractive for investors.  Tenants are not likely to heavily invest in homes they do not own, and unfortunately, the vast amount of investors are not going to infuse the amount of capital improvements needed into this older housing stock to revitalize a neighborhood.  Municipal leaders are now targeting these more transient, destabilized areas for revitalization.

Middle-income neighborhoods need to market themselves to who they were originally built for in order to survive: working-class residents and middle class.  Unlike 50 years ago, they cannot be marketed only to families with children.  Empty nesters looking to downsize, first-time homebuyers who are looking to establish roots in a true community, potential residents attracted to the unique geography and offerings of the area are all potential targets for any middle neighborhood revitalization.   Providing a way of communicating the good things going on in these areas is critical to restoring confidence in the neighborhood and attracting long term homeowners and quality investors. Municipalities, neighborhood associations, and realtors need to tout the benefits of sustainable homeownership for families – less school transiency, better educational attainment and stronger social ties to their communities.  Even those communities who have realized that these neighborhoods are no longer attractive to homeowners must implement policies that promote stable, responsible landlords purchasing properties and put investors on notice as to acceptable property standards.  Providing quality municipal services to property owners, fostering a sense of community and allowing residents to participate in shaping the future of these neighborhoods will all allow the middle neighborhood to again be a sturdy, stable base of a postindustrial city.

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2019-hey-mom-dad

“Hey, Mom and Dad, can I borrow $100,000+ today?”

Role reversal in families often happens when we aren’t ready for it.  Mom & Dad can’t live on their own and take care of their home anymore, and it’s the responsibility of the children to figure out where the best place is and how they are going to pay for it. It’s not easy like […]

Role reversal in families often happens when we aren’t ready for it.  Mom & Dad can’t live on their own and take care of their home anymore, and it’s the responsibility of the children to figure out where the best place is and how they are going to pay for it. It’s not easy like when you were young and asked your parents to borrow money. In most cases, it is a substantial amount of money. Depending on the health or financial situation, will determine if the children are able to accommodate moving mom or dad in with them or if an assisted living/nursing facility is the best route.

No matter what the answer is, the biggest question is how to pay for either of these choices. 1. Do you make renovations to your existing home? 2. Do you sell your home and look for a new home with an in-law suite? 3. Do you find an appropriate facility?  No matter what you must sell your parents’ house.

Option #1 Making renovations to your existing home.  If you live in a community, with an HOA or not, you need to be sure the proper channels are taken to know if this is a viable option. What are those channels?  Contacting the HOA, Community, Township or City you live in is the first step.  Knowing if you have enough land to expand.  If you do, then finding the right contractor who will do the job up to the Code of the Township/City and applying for the proper permits is the next step. Then how do you pay for this?  Do you need to re-mortgage your home? Will your parents give you some of the money from the sale of their home to finance this? This is where your Realtor can be a big resource for you and help guide you with how not to over-improve your home for future sale, sharing a few names of contacts that they’ve done work with in the past. Making sure they are licensed and insured for your protection.

Option #2 Selling your home to find one that already has an existing in-law suite or extended family option.  You’ve done your homework to realize your current home cannot accommodate substantial renovations due to the Community or Township rules and regs so now what?  Let’s start looking for a home that already has what we need.  In today’s market, this is not an easy task as right now inventory is low and finding the right fit can be time-consuming. Time which is something you don’t have. Selling and buying can take several months to accomplish in any market.  Let’s not forget we still have to sell Mom & Dad’s house.

Option #3 Putting your parents into a Senior Living Facility. This process is usually very stressful, painful and emotional all at the same time.  Finding and knowing the right facility, being able to afford the care given at the facility, and your parents being accepting of this option. One of the biggest questions you should have when shopping these facilities is what if I run out of money? How much money do my parents have to live there before their home sells which is going to be the biggest asset people have to pay for this type of care.  Some facilities will take all the assets you have and once it’s gone so are you.  Now what?  Since option 1 & 2 didn’t work out now, another option is moving Mom or Dad to a state-funded facility. The process of enrolling is tedious, and the State wants nothing short of your first born to be sure there isn’t any hidden money they can tap into.  The state’s research process of your finances can go back as many as 5+ years.

In short, there is much to consider as we age, and the bigger question is how do I know what is best for my Mom & Dad?  Every family and circumstance are different for everyone, so there are no set rules.  That’s where hiring the right real estate agent is going to be one of the best resources to help you through this process.

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2019-six-things

Six “Things” That are (or Should be) in Every Lease

Here are six “things” that I think must be in every commercial real estate lease. You may have a different list. Also, state law may dictate changes or additions. The names of the landlord and the tenant. (That’s obvious.) The address of the premises. (This may also seem obvious, but in early 2015, I received […]

Here are six “things” that I think must be in every commercial real estate lease. You may have a different list. Also, state law may dictate changes or additions.

  1. The names of the landlord and the tenant. (That’s obvious.)
  1. The address of the premises. (This may also seem obvious, but in early 2015, I received a lease from a landlord that had no address for the premises – no street, city or state. Nothing. There were also other errors in the lease. When I pointed out these errors, I was told by the landlord that I was being “picky.” The lease took over three years to be signed.)
  1. Consideration – who’s giving what to whom? (Attorneys Jordan L. Paust and Robert D. Upp in their book “Business Law” defined it as follows: “Consideration is something of value which is a benefit to one party or a loss to the other party. It is the inducement to the contract.”) Rent is the most common form of consideration given by a tenant to a landlord, but it is NOT mandatory. There are many leases (particularly land that’s leased for farming where the tenant grows crops and removes the weeds) in which a tenant takes care of the property, but pays no rent.
  1. The use – what can the tenant use the space for? In my opinion, this is the most important provision in the lease. (This is different from the question “Why do you as the tenant want to lease space in the first place?” If it takes you longer than five seconds to respond with a succinct answer, you haven’t thought through the question. Remember – leases are LONG TERM CONTRACTS. You cannot terminate a lease except where it states you can (end of the term; fire; possibly landlord’s default; maybe others). You do NOT want to break the lease. Going to war with the landlord is very dangerous and often expensive.)

    Once you understand WHY you want to lease the space, then you must determine if the premises can be used for your intended purpose. If you’re the tenant and you cannot use the premises for your intended purpose, then you’re out of business. This provision also protects the landlord, because it can limit the tenant’s activities.

  1. The term – the beginning and ending dates of the lease.
  1. Signatures of the landlord and the tenant. Some state laws may permit the exchange of emails as “signatures.” However, I am not an attorney, so I urge you to consult a good commercial real estate attorney about this.

There are dozens, perhaps hundreds, of other provisions that are important and can appear in a lease. But if you don’t have all six of the above, then you have nothing.

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