Green Building to Balloon to $173.5 Billion

The most recent issue of EL Insights reports that the U.S. green building market value will jump from $71.1 billion now to $173 billion by 2015.

Commercial green building is expected to grow by 18.1 percent annually during the same time period, from $35.6 billion to $81.8 billion.

In the report, green building is defined as development with resource use and employee productivity in mind. The high project growth is attributed to a growing recognition of green building’s potential cost savings and incentives from the government, like the multi-million dollar Sustainable Communities Challenge Planning Grant program and the Sustainable Communities Regional Planning Grant program.

Green renovation is also expected to be a major part of future green building, largely due to government projects like the Recovery through Retrofit initiative, which offers $80 billion in energy and environmental retrofits for federal buildings.

Green building growth will create many changes in the greater building market, according to EL Insights. For example, construction workers will increasingly pursue green training programs, companies will spend more money on green building technology, and homes with green features will do better on the real estate market. These changes will lead to cost savings for building and home owners, who will benefit from lower energy and heating bills.

Source: Fast Company, Ariel Schwartz (07/10)

By Dina ElBoghdady
Washington Post Staff Writer
Tuesday, July 27, 2010

While the nation’s housing market struggles amid a sudden downdraft that has once again battered sales, the Washington region appears relatively insulated and poised for a turnaround.

Home-buying activity in the second quarter was well above where it was in the comparable period a year ago, and homes sold more quickly and at higher prices, according to a study compiled by the Delta Associates consulting firm and Metropolitan Regional Information Systems, the local multiple listing service.

“We feel quite comfortable in saying that the bottom has passed in this region,” said Sandy Paul, Delta’s national research director. “But if the national and global economies take a turn for the worse, all bets are off.”

The local market owes its strength in part to its relatively low unemployment rates and plentiful supply of high-paying jobs, the study concluded. Its performance contrasts sharply with the national trend, which shows home sales plummeting in recent months and the supply of homes swelling because of renewed fears about job security and a tightening lending environment.

Adding to the gloom Monday was a government report showing that even though new-home sales climbed almost 24 percent in June from May to a seasonally adjusted annual pace of 330,000, that rate ranks as the second lowest since 1963, when the Commerce Department started compiling such data.

“May’s [new-home sales] were the worst ever and June’s were the second worst,” said Michael Larson, a housing analyst at Weiss Research. “You’re seeing a housing market that’s still struggling to find its footing.”

But the Washington market stands out as a bright spot in part because it continues to add high-salary jobs that fuel housing demand, the MRIS/Delta report said. Second-quarter home sales in the region shot up nearly 61 percent from the first quarter and about 16 percent from the same quarter a year ago, the report said.

Impact of tax credit

Much of the activity took place in the lower price ranges — from $120,000 to $299,000 — as bargain hunters chased after aggressively priced foreclosures and took advantage of record-low interest rates.

A recently expired home-buyer tax credit — $8,000 for some first-time buyers and $6,500 for certain repeat buyers — also helped boost area sales in the early part of the quarter, but not as much as it did in other regions, said Gregory Leisch, chief executive of Delta Associates.

For starters, the earnings of many local buyers probably exceeded the income limits imposed by the tax-credit program, Leisch said. Also, homes in this region tend to be relatively expensive, which diminishes the impact of the tax credit, he said.

“If you’re buying a home for $100,000, the tax credit means a lot more than if you’re buying a home for $400,000, which is not uncommon in the close-in suburbs of Washington,” Leisch said.

For all those reasons, sales in this area are not expected to drop in the second half of the year as much as they might in other markets that had a larger volume of tax-credit-driven sales, Delta executives said.

The area’s robust sales activity helped clear out the glut of homes. The region has an average of 4.5 months of homes for sale, meaning it would take that long to sell all the homes on the market if sales continued at the current pace. Falls Church had 2.4 months’ worth of homes on the market as of June, the lowest figure in the region.

Typically, average home prices rise quickly when the supply of homes dips below the six-month range. That rapid climb is unlikely to happen this time around because people are more disciplined about their buying decisions, Leisch said. Also, home prices had sunk so low that it’s going to take longer for them to rebound.

Some home prices up

Still, the area’s average home price rose in the second quarter to $398,445, up 11.3 percent from the previous quarter and 4.2 percent from a year ago. Prices were highest in what the report describes as the “core” jurisdiction — the District, Arlington County and Alexandria, where the average sales price rose 2.4 percent from a year ago, to $509,156.

The strongest year-over-year gain was made in outer suburbs that were devastated by foreclosures and steep price declines. Collectively, prices surged 14.2 percent, to $320,514, in Loudoun and Prince William counties and Maryland’s Frederick County. Those areas were the first hit when the housing market unraveled and, therefore, the first to recover.

Closer-in suburbs fared less well. The average price fell 1.1 percent, to $392,958, in Montgomery and Prince George’s counties and Fairfax County. The report predicts price gains in this closer-in region later this year or early next year.

Another upbeat trend in the Washington area is that homes are not sitting on the market as long as they used to, the report said. Across the region, days on the market are either close to or well below the region’s long term average of 76 days.

How to ensure lender’s price quote is legit

By Jack Guttentag, Monday, July 19, 2010.

Inman News

“Mortgage interest rates are currently at record lows, and it would seem that they couldn’t possibly fall any lower. Would you recommend then that borrowers obtain a rate-lock as soon as they begin the process of shopping for a mortgage?”

Two days after receiving this letter, rates dropped another 1/8 percent! Nonetheless, the writer’s major point, that at current rate levels there is much greater potential for rate increases than rate decreases, is valid. And that is a good reason for locking ASAP. But it is not the only reason, as indicated by this reader.

“While comparing two lenders, the first lender sent me the GFE (Good Faith Estimate) and TIL (Truth in Lending Act disclosure) and locked us immediately upon receiving the memorandum of terms of the house purchase. The second lender gave us a rate quote via e-mail that was 1/8 percent less than that of the first lender for the same lender fees, so we canceled our lock with the first lender.

“But then the second lender told me he needed the signed purchase contract before he could lock, which took one day. Then he told me he needed additional verification of my income, which took two more days. Next he told me that he needed an appraisal, which took more time. By the time he was prepared to lock, the market had changed and both the rate and fees were higher than those offered by the first lender. We had no choice except to close with the second lender.”

This reader locked immediately and then walked away from the lock because he thought he could do better, only to learn (at considerable cost) the difference between a price quote and a price lock. His experience suggests another reason why it is a good idea to lock ASAP: Lenders who deliberately drag out the lock process may be playing with a stacked deck.

The lender who won’t lock until he has all the data is positioned to cheat. He can “lowball,” quoting a price below what he can deliver and to which he cannot be held, the intent being to snare the borrower. He can then raise the price when the borrower is committed and it is too late to back out. In all probability, the second reader was ripped off in that way. Note that such rip-offs depend on the borrower not being able to check the validity of the quoted prices.

This view that reliable lenders will lock quickly was confirmed by my locking guru, Jack Pritchard. In most cases, he says, the borrower’s credit and a computerized estimate of property value can be obtained within a few minutes, while the borrower’s income can be verified or at least checked for reasonableness within the day. These are the critical factors involved in a lock.

That does not mean that an honest lender will always provide an immediate lock to any loan applicant. Because locking imposes a cost on the lender, no lender wants to lock a loan that is unlikely to close. If the initial information available to the lender indicates that the borrower may not qualify for the requested loan at the posted price, the lender won’t lock.

In that situation, the borrower must decide whether the lender has a valid reason for delaying the lock, or is using delay as a tool for gaining a strategic advantage.

There is only one reliable way to answer that question, and that is to determine whether the lender offers an objective method of disclosing its loan prices. If a price is communicated orally, or in an e-mail letter, the borrower should assume that the lender is trying to game him with the delay.

On the other hand, if the borrower can find her price on the lender’s website, there is no strategic advantage to the lender of delaying a lock, because the borrower can check any future lock price. It may be higher or lower than the price on the day a lock was first requested, depending on which way the market has moved, but it is the correct price on the day the loan is finally locked.

Providing such pricing objectivity was a major reason I developed the Upfront Mortgage Lender certification.

If you are dealing with a loan officer who can’t give you a same-day lock, and if you can’t price your loan online, you should shift the burden of proving objectivity to the loan officer. All loan officers today have computer access to the lender’s posted prices and can print the page showing your price.

Ask for that page on the day you receive your initial price quote — it will be your assurance that you have not been lowballed. And ask for a commitment that you will receive an updated version when your loan is finally locked.

Such objectivity in pricing disclosure should also come into play in the event that a price lock is nullified when new information received by the lender invalidates the information on which the lock is based. That happens occasionally when an appraisal comes in unexpectedly low, or there is a hit to the borrower’s credit score. In such case, the burden should be on the loan officer to document the validity of the new price.

Bottom line, “lock ASAP” is a good rule in today’s market, but to make it work effectively, it should be accompanied by another rule: “Make the lender document your price.”

Wouldn’t it be wonderful if there was a crystal ball that told you everything that was wrong or could go wrong in a house you are interested in? The thought of “FULL” disclosure is right up there with genies and fling carpets. However the real estate industry does require sellers’ to disclose everything they know to be wrong with the house. The key word is “know”. And in the absence of a crystal ball, a good inspector is an essential tool.

Each state varies on what the seller is required to disclose. As a local real estate agent I can provide insight to your area of interest.

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.58 percent with an average 0.7 point for the week ending July 1, 2010, down from last week when it averaged 4.69 percent. Last year at this time, the 30-year FRM averaged 5.32 percent.

The 15-year FRM this week averaged 4.04 percent with an average 0.7 point, down from last week when it averaged 4.13 percent. A year ago at this time, the 15-year FRM averaged 4.77 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.79 percent this week, with an average 0.7 point, down from last week when it averaged 3.84 percent. A year ago, the 5-year ARM averaged 4.88 percent.

The 1-year Treasury-indexed ARM averaged 3.80 percent this week with an average 0.7 point, up from last week when it averaged 3.77 percent. At this time last year, the 1-year ARM averaged 4.94 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

“Interest rates on fixed-rate mortgages and the 5-year hybrid ARM fell once again to all-time record lows this week in a period where the economy struggles to gain momentum and inflation remains very low,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Growth estimates for first quarter GDP were revised down by a half percentage point over the past two months to 2.7 percent, according to the Bureau of Economic Analysis . Annual inflation, as measured by the 12-month change in the core CPI, held at 0.9 percent in April and May, which is the slowest pace in over 44 years, as reported by the Bureau of Labor Statistics .

“Meanwhile, house prices are improving due in part to the homebuyer tax credit. The S&P/Case-Shiller®  20-city home price index grew 0.4 percent between March and April and was up 3.9 percent from April 2009, representing the largest annual gain since October 2006. Moreover, 17 of the metropolitan areas experienced monthly gains in April, compared to 10 in March and six in February.”

A lot of renters make the mistake of thinking, “For what I pay in rent, I could own a house!”  True, especially in metropolitan areas, you can easily make a mortgage payment with what you pay for rent; but affording a home goes beyond the monthly payments.  The New Rules of Mortgage Finance  can be a reality shock when applying for a loan.

Here are 5 realities when applying for a home loan:

1.       Your credit score has to be good. What does “good” even mean?  Below is a chart as of June 30^th, 2010 for a 30 year fixed loan. You can see that the lower your score the higher the interest rates.   

A good rule of thumb is you will need at least a 580 for a FHA loan and a 620 for a conventional loan.  For the best rates you will need a 760 or above.

2.       You need a down payment of at least 3.5% for a FHA Loan. Percentages are higher, around 10%-20% for a conventional loan.  For example on a $250,000 home:  3.5% down is $8,750 and 10% to 20% ranges from $25,000- $50,000. And you’ll need additional money for cash reverses and closing cost. In 2009 lenders were requiring up to 6 months in cash reserves.

 3.       You need to have an acceptable debt-to-income ratio.  The debt to income ratio compares the debt you are carrying (auto loans, credit cards, school loans and so on) with your amount of gross income ( before tax). Lenders today are accepting a debt-to-income ratio of around 30% to 40%.

 4.       Condos are harder and more expensive to finance than single family homes. There is a long list of lender rules that may add to the price of financing a condo.  Rules include such things as commercial space taking more than 25 % of total footage to how many people in the building are defaulting on their loans.

Lenders say that buyers who need a loan to close on their purchase should ask whether a building is approved for financing before bothering to go for a showing. If you are considering a condo you should check out this article, “Condo Financing Faces Strict Rules …” or contact me for advice.

5.        All information you provide will be verified. It’s not enough to provide the long list of documents; they will be verified as well.  Full disclosure is the name of the game when it comes to being approved for a loan. If your wife has a scrapbooking business on the side, be sure to tell the lender and claim it on your taxes. They will check.

Here’s how it work; you find a home online, love it but are not ready to talk to an agent.  You want to make sure it’s worth taking the next step so you type the address into your GPS and go investigate. Sound familiar? It should. Over 77% of all home buyers drive by the house first, after seeing a property online, before taking any other action.

The drive by takes you beyond the 2×2 picture online and into the community and up close and personal with the home itself.  So what information can you gather in 5 minutes or less?

1. Distance. It may look close on map but driving the distance will put things into perspective. How far are you willing to travel to the nearest grocery store or work?  If you are getting really serious about a home, consider driving to it from work during rush hour. Rush hour is the true test.
2. Community. Drive through the neighborhood and surrounding areas before or after seeing the house. Is parking a nightmare? Even a single family home community can have parking issues that crowd the streets.  Is the house right behind the busy highway or in stone’s throw of a factory?  You can also get a feel if the community is family oriented.  A great tip is to drive through at night, that’s when the skeletons come out the closet.
3. Condition.  You can get a sense of the house’s overall condition by assessing  the exterior. Is the roof discolored, wood rotten, fence in tack? It’s not a set fact that if the outside is a mess the inside will be too, but it can be an indicator. Are you willing to put up the money for the obvious repairs?
4. Neighbors. If you decide to turn the drive by into a walk by, be sure to take the opportunity to talk to neighbors.  If there is no sign on the lawn, be courteous to the seller and don’t disclose which house you are interested in but simply say you are interested in the neighborhood. You will be surprise by the honesty, people love to talk and talk.

Driving by a property is a great way to quickly eliminate or confirm a house of interest but be careful not to completely judge a book by its cover.  Don’t let tall grass and bad landscaping hide a jewel within.

Tip: When you are ready to view the inside of a home, any Real Estate agent can show you any property. You do not have to use the agent on the listing sign.  Having just one buyer agent makes scheduling to see several homes much easier.  Ready to work with an agent, we can help

Want to feel a whole lot happier? Right now? Then grab a pen and a thank-you card, and share some gratitude with someone.

When a group of students wrote a series of one-page thank-you letters every 2 weeks for 6 weeks, measurements showed that their baseline happiness levels increased by 20 percent.
Science says that happiness is 50 percent genetic, 10 percent circumstances, and 40 percent intentional activity (i.e., what you do). With so much happiness attributed to your own actions, it makes sense to do things that make you feel good. For the study, that meant the students expressed gratitude in writing, and their happiness increased with each letter. Every month, try writing a couple of thank-you notes to people who did something nice for you. (This article helps explain how happy feelings directly affect your health.)

The Gratitude Connection
Seeing the world through the rose-colored lenses of appreciation and thankfulness can help boost feelings of life satisfaction and overall well-being. And that is great for your health. Here are a few more ways to boost feel-good feelings:

Get up! Exercise helps release endorphins. Get a mood boost by doing the YOU: On a Diet Beginner Workout.
Get talking! Spending time with happy friends will do warm, fuzzy favors for your mood. Find out how contagious happiness is.
Make a plan. Happy feelings don’t always just happen by themselves.

Practice these five simple steps to getting happy.

Getting Perspective

Take housing data in context to get the full picture
The news headlines of the last 48 hours are enough to get any consumer rattled. Media outlets across the country are shouting far and wide about a “double dip housing recession” and housing sales that have “plunged 33 percent.”

I think it’s important to put these numbers in context, and help my customers understand that national media headlines are not always reflective of the entire picture of our real estate markets.

Let’s break down a couple of this week’s rather dramatic headlines.

New home sales plummet to record low (CNNMoney.com)

The U.S. Commerce Department reported Wednesday that new home sales declined almost 33 percent from April levels, to a seasonally adjusted rate of 300,000 sold units. Year-over-year, this number represents an 18.3 percent decline in sales.

Here’s what you need to know:

• This sales report is for new construction homes, not existing homes that have resold. The headline says “new home sales,” for sure, but the media does little to clarify that this report is for new construction sales only.
• Further, new construction sales made up only 5 percent of all home sales in May. The vast majority of the market was existing home sales.
• Due to the seasonality of home sales, month to month increases or declines are far less pertinent than year-over-year changes.

Housing sales decrease in May, dashing hopes of quick recovery (The Washington Post)

The Washington Post may be located in Long & Foster’s territory, but it’s not necessarily a local publication. This article, and many like it, reported existing home sales figures released this week by the National Association of Realtors. These numbers are reported on a national level.

NAR reported that sales of existing single-family homes, townhouses and condos fell 2.2 percent from April to a seasonally adjusted rate of 5.66 million units in May. On the heels of big sales gains the previous two months, the media positions this number as representing a housing market that lost momentum toward the end of the tax incentive period.