Is climate change affecting the real estate market? Without a doubt, the answer to this question is yes. Due to an increasing number of wildfires in the west and major floods along our nation’s coasts, homes in areas affected by climate-related disasters are losing their value. While coastal properties were once worth a fortune, many people no longer want to invest in real estate that could literally end up underwater.
A study by researchers at Harvard University, however, illustrates that climate change is affecting the urban real estate market in a different way. As coastal homes become increasingly vulnerable to flooding, wealthy people are selling waterfront properties and moving into low-income areas that are less susceptible to flooding. As properties at higher elevations appreciate in value, low-income families are priced out and forced to seek more affordable housing elsewhere.
The researchers call this phenomenon climate gentrification and identify a few pathways through which it occurs:
• Superior investment pathway: since waterfront property is no longer a sound investment, property values in wealthy, coastal areas like Miami Beach drop as people invest more in poorer neighborhoods like Little Haiti, thereby driving out existing residents.
• Cost-burden pathway: the cost of making homes resistant to flooding becomes so high that lower-income people move out of coastal and water-locked cities altogether (for instance, people leaving Venice for Italy’s mainland).
• Resilience investment pathway: as cities invest in making housing more resilient to climate-related disasters, property values go up and lower-income households are forced out.
Overall, the study reveals that climate change affects not only our weather but also the values of our homes and the demographics of our cities.
Should you stay or should you go?
Here is a happy problem: Should you renovate or move? No matter what choice you make, you are going to have something better.
But when you get into the details, both options are stressful.
If this is your decision, start by asking yourself whether you like the location of your home.
You might find yourself saying you like the neighborhood, the commute, the access to amenities, and the school district. If so, ask yourself if your home has the space to accommodate your needs and, if not, what it would take to make it work.
Changes are an important issue. It’s fun to change the look of a home, but the most important renovations could be functional: roof, furnace, foundation, and siding. These cost a lot and aren’t nearly as satisfying, but they are crucial to maintaining your investment.
Cost is an issue. Adding a room can cost $40,000, according to CNBC. Remodeling a kitchen averages about $22,507. A new bathroom could cost $47,000. Of course, getting a contractor to estimate the costs and the time it will take to make the changes will be important. You’ll be living in a construction zone for a while — consider whether you are willing to do that.
Another thing to consider is the future resale value of the renovations. You don’t want a house that doesn’t fit the neighborhood, or your renovations will be worth less.
On the other hand, moving could get you into a house that already fits you. Of course, you’ll have to sell, pack up, and move. That is no treat. But when your lot is too small to add a room or if your kids need to be in another school district, it’s time to move on and build memories in a new space.
How to write a homebuyer’s letter
In a competitive market, writing a homebuyer letter can help persuade the seller that you’re the right candidate for their home. Here are a few tips for drafting the perfect letter to seal the deal.
1. Get personal. Above all, your letter should build an emotional connection with the seller. Paint a picture of why you’re excited about buying their home. Sellers like to know their property will be more than just an investment. For example, if you have children, mention how nice it’ll be to raise them in such a picturesque home. The goal is to help the seller identify with you and your family.
2. Don’t mention remodeling. People have deep emotional connections to their homes. Therefore, keep any remodeling plans to yourself. Instead, mention the things you love most about the house. This will reassure the seller that you’ll leave their favorite aspects intact.
3. Keep it short. If you want your letter to stand out, keep your letter concise and to a single page. Focus on two or three of the most important reasons why you’re the best buyer for the home.
Finally, revise and proofread your letter to ensure it’s as professional and eloquent as possible.
The Trust Deed Pledge Plan: An investor’s greatest investment aspiration
REAL ESTATE INVESTORS AND REAL ESTATE AGENTS
An original Trust Deed Pledge (TDPP) to help property owners from losing their entire property equity due to a foreclosure has been developed. By rescuing the equity and turning the owner into a qualified investor in plan, the owner continues to grow the funds rescued.
THE SECURED CASH INVESTOR POSITION IN THE TDPP INVESTMENT
The desire to be protected in a safe rewarding and timely investment is what the investor wants and needs and receives in the TDPP.
- Investment amount required? – Ans: ($60,000 total in small amounts by a group of investors)
- What is the reward? – Ans: (Pre-agreed fixed amount of $25,500 up to $42,500)
- What is the timing of investment? – Ans: (Estimated one-year)
- Amount of protection? – Ans: (Collateral exceeds invested amount)
- How is the investor “protected”? – Ans: (With a very strong superior legal position)
REAL ESTATE ACTIVITY EARNINGS
The TDPP offers a way to achieve an exclusive listing to sell (foreclosure free) for the agent/broker finding and introducing the necessary material to the foreclosure owner. There is strong competition, in the regular market place for exclusive listings, that makes it a challenge to accumulate enough listings for the average licensee to earn and build a personal lifetime wealth of a million dollars plus. It is fair to say the TDPP can do it.
The TDPP offers new type real estate earnings, separate from and in addition to a 6% sale commission.
- Introducing an original way to earn 1% of the sales price of a property and a second way to earn 5% of the net sales price of the property.
- There are other original ways to earn a fee of $9,000 and one of $15,000 for new type activity in the TDPP.
- Achieve an exclusive foreclosure free exclusive listing for the person processing the property owner joining the TDPP.
- Other unique exciting opportunities are available to earn profit in original ways within the TDPP!
Go to http://investmentrevelation.com for more information.
Robert L. Evans, President
Foreclosure Answer Affirmed, Inc.
What to look for when buying an accessible home
If you or someone you live with has a physical disability, it’s important to find a home that accommodates your needs. Here are a few things to remember when looking for an accessible home.
• Single level. When house hunting, prioritize bungalows and ranch-style homes. These are the most accessible options because they typically only have one floor. If you’re looking at two-story homes, make sure there’s at least one bedroom and a full bathroom on the main level.
• Control inputs. Many traditional homes have basements that house the electrical panel, water heater, and furnace. In some homes, the washer and dryer are also located in the basement. To keep things accessible, look for a home with a main floor utility room or an attached garage for these control inputs.
• Doors and hallways. In most modern homes, the doors and hallways are at least 30 inches wide. However, if your home needs to be wheelchair accessible, make sure these areas are between 32 and 36 inches. The doorways should also have zero-clearance thresholds.
• Shower and bathroom. To accommodate a wheelchair or walker, look for bathrooms with ample floor space to maneuver a wheelchair and a shower stall that measures at least 30 by 60 inches.
Finally, let your real estate agent know that you must prioritize accessibility when looking for a place to live. They’ll be able to guide you to homes that fit the bill.
Ask the Expert: What is a conforming loan?
A conforming loan conforms to Fannie Mae and Freddie Mac guidelines. Fannie Mae and Freddie Mac are giant government-chartered mortgage companies that buy loans from lenders, giving lenders more flexibility to make new housing loans.
Most everyone who gets a mortgage has a conforming loan.
A non-conforming loan, by contrast, goes over the loan limit, and the requirements are stricter. Credit scores must be higher. The down payment must be higher. The debt-to-income ratio must be lower. Generally, the borrower shows high cash reserves.
In 2023, the limit for conforming loans has gone up.
The baseline for a conforming loan in 2023 will be $726,200, up $79,000 from the 2022 limit of $647,200. In higher-cost areas, the conforming limit will be even higher for 2023, up to $1,089,300 from $970,800 in 2022. This is good news since more homeowners will be able to qualify for loans that are less expensive and have lower requirements.
The Federal Housing Finance Agency made the changes because home prices were still climbing in the third quarter of 2022 compared to 2021, but the increase in the loan limit was smaller than in 2022 because price growth has slowed.
Conforming loan requirements
Loan-to-value ratio: Your down payment has to be equal to 20 percent or more of the home’s value, but buyers can qualify for an FHA loan with as little as 3 percent down. With a down payment of less than 20 percent, buyers have to pay Private Mortgage Insurance, which can be expensive.
Credit score: A conforming loan requires a FICO credit score of 620-640. However, an FHA loan requires a credit score of 580. A lower credit score than that requires a higher down payment.
Debt-to-income ratio: Your debt-to-income ratio must be below 43 percent (although exceptions may raise this percentage) of your gross income.
Virginia’s home sales activity returns to pre-pandemic levels
According to the December 2022 Virginia Home Sales Report released by Virginia REALTORS®, following two very busy years in the housing market, Virginia’s market slowed considerably in 2022.
There were about 123,000 homes sold in Virginia in 2022, which is 20% fewer than the annual total in 2021. In December 2022, 7,492 homes were sold statewide, a sharp drop of nearly 38% from the same time last year. The rapid rise of interest rates over much of 2022 played a significant role in the slowdown. In all, 87% of counties and cities in Virginia had fewer home sales in 2022 compared to 2021. From an annual perspective, statewide sales activity is back to pre-pandemic totals, near market levels seen in 2018.
“Sales activity in the commonwealth’s housing market has been cooling for 13 consecutive months now. This is largely due to mortgage rates doubling over the past year, causing many to delay their home search,” says Virginia REALTORS® Chief Economist Ryan Price. “We’ve been seeing fewer new sales contracts each month. Homes are taking longer to sell, and sellers, on average, are not getting their asking price.”
These shifts, paired with increases in inventory, could come as welcome news to potential buyers. “We are still seeing fewer new listings coming on the market; however, Virginia’s inventories of available homes are, in fact, growing,” says Katrina M. Smith, Virginia REALTORS® 2023 President. “The fact that homes are taking longer to sell is allowing the overall supply of active listings to build. Buyers may begin to see more options, not to mention less competition.”
In Virginia, there were 16,115 active listings on the market at the end of December. This is a supply jump of nearly 20% over the same time last year.
The Virginia Home Sales Report is published by Virginia REALTORS®. Click here to view the full December 2022 Virginia Home Sales Report.