HousingWatch

Avoid Foreclosure: Do Your (Math) Homework

Eileen Gunn — 2010-06-04T17:00:00 00:00

How are your math skills? Did you breeze through high school algebra and Econ 101, or struggle through the former and never get to the latter? It turns out, perhaps not surprisingly, that people who know more math and economics are less likely to default on their mortgages.

Stephen Meier, an assistant professor at Columbia Business School, tested sub-prime borrowers in three states on their basic math skills, economic literacy and thinking skills. He found that those with the least numerical knowhow were delinquent on their mortgage 24 percent of the time, twice as often as those with the most.

This group was also three times more likely to face foreclosure than their math-savvy counterparts.
Meier told HousingWatch, "The default rates for those in the lowest numerical ability group were similar across all types of mortgages." This suggests that people with poor math skills are more likely to get into trouble because they're less able to manage their money in general, not simply because they borrow more than others or are steered toward riskier loans.

So what can those who don't know much about algebra do to keep their finances healthy and their mortgage current? Here are a few ideas:

Learn how to budget.
There are plenty of tools around today to help you speed through stuff that's too hard-or boring-to do on your own. Try some online calculators or software and advice from companies like Intuit.

If you prefer a low-tech approach, try shopping for a book or workbook to walk you through the process.

Study up.
Meier notes in his report that while college-educated borrowers are less likely to have trouble "dividing 300 by two -- the easiest of the questions we ask on the survey," that doesn't mean they know all the basic financial concepts you need to be a good borrower, "like what compound interest is or what inflation does."

If you don't know those things, it might pay to head to a community college or to a continuing education program and look for courses in economics, or family and consumer science (it used to be called "home ec") . You should be able to find classes where you can brush up on these must-know financial basics.

Be skeptical.
Just because financial companies will let you borrow a certain sum of money or buy a house with little or no money down, doesn't mean you should.

Mortgage companies estimate that you can direct up to 45 percent of your income to paying down your debts, including student and car loans, credit cards and your mortgage. But it isn't necessarily prudent to get quite that deep in debt. First, figure out for yourself what you're comfortable borrowing and what you can probably handle if things go wrong (you lose one of two incomes, other household costs go up, you have an expensive emergency like your boiler breaking in January). Then go shopping for a house and a mortgage in your price range.

Or bone up on budgeting and save more before you buy.

Seek Advice.
Meier says that not everyone can be an expert in everything: "I'm bad at biology, which is why I have a doctor. I'm bad at cars; that's why I have a mechanic. A lot of people don't have the time or the financial skills, and financial decisions are more complicated today, so we really do need to reach out."

He urges people (who recognize what they don't know) to reach out to family, friends and co-workers (who do), just as they would on other matters. Or they should be willing to get professional advice from financial planners, real estate attorneys or even your accountant.

"In a time where people distrust everything that has to do with finance, it's not so easy to do," says Meier, "but you have to try and, just like with doctors, you should get a second opinion and do your homework."

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Coney Island's New Rides Won't Lift Home Sales

Eileen Gunn — 2010-05-13T10:00:00 00:00

Filed under: Cities

Brooklyn's Coney Island is getting something of a well-needed makeover. A new, $30-million amusement park featuring the latest in rides and attractions from Italy's renowned Zamperla Group, is scheduled to open Memorial Day weekend.

It's the latest in a series of upgrades including a new boardwalk, a restyled subway station (left) and a Mets farm team with by far the spiffiest stadium in its league. The sort of development that's still lacking around the New York City landmark, however, is new housing and retail space. This is why area realtors say home prices are unlikely to climb like a seat on the Parachute Jump anytime soon.
"They've been talking about this for 40 years -- 40 years-and no one has broken ground yet," says Michele Pietrafesa, a Brooklyn native and agent with Fillmore Real Estate. "It's just plans."

Pietrafesa points out that the neighborhood still has its attributes. Inside Schools reveals a selection of decent-to-good public schools nearby. There are several subway lines and an express bus to Manhattan along with shopping, restaurants and services blocks away in Brighton Beach (of course, it helps to speak Russian if you want to do business there).

Residents from there and Seagate, which bookend the neighborhood, would likely spill over into Coney Island if there were more housing, stores, services and restaurants -- other than Nathan's -- to attract them, the real estate agent says.

"If you walk a few blocks down to Brighton, there's restaurants and local life on the boardwalk and people don't mind living there at all," she said.

On the other hand, Coney Island is a narrow strip of a neighborhood that fronts the Atlantic Ocean but backs up to a grimy industrial area. During the summer, visitors to the beach, aquarium, amusement park and baseball stadium create gridlock in the streets, congestion on the boardwalk, and blanket-to-blanket crowding on the sand.

In the winter all this shuts down, leaving the area dreary and desolate.

Louis Esposito, a Coney Island native and realtor with Prudential Douglas Elliman, says that most of the people who live there "have been there for years."

"The area is stale and it lacks a residential, neighborhoody feel," he said. "New development would help, especially affordable rentals and condos." If it ever happens, that is.

Coney Island, it seems, is the real estate equivalent of the Hollywood movie that is perpetually in development but never gets made. The idea of it is so alluring that many want to try their hand at it, but there are just too many impracticalities and hurdles for it to actually happen.

Pietrafesa points out that given the high cost and hassle of creating new housing stock, especially in New York, developers feel they need to put up highrises and make the majority of apartments high-end -- to make the expenses worthwhile. Indeed, the city council did some rezoning in the neighborhood last year that paves the way for highrise hotels and apartment buildings.

But ocean-views aside, the neighborhood is hemmed in by the Brooklyn-Queens Expressway, overshadowed by an elevated train line and is one long ride from midtown Manhattan. The existing housing stock is a mix of rowhouses built in the 1980s; older rent-controlled and rent-stabilized apartments; and senior citizen homes as aged as their residents.

All this, plus the hassles of living in a cramped urban neighborhood (and a remote one at that) seems likely to keep the area solidly middle- and working-class.

The plans on the table now provides for a mix of middle-class and "affordable" housing along with units that developers can sell for as much as they can get for them. These ratios are hypothetical and often shift as building plans unfold --usually in the developers' favor. But even with a shiny new Tilt-A-Whirl on the way, the current, tough-financing environment leaves developers unwilling to plow ahead with new properties that could be saleable -- but more middle- and working-class than their spreadsheets allow for.

In the meantime, the existing real estate market has the feeling of being on hold. A few realtors keep a toe in it -- just in case -- while focusing their energies on livelier parts of the Brooklyn market.

Says Esposito, "I have one property in a prime location that's been listed for seven weeks. I've gotten no calls."

See homes for sale in Brooklyn, New York at AOL Real Estate.

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Home-Sale Hardball: What Works Now

Eileen Gunn — 2010-04-29T17:00:00 00:00

Filed under: News

If you need to sell a house that's underwater, the last thing you want to do is shell out a realtor fee that's going to cut into your loss even more. But doing an FSBO in this market means a lot more than sticking a sign on your lawn and listing a few open houses in the local paper.

You need to be persistent, networked and pretty darn creative.

Here are some extreme tactics homeowners are using to lure serious buyers.

At least some of them actually worked.
Know Your Market
A family trying to sell a 2,000-square-foot, 3-bedroom, Tudor-style home in multicultural Queens, N.Y., translated their for-sale signs into Korean, Mandarin and Cantonese, and posted them in nail salons, laundromats and ethnic supermarkets around the neighborhood.

Network, network, network
Lisa Antinore, the family member in charge of selling the Queens home, also told all of the crossing guards at her son's school ("They talk to everybody," she says). She also wore a T-shirt that read "ask me about buying my Gorgeous English Tudor" around her neighborhood one weekend. She posted the home, with a link to her Zillow listing, on her Facebook page and asked her 572 FB friends to add her post to their profile. "This is what did the trick," she says. She landed a buyer in 28 days.

Blog
Guy Mastrion, a home-seller in Saratoga Springs, NY, started a blog about local life and real estate. The website has images of the quaint former spa town, links to local news and sports, and some Trulia listings for houses selling in the area. It also has a lot of postings, photos and a YouTube video related to the "featured property" at 8 Granite Lake Dr. in Greenfield, a few miles outside of Saratoga. It just happens to be the house that Mastrion is trying to sell.

Advertise
One home-seller in Westchester, N.Y. has taken a tip from pizza delivery guys and propped an advertisement on the top of his car. It has a picture of the house and a phone number. We haven't heard how it's working but we have heard that people are noticing it. We got this tip from a person who parks in the same lot with the seller at work.

Get Help From Your Neighbors
Suzanne Kay-Pittman, who recently put her 4-bedroom, 3-bath Nashville-area home on the market, agreed to let a neighbor help make her house look like a bargain. She told HousingWatch that her neighbor plans to put a for-sale sign on his lawn with an asking price $50,000 higher than hers. "His thought is that if someone sees his sign and the price, and looks at my MLS listing, then that buyer may be more interested in my house based on the price," she says. The signs went up over the weekend so it's too soon to know if it will work.

Spy on Your Own House
Dave Darby actually used a realtor when he sold his 3,300-square-foot house in Carmel, Ind. at the beginning of the downturn, but didn't leave anything to chance. Before the agent dropped by with a prospect, he'd vacuum the place clean. Then he'd come back afterward and track the footprints on the carpet to see which rooms attracted the most interest. Then he spruced those up, as in "I turned on some mood music in the den and opened the blinds to better expose those views." He reports that while neighbors' homes were already sitting on the market for months, he managed to find a buyer in a few days-and get 98 percent of his asking price.

Offer a Reward
One Couple in Brooklyn, N.Y. created a website, advertised on Craigslist and NYTimes.com, and hosted the requisite open houses with no luck. So now they're putting up serious cash in an effort to dispatch their 2-bedroom, 2-bath duplex (pictured above) in an up-and-coming neighborhood. The couple posted on a local parenting list-serv and passed the word along to friends and colleagues that they would pay a $2,000 finder's fee to the person who sends a buyer their way.

If You Can't Sell, Try Trading
A growing number of people who can't sell their homes are doing permanent home swaps, via websites like DomusSwap, OnlineHouseTrading, and Pad4Pad. No one tracks home-trading so it's hard to know just how many people have closed deals this way. But if you're interested and a bit of an exhibitionist, you can apply to be on a reality show about home-trading.

Get rid of your house and get your 15 minutes of fame at the same time. That would be a DIY coup that you could brag about for years-to all your new neighbors.

See homes for sale at AOL Real Estate.

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Does Your Home Match Your Lifestyle?

Eileen Gunn — 2010-04-08T13:00:00 00:00

Filed under: Design, Cities

Why go to all the trouble of being a movie star, vineyard owner, golf pro or naturalist, when you can just live like one -- in a spanking new high-rise or community where you have tons of amenities and are surrounded by neighbors just like you?

Whether you are an urban sophisticate, a foodie boomer or a nature-loving family, there is a community that fits your lifestyle to a tee.

At least, that's the concept that real estate developers have been increasingly hawking over the past few years. These lifestyle residences may be urban or suburban, high-end or middle class, and targeted at anyone from the young and hip to "active adults" (you know, empty nesters who might or might not be retired and are not ready to call themselves seniors). There's actually a consulting firm in Chattanooga, TN, whose business is helping developers "define lifestyles and market communities."

Here's a look at some of the latest lifestyle options -- and a prediction for the next housing trend.
Urban Singles
One of the latest entrants to target young sophisticates is 436 West 20th Street. Located in New York's Chelsea neighborhood, the brick building (pictured) is a restored 10,000-square-foot, 19th century mansion that's been broken up into long and short-term rental apartments. Some of the amenities, according to marketing materials, include: "regular delivery of Organic Avenue's signature juices, purified water and vegetable drinks, daily private Jivamukti Yoga sessions and complimentary consultations with top wine consultant Janine Lettieri," wine director at the oh-so-cool Waverly Inn. Residents can live their healthful urban lifestyles in digs that feature rooftop gardens, 17-foot-ceilings, Baccarat chandeliers and working fireplaces. If that's not enough, there's a "house butler" who delivers mail, makes dinner reservations, books massages (in case you strain something doing yoga) and lights your fireplace for you.

It's a mixture of fitness and pampering that movie stars take for granted and not surprisingly it's priced accordingly. An 1,800-square foot second-floor pad is $20,000 a month.

A little north and west, and slightly more down to earth price-wise, is Ohm, a high-rise haven for young professionals who wish they'd done a stint on the Real World after college instead of buckling down and getting real jobs. (although they need those banking jobs to afford this place). The building has gotten attention lately for staging rock concerts in its lobby, in partnership with the Knitting Factory, a longtime mainstay on the NY indie music scene.

But put aside the possibility of clubbing without leaving your building and it's still quite self-consciously cool. The lobby and a separate lounge offer clusters of modern furniture, where cliques of neighbors will presumably hang out and chill. The lounge has big-screen TVs, billiards and a giant fireplace while a separate "retro" arcade offers "every video game you will ever want to play." Bike storage and common-area wifi round out the hipster offerings while a shuttle service helps residents get to work. With rents starting at $1,880 for a studio and topping out at $3,630 for a two-bedroom, it's affordable by white-collar New York standards.

Earthy Families
Venture beyond New York and the offerings are much more down to earth, literally. Power Ranch is a solidly middle class planned community for "active families" in Gilbert, AZ. Tree-lined neighborhoods are built around parks and connected by trails for running or biking. Playgrounds and common barbecue areas abound to encourage community activities and cultivate a "hometown-rural feeling," while pools, soccer fields and stocked fishing lakes keep residents moving.

In Lake Tahoe, the same developers offer Martis Camp, which is suppose to be just that -- a camp. There's golfing on a posh course during the summer, private access to a public ski mountain in winter, a family "barn" that serves as a community center with bowling, movies, basketball and an art loft, and a rustic library cottage where local book clubs can gather. There's even a "folk school" that holds classes in fly fishing, quilting and photography. The houses are, appropriately modern-rustic with lots of glass and weathered wood. If you're moving to Tahoe to get out of the city and back to nature, you can feel like a regular Grizzly Adams here -- if Adams shopped at Patagonia and had an occasional shave.

Gourmet Boomers
For empty nesters, Shea Homes is offering its themed Trilogy developments, including the Vineyards community outside of San Francisco. Cooking classes, Champagne happy hours and periodic winemaker dinners remind residents they're nestled in California wine country. A walk among the grape vines planted by the developers provides foodies aged 50+ a taste of that idyllic vineyard lifestyle without their having to be bothered with actual farming or making wine.

The company's communities in the Southwest, meanwhile, are built around golf, with fairways designed by big-name golf course architects and clubhouses that would make some resort owners envious.

Joining the Hive
Developers aren't the only ones paying attention to this trend; sociologists have been studying it as well. These lifestyle developments may represent the next stage of hiving -- the term that the sociological research firm Yankelovich came up with a few years ago. Instead of using our homes to hide from the world -- you know, cocooning -- we want to them to be portals to a larger community, the firm explains. In the late 1990s and early part of this decade, homeowners began trading in their remote cul de sacs for places like like Reston, VA, where a (way-too-clean and orderly and somewhat artificial, some might say) town center offers the opportunity to walk to restaurants, movies and shops, passing neighbors along the way and feeling generally Mr. Rogers-ish about life.

It seems it's not enough to merely be around other people anymore. For developers, the next logical step seems to be helping people be around people who are just like them -- bees want to hive with other bees, not with butterflies and crickets, the thinking goes.

Whether you're a club-hopping singleton, an outdoorsy family or wine-drinking, golf playing boomer, you can know your neighbors like the exact same things. It makes it easier to organize picture-perfect barbecues, wine parties or vegetarian brunch parties and less likely that you'll irritate your neighbors. And it no doubt makes it easier to sell homes.

But we're ready to go out on a limb here and predict the next big sociological shift that developers will jump on: multi-lifestyle communities. You know, for when you're tired of everyone looking and acting just like you.

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A New Way to Fund Green Home Renovations

Eileen Gunn — 2010-04-06T11:00:00 00:00

Filed under: News, Cities

How's this for a clever energy-saving program: homeowners borrow money for green upgrades such as new windows, water heaters, insulation or roof-top solar panels. The money, loaned by states and municipalities that issue bonds to cover the program, is paid back by homeowners over 15 to 20 years, via a property tax surcharge. It's a win for all: The energy savings cover the homeowner's extra annual tax payment; jobs are created; and the planet gets a break.

What's not to like? Apparently, plenty.

The Wall Street Journal reported recently that the program, called Property Assessed Clean Energy (PACE), is facing resistance from Fannie, Freddie and mortgage providers across the country, who are doing their best to undermine it.

Nonetheless, PACE bonds seem to be gaining traction.The first PACE bond was issued by Berkeley, CA in January, 2009. Since then, sixteen states have passed legislation to enable the bonds, and another couple are considering it.

One interesting twist to the program is that the tax is attached to the house, not the homeowner. So if the person who makes the upgrade moves, the new buyer inherits the property tax.

That's where the resistance comes in. Lenders worry that if the homeowner goes into foreclosure, the property tax will take precedence over the mortgage for repayment. States say this is essential if they want to float the public bonds that are financing the programs. But the Federal Housing Finance Agency told The Journal that these programs could encourage irresponsible lending (as opposed to the many reckless policies that the lenders themselves indulged in during the housing boom!).

As Greg Hale, a financial policy specialist and blogger for the NRDC points out, it's not hard to buffer against these potential pitfalls with the right requirements, which are likely to be part of most programs. Some of those include no-brainers like making sure borrowers are current on their mortgage and taxes, that a project's cost are capped at a certain portion, say 10 percent, of a home's value, and that the total value of this loan and any mortgage doesn't exceed the home's market value.

While lenders fret, many municipalities seem to be moving ahead. The city of Boulder, Co. launched the first phase of Climate Smart, its PACE program, a year ago and made nearly 400 loans worth $6.6 million, or an average of just over $16,700 per project. The city points out on the ClimateSmart website that the program also put 280 installers, contractors and other vendors to work, providing green-collar jobs and local economic stimulus. The city of Berkeley, CA, meanwhile, conducted a pilot project that focused only on solar photovoltaic electric systems and involved 13 homes. The city is hoping to expand the initiative via a statewide project.

We should start to see initiatives in the other 14 states start to roll out some time this year.

Attaching the loan to the home rather than the homeowner is innovative and perhaps clever. Here's why: For some of the bigger renovations projects like solar installations, it could be ten years before the homeowner makes his money back in lower energy bills, but according to the National Association of Home Builders, only about half of US homeowners stay in their houses for that long. So the ability to spread a project's cost over 20 years and several owners might make consumers confident that the project is worth the cost even if they only stay in a place for five or seven years.

The question that hasn't been answered and that really can only be answered over time is how the expense will affect the resale value of the homes. In theory, the energy savings outpaces the added property tax burden and the family who initiates the project presumably will see the reassuring drop in their heating or electric bills in the first year or two. But subsequent buyers will have to trust that the cost-saving is there; it's not going to be as tangible for them, while the added tax burden will be entirely tangible. Presumably they would be able to deduct the extra tax on their federal tax forms the way you can with other types of property taxes.

But even so, until the loan is paid off, and the seller can pitch the energy efficiency as a free-and-clear money saving feature that boosts the value or at least the saleability of the house, could the added tax costs actually dampen those things? That will probably depend on how educated the buyer is about energy efficiency and how committed he is to it.

Previous green lending programs have been left in the hands of traditional lenders--who can't seem to distinguish between irrational risk and genuine innovation--and have pretty much been neglected, ignored and allowed to wither on the vine. Ironically, because this program is in the hands of local governments, it seems to have a shot at taking root and growing. Despite some unanswered questions, it's a fresh, inventive program. It should be given its day in the sun.

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Energy Star: Not So Reliable After All

Eileen Gunn — 2010-03-30T08:30:00 00:00

Filed under: Design, News

The U.S. government's Energy Star program is shining a little less brightly this week, after an investigation by the Government Accountability Office highlighted some embarrassing lapses. As The New York Times reported late last week, the GAO, acting at the behest of Congress, was able to obtain Energy Star approval for phony products including a comically large, gasoline-powered alarm clock and an air purifier jury-rigged with a feather duster.

While Energy Star, a partnership between the Department of Energy and Environmental Protection Agency, repairs its credibility, consumers looking for energy efficient appliances may have to do more of their own legwork.

In response to the GAO report, the EPA and DOE issued an statement saying they had begun testing "some of the most commonly used appliances, which account for more than 25 percent of a household's energy bill, and both agencies are now developing a system to test all products that earn the ENERGY STAR label."

In the meantime, here are some tips and alternatives for consumers looking for the most efficient appliances.

Useful Information:

For starters, rather than just looking for the Energy Star seal, you can look at energy usage guides -- those big stickers that are stuck to the floor models of most large appliances. They tell you how much power a particular refrigerator or air conditioner uses and how that compares to other models. It also tells you about how much it will cost to run the appliance each year, based on the average price of energy across the country (which could vary greatly from your cost).

Of course, these numbers are based on data supplied by the manufacturers and some energy hawks believe they are often overly optimistic. Consumer Reports conducts its own energy usage tests when it puts products through their paces, and claims that its efficiency ratings are more accurate. If you aren't willing to shell out $26 a year for full access to CR's website (or $6 a month, which might be worth it if you're making a large purchase like a new fridge or washer/dryer), the website offers free buying guides that include explanations of what makes a particular kind of appliance more or less energy efficient.

Some Tips:

In addition, the California Energy Commission, Good Housekeeping Research Institute and the NRDC all provide some worthwhile tips for choosing products that will shrink your gas or electric bill. For example:

o. Front-loading washing machines generally use less energy and water than top-loaders.

o. Gas-powered dryers are typically more efficient than electric ones and quickly make up for their higher upfront cost.

o. Freezer-on-top refrigerators use less energy than side-by-sides.

o. More appliances these days have energy savings features, like washers that let you adjust the water level, dryers that tell you when you're clothes are dry instead of just finishing out the cycle, and dishwashers that use circulating air instead of high heat to dry.

o. Older products built before a certain year (the year varies from one kind of appliance to another) are bigger energy eaters, since minimum efficiency requirements have gotten stricter over time.

o. Buy just as much capacity as you need in any appliance so you aren't paying for excess energy use. This is especially good advice when it comes to a refrigerator, which runs non-stop and is one the biggest electricity suckers in your house.

Some Tools

o. Good Housekeeping provides a calculator to help you find the right size air conditioner for your place -- an appliance where people often buy way more capacity than they need and then feel burned when the electric bill comes.

o. The NRDC has an interactive house that provides advice for buying energy-saving appliances and using them in the most efficient ways.

It will be great news when Energy Star gets its act together and its sticker really provides the seal of approval that it's meant to be. But it's good to know that in the meantime, you can still do more than take a manufacturer's word for it when it comes to saving energy - and money.

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Do You Need a Green Broker?

Eileen Gunn — 2010-03-15T15:30:00 00:00

Filed under: Design, Cities

It's easy to see how the things that go into a new home -- furniture, windows, insulation, even the car sitting in the new garage -- can be made in a more eco-friendly way. Heck, even a lawn can be greener, figuratively speaking. But what about the real estate agent who sold the house? What exactly would make him or her greener?

It's a good question because more than 10,000 agents have added some sort of "green" agent credential to their resume in the past eight years. Some 6,000 have earned an Ecobroker credential since it was first offered in 2002. And another nearly 4,200 have garnered the National Association of Realtors' green designation since the industry group launched it in fall 2008. That's a tiny portion of the NAR's 1.2 million-or-so members. But still, no matter where you live, there's a good chance you'll be able to find a green real estate agent if you want to work with one.

The question is, why do want to work with one?

Well, Stu Galvis, a Boulder, Colo. broker who got his Ecobroker credential in early 2006, says that he has the networks and knowledge to tap into a green housing market that's out there, but not always that apparent. For buyers, he knows which local developers are using greener building practices, for instance, and the service providers who can add, say, energy efficient features to a home a client wants to buy. For both buyers and sellers, he says, he knows the appraisers who understand how to value greener features in a home, and he can walk through a house with an appraiser or engineer to make sure they spot all the green features and take them into account. Galvis can also explain the different between the many green building certifications that have sprung up, like Energy Star and the various LEED designations.

"I spend a lot of time educating clients," Galvis said in an interview with HousingWatch. "A home is not just about rooms and location, but also about true cost of ownership - energy efficiency, safety, health, comfort, insulating against future energy costs." For example, he says location, square footage and finish are important to energy efficiency.

Then there's the matter of what he calls home health. "New homes are built with materials that have horrible chemicals that can 'outgas' for years," he says. "It's important to educate buyers and let them know they have options."

Galvis says that he's made a point of understanding the local housing stock so that if a client, say, wants to buy an older house and add green features, "I can point to the homes that will have the best return on investment for energy efficiency upgrades."

On the flip side, people with a greener home to sell would benefit from using a broker who understands what they have to offer and how to market it. Galvis estimates that about 35 percent of his clients seek him out for his environment expertise. This means he can lead interested buyers to homes with eco-friendly features that don't make it into the real estate listings. For example, Boulder's local MLS notes whether a home has energy efficient features, but it doesn't have any information about whether a house has been built with materials like eco-friendly insulation and sustainable wood, or whether it's water efficient.

Galvis is lobbying to add more of that kind of information to his local MLS. He's not alone. Lobbying, whether for a greener MLS or a broader local use of green building standards, is what a lot of "green" real estate agents spend their time doing, especially in areas where there isn't much in the way of green housing stock to point out to clients.

"Now, you almost have to be pushing for a greener MLS if you want to look serious about your green real estate practice," John Beldock, president and CEO of Ecobroker, told Housingwatch.

Al Medina, the director of NAR's Green Designation program, notes that there are still quite a few markets where, "a lot of people have gotten these designations but there's no green happening." Indeed, Housingwatch has noted the home building industry's frustration at how slow appraisers and lenders have been to learn how to take green features into account when valuing a home for the sale or mortgage value. Medina estimates that just two percent of MLS listings include any type of green information right now.

But one has to wonder if these eco-brokers could eventually lobby themselves out of business. Over the next few years, California and the city of Boston are among the places that will impose green standards across the board on new real estate developments. And Medina notes, "All the major home builders are committing to a sustainable strategy."

When green is the norm and the MLS directories have come up to speed, will a "green" broker be able to tell you anything that a sharp well-informed general broker won't? Perhaps not. But that future is still a long way off. In the meantime, a green broker can help house hunters sort out an eco-friendly real estate sub-market that is anything but standard and guide them to the hard-to-find green gems in the housing rough.

Besides, this new breed of real estate agent typically charges the local going rate for his or her services, so if you have even a passing interest in greener housing, you don't stand to lose any of your green by giving them a try.

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Homeowners Alone Can't Turn Blue Collars Green

Eileen Gunn — 2010-02-18T10:00:00 00:00

Filed under: News

A funny thing happened on the way to the green economy: A recession wiped out countless old-line jobs, along with funding for the so-called green-collar jobs that were supposed to replace many of them.

Last year, President Obama made green jobs a centerpiece of his job creation and stimulus programs. But despite the promises, we haven't been able to create green-collar jobs anywhere near fast enough to replace the jobs that have been lost. That's particularly true in fields related to construction work, which have been hard hit by the housing market collapse.

The unemployment rate jumped to nearly 25 percent in January for people in construction jobs, according a recent article in Time magazine. In some parts of the country joblessness in construction could be as high as 30 percent, Time reports.
The stimulus packages Congress passed have been "the most ambitious green-agenda action ever by the government," says Robert Pollin, co-director of the Political Economy Research Institute at the University of Massachusetts, Amherst. Still, Pollin told HousingWatch, "they have been a drop in the bucket in comparison to the sheer number of jobs that have been lost."

Pollin is the author of a pair of influential reports issued in the fall of 2008 that looked at how the green economy could shorten the recession and fuel a recovery. As I reported in USNews.com at the time, Pollin's research suggested that if Obama directed $100 billion in a green U.S. economy when he came into office, he might create nearly one million jobs in just a few years.

In particular, Pollin, left, thought that spending stimulus money on energy-efficiency retrofitting would create jobs for electricians, heating/air conditioning installers, carpenters, carpenters' helpers, construction equipment operators, roofers, insulation workers, construction managers and building inspectors. Meanwhile, adding solar power to new and existing buildings was supposed to put construction equipment operators, electricians, welders, installation helpers, laborers and construction managers to work.

Why didn't the jobs materialize? One of the problems, says Pollin, is that "the government is relying on individual homeowners to create these jobs," by encouraging them to retrofit their homes with better insulation, new windows, more efficient heating and AC ducts and other energy efficient features. But there are "too many steps," like securing loans, pricing out contractors and filling out rebate forms for homeowners to move forward with these projects quickly enough to have a big, fast impact on jobs, he said.

"Obama had a photo op at a Home Depot, but his message was askew," he said, referring to the President's energy efficiency speech last December at a Home Depot in Alexandria, Va. "That message was get to Home Depot and get your caulking gun and get it done, but that's not really going to spur new jobs on the level we're talking about."

Calli Schmidt, Director of Environmental Communications at the National Association of Homebuilders, concurs. She tells HousingWatch that a lot of the stimulus money has been filtered down for distribution by the states, but with red tape attached that has made it hard to put it to work. "Homeowners and contractors have to keep track of a lot of paperwork that just isn't always practical," she says.

Besides, homeowners have other distractions. "If you're afraid of not being able to pay your mortgage and being foreclosed on, you're not going to worry about making your home more energy efficient," Pollin notes.

Even if homeowners are on top of their mortgage, they're reluctant to invest in their homes while values are falling. A lot of the low-hanging fruit, like improving insulation and sealing leaks around windows, can pay off in three years or so. But that's not quick enough for strapped homeowners. "People are nervous about making improvements to their homes unless they see the payback right away," says Schmidt of the NAH.

But the Green Recovery isn't necessarily a bust. Pollin does see some of these jobs being created. And, he says, the need for energy efficient upgrades is uniform across the country. "If you look in any neighborhood, 70 to 80 percent of the buildings would benefit from retrofitting," he says.

In the Northeast much of the work centers on keeping homes warmer during the winter, he says. But in the Southwest, where construction jobs have been especially hard hit, homeowners can make their air conditioning ducts more efficient, replace old window panes with newer UV filtering glass and, if they are willing to invest in a longer term payoff, add solar panels for heating hot water and generating electricity.

Pollin and Schmidt expect to see a slow but steady increase in work from these kinds of projects as the job and housing markets stabilize, consumer credit loosens up and confidence returns. Home appraisers and mortgage lenders have to understand how energy-related features add value to a home and free up money in one place (energy bills) that can support the bigger mortgage needed to finance these upgrades. But both believe that will happen, albeit more gradually than out-of-work electricians and carpenters would like.

To see a bigger boom in green collar construction jobs more quickly, Pollin says, the government should redirect stimulus money toward retrofitting public buildings, most of which could benefit from it. "You'd get bigger construction companies involved in the work so there would be large-scale job creation," he says.

"It would be high profile work, too, so that would raise awareness," which would help things like appraisals and mortgages that recognize these upgrades to come on line. "Then the residential market might really start to move," he says. And with it, perhaps, some of those construction workers who have been sitting around way too much lately.

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A Hedging Option For Your Home

Eileen Gunn — 2010-02-02T14:45:00 00:00

Filed under: News

You'd like to buy a home, but you're not sure if the market has hit bottom. And you sure don't want to be the sucker who plunks down his hard-earned money only to see his house start losing value the minute the drapes go up.

Sirius Value Protection says it has a product for you. The New York-based start-up has created a financial hedging device that it claims will protect against a drop in the value of your home. The product, for which a patent is pending, which will be available through major housing developers later this year, and perhaps as early as next month. The company hopes it will help draw skittish buyers back to the market.

Insurance policy or gimmick?

Before you sign up, read the fine print. There's a lot of it. And the upshot is, this hedge probably won't help you in the one situation where you'll need it most - when you need to sell a place that's underwater.

Here's how it works: Developers bundle the cost of the Sirius Value Protection tool into the sale price -- padding the home price by about 20 to 25 percent. Right now, co-managing partner Andrew Herzberg expects that developers will eat that cost to entice buyers. But as the market improves, he expects developers will split the difference with buyers, charging them 10 percent of the home's value.

Once you're in your new digs, you have six years to exercise your option and let Sirius buy your house for the price you paid for it (including the cost of the hedge). This excludes your closing fees and mortgage costs, of course. But that's not the biggest catch.

This is: Sirius doesn't buy the house back when you exercise the option. No, it only turns over your cash after you've owned the place for ten years. Moreover, to exercise the option and collect on it, you have to own the house and be current on your mortgage.

So basically, you have to know at some point during years one through six that you're unhappy with the value of your house, that you're going to be ready to move out in exactly four to nine years from that point, and that you don't expect prices to bounce back in that time. Yeah, right.

Sirius does throw consumers a bone: If you exercise your option and the housing market comes back afterward, you can still sell your place on your own and pocket the profit. If you don't, you'll forfeit that upside and be looking for a new place to live after ten years roll by.

There's also a bonus option. After you close the deal, you can opt out of the program and collect a bonus that starts at ten percent in the first year and slides down to three percent in year six. Herzberg said candidly that in the focus groups Sirius ran, a lot of people said they would most likely ignore the hedging option and cash in the bonus the day after the closing.

Indeed, this is probably what most buyers will do. After all, people don't buy homes that they believe will lose value. And if you don't need to exercise the option you'll feel silly forfeiting that cash (especially when it just about covers what you paid for the hedging product to begin with).

Moreover, if you don't cash in right away and it does turn out that you need to sell, say in year four, you'll probably opt out of the program then and collect a smaller bonus before putting the house on the market. But if the place is under water at that point, a three or five percent rebate isn't going to offset very much.

Herzberg admitted that this program "isn't for everyone."

It's clearly good for Sirius, which collects its fees with the prospect of paying, at most, 10 percent back to you. There's a small chance the company might wind up holding your house ten years from now, but Herzberg notes that the average American home buyer only lives in a place for 7.2 years. So even if you do panic and exercise your option, chances are you'll sell before Sirius has to make good on it.

It's also good for the real estate giants Sirius developed it for, who can offer some psychological piece of mind to reluctant buyers and perhaps finally move some of the inventory they're sitting on.

But Herzberg couldn't tell me what type of consumer this financial tool would be especially good for and I can't tell either. It seems that no matter how you slice it, the best way to hedge against receding home values is to pay 25 percent less for a place to begin with.

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Girl, 10, Builds Green Dream Home

Eileen Gunn — 2010-01-06T12:10:00 00:00

Filed under: Design

Little kids are the big nudges in the environmental movement these days. Just ask all the grown-ups who began recycling because their sons learned about it at school, or who bought a hybrid car instead of a conventional one because their daughters kept nagging them about their carbon footprint.

Or, you could ask Jennifer Brook, a young British girl who drew a eco-friendly house for a contest run by a local housing developer. Her winning design provided the inspiration for actual houses that will soon be built as part of a community that emphasizes the use of recycled materials and energy saving features in its homes.

Brook, who was 10 when she conceived her "Eco Home of the Future," beat out 70 other children with her design, which was chosen by environmental activist David Bellamy. Her fanciful home featured solar panels, a TV powered by an exercise bike, light switches on the floor that would be activated when people enter and leave a room, and a system for feeding stale bread to birds.
Some of the more practical features from her drawing will be incorporated into two homes that a housing co-op, Redditch Co-operative Homes, will build in partnership with the Accord Group, a housing management company, and the Redditch borough council in central England. These features, including solar hot water and photovoltaic panels, a wildlife area, smart lighting, recycled water in the garden and a composting center, will contribute to making the homes carbon free.

A spokesperson for the Accord Group said Brook's drawing won because "It was imaginative, practical and met the key criteria that we could actually use the design to build a real house. Jennifer also spoke really well about her designs and rationale during the finalist stage."

Each home will cost £180,000 (about $280,000) to build, compared with £140,000 (about $224,000) for other green homes in the community. The UK has a code ranging from 0 to 6 that it uses to rate homes for sustainability. A standard house with no green features would rate a 0, while a carbon neutral home would rate a 6. The so-called Jennifer houses will be built to a code 6, while other homes in the community are usually 4s.

Brook, now 12, and her family live in their a somewhat less green, more traditional home in nearby Warwickshire, and aren't planning to move into either of the finished houses, which will be rented or sold. But the girl says she "can't wait to visit it with some of my friends once it's been finished,"

If this green preteen has her way, they'll no doubt drive a Prius to get there.

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