How Long Does It Take to Pay Off a Net-Zero Home?

Net-zero homes—those that make as much energy as they put out—may cost more up front to build, but they can save homeowners money on their energy bills. Eventually, that savings adds up and the home can pay for itself, no matter where you live, a new study shows.

Net-zero energy homes usually are outfitted with rooftop solar panels, energy-efficient insulation, triple-pane windows, energy-savvy appliances, LED lighting, and smart thermostats. Builders will take the home’s design and natural lighting into account too, such as the position of windows and overhangs that could supply additional solar heating in the winter or shade in the summer months.

The Rocky Mountain Institute, a research nonprofit focusing on clean energy, looked at how long it takes for the savings on a net-zero home to cover the initial costs of a 2,200-square-foot home in the 30 largest U.S. cities. Here are the top cities where you can pay off a net-zero home in the fastest amount of time:

1. 1. San Francisco: 7.8 years 
2. 2. Detroit: 9.1 years
3. 3. Baltimore: 9.2 years
4. 4. Columbus, Ohio: 9.7 years
5. 5. New York: 10.1 years
6. 6. Phoenix: 10.7 years
7. 7. Jacksonville, Fla.: 10.9 years
8. 8. Los Angeles: 11 years
9. 9. Washington, D.C.: 11 years
10. 10. Chicago: 11.4 years
11. 11. Sacramento, Calif.: 11.7 years
12. 12. Indianapolis: 12.3 years
13. 13.  Portland, Ore.: 12.3 years
14. 14. Seattle: 12.4 years
15. 15. Dallas: 12.5 years
16. 16. Oakland, Calif.: 12.5 years
17. 17. Wichita, Kan.: 12.5 years

The costs of building net-zero homes can vary widely geographically. The biggest savings tend to be in locales with high electricity rates and older building codes, according to the Rocky Mountain Institute.

“Zero-energy homes are actually affordable,” Jacob Corvidae, principal at the Rocky Mountain Institute, told InsideClimate News. Corvidae stresses this it is important to note because consumers, builders, and policymakers may be reluctant to encourage net-zero building over perceptions that it isn’t affordable.

But even in places like Detroit—not known for its year-round sunshine that would make solar as attractive—net-zero homes can be paid off in less than a decade, one of the fastest regions in the country. A 2,200-square-foot net-zero energy home in Detroit would cost $19,753 more to build than the same house without any solar or standard efficiency. But that home's energy bill savings would be $2,508 in the first year. The solar and efficiency costs would pay for themselves in about 9 years, according to the Rocky Mountain Institute study.

Some of the nation’s largest home builders, like PulteGroup and Meritage Homes, are offering more net-zero energy options to consumers. Pearl Homes in Cortez, Fla., is building a zero-energy community that uses energy storage and electric vehicle chargers.

“We’re starting to see the tip of that iceberg, and when it really hits, it’s going to be huge,” says Ann Edminster, a consultant and architect who works with the Net-Zero Energy Coalition.

SOURCE: DAILY REAL ESTATE NEWS

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Airbnb to Begin Designing, Building New Homes

Airbnb is moving beyond helping people rent out space in their homes. Now it wants to start providing the actual houses, too. The company has announced plans for a new venture that will design and build homes, called “Backyard.” Airbnb co-founder Joe Gebbia describes it as “an endeavor to design and prototype new ways of building and sharing homes.”

Airbnb officials say they want to combine the use of smart-home tech and sophisticated manufacturing techniques—including those from prefabricated dwellings and green building materials—with their experience in the vacation rental industry to “reimagine the design of homes.” Gebbia told Fast Company he feels a moral imperative to ensure that new homes are designed well, and respond to changing owner and occupant needs.

Airbnb says it has created a team of industrial designers, architects, roboticists, mechanical and hardware engineers, policy experts and other professionals to move forward with the Backyard concept.

This is “an initiative to rethink the home,” Gebbia told Fast Company. “Homes are complex, and we’re taking a broad approach—not just designing one thing, but a system that can do many things.”

Airbnb has been vague about what exactly they’ll be building, but the spaces will be designed to be sharable, Gebbia says. The homes also will feature spaces that can be reconfigured to the occupants’ changing needs, Fast Company reports. The spaces also may support co-living arrangements.

The first Backyard test units are expected to become available as soon as the fall of 2019.

The new initiative will diversify Airbnb’s business. Airbnb, valued at an estimated $38 billion, has created a global network of more than 5 million homes for rent. “We’re interested in thoughtfully … doing something transformative, similar to what Airbnb did when it started,” Gebbia says.

SOURCE: DAILY REAL ESTATE NEWS

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More Homeowners Add ADUs, Other Improvements

Homeowners appear to be spending more on property improvements while waiting for the right time to sell. In October, expenditures on existing homes, including renovations, additions, and alterations, rose 2.9 percent year over year, according to a new report from BuildFax, a firm that provides property condition and history data.

Home prices are outpacing wage growth significantly, and along with rising mortgage rates, more homeowners are feeling stuck in place. “As a result, homeowners, unable to re-enter the housing market, are reinvesting in their existing properties,” says BuildFax CEO Holly Tachovsky. “Homeowners may feel unprepared to enter the housing market, but they are making larger investments in the health of their existing property.”

Home maintenance activity may signal the most active housing markets, according to BuildFax. Minnesota has seen some of the most significant maintenance activity over the past year, leading the nation in per capita maintenance volume since 2013. New listings in Minnesota have also fallen the past three years. But the average sales price of properties has risen more than 5 percent annually in that time, the report notes.

Some homeowners are adding accessory dwelling units, also known as granny flats—which are small living spaces designed to house a family member or renter. California has seen the most growth in ADU construction and maintenance. ADUs in the state have grown by nearly 54 percent so far in 2018 compared to a year ago. Oregon and Washington are also seeing a large uptick of ADUs.

SOURCE: DAILY REAL ESTATE NEWS

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Single Women Prop Up First-Time Buyer Segment

Lower affordability and continued inventory crunches aren’t sidelining single women home buyers, who, for the second consecutive year, account for 18 percent of all buyers, according to the National Association of REALTORS®’ 2018 Profile of Home Buyers and Sellers. Single women are the second most common buyer type behind married couples (63 percent), according to NAR’s report. Single men are the third most common buyer type, accounting for half the number of their female counterparts at 9 percent. However, single men tend to purchase pricier homes than single women—a median of $215,000 compared to $189,000, respectively.

Single women buyers, many of whom are first-timers, are proving a powerful force in the housing market. However, first-time buyers, who once dominated the buying pool, are a shrinking segment. The share of first-time buyers fell to a three-year low this year, according to NAR’s report. First-time buyers comprised 33 percent of the housing market this year, down from 34 percent last year. The number of first-time buyers has not gone above 40 percent since the first-time home buyer tax credit ended in 2010, NAR notes.

“With the lower end of the housing market—smaller, moderately priced homes—seeing the worst of the inventory shortage, first-time home buyers who want to enter the market are having difficulty finding a home they can afford,” says NAR Chief Economist Lawrence Yun. “Low inventory, rising interest rates, and student loan debt are all factors contributing to the suppression of first-time home buyers.”

However, Yun notes that existing-home sales data has shown in recent months that inventory is rising slowly on a year-over-year basis. That may “encourage more would-be buyers who were previously convinced they could not find a home to enter the market,” Yun says.

SOURCE: DAILY REAL ESTATE NEWS

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Sellers Brace for Stiffer Competition as Buyers Retreat

A shift is occurring in many housing markets. Affordability may be prompting more potential buyers to pause due to rising mortgage rates over the last few weeks, and home sellers are now facing more competition. Homeowners may no longer be able to expect the quick sale they’ve seen their neighbors get in the past.

The number of For Sale signs is starting to increase across the country. Unsold inventory is at a 4.4-month supply at the current sales pace. Inventories were at 1.88 million in September, up slightly from 1.86 million a year ago, according to the National Association of REALTORS®’ latest housing report, released Friday.

“There is a clear shift in the market with another month of rising inventory on a year-over-year basis, though seasonal factors are leading to a third straight month of declining inventory,” says Lawrence Yun, NAR’s chief economist. “Homes will take a bit longer to sell compared to the super-heated fast pace that we saw earlier this year.”

Existing-home sales declined in September, with all four major regions of the country seeing no gains in sales activity last month, according to NAR’s report. Total existing home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—dropped 3.4 percent in September compared to August, and are now at a seasonally adjusted annual rate of 5.15 million. Sales are down 4.1 percent from a year ago.

“This is the lowest existing home sale level since November 2015,” says Yun. “Decades-high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

The 30-year fixed-rate mortgage has jumped from an average of 3.99 percent in 2017 to an average of 4.63 percent in September. Freddie Mac reported this week that rates are averaging 4.85 percent.

“Rising interest rates coupled with increasing home prices are keeping first-time buyers out of the market, but consistent job gains could allow more Americans to enter the market with a steady and measurable rise in inventory,” Yun says.

Here’s a closer look at some key housing indicators from NAR’s latest report:

• Home prices: The median existing-home price for all housing types was $258,100 in September, a 4.2 percent increase compared to a year ago.
• Days on the market: Forty-seven percent of homes sold in September were on the market for less than a month. Properties stayed on the market an average of 32 days in September, down from 34 days a year ago.
• All-cash sales: All-cash transactions comprised 21 percent of real estate sales in September, up from 20 percent a year ago. Individual investors tend to make up the biggest bulk of cash sales. They purchased 13 percent of homes in September, down from 15 percent a year ago.
• Distressed sales: Foreclosures and short sales made up 3 percent of sales in September, which is the lowest since NAR began tracking such data in October 2008. Broken out, 2 percent of sales in September were foreclosures and 1 percent were short sales.

SOURCE: DAILY REAL ESTATE NEWS

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Amazon Partners With Builders to Put Alexa in New Homes

Amazon is partnering with homebuilders to bring its Alexa voice assistant to more new housing units as a standard smart-home feature. The online retailer recently announced it has partnered with Plant Prefab, a California-based company that uses sustainable materials to build prefabricated single-family and multifamily homes. The move comes after Amazon introduced more than a dozen Alexa-controlled smart-home devices, including a microwave oven and doorbell.

“Voice has emerged as a delightful technology in the home, and there are now more than 20,000 Alexa-compatible smart-home devices from 3,500 different brands,” Paul Bernard, director of the Alexa Fund, said in a statement. “We’re thrilled to support [Plant Prefab] as they make sustainable, connected homes more accessible to customers and developers.” Amazon also has partnered with Lennar, one of the nation’s largest homebuilders, to preinstall Alexa in all of the builder’s new homes.

Plant Prefab is trying to use automation to speed up construction projects and lower costs. The company says its prefab method cuts construction time in half and costs up to 10 percent to 25 percent less than a traditional home. “In the housing-crunched major cities like Los Angeles, New York, and San Francisco—along with areas like Silicon Valley—it takes too much time to build a home from groundbreaking to occupancy. And labor shortages, construction delays, and increased construction costs are exacerbating this trend even further, making homes increasingly less affordable,” says Plant Prefab CEO Steve Glenn.

Meanwhile, the smart-home market is seeing explosive growth in new technology products. It’s expected to grow to a $53 billion industry by 2022, according to Zion Market Research.

SOURCE: DAILY REAL ESTATE NEWS

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When Is it OK to Tap Home Equity?

As home prices continue to rise, homeowners are finding they’re sitting on record amounts of home equity. People have mostly been shy about tapping into that wealth—but a new survey Bankrate.com survey of 1,000 consumers shows they have plenty of reasons they may want to take out a loan to unlock it.

Consumers’ “growing penchant toward debt might make it tempting to tap into their home’s value,” says Greg McBride, Bankrate’s chief financial analyst.

Nearly three quarters of homeowners recently surveyed say that home improvements or repairs are an acceptable reason to access the equity they have in their homes. In fact, more than half of those surveyed say that is the best reason to apply for a cash-out refinance loan or home equity line of credit (HELOC).

Survey respondents also cited other reasons they’d be tempted to use their home equity, including to consolidate debt (44 percent); pay for tuition or other educational expenses (31 percent); keep up with regular household bills (15 percent); and make other investments (12 percent). Nine percent of homeowners say they believe it would be a good idea to use home equity to purchase big-ticket items, such as appliances and furniture.

People with lower incomes were more likely than those who earn more to say it’s OK to tap into home equity to meet ordinary expenses, the survey found. Meanwhile, millennials seem more willing to tap into home equity than older generations, the survey found. Twenty-two percent of millennial respondents say that borrowing from home equity to pay day-to-day bills is a viable option, compared with 12 percent of members of older generations.

Many households may be overstretched financially, which could heighten the temptation to borrow. Forty-four percent of Americans say they could not cover a $400 emergency expense out of pocket, according to a recent Federal Reserve report.

“With the sorry state of emergency savings and increasing levels of consumer debt in a rising interest rate environment, it’s a matter of ‘when’ not ‘if’ more homeowners turn to home equity to fund home improvements and repairs, or consolidate debt,” McBride noted in the survey’s report.

Using equity to pay for home improvements that increase the value of your home can help rebuild any of the equity taken out, McBride says. The new tax law, that went into effect this year also allows homeowners to deduct the interest they pay on home equity loans and HELOCs if the proceeds are used to finance improvements that add significant home value.

Still, financial experts recommend caution for homeowners who are thinking of borrowing against their home equity, especially because using your home as collateral for a loan means you could lose it if you are unable to repay the lender.

“For a disciplined homeowner, using home equity to consolidate debt at a lower interest rate can be a savvy way to cut interest costs and accelerate debt repayment,” McBride says. “But for undisciplined homeowners, it ties up an asset that is put at further risk of foreclosure while the temptation to run up high-cost debt all over again proves difficult to resist.”

SOURCE: DAILY REAL ESTATE NEWS

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3 Biggest Blockchain Myths Debunked

Despite its speed in verifying records and heightened online security, real estate professionals have been slow to adopt blockchain.

Natalia Karayaneva, CEO of Propy, a real estate marketplace that uses blockchain to facilitate transactions based in San Francisco, says there are a lot of misconceptions about the new technology. She’s debunking three perceived risks.

Myth 1: Blockchain isn’t as secure as we think.

Karayaneva says blockchains such as ethereum or bitcoin have never been hacked. The Decentralized Autonomous Organization (known as the DAO) and exchanges have been hacked, but the blockchain ledgers cannot be hacked because they will reject any record with altered data, she says.

Myth 2: Blockchain is a hotbed of illegal activity.

“Yes, criminals can use the blockchain for illegal activities. Criminals can also use highways to carry drugs, but no one is calling highways ‘hotbeds of illegal activity,’ because regular people use them to perform legal, necessary tasks,” Karayaneva says. “In the same way, the use of blockchain for legitimate purposes renders it irreplaceable.”

Myth 3: Blockchain is simply for trading cryptocurrency.

Because blockchains prevent errors in record-keeping and accelerate transactions by eliminating third-party verifications, Karayaneva says that the technology can enhance nearly any industry.

SOURCE: DAILY REAL ESTATE NEWS

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Why Clients May Be Asked to Write a ‘Comfort Letter’ to Their Lender

When an insurance company's underwriting department has questions about a borrower’s background, it's becoming common to ask the borrower to write a letter of explanation to their lender, dubbed a “comfort letter.” The lender may request a letter to gain clarity on the borrower’s circumstances that were not explained in their credit or employment documentation.

“We try to connect the dots using data, and we think that makes the application process more robust,” Bill Banfield, executive vice president of capital markets for Quicken Loans, told The Wall Street Journal. “But when you need a little help from the client to connect those dots, letters of explanation are a way to help the underwriter interpret something.”

When would a client be asked to write one? The Wall Street Journal offers up some scenarios, such as a borrower who wants to buy a new home far away from their current place of employment. The lender may ask the borrower to explain, like if they intending to telecommute or has a new job. The bank may also request one if the borrower makes an unusual large deposit. They may ask for a letter to document where the funds came from. A lender may also ask for an explanation if there was a gap within employment.

“It could be as simple as somebody had a child, and they left the workplace for a period of time,” Banfield told The Wall Street Journal . “What the underwriter is trying to get at is the stability and continuity of the income they’re using to qualify the client to ensure that they can actually afford the payments.”

For lenders who do ask for a letter, banks tell borrowers not to panic. It’s a common part of the mortgage-application process these days. This does not mean there is a problem with the application or that it will be denied. In the letter, WSJ advises making sure the borrower fully understands the question and addresses the underwriter’s concern with concise and accurate information when requested.

Banks, however, are not permitted by law to ask borrowers anything that is “prohibited bias,” like on medical privacy, gender, age, religious, or racial discrimination, says Allen White, senior vice president of mortgage lending at South State Bank in Seneca, S.C.

SOURCE: DAILY REAL ESTATE NEWS

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Wall Street Is Taking an Even Bigger Bet on Rentals

Investors are bullish that more Americans will choose to be renters, and they’re buying up even more single-family homes to make sure they are ahead of the trend. The number of homes purchased by major investors in 2017 was about 29,000, up 60 percent from the previous year, according to Amherst Capital Management LLC, a real estate investment firm. That is also the first time since 2013 that investors purchased more homes on an annual basis.

Investors are increasingly eyeing single-family homes over apartments. A rising number of apartments in recent years have increased vacancies and driven down rental yields. That has prompted investors to turn back to single-family homes for rentals.

Investors are reportedly raising billions of dollars to purchase more homes this year, and they are targeting areas like Atlanta, Phoenix, and other metros with fast-growing economies.

Pretium Partners LLC, an investment firm, announced Monday that it had raised more than $1 billion for its Progress Residential to add 26,000 rental homes to its portfolio.

In markets where there is little inventory to buy, some investors are building new. Transcendent Investment Management LLC , a south Florida firm, has secured more than $250 million to build thousands of rental homes in Southeast Florida.

"We're seeing a wider variety of investors coming into this asset class: sovereign-wealth funds, insurance companies, hedge funds, pensions, asset managers," Sandeep Bordia, Amherst's head of Research and Analytics, told The Wall Street Journal.

Investors are also targeting wealthier tenants for single-family home rentals. They tend to have children and need more bedrooms than apartments can offer, and they also may be more willing to weather rent increases in order to remain in a good school district.

Some of the fastest-growing markets for rental-home investments over the past year, according to ATTOM Data Solutions, a real estate data firm, are: Green Bay, Wis.; Myrtle Beach, S.C.; Sevierville, Tenn.; Syracuse, N.Y.; Anchorage, Alaska; and Charleston, W. Va.

SOURCE: DAILY REAL ESTATE NEWS

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Mobile Homes Could Fill Large Inventory Gaps

Home inventory of has fallen near record lows across the country, but more consumers are in need of a place to live. Some economists say manufactured homes—also known as mobile homes or trailers—may be the answer to relieve housing shortages in some markets starved for greater affordable housing.

About 5.6 percent of Americans—or 17.7 million—live in manufactured homes. These types of homes provide shelter for one in 10 households who live below the poverty line, according to a new report released by Apartment List, a real estate listing service.

Sydney Bennet, author of the report and a senior research associate at Apartment List, believes the number of people living in manufactured housing could grow significantly as the need for affordable housing grows more dire.

In the nation’s 100 largest metros, residents living in manufactured homes—either renting or owning—spend an average of 40 percent less on housing than those living in more traditional “stick-built” homes. The average monthly gross housing cost for a mobile home is $564, compared with $1,057 for a traditionally built home or apartment, according to the report by Apartment List. (The gross housing cost includes rent or mortgage payments and property taxes, lot rent for mobile homes, and utility costs.)

Seniors on fixed incomes may find the option more appealing. Upscale mobile home parks are popping up that are aimed at attracting the 55-plus crowd, offering spacious “double-wide” trailers, community centers, and pools, among other amenities.

But buying a mobile home is different than purchasing a stick-built home. Mobile homes are sold separate from the land in the trailer park. Also, mobile homes are classified as either a real estate property or personal property. Buyers can finance a purchase through a traditional mortgage if the property is classified as real estate. However, the majority of manufactured loans are financed as personal property with a chattel loan, which usually come with high rates and shorter loan terms.

Mortgage financing giants Fannie Mae and Freddie Mac are viewing manufactured housing as a potential solution to ease shortages of affordable homes. The government-sponsored enterprises announced plans in January to purchase more manufactured housing loans over the next three years.

SOURCE: DAILY REAL ESTATE NEWS

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Golf Course Closures Could Spur Construction

Younger people are not replacing older generations of golf enthusiasts, prompting many golf courses and clubs to shut down—and making room for new construction. The number of regular golfers dropped from 30 million to 20.9 million between 2002 and 2016, according to Pellucid Corp., a golf industry trade group. Now, because of golf facility closures, hundreds of thousands of acres of land nationwide is available for redevelopment, The Atlantic Monthly’s CityLab blog reports. 

The average 18-hole golf course sits on 150 acres, and at standard densities, that’s enough space for 600 single-family detached homes. But many golf courses are zoned for commercial use, so developers will have to find ways to include housing in redevelopment plans. In the meantime, developers are drafting up million-dollar commercial redevelopment plans to buy sections of foreclosed golf courses. For example, in a Kansas City suburb, one golf course is slated to become an industrial park. And in suburban Jacksonville, Fla., another golf course will be transformed into a mixed-use retail, office, and hotel development. 

“Golf probably isn’t coming back—at least not at the kind of scale it once boasted,” Nolan Gray, an urban planning researcher, writes in a column for CityLab. “Whether or not this bust can be a boon or a wash for suburbs and cities will likely be decided by hundreds of small zoning fights … over the decade. If recent pushes to downsize and preserve golf courses are any indication, it will take some effort and foresight on the part of planners and policymakers to get former greens productively redeveloped.”

SOURCE: DAILY REAL ESTATE NEWS

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3 Pros, 3 Cons of Buying New Construction

Many house hunters are under the mistaken impression that new construction is flawless, a perception that may be challenging to wrestle with if your seller’s home is surrounded by brand-new development. In reality, there can be just as many inspection issues with new builds as there are with resale properties. If you’re working with clients who are interested in purchasing new, it’s important to manage their expectations and let them know that no home no matter what age is perfect. On the other hand, new homes do have some advantages because they’re not worn. Here are three pros and three cons of new construction.

Pros

1. Less wear and tear. Buyers of new construction can expect fewer imperfections in the product, says Terrylynn Fisher, CRS, GRI, a professional stager and associate broker with Dudum Real Estate Group in Walnut Creek, Calif. Scratched floors and cracks in walls, for example, are more commonplace in resale homes than new ones. Finishes and design flourishes in new homes may also be brighter and more colorful because they are untouched.
2. Built-in technology. While many homeowners have been slow to adopt smart-home technology, developers are jumping on the bandwagon more quickly and incorporating smart features into their projects, says Sce Pike, founder and CEO of Portland, Ore.-based software company IOTAS. Smart door locks and thermostats are among the most popular products developers request, but some are eyeing more comprehensive packages that include smart humidity sensors and the ability to control access to a home remotely, Pike adds.
3. It’s a blank canvas. Buyers may feel more like they are designing a home specifically for them when starting from scratch with a brand-new home, which can be a big psychological motivator in a purchase decision, Fisher says. Though resale buyers, too, have the opportunity to make a home their own, they may not feel complete ownership of its style because they’re either adding to, morphing, or covering up the previous owner’s sense of style, says Christine Rae, founder of the Certified Staging Professionals International Business Training Academy.

Cons

1. Flaws due to building shortcuts. Builders may take shortcuts in the construction process to cut costs, and that can result in blemishes in the home. Fisher says one of her buyers recently bought a new home and discovered about six aesthetic problems that were caused during construction, including an unsightly gap at the top of a shower that made the framing behind the wall visible. “It was like a bad flip that appeared beautiful on the outside,” she says. “You’re going to have a more substantial house in an older home because it’s had owners that have cared for it.”
2. Style over functionality. Builders are hyperfocused on open floor plans, as it’s a top priority for today’s buyers. But that often requires sacrificing storage space, Rae says. To achieve a truly open space, builders often have to decrease the size of closets and other areas of the home designed for storage. That can be problematic for meeting the needs of buyers who envision purchasing a long-term residence.
3. Incomplete curb appeal. Many builders put all of their effort and investment into the front of the house so it looks good to potential buyers driving by. But they’ll sometimes leave the backyard unattended to, Fisher says. Many new-home buyers may have to assume all the costs of backyard landscaping, including planting grass or laying sod, as well as planting trees and other shrubbery. This can be a huge expense, too.

SOURCE: DAILY REAL ESTATE NEWS

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