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Odd Lots: Details, Bids, Mobile, Tall

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | February 12th, 2021

Chris Ann Cleland is a self-described “stickler for details.” That’s why the associate broker for Long & Foster Real Estate in Gainesville, Virginia, almost blew a gasket the other day when she toured a house for sale.

The place was “staged beautifully” with artwork and furniture, Cleland posted recently on the ActiveRain real estate site. But lightbulbs were missing from the bathroom fixture over the vanity. The foyer chandelier contained bulbs of different sizes and shapes. There was “absolutely zero lighting” in the secondary bedrooms, and the master bathroom’s shower had rust stains.

Small stuff to some, perhaps.

“To me, this stuff is unacceptable,” Cleland says. “Those items are way more important than the furnishings.”

Cleland and some of her colleagues say details like cleaning, caulking and making repairs are important because they make your home show better -- and that can put money in your pocket.

If left undone, items like these “signal a lack of maintenance,” says Sharon Tara, a home stager in Portsmouth, New Hampshire, adding that these details “reduce perceived value.”

Not all agents have seen the light, or the lightbulb. Tara says that more than once, agents have questioned her for pointing out such issues. “I actually had an agent tell me that he hired me for guidance on paint colors and furniture placement, not petty little details. All because I pointed out the fingerprints on the light switches and suggested they be cleaned.”

But Erik Hiss of Keller Williams Capital Partners Realty in Worthington, Ohio, is another agent who is annoyed by the things described here. “Sure, you can do the entire staging and make it look like a model (home),” he says. “But if you are missing lightbulbs, missing caulk on trim or the toilet seat is up, you’re missing the boat.”

Lynn Friedman of Atlanta Homes ODAT Realty is glad to know she’s not the Lone Ranger on this topic. In a house she previewed recently that was supposedly ready to list, she found that the dining room light didn’t work at all, and a bathroom that had been repainted still had switch plates in the old color. Not only that, but the bathroom fan covers looked like they had never been cleaned.

There’s probably a good reason sellers miss these items: They live with them all day, every day, so they just ignore them. Hey, if a bulb isn’t burned out, why change it? But these things stand out, warns sales coach Grant Schneider in Armonk, New York.

“It is like a beautiful shirt with a spot on it,” says Schneider.

So before you spend the money on a professional stager, who will prepare your house to appeal to the widest audience possible, tour your place with a buyer’s eye and make the necessary corrections.

“The first step in getting ready is on the seller,” advises Dorie Dillard of Coldwell Banker Realty in Austin, Texas. “The icing on the cake is the stager.”

RENTERS ARE BIDDING, TOO

Buyers aren’t the only ones competing with one another for prized houses. So are renters -- especially those who really, really want to get away from it all.

Blackstone International Realty recently rented a townhouse on South Beach for $36,000 a month -- more than $1,000 above the asking price -- after taking multiple offers for the property. The four-story, four-bedroom residence features, among other amenities, views of the Atlantic Ocean from the rooftop hot tub.

MOBILE HOME FINANCING

Financing for those looking to purchase manufactured houses will be a tad easier this year, as the major providers of mortgage money are going to bump up their activity in that sector.

At the direction of their federal regulator, Fannie Mae and Freddie Mac will purchase more loans made on factory-built houses, often referred to as mobile homes. Operating in the secondary mortgage market, the two government-sponsored enterprises buy loans from primary lenders and package them into securities for sale to investors.

Fannie will buy 12,650 to 13,150 such mortgages in 2021, a roughly 15% increase over its 2020 volume, while Freddie will boost its target from 4,000 loans in 2020 to as many as 4,700 in 2021. Loans that are stamped with the GSEs’ imprint are generally an eighth- to a quarter-percent less expensive than those not sold to them.

TALL, JUST NOT AS TALL

The tallest building completed last year, anywhere in the world, was Central Park Tower, a 179-unit condo in midtown Manhattan. It came in at 1,549 feet.

It’s the first time in five years that the tallest completed building was not in China, and the first time since 2014 -- when One World Trade Center was finished -- that the year’s tallest completed building was in the United States. It’s also the first time since 2014 that there hasn’t been a building finished that topped 1,640 feet.

To count as a tall structure, a building must be at least 656 feet high, according to the Council on Tall Buildings and Urban Habitat. Only 120 structures met that requirement last year, and 56 of them were in China. Dubai was the most prolific city, with 12.

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All-Electric Making Comeback

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | February 5th, 2021

When I first started writing about housing 50-plus years ago, the public utilities in my Washington, D.C., market were going toe-to-toe trying to win the hearts and minds of local builders. Electric heating and cooking were king, but natural gas was making big inroads.

I don’t know who won the battle, if there ever was a clear winner. But fast-forward to today and the all-electric house is making a comeback. The reason? Global warming: The heating and cooling of buildings accounts for roughly 10% of the country’s greenhouse gas emissions.

“Millions of our homes use outdated, energy-guzzling technology dependent on natural gas or oil,” says Matt Power, editor of trade publication Green Builder. Nearly half operate with natural gas, but not in the South. There, electricity is more prevalent -- in the form of woefully inefficient baseboard heating.

As Power writes in the fall edition of his magazine, “The shift has begun, but we all have to move faster. Every new home should have fossil fuel independence built into its design.”

A fully electric house is defined by Guidehouse Insights, an energy-sector marketing and advisory firm, as one in which space heating, water heating and cooking are electrified through the use of air-source heat pumps, heat-pump water heaters and induction cooking technologies. Not included are insulation and energy-management systems, but many all-electric houses have both.

Right now, some 70 million houses burn natural gas, oil or propane -- or a combination -- to warm their interiors and heat water, according to the Environmental Protection Agency. Together, they generate 560 million tons of carbon dioxide every year -- one-tenth of the total for the entire country. (There is no equivalent data for all-electric houses.)

Natural gas is the preferred heating source by almost half of all U.S. households, according to the Department of Energy. The owners of the 50 million houses powered by gas are likely to stick with it, particularly because it is still the least expensive source of home energy.

Perhaps the greatest sticking point to converting to all-electric is the expense. A 2018 study from the Rocky Mountain Institute found that it would be cheaper to replace gas furnaces and water heaters with new gas devices than to switch to electric appliances.

Homebuilders start from scratch, though, so they are not so constrained. And as a result, they are expected to lead the gradual shift to total electric in the coming years. According to the Census Bureau, they already are.

In 2016, 291,000 -- 36% of the newly built houses that year -- were heated with electricity. But in 2019, the last year for which data is available, that number jumped to 391,000 houses -- a 43% share. And the long-term trend is “likely to continue,” says Rose Quint, the assistant vice president for research at the National Association of Home Builders.

According to William Allen, a senior project manager at ConSol, “electrification is a win-win” for new-home buyers as well as builders. “Consumers save on their monthly utility costs and benefit from indoor air quality,” he said during a recent webinar, “and builders save on overall construction costs.” (ConSol, not to be confused with Pennsylvania coal company CONSOL Energy, is an energy service company based in California.)

Based on Allen’s analysis, builders of two-story, 2,700-square-foot houses in the Los Angeles area would save roughly $1,500 per unit because they don’t need to run gas lines. And while they may have to upgrade some electrical circuits, the appliances themselves -- cooktops, space and water heaters, clothes dryers -- are nearly $3,330 less expensive than gas models.

He hedges these numbers a bit, saying that the savings could differ based on location, so it’s “almost impossible to generalize” infrastructure costs. Gas lines, for example, could run anywhere from $1,500 per unit at infill projects where service is already at the street to $25,000 per house for an entire subdivision rising from raw ground.

Whatever the amount, it’s not chicken scratch -- and neither are the savings on an owner’s monthly utilities. Based on current rates, Allen estimates that folks in the L.A. market could save nearly $90 a month by going all-electric. Research by the Rocky Mountain Institute suggests an average savings nationally of about $300 a year.

California, which is home to seven of the 10 most polluted cities in America, is hell-bent on becoming carbon neutral by 2045, if not sooner. But 40 local jurisdictions, representing more than 10% of the state’s population, are going further by banning gas hookups -- with few exceptions, if any.

San Francisco’s prohibition starts July 1. And cities in other states -- including Massachusetts, Texas, Louisiana and Oregon -- are doing the same.

Meanwhile, some builders fear potential buyers will balk at all-electric houses. Some are concerned that heat-pump waters heaters, which Allen calls “the next great thing” in green building, don’t heat the water as quickly as gas units. Others worry buyers won’t want to give up the control they enjoy when cooking on gas ranges.

But the energy consultant said that builders are more concerned about these potential objections than their buyers -- especially when buyers understand how much more efficient their homes will be. “The energy savings usually outweigh” any objections, he said.

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Addressing the Racial Divide

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | January 29th, 2021

In an unusual, if not unprecedented, move for a major trade organization, the National Association of Realtors has taken full ownership for any and all discriminatory actions taken over the years by the 1.4 million agents and brokers for which it speaks.

Of course, realty pros aren’t the only ones who have been complicit in directing people of color away from white neighborhoods, pushing them into more expensive financing or denying them access to homeownership altogether. Lenders and appraisers have been part of the problem, too -- and so have some owners, who refuse to sell to African Americans.

But on the day after he was installed as the 2021 president of NAR -- the nation’s largest trade association -- Charlie Oppler apologized on behalf of the business for past policies that contributed to segregation and racial inequality in America.

In 1968, the group opposed passage of the Fair Housing Act. And at one time, it excluded some members of the profession based on both race and sex. The discrimination was all part of what NAR now says was a “systematic policy” of residential racial segregation led by the federal government and supported by the banking system and other segments of the real estate business.

But two recent events, in particular, underscored the need for the association to take the racial inequity bull by the horns. One was a three-year investigation by New York publication Newsday, which found widespread separate and unequal treatment of minorities by nearly 100 Long Island agents. Published in late 2019, the study covered some 5,750 listings and found that Asians were discriminated against 19% of the time; Hispanics, 39% of the time; and African Americans, 49%.

The other occurred in October in Scottsdale, Arizona, where a real estate agent confronted two Black men who were filming in front of his condominium building, telling them that the area was a “no n----- zone.” He was arrested and charged with misdemeanor disorderly conduct, and was subsequently fired by his brokerage.

“What Realtors did was an outrage to our morals and our ideals. It was a betrayal of our commitment to fairness and equality ... We were wrong,” Oppler said during a virtual summit on fair housing in November. “On behalf of our industry, we can say that what Realtors did was shameful, and we are sorry.”

However, the trade group has no issues, at least officially, on members who took part in the disturbance earlier this month in Washington, D.C. At least two real estate professionals have been identified among the throngs who broke into the Capitol, smashing windows and doors and otherwise defiling the place.

One was a Frisco, Texas, broker who took a charter plane to D.C. to participate in the march, but lied to authorities about having gone inside the historic structure. Video showed her inside, and she had bragged on social media (since taken down) about breaking in.

According to a training webinar about recent changes to NAR’s code of ethics, what happened in the nation’s capital was not a violation unless it was directed at a protected class. “Merely being a participant in something that appears likely to involve criminal activity does not” cross the line, said Matt Difanis, chair of NAR’s Professional Standards Committee and a Champaign, Illinois, broker.

On the discrimination issue, meanwhile, Oppler said that his organization intends to “look the problem squarely in the eye” and assume a leadership role in fighting for fair housing going forward. In that regard, it has adopted an initiative it calls ACT: Accountability, Cultural Change and Training.

Among other things, NAR’s Fair Housing Action plan, which was approved a year ago, has created an interactive software program that should help agents identify and confront discriminatory situations.

In another step, NAR has amended its code of ethics to make it a violation to use harassing or hate speech toward any protected class: race, color, religion, sex, handicap, family status, national origin, sexual orientation and gender identity.

But while the simulation program has been received well, the code addition is getting pushback: Some members say it goes too far because it bans such speech anywhere, at any time. That, they say, impinges on their right to free speech.

“I don’t need any bureaucrat monitoring my speech,” a California agent complained on the ActiveRain real estate site.

“This rule applies to what someone does outside of their activities as a Realtor,” said an agent in South Carolina. Others agreed, calling the rule “overreach” and “foolish.”

There were more than a score of comments like these. But Oppler said he hasn’t received “one negative call” on the issue.

“We hold our members to a higher level,” Oppler told me during a telephone press briefing. “Our intent is to stop members from engaging in hate. It’s not positive for our industry.”

Meanwhile, four appraisal organizations have come together to tackle “unconscious” behavior in valuing properties. Unlike NAR, the groups did not admit that their members engaged in discriminatory practices. But “acknowledging that bias exists is but one small step,” Lorrie Beaumont, president of the 5,500-member American Society of Appraisers, said in a statement.

According to a 2018 report published by the American Sociological Association, racial composition is “inextricably linked” to housing appraisals. The study found that in Harris County, Texas, comparable houses in Black and Hispanic neighborhoods were “valued systematically lower” than in white communities.

And last August, according to a New York Times story, a mixed-race Florida couple suspected bias when an appraiser valued their house far less than neighboring properties. After the couple removed family photos and books by Black authors -- personal effects that would indicate a Black person lived there -- a second appraiser said the place was worth more than 40% more.

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