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Tips for Grandparents on the Move

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | July 18th, 2018

In many neighborhoods, baby boomers are hanging onto their properties into their elder years, adding to the frustrations of millennials struggling to step onto the first rung of the housing ladder. The obvious result: rising prices.

“Home price appreciation continues to outpace wage growth,” says Daren Blomquist, senior vice president at Attom Data Solutions (attomdata.com), which tracks real estate markets throughout the country.

But one subgroup of boomers is finally releasing their houses, clearing the way for the next generation to take occupancy of their dwellings. These are seniors selling to move closer to their grown offspring.

Take the real-life example of a pair in their early 70s. They’ve owned their modest ranch-style house in a leafy middle-class suburb since the 1970s. But now that their only child has given birth to a daughter, they’re finally planning to sell and buy a condo near the baby’s parents' house.

Thanks to home price gains, some older owners can now afford to cash out of one property and buy another closer to their kids, says Victoria Mendenhall, a real estate broker since 1998.

“Family, and particularly grandchildren, are now a bigger factor in determining where people choose to retire,” says Mendenhall, who specializes in working with older clients and is affiliated with the Seniors Real Estate Council (seniorsrealestate.com).

Here are a few pointers for grandparents planning a move:

-- Don’t assume you need fancy entertainment options for the kids.

In an attempt to attract more frequent visits from grandchildren, some seniors decide to live in a community that offers easy access to such commercial entertainment features as an amusement park or a miniature golf course.

But Judy Luna, a veteran real estate broker, says retirees shouldn’t plan their move on the basis of kid-oriented tourist attractions. That’s because most communities offer enough in the way of recreation to keep most kids happy.

“It’s ideal -- but not necessary -- to have a neighborhood swimming pool the kids can use when weather is right. But you don’t need a lot of other major entertainment attractions,” says Luna, who’s affiliated with the Residential Real Estate Council (crs.com).

-- Challenge the notion that you’ll need an oversized yard for the kids.

Luna attempts to dissuade older buyers from seeking a property with a large yard, unless they’re devoted gardeners and have the stamina to maintain the property or can easily hire contractors to do so.

“To meet your grandchildren’s needs, you’re actually better off living near a park with a playground than having a big yard. Also, a small yard will certainly mean less upkeep for you,” she says.

-- Pick a setting with calm streets where kids can play safely.

One factor some older buyers overlook when selecting a grandchild-friendly community is the level of traffic coming through the area.

“You won’t want to live in a heavily traveled neighborhood or on a main road,” Luna says. As she observes, a road with a lot of traffic brings noise and fumes into your habitat. It can also pose obvious risks to the safety of your grandchildren.

Ideally, you’ll choose a property that’s located on a quiet cul-de-sac or a dead-end street. But if that’s unavailable, Luna says you’ll at least want to position yourself on a calm street with relatively little through traffic.

Making sure children are protected from road hazards is especially important if the grandparents intend to provide day care for very young children. But it’s also vital for older kids, who enjoy riding bikes and playing ball on neighborhood streets.

-- Seek a home with an extra bedroom or suite.

Many older buyers plan to downsize to a smaller property after selling the large family home where they’ve lived for years.

But Tom Early, a real estate broker who twice served as president of the National Association of Exclusive Buyers Agents (naeba.org), recommends that those hoping for overnight visits from family buy a place with at least one guest bedroom.

“Granted, your family can always check into a hotel. But it’s a lot more fun if everyone stays under the same roof and you can easily share those great pancake breakfasts,” Early says.

-- Rule out any community that limits family visits.

Though the Great Recession is in the past, Early says many grown children, including those with young kids, are still moving in with parents when facing a financial crunch or to save money.

If you’re an older homebuyer facing this possibility, he recommends you closely examine the rules or regulations that could limit your ability to house family members.

“It’s really shocking to see how many new condo and townhouse developments have deeds that severely limit how long guests can stay over,” Early says.

Often, the written rules governing guest visits are not enforced. But it’s always possible that leaders of the residents’ association will demand you follow the rules to the letter. That could mean, for instance, that your newly divorced son couldn’t move into your place with his toddler -- not even temporarily -- until he can afford to buy his own home.

“It can be painful to be forced to turn away family who need to live with you for one reason or another. Life is much too short to accept such draconian restraints,” Early says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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Tips for Young, Single Buyers

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | July 11th, 2018

After divorce ended her very brief but unhappy marriage, a filmmaker felt more celebratory than sad. Without a spouse to challenge her plans, she could finally fulfill her dream of owning a small cottage on a creek near Annapolis.

Given her substantial savings and solid salary from an academic medical center, the filmmaker was able to purchase a compact but stylish contemporary house with waterfront views and boat access. The closing went smoothly, and the woman’s move won the admiration of both family and friends.

This true story doesn’t surprise Andrew Cherlin, a sociology professor at Johns Hopkins University. A half-century ago, he says most Americans bought a home only after marrying, and those who didn’t wed first were considered “weird.”

“Fifty or 60 years ago, if you weren’t married, people thought you were mentally ill. People thought marriage was the only way to live a successful life,” says Cherlin, an expert on the demographics of marriage and divorce.

Of course, not every unattached person who aspires to homeownership can fund a purchase solo. Nowadays, two healthy paychecks are often necessary to cover the cost of buying in many prime neighborhoods. Compounding the affordability problem, a shortage of inventory -- especially in the starter home segment -- continues to push up prices.

Arlen Olberding, a certified financial planner who counts a number of young singles among his clients, says it's often wise for people with unsettled career plans to postpone homebuying. For example, many singles who expect to make a near-term job change or to soon head back to graduate school should delay.

“Solo buyers are more vulnerable to potential foreclosure if they encounter a layoff,” says Olberding, who’s affiliated with the National Association of Personal Financial Advisors (napfa.org).

Here are a few pointers for single buyers:

-- Choose a place within your financial “comfort zone.”

Merrill Ottwein, a veteran real estate broker, cautions all buyers -- but especially young singles -- against taking on a mortgage that feels uncomfortably large.

“Decide on your affordability target right from the start, before you go home shopping. After that, don’t let your real estate agent or lender inch you up above your comfort zone,” says Ottwein, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

Although lending standards remain stringent, he says it’s still very possible to obtain approval for a mortgage that’s larger than you can reasonably handle. That’s because lenders only see the big picture, and don't factor in all the daily expenses of modern life.

“Being ‘house poor’ is an awful way to live, and can cause lots of fear and anxiety,” Ottwein says.

-- Look for a home a roommate could share.

If you shared dorm space back in college, you may be in no mood to share the home you buy with a roommate who pays you rent. Still, Ottwein encourages young singles to seek a property that would be attractive to a potential housemate -- should they one day need rental income to help offset their mortgage payments.

“Also, a house with two or, ideally, three bedrooms will be easier to sell when you decide to do so,” he says.

What type of home works best for accommodating a roommate? Ottwein suggests a place with a second bedroom suite that includes a private bath, so a roommate could live more independently. Also, an outside entrance to this second suite is ideal.

-- Choose an energy-efficient property.

After moving in, many first-time buyers are surprised by the size of their home upkeep expenses. They hadn’t expected to spend so much for everything from electricians’ bills to mulch for the garden. The size of their energy bills also comes as a shock.

Obviously, some costs associated with homeownership -- such as taxes and insurance -- are unavoidable. But home shoppers can more easily contain their energy expenses by choosing a property that’s well insulated and has substantial, double-pane windows.

“Unless you buy an energy-efficient home, you’ve got a big risk for rising power costs looming ahead,” Ottwein says.

He encourages first-time buyers to educate themselves on the topic of energy efficiency housing by going online. One website that provides information on the subject, energystar.gov, is sponsored by the U.S. Department of Energy, along with the U.S. Environmental Protection Agency.

Also, make sure you ask the home inspector you hire to evaluate the energy efficiency of any property you plan to buy in advance of a final commitment for its purchase.

-- Don’t let homebuying constrain your social life.

You don’t have to live in the immediate vicinity of your friends to stay in touch. But if possible, you’ll want to avoid buying a property many miles from your closest friends, even if that’s the most affordable option.

“Buying a nice house is a wonderful goal, but so is maintaining friendships that can last a lifetime and support your happiness and well-being,” Ottwein says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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How to Avoid an Impulse-Buy Mistake

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | July 4th, 2018

A couple in their early 30s -- a writer engaged to a federal employee -- spent months preparing to buy their first jointly owned property. They both clocked hours at second jobs to help build a substantial down payment. They perfected their credit scores and then met with a lender to gain mortgage preapproval.

Just hours after they left their lender’s office, they immediately happened upon a house they loved from the moment they stepped inside. It was a brick colonial with gleaming hardwood floors, an updated kitchen and an artfully landscaped patio. Excitedly, they made a nearly full price offer for the place, which pushed them to the top of their price range.

But will the couple in this true story later suffer buyers’ remorse? Despite their love-at-first-sight feel about the property, should they have done more comparison shopping before bidding on the first house they’d toured with their real estate agent? Should they have thought through the pros and cons of the neighborhood? Longtime real estate pros say only time will tell.

“When I hear buyers have fallen in love with the first house they visited, I cringe. That’s like marrying the first person you’ve ever dated. That person could be absolutely wonderful. But have you had enough experience to know for sure?” says Merrill Ottwein, who heads his family’s real estate brokerage

This year, many buyers are grappling with tight inventory markets, rising mortgage rates and competitive multiple-bidding situations in popular neighborhoods. This buying frenzy is also fueled by home values that are still rising.

Lawrence Yun, chief economist for the National Association of Realtors (realtor.org), predicts that the volume of home sales will drop slightly this year. But he projects that prices will continue to rise, which only adds to the sense of urgency among buyers determined to make a purchase in coming months.

“Realtors in most of the country continue to describe their markets as highly competitive and fast-moving. But without enough new and existing inventory for sale, activity has essentially stalled,” Yun says.

If you’re seeking to own in a place where demand exceeds supply, it can be tough to guard against a mistaken property selection. Here are a few pointers:

-- Search for an area where properties are selling quickly.

Obviously, those seeking to buy for appreciation potential should avoid neighborhoods where many homes languish unsold for a lengthy time. Indeed, evidence that available properties are snapped up quickly is a strong sign of the desirability of a community.

“You’re unlikely to experience eroding values in any area where homes are flying off the market,” Ottwein says.

How can buyers gauge the velocity of sales in an area they’re considering? He suggests they ask their real estate agent for statistics on “days on market” for homes sold in the area during the past two years or longer. The quicker the sales, the more coveted the community.

-- Screen for pride of ownership.

Though sales statistics and census data speak volumes about a neighborhood, subjective information can be equally meaningful.

Ottwein encourages buyers to stroll through any neighborhood they’re considering to look for signs that residents are committed to upkeep -- including the greenery that surrounds their homes.

“Pride is not an intangible when it comes to real estate. It translates into carefully manicured lawns, fresh paint and the absence of such unsightly clutter as junk cars and beat-up building materials,” he says.

-- Don’t rule out an up-and-coming city neighborhood.

Fred Meyer, a real estate appraiser and broker who sells property near Harvard University, says more Americans are becoming like Parisians in their preference for prime city and semi-city areas over communities deep in the suburbs. And that bodes well for values in popular urbanized areas.

“The outer concentric circles around metropolitan areas won’t appreciate as much in the future,” Meyer says.

One way to identify prime urban or semi-urban communities is to look at data from the U.S. Census Bureau -- available online -- which show where high-income people are living.

Why is a wealthier neighborhood a better bet for appreciation? Because over time, Meyer says, “rich areas tend to progress in value, while poor ones tend to regress in value.”

He advises buyers to choose the wealthiest neighborhood they can afford -- even if that means picking one of the smallest homes there.

“Want good clues to a city neighborhood that should hold and gain in value? See if there’s a Starbucks nearby, or pricey restaurants or an upscale department store. Those are very strong signals,” Meyer says.

-- Choose a home with both now and later in mind.

Ottwein says more purchasers now view real estate as a durable good -- like a car or a refrigerator -- that’s purchased for its utility rather than appreciation. But he says all buyers should also factor in a property’s resale potential.

“A home is the ultimate price-sensitive purchase. Buy it the way you would a growth stock. People who think only about lifestyle get hurt,” Ottwein says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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