MONEY Housing Market

6 Smart Real Estate Moves That Will Pay For Themselves

Whether you're new to the housing market or already live in the home of your dreams, these 6 moves can help put money in your pocket.

 

  • Rent Until You Can Stay Put

    rental sign in front of apartment buildings
    Alamy

    When deciding whether to rent or buy a home, don’t forget the fees, commissions, and closing costs that come with buying, says Darrow Kirkpatrick of CanIRetireYet.com. Local prices and appreciation trends matter too. Use the rent/buy calculator at Trulia.com to see the tradeoffs. A good rule of thumb is to rent if you might move in three years or so. (For more help with the decision, see “Should I Rent or Buy a Home?“)

  • Ready to Buy? Remember 28/36

    woman looking at real estate signs
    Dave and Les Jacobs—Getty Images

    Eight years after the real estate crisis, lenders are making mortgages more accessible. But don’t go back to the old days of high borrowing, even if a lender offers some wiggle room. Housing should take up no more than 28% of gross monthly income; housing plus other debt, 36% or less.

  • Fix Up Your Home—the Cheap Way

    home with new driveway
    Greg Nicholas—Getty Images

    Looking to sell fast? Curb appeal literally gets buyers in the front door. An overlooked simple project: a fresh seal coat on the driveway, which “gives a pop” of a first impression, says Kokomo, Ind., agent Paul Wyman.

  • Fix Up Your Home—the Luxe Way

    attic bedroom
    Martin Barraud—Getty Images

    You’ll get the most bang for your buck by adding living space, says Craig Webb of Remodeling magazine. An attic bedroom and basement remodel average $51,700 and $65,400, but, he says, “buyers will appreciate that you made space that wasn’t previously available.” (For a rundown of major projects and what they return in your area, check out Remodeling‘s annual Cost vs. Value survey.)

  • Ditch the 30-Year Mortgage

    Local and Express subway signs
    John Ott—Flickr Creative Commons

    The 30-year mortgage has been called the best friend of the middle class, since it allows families to buy bigger homes. But is that in your best interest? Meet your new buddy: the 15-year loan. The shorter term makes you stay on a tighter budget. The trick is to commit before picking a house, because “that really forces you to save,” says financial planner Ron Rogé. Say you can afford $1,950 payments on a $400,000 home with a 30-year loan at 3.75%. With a 15-year at 3%, you’d have to settle for a $310,000 home. But you’d have a better shot at retiring debt-free. And the total cost savings are immense.

  • Pick the Right ‘Hood

    Ample Hills Creamery ice cream shop, Prospect Heights, Brooklyn, New York
    Richard Levine—Alamy Brooklyn, New York

    “Don’t buy in the part of town that’s already hot—you’ll have missed the opportunity to buy low and sell high,” says Stan Humphries, chief economist at Zillow. Look in an adjacent area “and wait for the cool to come to you.” And don’t listen to that old saw about buying the worst home on the best block. That will bite you when it comes time to sell. One surprising indicator of value? Starbucks. “Homes within a quarter-mile of Starbucks doubled in value, whereas the average home in the U.S. appreciated 65%” from 1997 to 2013, Humphries says.

    Adapted from “101 Ways to Build Wealth,” by Daniel Bortz, Kara Brandeisky, Paul J. Lim, and Taylor Tepper, which originally appeared in the May 2015 issue of MONEY magazine.

MONEY home prices

15 Insanely Expensive Homes on the Market This Spring

It's finally beginning to feel like spring, and that marks the start of home shopping season. We've teamed up with real estate website Zillow for a peek into the most expensive listings in 15 U.S. cities.

MONEY real estate

Four Moves That Will Make Your House a Great Place to Retire

Q: I want to remain in my current home when I retire. What can I do to make sure it is a place where I can age well?

A: If your home is where your heart is, then you have lots of company: Three-quarters of people 45 and up surveyed by AARP say they’ll remain in their current residences as long as they can.

Adapting your home to accommodate your needs as you age takes work, however. So the earlier you start, the better. Do it now, while you have the income and energy to tackle the project, advises Amy Levner, manager of AARP’s Livable Communities initiative. Here’s your plan of action:

Start with the easy fixes. Many of the upgrades that make it easier to stay in your home as you get older—such as raising electrical outlets to make them more accessible, installing better outdoor lighting, and trading in turning doorknobs for lever handles—aren’t expensive. “And these small changes can make a big difference,” says Levner. Check out AARP’s room-by-room guide at aarp.org/livable-communities for more suggestions of what to fix.

Assess the bigger jobs. To make your house livable for the long, long run, consider investing in some more extensive renovations. These include things like bringing the master suite and laundry room to the first floor to avoid stairs, adding a step-in shower, and covering entranceways to prevent falls. Such jobs can be costly (see chart below), so get a bid from a contractor—then determine if it’s worth that price to you to stay or whether you’ll just move later if need be. The good news is that changes you make for aging in place can also make the home more appealing to future buyers, says Linda Broadbent, a real estate agent in Charlottesville, Va.

Notes: Prices for grab bars, door handles, and lights are per unit. Sources: AARP, National Association of Home Builders, AgeInPlace.org, Remodeling magazine

Budget for outsourcing. No getting around the upkeep a house requires. Sure, when you’re retired, you’ll have more time to mow the lawn and paint the fence. But don’t forget that you may be away from home for periods traveling or visiting the grandkids. And later on, you probably don’t want the physical drudgery of home maintenance. Research the fees to hire out some of the tougher tasks such as snow removal and yard work, and build those costs into your retirement income needs.

Deepen community connections. Your close-by social network is just as important as the house itself. “Living in a place where people know you and can help you or provide social interaction will give you a better quality of life,” says Emily Saltz, CEO of geriatriccare-management service provider Life Care Advocates. Use these pre-retirement years to strengthen local ties—explore volunteer opportunities, check out classes, and get to know your neighbors.

Maintaining a social circle is especially important if your kids live far away or have demanding jobs. Good friends will shuttle you to doctors’ appointments and hold the ladder while you change the fire-detector battery, as well as help you up your tennis game.

 

MONEY selling a home

If You Want to Sell Your House This Year, Start Doing These Things Now

Living room
Michael Grimm—Gallery Stock

With home prices recovering and interest rates still low, now may be the time to act. Here are 8 things successful sellers need to know.

In part one of our Spring Real Estate Guide, we told you what to do if you want to buy a home this year. In today’s part two we’ve got tips for sellers. Stay tuned for part three, with advice for those who want to say put and add value with home improvements.

If you haven’t sold a house in the past decade, brace yourself. Today’s buyers are demanding. They’re savvier about market dynamics and data and want to see houses on their own schedule, says Redfin’s chief economist, Nela Richardson. “We’re finding that buyers want access to your house when it works for them,” she says. “They don’t want to wait for the open house.” Baking cookies won’t cut it anymore.

Some things in your favor: Low interest rates are your friend too. Buyers know that rock-bottom mortgages can’t last forever. If interest rates start to tick up, there could well be a rush to buy. On the other hand, if rates go up too far, that will almost certainly dampen prices. “As a buyer’s monthly payment goes up with rising rates, something’s got to give—and that’s likely your home price,” says Keith Gumbinger, vice president of HSH, a mortgage information provider. In other words, sellers: If you snooze, you may well lose.

Your Action Plan

Sell first, then buy. The dilemma most sellers face is whether to buy a new place at the same time. In general, it’s smarter to sell before you buy—there’s nothing worse than having to carry two mortgages at once. You may be able to rent your house from the buyer for a few months, or at least find a short-term rental elsewhere. The one thing you don’t want to do is try to buy a new place with the contingency that you have to sell your old place first. Nothing kills a deal faster, especially if you’re up against other bidders.

Don’t just list your home—market it. Gorgeous photographs, video walk-throughs, perfect floor plans—buyers want it all. You need an agent who can develop a full-blown marketing plan, including social media. “People are doing so much more research ahead of time, going through listings online, and weeding out properties before they see them,” says Benjamin Beaver, an agent with Coldwell Banker in San Angelo, Texas. That’s especially true of millennial first-time buyers, who have grown up with information on demand.

And a top-flight agent can help pay for himself. Redfin found that listings with photos taken by a professional got 61% more views, and homes listed between $200,000 and $1 million sold for $3,400 to $11,200 more than similarly priced homes. A video tour including views of the neighborhood (parks, restaurants, main street) is another great tool. “If your photos capture an interested buyer, the video can help boost their interest,” says Rae Wayne, a real estate agent in Los Angeles. Plus, a video can help drive additional traffic to your listing.

Negotiate with your agent. Bernice Ross, the CEO of RealEstateCoach.com, has a brilliant method for testing a potential agent’s bargaining skills: Ask her for a reduction in her commission—and then think twice about hiring her if she agrees. “If they can’t negotiate a full commission on their own behalf, how are they going to negotiate the best price for you?” she says.

Don’t “test” the market. Pricing right is an art these days. The last thing you want to do is accidentally list too high out of the gate. Not only does it require cutting the price—in many cases to less than the estimated value—but it also means more time on the market. “It’s not like the old days where you put in a 10% buffer,” says Jacquie Sebulsky, a broker with Cascade Sotheby’s International in Bend, Ore. “People are savvier, and many agents won’t even show a house if it’s overpriced.” According to Zillow Talk: The New Rules of Real Estate, a house that is priced right will sell in about half the time of one that is overpriced.

Another reason to price right: traffic. In the first week a listing goes on the market, it gets four times as many visits as a month later, Redfin found. Moreover, if you do end up dropping your price, says Richardson, it sends a signal to buyers that you’ll come down more. “One agent described it to me as ‘blood in the water,’ ” she says.

To help you arrive at a price, your agent should show you up to 10 comparable active, pending, and recently sold (in the past three months) listings and sales. The most recently sold and the ones that are pending are the best; six or even four months ago may not reflect today’s market, says Brendon DeSimone, a broker in New York City and the author of Next Generation Real Estate. Automatic valuation tools, such as from Zillow and Trulia, are definitely great sources of intelligence. They’ll show you how quickly houses are selling in your market, how close they are going to asking price, and more. But data can tell buyers only so much. “The computer can’t see the inside of the house,” says Ross, “and it can’t see if your house has a view.”

Go green. With homes selling at a healthy pace, you probably don’t need to make any major pre-sale upgrades. One that does pay off: the front lawn. A 2012 Texas A&M survey found that curb appeal increases sales prices by up to 17%. “Green grass is huge, whether that means new sod or just fertilizer and lots of water,” says Wayne. Sustainability and low maintenance are the top trends for residential landscape projects, according to the 2015 Residential Landscape Architecture Trends Survey, so you might add simple native plants. You don’t have to spend a lot. See what’s on sale at Home Depot. It only has to be green, not gorgeous.

Fix what’s broken. Paul Reid, a Redfin agent in Southern California, recommends getting a home inspection and fixing any problems before you list the house, despite the out-of-pocket costs. “First-time homebuyers in particular don’t want to come in and do a ton of work,” he says. “They’re making a huge financial commitment and don’t want a money pit. I’ve seen it time and again where a buyer will get in escrow, have the inspection, and back out because the list is overwhelming.”

Go clean. Ten years ago it was mostly upper-end sellers (and maybe desperate ones) who went to the trouble to “stage” their home. Now, the idea that you need to clean out your closets, clear off the counters, take down your photos, and pare down the furniture and accessories is Real Estate 101. That said, you don’t need to hire anyone (though you may need to find someplace to store all your junk). Two areas not to forget: the entrance (that expression about not getting a second chance to make a good first impression is true) and the bathrooms. “I like to say that big, fluffy, white towels can add $10,000 to the price of a house,” says Sebulsky.

Give yourself a deadline. It’s true that houses tend to sell faster in spring and summer (in large part because families want to be settled before the new school year begins). And if your home is still sitting come Labor Day, think twice about keeping it on the market into the fall. “By then a lot of people have made their choices, and if your house has been on the market for six months, people automatically assume something is wrong,” says Sebulsky. Every market is different, of course, but winter may actually be a better option. There’s less competition from other sellers, as well as some pent-up demand after the holidays. Bonus: Anyone trudging through open houses during the winter “tends to be pretty serious about finding a house,” Sebulsky says.

Get more answers to your questions about home buying and selling:
How do I make my home attractive to buyers?
What renovations will pay off when I sell?
Will I pay income taxes on the sale of my home?

MONEY sustainability

10 Super Easy Practices That Are Good for the Earth—and Your Budget

In honor of Earth Day, here are 10 incredibly easy things we should all be doing: They're good for the environment and save money at the same time.

Taking major steps like installing rooftop solar panels or buying an electric car are hardly the only ways to go green. It’s very possible to practice an earth-friendly lifestyle without incurring a major cost outlay. In fact, tons of tiny, easy tweaks to what you do and what you buy day in, day out can not only help the environment, they’ll save you money as a bonus. Here are 10 green cost-saving practices for Earth Day—and every day.

  • Walk or Bike

    Capital Bikeshare, Washington, D.C.
    James A. Parcell—The Washington Post via Getty Images Capital Bikeshare, Washington, D.C.

    Cities and even many small towns are increasingly focused on becoming more walkable and bike-friendly. So why not take advantage? Obviously, neither of these modes of transportation requires the use of fossil fuels or electricity. They’re also free or nearly so. Depending on where you live, you might not even have to buy a bike: The bike share program in Washington, D.C., for instance, costs $75 per year and rides are free if they last 30 minutes or less. (Check out MONEY’s ranking of the Best Places to Walk or Bike.)

  • Group Errands Together

    150420_EM_EarthDay_GroupErrands
    Getty Images—Getty Images

    You could take separate car trips to go grocery shopping, get the oil changed in the car, and visit the doctor for an annual checkup. Or you could combine them into one outing, in a process some call “trip chaining,” which is as simple—or challenging, for some—as being a little more organized and efficient. By planning ahead and grouping errands, you save time and gas money and reduce congestion on the roads.

  • Use Public Transportation

    150420_EM_EarthDay_MassTransit
    Craig Warga—Bloomberg via Getty Images New York subway

    Some parts of the country have better public transit than others, and surveys indicate that people—millennials especially—place a high priority on living in cities with good options for getting around. This makes sense for a number of reasons. According to a study on commuter satisfaction, people who get to work on foot, bike, or via train are happiest. These options are not only more affordable compared with driving, the time of one’s commute is more consistent and therefore less stressful. Check out the tools at PublicTransportation.org to scope out transit options and see how much money and carbon emissions you could save by using public transportation in your neck of the woods.

  • Drink Tap Water

    150420_EM_EarthDay_WaterBottle2
    Alamy

    Americans spent roughly $13 billion on bottled water last year, up 6% from 2013. We’re drinking roughly 34 gallons of bottled water annually per capita, up from just 1.6 gallons in 1976. Granted, this is a much healthier option than sugary beverages, but is bottled water any better for us than tap water? According to the Environmental Protection Agency, tap water is completely safe; many bottled waters are just tap water that’s sometimes (but not always) filtered. And bottled water easily costs 100 times or perhaps even 1,000 times more than tap water. Only an estimated 23% of disposable plastic water bottles are recycled, by the way.

  • Shop with Reusable Bags

    canvas bag
    Getty Images

    The environmental benefits of shopping with a reusable bag like these recommended by Real Simple are pretty obvious: They eliminate the need for plastic bags that tend to wind up in landfills. Shopping with a reusable bag may also save you money, because stores in places like Dallas and Encinitas, Calif., charge customers 5¢ or 10¢ apiece for non-reusable bags.

  • Don’t Overdo It on Groceries

    shopping list
    Getty Images

    Somewhere between 25% and 40% of the food we buy in the U.S. is thrown away. What this shows is that too many of us buy too much at supermarkets and warehouse bulk-supply retailers, and/or that we’re not particularly good at strategically freezing or concocting leftover dishes. To waste less, shop smarter and be creative with foods that might otherwise be dumped in the trash. And to avoid going overboard with impulse purchases at the grocery store, always make a shopping list in advance, and stick to it.

  • Heat and Cool Your Home Wisely

    Insulation
    Jonathan Maddock—Getty Images

    Among the many straightforward and fairly simple steps you can take to trim back household costs and conserve resources: Turn the heat down in winter (you’ll shave 1% off your heating bill for every 1 degree lower); use fans rather than nonstop A/C in the summer; insulate around doors and windows to protect from drafts; and put heating and cooling systems on a timer so that they’re only in use when needed.

  • Use Energy-Efficient Lightbulbs, Appliances

    150420_EM_EarthDay_Lightbulb
    Alamy

    They tend to cost more upfront than less efficient models. But they’ll save you money in the long run because they eat up less electricity when being used, and, at least in terms of lightbulbs, they have longer lifespans so therefore have to be replaced less frequently. As for appliances, look for the Energy Star label as a sign of a product’s efficiency—and its potential to shave dollars off your utility bills.

  • Be Practical About Landscaping

    cactuses outside home
    Trinette Reed—Getty Images

    It’s not wise to battle against Mother Nature by trying to force flowers, plants, and grasses to grow in areas where they’re simply not suited. A low-cost, low-maintenance yard is one that incorporates native plants and greenery that flourish in your zone, without requiring extensive watering, fertilizer, and attention—nor a big budget. Check out classic tips from This Old House and Better Homes & Gardens for landscaping that’s gorgeous, affordable, and earth-friendly. Don’t fixate on having a prototypical grassy front lawn, which may look good but often requires loads of time, energy, money, water, and chemicals to maintain.

  • Compost

    Dumping compost
    Jill Ferry Photography—Getty Images

    Many towns give residents free or deeply subsidized composters, and using one is generally as simple as dumping vegetable peelings, coffee grounds, fallen leaves, grass clippings, and such into the bin. The resulting material can be help your garden and new plants grow, and eliminate much of the need to water and buy fertilizers and pesticides. Composting reduces the amount of waste in landfills as well, of course. (Even apartment dwellers can get in on the act with vermicomposting, or composting with worms.)

MONEY home buying

If You Want to Buy a Home, Here’s What You Need to Do Now

suburban neighborhood
Dan Saelinger

For the first time in years, the boom-and-bust housing market may be finding its sweet spot, with good deals for buyers and sellers. Is it time to jump in?

Too hot, too cold, too hot. For more than a decade the housing market has been nowhere near its Goldilocks moment, a just-right rate of growth that offers opportunities for both buyers and sellers. By certain markers, we’re finally starting to get there: Home prices nationwide are expected to rise 4.9% on average this year, according to the National Association of Realtors (NAR). That’s closer than we’ve been in a while to the long-term average of 3.3%—and a lot more manageable than either the sharp drops of the bust years or the 12% spike we saw in 2013.

What’s more, inventory is expected to loosen up, with 1.9 million units on the market this year—far below the flooded supply of 4 million we saw in 2008. The number of homes that were “flipped” (bought for a quick-sale investment) has dropped for the second year in a row, while the foreclosure rate is less than half what it was two years ago. Those are healthy signs for everyone (except, perhaps, for the small army of TV shows obsessed with renovating and flipping).

Can the center hold? The big question now is whether this manageable growth is sustainable in the long term. Economists such as Moody’s Analytics’ Mark Zandi note that we certainly need more first-time homebuyers in the mix to make that happen, because they drive a good piece of demand, allowing current homeowners to trade up—or cash in. In 2014 the percentage of rookie homebuyers on the market hit its lowest level in decades, just 33% of sales, vs. 40% historically. That said, a new report from BMO Harris Bank finds that 74% of Americans 18 to 34 plan to buy a new home in the next five years, and they are budgeting $240,000 to make the sale, a 24% increase over just last year.

On the other end of the spectrum, experts warn that prices in some markets have already pushed past the bubbling-over peaks, according to RealtyTrac. In San Francisco the median price for a house in December 2014 was $1 million, up 18% from the peak during the bubble. Prices in New York City (median house: $935,000) are 15% above the peak. It’s not just the coasts either. Prices around Austin are 8.6% higher than they were during the mid-2000s. “What we’ve seen so far,” says Zillow’s chief economist, Stan Humphries, “is still a long way from normal.”

What does it all mean for you? If you’re a buyer, you don’t have to worry as much today about being priced out in a bidding war or by all-cash offers. Sellers who didn’t have enough equity in their homes just a few years ago to justify a move could find themselves in a much better position now. And renovators can still get low rates on home-equity loans and lines of credit. In short: If you’ve been sitting on the sidelines, this may be the time to act—or at least to do some serious number crunching.

Here’s some advice to help would-be home buyers plot their next move. In future posts in this series we’ll offer tips for sellers and those who want to stay put and add some value with smart upgrades.

If you’re in the market to buy

The good news: There are a lot more homes to choose from. In addition to the additional properties already on the market, Zillow’s Humphries is forecasting an increase in houses and condos for sale this year as builders pick up the pace and more homeowners cash in on their rising equity. As prices have risen from the depths of the recession—the median sales price hit bottom in 2012, at an average home price of $152,000—the flippers have started to flee, which has helped the overall market stabilize. “Home prices have risen to the point where, in many markets, houses don’t make sense for investors,” says Daren Blomquist, vice president of Realty-Trac, noting that cash buyers dipped to 30%, the lowest in four years. “That helps level the playing field for regular buyers.”

Then there’s that other important factor: interest rates. Despite prognostications that they could tick up by summer, the 30-year fixed rate—recently at 3.7%—”is still within shouting distance of 60-year lows,” says Keith Gumbinger, vice president of HSH, a mortgage information provider.

suburban house
Dan Saelinger

Your action plan

Start hunting. Sure, you’ve been hearing for years that interest rates would shoot up soon. This time you can believe it—Federal Reserve chairman Janet Yellen signaled as much in her most recent Federal Open Market Committee statement. The NAR is forecasting that the 30-year fixed-rate mortgage will average 4.3% in the third quarter of this year, 4.7% in the fourth, and 5.3% over all of 2016. On a $300,000 loan, the difference between 3.7% and 5.3% would be $285 a month (a payment of $1,381 vs. $1,666) and $102,600 over the life of the loan.

Those rates could go even higher if Europe’s economy starts to recover, warns Sam Khater, deputy chief economist for CoreLogic. One reason that American mortgage rates have stayed so low is that in recent years global investors have poured money into the relative safety of U.S. Treasuries, a main factor influencing the price of mortgages. If money starts flowing back out to the rest of the world, domestic rates will inch up.

Home prices have been heading up as well. Not as fast as in the bubble years, of course, but some areas have already seen double-digit growth. “Until recently the fastest-growing markets were those hit hardest,” says Khater. “Today the fastest growing are those with healthy economies.” With the economy on the upswing, there are a lot more of those now too.

Go fixed-rate, not flex. Adjustable-rate loans may look irresistibly low now—around a 3% average for a five-year and as low as 2.5% for borrowers with credit scores of 760 and higher. But you’re likely to end up paying significantly more at the reset date with rates heading upward. “It’s hard to argue against a fixed-rate loan,” Gumbinger says. The exception: Buyers who plan to stay in the home for less than 10 years may benefit from the low ARM rates in the fixed period.

Right-size your down payment. If you’re looking in a highly competitive market, offer to put down more than the standard 20% if you can afford it. That gives the seller the extra reassurance that if the house appraises for less than the asking price, you’ll still be able to secure a mortgage. Signs that market conditions warrant sweetening the down payment: if houses where you’re looking are going to contract within a matter of days or if they are routinely selling for more than the asking price.

Find a savvy broker. Buyers have so much more information at their fingertips: comparable sales, school district reports, walkability, and more. But don’t underestimate the kind of advice you’d get from a broker. A buyer’s agent will have on-the-ground knowledge of market trends and be able to identify unseen circumstances that affect a property’s price, anything from a cracked foundation or a dead boiler to whether there’s been a recent school redistricting or a zoning change in the area. She might also have access to “pocket” listings that don’t make it online because the privacy-minded sellers don’t want their home flooded with prospective buyers.

Take a little time. Sure, you want to keep an eye on the prospect of rising interest rates. But in a balanced market with steadily rising inventory, don’t feel pressure to jump at the first house you like, says Craig Reger, a broker in Portland, Ore. Visit a good number of open houses (at least five) to get a sense of what’s out there, and go shopping with your agent. You’ll start to learn if a property is over- or under-priced and why.

The rules are a little different if you’re looking at new construction, because builders don’t negotiate on price very often. “They tend to sell at 100% of their list price because that’s their comparable for the next house,” says Jacquie Sebulsky, a broker with Cascade Sotheby’s International in Bend, Ore. That said, if you buy in the early stages of construction (when the developer knows you’ll have to live through months of noise, dust, and other hassles), you may be able to ask for help later with closing costs, upgrades, and additional amenities, such as appliances, in lieu of a price cut.

Remember that money isn’t (always) everything. Even in a market where inventory is tight and sellers aren’t negotiating much, you still have some leverage. That starts with minimizing the seller’s potential headaches. If you have attractive financing—a pre-approved loan from a reliable lender or a large down payment—say so. If you can close on the seller’s schedule—whether that means quickly or letting him stay an extra month—do it.

And don’t be shy about plucking a few heartstrings. It never hurts to write a letter explaining what the house means to you. “A lot of sellers don’t want to sell to investors,” says Tim Lenihan, a broker in Seattle. “Hokey as it sounds, it can help you get your foot in the door.”

MONEY buying a home

This Spring’s Hottest Real Estate Markets

North Beach, San Francisco Bay Area homes
Christian Heeb—Getty Images North Beach, San Francisco Bay Area

Buyers need to move a bit faster this year in order to snag their dream house, even in some of the slowest-moving markets. Homes are going especially quick in the San Francisco Bay Area, Southern California, Seattle, and Salt Lake City.

Housing inventory remains tight, and one of the questions on the minds of many homebuyers this spring is just how fast they will have to move to get the home they want and can afford.

To find out how long homes are staying on the market, we calculated the share of homes for sale on Trulia over a two-month period. We first looked at homes listed on February 5, then counted how many were still for sale on April 5. Faster-moving markets had a lower percentage of homes still on the market after two months, while slower-moving markets had a higher percentage.

Trulia_FastestMovingMarkets_Infographic_Apr20151

Our two-month measure is similar to a common housing statistic: days on market (DOM). In general, housing markets with more inventory and fewer buyers will have a higher share of for-sale homes remaining on the market after two months and a higher median DOM. But we prefer our two-month measure over the widely watched DOM as a way to determine how quickly homes are moving in a market.

Why? We think DOM is potentially misleading. If lots of new inventory suddenly lands on the market, then the median DOM could fall thanks to all those newly listed homes. Thus, a low median DOM might indicate that buyers are snapping up homes quickly, so homes aren’t staying on the market long (a seller’s market). But it could also signal that a lot of new inventory has just come onto the market (a buyer’s market). As a result, it’s difficult to decipher what’s really going on based on DOM alone.

Looking for a Bargain Home? So Is Everyone Else

Nationally, 60% of homes listed for sale on February 5 were still on the market on April 5, down a bit from 62% for the same period last year. What’s quickening the pace of sales? It turns out it’s homes priced at the low end of the market. To see this, we evenly divided all homes in each of the 100 largest U.S. metros into three price tiers.

We gave each metro its own price cutoffs based on what’s considered high-end, mid-range, and low-end locally. On average, lower-priced homes moved fastest. Only 50% of homes in this tier were still on the market after two months compared with 65% of higher-priced homes.

What’s more, home sales in the low-price tier sped up more compared with a year ago than sales in other tiers. The share of low-price homes still on the market after two months dropped 3 percentage points, compared with a 1 point drop for middle-tier homes and a 1 point increase for high-tier homes. As always though, the national trend hides big differences from one local market to another. In many metros, the sales pace is quickening, while in others it is slowing.

Trulia_FastestMovingMarkets_BarChart_Apr2015

California: Home to America’s Fastest-Moving Housing Markets

If you’re a home seller, California may indeed be the Golden State. Eight of the 10 fastest-moving housing markets are there, and homes are selling much faster than in the Northeast, South, and Midwest. In fact, fewer than 30% of homes for sale in the three San Francisco Bay Area metros remained on the market after two months.

By contrast, about 70% of homes in Long Island and Albany, NY were still on the market. In addition, the only metros outside California that made the 10 fastest moving list were Seattle and Salt Lake City.

America’s Top 10 Fastest-Moving Housing Markets
# U.S. Metro % of homes still for sale after two months, April 2015 % of homes still for sale after two months, April 2014 Difference in share still for sale, 2015 vs 2014 Median Asking Home prices, April 2015
1 San Francisco, CA 26% 28% -3% $1,099,000
2 San Jose, CA 30% 31% -1% $800,000
3 Oakland, CA 30% 31% -1% $598,000
4 San Diego, CA 33% 44% -11% $549,990
5 Orange County, CA 41% 45% -3% $699,000
6 Seattle, WA 42% 45% -3% $409,993
7 Sacramento, CA 42% 45% -3% $396,950
8 Los Angeles, CA 43% 45% -3% $549,000
9 Ventura County, CA 43% 50% -6% $589,999
10 Salt Lake City, UT 45% 28% -6% $299,900
Note: Among the 100 largest U.S. metros. The two-month shares and the difference are rounded to the nearest percentage point, and the difference was calculated before rounding; therefore, the rounded difference might not equal the difference between the rounded shares. Click here to download the full results for each of the 100 largest U.S. metros.

None of the fastest-moving markets have slowed since last year. In fact, the markets on our top 10 list that sped up the most are San Diego, Ventura County, and Salt Lake City. Other markets that are speeding up most rapidly are almost exclusively in the South and Southwest. The share of homes for sale in Cape CoralFort Myers, FL still on the market two months later dropped from 64% in April 2014 to 47% in April 2015. El Paso, TX and Richmond, VA also sped up at a similar pace, even though homes in those markets aren’t moving quickly enough to land them on the 10 fastest-moving markets list.

To illustrate this point, the figure below shows that homes in markets with bigger price increases tend to move faster, though not always. For the most part, these fast-moving metros are sellers’ markets where homes don’t sit very long.

Trulia_FastestMovingMarkets_Scatterplot_Apr2015

Housing Markets Moving Sluggishly in Long Island and Albany, NY

In contrast, the slowest-moving markets are in the Northeast, including Long Island and Albany, and in the South, including Columbia, SC, and Knoxville. All but two of the 10 slowest-moving markets had year-over-year price increases below the 5% national average.

However, even among these snail’s-pace markets, the share of homes still for sale after two months dropped in five of 10 metros. Knoxville and Long Island both all sped up 2 percentage points this year compared with last. It’s true that in six of the metros on this list, the pace of sales slowed in 2015 compared with the year before. The pace of sales slowed the most in Miami (9 points) and Pittsburgh (4 points).

America’s Top 10 Slowest-Moving Housing Markets
# U.S. Metro % of homes still for sale after two months, April 2015 % of homes still for sale after two months, April 2014 Difference in share still for sale, 2015 vs 2014 Median Asking Home prices, April 2015
1 Albany, NY 71% 70% 1% $264,900
2 Long Island, NY 69% 71% -2% $474,995
3 Syracuse, NY 68% 67% 1% $153,000
4 Columbia, SC 67% 69% -1% $170,000
5 Knoxville, TN 67% 69% -2% $184,900
6 Pittsburgh, PA 67% 62% 4% $155,000
7 Lake County –Kenosha County, IL-WI 67% 64% 3% $289,000
8 Virginia BeachNorfolk, VA 65% 65% 0% $249,000
9 Birmingham, AL 65% 66% -1% $193,000
10 Miami, FL 65% 56% 9% $319,000
Note: Among the 100 largest U.S. metros. The two-month shares and the difference are rounded to the nearest percentage point, and the difference was calculated before rounding; therefore, the rounded difference might not equal the difference between the rounded shares. Click here to download the full results for each of the 100 largest U.S. metros.

Why do some markets speed up while others slow down? Last year we found the fastest moving markets were those that had the largest year-over-year price gains. Things don’t appear to have changed this year. In fact, asking prices increased near or above the national average of 5% year-over-year in six of the 10 fastest-moving markets.

But fast-moving markets are different in other ways, too. They tend to be more expensive to begin with. In other words, they have both higher price levels AND they’ve notched bigger price increases in the past year. Expensive markets—including many in California—have tight housing supplies because of limited construction in the face of growing demand. So homes get snapped up quickly.

And this is bad news for first-time homebuyers. The combination of an expensive market and fast-selling homes at the low tier is yet another hurdle for first-timers, who are already getting slammed by declining affordability and slow wage growth. Now, even the homes they might be able to afford seem to be disappearing in the blink of an eye.

MONEY Taxes

8 Reasons Your Property Taxes Are So Damn High

150420_EM_PropertyTax
Lisa Corson—Gallery Stock Tourism keeps Las Vegas' property taxes low. New Jersey homeowners have no such luck.

Income taxes are probably top of mind right about now. But for many homeowners, high property taxes are an issue year-round. What's to explain why property taxes are such a burden in certain parts of the country?

A Monmouth University survey released last fall showed that more than half of New Jersey residents want to leave at some point, with 26% saying that it’s “very likely” they’ll move away from the Garden State. The most popular reasons cited for were the costs of housing and property taxes—the high cost of property taxes in particular. “The chief culprit among these costs is the New Jersey’s property tax burden,” Patrick Murray, director of the Monmouth University Polling Institute, explained.

New Jersey isn’t the only state at risk of losing residents to Florida, Pennsylvania, or another state with lower taxes. Stories pop up regularly speculating about the likelihood of homeowners jumping ship from high-tax states like New York and Connecticut as well.

Why is it that some states and municipalities have much higher property tax than their neighbors in the first place? Here’s a rundown of a few major factors.

The community has good schools. Or at least extremely well-funded ones. According to Zillow, the median residential property tax bill in New York’s Westchester County is $13,842, highest in the nation. A Westchester Magazine feature focused on why the leafy, desirable county holds this dubious distinction. The piece draws a comparison to Virginia’s Fairfax County, which is similar in many ways to Westchester: They’re both suburbs of big cities (New York and Washington, D.C.), they have similarly high home values, and they educate about the same number of students in public schools, which in both places have a good reputation.

Yet Westchester spends over $1 billion more to fund its schools, and since property taxes cover the lion’s share of that bill, there’s a big disparity in what homeowners pay. The average residential property tax bill is about $5,500 annually, less than half of what Westchester residents pay (people in Fairfax still complain about property taxes being too high).

The average teacher salary in Fairfax was roughly $67,000 in 2014. In Westchester, the average was estimated at $88,000 in 2013. Benefits and administrative costs add up too—Fairfax County has one superintendent, Westchester has 40—and collectively they translate into bigger burdens on Westchester’s property owners. Defenders of high educator salaries always note that they’re necessary given the high cost of living in the area, and it’s a valid point. After all, teachers, principals, and superintendents must pay local property taxes!

State workers make good money too. By most measures, New Jersey homeowners have the country’s highest property taxes. Tax Foundation data shows that the Garden State has the highest effective property tax rate (percentage of home value) and the highest property taxes per capita. The average property tax bill in the state hit $8,161 in 2014, also tops in the U.S. In fact, one study indicates that less than 1% of American homeowners pay more than $8,000 annually in property taxes.

An Asbury Park Press op-ed published last summer noted that a big reason for the state’s high property taxes is how much the state pays its workers:

The problem lies less with layers of government and excessive numbers of government workers providing services than with the generous salaries and benefits of those who are on the public payroll. Average state worker salaries: highest in the nation. Average teacher salaries: third highest. Public employee health benefit costs: second highest in the nation.

Your state relies heavily on property taxes. The above-referenced editorial also points out that 48% of state and local revenues collected in N.J. come from property taxes, which is off-the-charts high: “No other state derives more than 41 percent of its revenue from that source; the U.S. average is 33.1 percent.”

This state of affairs would be more acceptable to locals if the tradeoff for high property taxes is low taxation in other areas. Indeed, New Jersey has one of the country’s lowest gas taxes, and it’s in the middle of the pack in terms of taxes on wine, spirits, and beer. Unlike many other states, people in New Jersey don’t pay any vehicle property taxes either. Then again, New Jerseyans do pay the second highest state sales tax rate (7%, only California is higher).

Little or no tourism. A recent WalletHub study named Hawaii as the state with the lowest property taxes. New Jersey property taxes are eight times higher than their counterparts in the Aloha State. And a big reason why homeowners get off (relatively) easy in Hawaii is that the state collects so much from outsiders, thanks to high taxes on hotels and other tourism expenses. Likewise, taxes paid by casinos and tourists in Nevada are often credited as a reason why state property taxes aren’t high.

Little or no industry. The more that industrial and commercial businesses pay in taxes in a state or town, the less it’s necessary for homeowners to cover the government’s tab. According to the Wyoming Taxpayer Association, 69% of property taxes in the state are paid by mineral production businesses. Therefore, residential property taxes can remain low—the state has no income tax either. The city of Marlborough, Mass., recently estimated that it were it not for local commercial taxpayers, the average homeowner would see his property tax bill (now averaging $4,791) shoot up by $1,164 per year.

Your property is worth a bundle. Your property tax bill is based on multiplying the local tax rate times the assessed value of your home. So, generally speaking, the owners of more valuable homes pay more in property taxes. Marin County has the most expensive real estate in California, on average, so it should come as no surprise that it has the highest (or among the highest) average property taxes too. In New Jersey, the 10 towns with the highest property tax bills all averaged over $18,000 per year, and five out of the ten had average residential property values over $1 million.

Or it’s not worth much at all. A recent RealtyTrac report shows that nationwide, the highest property tax rates were for high-end homes, valued between $2 million and $5 million. That’s not surprising. What is somewhat of a shock, however, is that the second highest effective property tax rate—calculated based on a percentage of a home’s value—was for houses at the extreme low end of the value spectrum, assessed at under $50,000 or less. Granted, owners at the low end aren’t paying big bucks, but in terms of the percentage of the home’s value, property tax rates represent a disproportionate burden.

Your assessment was too high. There may not be much you can do to change your local tax rate—other than move, of course. But you can challenge the assessment on your property. If your appeal results in a lower assessment, your tax bill goes down as well. The National Taxpayers Union estimates that somewhere between 30% and 60% of properties are over-assessed. This guide to disputing your property taxes from This Old House has some of the best advice on the topic we could find.

MONEY home improvement

Getting Your Lawn Equipment Ready for the Season

For Sale sign illustration
Robert A. Di Ieso, Jr.

Q: I learned the hard way that lawnmower gas goes stale over the winter, so now I use gasoline additive in my mower, string trimmer, snow blower, and generator. But my neighbor says it’s better to burn the tank dry. Is that true?

The reason that gas gets “stale” and can gum up power equipment engines is that it contains ethanol, which absorbs water. That water can damage the engines of non-road equipment, says Kris Kiser, of the Outdoor Power Equipment Institute, a trade association.

Most gas-station gas contains 10% ethanol, thanks to a 2007 federal mandate designed to reduce carbon emissions. And 15% ethanol is now being sold at some stations, but only for cars built in 2001 or later.

It actually turns out that ethanol doesn’t provide nearly the environmental benefit that was expected—and some lawmakers are proposing eliminating the mandate altogether—but that’s another story. For now, the vast majority of small-engine problems can be traced to ethanol, says Kiser, and you have three choices for avoiding trouble:

  1. Buy ethanol-free fuel. You can get it at home centers and outdoor power equipment dealers. Burn it and you won’t have to worry about your gas going stale. The problem is you’ll pay around $6 a quart for “E-0” gas. That equates to a very steep $24 a gallon.
  2. Use a fuel stabilizer. It prevents the ethanol from absorbing moisture and thereby prevents regular gas-station fuel from going stale and gumming up the motor. A bottle that costs only about $9 will probably last you several years.
  3. Run your gas tank dry. By rationing small portions of gasoline into your power equipment as needed and always running the machines until they burn all that gas and stall out, you ensure that no gas is left in the engine to go stale. This solves the problem and offers another large benefit, especially for gas-powered generators. The standard advice to run generators monthly is largely designed to burn the old gas and prevent it from going stale. But if you leave the tank dry, there’s no need to do that. Just start it (with very little gas) every few months to ensure it’s working properly, and run it until the gas is gone.

“Any of these three options works well,” says Kiser, “but check your owner’s manuals because different manufacturers have different requirements for their machines.”

 

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