By Brad Reagan and Elizabeth O'Brien
Oct 20th, 2008
When the headlines about the housing market are apocalyptic, the last thing a homeowner wants to do is sell. But a funny thing happened to Jeff and Jennifer Boyd when they put their three-bedroom house in Philadelphia's Graduate Hospital district on the market this summer: They turned a profit. Just 45 days after the listing went up, a buyer snapped up the property for $555,000-$29,000 more than the Boyds paid in 2006. "We were pretty hesitant, knowing what the market is like," says Jeff. "But a few weeks later, it was gone."
Here's a surefire way to start an argument: Suggest that the housing market has reached bottom. To be sure, the near-term outlook is still grim, and nobody is forecasting a rapid nationwide rebound. But there are signs that the overbuilding and speculative pricing that inflated the bubble are working their way through the system. In October 2005, near the peak of the boom, the median sales price for a U.S. home reached 7.3 times per capita income; by this May it had fallen to 5.7, in line with historical norms. Nationally, the rate of decline in sales is slowing, and in some regions sales numbers have actually perked up. "The indicators are starting to look better," says Adam York, an economic analyst with Wachovia. Why the disconnect? For starters, the national sales figures that get so much attention-and remain depressing-are brought down by boom-and-bust markets like Las Vegas, Miami and Phoenix. David Berson, chief economist with mortgage insurance firm The PMI Group, says that if hard-hit states like California, Arizona, Nevada and Florida are taken out of the statistical mix, the picture is much more promising. According to PMI's "risk index," which estimates the odds of prices falling in a given market, at least 65 percent of the nation's 386 metro areas have less than a 10 percent chance of seeing lower prices two years from now. What's more, the government's sweeping bailout of the financial sector could boost the housing market by making borthe rowing easier for buyers.
We dug into those numbers as well as other forecasts and analysis to determine which markets are in the best shape for a rebound. We also talked with housing experts to learn which kinds of neighborhoods and suburbs are thriving. Our search led us to 25 metropolitan areas that look particularly promising, and there are more than a few surprises. Here, we profile seven of the best-looking markets; for the full list of 25, see November's issue of SmartMoney magazine.
Philadelphia
Philadelphia bashers like to note how the city doesn’t quite keep pace with its northeastern neighbors New York and Boston. When it comes to real estate, that may be a good thing. While prices in the Big Apple and Beantown soared during the bubble years from 2003 to 2006, the City of Brotherly Love charted slow and steady growth. Over the past year, Philadelphia prices have stayed stable, while New York and Boston suffered small declines. And only 7 percent of Philly-area homeowners sold for a loss in the past year, according to Zillow—well below the national average of almost 24 percent.
The region did see some overbuilding, but employers such as pharmaceutical and other health care companies are drawing an influx of newcomers to the suburbs. That’s especially true in Collegeville, a former bedroom community 30 minutes northwest of Philly’s city center that is now home to operations of both Wyeth and GlaxoSmithKline, with mutual fund giant Vanguard just a few towns down the road. So named for the leafy campus of Ursinus College, Collegeville offers multi-acre horse farms and country estates for executive types, with more quaint accommodations in town for tweedy academics. Prudential Fox & Roach, a brokerage with about 4,000 agents in greater Philadelphia, says Collegeville prices are up 16 percent this year. “We are getting a lot of lowball offers, but we are negotiating them up,” says realtor Megan Goldstein. Other Philly suburbs are benefiting from the more traditional migration of young families from the city center. The Boyds, the couple who sold their house in town at a profit, are using the proceeds to buy a four-bedroom, 3,000-square-foot home in a new development in Skippack, Pa.
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by Kenneth R. Harney
Election day is November 4th, but some Washington lobbyists are much more focused on what happens in Congress immediately after the election.
Will there be a "lame duck" session? Will there be a Congressional effort to pass a second 2008 economic stimulus bill, and if so, will it provide new, more direct relief to home buyers?
Democratic leaders in both houses are still debating the timing, but there's little doubt that -- no matter who wins on November 4 -- there will be an effort to put together a new stimulus package -- probably larger than the $150 billion plan passed in February.
This time around, though, housing trade groups want much more direct and targeted oomph for real estate out of whatever stimulus assistance Congress provides.
The National Association of Realtors already is pushing a plan that would give a tax credit to all buyers of houses nationwide -- not just first time purchasers -- and would make the credit non-repayable.
Under housing legislation passed this summer, first time buyers can qualify for a $7,500 federal tax credit, but they have to agree to pay it back to the government over a period of years, or whenever they sell the property.
Though early estimates indicated that thousands of buyers would rush into the market to take advantage of what amounted to an interest-free loan from the government, Dr. Lawrence Yun says the payback requirement has turned off a lot of buyers and reduced the effectiveness of the credit.
Yun says a larger credit than $7,500 "would be better," but as long as the repayment feature is removed, the current amount should be sufficient to stimulate sales and reduce unsold housing inventories.
Meanwhile, the National Association of Home Builders (NAHB) plans to ask Congress for an expanded credit as high as $10,000 to $12,000, with no repayment, and is working on a program to "monetize" the credit up front so that it could be used for immediate downpayment cash by purchasers.
Under the builders' plan, private lenders would extend loans to home buyers at or before settlement, much like tax refund anticipation lenders now provide cash in advance to consumers who are expecting refunds on their federal income tax returns.
The downpayment cash would be paid back, plus interest, when the home purchasers received their tax credits the following year.
We'll keep you up to date on the stimulus plans and timing in the weeks ahead, so check back with us regularly here at Realty Times.
Published: October 27, 2008
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Before you spend much time looking for land to buy, first do a little research to find out what costs and steps have to be take before the actual construction. You may decide it is worth more to buy an existing home and make personal modifications.
Many first time home builders think you just buy a lot and get some building permits and
start building. Not so, there are a number of steps and issues one has to consider before
applying for building permits.
When buying land, you need to check the zoning to see if a home can be built on it.
If it is zoned for residential, one must consider if it can be hooked up to sewer and water or is capable of supporting a septic system and well.
Septic systems generally cost $5,000-$10,000.
Wells can cost $15,000-$40,000, depending on the depth, location and the need for a secondary pressure tank.
Building in an unincorporated area usually requires a secondary pressure tank for the required interior fire sprinklers. Then there is the cost of bringing in other utilities such as electricity, propane tanks and phone lines.
Certain areas in the county require a "Perq Test" to determine if the site is suitable for the required septic system. This involves digging a hole about 10 feet deep and waiting a few days to determine if the ground water rises to the point where a septic system would contaminate it.
This test can only be done during the rainy season which generally ends in April.
Grading a lot can be a major cost of building a home. Many lots are priced seemingly low because the high cost of grading and site preparation in order to build.
Obtaining a loan on land is not as easy as getting a loan for buying a house.
Buying raw land, lenders typically require 50% down usually with a shorter term and
a higher rate of interest.
Once these steps are taken the next stop is the local planning department.
The following information was derived from materials provided by the cities of
Morgan Hill and Gilroy and should be considered as only a guideline.
Contact the City for the most up to date information.
Follows are some of the steps necessary to complete the process of building a home.
Advanced Review Group
This group, consisting of a Planner, an Engineer, a Plan Review Technician and the Fire Marshal, meets with the project owner and his/her staff at their request, prior to the submission of any application, to discuss the process for that particular project.
This optional meeting is designed to result in both the owner and the City having an understanding about the nature and scope of the project, the steps required in the process, an approximate time frame in which the project can be completed and an approximation of the fees which will be charged.
Land Use Applications
Land use applications are processes such as General Plan Amendments, Zoning Changes, inclusion in the Urban Service Area, Residential Development Ordinance applications, Tentative Map applications, Conditional Use permits, and Architectural and Site Reviews. One or more of these applications may be necessary on some developments.
Environmental Review
Certain projects, because of their size or potential impact, may require an environmental review. This determination is based on rules of the California Environmental Quality act.
Development Review Group
The Development Review Group meets every week to discuss all applications received in the past week. This group consists of members of each Division within the City organization which has responsibility for any part of the development process.
The group reviews Architectural and Site Review applications. It will also review preliminary plans in order to help the applicant identify any problem areas prior to a full submission of an application. In many cases, this results in a significant time savings for both the applicant and the City, allowing us to reduce your costs as well as the fees we must charge to recover our costs.
Sewer Allocations
Additional or new allocations for sewer capacity are granted by the Engineering Division in accordance with policies set by the City Council.
Utility Connections
Connections to water, sewer and storm drainage systems are handled by the Engineering Division. Engineering also reviews all infrastructure plans associated with new development and inspects the work.
Parcel Maps
Parcel maps are required in order to split lots and for subdivisions of less than five lots.
Building Permits and Inspection
Building permits are generally required for any building or construction involving any plumbing, electrical, mechanical, or structural alterations.
The Uniform Building Code states that a permit is required for all new construction, demolition, remodeling, improving, removing, repairs, or moving of all buildings or structures.
Regardless of the type of occupancy, a permit is required for additions, swimming pools, hot tubs, spas, decks over 30" above grade, carports, sheds over 120 sq. ft. of roof area, skylights, covered patios and walkways, retaining walls, bathroom and kitchen remodeling, termite repairs, reroofing, solar panels and most interior and exterior remodeling work. Permits are also required for plumbing, electrical, and heating and cooling work.
When work is done without a permit, the permit fees will be doubled, the completed work may have to be dismantled or uncovered to provide access for inspection.
Who May Apply for a Permit?
Property owners or licensed contractors may apply for a building permit.
The person signing for the permit must declare they have no employees, or they must show proof of a valid Workers' Compensation Insurance policy before a permit
can be issued.
General Permit Requirements
For new construction, additions and most remodeling, complete plans are required.
All plans must include the name and address of the architect, engineer, or other person preparing the plan.
Energy calculations are required and must be incorporated into the plans.
Generally 3 or 4 sets of plans are required to be submitted.
Information Required on Drawings
A plot plan must be included in plans for any work which alters the use, exterior footprint, exterior of an existing structure, or for any new buildings.
Plot plans must show lot dimensions, front, rear and side setback distances to all property lines and existing buildings.
Indicate all easements and underground utility lines.
Show locations and sizes of proposed and existing water, sewer, gas and electric meter.
Floor plans must show dimensions and the location of all walls, plumbing fixtures, doors, windows, appliances, kitchen counter, furnace and water heater.
All electrical fixtures and locations must be indicated.
Framing plans must indicate the sizes of floor joists and girders, ceiling joists and roof rafters. If you are using main beams, trusses or any unconventional framing, calculations must be submitted.
Four exterior elevations are required which show windows, doors, skylights and architectural finish features. Heights of buildings must be indicated to show compliance with zoning regulations.
Engineered Plans
If you are constructing a new building or addition on a hillside, engineered footings are required, with soils and geology reports to substantiate all design assumptions. Calculations shall be submitted in two copies with the designer’s wet signature and stamp. Structures in the residential hillside zone must have noncombustible roofing and have ceiling fire sprinklers.
How Much Will it Cost?
Building permit fees are based on a proportion of the total construction cost, including all labor and material involved in the proposed work.
A plan check fee is assessed at a percentage of the building permit fee.
Plumbing, electrical and mechanical permit fees are based on the actual work done, such as how many receptacles, sinks, etc.
Where applicable, all site development fees, parks development fees, public safety fees
and school impact fees, mitigation fees and water meter hook-up fees must be paid prior
to permit issuance.
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Taking out a another loan, buying a car, or making large credit card charges before you close can jeopardize your loan commitment. Lenders run a second credit check prior to closing to check for new charges.
Time to Close
Closing at the beginning of a month, the lender will require you to "prepay" the interest on your loan from the day of closing to the end of the month. Therefore the cash you need to close will be more than if you close at the end of the month. Talk with your lender about this.
Buyers Remorse
It's common for buyers to feel stressed or remorseful during and after the purchase of a home, Educating yourself about the buying process will help minimize "buyers remorse".
You will probably forget it soon after you move into your new home.
Notify Services & Utilities
Don't forget to contact services such as: post office, insurance, movers, telephone, utilities, newspaper, etc. a few weeks prior to you moving out to "change over" billing/mailing addresses.
Get a couple of written estimates from movers on the services they provide for the costs of your move. Check the local Yellow Pages to get quotes and contacts.
Final Walk Through
Do a final walk through as close to the sign off as possible.
Check appliances for operability. Test outlets with a radio or test device. Turn on light switches. Check water faucets and toilets.
Make sure promised cleaning and repairs have been completed.
Check that all items included in the purchase of the home(review contract) are present.
For new construction, write down what needs to be completed or fixed, have builder sign. Include the date when these items will be completed.
Closing Costs
You will have to have your closing cost "monies" deposited in escrow before you can close. Don't bring in a personal check to pay. Money should be in the form of a certified check or a money wire transfer. Check with your escrow officer.
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