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6 tips for buying a vacation home

LOS ANGELES – June 16, 2014 – When Taylor Billington and her husband, Gary, set their goals 10 years ago, one of the items they included on their “vision board” was a vacation home.

It was more than an idle fantasy. The Fort Lauderdale homeowners, who own a marketing firm, had traveled to Orange County many times, and they had a clear idea of what they were seeking.

“The house had to have a water view,” Taylor Billington said. “It had to be Zen. It had to be modern. It had to have a very organic feel.”

Earlier this year, they took the plunge, spending $2.9 million on a three-bedroom, 3,800-square-foot home overlooking the Pacific Ocean in Laguna Beach, where they’ll celebrate July 4th.

The home, perched on the edge of a canyon, beckoned with its fluid decks and an abundance of windows, as well as an infinity edge swimming pool and spa. The couple isn’t crazy about Laguna Beach’s summer traffic, but it did not come as a surprise. And it wasn’t a deal-breaker.

“We just don’t hate it as bad as here,” Taylor Billington said of the congestion on South Coast Highway, in an interview from her Florida home, “because the (Laguna) views are so amazing.”

The Billingtons followed one of the top rules that real estate agents cite about buying a second home: Make sure you know the area well first. Not just the draw. The drawbacks, too.

“Many people vacation somewhere, have a great time, then decide to buy something on a whim,” said Phil Malamatenios, Stanfield Group manager at Hom Sotheby’s International Realty in Orange County. It’s “not a good idea without researching thoroughly.”

Vacation home sales surged in 2013, the latest year available, according to the National Association of Realtors. They made up 13 percent of all residential transactions last year, the highest market share since before the housing crash in 2006.

If you’re on the market for a vacation home, here are some additional issues to consider, as laid out by agents and others knowledgeable about Southern California real estate:

Beware joint ventures

Ideally, one person or family will buy and use the home.

“If you involve friends or family members in a joint venture, be cautious and have an attorney to draft a partnership agreement,” said Phil Immel of ImmelTeam Luxury Real Estate in Dana Point. “Human nature changes business and family relationships. Divorce or financial change of circumstances over the years can get messy.”

If there’s more than one party involved, he advised, have a buyout agreement in advance.

Also, you would have to figure out who signs the loan documents. Some or all of the partners? The fewer involved, he said, the better.

He explained it this way: If two separate parties were on the documents, they’d be jointly – and separately – liable for the payments.

“If (you’re) not on the loan, the lender cannot use that against you” in evaluating whether you can afford other properties, Immel said. “However, you can count it as an asset, improving your creditworthiness overall.”

Consider renting it out

If you’re buying in a beach town and thinking of renting the home when you’re not there, get close to the water. Walking distance is most in demand, said Larry Aguilar of First Team Real Estate.

Aguilar is in the midst of closing a deal on a Balboa Peninsula condo for a client whose primary home is in Yorba Linda.

On the peninsula, Aguilar said, “You can make in the summer months what most people make in the whole year on a month-to-month rent somewhere else.”

“I own a lot of rental properties inland,” he said, adding, “Why don’t I buy something over there (near the ocean), and I can almost double or triple my income on rentals?”

If you are considering becoming a seasonal landlord somewhere, make sure you are clear on any rental restrictions, either by the city or a homeowners association.

Figure on extra costs

Think about how you would handle the business of rentals, including whether to hire a management company.

“Along the same lines, if you do not plan to do all of the work on the rental yourself, you need to consider having a team of people who can do repairs and manage the condition of the property as well,” said Christine Donovan, a real estate broker and attorney at DonovanBlatt Realty in Costa Mesa. “These all add up to additional costs of owning the home.”

Even if you don’t share your getaway with tenants, remember to factor in such costs as utilities, maintenance and landscaping.

Make it a stress-free trip

Many people prefer a relatively short trek to their second home, so buying something that’s between a 45-minute and a couple-of-hours’ drive from your primary residence can be a good idea.

Larry Aguilar’s Yorba Linda client is 56-year-old Hemant Agrawal. The Balboa Peninsula condo is his first vacation home. The search, Agrawal said, was a relative snap.

“It was much simpler than had it been for someone who’s not aware of what they need,” he said. “We were already clear we wanted to be as close to the water as we can.”

He also saw no need to travel far.

“Sometimes you just want to get away just to take a break,” said Agrawal, who works in the software industry and is married with two grown children in their 20s. The kids like the peninsula’s summertime vibe, busier than their quiet, inland neighborhood, he noted.

“They wanted to be someplace where there’s some action.”

Pick the right beach

Buying a house along the beach brings its own set of decisions.

“Do they want a busy beach or quiet beach?” asks Ken Ross of Surterre Properties, who sells oceanfront houses along a strip of Capistrano Beach where the homeowners also own the sand.

“Do they want to be closer or further away from the water?” he said. “In Orange County the water could be anywhere from 50 feet away to 500 feet away.”

And size doesn’t matter as much as it might in another area, according to Ross.

“Do they really need a bigger home?” he said. “When at the beach, they are outside 80 percent-plus of the time.”

Don’t isolate yourself

If it’s isolation you’re after, that’s fine. But be aware of the financial implications. Agents say that being an outlier can limit a vacation home’s resale potential.

“A remote location could be a hard resale, as most people don’t want to be remote,” Donavan said. They typically want to be near such amenities as restaurants and shopping, she said.

Gloria Jewell of Teles Properties, who sold the Billingtons their Laguna Beach house, agreed.

“Although a remote area does appeal to a few, the masses will prefer a destination resort for a vacation home,” she said. “Anywhere in a resort area – whether it’s golf, ocean, skiing (or) desert – will sell quicker.”

Above all, don’t let your vacation bliss lead you into a bad decision that could be with you for years.

“Purchasing a vacation home is such an emotional purchase,” Ross said, “that I have seen very smart people make decisions they would not do in any other circumstance.”

Copyright © 2014 The Orange County Register (Santa Ana, Calif.), Marilyn Kalfus. Distributed by MCT Information Services.

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Home ‘value’ isn’t absolute – it’s subjective

SAN FRANCISCO – June 12, 2014 – The concept of value is subjective when it comes to home amenities, and sellers often find that price and cost do not equal value.

Buyers’ and sellers’ motivations and desires play a big role, but they can be difficult to calculate. Some people may be willing to pay more for a pool, a main-floor master bedroom or to live a certain location, for example, but these features may turn off others.

Experts point out that a home’s worth is based on the data as well as the role it serves for the person living there. Other factors to consider include functional obsolescence due to over-improvement, whether the market will pay more for unique features like outdoor kitchens or media and audio systems, and whether buyers want athletic equipment in their homes that they can access at professional gyms and training facilities.

It’s important for buyers to consider whether the home works for them, as the “value in use” to the occupant may not be supported by market data.

Source: Inman News (03/31/14) Miller, Hank

© Copyright 2014 INFORMATION, INC. Bethesda, MD (301) 215-4688

 

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Leading Markets Index shows 56 metros at or above normal levels in June

NAHB: Leading Markets Index shows 56 metros at or above normal levels in June

 

WASHINGTON – June 10, 2014 – Of the approximately 350 metro markets nationwide, 56 returned to or exceeded their last normal levels of economic and housing activity in June, according to the National Association of Home Builders/First American Leading Markets Index (LMI). This represents a net gain of nine metros year-over-year.

The index’s nationwide score of .88 held steady from the previous month. This means that based on current permit, price and employment data, the nationwide average is running at 88 percent of normal economic and housing activity. Meanwhile, 30 percent of metro areas saw their score rise this month and 83 percent have shown an improvement over the past year.

“Markets are gradually returning to normal levels of housing and economic activity,” said NAHB Chairman Kevin Kelly. “When we see more sustainable levels of job growth, this will unleash pent-up demand and bring more buyers into the marketplace.”

Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.4 – or 40 percent better than its last normal market level. Other major metros at the top of the list include Honolulu; Oklahoma City; Austin, Texas and Houston. Rounding out the top 10 are Los Angeles; San Jose, Calif.; Harrisburg, Pa.; Pittsburgh and Salt Lake City – all of whose LMI scores indicate that their market activity now equals or exceeds previous norms.

“Of the three components in the LMI, the one lagging is single-family housing permits, which is only 43 percent of the way back to normal while home prices are 26 percent above their last normal level and employment is at 95 percent of its previous norm,” said NAHB Chief Economist David Crowe. “In the 22 metros where permits are at or above normal, the overall index indicates that these markets have fully recovered.”

“Well over one-third of all markets are operating at a level of at least 90 percent of previous norms, and this bodes well for a continuing housing recovery in the year ahead,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.

Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession. Also at the top of the list of smaller metros are Bismarck, N.D.; Casper, Wyo.; and Grand Forks, N.D., respectively.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity.

More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth. For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison.

© 2014 Florida Realtors®

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Growth to pick up, hiring steady

Good News for All!!

Survey: Growth to pick up, hiring steady

 

WASHINGTON (AP) – June 9, 2014 – U.S. economic growth should accelerate in the second quarter and remain healthy for the rest of this year, according to a forecast by a group of U.S. business economists. Still, growth for the full year will likely come in lower than they previously estimated.

Job growth should remain steady and consumer spending will also likely pick up, a survey by the National Association of Business Economists said Monday. The survey of 47 economists from companies, trade associations and academia was conducted from May 8 to May 21.

The survey also found that economists increasingly agree that the Federal Reserve will end its bond purchase program by the end of this year.

That’s partly because economists are optimistic about growth for the rest of this year: They expect it will jump to 3.5 percent in the second quarter and remain above 3 percent for the rest of the year.

But the pickup comes after harsh winter weather caused the nation’s gross domestic product to contract 1 percent in the first three months of the year, much worse than analysts had expected. GDP is the broadest measure of an economy’s output.

That weak first quarter reading has caused many economists to lower their expectations for 2014 as a whole. The NABE survey found that economists now project growth will be just 2.5 percent this year, down from a forecast of 2.8 percent in March.

The new forecast is still slightly above the annual average growth rate of about 2.2 percent since the recession ended in June 2009 and up from 1.9 percent in 2013. But stronger growth is needed to accelerate hiring and boost wage growth, which has been weak by historical standards.

The NABE’s survey is slightly more pessimistic than the Federal Reserve’s most recent projections, released in March. The Fed expects growth will be between 2.8 percent and 3 percent this year. The Fed may lower its growth outlook for this year when it releases its next forecasts later this month because of the first quarter’s contraction.

Economists are nearing a consensus about the timing of the Federal Reserve’s next moves. Nearly three-quarters expect the Fed will end its bond purchase program in the final three months of this year, the NABE survey found. That’s up from the 57 percent who said so three months ago.

The Fed is purchasing Treasury securities and mortgage-backed bonds in an effort to lower long-term interest rates to encourage more borrowing and spending. It has been steadily paring back the program, from $85 billion a month last year to $45 billion in May.

In addition, 86 percent of economists forecast that the Fed will raise the benchmark short-term interest rate it controls for the first time in 2015. In March, just 53 percent said 2015, while one-third said this year and 15 percent said a rate hike wouldn’t occur until 2016.

The NABE survey found that the economists are more optimistic about hiring. They project that employers will add 209,000 jobs a month this year. That’s up from their March forecast of 188,000.

So far this year, hiring has been a little bit better: it has averaged 214,000 a month from January through May.

More jobs means more people earning paychecks, and that can boost spending.

Economists are more optimistic about consumer spending this year, which they estimate will grow at a 2.9 percent pace. That would be the highest level since 2006.

AP Logo Copyright © 2014 The Associated Press, Chris Rugaber, AP economics writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

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Why do people move?

WASHINGTON – June 5, 2014 – Among 36 million people who moved between 2012 and 2013, 5 percent said the most important reason for moving was to be closer to work or for an easier commute, while another 8 percent cited the desire for cheaper housing, according to a report released by the U.S. Census Bureau.

The most common reason for moving in 2013 was “wanted new or better home/apartment.”

The report, Reason for Moving: 2012 to 2013, presents an in-depth look at 19 reasons why people changed residences during the previous year. It’s the Census Bureau’s first on this topic since 2001, and the report compares numbers to 1999.

Overall, the reasons for moving haven’t changed, but a higher percentage of people now move for pragmatic reasons, such as saving money. While “new or better home” still topped the list of reasons, it was cited by only 14.8 percent of respondents recently. In 1999, 20.8 percent of Americans moved to improve their circumstances.

In addition, 6 percent moved in 1999 for cheaper housing; last year that parentage rose to 8.3 percent. And the percentage that hoped to lower their commute costs to work was only 3.1 percent in 1999; last year it was 5.4 percent.

“We asked people to select the reason that contributed most to their decision to move,” said the report’s author, David Ihrke, a demographer in the Census Bureau’s Journey to Work and Migration Statistics Branch. “Picking one reason can be difficult as moves are often motivated by many different, and oftentimes competing, factors. For instance, if one’s primary reason for moving is to be closer to work or having an easier commute, they may have to sacrifice other preferences. This could include forgoing cheaper housing options or settling for a different neighborhood. If they mainly want cheaper housing, they may have to deal with a longer commute.”

Some people moved for a better job, but the Census study finds that reason increases based on the distance of the move: 23 percent of moves less than 50 miles were for job-related reasons, but it was 48 percent of those 500 miles or more.

Other highlights

″ Men were more likely than women to move for job-related reasons.

″ Better-educated people were more likely to move for job-related reasons than those with lower levels of education.

″ Married respondents were the least likely to move for family-related reasons.

″ Moves within the same county were typically for housing-related reasons, while intercounty moves and moves from abroad were more for job-related reasons.

″ Several individual reasons, such as “change of climate,” “health reasons” and “natural disaster,” were each cited as the main reason for moving by fewer than 1 percent of householders.

For people who seeking to move, dwellr, a new Census Bureau app powered by American Community Survey statistics, can pull up a list of U.S. locations that matches users’ preferences for such variables as city size, geographic region and job type.

The full survey is available on the Census Bureau’s website.

© 2014 Florida Realtors®

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Confidence to heat up summer market

Survey: Confidence to heat up summer market

 

WASHINGTON – May 28, 2014 – More buyers are saying that summer is the best time to purchase a home, according to the latest Prudential Real Estate Consumer Outlook Survey.

More consumers say that the spring momentum will carry into summer, with the survey showing an eight-point jump over a year ago in those who view summer as the best time to buy a home.

Overall, 77 percent of 2,500 consumers surveyed reported a favorable view of housing, a 12-point jump from one year prior. Millennials showed the most optimism, at 85 percent.

Nearly 70 percent of those surveyed said they’re committed to buying or selling a home now, a six-point increase compared to Prudential’s survey at the end of 2013.

“Consumers understand that home valuations remain attractive and mortgage rates are still near historic lows, but with the brutal winter that extended into spring around the country, they really couldn’t do much about it,” says Earl Lee, president of Prudential Real Estate.

“The optimism and enthusiasm we’re seeing through the survey underscores consumers’ motivations and pent-up demand,” says Lee. “As more homes come to market and lenders ease their stringent underwriting guidelines, we anticipate busy times ahead in real estate.”

Survey findings

  • 78 percent of potential buyers say it will be easier to buy a home this spring since “homeowners want to sell”
  • 63 percent of sellers report increased optimism based on an improving economy and their perception of buyer motivation
  • 76 percent of consumers say pent-up demand will create more competition for existing homes this season
  • 83 percent of buyers say they plan to buy a home sooner rather than later because they fear interest rates will rise

Source: “Buyers and Sellers See Spring Buying Season Blooming into Summer: Survey,” RISMedia (May 26, 2014)

© Copyright 2014 INFORMATION, INC. Bethesda, MD (301) 215-4688

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‘Buying Naked’ on TLC latest entry into the nude reality TV trend

“Naked and Afraid” and “Naked Castaway” have been surprise hits for Discovery Channel; now it looks like TLC is getting in on the baring-all act with a new series, “Buying Naked.” However, instead of being oddly naked in the woods or stranded in some desperate situation, “Buying Naked” will feature a community where clothing-optional clients are shopping the real estate market with the help of expert realtor Jackie Youngblood.

Pasco County, FL, boasts the largest concentration of nudist communities in the nation, and happily holds the title, “Nudist Capital of America.” Now, TLC follows Jackie and her team as they help “in the buff” homebuyers find their dream house. Prospective homebuyers typically consider such factors as location, layout, and budget, to help influence their decisions. However, finding a home for a nudist goes well-beyond the concerns that come with typical house hunting.

Jackie and her team must keep in mind the hazards that are lurking for their clothing-optional clientele – everything from countertop height to sharp corners and flooring (rug burn hurts!). Routine tasks such as cooking, cleaning and even just walking can present safety risks for the unclothed occupants of the home. Fortunately, Jackie and her team take extra care to uncover the perfect property to accommodate their clients’ unique needs and lifestyles.

In the season premiere of “Buying Naked,” Jackie brings together the “textiles” or clothed conservatives of the Pasco County real estate industry and the nudists of the community for a very hands-on networking event. Meanwhile, the team’s newest recruit, Alex, is put to the test when she enters a nudist community for the first time, and has to prove she’s got what it takes to sell a home to an especially eclectic nudist pair.

The whole “naked” theme that seems to be developing with reality shows is mystifying, at best–are we really that interested in people in the buff, or are we (and networks) just running out of ideas? Whatever the reason, at least the people in this series have a legitimate reason to be naked, as they are, after all, nudists; being naked and testing one’s survival skills has never made any practical sense.

“Buying Naked” premieres on TLC on Saturday, June 28, at 10/9c, and is produced by Paper Route Productions for TLC.