Transit Score Determines Home’s Transportation Costs

When it comes to the public transportation system, the United States is slacking. A well-developed transportation system can take the nation a long ways when it comes to becoming green, and Walk Score’s newly launched Transit Score offering allows homebuyers to evaluate long term transportation costs associated with a potential home.

According to a study conducted by the Texas Transportation Institute, commuters waste 4.2 billion hours and 2.8 billion gallons of gas sitting in traffic each year. This is a lot of waste. Today’s commuters are very interested in a public transportation system that will help cut back on this waste of time.

Walk Score’s over 4,000 websites has been helping house-hunters find the perfect address for years. Walk Score has now introduced a tool that will help calculate commuting costs into the cost of purchasing a home. This tool is called Transit Score. It is designed to provide buyers with an effective solution to this driving issue.

Walk Score, developed by Front Seat, is based in Seattle. This product has been helping customers make housing decisions based on proximity to nearby amenities. These amenities include grocery stores, restaurants, schools, and public transportation. Walk Score has found that walkable neighborhoods offer tremendous value in terms of the economy, environment, and health benefits. A study conducted by the Center for Neighborhood Technology shows that traditional suburb dwellers can spend up to 32% of their income on the cost of transportation. That’s a lot of money going down the drain! Those living in more walkable neighborhoods only spend up to 12 percent.

Walk Score helps house hunters meet their transportation requirements with Transit Score. This service provides buyers with custom commute reports and a transportation calculator. Before you buy, you can know your transportation costs as well as proximity to public transportation and other essentials. This project is partially funded by The Rockefeller Foundation’s transportation initiative. It allows for third parties to easily add public transit information to its website.

Walk Score’s transportation ratings are currently available in Boston, Chicago, Los Angeles, San Francisco, Seattle, and Washington D.C.

Blighted Properties Exposed on New Website

During the real estate crisis that plagued much of the nation, many homeowners have suffered the loss of their homes. Most have fought to stay and pay their mortgages. However, there are also select property owners that have purposely let their investments fall to the wayside while the market has dipped. The property owners discussed in this article have avoided the upkeep of their homes while in the process of foreclosure or bankruptcy. This lack of maintenance or the reasons behind it are not news, however, a new tactic to handle these “blighted properties”, pioneered by Mayor Tom McMahon of Reading, PA, has made headlines.

Enforcing Property Maintenance

Until now, it has been a difficult task to enforce property owners to maintain their dwellings. Once the property is back into the hands of the lender the maintenance or tearing down of the property can resume, but that often takes months. Property owners in the neighboring area will see their homes depreciate in value during the interim.

Reading, PA Mayor Tom McMahon has come up with a unique strategy to handle this issue. In “Owners of Blighted Property Shamed Online”, McMahon discusses his idea. Rather than continue hitting a wall trying to work with irresponsible property owners, McMahon has turned to publicly shaming them by posting these decrepit houses on a new web site deemed the Reading, PA Wall of Shame. Complete with the name and address of the owner, this site contains photos of these properties, some even have cartoon bubbles mocking how damaged they are. To a few, this may seem to be an extreme approach; however, what is the best way to enforce property maintenance in a shaky market?

Reading, PA Blighted Property Wall of Shame

Many certainly understand and condone his position. A rundown property can affect an entire neighborhood’s resale value. For homeowners who have managed to pay their mortgages and maintain their homes, this can be an extremely frustrating scenario.

Neglected Properties Depreciate Neighborhoods Nationwide

“We are ramping up our focus on irresponsible property owners that are bringing blight into our city neighborhoods,” McMahon said in a statement Monday after touring one property. This one town has around 60 properties McMahon terms as “blighted” and he would like to see the number brought down. 10 of these properties are currently in court proceedings. The other 50 will simply continue to sit in their devalued state until a settlement has been made in the courts.

Most of us know that pushing paperwork in the courts takes a long time, and the more depleted a property becomes, the more a neighborhood will suffer. McMahon’s approach is unique, and definitely brings attention to these blighted properties, though residents have yet to see the results.

Five Reasons To Buy a Home Now

Have you been considering purchasing a new home? Whether you are a first time homebuyer or you are considering moving to a larger or smaller home to suit your personal needs, now is a very good time to make the move. In fact, there are five very good reasons to consider buying a new home.

Reason #1: Mortgage Rates are Low

Today’s mortgage rates have reached a record low, which means you stand to save a significant amount in terms of interest. Furthermore, because the rates are so low, you actually start to build equity in your home as soon as you buy it, which means you don’t have to stress out about the ups and downs of the economy as it still works toward a recovery.

Reason #2: Home Prices are Down

It is no secret that housing costs are down. Even better, many of the homes coming on the market today are quite beautiful and contain many luxury features that were once too costly for many people to afford. The number of terrific houses coming on the market is on the rise. At the same time, because many sellers are interested in selling their houses as quickly as possible, you enjoy a great deal of leverage as a buyer.

Reason #3: Many Available Houses are in Great Condition

Not only are there many beautiful houses coming onto the market, but many are in move-in condition as well. In fact, the Harvard Joint Center on Housing reports that homeowners have continued to spend the money necessary to maintain and repair their homes. This is because most of those who had been holding back on putting their houses on the market were keeping their houses in good shape until the time was right to list it for sale.

Reason #4: Appraisal Guidelines Have Been Adjusted

Shortly after the economic fallout, appraisal guidelines were changed in such a way that it seriously impeded the purchasing process. Thankfully, Fannie Mae has made some adjustments to these guidelines, which gives appraisers more flexibility when it comes to setting values. The result? Closing on deals is a much faster process than it was just a year ago.

Reason #5: Programs Make Home Buying More Affordable

Thanks to the many different grants, loans and other housing assistance programs available to homebuyers, buying a home is quite affordable. Many communities still offer “workforce housing” programs, which help middle-class families afford purchasing a home. For those who qualify for one of these programs, they can enjoy a helping hand with their home buying expenses.

According to many experts, most real estate markets throughout the country have reached their bottoms. Combine these low prices with low interest rates, eager sellers, faster appraisal guidelines and numerous financial assistance programs, and there really has never been a better time to buy a home. So, if you have been thinking of making a home purchase, there is no reason to put it off any longer!

Summer’s Thoughts from Keith Munsell

Home Runs:

Sales for the month of June hit an artificial 4 year high driven by the government tax credit. Congress has extended the deadline from the original June 30 until September 30 but still requiring a binding contract to have been executed by the end of April. Median price also rose slightly nationwide; here in Massachusetts we outstripped the national increase by more than double.

The local developers also seem to believe that the rise in sales and pricing may be just an anomaly as plans for local developments keep getting scaled back; e.g., the Fort Point development continues to be downsized. However, with the thinking that ‘if you build it they will come’ the state appears to be funding some of the infrastructure for the South Weymouth Naval Air Station (where I worked some 4 decades ago) with the thinking that this will help jump start the development. Maybe they should be thinking about where the demand will come from before we spend precious tax payer dollars – but maybe that is just me being skeptical.

However, the silver lining in these clouds is that the mortgage rates are at historic lows. So if you have a steady job, can afford to buy, or want to refinance, now is a great time to do so.

In sharp contrast to a rise in homeowner activity, Consumer Confidence fell to 51.0 in July, down from June which was down from May. The undercurrents of high unemployment, poor wage growth, a volatile stock market and rising imports appear to be the cause of great concern; thus my doubt about sustained growth.

Shop ‘til You Drop (Retail):

Shopping centers will face huge pressure as nationwide they appear to be overbuilt, though locally they seem to be OK (maybe our nightmare permitting process actually does have some benefits). The ills that affect the Consumer Confidence are brought to fruition in this sector. Watch for poorly located centers to close.

Overnight Guests (Hotels):

Hotels seemed to buck the downward trend both nationwide and locally as occupancy and rates have rebounded seemingly from a rise in business travel and summer vacationers. This is all good news for the hospitality industry; however, it will not bail out this over financed, under-performing sector as occupancy and room rates have not risen to the projections used to fund acquisitions and refinancing. There continues to be large debt service challenges ahead as loan to values and debt service coverage have not met expectations.

See through:

Years ago when I was visiting Houston, I heard for the first time the term ‘see throughs’ – referring to completed buildings with no tenants so you could see through entire floor plates to the other side. Nationwide we seem to be going that way, both with newly constructed and existing office buildings. The office sector continues to both shrink and play musical chairs as companies continue to upgrade their space while decreasing their rental expense and demand for space. Locally the first quarter showed negative absorption (giving more space back than taken off the market). In a 200+/- million square foot market (Boston to 495) there is almost 40 million square feet available. Like the Hotel sector, the office sector will have debt service challenges as rolling office debt needs to be refinanced at a time when rents have fallen and vacancy rates have risen and the banking sector continues its conservative ways.

Closing Thoughts:

Across all sectors, underperforming over financed properties will likely be returned to lenders. Consider as an example an office building financed three years ago at a reasonable 80% loan to value. Now values have dropped by say 40% and the borrower goes in to refinance. Well, that loan is underwater and the lender states that they will be happy to entertain a 65% loan to value based on the new value. This of course means that the borrower has to come up with equity representing 41% of the original value. Good luck.

I am still skeptical about the economy even though our corporations seem to be having a better time than in the immediate past. If one were to disaggregate their performance you might find that there is growth but not American job growth as some of those 8.5 million US jobs are probably lost forever. With approximately 15 million Americans out of work, there will continue to be stress across all sectors of the real estate economy.

How Home Appraisals Have Changed – Part II

In early June, I kicked off a two-part article on how the home appraisal landscape has changed across the country in the recent past. The first piece of the article (see How Home Appraisals Have Changed – Part I), went over two characteristics, and I’ll be wrapping up the piece today in an effort to outline the 5 Ways Home Appraisals Have Changed.

Let’s continue the thread with the following…

3) What’s bad for the seller is good for the buyer

A big part of the problem that caused the housing bubble was appraisals coming in extremely high, well over market value. Now it seems just the opposite, due to a declining market mixed with short sales and foreclosures, traditional home sellers are taking a huge hit. For instance, I had an appraiser tell one of my clients the upgrades (over $25K) they did added very little value to their home. No home seller wants to hear that the house they feel is worth $300,000 is actually only worth $219,000 now and no home buyer would want to pay an inflated price. So if you’re a home buyer, hang in there with the time and price, in the end it will be worth it.

4) Know the comps if you’re a seller

As a seller you should take a proactive approach in the appraisal process, and be prepared ahead of time to answer any questions the appraiser might have. A good recommendation is to have listings of what homes sold in the past 3-6 months in your neighborhood and documentation of any repairs or upgrades made while you owned the home. Anytime you can make the appraiser’s job easier, you’re both helping them, and yourself.

5) Appraisal Rules will smooth out naturally

I know the current situation might not look promising, but like all good things it will take some time to fix. Part of the reason the larger US economy took such a huge hit was due to the real estate debacle. We need regulations so this will not happen again. On July 28, 2009 the Federal Fair Housing Agency, Fannie Mae and Freddie Mac issued an alert to all lenders clarifying two points that had made a lot of people in the industry upset.They said that appraisers should have clear experience in the geographic area. If they don’t, they should be reported to state appraiser licensing agencies. This is a great step to ensure one of the most valued assets one owns is protected by recognizing that real estate values are hyper local.

This article was contributed by Ryan Nager, a specialist in Mesa Real Estate in the Phoenix Metro Area.

How Home Appraisals Have Changed – Part I

I’m sure we’ve all heard that appraisal guidelines and regulations have changed dramatically in the past year or so. But is anyone sure why and what changes were made?

Inflated home prices in many markets across the US contributed to the housing crisis, motivating the New York Attorney General to pass the Home Valuation Code of Conduct (HVCC) — a set of rules that determines how appraisals should be made — in May 2009. The law aims to distance appraisers from the real estate transaction so they can provide an unbiased, objective analysis of a property’s fair market value.

But real estate agents (like myself) argue that the system is flawed and deals are falling through because of the ever-changing, lengthy maze of rules. Long story short, with the new rules in place, appraisals now take longer, are more expensive and are often conducted by appraisers unfamiliar with the local market. The National Association of Realtors has called for a moratorium to address the shortcomings of the HVCC, but until these rules are ironed out, expect them to hinder deals in 2010.

Here are 5 ways the home appraisal process has changed:

1) Appraisals are taking longer

Historically, after your lender or mortgage broker called their appraisal company, you would have a valuation back in a matter of days, not weeks like they are now. Now, an independent third party, usually called AMC (appraisal management company) is oftentimes involved, adding a layer of independence, but also time, to the process. This is extra frustrating for agents and buyers because the appraisal is a huge part of the FHA and VA process. With the majority of FHA loans being used for REO listings, the appraisal is the only justification we have to ask for repairs necessary, and banks are being good at making these lender required repairs. The problem I’m seeing is that close of escrow dates are being extended out to accommodate the lengthy appraisal process and make any repairs. Then after the repairs (if required) are completed, another appraiser is brought in to certify that the repairs were done. Now do you see why this can be very convoluted?

2) Appraisals cost more now

The typical appraisal on a single-family now costs in excess of $350. These third party AMC companies are driving the price up. And for the money, most would contend the value of service is worse. Instead of having a local appraiser evaluate your home, AMC company sends a request to a random appraiser that may live 50 to 100 miles away from the subject property, clearly unaware of the hyper-local real estate market trends.

Stay tuned for part II of this series, where we’ll discuss the final three ways in which the home appraisal process has changed.

This article was contributed by Ryan Nager, a specialist in Mesa Real Estate in the Phoenix Metro Area.

“Walkability”: How Walking Distance Helps Sell Homes

Regardless of whether or not you live in a quaint, rural landscape or a bustling city neighborhood, the commodities and attractions within walking distance of your home may weigh on the minds of first time home buyers more than you’d think. Recently on HouseLogic , Sacha Cohen refers to a study conducted by CEOs for Cities where the findings showed that pedestrian-friendly areas may be more sought after than those requiring residents to drive around for their everyday necessities.

Boston Neighborhood Walkability

What designates a pedestrian-friendly neighborhood, exactly? For those selling homes in places where schools, parks, businesses and other amenities are within walking distance, their houses received a higher “Walk Score” in the CEOs for Cities study (PDF), whereas those houses situated so that the locals rely on public transportation or fill up their gas tank on the way to the grocery store have lower ones. By scouring through data from nearly 100,000 real estate transactions, CEOs for Cities found that 13 out of 15 markets have the easily walkable abodes ranking higher on the value scale.

For first time home buyers, this information is valuable for two reasons.

  1. You have a better understanding as to how the value of a home is decided upon
  2. You have a point of reference for hunting out properties that are more suitable for your budget

Though testing a home’s walkability score isn’t necessarily one of the first steps to buying a house, its affect on real estate market analysis is undeniable and homeowners are now looking for ways to improve the walkability of their homes in order to up the ante on the value front. Cohen links us to a few walkability tips from John Wetmore, the producer of Perils for Pedestrians Television:

  • Trim shrubbery that’s blocking the sidewalk in front of your house.
  • Pick up trash and litter to make it a more pleasant place.
  • Support initiatives in your town to build new sidewalks and repair existing sidewalks.
  • Be polite to other drivers and pedestrians when you drive.
  • Set an example by walking more by yourself or with your family.

Even if you’re not selling homes and looking to raise the bar when it comes to your property value or if you’re just starting out on the house hunt, Cohen’s raised points regarding walkability are important when it comes to the safety and value of your new or current neighborhood.

Green MLS Tool Kit Helps Find “Green” Properties

Sustainable, local, eco-friendly: These are all “green” buzzwords that have been making their mark on consumer trends in fashion, food, and now most recently, real estate. As consumers grow more and more conscious of the effects their daily spending can have on the environment, “going green” is a lifestyle choice that has begun, and will grow in prevalence, to affect real estate market analysis. In a recent post published by the National Association of Realtors, the Green MLS Tool Kit is introduced as a helpful resource for first time home buyers and realtors alike to look for green homes.

As quoted on

“Realtors® are the best source for real estate information and have access to the most comprehensive data in the world,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associate in Tucson, Ariz. “NAR research has consistently shown that there is a considerable and growing market for green buildings. The approach of Earth Day on April 22 only underscores the fact that many of today’s consumers want homes and communities that are sensitive to the larger environment. The Green MLS Tool Kit allows Realtors® to support this growing market.”

Whether selling commercial properties or walking prospective new owners through the steps to buying a house on a greener scale, the Green MLS Tool Kit is one that will help realtors, and in turn, their eco-savvy clients, with finding the perfect green property. The National Association of Realtors continues on to discuss the merits of the tool kit, drawing attention to its suggestions for effective changes within the green home industry while introducing multiple resources for NAR members to get their MLS on the green side.

In addition to taking the wellbeing of the environment into consideration, going green has numerous cost-effective benefits that are particularly attractive to first time home buyers. Through the advantages of the Green MLS Tool Kit, more informed choices regarding aspects of green living are now integral discussion points for realtors, homeowners, and those who are seeing the industry-changing affects “going green” can have on the national real estate market.

President Obama’s Short Sale Program

Since the Obama Administration took office, it seemed that their goal was to keep home owners in their homes. Now, the strategy appears to have changed with a recent announcement from the U.S. Treasury. Recently, the Treasury revealed that it would encourage home owners to leave their properties – by paying them. It is believed that the new plan will prompt home owners that are behind on their mortgages to choose short sales, which could reduce the amount of foreclosures throughout America.

During short sales, home owners who are delinquent on their mortgages agree to sell their houses for less than the remaining balance of the loan. In return, banks and mortgage lenders agree to undertake losses (in lieu of not receiving any debt service from borrowers).

With an increase in short sales being eminent, many people are wondering what bearing Obama’s short sale plan will have on the real estate market. With the new plan coming into play, there are a few things people with a mortgage can expect.

First, fewer people may pursue loan modifications. In the recent past, big banks said that they were committed to helping struggling home owners who had defaulted on their mortgages. Yet, according to ABC News, of the 1.1 million people that have requested help from banks, only 168,000 have completed loan modifications this year. With the loan modification success rate being so low, more home owners may view short sales as a viable option.

Next, the number of foreclosures may decrease as the number of short sales continues to increase. Finally, more home buyers will choose to purchase short sale properties. Prior to the plan, home buyers and real estate agents wanted little to do with short sales because these real estate transactions involve long waits and complicated paperwork. Now, due to the increase in short sales and bargain prices, more home buyers will stop turning a blind eye to these types of properties.

While it is still too early to determine how US real estate markets will be impacted by the President’s short sale plan, it is apparent that more home owners will be persuaded to sell their homes and receive a payout than enter into foreclosure.

Mixed Reviews on Housing Sector

Employers unexpectedly cut 23,000 jobs last month as economists had predicted a job growth of some 40,000 positions.

Speaking of the unexpected, the good news is that more insured overdue mortgage holders got back on track last month than fell into default for the first time in over three years.

More good news is that factory orders rose in February, bolstered by strong demand in aircraft and machinery from overseas orders and increased business spending on capital equipment; continuing the recovery in the manufacturing sector, which had shed orders by some 25% during the recession.

Consumer spending rose for the fifth month in a row. Does this mean that the recession is over and that consumer confidence is back? Who knows? Jobs will be the key to recovery and as pointed out, the news is not good here; though less bad (if that can be considered good) than in the past. The increase in consumer spending may b e explained in part due to the growth in wealth as consumers have recouped (net worth of households) over $5.5T, reversing the trend that took away almost $17.5T since the zenith of net worth some three years ago.

Though nationally the real estate market continues to decline, most recently by .7% last month, locally, median sales prices rose by 8.4%; making this the third month in a row that prices have increased while sales volume also increased above what was seen during the same period in the prior year. However, don’t be alarmed at the dramatic rise in prices as this was a reflection of a particularly strong upper end of the market. Continued strength can be attributed to both pent up demand and more affordability as prices have come down nationwide by some 30% and 16%+ locally.

Single family home construction nationwide has fallen to just over 300,000 units, the lowest point in recent history. Homeowners continue to keep product off the market in the hopes of a recovery. These two facts have shrunk the pool of available housing and as we can remember from our freshman economics class on supply and demand if. …

While talking about single family homes an interesting factoid is that the national average size of newly built homes continues to migrate south as home sizes have fallen from just over 2,500 square feet in 2007 to about 2,350 square feet in 2009. One might surmise that this is due to cost containment, availability of conforming mortgages and being conscious of the environmentally impact of living large.

The question on everyone’s lips is whether the single family home market will continue to gain momentum. Home buyer credits are currently set to expire soon, and the federal government is pulling its support of housing through the purchase of mortgage-backed securities. So, can the housing market rebound without these two underpinnings? The government has just ended its program that purchased $1.25T (as in trillion) of mortgage-backed securities as well as about $175B of housing agency debt, a total of some $1.4T.
Mortgage rates continue to be at historic lows, but there is uncertainty in the market due to the looming removal of the buyer credit and government pullout (the underlying point here is that the private market will begin to function on its own again versus having the forced presence of government funds artificially manipulating market supply and demand forces). Because of this uncertainty I believe that mortgage rates will begin to drift upward over the coming months.