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Trulia observes equity spikes in “Pride neighborhoods”

(HOMEOWNERSHIP) If a home is located in one of these Pride neighborhood, even better news is coming about equity spikes.

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Pride Month investigation

During the last five years, the premium to live in neighborhoods with the largest gay populations has grown substantially.

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In honor of Pride Month, Trulia partnered with OkCupid, the online dating site, so that they could more accurately measure gay, or what are also referred to as Pride neighborhoods.

Wait, how?

Because sexual orientation is not a part of the census, others looking for this kind of data would only have the data that the U.S. Census offered on same-sex couples. The glaring issue with that, however, is that not all gay individuals are in relationships and not everyone declares those relationships (or their orientation) on the census.

Also worth noting is that just because researchers have made measurements from that data does not mean that those researchers measured correctly.

In their infinite wisdom, Trulia and OkCupid came up with the Neighborhood Pride Score using OkCupid data about where gay singles (gay, lesbian and bisexual) are combined with U.S. Census data.

Using this new measure, they found that the premium to live in a neighborhood with a high Neighborhood Pride Score has increased from $209 per square foot in 2012 (a 28.9 percent premium) to $320 per square foot in 2017 — a 36.8 percent premium.

The Trulia-OkCupid Neighborhood Pride Score

To calculate the Neighborhood Pride Score, the researchers added the percent of OkCupid’s users in each ZIP code that are searching for same sex partners (gay singles) to the percent of households that are same-sex couples using 2015 5-year American Community Survey (ACS).

For example, if a ZIP code had 30 percent of its OkCupid users searching for same-sex partners and 15 percent of its ACS households are same-sex couples, that ZIP code was assigned a Neighborhood Price Score of 0.45.

Then they calculated the median value per foot of homes for sale in each ZIP code as of April 1 and compared it to April 1, 2012 to find out how prices have changed over time and relative to their metropolitan area.

From then, to now

In 2012, homes in Pride neighborhoods were valued at $209 per square foot, which was $47 – or 29.9 percent – more expensive than their respective median metropolitan home values.

Since then, home values in Pride neighborhoods have nearly doubled and are now somewhere around $86 – or 36.8 percent – more expensive. Based on that data alone, if you want to live in a Pride heavy community, you’ll have to pay more than in a Pride light community.

Where the demand is changing the most

The national numbers showed interesting trends but they didn’t quite express the variations across metropolitan areas either. In fact, if you took a microscope to each of the metros, you can see where Pride neighborhoods are becoming more and less valuable relative to the median metropolitan home value over time (on a square-foot basis).

On the up

The New York metropolitan area tops the list of where neighborhoods with a high Neighborhood Pride Score are becoming more valuable. Home values in Pride neighborhoods there rose from 106 percent to 162 percent – an increase of 56 percentage points.

Experiencing growth as well was New Orleans by 52 percent and Boston by 27 percent. And if you’re looking for a rising Pride community where you can get a discount Grand Rapids, MI, is where you want to be.

On the way down

However, not all Pride neighborhoods in the nation’s metros have gained value over the past five years.

Pride neighborhood home values in 34 of the largest 100 metros have actually declined relative to their metro median.

Topping the list is Miami, where the Pride neighborhood home value premium has declined by 13 percent over the past 5 years, falling from a premium of 73 percent to 60 percent.

Buffalo and San Francisco have seen the second and third most declines, where Buffalo premiums have fallen by 10 and San Francisco, 6 percent.

Unlike the metros with the largest increase in Pride neighborhood premiums, you can buy at a discount in several among the bottom metros. The Pride neighborhoods in Buffalo, Salt Lake City, Dayton, Ohio, and Charleston, S.C., boast discounts of 17 percent, 1 , 4, and 18 percents, respectively.

The Takeaway

You’ve heard it said that correlation does not equal causation. Can you infer from the data collected that the presence of gay households in a neighborhood cause home values to increase? Maybe.

One thing is for certain though, homeowners in Pride neighborhoods have a lot to celebrate this June, especially the growing equity they’re gaining in their homes.

#PrideNeighbors

Kiri Isaac is the Web Producer at The American Genius and studied communications at Texas A&M. She is fluent in sarcasm and movie quotes and her love language is tacos.

Homeownership

The phrase ‘starter home’ is overrated and overused

(HOMEOWNERSHIP) You see the term in the MLS for fixer uppers, you hear it when Realtors are working with first time buyers. But the term “starter home” shouldn’t be in anyone’s vocabulary. Here’s why.

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Just words

Collins English Dictionary defines a starter home as a “small, new house which is cheap enough for people who are buying their first home to afford.” You won’t find the phrase too often outside of the real estate industry.

There isn’t much about the etymology of the phrase, but most likely, it’s a marketing ploy to get people to buy into the idea of purchasing another home in a few years.

Grind your gears

Mark Greutman, husband to Lauren Greutman, believes that the term “starter home” should bother people. The phrase implies that you will upgrade later.

Your starter home isn’t good enough for the rest of your life. And not to get into how well Americans have it, what about people who will never be able to afford anything more? Is it an insult to them?

Do you really need two living rooms?

Older generations bought one home and lived in it until they could no longer be independent. In today’s world, we buy a starter home, then upgrade to have more space, to live farther away from our neighbors, to have rooms that are only used once or twice a year, and to make sure you have a 2 or 3 car garage to hold your vehicles and more stuff, some of which isn’t taken out very often.

But consider this: You could pay off your starter home in 15 to 20 years, if you budget right.

You could be out from under a mortgage and have money to travel, send the kids to college, or even retire early. When you think about what led to the financial crisis in 2008, isn’t it better to have a smaller house where you can make the payments than worry about losing your house?

Be content where you are

Realtors are motivated to make sure that they have customers. If people buy one home with the intent to stay, will the market dry up? Probably not, because people move and a new generation will be ready to purchase homes for their own family.

Let’s think about that phrase, “starter home.” It fuels consumerism and discontentment. Don’t call cheaper houses starter homes, but just a home.

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Homeownership

The remodeling projects with best ROI that actually increase home value

(HOMEOWNERSHIP) Knowing which remodeling projects to tackle when a home is being put on the market can save a lot of wasted effort and money.

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If you’re looking to help your clients to identify which projects to tackle before putting their home on the market, look no further: the National Association of Realtors surveyed thousands of real estate agents, industry professionals, and consumers on interior and exterior house remodeling projects, and these are the best projects for upping a home’s value before listing it on the market, ranked on the most value and cost recovery a homeowner can get.

  • Refinishing hardwood floors. Start from the bottom to earn top dollar. Refinishing floors transform a home from worn-out and aging to vibrant and inviting, and only costs about $2500 according to the National Association of the Remodeling Industry (NARI). The project also increases a home’s value by that same amount, meaning a homeowner can recover 100 percent of the costs. Pretty sweet deal.
  • Upgrading insulation. Because it’s what’s inside that counts. This project costs about $2100 based on NARI Remodeler’s estimate and increases a home’s value by $2000 according to Realtors surveyed. That’s a 95% cost recovery.
  • Adding new wood floors. If you don’t have wood floors to refinish, add them in! This costs about $5,500 according to NARI Remodelers, and the increased sales value is $5000. A homeowner can recover 91% of costs from a new wood floor addition.
  • Replacing HVAC system. A new HVAC system adds energy efficiency and refreshes the entire home, and NARI Remodelers estimate doing so costs $7000. The increased value for sellers is $5000 according to NAR REALTORS, meaning an easy breezy 71% cost recovery for homeowners.
  • Converting a basement into a living area. Not only is this cost and space-efficient, it’s also undeniably trendy. A basement makeover costs about $36,000 according to NARI Remodelers estimate and increases value for sellers by $25,000 according to Realtors surveyed. That comes out to a cost recovery of 69%.

Which projects are the most costly?

In case you’re curious, these are some of the most expensive remodeling projects:

  • New master suite. More like master $uite – this costs about $112,500 with a cost recovery of 53%. 
  • Converting an attic into a living area. Cute idea, but also a $65,000 one with a 61% cost recovery. One might say the price is through the roof.
  • Complete kitchen renovation. This project costs an estimated $60,000 with a 67% cost recovery. Even more if you want to throw in a brick oven, and you probably do.
  • New bathroom. With an estimated cost of $50,000 and a 52% cost recovery, make sure you aren’t flushing money down the drain with your bathroom addition!

These trends change over the years, so make sure your knowledge is up to date locally since we all know local trends trump national. Hopefully today you’ve garnered some ammo to help clients better understand how to improve their home’s value!

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Homeownership

How to inform clients about well-known homebuyer scams

(HOMEOWNERSHIP) Real estate scams continue to victimize people, but Realtors are in a position to better protect homebuyers. Here are some tips.

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Despite warning after warning and news story after news story, homebuyers keep getting their money stolen in real estate wire transfer schemes. Some blame the mortgage and real estate industries for not doing enough to educate and protect their clients. Others say the people committing these crimes are getting more and more sophisticated. No matter who’s to blame, there’s no arguing that this crime is on the rise.

What exactly do these real estate scams look like? These criminals usually hack into a business’s emails, often a title company, and get all the pertinent information they need. They then steal and copy that company’s letterhead, and the email addresses, signature blocks and any other relevant information they will need to fool the homebuyer. The homebuyer then gets an email that appears to be from the title company, asking them to wire money, often tens or sometimes hundreds of thousands of dollars.

So, you’re probably wondering right now: What can I do? You want to know how to warn and protect your clients and keep your reputation intact (and avoid costly lawsuits). The following safeguarding tips can help keep cash out of cyberthieves’ hands:

1. Pick up the phone. If you’re closing on a home and receive an email with instructions on how to transfer money to your closing company or lender, take a few minutes to call your agent or broker to make sure it’s legit. Yes, this might be a bit annoying, but not as annoying as losing thousands of dollars in an email scam.

2. Be aware. These scammers usually send emails that look like the real thing. If you’re a homebuyer, look for weirdly timed emails (sent in the middle of the night) or spelling and punctuation errors. Is there a sense of urgency to the email?

3. Educate your clients. If you’re a real estate professional, make sure your clients know about this scheme. Not everyone is aware they could be a target (which is why it keeps happening). Set up a specific passcode for each client.

4. Consider using ClosingLock and asking your title company to use this technology for all of their transactions… What’s ClosingLock (previous name was BuyerDocs), you ask? This tech startup provides secure document delivery for closing companies and homebuyers. The company says it has protected more than $5 billion in wire transfers and works with big and small businesses across the country.

Scams will never be eradicated, but it is part of your job to know the current scams and how to protect transactions against shady folks.

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