Enclave of Sex Offenders a La “Arrested Development” = New Real Estate Reality?

FINGERPRINTRemember that episode of the popular TV series “Arrested Development,” where a member of the once-wealthy family tries to unload empty houses in their development by selling them to sex offenders?

If you laughed then, you now need to solemnly admire the show creators’ prophetic powers. According to Inman News’s reporting on this topic by Teke Wiggins, the increasing accessibility of data on where registered sex offenders live could ultimately “herd offenders into enclaves, depressing home values in some neighborhoods and scaring away families with children.”

Here’s a bit of the back story. All the relevant data – for-sale home listings on one hand, addresses of registered sex offenders on the other — has been available online (and as apps) for a while. (Federal legislation known as Megan’s Law mandates that each state collect information on registered sex offenders and make it publicly available, though many states specify that the public may access the information only for certain reasons, and not for others. California, for example, prohibits using the database for the purpose of denying housing.)

What’s new and different, however, is that various online services have begun merging all this data – although in some cases later “de-merging” it, as RealtyTrac (a major U.S. source of real estate listings) did, possibly in response to outcry from real estate agents and industry insiders as well as some legal issues. (See “RealtyTrac Wipes Hyperlocal Neighborhood Info From Listings.”)

You could look at RealtyTrac’s latest action cynically and say that the real estate industry doesn’t want to promote any feature, however snazzy, that puts “sex offender” warning flags right next to images of homes where prospective buyers might have hoped to raise children.

In the blandest economic terms, sex offenders in the neighborhood tend to depress home values. In fact, according to Wiggins’ article (“Sex offender data threatening home values, tarnishing neighborhoods and frustrating real estate agents”), knowing where a registered sex offender lived pushed down home values by 4% for those properties within a tenth of a mile of the offender’s house, in North Carolina’s Mecklenburg County. That data is from a study done by Jonah Rockoff, associate professor of finance and economics at Columbia Business School.

The direst of warnings came from real estate agent Steve Clarke who, reacting to RealtyTrac’s initial data merge, stated, “This could literally bring down property values all over the United States.”

Yikes. But doesn’t Clarke’s statement cut both ways? If the U.S. is littered with sex offenders, then shouldn’t home buyers simply realize that it’s nearly impossible to find an area where everyone is sane and harmless? You could move to a “sex-offender-free zone” and still find local folks convicted of various other crimes as well as crazy neighbors who have 25 cats.

I don’t mean to minimize the fear that a homebuyer, particularly a parent, might have when considering the prospect of living near someone with a history of sexual assault, rape, or other such offenses. But as Wiggins rightly points out, there’s a “potential for sex offender data to mislead and spook consumers.” He details a story in which neighbors were spreading the news that a local 17-year old was a sex offender – but it turned out that his offense was to have had sex – apparently consensual sex — with his 15-year-old girlfriend, after which the girl’s father pressed charges. (In some states, a conviction for consensual sex, that is, statutory rape, can result in a registration requirement.) The young man’s actions hardly seems like the sort that should inspire panic and bring down local home values.

Wiggins also notes that the accuracy of sex offender databases is questionable. Changes of address may not be entered into the database for some time, if at all. And offenders often fail to register.

After talking to some criminal law attorneys, I can add a few more reasons why prospective homebuyers shouldn’t stir themselves into a frenzy looking at sex offender maps:

  • A minority of sex offenders commit subsequent offenses. According to the Huffington Post, “Contrary to popular belief, as a group, sex offenders have the lowest rate of recidivism of all the crime categories.” (See “Sex Offenders: Recidivism, Re-Entry Policy and Facts.”)
  • Not everyone who is charged with a registerable sex offense will end up on the sex offender registery. A good defense attorney will do everything possible to avoid an outcome that requires registration, a life-long duty that will limit the client’s ability to get jobs and housing long after any jail time has been served. Particularly when the prosecution’s case is weak, clients will enter into plea bargains to lesser, non-registerable offenses, like assault.
  • The most common sex offenders are the people you might least suspect. According to the organization Parents for Megan’s Law, “Most child sexual abuse, up to 90%, occurs with someone a child has an established and trusting relationship with.” Friends, babysitters, family members, coaches, and others are commonly identified in studies and statistics of child sexual abuse.

Not all of the above news is exactly comforting. But it points to a larger truth: We can’t completely isolate ourselves or our children from danger – not in the homebuying process, nor anywhere else. The best bet for parents worrying about their children’s personal safety is to teach those children what to watch out for and encourage them to talk to parents or other adults about any inappropriate behavior.

Mortgage Crisis May Be Over, But Look How Many Consumers Still Have Complaints!

telephoneBig thanks to real estate journalist Ken Harney for digging into some of the numbers put out by the Consumer Financial Protection Bureau (CFPB) — that is, the federal agency tasked with enforcing financial laws concerning banks, credit unions, and other financial companies, and dealing with consumer complaints.

Harney found that the CFPB received 60,000 complaints from homeowners in 2013 alone. Major issues included “messed-up escrow accounts, botched transfers of accounts, payment amount disputes, short-sale foulups, loan modifications and foreclosures,” and more.

I’m no numbers maven, but the number of zeros in that analysis can’t help but remind us that plenty of homeowners are still living with rotten mortgages that they or their bank rushed into during the heady days of rocketing real estate prices.

As for whether complaining to the CFPB gets you anywhere, don’t miss Harney’s account of how at least one homeowner succeeded in avoiding foreclosure by providing evidence of unethical behavior by the broker of a reverse mortgage.

And if you’re a homeowner at risk of foreclosure, be sure to see the relevant section of Nolo’s online encyclopedia.

 

Will a “Premiere Party” Help Sell Your Home?

mimosa iStock_000012039452XSmallThe trend-spotters at Oakland Magazine have been at work, with a recent article titled, “To Sell a Property, They Throw a Party.”

And not just any party: It’s a “premiere party” (usually for a luxury home in an affluent neighborhood), to which the real estate agent invites hundred of neighbors and other prospects.

They might serve champagne and hors d’oeuvres (will I ever be able to spell that without looking it up?) or perhaps chocolate chip cookies. They might create an art show with work from a local artist. One agent even commissioned a bagpipe player.

The odd thing is, most of the article discussed not what benefits parties like these offer the home seller, but what they can do for the selling agents, who — in the hot, hot, and already hotter Oakland market — find they’ve got to work hard to set themselves apart and attract clients. As one agent told writer Mike Rosen-Molina, “Listing agents are looking for tools that every agent might not have and ways to convince sellers to list their home with them.”

Okay, so do such parties really help sell your home? Especially given one agent’s acknowledgment that, “Buyers will see the home anyway; anyone looking won’t miss the property.”

The answer seems to be that such parties create a “buzz.” They get people talking, and create a sense that the property itself is an object of desire. And, while no agent quoted in the article came out and said this, buzz like this can lead to every seller’s dream: Offers over asking price, and possibly a bidding war.

 

 

Will This Year’s Real Estate April Fools’ Joke Be Tomorrow’s Listing Reality?

applesAnyone who didn’t read the “April 1″ dateline on Midwest Real Estate Data’s article called “MRED Makes Scents,” might have been shocked by this Illinois provider of multiple listing services’ announcement that it had “added a revolutionary new “Scent” field to all MRED property listings. The “Scent” field allows MRED agents to indicate the aromatic smell that prospective clients can anticipate when visiting their property.”

Meanwhile, just a couple of week’s ago — and not on April 1 — CNN came out with an article by Kieron Monk called, “Forget text messaging, the ‘oPhone’ lets you send smells.” That’s right, a new device (to be beta tested in July) will allow users to “mix and match aromas and then send their composition as a message, which will be recreated on a fellow user’s device.”

Just think, your real estate agent may someday send you a message saying, “You’ll love this house, just the place to bake a hot apple pie,” and then send you the corresponding aroma!

But is the oPhone going to be ready for the other most likely message? “It’s a fixer upper, but if we can pull up the cat-pee soaked carpets and give it a fresh coat of paint, I think you may have a bargain!”

Of course it will. The future is here.

They’re Tweeting About This House!

IMG_4987Well, it looks like a charming young couple was intrigued by the open house, and is moving into our “cottage.”

(When selling a house with less-than-impressive square footage, it’s important to use appealing words like “cottage” rather than “matchbox” or, God forbid, “birdhouse.”)

Like any smart homebuyers, they’ve done their looking around (two other places within sight of my kitchen window were visited and rejected) and conducted a thorough home inspection.

I believe they were then convinced by the following home features:

  • Room for a growing family. (The Oak Titmouse lays from three to nine eggs.)
  • Solid construction. This one was built by Berkeley Rustic Birdhouses, known for complying with the International Standards of Ornithology.
  • Security. Try as you might, Mr. Squirrel, you’re not getting your head in that front door.
  • Quiet neighbors. (Well, the neighbor’s dog does have it in for the postal carrier. Let’s say “relatively quiet.”)
  • Sunny location. But not too sunny.
  • Cleanliness. As is recommended, I removed the old nest last year and cleaned the inside with boiling water. Every responsible home seller should behave similarly. (With perhaps a little less of the boiling water.)
  • Proximity of restaurants, bars, and other amenities. The water in the nearby birdbath gets changed daily, and there’s an all-you-can-eat buffet of seeds on a nearby ledge. How’s that for a Walk Score?

I do notice, however, as the moving in progresses, that they occasionally have trouble getting their furniture in the front door. Next time I trust they’ll wise up and carry a tape measure.

 

 

Should Your First Home Be an Old One, or Newly Built?

Brick entryIf you’re thinking of buying your first  home. chances are you’re a member of Generation Y (born between 1977 and 1994), had a median income of around $73,600 in 2012, and are looking to buy an 1,800-square-foot home that will cost you about $180,000.

How’s the crystal ball doing so far? (Actually, those figures are based on a recent “Home Buyer and Seller Generational Trends” study by the National Association of Realtors.)

If those demographic descriptors describe you, you’ve probably already noticed that they are not, for the most part, within your control. The amount you’ll spend on a home, for example, probably depends largely on what you can afford and what’s available in your area.

But now we come to an important matter that IS within your control: Will you buy an older, previously lived-in home, or a brand-spanking new one, most likely in a development?

The differences may be larger than you realize: Older homes tend to be more solidly built, more affordable (though not always), and in established neighborhoods with grown trees and neighborhood character. Newer ones, however, offer the advantages of customizable finishes and features, adaptations to modern building codes and energy efficiency standards, and, because they’re often in communities run by a homeowners’ association, reduced maintenance responsibilities for the homeowner.

So, would you like to know what the other Gen Y homebuyers are choosing? (The drum roll, please.) The answer is: OLDER HOMES! Apparently for all the reasons just described. So if you have confidence that your fellow Gen-Yers know what they’re about, the decision has just been made for you.

But should it give you pause that the Boomers, just two generations up the line from you — who have already owned a home or two — are now mostly choosing to buy newly built homes? Apparently they got tired of all the maintenance as an older home starts to fall apart.

The real test would be, however, to ask these Boomer-buyers how they feel about their new home in a year or so. By then, they may be kvetching about how newer homes have thinner walls (“I can hear the neighbors’ TV!”), they can’t get a dog of the size they’d wish (because of homeowners’ association restrictions) and the hot tub leaks (hasty building with unqualified labor is epidemic in the new home world).

There’s just no perfect, obvious selection. To help you make that choice intelligently, see the articles on the “Choosing a House” page of Nolo’s website.

Chances Are, You’re Buying Into an Underfunded HOA

condoThe financial troubles faced by homeowners’ associations — those being the governing bodies of many new-home or condo developments — have gotten worse over the last decade, according to Association Reserves, and as reported by Sandra Block in the April, 2014 edition of Kiplingers.

A disturbing 70% of them are “underfunded.” That means they don’t have enough cash in reserve to handle a major repair or an emergency that’s not covered by insurance.

And that could be very bad news for the homeowners buying in. An HOA isn’t some remote group that’s meant to take care of the homeowners in a planned community — it IS the homeowners in the planned community. When and if a major need for cash arises, it’s the homeowners who will be asked to pitch in and cover it, in the form of “special assessments.”

Did I say “asked” to pitch in? I meant “required.”  As described by Beth Ross in Nolo’s article on “When HOA Associations Can Impose Special Assessments,” “A well-run HOA also sets aside a portion of the periodic dues in a reserve fund. This fund is meant to pay for the costs of larger, infrequent expenditures, such as replacing worn-out patio furniture around a common pool, or putting a new roof on an aging clubhouse. . . . [but if the] HOA’s reserve fund is inadequately funded, . . . the HOA won’t have enough money when it comes time to make repairs, so — you guessed it — a special assessment will probably be on its way.”

As described in the same article, HOAs don’t have unlimited power to impose these assessments. But assuming they act within their legal limits, they do have power to penalize nonpayment — for example, by placing a lien or ultimately foreclosing on the homeowner’s property.

All of which is to say that it’s important to do your research BEFORE buying a home in a development. See the articles on the “Buying a New Home or One in a Development” page of Nolo’s website for more on this.

Huge Disparity in Home Affordability Across the U.S.

SFHow can an annual salary of just over $19,000 be enough to buy you a home in Cleveland, Ohio, while you’ll need a princely income of $115,510 per year to buy a home in San Francisco, California? Let’s just say that home prices, mortgage rates, and other economic factors vary tremendously across the U.S., as evidenced by a recent study by HSH.

The HSH study put together data on mortgage rates and median home prices in 25 of the largest metropolitan areas in the U.S., and calculated how much salary you would therefore need in order to cover the mortgage payments on an average home there. (And that’s before you start worrying about other costs of living, like local private schools.)

The results should make any Californian who doesn’t already own a home want to flee to another state. Not only is San Francisco absurdly difficult to buy into, but prospective Los Angeles homebuyers will need, on average, an income of $72,127, and San Diego homebuyers will need $81,570.

Even New York City starts to look cheap by comparison: An income of $66,167 gives you a shot at buying a home there, woo-whoo! And we can blame the dot-com industry for driving up rates in San Francisco, but why is Seattle, the home of Microsoft and Amazon, still affordable for folks with an income of $59,130?

No wonder the other big story in the San Francisco Bay Area is that rental rates are the highest in the nation. But if you need to buy a house in an expensive area, you’ll find useful information in the “Affording a House” section of Nolo’s website.

 

 

 

Joining the Crowd of Newly Built Home Buyers? Do Your Homework

valentines houseA couple of years ago, finding a newly built home to buy was as hard as finding an open seat in a nice restaurant on Valentine’s Day. The builders weren’t building, knowing that the buyers weren’t looking.

But last month saw a sharp spike in sales of new homes, according to estimates by the Mortgage Bankers Association (MBA).

A whole new crop of homebuyers may, for the first time, be considering the possibility of investing in a home that, at the moment, exists only in the form of a drawing on a map. It’s an exciting process — new-home buyers can often customize the place to their own wishes, from the layout to the counter tops to various amenities.

It’s also a time for caution. First, there’s the matter of construction quality. The model house in the development, if there is one, probably looks shiny, new, and perfect. But not every builder is attentive to quality, and some are more attentive to speed and appearance than anything else — leading to horrible customer surprises down the line, as described in Nolo’s article, “Newly Built Houses: Pros and Cons of Buying.”

Then there’s the fact that many homes in development — particularly, but not always, if they’re condos or townhouses — require all owners to join a homeowners’ association (HOA). That offers many advantages, such as someone to maintain common areas and watch over community quality and uniformity.

But it also means ongoing monthly dues, the possibility of expensive special assessments, and a level of control over your life that not even a landlord could exert. (“Sorry, your dog’s too big, you can’t fly that flag, and you can’t hang your laundry outside.”) For more on that, see “Homeowners’ Associations (HOAs) and CC&Rs: Know What You’re Getting Into.”

And when you’re done with all that reading, don’t forget to make those Valentine’s Day reservations!

Now’s a Good Time for Some Homeowners to Refinance

castleMortgage rates (30-year fixed) are at around 4.25% today, according to Bankrate.com. And what with rising home values in many parts of the U.S., a whole new crop of homeowners may find that they have, at last, sufficient equity to consider refinancing.

But that doesn’t mean everyone with a mortgage rate higher than 4.25% should rush out and refinance. The upfront costs of arranging for a new mortgage can sometimes wipe out the savings to be gained.

Yes, figuring out whether a refi is right for you is going to involve some math. How nice, then, that Consumer Reports‘ January, 2014 issue offers (in its Money section) a handy guideline for today’s mortgage market. Quoting Michael Garry, a financial planner in Newtown, PA, it says, “Refinancing might be worthwhile if you’re paying more than 5 percent.”

So if you’re paying less than 5 percent on your home loan, you can probably save yourself running some numbers. If you’re paying more, however, don’t worry that you’ll have to dig out your slide rule. Some simple online calculators can help you, as described in Nolo’s article, “Make Sure You Won’t Lose Money When Refinancing.”