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Why we bought a house: Stories of 3 buyers

Couple holding piggy bank
Highlights
  • Making a mortgage  payment was better than paying rent.
  • Not buying was  unthinkable -- even when burdened with negative equity.
  • Getting a mortgage  while self-employed wasn't easy.
 

The current pace of U.S. home sales is still nowhere near what it was at the  peak of the housing boom. Yet house sales are on an upswing. Here, three recent  homebuyers explain why they jumped in and closed the deal.

 

Buy, not rent

"Joe O'Connell, a first-time buyer in Mesa, Ariz., bought his house because he  figured a mortgage  payment was a better bargain than rent. As a one-time construction worker, he  felt ready to take on the do-it-yourself aspects of homeownership.

"Apartment rents in the area were approaching $800 to $900," O'Connell says.  "For that amount, I could get a house, so I felt that instead of paying rent, I  could pay a mortgage and help myself out a little bit."

O'Connell describes his 1,500-square-foot house as a starter home with three  bedrooms, two bathrooms and a large swimming pool. He says the house was a flip  previously owned by an investor, who made a number of improvements, including  new appliances, flooring and fresh paint."

 

Home already

"When Carl Coffee, a tech service engineer at US Steel, was transferred by his  employer to another state, he and his wife, Luanne, didn't hesitate to buy  another house -- even though the one they'd occupied for the previous 30 years  was burdened by negative equity.

"I guess it's a mentality," Coffee says. "If you live someplace, you live in  a house that you purchase. And I think it's a good investment. We never  considered not buying a home.""

 

Family secrets

"Gabriela Koenen and her husband, Ken, aren't newbies at homeownership, having  been homeowners for years.

In fact, the couple had moved into a rental in Paso Robles, Calif., only  because they had bought a lot on which they'd planned to build a brand-new  house. When that didn't pan out, they bought a house in nearby Livermore that  had caught their interest.

Gabriela Koenen describes the house as a "gorgeous" home with three bedrooms,  an office, great room and a "beautiful, beautiful" kitchen.

The Koenens, both in their early 60s, are self-employed. He's a tax, real  estate and bankruptcy attorney; she's his assistant and paralegal. That made  getting a new mortgage challenging, though they ultimately were able to finance  $472,500 of the $630,000 purchase price with a 30-year fixed-rate mortgage."


"Why did they buy?

"At our age," Gabriela Koenen says, "homeownership is something that you just  do. You don't rent.""

No Parking, No Problem

Transit-oriented developments are reflecting the preferences of today’s younger professionals. Learn what leading-edge developers are thinking.

Millennials are driving today’s transformation of major urban centers, according to a fall 2014 Cushman & Wakefield report. Many are opting to ditch cars as long as they can live within walking distance of amenity-rich areas and easily catch transit when they’re looking to venture beyond their neighborhood hub. In just six years, C&W reports, they’ll make up more than half of the global workforce. This expanding cohort of workers born since 1982 is likely to turbocharge another phenomenon with important ramifications for commercial practitioners: the demand for so-called transit-oriented development.

These mixed-use areas in cities and suburbs are located a half-mile or less from public transportation and typically occur in higher-density communities. Along with improving access to jobs, such developments spur other benefits, including reductions in driving rates, road congestion, and greenhouse gas emissions. Perhaps the most radical departure of all from conventional development priorities, onsite parking is typically a minimal or nonexistent part of the plan.

However, like the millennials themselves, TODs have matured since they first emerged. In some cases, neighborhood activists are pushing for TODs. And where they’re not on consumers’ radar, developers are fine-tuning their strategies to seek meaningful community involvement. Smart developers understand they need to offer more than just proximity to transit. Their projects need to reflect the changing lifestyles of younger consumers who are more likely to be tethered to their electronic gadgets than to a vehicle—a reality that lenders are starting to grasp as well.

Since the late 1990s, TOD has been a force in the development world, says David Dixon, an urban planner at Stantec in Boston. The Great Recession, however, changed TOD’s trajectory.

“Transit’s ability to really incent development—and a different kind of development, of walkable communities—first became recognized in the late 1990s and early 2000s,” he explains. “But coming out of the recession there’s been so much more awareness of the power of cities to attract people, the interest in walkable environments, and the desire to not have a car. ”

Data has begun emerging showing that TOD improves property values. A 2009 study by CEOs for Cities found that in 13 of the 15 markets analyzed, increased walkability in a neighborhood was directly linked to higher home values.

Fitzhugh Stout, senior managing director of the Charlotte, N.C., office of Integra Realty Resources, a real estate valuation company, studied the effect of a light rail line that opened in his area in 2007. He found properties had increased in value from 5 percent to 73 percent since then, and the most dramatic increases came from changes in zoning that permitted increased density. “Everywhere in the country, people talk about reducing parking and getting higher density in development,” he says. “Transit has allowed that to happen.”

...

Jackson agrees with colleagues that planning for parking can be tricky. At Shady Grove, townhomes have attached parking for one or two cars while rentals have fewer allotted parking spaces. “One consideration is who’s moving into the units. You may be doing larger units targeted for empty nesters. They may be less willing to give up their cars,” he says. You also have to think about what amenities are within walking distance. The higher the Walk Score, the less parking you need.

Bottom line: You can’t just throw up a development near a subway station and call it a day. Transportation (and not necessarily rail; good bus service also qualifies), walkability, and neighborhood amenities are all factors in successful TOD, he says. “It’s a dynamic analysis.”


When should I sell my house? Tips for when to sell your home


by Julia Miller - June 4, 2012

Ultimately, the decision to sell your home is a very personal one. It's impossible to come up with an exact formula of circumstances that tell you it's time to move. Though it may come down to gut instinct, here are some things to consider before putting your home on the market.

Look at local market conditions
The last few years have been tough for real estate in many areas, but that doesn't necessarily mean it's not a good time to sell your house. Look at conditions in your city and your neighborhood. How long are houses staying on the market? In many places, lack of inventory is creating a competitive market, which is great for sellers!
 
Consider renting
Still not sure it's a good time to sell? Consider renting out your property for a couple of years. Conditions may improve, and in the meantime, you can live in a brand new home and get today's great rates. You can even hire a property management company to handle the paperwork and maintenance.
 

SOLD signEvaluate your mortgage
Interest rates are low at the moment, but that may not last. If your current home was financed with a high interest rate, and you're ready for a change anyway, this may be a good time to unload your old home and move into a brand new one. With conditions as they are, you may even be able to get more square footage with a lower mortgage payment.

Talk with a real estate agent
If anyone knows what happening with the current housing market and your neighborhood, it's a real estate agent who specializes in your area of town. Don't be afraid to give one a call to discuss your options. The working knowledge an agent can provide could be invaluable!

Window shop
Even if your house isn't on the market yet, it doesn't hurt to window shop for a new home. Touring model homes and visiting communities will give you a good idea of what you can get for your money and what homes are going for in your area.

Tax credit, energy savings add up

A geothermal heat pump placed in service between Jan. 1, 2009, and Dec. 31,  2016, is eligible for a 30% federal tax credit. The system must meet certain efficiency standards. All geothermal heat  pumps rated by Energy Star, the federal energy-efficiency program, qualify.  Energy Star was scheduled to release updated guidelines on eligible systems in  late 2009.

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