Friday, December 31, 2010

Bathrooms: Pretty in Pink, Again


By KATE MURPHY
Published: December 29, 2010


WHEN Nancy Burns and her husband, Thomas, moved into a 1959 split-level house in Fairfax, Va., three years ago, they tore up the cheesy shag carpeting and renovated the dark-paneled rumpus room but spared the pink-tiled bathroom with a matching pink tub and toilet that their real estate agent had thought would be a deal-breaker.

“We had the opposite reaction,” said Ms. Burns, who is 37 and a computer technician. “When we saw the expanse of pink, we knew this house was it.”

Pink bathrooms were common in homes built in midcentury America. But by the 1970s they were considered as saccharine as a package of Sweet’N Low. The color scheme in bathrooms then shifted from carnation and Pepto-Bismol pink — not to mention robin’s egg blue and avocado green, also midcentury favorites — to more muted tones like almond and ecru until, more recently, plain old white predominated.

But within the last five years, pink has come back into vogue, with more people like Ms. Burns embracing their vintage pink bathrooms rather than taking a sledgehammer to them. Moreover, interior designers now advocate flattering rosy hues for new or renovated bathrooms. And manufacturers of bathroom tiles and fixtures have been introducing more pink options. Noticing the trend, the color authority Pantone this month decreed that hot pink will be the “it” color of 2011.

“Pink makes you happy,” said Ms. Burns, who plays up her pink bathroom with a pink-poodle shower curtain, ceramic pink poodle figurines, pink towels and even a vintage pink bathroom scale.

While pink bathrooms started appearing as early as the 1930s, many credit Mamie Eisenhower with popularizing them in the 1950s. She decorated the White House with so much pink when her husband took office in 1953 that the staff began referring to it as the “Pink Palace.”

Pastel pink or “Mamie pink” soon became the era’s iconic bathroom color. While it is difficult to find colorful plumbing fixtures today, back then manufacturers like American Standard, Crane and Kohler all carried pink toilets, tubs and sinks (albeit in slightly different hues).

“That color palette languished for years, and now I can’t keep pink toilets in stock,” said John Vienop, operations manager for DEA Bathroom Machineries, a seller of salvaged plumbing fixtures based in Murphys, Calif. “We’re shipping them all over the United States.”

It’s unclear what is driving the recent rethinking of pink, but one factor could be the high visibility of midcentury design due in part to the popularity of “Mad Men” (the Drapers’ downstairs powder room was pink) and Atomic Ranch, the retro architecture magazine.

And since pink bathrooms are associated with a time of prosperity, perhaps there is also an element of nostalgia for rosier times, said Pam Kueber, who started a blog, savethepinkbathrooms.com, in 2007. Of the more than 500 people who have left comments on her blog, many fondly remember a grandmother, great-grandmother or favorite aunt who had a pink bathroom.

“There’s a lot of sentiment tied up in pink bathrooms,” said Ms. Kueber, 51. She lives in a 1951 brick ranch-style house in Lenox, Mass., that would have a pink bathroom if only she had known where to get pink ceramic tiles when she renovated it in 2003. She went with the next closest color she could find — pale peach. “One of the reasons I started the blog was to help people share information on sources” for pink tiles and fixtures, she said.

But some people with vintage pink bathrooms have left them intact, not so much because they are nostalgic or are in love with the color but because it is too costly to redo them. “For a long time, I hated it and planned to gut it, but I was limited by my frugality,” said Michael Heaton, 34, a stockbroker, referring to the pink-tiled bathroom in his 1964 brick ranch-style house in Norman, Okla. “There wasn’t a thing wrong with it except the color.” After painting the walls a darker pink and painting the cabinetry black, however, his opinion changed. “Now it’s the best room in the house,” he said.

Ceramic tile work done before the 1970s was usually of very high quality, according to architects and architectural historians. The tiles themselves were often more substantial and less prone to crack and the so-called mud job, or the way tiles are set in place, was more careful and adhesive.

“The tiles back then were laid in real mortar, which is why so many of the pink and other wild-colored bathrooms survived,” said Jane Powell, a restoration consultant in Oakland, Calif., and the author of “Bungalow Bathrooms” (2001). “It’s extremely labor intensive and expensive to get rid of them.”

That’s not stopping Janice Friedman, 53, a legal administrator who lives in a 1954 brick ranch-style house in Wichita, Kan., from removing the tiles mortared into one of her bathrooms so she can replace them with pink ones. The original tiles were light green, she said, but were painted “a hideous off-white” by a previous owner. Although it will be arduous to remove them, she is determined: “I’ve ordered the pink tiles and told my husband we’re tearing out the old tile as soon as the Christmas tree comes down.”

While Ms. Friedman is aiming for a classic midcentury American look, high-end European designers of bathroom fixtures and tile have recently begun offering arty lines that are predominantly pink. Examples include a hot pink and white bathroom by the Swiss company Laufen and a stunning contemporary bathroom, by the Italian manufacturer Bisazza, that is lined from floor to ceiling with pink glass mosaic tiles.

“Bath design has been trending toward pink over the past two or so years,” said Scott Cook, manager of the Bisazza showroom in SoHo. “It’s very warm and makes your coloring look better in the reflected glow.”

The interior designer Brooke Giannetti, 45, and her architect husband, Steve, also 45, achieved that warmth with nothing more than a coat of paint. They painted the bathroom of their shingled beach cottage in Santa Monica, Calif., seashell pink a few months ago; for years it had been a spa-like all white. “You don’t want to be assaulted by that kind of starkness first thing in the morning or right before bed, which is when you spend the most time in the bathroom,” Ms. Giannetti said. “We’ve found the pink to be much more soothing and enveloping.”

And pink is complimentary, too. Tamelyn Feinstein, a 50-year-old photographer, painted the bathroom in her Nashville condominium bubble-gum pink in 2001. She was so happy with how she looked in there that she used the bathroom as the backdrop for a series of 365 self-portraits that she shot daily a few years ago.

“It’s very flattering,” she said. “It’s hard to be sad in a pink bathroom.”

Similarly, Sarah McColl, 28, a freelance writer, painted the nondescript bathroom of her Brooklyn walk-up a vibrant pink last year; she remembered reading in Vogue when she was a teenager that the color made you look better. She also decorated it with pinup-girl posters from the 1940s and 1950s, along with old album covers that have some pink.

“I think the article in Vogue said something like, ‘If you paint your bathroom pink, you’ll never regret it,’ ” she said. “And it’s true.”

View original article: http://www.nytimes.com/2010/12/30/garden/30pink.html?pagewanted=1&_r=1

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Thursday, December 23, 2010

Charlton Cottage Update

BEFORE: Obviously the floor plans don't show the 8 foot ceilings, but one important component will be removing the ceilings and exposing the rafters. Right now you have two bedrooms, one bath and what's labeled as a "spare room."
















AFTER: In the new plan, the closet in the front bedroom will become a full wall of closets, as the master bedroom closet will incorporated into the front bedroom's space. There will be a cased opening from the master bedroom into what will become a bath suite. So there will be a full walk-in closet, a washer/dryer and then the bathroom, with a clawfoot tub. In the kitchen one window is going away, creating more upper cabinet space. There will also be an inglenook (built-in L-shaped bench seats and table) on the long wall opposite the cabinets.
















Click on the images above to view a larger version.

2010 Reader Remodel Winner: From Blank Slate to Charming Cape


By: Bibi Coyne, Homeowner, This Old House magazine

John and Bibi Coyne nabbed the top prize in This Old House's 2010 Reader Remodel Contest. Here's the story of their renovation:

Want to know what it's been like to fix up our little Cape? Picture my husband, John, and me up at midnight prying off door trim and sawing through plaster. We just had to widen that doorway. It was the only way to get our new fridge into the kitchen.

Eight years ago, we didn't own a Sawzall, much less know how to operate one. But that was also before we noticed flakes of spray paint sticking to our kids after bath time, thanks to an old cosmetic fix on the tub. And before that same bath's dripping faucet finally sent us over the edge, forcing us to redo the dismal room long before we wanted to. Yes, we ripped out the tub, and the faucet, too.

Continue reading at http://www.thisoldhouse.com/toh/photos/0,,20394980,00.html

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Best Bath Before and Afters 2010

The readers of This Old House have done it again. Follow the link below to check out the Best Bath Before and Afters of 2010.

http://www.thisoldhouse.com/toh/photos/0,,20393032,00.html?xid=kbnewsletter-101223-best-baths

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Wednesday, December 22, 2010

New Project!

The beginning of the year is going to be extremely busy. We have another project, this time on 510 East Waldburg Street. Despite my best efforts to avoid it, the project found me. It had previously gone under contract, but it fell through and the seller’s agent called me. We worked out a deal, which is closing tomorrow, and so off we go. This is an unusual house for the Victorian District, because it was built in a Mediterranean style in the 1930s. I don’t know whether there was an earlier house on the lot, which is sometimes the case with these homes that are later than the other homes in the neighborhood. It’s an upstairs/downstairs duplex, with 2 bedrooms and 1 bath and about 1250 square feet in each unit. The bedrooms are very good sizes for a home this age—about 12 x 12 ¾ for the larger and 12 ½ x 10 ¾ for the smaller bedroom. Each unit has a kitchen, breakfast room, separate dining room, living room, and a sunroom. For SCAD purposes, that sunroom could turn into a third bedroom, but a more elegant use would be as a den or office. The breakfast rooms will turn into laundry rooms, with extra pantry storage.

The house needs the usual suspects—upgraded plumbing, electric, new paint, new cabinets, HVAC. The HVAC, we hope, will be a slightly less involved ordeal, because there is actually central heat. Not sure why it’s just a central heat system without central air, but at least the ducting is in place. The hardwood floors appear to be in pretty good condition, and the hardwoods are still in place underneath the vinyl and linoleum in the kitchen and breakfast rooms. We have a bathroom floor that has seen too much water and needs to be rebuilt, but in general the structure appears to be solid. The upper unit also has an attic—did I mention yet we’ll be doing a new roof—which houses some ducting but also has plenty of room for storage.

I’m excited—the house in on a good block and we should be able to put in back on the market at an attractive price.

Front Exterior














Downstairs Living Room














Downstairs Sunroom














Downstairs Bathroom














Downstairs Breakfast Room (soon to be laundry room)




















Downstairs Kitchen














Downstairs Bedroom














Upstairs Living Room














Floor in Upstairs Dining Room














Upstairs Kitchen














Upstairs Bathroom




















Rear Exterior

Friday, December 17, 2010

Average 30-Year Fixed Mortgage Rises to 4.83 Percent

Published: Thursday, 16 Dec 2010 | 10:46 AM ET
By: AP


Rates on fixed mortgages surged for the fifth straight week, reflecting higher yields on long-term Treasurys.

Freddie Mac said Thursday the average rate on a 30-year fixed mortgage rose to 4.83 percent from 4.61 percent in the previous week. Last month, the rate hit a 40-year low of 4.17 percent.

The average rate on the 15-year loan also increased to 4.17 percent from 3.96 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.

Rates are on the rise after falling for seven months.

Investors are shifting money out of Treasurys and into stocks. That's largely on the expectation that the tax-cut plan that Congress is set to approve will spur growth and potentially higher inflation.

Yields tend to rise on fears of higher inflation. Mortgage rates track the yields on the 10-year Treasury note.

The sell-off in the 10-year Treasury note is complicating the Federal Reserve's efforts to lower interest rates by buying up $600 billion in Treasurys. Some traders had hoped the central bank would boost the scale of its purchases to keep interest rates down.

The increase in rates already is chilling the housing market. Refinance activity fell last week for the fifth straight week, while the number of people applying for a mortgage to purchase a home dropped 5 percent from the previous week, the Mortgage Bankers Association said.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage rose to 3.77 percent from 3.60 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.

The average rate on one-year adjustable-rate home loans edged up to 3.35 percent from 3.27 percent.

The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for all mortgages in Freddie Mac's survey was 0.7 point.

View original article: http://www.cnbc.com/id/40699814

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Housing Starts Rise in November, But Permits Drop

Published: Thursday, 16 Dec 2010 | 8:36 AM ET
By: Reuters


U.S. housing starts rose slightly more than expected in November, but a surprise drop in permits for future home construction to a 1-1/2 year low indicated continued weakness in the housing market even as the economic recovery gains traction.

The Commerce Department said on Thursday housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units. October's starts were revised up to a 534,000-unit pace from the previously reported 1-1/2 year low rate of 519,000 units.

Analysts polled by Reuters had expected housing starts to rise to a 550,000-unit rate.

Despite last month's pick-up in residential construction, housing remains weak as a 9.8 percent unemployment rate weighs on demand and homeowners' ability to hang on to their properties, lagging an acceleration in broader economic activity.

A survey on Wednesday showed sentiment among home builders was mired at record low levels this month, suggesting residential construction will again be a drag on gross domestic product growth in the fourth quarter.

New building permits fell 4.0 percent to a 530,000-unit pace last month, the lowest since April 2009, after a 0.9 percent increase in October. Permits were dragged down by a 23 percent plunge in the volatile multi-family segment. Permits for single-family homes rose 3 percent last month.

Analysts had expected overall building permits to rise to a 560,000-unit pace in November.

Groundbreaking last month was lifted by a 6.9 percent rise in single-family home construction. Starts for the multi-family segment, however, fell 9.1 percent. New home completions tumbled 14.1 percent to a record low 513,000 units in November.

View original article: http://www.cnbc.com/id/40696959

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Foreclosures Show Biggest 5-Year Drop as Process Slows


Published: Thursday, 16 Dec 2010 | 7:19 AM ET
By: Joseph Pisani
CNBC News Associate


Foreclosures activity fell dramatically in November, showing the biggest drop in more than five years, mostly due to a temporary freeze on foreclosures and the holiday slowdown, a report released Thursday said.

Foreclosures fell 21 percent in November from the previous month and 14.4 percent from the year before, according to foreclosure tracking web site RealtyTrac.

Both percentage drops are the highest recorded since RealtyTrac began publishing its reports in 2005. But the drop isn't due to a recovery, RealtyTrac said.

“Part of the decrease can be attributed to a seasonal drop of 7 to 10 percent that typically occurs in November," said RealtyTrac CEO James Saccacio in the report.

The other reason for the decrease is the foreclosure freeze earlier this fall, which continues to slow down the foreclosure process, even though most banks have resumed foreclosures.

"Fallout from the foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork,” said Saccacio.

A separate report released this week from Moody's said that this year's foreclosure freeze will delay the time it takes to foreclose on a property in 2011 by three months.

"We expect that foreclosure activity in December will remain artificially low, but not as low as November," said Rick Sharga, senior vice president at RealtyTrac. "Foreclosure activity rates will accelerate during the first quarter of 2011 as the lenders and servicers catch up on these delayed proceedings."

RealtyTrac said that one in every 492 American household received a foreclosure notice in November, totaling 262,339 properties, the lowest that number has been since February 2009. (Foreclosure notices are defined as a default notice, auction sale notice or bank repossession.)

Bank repossessions, the final step in the foreclosure process after a home fails to sell at auction, fell 28 percent in November from the previous month and dropped 12 percent from a year ago. In all, 67,428 homes were repossessed by banks in November, a sharp drop from September when bank repossessions topped 100,000 for the first time.

But despite the decline, bank repossessions for the year have already broken 2009’s record, with 980,000 properties repossessed in 2010 so far.

Among the individual states, Nevada had the highest foreclosure rate for the 47th consecutive month, with one in every 99 households receiving a foreclosure notice in November. (Nevada also has the highest unemployment rate in the country.)

Utah had the second highest rate with one in every 221 households receiving a foreclosure notice. Following Utah were California (one in every 233 households), Arizona (one in every 262 households) and Florida (one in every 267 households). (See the 10 states with the highest foreclosure in our slideshow.)

Vermont had the lowest foreclosure rate in the nation, with one in every 31,262 households receiving a foreclosure notice.

© 2010 CNBC.com

View original article: http://www.cnbc.com/id/40681328

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Thursday, December 16, 2010

Trouble in Paradise


Trouble in paradise—our plans to build a new house at 102 W 31st may be in jeopardy. Our title search has come back and it’s not looking good. I suppose this would be a good time to discuss the concept of title to a property, which is not unlike title to a car, which most of us have experience with. Think of title as your proof of ownership, which passes from owner to owner when you sell your car or property. Think of buying a new car, in which your title is also brand-new, or even a used car, where you probably only have one or two people before you. But property title can be a little more complicated, especially in a historic district, because of the extended age of the house. Now throw in an issue like we’re experiencing at 102 West 31st, where the current owner bought it at a tax sale, meaning the previous owner had delinquent taxes and the county sold the property to pay those delinquent taxes. Now you see why your mortgage company wants you to create an escrow account with them, so THEY can pay the taxes to make sure they are current. Your property taxes take priority over your mortgage payments in terms of delinquency—in other words, you might be current on your $200,000 mortgage, but if the taxes aren’t paid, the county can take that property, leaving the bank stuck with your $200,000 mortgage, and unlike a foreclosure, without the right to sell the property. It doesn’t happen that often, because usually the mortgage company will pay the taxes and then foreclose upon the house, anyway, because not paying the taxes is a violation of the mortgage, but just know it’s out there. More likely, a property that has no mortgage, especially a piece of vacant land like this, has no bank overseeing tax delinquencies, and eventually, someone gets tired of paying this tax bill and the property changes hands.

The problem we’ve run into is that having the county take the land from you doesn’t mean there were not any title issues before. So let’s say you are in possession of a will that says Aunt Edna is leaving you the house. But Aunt Edna changes her mind and leaves it to Cousin Joe. That ticks you off, so you file a legal suit using the copy of the will as evidence. Now you need a court date and a judgment of some sort, deciding who has the right to the property. And if the judge decides you have the legal right, not Cousin Joe, then Joe may be forced to sell the property or write you a check to settle your interest.

So with all these risks, how do you protect yourself? Well, for starters, most properties don’t have these issues, because you have a title search done as part of your due diligence. You pay someone to go to the courthouse to search the records for anything that’s recorded against the title. Now, all that means is that if someone actually went to the courthouse and legally recorded it, making it of legal record, then there is proof. But if someone has Aunt Edna’s will stuffed under the mattress, and never recorded it, there’s a potential issue. So, if the title is reasonably clean, a title insurance company steps in and says, OK, we will insure this title, and if that will does appear, we’ll defend your interest in the property. If you can purchase title insurance, what’s the issue with 102 West 31st? Well, just like Allstate doesn’t want to insure a driver with 10 accidents, if the title search has brought up a number of issues, the title insurance company may not want to insure. Now, you could still buy the house, going into it with your eyes open, knowing that you’re not protected, and maybe you do. BUT, when you go to sell the property, you have to find another risk-taker willing to buy without the title insurance. Because just because you bought the place, held it for 20 years, and had no problems, it doesn’t mean that will, or some sort of contract written on a napkin, couldn’t rear its head and force you into a legal action to defend your property. And as you know, legal actions are expensive.

And thus, we have a problem. Stay tuned.

Negative Home Equity Is Worse Than You Think


Published: Wednesday, 15 Dec 2010 | 1:12 PM ET
By: Diana Olick
CNBC Real Estate Reporter


There was a lot of talk last week about how negative equity, now at 22.5 percent of all homes with mortgages, according to CoreLogic, will affect the housing recovery. Then mortgage rates popped up to 5 percent overnight, thanks to the 10-year Treasury, and more folks voiced concern over today's potential home buyer and his or her ability to take advantage of this low-priced housing market.

Owing more on your mortgage than your home is currently worth doesn't necessarily mean you can't afford your monthly mortgage payment or that you're going to go about your day any differently, other than feeling a little financially depressed. While it may make some more likely to walk away or "strategically default," most won't.

It does mean that you can't use your home to pay for anything, like a new car or your kids' college tuition, and it does mean that you can't move up to a nicer home without having to take a hit by paying off your mortgage with whatever stash of cash you have. Now here's the issue: The move-up buyer (which is the market we're counting on now to get us out of this mess, given that the home buyer tax credit pulled a lot of first-time buyer demand forward to the beginning of 2010). A significant number of move-up buyers, even if not underwater on their mortgages now, may be in a negative equity position when it comes to buying a new home.

Let me just preface that if you happen to be wealthy independent of your home, or a relative just died and left you a sizeable chunk of cash, this doesn't apply to you. Now here goes. Mortgage expert Mark Hanson makes an excellent point and did some math, which I want to share:

"In order to sell and re-buy, a homeowner must receive enough proceeds from the sale to 1) pay off the mortgage(s), 2) pay a Realtor 5-6 percent and 3) put a 3.5-20 percent down payment on a new vintage loan," begins Hanson, and those alone may be too financially off-putting in today's economy for many potential buyers.

"Effective negative-equity is the big weight on housing that has no easy or quick cure," continues Hanson.

His math:
  • Real effective negative-equity as it pertains to house selling and buying starts at:
  • less than 9.5% positive equity for FHA repeat buyers (6% Realtor fee + 3.5% down payment)
  • less than 16% positive equity for Fannie/Freddie repeat buyers (6% Realtor fee + 10% down payment)
  • less than 26% for Jumbo repeat buyers (6% Realtor fee + 20% down payment)
When lowering Corelogic's negative equity threshold to 75% on CA mortgages, 53% are effectively underwater.

And I would add to Hanson's logic, that CoreLogic also noted that an additional 2.4 million borrowers are in a "near-negative equity" position, with less than 5 percent equity in their homes. That puts them out of the move-up market as well.

With rising mortgage rates, even if they don't go much higher, the "effective" negative equity rate of the move-up buyer will impact recovery, slowing sales as more buyers/demand are priced out of the market.

View original article: http://www.cnbc.com/id/40682173

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Wednesday, December 15, 2010

Buying a home now is a no-brainer

Money Magazine has given their official approval for you to purchase your home. The article below mentions a lot of things I've been discussing the last few months, not that it wasn't common sense to start with. Remember the mantra? If you like the home and the payment makes sense and you're not moving any time soon, this is a great time to buy.

----

By Ali Velshi, CNN chief business correspondent
December 13, 2010: 9:26 AM ET


(MONEY Magazine) -- Is now the right time to invest in a house?

Trick question. Actually, it's two questions.

Question No. 1: Is now the time to buy?

Question No. 2: Is buying a house a good investment?

The first answer is easy: With a few exceptions, if you have 20% to put down and good credit, now is a great time to buy. That's been the case all year, and I'd argue that we're probably closer to the end than to the beginning of the really great time. Let me explain.

Back in January home prices had dropped 28% from their peak. More important, interest rates were at historical lows. By locking in a mortgage for 15 or 30 years on a value-priced home, you were getting an incredible deal, even if home prices decreased. (I took my advice and bought a New York City apartment.)

At the time, I thought that prices and rates were more likely to rise than fall. I was half right: Home values have been inching up since the spring, but mortgage rates, incredibly, dropped further.

By August (the latest numbers available) the median home price had risen 1% over a year ago, but 30-year rates had dropped a half-point to 4.5%. Assuming 20% down and a 30-year mortgage, the total cost of owning a median-priced home is now down $16,000 from a year ago.

Home values may waffle over the coming year, but because Americans take out such large, long mortgages, rates are what really matter. And I am more likely to grow hair than see 30-year mortgage rates drop below 4%. It's far more likely that rates (and the cost of ownership) will rise.

Now for question No. 2: Is a house a good investment?

First, it depends on what you mean by investment. If your definition is strictly about dollars returned, a house probably won't be a great use of your capital. If you bought the median-priced house today with 20% down, to recoup your total costs (and I'm not including property taxes and maintenance here) over three decades, the home's value would have to rise about 3% a year.

That's likely, but you'll almost certainly (we all hope) do much better than that in the stock market. The fact is, however, that that's the normal case for housing; the booms that began after World War II and in the late 1990s were the exceptions.

Of course, there are places where you might do better. I bought my condo in Manhattan, a small island that, by virtue of the business done on it, has a sustained demand for property. And smaller, energy-efficient housing in cities or inner suburbs around San Francisco or Chicago is likely to be in higher demand than big, outer suburban homes with long commutes to Las Vegas or Atlanta.

According to urban and environmental planning professor William Lucy of the University of Virginia, this move toward urbanization in American housing is the reversal of a trend that's been in place since 1945. Keep it in mind when making your buying decisions.

That said, the key point to remember is this: Buying a fairly priced home at today's rates may be the best deal you will ever get. And who knows? It may even turn out to be a good investment.

View original article at http://money.cnn.com/2010/12/10/pf/buy_a_home_now.moneymag/index.htm

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Friday, December 10, 2010

Best Kitchen Before and Afters 2010

Check out this slide show from ThisOldHouse.com featuring the best kitchen before and after remodels from their readers.

http://www.thisoldhouse.com/toh/photos/0,,20391252,00.html


Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Thursday, December 9, 2010

414 E. Duffy Street Wrap Up

Well, maybe not a wrap up because we are hoping to have some photos of the newly furnished home, but we have closed, the buyer has returned from his military service abroad (thank you for your service) and has moved in. Our next houses will be a variation on this theme with some differences. The great room will be a little bigger on 528 E. Duffy Street and 102 W. 31st Street with a slightly smaller kitchen as a trade off. Also the new plans do not have a rear upper deck because we're moving the master bedroom to the front of the house. The owner chose some upgrades on his appliances and mosaic kitchen backsplash as well as adding a concrete parking pad and some bath tile niches, but for the most part what you see is what you get standard in our new construction homes. I should also add that his upgrades at current interest rates maybe added $25/month to the mortgage payment. So they're pretty minor in the scheme of things.





































































































































A New Renovation Project

If you’ve been waiting for a post with a little meat on the bones (not that we all don’t love This Old House’s best products of 2010), here we go. Lately I’ve started to feel like a straight-up homebuilder, considering the work on 414 East Duffy and our plans for 528 East Duffy, and now 102 West 31st Street. We’re still waiting for another lot on 313 East Park, which is tied up in some legal issues. But now I have a straight-up renovation on my hands, just like the old days. 521 East Charlton is in the Landmark Historic District, in the Beach Institute neighborhood. It’s an unusual house by the standards of the Landmark District, because it’s actually a small cinderblock cottage that was probably built in the 1940s or early 1950s, measuring about 900 square feet, with 2 bedrooms and 1 bath. There is carpet AND linoleum over the original hardwood floors, a funky little addition in the back, off the second bedroom, and very low ceilings. What, pray tell, is interesting about this house, then? For starters, it’s in a great location, just one block from Troup Square. It has a great yard with what will be 2 parking spaces. And there is very little inventory in the sub-$140k range, which is where we plan to market the finished product. It will also give me a change to work on a style of house that I haven’t done yet, which is a straight-up cottage. I’m thinking beadboard in the kitchen and baths, clawfoot tub in what will be the new second bath in the addition. Plus refinishing the original floors, adding HVAC, new plumbing and electric and tearing out the low ceilings and exposing the rafters. Should be a major transformation.

Image 1: Front Exterior















Image 2: Living Room (Yes, we will be replacing that weird old heater with central HVAC)














Image 3: Floor in Living Room (Hardwoods under three layers of junk)














Image 4: Bathroom (We'll need to jack up the floor a bit, not to mention EVERYTHING else.)



















Image 5: Bedroom #1 (This will turn into a full wall of closets because the next bedroom will have a walk-in closet of its own.)














Image 6: Kitchen (Picture new cabinets and appliances and a dining nook in that right back corner.)














Image 7: Floor in Kitchen




















Image 8: Soon to be Master Bath & Closet (This is the weird addition. Picture walking through a large closet into the master bath with clawfoot tub.)














Image 9: We'll be tearing out the ceiling and exposing these rafters.



















Image 10: Backyard (The lot is about 100 feet deep and the parking pad will be about 20 feet wide.)

Wednesday, December 8, 2010

Opulent RI mansions embody America's Gilded Age


By ERIC TUCKER, Associated Press Eric Tucker, Associated Press – Mon Nov 29, 2:31 pm ET

NEWPORT, R.I. – Bellevue Avenue, home to a series of eye-catching mansions that famously embody America's Gilded Age, crams enough history in a two-mile strip of Newport to be a mini-city unto itself.

Now, to accommodate both history buffs and casual passers-by, the nonprofit organization that owns and operates this city's historic mansions has created a self-guided walking trail linking 11 historic clusters of properties along the avenue.

Markers outside the properties help identify the trail while also detailing the buildings' history, architectural style and cultural commentary. They even include descriptions of neighboring buildings that have been demolished or are simply less well known.

"We tell the stories of each individual house, and yes, you can reference one house with another, but we felt we didn't have an effective medium for linking the whole neighborhood together and telling the whole story," said John Tschirch, an architectural historian and director of museum affairs for the Preservation Society of Newport County, which owns most of the city's famous mansions and opens them to the public as tourist destinations.

"You get a rich experience in each house, but we wanted to give the experience of the whole streetscape and the urban plan," he added.

There are about six homes in each of the clusters. Among the best known homes are the Elms, Chateau-sur-Mer and Rough Point, the one-time home of tobacco heiress Doris Duke.

Some of the homes are private; many of those that are not private are open to visitors during certain hours.

The four-year trail project was completed in November and cost roughly $35,000, most of which was given by a private donor. It is similar in intent to the red-brick Freedom Trail in Boston, though the pale-green markers in Newport are designed to blend into the neighborhood.

The markers read like a list of who's who of wealthy dignitaries and socialites from the late 19th century and early 20th century.

The sign outside the Preservation Society's headquarters, for instance, reveals that it once was the home of Herbert Pell, a congressman from New York and the father of Claiborne Pell, who represented Rhode Island in the U.S. Senate for 36 years and died in January 2009.

A nearby Gothic Revival house, the marker says, was built for Albert Sumner, the brother of Charles Sumner, a senator from Massachusetts who in 1856 was badly beaten on the Senate floor by a South Carolina congressman after delivering an anti-slavery speech.

The markers also offer assorted tidbits of information, obscure and well-known alike. Visitors are reminded not only that the film version of "The Great Gatsby" was shot at the Rosecliff mansion, but that decades earlier, the home's owner, a Nevada silver heiress named Theresa Fair Oelrichs, dressed as Mother Goose at a special Fairy Tales ball.

The trail also highlights the Sherwood home, where an engagement party for John F. Kennedy and Jacqueline Bouvier was once held. The building has since been converted into apartments.

The markers tell of fights over preservation, demolition and even over the fate of an unsightly junkyard that some wealthy residents considered a blight on the neighborhood. Each one includes a section called "Voices from the Past" — typically a quote from a newspaper or magazine article offering commentary on the homes and on Newport society.

"Since the passing of the Gilded Age that these houses symbolize, two wars, a long depression, high income taxes and a shortage of servants have dimmed Newport's splendor. The doors of these villas will never be opened again," a 1944 Life magazine article posited.

Dawn Cochran, 38, who works at a bank and recently was taking a morning stroll down the avenue, said the trail is a good idea, even for locals like herself.

"Living here all my life, I don't know the history of Newport," she said.

The first signs went up several years ago to a positive reception, Tschirch said. Of course, there are many Newport attractions beyond the ones on Bellevue Avenue — for instance, the Breakers, the most-visited and spectacular of the city's mansions — that don't get recognized on the trail.

Tschirch he hopes to ultimately expand the project to other streets to help visitors better appreciate the city's rich history.

"Newport was America's architectural treasure chest and as a result, those architects, landscape designers were shaping American culture, or contributing to American culture — just like painters and writers," he said.

View original article: http://news.yahoo.com/s/ap_travel/us_travel_trip_newport_history_trail

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Best New Home Products 2010: Kitchen & Bath

Click the link below to check out some of the best new home products for your kitchen and baths according to the Editors at This Old House Magazine.

http://www.thisoldhouse.com/toh/photos/0,,20441317,00.html

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

For Your Clients: 10 Ways to Make a Small Room Look Larger


RISMEDIA, Most people have one: that room in the house that they wish was
just a little larger. What many don't realize is that with a little work and
some TLC, they could have exactly what they're looking for.

Here, Lowe's offers 10 designer tricks to help you make any room look
larger:

1. For the illusion of a larger room, use a color scheme that is light
rather than bright or dark. Pastels, neutrals and white are all color
possibilities.

2. Use a monochromatic color scheme on the furniture, rugs and walls. Select
different shades and textures of your single color.

3. Lighting is a key element in opening up a space. Recessed spot lighting
is visually appealing and is perfect for a small space. A torchiere light is
great for bouncing light off of the ceiling and back down on the
room.Skylights and solar tubes are natural alternatives for adding light to
a room.

4. Limit the number of accessories to avoid the cluttered feeling.

5. The floor and the ceiling are the fifth and sixth walls of every room. A
light-colored flooring such as light oak or a light-colored carpet will make
the room appear brighter and more open. The same applies to the ceiling-use
a light color or white to "open up" the space above.

6. Increase the appearance of the size of the room by adding wall mirrors.
They not only reflect images, they reflect light and color. Be a little
daring! Use mirror tiles to mirror an entire wall. Your room will appear to
double in size.

7. Don't place too many pieces of furniture in a small space. A love seat
may work better than a full-size sofa depending on the size and shape of the
room. Add two medium-sized chairs or two small wood chairs. Place the chairs
closer to the wall and then pull them into the area when additional seating
is needed.

8. Add paintings or prints to the walls. One large painting works better
than a group of small paintings.

9. The visual balance of a room is also important. A large, brightly colored
element can overwhelm a room and decrease the appearance of space.

10. A glass table, whether it is a dining, coffee or end table, will keep
the appearance of an open and free space.

Wednesday, November 24, 2010

Toyota, Panasonic Sally into Nascent Green-Housing Sector

This article doesn’t mention it, but it seems to me that a logical next step would have Toyota entering into the modular home arena. Obviously, their car factories are set up for mass production, so I could see a day when you buy a Toyota house, which, like other modular housing, arrives in mass-produced components, and is then assembled on site by Toyota-certified technicians. Modular housing is a topic for another post, but pre-fabricated housing is a sector which is growing and will probably replace full on-site (stick-built) construction in the near future. ----

By Nobuyuki Kojima and Satoshi Nakagawa

RISMEDIA, November 19, 2010—(MCT)—In what promises to be a fascinating contest between industry leaders in relatively unfamiliar territory, two of Japan’s manufacturing giants, Toyota Motor Corp. and Panasonic Corp., are attempting strong advances in the housing sector.

Both firms believe there are huge opportunities ahead for energy-saving technologies, with the introduction of the so-called smart grid—a next-generation power network that will optimize supply to residential and other properties—likely to accelerate demand for such products.

Toyota and Panasonic have been pushing their subsidiaries to do more to exploit the growing preference for environmentally friendly homes.

Toyota has integrated certain operations with subsidiary Toyota Home, with a view to adapting automobile-manufacturing techniques to the housing sector.

At a news conference on Oct. 5, Toyota announced a new design concept for homes that include recharging facilities for plug-in hybrid vehicles. "At long last, the integration of automobiles and homes has arrived," said Senta Morioka, president of Toyota Home.

The design makes use of Toyota's electric battery technology to maximize the power efficiency of both the building and the vehicle, the firm said.

Panasonic, meanwhile, combined its most advanced technologies in an experimental "eco home" built by its PanaHome Corp. subsidiary in Higashi-Omi, Shiga Prefecture, Japan, in July.

Hoping to put the eco-home on the market in fiscal 2011, PanaHome said its employees have been researching the eco home's performance by actually living in the experimental structure.

PanaHome's goal is for the home to produce zero carbon dioxide emissions.

Features of the design include a roof completely covered by solar cells, an interior lighting system based on organic electroluminescent devices and walls equipped with vacuum insulation, as used in refrigerators, the company said.

Such innovation by Panasonic and Toyota reflects both firms' long-term approach to the housing industry.

Toyota has long held a "strong interest" in the field, Toyota President Akio Toyoda said.

During Japan's period of economic and social turmoil immediately after World War II, Toyota founder Kiichiro Toyoda began a prefabricated home business, which his son Shoichiro Toyoda, currently honorary chairman of Toyota, continued by setting up a housing business department in 1975.

PanaHome is the housing industry's fifth-biggest firm in terms of sales. It reported sales of 260.3 billion yen in fiscal 2009 — less than one-fifth the sales of the industry's largest player, Daiwa House Industry Co.

With the resources of the wider Panasonic group behind it, PanaHome is "determined to soon become one of the top three" firms in the industry, PanaHome President Yasuteru Fujii has said.
Hidetaka Yoneyama, a senior researcher at private consulting firm Fujitsu Research Institute, said, "In the housing business, it's getting hard to satisfy consumers without offering wide-ranging, environment-friendly technology.

"While companies like Toyota and Panasonic can address these challenges on their own, many others will need to form partnerships that cross the boundaries between industries like housing, car manufacturing and electrical appliance manufacturing," Yoneyama said.

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

A Living Roof: More Expensive but Worth the Cost

I don’t know if we have any green roofs in Savannah, but if there’s a roofing contractor in the area who is capable of installing one correctly, it’s certainly something I’d like to explore on a future project.



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By Kathleen Lynn

RISMEDIA, November 19, 2010—(MCT)—When Scott Harris and Sarah Jack did a major renovation of their 1925 Teaneck, N.J., colonial in the summer of 2009, they kept the environment in mind—for example, choosing kitchen counters made of cement and recycled glass.

They thought about solar roof panels, but rejected that idea when they were told that they'd have to chop down a towering tree that shades their back yard and house.

Instead, they installed a green, or living, roof. The greenery absorbs and filters rainwater, as well as adding insulation, which cuts heating and cooling costs.

For most homeowners, the biggest environmental impact of a roof is simply that it keeps the environment out. But there are innovations that aim to make the roof over your head an important tool in the effort to save energy and reverse global warming. And we're not just talking about solar panels.

There are cool roofs that reflect, instead of absorb, the sun's rays; roofs made with recycled material; and green or "living" roofs, like the one on the Harris-Jack house.

While the number of energy-saving options is growing fast, these roofs tend to be significantly more expensive than the traditional asphalt shingle roof. As a result, homeowners have been slow to adopt them.

But Harris, a graphic designer, and Jack, a publishing executive, made the leap—choosing a green roof, partly for energy savings, and partly for aesthetics.

"We wanted to do something to see if we could save on energy bills," said Harris. "But it's nice just to look out at it. Now when people come to visit, we have to bring them to the bathroom upstairs to look at the roof."

Their green installation, on a flat section of roof at the rear of their house, consists of shallow trays holding a light, rocky soil and a mix of sedums, a drought-resistant, low-maintenance plant.

The cost of green roofs ranges from $15 to $35 a square foot—significantly more than a simple asphalt roof. The roofs require a structure strong enough to hold the plants and soil, even when the soil is saturated after a rainstorm. And some homeowners worry that if such a roof develops a leak, it would be more difficult to fix—though using trays lessens that concern.

But green roofs tend to last much longer, because the vegetation protects the roof structure from drastic changes in temperature, according to Jennifer Souder, a research manager at the Center for Green Building at Rutgers University.

"They can be a hard sell, because this is money you have to pay now," she said. "But over the long period, they can be cost-effective."

Green roofs also can help the environment by reducing storm water runoff, which washes pollutants into the state's waterways. And they can dramatically reduce the so-called urban heat island effect—the tendency of built-up, paved areas to be hotter than rural, natural areas. Souder said a test on roofs in Queens found that on a hot day, the air above a black roof registered 170 degrees; above a white roof, 115 degrees; and above a green roof, 85 degrees.

Though green roofs are still unusual, the industry grew 16 percent in 2009, according to the organization Green Roofs for Healthy Cities. They've been used on a number of public buildings, including Chicago City Hall.

Environmental concerns also are giving a boost to metal roofs, which make up an estimated 11 percent of the residential re-roofing market, up from about 4 percent a decade ago, according to the Metal Roofing Alliance, a trade group.

Metal roofs cost two to three times what an asphalt shingle roof costs, according to the alliance. But the group points out that metal roofs are lighter than asphalt shingles, and last decades longer.

They typically include at least 28 percent recycled material, and can be recycled at the end of their useful lives. In addition, the roofs can be coated or painted to reflect sunlight, which reduces the home's air conditioning costs. Some are Energy Star-rated, which entitles homeowners to a federal tax credit of up to $1,500 (which expires at the end of the year).

Bob LeSauvage had a very simple reason for choosing a metal roof on his Mahwah, N.J., home: "I'll never have to think about doing a roof again—and the next guy (who owns the house) probably won't, either," he said.

The steel roof LeSauvage had installed on his 1930s-vintage home last summer has a 50-year warranty.

So far, he's very happy with it. There's a layer of insulation between the wood and the metal, which muffles the sound of rain — though he said the acorns falling from a nearby tree do seem to make more noise than they did on the old roof.

Metal is not the only material that is recycled for roofs; roofs can be made out of recycled rubber and plastic, including old tires, carpet and bottles, and made to look like slate or wood shakes.

Even asphalt shingles, the workhorse of the roofing world, are getting an energy-saving twist. Asphalt roofs are the lowest-cost option, typically running $80 to $100 per "square"—a roofing industry measure that's equal to 100 square feet. That comes to about $1,000 to $1,200 for a 1,200-square-foot roof on a Cape Cod (not including installation charges). Larger houses, of course, cost more.

Because the asphalt shingles are affordable, they cover eight of every 10 homes in the U.S., according to the Asphalt Roofing Manufacturers Association.

But there are some new developments here, too—notably energy-saving "cool" roofs, which incorporate reflective granules to reduce the heat that comes into the attic.

GAF Materials Corp. of Wayne, N.J., the nation's largest manufacturer of roofing materials, estimates that such roofs can cut homeowners' cooling costs by 7 to 15 percent.

Friday, November 19, 2010

October Housing Starts Down

Housing starts are down. What does this actually mean? The seasonably adjusted number of new construction homes based on permit applications has decreased. Clearly the two new home construction permits my investors and I are applying for next week were not taken into consideration. So a recovery might be on its way. Seriously, though, all the numbers are extremely difficult to use for personal purposes. We're talking about national numbers, and we know that all markets are different, and if there's one thing anyone following this blog should have learned in the past six months, it's that no one really seems to know what's happening. You can sit on the sideline, read your data, wonder where prices are going, wonder where interest rates are going, wonder how many permits were pulled, or you can find a house that makes sense for you now, lock in a historically low interest rate, and stop hiding under the covers. And remember, a rise in interest rates from 4.25% to 5.25% will more than negate any monthly savings you might have in your mortgage payment if you wait for prices to drop 10%. If prices don't drop and interest rates go up, which most observers think they must, you'll be kicking yourself for not locking in at a ridiculously low rate now. And now on to those inscrutable statistics.

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RISMEDIA, November 18, 2010—Nationwide housing starts declined 11.7 percent to a seasonally adjusted annual rate of 519,000 units in October, according to figures released by the U.S. Commerce Department. The decline was primarily registered in the more volatile multifamily sector, where starts retreated 43.5 percent to an 83,000-unit rate, while single-family starts posted a more modest 1.1 percent decline to 436,000 units.

"Home builders continue to be very cautious about starting new projects at this time," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "That said, in markets where consumer demand for new homes is reviving, builders are finding it almost impossible to obtain construction financing, and this frustrating situation is producing an unnecessary drag on both new home production and economic growth."

"October single-family starts and permitting activity remained essentially in line with the third quarter's trend," noted NAHB Chief Economist David Crowe. "What this tells us is that the market is running at a steady, but slow, rate following the downturn that took place upon expiration of the home buyer tax credit program and the economic slowdown this summer. Today, builders are just starting to report some improvement in buyer demand, which should gradually translate into more sales activity, and more starts, as the economy strengthens. The great concern is that this positive momentum will be stifled due to builders' inability to obtain financing for new construction at a time when inventories of completed new homes are very thin."

A report to be released by NAHB later today will highlight the extent to which much of the U.S. single-family housing market is underbuilt following the severe decline in production that has taken place since 2006. This finding underscores the concern that demand for new homes could quickly overwhelm supplies as economic conditions improve.

Starts activity was mixed across the nation in October, with gains of 12.9 percent and 1 percent reported in the Northeast and Midwest, respectively, and declines of 13.4 percent and 30.5 percent reported in the South and West, respectively.

Permit issuance, which can be an indicator of future building activity, showed virtually no change in October, with a 0.5 percent gain to a seasonally adjusted annual rate of 550,000 units. This lack of movement was reflected in both the single-family and multifamily sectors, with a 1.0 percent gain recorded in the former and a 0.7 percent decline registered in the latter.

Regionally, permit activity showed no change in the Northeast, a 14.3 percent gain in the Midwest, a 3.4 percent decline in the South, and a 0.9 percent decline in the West.

View original article: http://rismedia.com/lowes/8355/11190

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Thursday, November 18, 2010

Renovations That Give You a Return on Your Investment

This Old House magazine always has some interesting online content. I’m often asked what improvements are worthwhile considering, in terms of home resale. My own take, of course, being a renovator, is that everything is worthwhile, since so many houses on the market are not upgraded, or if they are, the work is shoddy. We all have to live in the real world, as far as budgets, though, so this article is good reading:
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By: Carl Vogel, This Old House magazine


It's the fundamental question facing anyone who has ever embarked on a home renovation: How likely am I to get the money back when I sell my house?

There's no easy answer, because what a buyer might be willing to pay depends on many factors — everything from the choice of project to the materials you use to the value of other homes in your neighborhood. But it's important to have some idea of what your improvements might be worth.

Continue reading at http://www.thisoldhouse.com/toh/article/0,,408045,00.html

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Wednesday, November 17, 2010

Foreclosure mess prompts call for stress tests

As everyone knows, I’ve given up making predictions on the near-term future of real estate, and am continuing to make purchases that make sense for my own purposes, as well as advising clients to do the same. My investors and I have three projects in the works—the next two skinny lot Victorian District new construction projects I’ve been discussing, and a small cottage in the Landmark Historic District that we just put under contract and plan to renovate. More on that later. Anyway, we’ve been successful, but maybe news like the following will ultimately make us look like idiots. Or, maybe we’ll continuing being successful while others sit on the sidelines.
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By Ben Rooney, staff reporter
November 16, 2010: 8:20 AM ET


NEW YORK (CNNMoney.com) -- A Congressional watchdog group said Tuesday that U.S. banks should undergo stress tests to determine whether or not they have enough money to absorb losses that could stem from investigations into their foreclosure processes.

The Congressional Oversight Panel, created by Congress in 2008 to review the Treasury Department's response to the financial crisis, issued a 125-page report detailing recent allegations that banks and loan servicers filed thousands of inaccurate documents in foreclosure cases across the country.

While the report acknowledged that the scope and the consequences of controversy remain unknown, the panel warned that the financial system could be at risk if the allegations of "robo-signing" are proven to be true.

"If documentation problems prove to be pervasive and, more importantly, throw into doubt the ownership of not only foreclosed properties but also pooled mortgages, the consequences could be severe," the report said.

The worry is that banks will be forced to buy back mortgages that had been bundled and sold in the $7.6 trillion market for Residential Mortgage Backed Securities, or RMBS. That could result in severe losses for the banks and destabilize the still-fragile financial system, according to the report.

Bank of America has already come under fire from some big institutional investors, including the Pacific Investment Management Company and the Federal Reserve Bank of New York, which have accused the bank of mishandling $47 billion in home loans.

In addition, attorneys general from all 50 states have launched investigations into banks' foreclosure practices.

Still, the report noted that concerns about robo-signing could be overblown, and the panel's chairman told reporters Monday that he doesn't yet know the full impact of the problem.

"It could turn out to be nothing, or it could turn out to be a big deal," said Senator Ted Kaufman, D-Del. "We're not at the stage yet were we have all the info we need to determine how bad it's going to be," he added.

To assess banks' vulnerability, the panel called on regulators to subject banks to stress tests to gauge whether their financial health is sound enough to withstand losses that could result from the controversy under a worst-case scenario.

The Federal Reserve and the Treasury Department conducted stress tests on banks in 2009 amid the financial crisis. But those tests offer "limited reassurance that major banks could survive further shocks in the months and years to come," the report said.

The panel also took issue with statements from the Treasury Department suggesting that the robo-signing problem does not currently pose a threat to the financial system, saying such assertions "appear premature."

In response, a Treasury official said in a statement that the agency is working closely with 11 other federal regulators to investigate the issue, but "they have not found evidence to date of a systemic threat to the broader financial system."

"We strongly believe that the reported behavior within the mortgage servicer industry is simply unacceptable, and servicers who have failed to follow the law must be held accountable," said Treasury spokesman Mark Paustenbach.

The report also raised concerns that the controversy could undermine the Treasury's main foreclosure prevention program, the Home Affordable Modification Program, or HAMP. Panel members are concerned that some servicers dealing with Treasury may have no legal right to initiate foreclosures, which may call into question their ability to grant modifications or to demand payments from homeowners.

However, the Treasury noted that HAMP is intended to help eligible homeowners before they enter the foreclosure process.

View original article: http://money.cnn.com/2010/11/16/real_estate/congressional_oversight_panel_bank_foreclosures/index.htm

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.