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Mortgage Loan Rates Turn Lower After Holidays

The Mortgage Bankers Association (MBA) released its most recent report on mortgage applications Wednesday morning. It noted a decrease of 9.1% in the group’s seasonally adjusted composite index for the two-week period ending January 2, following a rise of 0.9% for the week ending December 19. The group did not publish a report last week, and the new report includes adjustments for both the Christmas and New Year holidays. Mortgage loan rates declined on all types of loans during the period.

On an unadjusted basis, the composite index decreased by 37% week-over-week. The seasonally adjusted purchase index decreased 5%, compared to the week ended December 19. The unadjusted purchase index fell by 33% for the week and remains 8% lower year-over-year.

Adjustable rate mortgage loans accounted for 4.9% of all applications, down from 6.5% in the prior week.

The MBA’s refinance index dropped 12% week-over-week, and the percentage of all new applications that were seeking refinancing rose from 63% in the prior week to 65%.

The average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 4.04% to 4.01%. The rate for a jumbo 30-year fixed-rate mortgage decreased from 4.05% to 3.99%. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.32% to 3.22%.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 3.26% to 3.19%. Rates on a 30-year FHA-backed fixed rate loan fell from 3.82% to 3.81%.

Interest rates were compared to rates for the prior week only, not calculated on a two-week basis as index scores were.

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Apartments coming to 125-year-old St. Louis building built as warehouse for drying tobacco

By: Tim Bryant, St. Louis Post-DispatchDowntown St. Louis Apartments

In downtown St. Louis, a 125-year-old brick warehouse built for drying tobacco is about to undergo conversion as apartments.

Sherman Associates, a housing developer based in Minneapolis, is behind the undertaking. Paul Keenan, a Sherman Associates manager, said work on the project — called Station Plaza — will begin by mid-January.

The six-story building near Union Station, at 1900 Pine Street, will get a total interior rehab as 87 studio, one- and two-bedroom apartments. The $10.5 million construction job will obliterate offices put into the now-vacant building in the 1980s.

Key to the new project are state and federal low-income housing tax credits, plus state and federal historic preservation tax credits, Keenan said. The project also has from the city 15 years of property tax abatement.

Housing tax credits are especially valuable to Station Plaza because they allow Sherman Associates to offer below-market rents, Keenan said. He noted that Station Plaza is several blocks west of downtown’s higher-rent, more densely populated area.

Monthly rents for Station Plaza’s studio apartments will be $525. One-bedroom apartments will rent for $650 while two-bedroom units will go for $780. All the apartments will carry income restrictions for residents, who generally may earn no more than 60 percent of the area’s median annual individual or family income to qualify as tenants. (Median family income is $67,100 in the city; 60 percent for a family of four is $40,260. An individual’s adjusted income would be $28,200.)

Keenan said Station Plaza should be ready for occupancy by Jan. 1, 2016. The project includes space for 127 vehicles on a parking lot next to the building.

Royal Bank of Canada is putting $6.9 million in Station Plaza through the federal housing and historic preservation tax credits. Sugar Creek Capital, of Webster Groves, is investing $2.15 million in state housing tax credits, Keenan said.

Sherman Associates, whose historic preservation projects include the Syndicate Apartments at 915 Olive Street, said the old tobacco warehouse on Pine is a smart investment.

“There’s definitely some good economic activity going on in that part of St. Louis,” Keenan said.

The developer bought the building in 2014 from R&P Realty for about $1.6 million.

Liggett & Meyers Tobacco Co. completed the building in 1889 as a warehouse to dry chewing tobacco. According to documentation for the building’s inclusion on the National Register of Historic Places, the building had a key role in what was once the city’s thriving tobacco industry. Its unaltered exterior puts it among the city’s best preserved and sophisticated examples of 1880s industrial architecture, according to the report done by the Landmarks Association of St. Louis.

The city’s 19th-century tobacco industry was so strong that by 1897, Liggett & Meyers moved its headquarters from downtown to a larger complex in what is known now as the Botanical Heights neighborhood. The company retained 1900 Pine as a tobacco “drying house” for several more years.

Succeeding owners used the building to store plumbing supplies or to house light industry. In the 1930s, buildings just south of the old warehouse were demolished to make way for Aloe Plaza.

Keenan said Sherman Associates has no immediate plan for another St. Louis project but is scouting for opportunities.

“We are always looking in St. Louis, given the inventory of historic buildings,” he said.

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Millions of homeowners could refinance and save big

Mortgage RefinanceBy Les Christie, CNN Money

Millions of homeowners could save big money — and possibly their homes — by refinancing to today’s historically low rates. But most don’t even apply.

Nearly one in five homeowners who are behind on their mortgage payments have loans with interest rates of 8% and higher — nearly double today’s rates of around 4%, according to nonprofit community development group NeighborWorks America.

The government recently launched a campaign to convince those most at risk to take the leap. According to the Federal Housing Finance Agency, nearly 770,000 homeowners are eligible for cheaper loans through its Home Affordable Refinance Program. Refinancing through that program could save homeowners an average of $200 a month, or $2,400 a year, the agency said.

Even homeowners who aren’t struggling to make payments could benefit. Overall, there are 7.4 million mortgage borrowers in the U.S. with rates of 4.5% or higher who could qualify for — and benefit from — refinancing their mortgages, according to Black Knight Financial Services, a mortgage analytics company.

Quiz: How much do you know about mortgages?

So why haven’t homeowners acted?

It’s a combination of procrastination and fear, according to study from the University of Chicago and Brigham Young University.

“Deciding to refinance is a complex decision,” said University of Chicago professor Benjamin Keys, one of the authors of the study.

Related: 10 hottest housing markets for 2025

Many borrowers have heard horror stories from friends and neighbors who refinanced in the past, sometimes into predatory loans, he said.

Some borrowers who tried to refinance found the process “time consuming and confusing,” said Jeanne Fekade-Sellassie, a senior vice president for NeighborWorks. “Others don’t believe they qualify.”

For borrowers who manage to make their payments, status quo seems to be working, so why risk change?

And then there are distressed borrowers who have been in and out of default for years, meeting with harried foreclosure counselors, dealing with unsympathetic lenders, compiling paperwork over and over. All of this to save homes that may be worth a lot less than the amount the borrowers owe.

Related: Best cities for millennial home buyers

Still, no matter how difficult the process, the savings can be worth the headache.

At 4%, borrowers who have a 30-year fixed-rate mortgage with a $200,000 balance would save more than $300 a month, compared with someone who has the same loan at a 6.5% rate. For those who are currently paying 8%, the savings comes to more than $500 a month.

Keys said the huge savings from refinancing may sound too good to be true to some. But the savings are real.

“It’s a real shame if people miss out on the opportunity,” he said.

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St. Louis renters paid more in 2014

St. Louis RentalsBy Diana Barr, St. Louis Business Journal

St. Louisans paid out $2.8 billion dollars in rent this year, up 3.3 percent from 2013, according to a report by real estate information provider Zillow Inc.

St. Louis renters saw their monthly payment increase by $10 this year, taking into account renter households added during the year, according to the report.

Renters in the U.S. paid $20.6 billion more in rent this year than last, or a cumulative $441 billion in 2014 compared with $420 billion in 2013 — a nearly 5 percent increase, according to the report, issued Tuesday.

Nationally, there was an increase in both the number of renting households and the average rent, according to Seattle-based Zillow (NASDAQ: Z).

The total number of renters nationwide grew an estimated 1.9 percent in 2014, according to the Zillow report, and median rent paid grew 2.9 percent over the same time period.

“Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand, and insufficient growth in the supply of rental housing,” said Zillow Chief Economist Stan Humphries in a statement. “This has created real opportunities for rental housing owners and investors, but has also been a bitter pill to swallow for tenants, particularly those on an entry-level salary and those would-be buyers struggling to save for a down payment on a home of their own.”

In 2015, Humphries said he expects rents to rise even faster than home values, with another increase in total rent paid similar to this year’s being probable.

The largest jump in cumulative rent paid in 2014 was seen in the Bay Area, consisting of the San Jose and San Francisco metro markets, up 14.4 percent and 13.5 percent, respectively. Rent per household rose by $197 per month in the San Jose metro area and $163 per month in the San Francisco area.

Among the nation’s 50 largest metro areas, the New York-Northern New Jersey market paid the most cumulative rent at $50 billion, followed by the Los Angeles metro area at $34 billion. Renters in Birmingham, Alabama, ($1 billion); Louisville, Kentucky ($1.2 billion); and Buffalo, New York ($1.2 billion) paid the smallest amount of cumulative rent in 2014.

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St. Louis foreclosure rate drops again

By: Brian Feldt, St. Louis Business JournalSt. Louis Foreclosures

Foreclosure rates in St. Louis during October decreased when compared to the same time period last year, according to data from California-based real estate tracker CoreLogic.

The St. Louis area foreclosure rate was 0.72 percent in October, a decrease of 0.28 percentage points compared to October 2013, when the rate was 1.00 percent. Foreclosure activity in St. Louis was lower than the national foreclosure rate, which was 1.52 percent for October 2014, CoreLogic data showed.

Foreclosure delinquency rates also fell in St. Louis. According to CoreLogic data for October 2014, 3.29 percent of mortgage loans were 90 days or more delinquent compared to 3.76 percent for the same period last year, representing a decrease of 0.47 percentage points.

In Missouri, the foreclosure rate in October was 0.62 percent, down slightly from the 0.83 percent rate the state had in October 2013.

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Housing 2015: The return of first-time home buyers

 at CNN Money

When it comes to the housing market, 2015 may be the year first-time home buyers make a comeback.

With rents rising faster than incomes, many Millennials are expected to start looking to buy homes of their own.

What they will find are much more favorable conditions than they have seen in years, including lower down payment mortgages, looser lending standards and a bigger selection of homes to choose from.

Here are four housing market trends economists and other industry experts expect to see in the year ahead.

1. Looser lending standards

Conspicuously absent from the housing market over the past five years have been first-time home buyers.

But in early December, Fannie Mae and Freddie Mac put new lending guidelines in place and started offering 3% down payment mortgages that will make it easier for more first-time buyers to qualify for a mortgage.

Add to that a strengthening job market, and prospects look much brighter for young home buyers.

“It’s already begun that Millennials are going back into the market,” said Mark Zandi, chief economist for Moody’s Analytics.

According to the Mortgage Bankers Association, sales of new homes are expected to climb by more than 13% in 2015, while existing home sales are expected to increase by 5%.

A spike in the number of first-time home buyers should spark a chain reaction by enabling existing homeowners to sell their homes and buy more expensive ones, said Zandi.

2. There will be more homes to choose from

Builders are ramping up production of smaller homes to accommodate these new entry-level buyers, said Stan Humphries, chief economist for Zillow.

Homebuilder D.R. Horton formed Express Homes, to build no-frills homes ranging in price from $120,000 to $150,000, about half the average price of the homes it normally builds. Other builders, like LGI Homes and KB Homes are also targeting first-time buyers.

3. Home prices will become more affordable

With so many new homes slated to come onto the market, the supply is expected to loosen up and take some pressure off of home prices. That should improve affordability in some of the more out-of-reach metro area markets like Washington, D.C., San Jose, Calif., and Seattle.

Related: 10 hottest housing markets for 2015

Plus, says Robert Shiller, the Nobel-Prize winning economist and co-founder of the S&P/Case-Shiller home price index, “home prices look somewhat expensive.” In fact, he thinks a decline in home prices is a “distinct possibility.”

Other economists expect to see small gains.

Jed Kolko expects increases, but only in low single-digit percentages because there will be fewer big institutional investors buying up properties and propping up prices.

4. Mortgage rates will move higher — at some point

If there’s any single market trend that real estate industry pros have gotten consistently wrong lately, it’s the direction of mortgage rates. But most do expect rates to rise at some point in 2015.

Related: Getting a mortgage is about to get easier

In December, the Federal Reserve signaled that it would not raise the Federal Funds rate until the summer of 2015 or perhaps even later.

Keith Gumbinger of HSH.com, a mortgage information provider, expects mortgage rates to peak next year at about 4.75% for a 30-year fixed rate mortgage. He doesn’t see rates rising much beyond 5%, which would still be “very favorable rate, historically.”

Khater doesn’t even expect rates to go that high. He predicts rates to top out at 4.5%, which should do little to affect buyers. An increase to 4.5% from the current 4% adds about $60 a month to mortgage payments on a loan with a principal balance of $200,000.

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Multifamily Sector Embraces Green Movement

By Debbie Swanson at Realtor.com

Staying current on incentives and programs available to multifamily owners and developers keeps real estate pros better positioned to discuss and market such properties.

Green isn’t just for single-family home owners anymore. Environmentally friendly properties are gaining favor among both tenants and property owners in the multifamily sector.

“Green buildings are seen by many as a better asset,” says David Newcombe, designated broker of Habitat Urban Agents in Phoenix. “The green concept will continue to be a stamp of approval, not just for the environmental benefits, but for the quality of the building.”

The initial push for green buildings — those that have a minimal impact on the environment — began in the early 1990s, propelled by the introduction of the Environmental Protection Agency’Energy Star program and the creation of the U.S. Green Building Council. Soon technological advances created better ways to reduce energy consumption, and terms like “sustainable” and “high performance” became a more common element of a property’s description.

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Current eco-friendly updates include:

  • Energy Star appliances and windows
  • Water-saving features, such as low-flow faucets, high-efficiency toilets, and timers on irrigation systems
  • Efficient water heaters, such as tankless and solar models
  • Whole-home systems that give tenants the ability to control energy use when not in the home
  • LED retrofits in existing light fixtures

With the larger occupancy rate of multifamily buildings expending more energy per square foot than single-family homes, these structures have been the focus of recent energy conservation incentives and certification programs, giving real estate professionals and property owners new ways to compare and assess properties.

Energy Star for Multifamily

The Energy Star designation, created in 1992 by the EPA, has become synonymous with appliances and materials that are highly energy-efficient. Recognizing that multifamily property owners needed a way to understand and compare the performance of their buildings, Fannie Mae Multifamily Mortgage Business partnered with the EPA to create Energy Star for multifamily properties, introduced in September of 2014.

Newcombe says this is a huge step forward for multifamily customers, property managers, and developers.

“People are familiar with the concept of Energy Star; there’s a public understanding already in place,” he says.

To obtain a score, property owners submit data to the EPA’s Portfolio Manager, a free online tool for measuring and comparing buildings’ energy use. The resulting number, from 1 to 100, ranks a building’s performance in comparison with others; for example, a score of 70 indicates that the building performs better than 70 percent of similar properties.

Multifamily properties scoring over 75 qualify for Energy Star certification. Overall, certified buildings use approximately 35 percent less energy and emit 35 percent fewer greenhouse gases than standard buildings.

LEED Certification

LEED, which stands for Leadership in Energy and Environmental Design, was created in 2000 by the U.S. Green Building Council. A building receives LEED points for energy- and water-saving features, as well as other factors such as innovative property management. The total number of points sets the certification level: certified, silver, gold, or platinum. Real estate professionals can then incorporate such language into their property descriptions.

“We’ve seen tremendous success in multifamilies with LEED certification,” says Asa Foss, a LEED residential technical director with the U.S. Green Building Council.

Multifamily low-rise buildings became eligible for certification under the LEED for Homes classification in 2008. With LEED v4, launched in November of 2013, multifamily mid-rises—up to 12 stories above grade—are also eligible, and upgraded standards apply to multifamily low-rise buildings.

“Certification is valuable if you’re marketing your building to a younger demographic, to whom environmental issues are important,” says Foss, adding that it can also be beneficial to property owners seeking financing. “Some larger lenders — who see certified buildings as better, safer investments — are starting to require LEED certification.”

Foss points to a recent study published by researchers at CoStar’s Property and Portfolio Researchsubsidiary for proof of the bottom-line benefits of certification. The study looked at a half-million data points about apartment buildings that drive investment value based on renter demand in the apartment sector. LEED certification was determined to be the second highest driver in lease rates, behind location.

Better Buildings Challenge

Another incentive igniting eco-friendly improvements to multifamily structures is the Better Buildings Challenge. Originally launched in 2011 by President Barack Obama and implemented through the U.S. Department of Energy, this program challenges commercial and industrial building owners to strive to make their properties at least 20 percent more energy efficient by 2020.

In 2013, the Department of Housing and Urban Development partnered with the DOE to expand the challenge to the multifamily sector. Participants in the challenge, referred to as partners, commit to reducing energy consumption by at least 20 percent over 10 years. Partners agree to publicly share their data on their energy savings and details about the efficiency strategies they employ.

Partners in the challenge are looked upon as energy-efficient role models in their community, and are recognized as part of a collaborative conservation effort. While the specifics vary by state, subsidized services and resources are available to support reduction goals.

Boston-based real estate developer WinnCompanies was a partner in the challenge in 2013.

“Joining the challenge has given us an opportunity to be a leader in both meeting — and going beyond — green building standards,” says Darien Crimmin, vice president of Energy and Sustainability at WinnCompanies. “Both renters and buyers are recognizing the trend toward more environmental building.”

Crimmin says the challenge has been beneficial, given the demographic shift in favor of environmentally sound buildings.

“It’s forced us to take a holistic look at our long-term energy efficiency strategy,” he reports. “Renters and buyers are recognizing that this is a priority.”

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21 Hot Housing Trends for 2015

From Barbara Ballinger at Realtor.com

Everyone wants to be hip, and the latest trends in design can help distinguish one home from another.  And it’s not all flash; many new home fads are geared to pare maintenance and energy use and deliver information faster.  Here’s a look at what’s coming.

This time of the year, we hear from just about every sector of the economy what’s expected to be popular in the coming year. Foodies with their fingers on the pulse of the restaurant industry and hot TV chefs will tell us to say goodbye to beet-and-goat cheese salad and hello roasted cauliflower, and there’s no end to the gadgets touted as the next big thing.

In real estate, however, trends typically come slowly, often well after they appear in commercial spaces and fashion. And though they may entice buyers and sellers, remind them that trends are just that—a change in direction that may captivate, go mainstream, then disappear (though some will gain momentum and remain as classics). Which way they’ll go is hard to predict, but here are 21 trends that experts expect to draw great appeal this year:

  1. Coral shades. A blast of a new color is often the easiest change for sellers to make, offering the biggest bang for their buck. Sherwin-Williams says Coral Reef (#6606) is 2015’s color of the year because it reflects the country’s optimism about the future. “We have a brighter outlook now that we’re out of the recession. But this isn’t a bravado color; it’s more youthful, yet still sophisticated,” says Jackie Jordan, the company’s director of color marketing. She suggests using it outside or on an accent wall. Pair it with crisp white, gray, or similar saturations of lilac, green, and violet.
  2. Open spaces go mainstream. An open floor plan may feel like old hat, but it’s becoming a wish beyond the young hipster demographic, so you’ll increasingly see this layout in traditional condo buildings and single-family suburban homes in 2015. The reason? After the kitchen became the home’s hub, the next step was to remove all walls for greater togetherness. Design experts at Nurzia Construction Corp. recommend going a step further and adding windows to better meld indoors and outdoors.
  3. Off-the-shelf plans. Buyers who don’t want to spend time or money for a custom house have another option. House plan companies offer myriad blueprints to modify for site, code, budget, and climate conditions, says James Roche, whose Houseplans.com firm has 40,000 choices. There are lots of companies to consider, but the best bets are ones that are updating layouts for today’s wish lists—open-plan living, multiple master suites, greater energy efficiency, and smaller footprints for downsizers (in fact, Roche says, their plans’ average now is 2,300 square feet, versus 3,500 a few years ago). Many builders will accept these outsiders’ plans, though they may charge to adapt them.
  4. Freestanding tubs. Freestanding tubs may conjure images of Victorian-era opulence, but the newest iteration from companies like Kohler shows a cool sculptural hand. One caveat: Some may find it hard to climb in and out. These tubs complement other bathroom trends: open wall niches and single wash basins, since two people rarely use the room simultaneously.
  5. Quartzite. While granite still appeals, quartzite is becoming the new hot contender, thanks to its reputation as a natural stone that’s virtually indestructible. It also more closely resembles the most luxe classic—marble—without the drawbacks of staining easily. Quartzite is moving ahead of last year’s favorite, quartz, which is also tough but is manmade.
  6. Porcelain floors. If you’re going to go with imitation wood, porcelain will be your 2015 go-to. It’s less expensive and wears as well as or better than the real thing, saysarchitect Stephen Alton. Porcelain can be found in traditional small tiles or long, linear planks. It’s also available in numerous colors and textures, including popular one-color combos with slight variations for a hint of differentiation. Good places to use this material are high-traffic rooms, hallways, and areas exposed to moisture.
  7. Almost Jetson-ready. Prices have come down for technologies such as web-controlled security cameras and motion sensors for pets. Newer models are also easier to install and operate since many are powered by batteries, rather than requiring an electrician to rewire an entire house,says Bob Cooper at Zonoff, which offers a software platform that allows multiple smart devices to communicate with each other. “You no longer have to worry about different standards,” Cooper says.
  8. Charging stations. With the size of electronic devices shrinking and the proliferation of Wi-Fi, demand for large desks and separate home office is waning. However, home owners still need a dedicated space for charging devices, and the most popular locations are a corner of a kitchen, entrance from the garage, and the mud room. In some two-story Lexington Homes plans, a niche is set aside on a landing everyone passes by daily.
  9. Multiple master suites. Having two master bedroom suites, each with its own adjoining bathroom, makes a house work better for multiple generations. Such an arrangement allows grown children and aging parents to move in for long- or short-term stays, but the arrangement also welcomes out-of-town guests, according to Nurzia Construction. When both suites are located on the main level, you hit the jackpot.
  10. Fireplaces and fire pits. The sight of a flame—real or faux—has universal appeal as a signal of warmth, romance, and togetherness. New versions on the market make this amenity more accessible with more compact design and fewer venting concerns. This year, be on the lookout for the latest iteration on this classic: chic, modern takes on the humble wood stove.
  11. Wellness systems. Builders are now addressing environmental and health concerns with holistic solutions, such as heat recovery ventilation systems that filter air continuously and use little energy, says real estate developer Gregory Malin of Troon Pacific. Other new ways to improve healthfulness include lighting systems that utilize sunshine, swimming pools that eschew chlorine and salt by featuring a second adjacent pool with plants and gravel that cleanse water, and edible gardens starring ingredients such as curly blue kale.
  12. Storage. The new buzzword is “specialized storage,” placed right where it’s needed. “Home owners want everything to have its place,” says designer Jennifer Adams. More home owners are increasingly willing to pare the dimensions of a second or third bedroom in order to gain a suitably sized walk-in closet in their master bedroom, Alton says. In a kitchen, it may mean a “super pantry”—a butler’s pantry on steroids with prep space, open storage, secondary appliances, and even a room for wrapping gifts. “It minimizes clutter in the main kitchen,” says architect Fred Wilson of Morgante-Wilson.
  13. Grander garages. According to Troon Pacific, the new trends here include bringing the driveway’s material into the garage, temperature controls, sleek glass doors, specialized zones for home audiovisual controls, and a big sink or tub to wash pets. For home owners with deeper pockets, car lifts have gone residential so extra autos don’t have to be parked outside.
  14. Keyless entry. Forget your key (again)? No big deal as builders start to switch to biometric fingerprint door locks with numerical algorithms entered in a database. Some systems permit home owners to track who entered and when, says Malin of Troon Pacific.
  15. Water conservation. The concerns of drought-ravaged California are spreading nationwide. Home owners can now purchase rainwater harvesting tanks and cisterns, graywater systems, weather-controlled watering stations, permeable pavers, drought-tolerant plants, and no- or low-mow grasses.
  16. Salon-style walls. Instead of displaying a few distinct pieces on a wall, the “salon style” trend features works from floor to ceiling and wall-to-wall. Think Parisian salon at the turn of the century. HGTV designer Taniya Nayak suggests using a common denominator for cohesiveness, such as the same mat, frame color, or subject matter. Before she hangs works, she spaces them four to five inches apart, starting at the center and at eye level and working outward, then up and down. She uses Frog Tape to test the layout since it doesn’t take paint off walls. Artist Francine Turk also installs works this way, but prefers testing the design on the floor like a big jigsaw puzzle.
  17. Cool copper. First came pewter; then brass made a comeback. The 2015 “it” metal is copper, which can exude industrial warmth in large swaths or judiciously in a few backsplash tiles, hanging fixture, or pots dangling from a rack. The appeal comes from the popularity of industrial chic, which Restoration Hardware’s iconic style has helped promote, says designer Tom Segal.
  18. Return to human scale. During the McMansion craze, kitchens got so big they almost required skates to get around. This year we’ll see a return to a more human, comfortable scale, says Mark Cutler, chief designer of design platform nousDecor. In many living or family rooms that will mean just enough space for one conversation grouping, and in kitchens one set of appliances, fewer countertops, and smaller islands.
  19. Luxury 2.0. Getting the right amount of sleep can improve alertness, mood, and productivity, according to the National Sleep Foundation. With trendsetters such asArianna Huffington touting the importance of sleep, there’s no doubt this particular health concern will go mainstream this year. And there’s no space better to indulge the desire for quality rest than in a bedroom, says designer Jennifer Adams. “Everyone is realizing the importance of comfort, quality sleep, and taking care of yourself,” she says. To help, Adams suggests stocking up on luxury bedding, a new mattress, comfortable pillows, and calming scents.
  20. Shades of white kitchens. Despite all the variations in colors and textures for kitchen counters, backsplashes, cabinets, and flooring, the all-white kitchen still gets the brass ring. “Seven out of 10 of our kitchens have some form of white painted cabinetry,” says builder Peter Radzwillas. What’s different now is that all-white does not mean the same white, since variations add depth and visual appeal. White can go from stark white to creamy and beyond to pale blue-gray, says Radzwillas. He also notes that when cabinets are white, home owners can choose bigger, bolder hardware.
  21. Outdoor living. Interest in spending time outdoors keeps mushrooming, and 2015 will hold a few new options for enhancing the space, including outdoor showers adjacent to pools and hot tubs along with better-equipped roof decks for urban dwellers. Also expect to see improvements in perks for pets, such as private dog runs and wash stations, says landscape architect Jean Garbarini of Damon Farber Associates.

While it’s fun to be au courant with the latest trends, it’s also wise to put what’s newest in perspective for your clients. Remind them that the ultimate decision to update should hinge on their needs and budgets, not stargazers’ tempting predictions.

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Myth busting: Is winter really the worst time to sell?

From Inman News:

Conventional wisdom has it that winter is the worst time to sell a home.

But a recent study from Redfin casts doubt on that belief, finding that listings seem to fare better on the market from January to March than they do during the summer or fall — though spring still seems to take the cake as best the season to put your home up for sale.

From 2010 to 2013, the average share of homes that sold above list price during January, February and March ranged from 11 to 13 percent.

That range ticked up to between 12 and 14 percent during April, May and June, and then slumped for the summer and fall.

From July to November, the share of homes that sold above list price stayed steady at 11 percent before increasing to 12 percent in December.

(Another interesting takeaway: Does this mean almost 9 out of 10 sellers ask too much for their homes, regardless of the season?)

Data provided by Redfin

According to the study, homes also tended to sell at the slowest rate during the summer and fall, with September (83) and October (83) registering the highest average number of days on the market between 2010 and 2013.

Data provided by Redfin

While the data suggested homes were most likely to sell the fastest and at the highest price during the spring, winter turned out to be the season where a homeowner has the best shot at selling within 90 days.

January (62 percent), February (64 percent) and March (62 percent) led the pack as the best months for selling a home in 90 days or sooner, while October (58 percent) and November (58 percent) came in  last.

SoldWithin90Days

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5 distinct ways to classify value

From Hank Miller and Inman News

A piece of real estate is not a television or a vehicle, and buying or selling a home is nothing like a trip to pick up a new 60-inch plasma and a BMW to drive it home in. Real estate is truly unique; there are no two identical parcels of land or homes. Real estate has the added spice of additional parties to the contract, local and national economic influences, changing locational conditions and, most of all, emotionally involved buyers and sellers.

Sellers are particularly vested; when it’s time to list, confusion about the “value” of their property can cloud judgment. In some cases, “value” can be different than anticipated or indicated by data.

The term “value” can take many forms, and it’s wise to consider all of them (and be able to explain to your clients which they need to take into account). There are five distinct ways to classify value. Although there are dictionary definitions for each, they are best understood through real-world examples.

1. Market value is the amount that a particular home is worth to a particular buyer. The Uniform Residential Appraisal Report defines market value as the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with all parties (buyer and seller) acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: buyer and seller are typically motivated; both parties are well-informed or well-advised, and each is acting in what he or she considers his or her own best interest; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

This is by far the most common value considered by buyers and sellers. The seller’s home is for sale, and the buyer offers a set number of dollars for it.

2 . Appraised value is the estimated fair market value of a property at a designated point in time, as developed by a licensed or certified appraiser following accepted appraisal principles. Although it’s based on a fair market value, appraised value does not always equal market value; it is an opinion developed by an appraiser based upon comparable closed sales. Appraisers typically consider active and pending homes, but closed sales are the basis of value.

Mortgage lenders always require an appraisal because the real estate will be the collateral for the mortgage loan. Appraisals for purchases are written to underwriting standards; these are mandated by the lenders, and appraisers are required to follow them.

3. Assessed value is the valuation placed on the property by a public tax assessor for purposes of taxation. There is no standard for establishing assessed value; this is a local call. Usually, assessed value is based upon similar past sales in the immediate area. When the subject property sells, the new owners may get the “welcome, stranger” greeting; the sale price becomes the new assessed value.

In an ideal world, an evaluation similar to an appraisal is performed; in the real world, assessors may drive by, may measure the exterior of a home or may simply continue to build upon past historical data. The derived value is then multiplied by the assessment rate, and an assessed value is established.

The last 10 years have seen wild swings in assessed values as municipalities have been impacted by the market. Many reduced assessed values align with declining home values, but over the last few years, increases have been similarly applied.

4. Value in use is simply the value of a property as it is being used. However, a home may appraise at a certain dollar amount but contain specific features that make it especially valuable to a particular buyer or seller. Homes with in-law suites that allow for multigenerational living can be more valuable to occupants than the data might suggest. A home mechanic may find more value in a home with a garage workshop than an appraiser will. An artist who finds a home with fantastic natural lighting may place a very high value on that.

Some buyers speak of immediately knowing a home works for them because of some feature that it has. In a situation like this, many are willing to pay a premium price for the added utility of what a particular home offers. For them, the value of the added feature justifies a value that might not be recognized by the data.

5. Highest and best use is the reasonable, probable and legal use of vacant land or an improved property; highest and best use is always physically possible, appropriately supported, financially feasible — and that results in the highest property value.

Another way to think about highest and best use is to ask the question: In the real world, does the current use represent the most valuable option? An example of this might be a tear-down. An older, smaller home in an area where new, larger homes are being built is not as valuable as a new home. Similarly, a home on acreage in an area that is enjoying new construction might be most valuable subdivided and sold to a developer.

These ways of looking at value are mutually exclusive; they do not have to point to the same estimated value for a property. It’s wise to understand the differences, especially potential differences between appraised value and market value. In most cases, residential buyers and sellers will concern themselves with market value and look for price support through current data. Properties with unique or special features can fall outside these parameters, and a buyer may be willing to pay a premium for them due to their value in use. By having a working knowledge of how to apply these different views, a quality agent can be an invaluable resource for a buyer or seller.

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St. Louis ranks as nation’s third most affordable home market

From the St. Louis Business Journal:

St. Louis is the third most affordable home market among the nation’s 25 largest cities, according to new data from financial website Interest.com’s 2014 Home Affordability Study.

Only Minneapolis and Atlanta came in ahead of St. Louis for home affordability.

The report shows the median household income in the St. Louis area exceeds the income needed to buy a median-priced home by 20 percent, up slightly from last year.

According to the report, St. Louis’ median home price climbed 9.74 percent to $149,900 while housing in the city remained among the cheapest in the country, ahead of only Detroit and Pittsburgh.

Nationwide, home prices were up just 4 percent, but incomes rose just under 2 percent.

In this year’s study, San Francisco is the least affordable home market, with median household income falling 46 percent short of the income required to buy a median-priced home there.

More on the Interest.com study can be found here.

St. Louis home prices are expected to appreciate 3.2 percent over the next 12 months,according to Veros Real Estate Solutions.

St. Louis’ most expensive homes are found in Chesterfield and Wildwood.  Chesterfield’s average price for a four-bedroom, two-bathroom home is $352,107. Wildwood’s average price was $342,090. Dardenne Prairie ($324,063); Lake Saint Louis ($283,530); and Eureka ($281,850) rounded out the top five in the state.

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St. Louis has two of the most expensive home markets in the state

From the St. Louis Business Journal

Chesterfield and Wildwood are not only the two most expensive markets to buy a home in the St. Louis-area, they’re also the most expensive markets in the entire state of Missouri.

That’s according to new research, which looks at the average listing price of a four-bedroom, two-bathroom home.

Chesterfield’s average price for a four-bedroom, two-bathroom home is $352,107. Wildwood’s average price was $342,090. Dardenne Prairie ($324,063); Lake Saint Louis ($283,530); and Eureka ($281,850) rounded out the top five in the state.

The average home of that size in Missouri is $227,787. The national average is around $327,000.

Moberly was the most affordable city, according to the ranking, with an average price of $122,183 for a home that size.

St. Louis home prices are expected to appreciate 3.2 percent over the next 12 months, according to Veros Real Estate Solutions.

Nine of the 10 most expensive markets in the country, according to the report, are in California. The most expensive market in the country is Los Altos, California, which has an average home value of $1.96 million.

Chesterfield wasn’t even in the top 300 of the most expensive cities in the country.

Cleveland, Ohio ranks as the most affordable city in the country at $64,993.

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4 Things You Shouldn’t Overlook When Buying a Home

There are countless things to consider when looking to buy a home in St. Louis.  Perhaps the most important is choosing the right Realtor to represent you.  Contact The Agency today to get your home search started!  Below are 4 things that most people don’t take into account when they start the process.

From A.J. Smith at credit.com

The process of homebuying can be overwhelming — from figuring out how much house you can afford to determining what you truly need in that home. Between all the numbers and logistics, it is easy to leave a few things off the checklist. Check out the below list of common things buyers overlook so you don’t.

Environmental Factors

Noise, odor and bright lights can get in the way of enjoying a home. Since not all of these will make themselves known in the daytime, consider driving through your potential neighborhood at varying times in the day and week so you get a true feel. Even if you think you have found a great neighborhood, you will want to see what it is like both on weekdays and weekends, mornings and evenings. It’s a good idea to try talking to neighbors and asking around in the community to find out if you and your family would be compatible. When it comes to safety, you can try doing an online search for nearby sex offenders or look into crime rates.

Distance from Work, Shopping

They say “location, location, location” — and yet buyers still don’t always look at the full scope when it comes to where their house is located. You cannot change the proximity to schools, commutes to and from work or how close the nearest supermarket and mall are. It’s important to look into these factors as well as traffic and transportation options so you can determine if this is the right home for your family.

Connectivity

When it comes to modern living, there’s a new factor to consider — connectivity. This means cellphone coverage, ability to get a strong Internet signal and charging potential. Older homes have fewer outlets so if you need a spot for your television, iPad, iPod, laptop, e-reader and electric toothbrush, be sure you find a house that can sustain all that.

Extra Costs

Before you make a home purchase, it’s a good idea to do your research and find out how much closing costs will be, how far property taxes will set you back and how much homeowner’s insurance is. Another important factor is the potential resale value of the home. Although it seems weird to think of selling a home you haven’t even bought yet, you want to look into the median home-price growth in the area to help determine if this is a good investment.

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Ballwin Named one of America’s Top Suburbs

Ballwin was just named the 46th best suburb in the country by Business Insider.  According to Business Insider: “Ballwin may be looking at a higher-than-average commute time of 25.2 minutes, but a median annual household income of $83,441 and low crime rates make this St. Louis suburb a pleasant place. Money Magazine named Ballwin one of America’s best places to live in 2005, 2011, and 2013.”

Whether you are looking to buy or sell in Ballwin or in any of the other great suburbs and towns in the St. Louis area, call The Agency today!

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5 real estate mistakes retirees make

Here is some great information from MarketWatch.com for anyone that is in retirement or will be retiring soon.

By: Amy Hoak

Most people heading into retirement inevitably make some sort of real estate decision—whether they downsize, relocate to a different community or make renovations to an existing home that makes the place more accessible to live in as they get older.

So, not surprisingly, there are numerous real estate mistakes people in this group make.

“Real estate is usually one of the biggest assets retirees have, but it’s the area with the most emotional attachment—and a place where it’s very easy to mess up,” said Larry Luxenberg, managing partner with Lexington Avenue Capital Management, a financial advisory firm in New City, N.Y.

Below are five common retiree real estate stumbles.

Not downsizing soon enough

Big homes come with big energy bills and large lawns to mow—not to mention sizable real estate taxes and homeowner-insurance premiums. The longer you delay a move to a place that better fits your current needs, the more savings you’re missing out on.

“You don’t necessarily need to wait until the last [child] gets out of college to pull the trigger,” said Thomas Scanlon, an adviser with Raymond James in Manchester, Conn. “Lots of folks wait until post-college, and then children boomerang into the basement—it could be an eight- to 10-year run of having more home than you need.”

Not investing the downsizing proceeds

When downsizing, not everyone walks away with cash at closing—some people buy a smaller home, but it doesn’t come with a less expensive price tag. If, however, you are able to purchase a home and bank some cash at the same time, it’s crucial to invest that windfall, Luxenberg said.

“People have a tendency to look at that as found money,” finding a way to spend it quickly, he said.

Individual circumstances will determine exactly what to do with the cash, said Scott Bishop, director of financial planning with STA Wealth Advisors, in Houston. In some situations, it might be best to live on the home equity money first, which would allow you to leave retirement funds untouched for a while, allowing them to grow for a longer period. (Doing so might also enable you to wait longer to claim Social Security, thus entitling you to larger benefits.) Also consider the tax implications when deciding which pot of money to tap for expenses first, he said.

Not researching an area before relocating

Those with dreams of relocating to a sunny locale need to research the place before moving—and early, Bishop said. Know how your taxes will be affected, the cost of the living in the new area, and generally how you’ll fill your days there.

But also be mindful about your health-care options, Bishop said. Research doctors and make sure the ones you’d choose are accepting new patients—and that they’d be in your insurance network. Those with specific health concerns should make sure there are specialists in areas they need.

“As you age, even if you’re healthy now, you may need to visit hospitals more frequently,” Bishop said. That might not be top of mind for people when they’re moving, say, in their 50s and 60s.

Maintaining two homes

Maybe you’re a snowbird, who likes living part-time in two locations. Maybe you’ve purchased a second home with the intent to retire there someday, thinking that you’d save money by buying at today’s prices. Either way, maintaining two homes is a drain on your finances, Scanlon said.

If you’re a snowbird, make sure both homes are small, with manageable running costs, Scanlon said. And if you’re buying now to live in later, reconsider, Luxenberg said. Buying now may end up not being that much of a savings, after factoring in the cost of running two homes—and may even cost more in the long run, he said.

“My own experience owning a house is that everything costs more than anticipated beforehand,” Luxenberg said.

Having a mortgage in retirement

Yes, mortgage rates are favorable, and owners can deduct mortgage interest when filing their income taxes. But most retirees live on Social Security, IRA distributions, their savings and portfolio, and for many, the tax deduction isn’t very significant, Scanlon said. Also, not having a mortgage can keep expenses down, perhaps allowing a retiree to delay taking Social Security distributions early, he said. When you wait until full retirement age, Social Security distributions are larger.

Scanlon also advises against taking out a mortgage if you downsize to a new home—despite low rates. “If someone is 50 years old, he’d have the mortgage until he’s 80,” he said.

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