Tag: real estate

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Living Spaces Real Estate

Spend the weekend visiting open houses.

Look around. The grass is green, the sun is shining, and summer is definitely here. You can see the difference all over the Mid-South. People are outside enjoying themselves and doing all the things that are typical of summer: working in the yard, grilling outdoors, and scanning the real estate section for open houses.

The climate is right for buying a new home too. Interest rates are near historic lows. A 30-year fixed mortgage at around 6 percent is always attractive, but when you combine that with a strong economy, rising home values, and a projected demand for homes in Memphis well into the future, you’ve got a market that puts you in the driver’s seat.

And the driver’s seat is exactly where you belong. From there you can take the family for a nice weekend drive and explore the new developments in our area that are calling your name. Your ideal model home, lot, or condominium is waiting to be discovered.

As with any trip, it’s best to start with directions. You can map out your day by using A Change of Address magazine, found at the Memphis Area Home Builders Association, Schnucks, Kroger, Wal-Mart, Sam’s, and Blockbuster stores around the Mid-South. The magazine is a great way to learn what local builders and developers have to offer. Make a list of the subdivisions or model homes that appeal to you, and work from there. As you are driving, keep your eyes open for additional developments; you may be pleasantly surprised by what you see.

Take the time to tour a few developments so you can compare what each one has to offer. Remember that most developments have restrictions that will impact things such as the size of your home, its placement on your lot, and the materials used on the exterior. While these restrictions are designed to protect the architectural integrity of homes in the subdivision, and thus protect the resale value of the homes, they also can impact your building costs.

You should also keep in mind that condominium living is different from single-family-home living. The benefits of having someone else maintain the exterior of your home are great for those who are getting older or those who simply do not have the time to dedicate to a yard or a garden. Monthly association fees cover these costs and more.

Touring model homes and condominiums is much like visiting a car lot. You get to “kick the tires” by taking the time to evaluate the floor plan, the attention to detail, and the pros and cons of the house or condominium as it relates to the way your family lives. Only when you tour a model is there is a salesperson on hand who can educate you on the home or condominium you are touring. ■

For the latest copy of A Change of Address, visit one of the stores listed above or call the Memphis Area Home Builders Association at 756-4500.

Keith Grant is president of the Memphis Area Home Builders Association.

Categories
Living Spaces Real Estate

Opportunities abound for the first-time home buyer

For many people, buying a first home is a rite of passage. It’s a foot firmly planted in independence and on the path to success, a true part of the American dream. But as many first-time buyers are coming to realize, it’s more than just the end-goal of a journey toward financial independence. Buying a home, particularly your first home, just makes good plain sense, now more than ever.

Potential first-time buyers may be intimidated by today’s changing housing market. Isn’t it just better to “play it safe” and keep renting in case home prices fall? If you buy now, will you be paying too much?

First, these are valid considerations. Even those who have bought and sold many homes ask similar questions. But the truth is that today’s economic environment makes it an excellent time to buy. Interest rates are low by historical standards, there are lots of choices, and sellers are offering incentives.

Perhaps, as a first-time buyer, you want to wait until prices drop lower. Actually, if you continue to wait, you may never be able to afford to get into the housing market. The truth is, even a small uptick in interest rates can wipe out any gains from falling prices.

Consider this example: If you decide to wait to purchase a home and the price were to drop $10,000 from where it is today, you could still end up losing money. How? If interest rates were to move up half a point during this period, the savings on the reduced home price would be more than offset by the higher monthly payment you would be making over the life of the loan.

Interest rates currently stand at about 6.5 percent and are extremely favorable for buyers. In fact, they are hovering near 30-year lows. But waiting to time the market is a dangerous — and losing — game. Even those who follow the market for a living can’t figure out when interest rates will bottom out. If they could, they would all be multimillionaires. Because interest rates are near historic lows, it is much more likely that they will head higher in the future as opposed to moving even lower.

Now consider the current rental market. During the past few years, many rental units have been converted to condos, resulting in fewer rentals on the market. Less supply, higher prices. Each year, your rent can easily go up 5 to 10 percent. Where is the economic security in that? When you buy a home, you’re also locking in price stability, knowing that you will pay the same monthly payment for the life of your 30-year fixed-rate mortgage. Plus, renting doesn’t get you the investment or tax benefits of homeownership.

The best way to build household wealth is to own a home. Once you do, you are able to take advantage of generous tax deductions, and your equity begins to build. Your home will appreciate in value over the years, and eventually you can use those gains to sell your starter home and afford to move into a bigger house. Remember, it’s called a starter home for a reason. With so many homes on the market to choose from, your best strategy may be to scale back expectations for your dream home. After a few years, you will be able to leverage this investment and buy a larger house.

The truth is, buying your first home just makes good sense. Housing is always a smart investment, and it is by far the best way to use a small amount of money for a big return. Interest rates are historically low, and the selection of homes on the market is plentiful. Do your research and you’ll come to this conclusion: In today’s market, the real risk isn’t in buying a home, it’s sitting on the fence.

Keith Grant is president of the Memphis Area Home Builders Association.

Categories
Living Spaces Real Estate

How To Sell Your Home in 5 Days by Bill Effros(Workman, $15.95)

Nobody wants to get stuck with the dead weight that is a house that won’t sell. The vagaries of the market coupled with the pressures of getting on to your next living arrangement can be enough to send your blood pressure shooting. But Bill Effros thinks he has just the sword to cut through this real estate Gordian knot. He calls it the 5-Day Method, and it’s the subject of How To Sell Your Home in 5 Days.

Here’s the method: On Wednesday, “Run an ad offering your home for 50 percent of what you think it’s worth or ‘best offer.'” Mention amenities for your home, times for a home opening that weekend, and include the line “Home will be sold Sunday night to the highest bidder.” On Saturday and Sunday, show your home. On Sunday night, call everyone who left bids and determine who will pay the most. Take the highest amount, and on Monday, call the settlement agent. Including Monday, that’s actually six days, but who’s counting?

The bidding process is a little tricky. It’s called “round-robin” bidding, and all offers are left on bidding sheets that are open to view by others at the open house. After the home showing, the seller calls the bidders and asks those with low bids if they’re willing to top the high bid. Eliminations are made, and the next day, you close with that price (provided you’re happy with it).

One of the bonuses touted by the book is never having to set a price for the home — you let the buyer do it. Another is that there’s no risk. (You are encouraged to tell everyone who places a bid that it is non-binding.) It utilizes free-market concepts to determine the sale price.

Effros’ method is predicated on the idea that the process of selling a home should really be about finding the best buyer — not just any buyer. He says that many homes sell for prices lower than other people would be willing to pay. “You sold to the first bidder, not the high bidder, because you didn’t know the true value of your home. You could have sold it for more,” Effros chides.

Effros assumes that people will want to bid on a home. Many, I’m sure, would. But there’s going to be a lot of potential buyers who are turned off by the whole idea and never even look at the house.

One of the major weak points in the plan is that no mortgage lender will pay more than a house is appraised for. Having someone willing to pay the amount of your wildest dreams is one thing; getting them approved is another. Unless they’re paying cash, be realistic. Effros goes so far as to say, “The bid price isn’t wrong; the appraiser is wrong.” He suggests describing the five-day plan to the appraiser and/or bank to get them to increase the appraisal/alter their stance.

How To Sell Your Home in 5 Days also has a section dedicated to advice that is good for any home seller, whether or not they use the five-day method. Knowing what to fix is especially put under the microscope, summed up in the axiom “Fix nothing unless you’re certain you’ll get back two dollars for every dollar you spend.” (This excludes repairs required by law after a professional inspection.)

Some statements, such as “There are always more people who want to buy homes than there are homes. It’s just a question of price,” sound a little questionable. The author also claims, “When this book is exactly followed, the 5-Day Method works every time.” He adds the caveat: “Alter the method at your own peril.”

Categories
Living Spaces Real Estate

Buyers Have a Wealth of Opportunity in Today’s Housing Market

Attributes of the current housing market such as low mortgage rates, a large selection of available product, and generous builder incentives bode exceptionally well for potential buyers who find themselves favorably positioned when it comes to making a deal on a new home.

Today’s home buyers have opportunities they haven’t seen in years. Gone are the days when dozens of bidders stood in line for a chance to purchase a home at whatever terms the seller dictated. Housing consumers should take advantage now of the low rates, competitive prices, and great buying opportunities in today’s market.

There is a variety of reasons that buyers are holding all the cards, including:

■ Prices have leveled off and even declined in some areas,

making homes more affordable for first-time and repeat buyers.

■ Houses are staying on the market longer, creating a wider variety

of choice for home shoppers.

■ Mortgage interest rates remain in a very favorable range,

near historic lows.

■ Many builders are offering discounted financing packages and

value-added incentives such as a major upgrade to close the deal.

■ There is a wide range of financing options available for consumers

in all price ranges.

■ The economy is solid, job creation is strong, and demographic trends

portend strong housing demand in years to come — all of which

bode well for long-term house-price appreciation.

To some extent, it’s true to say that it is always a good time to buy a home, given the equity-building opportunities and tax savings that homeownership affords and the fact that it’s a more solid investment than almost anything else you can think of.

But today’s market is special. It’s a much more relaxed atmosphere for buyers than it was when sales were booming. That means you can find the home you want and carefully consider all its attributes before deciding to go ahead with your purchase. This compares to the frenzied atmosphere that prevailed in many housing markets not too long ago, when buyers had to make a snap decision or risk losing their chance of having a winning bid.

Caution, though, to those who may be sitting on the fence waiting for the market to head lower. Those who try to time the market just right in hopes of buying at the very lowest point are likely to lose out. First, it’s nearly impossible to predict exactly when the slowing market will start to speed back up again, and in the meantime you’re liable to lose the home of your dreams to another buyer. And second, if mortgage rates head higher while you’re waiting, or some other aspect of your financing changes, you could easily wind up spending more than if you bought now.

If you want to have the most opportunities in your home purchase, now is the best possible time to go for it. Seldom has there been a more advantageous environment for home shoppers. ■

Keith Grant is president of the Memphis Area Home Builders Association.

Categories
Living Spaces Real Estate

The Bookshelf

Investment in a home is a huge commitment with an equally sized potential for profit. But don’t just take our word for it. Here are five books already released or coming out soon that offer advice that can guide you to a great buy and a wise investment. — Greg Akers

Make Money in Abandoned Properties: How to Identify & Buy Vacant Properties & Make a Huge Profit (Wiley)

Chantal Howell Carey and Bill Carey

Now Available

$34.95

Working under the axiom that one man’s trash is another’s treasure, this book swears to be the only reliable and comprehensive guide to abandoned-property investment. It provides “ten tips for finding abandoned properties, five techniques for locating owners, five keys to the foolproof offer, and four ways to obtain financing.”

The Wall Street Journal: Complete Real-Estate Investing Guidebook (Three Rivers Press)

David Crook

December 2006

$14.95

Don’t let the author’s name fool you: Crook is the editor of The Wall Street Journal Sunday, which is syndicated in newspapers around the globe. This book claims to be the authority on real estate investing and teaches you how to avoid schemes, get financing, make contacts, find the right properties, and more.

Nothing Down for Women: The Smart Woman’s Quick-Start Guide to Real Estate Investing (Free Press)

Robert G. Allen and Karen Nelson Bell

January 2007

For the woman on the go, this book swears it can give the basics of real estate investment in short chapters that can be read and fully understood in less than five minutes. It includes scripts for communications with buyers and sellers and templates for sales ads.

The Complete Guide to Purchasing a Condo, Townhouse, or Apartment: What Smart Investors Need to Know — Explained Simply (Atlantic Publishing Company)

Susan Smith Alvis

January 2007

$24.95

This book guarantees an easy overview on this specialty market, including what to expect from the many people involved (realtors, condo boards, attorneys, bankers) and hints and tips on what to look for and how to avoid common mistakes.

Beyond the Bubble: How to Keep the Real Estate Market in Perspective — And Profit No Matter What Happens (AMACOM)

Michael C. Thomsett and Joshua Kahr

February 2007

$16.95Are you considering real estate investment but afraid that the bubble will burst? This book will help you distinguish between the facts and the myths of real estate investment. Published by AMACOM, the book publishing division of the American Management Association, this book also offers ideas for what to do even when sales hit a slump. ●

Categories
News The Fly-By

Losing House and Home

CREDIT: Danijel Micka, Dreamstime.com

On Laurel Lake Drive, a suburban street in Southeast Shelby County, a five-bedroom, four-bath brick home sits empty. Built last year, it has a three-car garage and is a spacious 3,836 square feet.

But this is by no means a model home.

The property, located near the new Shelby County high school, is one of about 5,000 homes that were foreclosed on during the last quarter.

Last week, a risk management provider listed Memphis as one of the top five markets for mortgage risk and fraud, with very good reason. According to RealtyTrac, an online marketplace for foreclosure properties, there’s one foreclosure for every 101 households in Memphis. Only Indianapolis, Atlanta, and Dallas fare worse.

“These are not only affordable, entry-level homes,” says Beanie Self, executive director of the Southeast Memphis Community Development Corporation (CDC). “These are $200,000, $300,000, $400,000 houses.”

The Southeast Memphis CDC is the only suburban CDC in Shelby County and was created, in part, after the University of Memphis identified a high number of foreclosures occurring in the Hickory Hill area.

“After the city annexed the area, there were a lot of significant problems,” says Self. “Property values went down because people were leaving and crime was up. When the property values went down, the homes were upside down. They owed more on their homes than they were worth, and a lot of people just walked away.”

Hickory Hill rivals Frayser for the most foreclosures, but since Self started tracking local foreclosures about three years ago, she’s seen the number increase 20 to 25 percent each year.

“What we see happening is that folks end up getting into a bigger house than they can afford and a larger loan than they can handle,” says Self.

As the former bankruptcy capital of the nation (read more in this week’s cover story), it’s not unheard of for Memphians to find themselves in financial trouble, but perhaps most telling is the scale of the current problem.

At the corner of Holmes and Hacks Cross, signs litter the roadways promising “New Homes! Zero Money Down!” But in neighborhoods still too new to be “mapquested,” banks are already foreclosing on houses: a $235,000 home on Maids Morton, a $100,000 home on Busy, a $168,000 home on Briona Cove — all foreclosures.

Because the housing market is saturated, many home builders offer special financing incentives. Mortgage brokers sell buyers on interest-only loans or Adjustable Rate Mortgages (ARMs) that can get them more house for the money, but it’s not always the best deal in the long run.

“There might not be a down-payment or closing costs. Two months later,” says Self, “the transmission goes out on the car and it’s, ‘Do I pay for that or the mortgage this month?'”

Residents can quickly find themselves owing more on their house than its market value, especially if they have an interest-only loan.

“Tennessee has been targeted by unscrupulous lending groups,” says Self. “We have not had the kind of regulations in place to tackle predatory lending.”

A new bill passed earlier this year will go into effect in January, but for some homeowners, it might be too late.

“Within the next year, it’s going to be really significant,” says Self. “Specifically with the ARMs or with the interest-only loans, when the principal payments kick in, it’s going to be huge.”

Not to burst your housing bubble, but this soap opera can have long-ranging effects.

The Southeast Memphis CDC is a HUD-approved housing provider, meaning it can buy foreclosed properties from the national department of Housing and Urban Development at a discount and then sell them to owner-occupants.

Only, other people are interested in the discounted property, too. “I can’t compete with the investor market,” says Self. “We have a very different cash flow.”

When investors buy property, it generally becomes a rental unit. And, nothing against renters, but rental property can contribute to a decline in the neighborhood. Especially if — as is often the case with rental houses — the landlord is not on-site.

Owning a home is the American dream. We’re a country that rewards citizens for buying a home with a tax break. Loans are available to help people buy a house who otherwise wouldn’t be able to afford one. The latest economic upswing was predicated on the housing market.

But the number of local foreclosures — and the variety of neighborhoods in which they occur — should be an eye-opener. If this is the American dream, maybe it’s time for Memphis to wake up.

Categories
News The Fly-By

Building an Icon?

CREDIT: Riverfront Development Corporation

I’ve been thinking a lot about icons lately. Fans of Memphis’ most recognizable face just celebrated — if that’s the right word — his 29th “Death Week.” A developer was recently quoted in The Commercial Appeal saying that the Number One Beale venture — a $175 million project with luxury residential, commercial, and hotel space — “would become an iconic building” for the city.

And last week, during a lecture presented by the Riverfront Development Corporation (RDC) and the Leadership Academy, speaker Alex Garvin showed a number of iconic images of waterfronts from Paris to Malibu to San Antonio.

Each place is completely different and instantly recognizable. But places and things that are instantly recognizable are not always workable. The last time Memphis tried to build something truly iconic, we got The Pyramid. And now it sits dark, waiting for Bass Pro to gut and filet, er, renovate it.

And with plans for the riverfront and Beale Street Landing moving forward, we’d be wise to think carefully about what we want from the river.

“Waterfronts are unique opportunities,” said Garvin. “It can become a transformative element [for a city].”

Garvin, an urban planner and Yale adjunct professor, outlined six criteria for success at the latest installment of the RDC’s “Leadership of Place Making” series, a number of discussions about how cities across the country are reconnecting to their waterfronts. These criteria are location, accessibility, design, financing, entrepreneurship, and time.

Sounds simple, right?

“People want to be able to enjoy the waterfront, but people have to be able to get there,” he said about accessibility. “You need to always be thinking about who’s coming and how to accommodate them when they get there.”

Garvin talked about waterfronts that were financially self-sustaining — helpful in any fiscal climate, not just the current one — such as Chelsea Piers in New York. Not only does the 30-acre complex house the soundstage for TV’s Law & Order, but more than 8,000 people go there each day to use the golf facilities, the ice-skating rink, and the Olympic-sized swimming pool.

But a few things Garvin said seemed particularly salient for Memphis’ waterfront. Most people understand that a successful project takes time, but he said planners should also be thinking about different uses during the day.

In one example he cited, “people are using the riverfront park all day and into the evening. You can’t just have a park that is used at 5 p.m. or after work.”

And I’m not sure it can happen with the way the riverfront has been designed. Think about Tom Lee Park. Visiting it in the middle of a summer day is like taking a trip through Death Valley. It needs trees or some sort of shade.

But because of the variety of Memphis In May activities — specifically music fest and the barbecue-cooking contest — there’s no place to put them.

Garvin also talked about the Jefferson National Expansion Memorial in St. Louis, which includes the Gateway Arch and the Museum of Westward Expansion. Over three million people visit the Arch every year, but the area does not connect well with the city. To get there, visitors have to use four sidewalks — each about half a mile long.

“Here’s a great location,” said Garvin, “but people come, they park their cars, they walk to the [Arch]. Then they go back to their cars and go somewhere else. Downtown doesn’t get any benefit from that.”

At the same time, the Gateway Arch is definitely an iconic symbol of St. Louis. And I wonder if that many people would visit it if it weren’t an icon. I mean, who wants to visit the Museum of Westward Expansion otherwise?

The RDC’s plan for Beale Street Landing includes five guitar-pick-shaped terraces, a floating dock, a parking garage, and a terminal building. I can’t say I’m totally sold, but I do think the riverfront needs … something.

If you look at the RDC’s list of the top 20 riverpark uses, most of them seem fairly active: jogging, dog walking, rollerblading, biking, yoga, frisbeeing, playing touch football. Others are more passive (kite flying, painting), but there doesn’t seem anything specific or special that brings citizens — or tourists — to the Mississippi River.

“Every city is different,” said Garvin. “I think what you do here has to be adjusted to Memphis and not copying someone else.”

Could the Memphis waterfront become an icon? Who knows? But depending on what is built, it could help — or hurt — the city’s image.

Categories
Opinion

The Ham-Sandwich Factor

You’re in the way.

Pat Kerr Tigrett, you’re in the way of a zoning change needed for Gene Carlisle’s $175 million Number One Beale. Gene Carlisle, your 30-story building is in the way of the view from Pat Kerr Tigrett’s Waterford Plaza penthouse.

Carlisle was visibly shaken last week after the Land Use Control Board decided to delay a final vote on his project for at least 30 days. “There’s nothing more I can do to change the design,” he said. “They want me to not build it.”

Tigrett, who spoke against the project, was her usual unflappable self, suggesting at the meeting and in a subsequent letter to The Commercial Appeal that a compromise could be reached on a “splendid project.”

Two Memphis downtowners who go back 40 years are at odds. Two tough negotiators. Something and somebody’s gotta give. It’s an interesting clash of personalities, but I suspect that most Memphians are not all that worried about One Beale or Court Square Center, another proposed downtown project that made headlines last week. They’d like to see something other than a vacant lot at Beale and Riverside Drive or an abandoned building next to Court Square, but when architectural renderings make the front page, it usually means there is not much going on.

I gave up trying to tout or shoot down downtown real estate deals several years ago after getting snookered for at least the tenth time by a developer with “vision,” a set of pretty pictures, and a lot of confusing double-talk about financing. Separating the real deals from the impostors was harder than picking stocks or the next Super Bowl winner — and a lot less interesting.

The notion that downtown is the common ground or gathering place of Memphis is a charming piece of propaganda tinged with nostalgia. Any number of locations, from Cooper-Young to Malco’s Paradiso to Wolfchase Galleria, could make a stronger claim. I have been walking and biking downtown from South Bluffs to Harbor Town five or six days a week for years, and, except for special events, the only place I regularly encounter pedestrians is on the sidewalk along the Greenbelt on Mud Island.

Jeff Sanford, the head of the Center City Commission, was quoted as saying that the incentives-laden financing package for Court Square Center was the most complicated he has ever seen. It will put tenants in the Lincoln American Tower and the Rhodes Jennings Building. If those names mean anything to you, chances are that you live or work downtown.

I have developed a much simpler real estate indicator called the ham-sandwich factor. If your project or mixed-use development or neo-traditional neighborhood or whatever you want to call it can’t support a place that sells a simple ham sandwich, then you probably have trouble.

The part of Peabody Place that faces Front Street is vacant and counts a grocery store and deli among its ex-tenants. Another grocery failed on the mall side of Peabody Place, as did the basement food court and, most recently, the Holiday Ham store that sold the best pimento cheese in town.

The intersection of Union Avenue and the Main Street mall features vacancies on all four corners now that the smoothie store has closed. The big hole in the ground next to Royal Discount Furniture on the mall looks like it will be there awhile, since a developer backed away from an apartment project. The two blocks of Front Street between Union and Madison, with an unobstructed view of the river, is mostly vacant.

Unlike the Front Street Deli, the Little Tea Shop, Miss Cordelia’s at Harbor Town, the Rendezvous, the late Jack’s grocery store next to Court Square, and Alice’s on South Front, the failures can’t pass the ham-sandwich test.

Number One Beale and Court Square Center are all about luxury. The developers of Court Square Center plan to put in a New York-style Italian grocery. Carlisle wants to blow away the competition with a four-star hotel and $2 million condos.

I wouldn’t bet a ham sandwich on either one of them.