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The Cost Of Purchasing A Home In The U.S. Increased 55% Last Year. But It’s Still A Great Time To Buy A House For These Five Reasons

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I’ve always been all-in on homeownership. Yet, for the first time in two decades since the beginning of the pandemic, I haven’t owned a home.

All of which got me thinking: The National Association of Realtors (NAR) just issued a report calculating that the cost of purchasing a house in the U.S. has increased 55% year over year since 2021 after factoring in home value appreciation, tax re-assessments, and mortgage rate increases.

So, from a seller’s standpoint did I just miss out on the frothiest bull housing market in decades?

The pandemically-fueled housing boom since 2020 as a function of appreciation over time is unprecedented against any other historical financial metric, including the recent Dow Jones, NASDAQ, and S&P run ups.

That percentage gain also translates directly into higher appraised home values, which means more equity in sellers’ pockets when they decide it’s time to move. Ergo in sum, homeowners have seen a better return on their real estate investments over a shorter period of time since 2020 than even the pre-Great Recession housing bubble.

The good news for people like me who’ve either rented by choice, been priced out of the current market by the math, or sat on the real estate sidelines for other personal reasons over the past two years, however, is that now is still a great time to buy a home for several reasons under the right circumstances.

First and foremost, the COVID housing froth finally is cooling off.

Listings are up along with new housing starts, closings are down, and the days of all cash, waive-all-contingencies bidding wars are waning. So, excluding places like San Francisco or Manhattan where home prices had reached the point of almost stupid years ago, buyers in most markets already are on the back side of the pandemic peak.

“The overheated market of 2021 is already transitioning toward a less frantic landscape in response to several factors, and housing’s fundamentals are already shifting from the early days of the pandemic,” says George Ratiu, Manager of Economic Research at Realtor.com. “Builders have ramped up the pace of construction and more new homes are hitting the market. In addition, many homeowners who delayed their plans during the pandemic are ready to move forward with their lives so we’re already seeing an increase in the number of new listings—a sign of improving supply in existing homes. This boost in inventory, coupled with higher mortgage rates, inevitably is going to put downward pressure on the frenetic price growth we have experienced over the past year. That’s good news for buyers who have time on their side since the real estate landscape over the next 8-12 months is likely to shift away from a seller’s only market.”

Many would-be home buyers, especially Millennials without kids, also have been stashing cash in lieu of eating out and taking vacations since the beginning of the pandemic, resulting in a COVID-induced nest egg alternatively deployable for down payments, closing costs, moving, and renovations—which often are the primary financial impediments to purchasing a home in the first place.

Perhaps most importantly, almost every expert I’ve spoken with agrees that the current housing boom isn’t a “bubble” a la 2007. Housing’s core fundamentals are strong—meaning the basics of supply and demand as well as the mortgages and household balance sheets upon which those foundations are based aren’t about to shatter from a glass house rock out of nowhere any time soon.

Prices Aren’t Going Down

No matter who you talk to, it’s widely agreed that U.S. home values across the board aren’t dropping any time soon. This is due primarily to a single-family housing supply crisis and demographic shifts that have been building for years. So even while homes prices might seem inflated right now by the numbers, they aren’t artificially elevated like they were back in in 2005.

“A couple of factors are likely to keep pressure on prices for the foreseeable future,” says Realtor.com’s Ratiu. “The first one is demographics. Millennials are the largest cohort in the U.S., are embracing homeownership, and eager to use real estate as a foundation for financial and economic growth. With over 4.5 million Millennials turning 30 over the next few years, housing demand will remain robust. At the same time, we started 2022 in the wake of over a decade of under-building. Based on Realtor.com’s calculations, we are short 5.8 million new single-family homes across the country which will sustain demand and prices.”

Mortgage Rates

In 1981, interest rate hikes by the Federal Reserve to put the breaks on inflation pushed 30-year fixed mortgage rates to an all-time high of 18.63%. So, despite the Federal Reserve’s recent monetary tightening and interest rate increases (the current 30-year mortgage rate according to Bankrate is 5.46%)—and the possibility of subsequent ones to come later this year—mortgage interest rates overall remain historically low.

Taxes

For first time homebuyers who’ve been renting for years, homeownership comes with a ton of perks.

Depending on the price of your home and the size of your mortgage, these aren’t small numbers, especially as interest rates rise. Some years in some houses, particularly in 2005 when I bought a home at an 8%+ rate, my mortgage interest deduction was well into the $20,000 range—which for a writer is no small nut to be able to write down off of my total earned income (in some years the mortgage interest deduction alone brought me down into an entirely different tax bracket).

In addition, after two years the profits from selling your house assuming it’s your primary residence aren’t taxed by capital gains which means more net money into your pocket after closing costs.

Rents Are Increasing Too

The pandemically-fueled home price increases in the U.S. over the past two years have been widely reported in the media, yet far less covered has been the fact that residential rents have been rising too. Rents in Boise, ID, for example, have increased over 13% since the beginning of the pandemic, almost double that of inflation as a whole. In Miami according to some estimates they’re up over 31%.

So for home buyers weighing the opportunity costs of continuing to rent and throwing their money away versus getting into the homeownership game and building long-term wealth, the logic isn’t as clear as it’s been in the past when rents typically have dropped asymmetrically relative to home price increases in a similar fashion to investors fleeing stock markets in favor of government backed bonds.

Wealth Building

No matter how you slice the numbers, long-term homeownership is still one of the most predictable, risk-manageable wealth building strategies compared with other ways of deploying one’s income for a return on investment. So compared with renting, even at today’s 5.46% mortgage rates, building equity in a house instead of renting is still a hard logic to argue with—especially if home prices remain strong.

What all of this means for the U.S. housing market writ large is good news, says Craig Studnicky, founder of Miami-based real estate brokerage RelatedISG.

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Snoqualmie gets safest city nod…Ranks safest in state according to website’s matrix.

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Snoqualmie was recently named safest city in Washington State by backgroundchecks.org.

The city took first place on the company’s 2019 safest cities to live in Washington list, which is based off of property crime and violent crime data.

Other cities on the list, in order from 2nd to 5th place, include Enumclaw, West Richland, Sunnyside and Oak Harbor.

Snoqualmie received a safety index score of 0.59.

Backgroundchecks.org says in the methodology section of its website that they used recent FBI crime statistics to rank the state’s cities. That data set contained 7,430 cities, which was narrowed down to 2,929 cities with a population smaller than 10,000.

They also explained how they used their math to create the safety index scores.

“We then calculated violent crime rates and property crime rates by dividing the crime numbers by the population to get rates per 1,000. We also calculated the ratio of law enforcement workers to per 1,000,” the website says. “These were weighted with -50 percent for the violent crime rate, -25 percent for the property crime rate, and +25 percent for the law enforcement rate. The resulting metric gave us the safety index score. The higher this number, the (safer) the city is.”

That website also states that Washington has a lower-than-average violent crime rate but high levels of property crime, such as automobile theft.

This recognition comes after other recent nods. Snoqualmie also was recognized as safest city in Washington by the National Council for Home Safety and Security as well as by SafeWise.

“We are pleased to be recognized by multiple organizations as one of the safest communities in Washington,” Police Chief Perry Phipps said in a press release. “Our belief and commitment to ‘No call too small’ combined with a community effort of residents and city personnel help keep our city a safe place to live, work and visit.”

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Microsoft Is Basically Starting a Bank for Affordable Housing in Seattle

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How much good can that do? We’re about to find out.

A building in Microsoft headquarters is pictured on July 17, 2014, in Redmond, Washington. Stephen Brashear/Getty Images

A building in Microsoft headquarters is pictured on July 17, 2014, in Redmond, Washington.
Stephen Brashear/Getty Images

Last week, Microsoft announced it would set aside $500 million to create a workforce housing fund—the largest philanthropic commitment in the company’s history.

It comes as Microsoft is expanding its headquarters in Redmond, Washington, to make room for 8,000 more employees. Those people won’t have too much trouble in bidding wars in the Seattle suburbs. But the company says the Puget So

und–area housing crisis for teachers, firefighters, and service workers is ultimately its problem too:

Ultimately, a healthy business needs to be part of a healthy community. And a healthy community must have housing that is within the economic reach of every part of the community, including the many dedicated people that provide the vital services on which we all rely.

Cynical? Maybe. Impactful? Probably. Solving the regional housing crisis? Definitely not.

Not that even one of the world’s most valuable companies would expect to. According to the Seattle Times, Microsoft executives started to think about a housing commitment in 2018, after threats from Amazon killed a Seattle employment tax that would have raised money for homeless shelters and low-income housing. After working with consultants, a local nonprofit, and Zillow, Microsoft decided its best path forward was to get into housing finance.

What that means, exactly, is complicated. Over three years, the company says it will commit $25 million in grants and subsidies to address regional homelessness. It will also lend $250 million to low-income housing developers and another $225 million at below-market rates to workforce housing developers. Then, as that money is repaid, Microsoft will make more loans.

To start, let’s look at the first part, which is the only piece of this that qualifies as straightforward corporate charity. Seattle is the nation’s 18th-largest city, but it has the third-largest homeless population. To start, Microsoft is giving grants to support legal aid for tenants and a new local homelessness agency. It’s the kind of thing that corporations regularly do in their home cities.

From there, things get more complicated. Microsoft is basically starting a housing trust fund—an idea that’s become the go-to city- and state-level affordable housing tool as Washington has steadily retreated from housing policy. The approaches of the country’s hundreds of housing trust funds vary, but they mostly include some combination of grants and loans. Counties, cities, and states generate nearly $1.3 billion in revenues for housing trust funds every year. Then they lend some of that money out to affordable housing developers, and distribute some of it as grants to fund housing for very low-income families or formerly homeless individuals.

So, if you’re a developer trying to build low-income units, you might look to your local housing trust fund for financing. You’ll probably get it on better terms than you would from a bank, which would permit you to select a slightly more expensive site for the project or open up apartments to lower-income tenants.

Marty Kooistra, the executive director of the Housing Development Consortium of Seattle-King County, said it was good to see corporations taking a role in housing construction. “I think you need to be honest with the reality that Microsoft doesn’t do anything without studying it to death,” he said, speculating on the fund’s potential impact. “If there’s below-market financing available, that will change the entire pro forma and inspire more development to take place.”

Housing trust funds typically boast that they leverage their contributions heavily, ensuring that $1 in fund investment can pull in $7 from other sources. That appears to be Microsoft’s vision: that knocking the debt service off a bunch of loans can open up a whole new range of housing possibilities.

It might give affordable developers a leg up in competing with their luxury peers. “We have to act quickly,” said Sharon Lee, the executive director of the Low Income Housing Institute. The nonprofit owns a handful of properties in South Lake Union, where Amazon has built its campus. Lee added, “We have to apply for state and city funds to put together financing, and to the extent Microsoft can help us with acquisition or bridge financing that would be terrific. The person that shows up with all cash at closing will get the property, so we need to be able to say to an owner, ‘We’d like this site for affordable housing, and here’s the money.’ ”

$225 million of Microsoft’s money is in low-interest loans. With another $250 million, the company is seeking market-rate returns—but only investing in low-income housing. One nonprofit developer I spoke to was skeptical about that: “It sounds more like a business. We need lower-cost financing, otherwise we could just get it from the bank.”

How far can Microsoft go in the region just by issuing targeted or low-interest loans? Even the company doesn’t know, and there aren’t many precedents. Silicon Valley has a (much smaller) nonprofit housing trust fund that served as a model for Microsoft. Even Washington state’s housing trust fund is dwarfed by the company’s proposal.

“If you look at a project, the cost of the debt is not typically one of the biggest line items,” said Danny Natsch, a managing director at McBride Capital, an advisory firm in Portland, Oregon, that arranges debt financing for real estate projects. “There’s a lot of liquid capital in the markets right now for real estate.” At the end of the day, he said, housing production in the Pacific Northwest isn’t expensive because of interest rates, but because of the costs of labor, materials, and land.

The potential impact of grants and subsidies that don’t have to be repaid is virtually limitless, given the scale of housing insecurity in the region. King County, which includes Seattle and Redmond, needs 244,000 new affordable units by 2040, according to a December report from a countywide task force. The current annual production rate is about 80 percent lower than that. But that’s not where Microsoft is focusing.

How much of a bottleneck is dedicated finance for developers? We’re about to find out.

HENRY GRABAR


Nearly 1 in 7 homes in Seattle now worth at least $1 million

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This $2,748,000 home has five bedrooms four baths four fireplaces and four garage spaces.  It was originally built in 1938 but has just gone through construction (image: Joshua Lewis)

SEATTLE — A growing number Seattleites can consider themselves as million-dollar homeowners as housing prices continue to climb in the region.

Seattle is now ranks 10th among U.S. metro areas for percentage of homes worth $1 million or more, according to a newly-released study by Trulia. In 2018, 13.3 percent of all homes in the city are worth at least seven figures, up from 11.8 percent last year. The median house price stands at just under $565,000, Trulia says.

We’re still a far cry from the Bay Area though, where 81 percent of homes in San Francisco and 70 percent of homes in San Jose are worth $1 million or more. Oakland checks in third at 30.7 percent, Truila says. Seattle’s 13.3 percent just a little behind Los Angeles at 13.9 percent.

And Seattle’s million dollar homes aren’t just clumped in one or two spots. Trulia found out of the city’s 95 neighborhoods, 10 of them are classified as “million dollar neighborhoods” where more than half the homes are worth $1 million or more.

But Seattle’s not the only city in the region with million dollar homes. Trulia finds that Bellevue has the highest percentage in the region of Million Dollar Neighborhoods. Of the 23 Bellevue neighborhoods identified by Trulia, nine are over the $1 million mark– three more than just two years ago. That’s 39 percent of all the city’s neighborhoods.

Other cities noted with at least one million-dollar neighborhood: Kirkland (5 out of 15), and Shoreline (2 out of 14). San Francisco, as mentioned, is pretty much million dollar city with 87 out of 102 neighborhoods having 50 percent or more million dollar homes.

Nationally, the share of homes worth $1 million or more has doubled since 2012 from 1.5 percent of all homes to 3.6 percent today.

 

American Homeownership Increases Again as Housing Market Looks for Balance

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More Americans became homeowners in the summer months, fresh evidence of a housing market that’s finding some stability after several rocky years.

The national homeownership rate was 64.4% in the third quarter, the Census Bureau said Tuesday. That’s a half-percentage point higher than a year ago.

 A look at the rate of homeownership since 2004. Census Bureau/Haver Analytics

 

After touching an all-time high of 69.1% in 2004 as the housing bubble inflated, the homeownership rate bottomed out at 62.9% in 2016 as waves of Americans lost their homes or sold under duress. At the same time, many Americans who would ordinarily become buyers were locked out of the market by stringent lending rules, a lack of affordable inventory and a challenging economic backdrop.

All that has made the post-crisis housing market not just less accessible, but less dynamic. It’s possible the moderation in home prices over the course of 2018, which some analysts believe came from would-be buyers pushing back against hefty price gains, helped many of them finally become owners.

The homeownership rate can be controversial. Some analysts believe that government policies that helped enable ownership more broadly were responsible for the housing crisis, although many others believe there’s blame to go around.

Still, the meager recovery to this point puts the homeownership rate only back to 1995 levels, well before the run-up to the bubble. That suggests it may be possible for many more Americans to become owners, if housing market conditions ease further. The vacancy rate for owners was just 1.5% for the second month in a row, tighter than the 1.6% it averaged throughout 2017.

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Conditions are perfect for the real estate market in Seattle to cool some

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October will be the last month with good inventory — so now’s as good a time as any to buy

Summer is over, but the real estate market is just catching up.

The heyday for the market is typically between May and October, when the sunshine makes for nice pictures and easy open houses. Which means that the final month is here to take advantage of the housing market before the fall drop-off.

Slowing real estate might let us catch our breath — or knock the wind out of us

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Last year Seattle ranked first in a widely watched report on markets with an strong outlook for real estate. This year it’s not in the top 10. (Greg Gilbert / The Seattle Times)

An important real estate forecast knocks Seattle out of the top 10 booming markets. We still rank well, but some risks are also gathering.

If you read my colleague Mike Rosenberg, you already know that segments of the Seattle real-estate market are slowing.

We have an apartment glut thanks to heavy investment in multifamily housing coming out of the Great Recession. Sales and inventory numbers for homes in King County are back to 2012 levels. Prices are dropping many places after record leaps in recent years.

Last week came further evidence: For the first time in about a decade, Seattle wasn’t among the top 10 markets for the coming year in the “Emerging Trends in Real Estate” report by the Urban Land Institute and PricewaterhouseCoopers. Last year, we were No. 1.

The report focuses on the Seattle-Bellevue area, setting Tacoma (No. 53) out separately. And it doesn’t directly correlate with livability. Rather, it assesses investment and development trends, and for several years has chronicled the rise of high-quality urban centers.

Many people will see this as all good news, a pause from explosive growth that has also been blamed for lower affordability, rising inequality and social ills. I would add that markets go down as well as up, and every swing creates winners and losers.

Still, while Seattle’s growth isn’t stopping, going from the equivalent of 90 miles per hour to 50 would be felt, and in some unpleasant ways, too.

“Emerging Trends” is the gold standard in real-estate forecasts, based on interviews and surveys of hundreds of leading developers, investors and lenders.  It provides a deep analysis of the outlook for residential, retail, office, hotel and industrial properties, as well as the wider economic environment.

For next year, the top overall markets according to the ULI study are Dallas-Fort Worth, Brooklyn, Raleigh-Durham, Orlando, Nashville, Austin, Boston, Denver, Charlotte and Tampa-St. Petersburg.

At No. 16, Seattle still shows a decent outlook among the 79 markets surveyed. We rank No. 20 in homebuilding prospects. And second, behind Boston, in local market attractiveness for investors. Office demand is expected to continue doing well in the central business district. Being No. 1 isn’t everything. I’d take Seattle over almost any city among the top 10. But Seattle dropping off might mark an inflection point — emphasis on “might.”

The report also offers this caution about Seattle’s drop: “Seattle is still viewed as an attractive place in which to invest, but did media coverage of potential new supply being delivered and increased regulatory discussions sway the opinion of survey respondents?”

(I’d say the news coverage reflected real events and trends.)

Seattle’s population is expected to keep growing, next year at twice the national rate.  Hard as it is to process, Seattle also gets relatively good marks for housing affordability within the context of the Pacific Coast (Tacoma does even better). Demand remains strong for distribution space, too.  The report points to a local economy operating near capacity (e.g. employment) as a constraint on real-estate investment next year.

“This is evidenced by the comments from focus group participants in Seattle and Portland that attracting qualified labor is getting more difficult and could be hurting employment growth,” it reads. The unemployment rate for Seattle-Tacoma-Bellevue was 3.6 percent in August.  Assuming the larger economic climate is stable, we can expect Seattle to go from “hot” to “warm.”  Even so, a pullback in construction would be felt, and not just by speculators.

Being the crane capital of America was part of the enormous construction boom during this expansion. It put hundreds of millions of dollars into the city treasury. This has helped finance low-income housing and social services.

On the other hand, the economy is never static. Risks abound nationally and internationally, from trade battles and asset bubbles to new vulnerability in the banking sector. Geopolitical instability is rising. So are interest rates.

The past week’s wobbly stock market was centered in nervousness about potential inflation — enough at least to cut into profit margins. Popular tech stocks, including Amazon, were among the shares roughed up.  Nobody has repealed the business cycle, so this second-longest expansion in modern American history shouldn’t be taken for granted.  A veteran asset manager quoted in “Emerging Trends” says, “2019 will be a turning-point year.  I think about the capital markets correction that is coming. We have been used to easy money and very low rates for so long. Now is the time to harvest, to hedge, to be cautious.”

Seattle specifically has yet to see how a “separate, equal” HQ2 — yet to be announced — will affect it. Those effects could pinball to small-businesses, city tax revenues, vendors and even charitable giving, as well as hiring at the city’s largest employer.  The metro area would also be hurt by a stock market correction — not only in terms of lost wealth, but potential job cutbacks by companies in response.  But the stomach-knot scenarios might not happen. What we know is that real estate is slowing.  This boom has remade Seattle more dramatically than almost any since the Great Fire. It’s been a lightning rod for criticism, and not just from the social-justice warriors.

Too many classic Seattle three-story brick apartment buildings have been lost, diminishing lower-rent units for renters. Too many useful commercial buildings have been demolished for towers, annihilating affordable retail space and the human-scale delights of the city. Add in straight-up skyscrapers with no setbacks and little distance between them, plus loss of views toward the Space Needle.

I’ve watched these changes over a decade and wondered: Why does this happen in a supposedly progressive city?

Some will pour out corruption conspiracy theories. My guess about what happened is a combination of inattention to protection and design standards; addiction to construction fees; loss of imagination among architects, and political division — all happening as this firehose of demand came at us with great suddenness.  On the other hand, the real-estate boom has been pretty good to Seattle, and not only in terms of tax revenues.

On the commercial side, it’s been driven by demand from some of the top companies offering some of the best jobs. We’re not cursed by the desert of huge surface parking lots or store fronts emptied out by changing consumer patterns and online competition. Speculation is an element in rising housing prices, but demand was the big driver. Real estate and construction are significant employers.

In the America as it is, rather than what I might wish it to be, this is a gift horse that shouldn’t require obsessing over its dental work.  In the many left-behind localities — places without the bother of an Amazon headquarters — inequality and opportunity are worse than here and future prospects are dim. These include some of the once-greatest American cities.

Seattle has been lucky, and made its luck. Now we’ll see whether what’s happening in real estate is a natural downshifting or something more.

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The Seattle Times

Lawn Care For The Fall: Essential Tips to Follow

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All summer you’ve been watering, cutting, trimming and feeding your yard in the hopes of having the greenest plot of land in the neighborhood. So what should you do to get your lawn in shapefor the cool breezes of autumn? These six steps will help you get a head start on the colder weather.

Aeration and Overseeding

If you live in a climate with cool-season grass, fall is the perfect time to aerate your lawn because the air is cool and the soil is still warm from the heat of summer. The earlier you can do this, the better the results will be for your yard. Depending on where you live, September or early October is the best time to tackle this project. You’ll pay around $120 for lawn aeration.

Aeration removes small plugs of soil from your lawn, allowing greater amounts of air, nutrients and water to reach the root system of your grass. It also reduces soil compaction in the process. Following aeration, you might want to overseed your yard. Overseeding makes it easier for seeds to germinate while the soil is loose.

Feed Your Yard

Fall is the prime season of the year to fertilize cool-season grasses. Unlike warm-season grasses, which often go dormant in the fall and winter, cool-season grasses can actually hit their peak growth rates during the fall. This means they need a full dosage of nitrogen to help boost the health of the soil and your grass. Most importantly, this will help prevent the growth of weeds, which choke out the grass over time.

Cut Down on Mowing

Throughout the summer, you’ve gotten into the habit of mowing weekly. But if you have cool-season grass, it’s time to start cutting back on the number of mowing events each month. Generally speaking, every other week should be your maximum. If you have too much leaf coverage on your yard, you can mulch those up, but remember to leave your cutting deck high so you aren’t cutting off too much of your grass in the process.

The professional recommendation is not to cut off more than one-third of the total blade of grass each time you mow. Doing so can result in scalping the lawn, which stunts the growth of your grass. If you live in a warmer climate with warm-season grass, you can likely skip mowing altogether because your grass is going into its dormancy cycle.

Leaf Removal

There are two approaches you can take when dealing with falling leaves. At a bare minimum, you should remove any fallen foliage within seven to 10 days because it blocks sunlight from reaching your grass. But, if you get a relatively light leaf fall each autumn and you own a strong mulching mower, you can turn fallen leaves into a composting gold mine. If you mulch your leaf fall on a regular basis — at least once a week — you are recycling the nutrients back into the soil. If your leaf pile is too big, consider hiring a pro. You can expect to pay about $310 for professional leaf removal services.

Sow and Reseed

Believe it or not, but fall is a great time to reseed the bare patches of your yard and sow new sections of lawn for cool-season grasses. Applying fresh soil and some new seed to barren patches of your yard can help prepare your lawn to bounce back in the fall. As mentioned earlier, this time of year is often the strongest for cool-season yard growth, so take advantage.

Winterize Your Sprinkler System

If you have an underground sprinkler system to help you keep your yard green all summer, it could be the biggest threat to your utility bill and soil during the winter months. If you fail to blow out your underground system, the water left in the pipes could freeze, expand and burst the pipes. This could lead to a water leak in your yard that could compromise the integrity of the soil and cause serious damage. If you live in a cooler climate, it’s important to winterize your sprinkler system immediately.

Conclusion

With one weekend of work, you can accomplish most of these tasks and have a yard that looks great for the coming fall months.

WRITTEN BY ANDREA DAVIS

Old House Renovation: Making Those Hard Repair-or-Replace Decisions

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When you’re planning (or in the middle of) a whole house remodel there are always questions about what to keep and what to do away with. Sometimes those questions are about big things, such as hallways, bedrooms or walls. Other times they’re about more particular items, such as doorknobs, trimwork or old wooden windows.

No matter what type of item, the question is usually a challenging one because there often is no “right answer.” If this sounds like a question you might have to tackle in your future, maybe I can help you be more prepared.

Always Lean Toward Restoration

The first step in making the decision of “restore vs. replace” is one of mindset. I can’t tell you how many times I’ve been in a home with a contractor, tradesman or even homeowner who just thinks everything that’s not brand new needs to find its way to the dumpster! That’s the wrong mindset in my opinion. Replacing something just for the sake of replacing it is wasteful at best. In the case of something really special like the wavy glass in my kitchen windows it can be downright tragic.

So the first thing you want to do is to adopt a “restore over replace” attitude. Whenever an item is being considered, your first thought regarding restoration should be “how can we?” By looking at things with this mindset you’ll find yourself thinking creatively and seeing solutions that lead to restoration. In the long run, this kind of mindset is key to creating a beautiful project that has the unmatched depth of character that can only be achieved through restoration.

Pay Attention to Unique Details

In the restoration of an older home, there are those older elements that are unique and unlike brand new homes, and then there are those items that are essentially the same today as they were yesterday.

When it comes to decorative building elements, the saying, “They just don’t make them like they used to,” is often true.

Walls are a good example of something that isn’t “usually” that different in a brand new home as compared to a 300-year-old home. Sure, there are exceptions, but I’m talking about smooth interior painted walls. Restoration of an old plaster wall in a bedroom might cost five times as much as just replacing that same wall with drywall and the end result may look nearly identical.

A solid wood interior door, on the other hand, may be the opposite situation. The existing home might have solid doors made of a hardwood you just can’t buy anymore. If you look closely, those old doors might have a particular profile on the trim or the panels. Even if you can get a similarly designed door, the chances of replacing that detail are slim. When it comes to decorative building elements, the saying, “They just don’t make them like they used to,” is often true.

I Just Love It

I was talking with some fixer-upper owners one day in their home when the homeowners and I started talking about an archway between two rooms. I mentioned how unique and interesting that archway was and the wife said, “I just love that arch, but I know it has to come out.” When I inquired further, I found that two other contractors had told her the arch had to go to accomplish the other objectives of the project. I helped them find a solution that saved the arch.

Whenever there is any element of your home, no matter how tiny or how big, that inspires you to use the words “I just love that,” my advice is to work very hard toward restoring that item rather than replacing during your whole-house remodel. Even if it’s difficult or something else has to be sacrificed. Those “love it” items are what makes the house yourhome.

Cost is Always a Factor

The last factor, of course, is cost. Sometimes restoration of an item is less costly than replacement; other times it’s far less expensive to replace than to restore. When you’re attempting a major project like a whole-house remodel, sometimes it can just come down to money. What makes the most financial sense in the long run?

Options Are Good

The great thing about this question is that it reveals the fact that there are options. You’re not forced to go one way or another and you shouldn’t listen to people who try to take those options away.

Restore when you can, replace when you have to … and enjoy the process either way!

by Tim Layton

What to Expect When Getting Pre-Approved

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Getting “pre-qualified” today when preparing to buy a home is so 80’s. Getting pre-qualified then meant talking to a loan officer over the phone or in an office and having a conversation about various aspects of your financial life. The loan officer asks about your job, how long you’ve worked there and how much money you make. The loan officer asks about your general credit history, whether it’s excellent, good or maybe needs a little work.

What about other debt? What sort of monthly payments are you obligated to pay each month? The loan officer would then take that information, plug in current market rates (back in 1981 the average 30 year rate hovered around 17%. No, really) and give you an amount you can qualify for. Maybe even the loan officer typed up a prequalification letter you could carry around.

Not anymore. If all you have is a prequalification letter it’s possible your real estate agent will ask that you go back to your loan officer and get pre-approved. The terms do sound somewhat alike but sellers, lenders and real estate agents alike know the difference.

A preapproval ups the qualification game by verifying the conversation you had with your loan officer. Instead of a conversation over the phone, you’ll be asked to submit a completed loan application. The key word here is “complete.” Well, almost. You don’t have a property picked out yet so you’ll leave that part blank. What you can expect to provide is proof of your income instead of a conversation. This means the most recent copies of your pay check stubs. To make sure you’ve been working for at least two years, your W2 statements for the last two years will also be reviewed.

If you’re self-employed, you may not have pay check stubs. Regardless, you’ll need to provide your last two years of income tax returns, both personal and business.

In addition, a year-to-date profit and loss statement should also be prepared. This P&L doesn’t necessarily have to be completed by an accountant or otherwise certified, you can put one together on your own if you want.

Regarding your credit history, you’ll also be asked to sign a Borrower’s Authorization form which allows the lender to pull your credit report and credit scores. You’ll need funds for a down payment and closing costs so copies of recent bank statements must be at the ready.

In short, you need to get your preapproval application to the point where all you need is a property to buy along with a signed sales contract. Now, not only can you shop in confidence, but the sellers and the seller’s real estate agent can put you at the top of the list when considering your offer.

Today, absolutely everyone should be shopping for a home with a solid preapproval letter in hand. There’s no question about it.

Written by: David Reed

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