Monthly Archives: October 2007

Green Living – Part 1 – start with the light bulb

Did you ever think that the incandescent light bulb, the symbol of a great idea, would be going the way of the kiwi bird? Well, it’s not extinct yet but it is moving in that direction and for good reason – it’s an electricity hog.

Energy usage in the United States continues to rise year after year. Power plants are keeping up with demand only by dipping into their “reserve” capacity, a resource that we’ve almost used up. Consumers in colder climates are facing staggering heating bills because of high natural gas prices driven by the electrical utilities increasing use of natural gas.

Conservation efforts are underway for each of the many uses of electricity, but lighting stands apart as one of the single biggest energy consumers (over 30% of the electricity in buildings goes to lighting).

So here’s what you can do – change all your incandescent light bulbs to compact fluorescents. I did. My electric bill dropped by 2/3rds – I was astounded and an instant believer!! And an added benefit – they last longer – so less waste!

Did you treat your home as an ATM?

I am not surprised that we have a credit squeeze and a sub-prime mortgage meltdown. For me. the first sign of the impending disaster was over 2 years ago when a young couple that I knew told me they were buying a house – no money down and no credit check. And I thought, “What bank would lend to them?? They live paycheck to paycheck, can’t even get a phone in their name….we are in BIG TROUBLE.” But the mortgage lenders kept giving out the loans with great teaser rates and life seemed good.

Not only did 100% financing become popular, but so did re-financing one’s existing mortgage. When home values were on the rise and interest rates were at all-time lows, it seemed like a no-brainer – increase the amount borrowed at a lower rate – wow – presto – your home was an ATM. You just had to go to the re-fi window whenever rates lowered by enough to cover the re-fi expenses, and presto more money!! ka-ching!! But worse, people were glomming onto ARMS (adjustable rate mortgages) by record numbers because their monthly payments would be lower but OOPS they forgot that rates can go up and so did those monthly payments.

Don’t get me wrong ARMS are great even now – BUT- only if it matches your time horizon for owning your house. What no one calculated was that interest rates might go up consecutively while real estate values were tanking. And the perfect storm for the mortgage meltdown began – while interest rates in ARMS were ratcheting up, house prices were ratcheting down. People who can’t afford to pay their new high monthly rates, need to sell their houses but their current value is less than their mortgage and….voila….one is stuck in the mortgage roach motel – one way in but no way out!!

Do I smell a buyers’ market?????

Valuing Real Estate

Customers sometimes think that real estate agents are seers. How’s the market? What’s my house worth? If I had perfect foresight, I would be a wealthy woman. But, the real answer is: a property is worth what a buyer is willing to pay and what a seller is willing to accept. Seems simple, but it is often forgotten that real estate is a “market,” just like the stock market, impacted by macro and micro economic forces, supply and demand, AND despite what the last few years exhibited – is a relatively illiquid market.

Right now, the market is more challenging than ever; there is a definite correction in pricing but no-one knows by how much, or when it is going to end. The best pricing strategy in this market is to tell the marketplace that you want to sell – i.e. price your property near or at where it will likely transact. And if you are a buyer – make an offer – you just never know!!

The bottom line – pricing real estate is both an art and a science. The science part is a careful review/analysis of past comparable sales, current comparable asking prices, length of time on the market, and location. The art is adjusting all the facts to the current reality, location, customer needs and requirements and an intuitive sense of what’s fair.