Week of May 4, 2009
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Headlines At a Glance
 
  • First-Time Buyers Find Deals, Help Perk Up House Sales
  • The Older Audience Is Looking Better Than Ever
  • Paying Tax Credit Forward Would Get More Buyers in the Door
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  • You Can Go Home Again; More Multigenerational Households as Economy Continues to Struggle
  • Building Trend Has Home Owners Sitting Pretty
  • Entertainment Central; Media Rooms Are the Perfect Escape for Viewing TV
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    First-Time Buyers Find Deals, Help Perk Up House Sales

    First-time buyers account for about 45% of today’s distressed and fixer-upper homes, which are being sold at bargain prices, for typically 20% less than traditional homes, according to the National Association of Realtors®. Economists tracking the beleaguered housing market say these first-time home buyers represent a critical demographic that could help lead the industry out of its doldrums by buying up much of the excess inventory of homes that is drawing down home values nationwide. The hope among housing experts is that interest in millions of such properties across the nation will rise because of low interest rates, a tax credit for first-time home buyers of up to $8,000 and home prices that have sunk in some markets by more than 20%. Signs that buyers are jumping off the sidelines to purchase distressed properties provide a welcome indication that sales overall could pick up. But sales at these low prices are having the unwanted side effect of drawing down home prices across the board. And there are potential risks to home buyers, who may leap at the good prices on distressed properties only to find they lose any cost savings because the homes need so much work. The national average cost of a bathroom remodel in 2008-2009 is nearly $16,000; a major kitchen remodel runs more than $56,000; and replacing a roof is $18,825, according to Hanley Wood. The shift toward buying homes that need work does have an upside: In areas hard hit by foreclosures such as Florida, California and Nevada, some neighborhoods peppered with boarded-up homes with overgrown lawns now are showing signs of revitalization. (www.usatoday.com)
    USA Today (4/29/09); Stephanie Armour

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    The Older Audience Is Looking Better Than Ever

    For decades, older consumers were largely shunned by marketers because they were deemed less wealthy, less likely to try new products and less willing to change brands. And as much as older consumers were to be shunned, young consumers — ages 18 to 34, or 18 to 49 — were desired for their free-spending ways, eagerness to sample new products and brand-switching proclivities. Those attitudes are now changing, for a couple of reasons. One is the recession, which makes older consumers who may have paid off mortgages seem a safer bet than younger ones who may get laid off in last-hired, first-fired downswings. The other reason for the change is demographic. The estimated 78 million people born from 1946 to 1964 — who have long set the agenda for Madison Avenue because of their numbers — are aging. The first boomers are turning 63 this year, and the youngest are turning 45. Although “18 to 49 is going to remain the predominant buying demographic,” said Andy Donchin, director  for media investments at Carat in New York, “the country is aging, and the boomers are an attractive demographic.” That appeal is because of the size of the boomer market and because, as Mr. Donchin put it, “50 isn’t what it used to be.” Older consumers today “are not as resistant to change” as older consumers previously may have been, he said, summarizing their attitude as “Show me something better, and I’ll try it.” And the boomers are even “comfortable with digital media,” he added. (www.nytimes.com)
    New York Times (4/20/09); Stuart Elliott

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    Paying Tax Credit Forward Would Get More Buyers in the Door

    In recent weeks, at least 10 states say they have created innovative bridge-loan programs that advance households eligible for the $8,000 first-time home-purchase tax credit the cash they need for their closings. Generally the advances take the form of second mortgages — with or without interest charges — that become due whenever purchasers receive their credits in the form of refunds from the IRS. In Washington, where the state housing finance commission already has such a program, state treasurer James McIntire wants to make it much bigger. He has been pushing for creation of a public-private downpayment program that could reach far more borrowers than is possible under the housing commission’s current funding constraints. He has proposed depositing $25 million of state funds into interest-earning bank accounts. The bank would then provide revolving lines of credit to the state housing commission to greatly expand its downpayment bridge-loan efforts. In a novel arrangement, the Washington Association of Realtors® has pledged $400,000 as a backstop for McIntire’s plan to cover any unexpected losses on the transactions. The state legislature has authorized the program in its new budget. Bill Riley, the incoming president of the Realtors® association, said research by his group has shown that half of all would-be first-time buyers in the state “cannot save enough money for the downpayment and closing costs” — effectively locking them out of both the $8,000 credit and current low mortgage rates and house prices even when their monthly incomes qualify them to purchase a home. (www.washingtonpost.com)
    Washington Post (4/2/09); Kenneth R. Harney

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    You Can Go Home Again; More Multigenerational Households as Economy Continues to Struggle

    According to a recent survey by AARP Bulletin, 11% of those 50 or older said they live with their grandchildren or parents. Fifteen percent of those surveyed said it was likely that they may need to move in with family or friends, or have family or friends move in with them. Of those, 34% said that a loss in income would drive them to that move, 19% said it would be due to a change in job status and 8% said it would be due to foreclosure. “We haven’t had a housing ownership crisis like this,” said Jim Toedtman, vice president and editor of AARP Bulletin, referring to the foreclosure crisis that has left many families scrambling to find a place to live. “People are having to realign, or put rooms into use that haven’t been used,” he said. Old bedrooms that were offices are returning to their original purpose, and some attics are getting new life. Many home builders have offered “granny flats” as an option for a while. There has also been an emphasis on “universal home design” that allows home owners to age in place, with accessible floor plans that could serve them well into their golden years, said Louis Tenenbaum, an independent living strategist based in Potomac, Md. The focus on addressing older family members in a home’s design leads Mike Kephart, of Denver-based Kephart Living, to believe the trend of multigenerational living could stick around for a while. “I don’t think the economy has been the driver for anytime other than the last several months,” he said. His firm builds accessory dwelling units called Sidekick Homes that often serve as grandparents’ suites and are built adjacent to single-family homes. The units can range from 400 to 800 square feet, cost about $80,000 to $200,000, and allow an older family member to maintain some independence while living right next to their children and grandchildren, he said. The structures are completely accessible, with features including wooden floors that accommodate wheelchairs and windows that can easily open with a crank or a motor. (www.marketwatch.com)
    MarketWatch (4/30/09); Amy Hoak

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    Building Trend Has Home Owners Sitting Pretty

    The Kays, who live in Manheim Township, Pa., added a spacious front porch to their 19-year-old home earlier this spring. “It’s a wonderful way to enjoy the outside and keep in touch with our neighbors,” Peg Kay says. “We wanted the front porch to be the focal point of our house. It’s big enough to entertain a crowd or just sit and read the paper.” The Kays are part of a building trend, says Phyllis Vail, director of marketing and communications for CertainTeed Corp. Front porches, she says, “are part of the ‘New Urbanism’ movement. New Urbanists list the ability to be closer to your neighbors, the welcoming warmth of a front porch, the aesthetics of a porch, the energy-saving benefits…and the added living space a porch can add as some of the attractions of the front porch.” In fact, 2007 research by NAHB’s Economics Group reports that the front porch will be a standard feature on homes by 2015. “Generally, today’s front porches are larger, often spanning the full length of the house front,” Vail says. “Also, they tend to be wider — 8 to 10 feet, instead of 4 to 6 feet.” Using low-maintenance materials, like vinyl, is a popular choice in new porch construction, she says. And today’s porches are anything but bland when it comes to color — using perhaps one color for the cladding, another for the trim and a third for window accents. Depending on the type of material used and the details in the design, a new porch can range in cost from $25,000 to $40,000, says Bill Patrick, president and senior designer for William J. Patrick Inc., the Lancaster, Pa.-based remodeler who built the Kays’ porch. (www.lancasteronline.com)
    Lancaster Newspapers (4/30/09); Cathy Molitoris

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    Entertainment Central; Media Rooms Are the Perfect Escape for Viewing TV

    According to NAHB, 16% of buyers of mid-priced new homes consider the media room/home theater critical, while 72% of buyers of upscale homes consider it critical. Both rank it more important than the exercise room, in-law suite and hobby room. “The trend started in the 1980s,” says Gopal Ahluwalia, NAHB’s vice president of research. “The definition varies from a room with a wide-screened TV to a theater with a popcorn stand, drop-screen and built-in recliners. Now, it is a must in upscale homes, especially.” Buyers of 3,200- to 4,500-square foot, single-family houses built by Chrystyn Homes in Napperville, Ill. usually want the builder’s second-floor, T-shaped bonus room that includes a media room, says president Bob Hudgens. “Most buyers use it as the kids’ TV room, while the parents watch TV in the family room,” says Hudgens. “We include CAT-5 wiring, cable, lots of electrical outlets and pre-wired surround sound. Many buyers also want built-ins for games, equipment and a mini-refrigerator.” Like granite countertops and butlers’ pantries, media rooms have trickled down from upscale homes to mid-priced homes,” says Ahluwalia. As the number of TVs per household and the size of those TVs both grow, the TV becomes an important household feature instead of an afterthought. So it’s no wonder builders and home owners dedicate rooms to it. (www.chicagotribune.com)
    Chicago Tribune (5/1/09); Leslie Mann

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