Archive for the 'Moving' Category
Housing and Young People
Yesterday was the first session in a five-part series on public housing policy. Housing: The Hub of Public Policy 2010 is presented by The Connecticut Housing Finance Authority, The Connecticut Department of Economic and Community Development, and The Partnership for Strong Communities; it is hosted by The Lyceum. The pre-event briefing memo touched on many issues and gave examples of what is happening in other parts of the country – it’s an interesting read. We learned about the event through our involvement in HYPE, and stopped by to check it out.
One of the recurring themes of the discussion was Connecticut’s difficulty in retaining our young adults, which is reported regularly via both official statistics and anecdotal experiences. It is a source of concern because of the ratio of workers to retirees in the state – currently 4.5:1 and expected to fall to 2.6:1 by 2030. The baseline assumption for the group was that housing played a critical role in the flight of the youth; our graduates move to other states because they can’t find affordable housing in Connecticut.
We have lived in three different states as working adults, with each move motivated by a specific opportunity. We moved to Boston because of a job, to Charlottesville because of a school, and then to Hartford because of a job. Housing costs only entered the discussion during our most recent move, as we were interested in understanding the cost of living relative to the available salaries. Hartford was more affordable that both Boston and Vermont, the other destinations we considered. So housing was a consideration for us, but it was a secondary factor after the available opportunities, and only became a factor because we expected to be in the area for a long time building a career.
Three other points that were raised during the discussion:
1. Housing costs can influence employment opportunities since companies have an incentive to locate their facilities in low-cost areas.
2. Because Connecticut is so geographically small, and located between Boston and New York, our young adults are often still close to home even if they live in another state.
3. Perhaps many of our young adults will return to the state when they are ready for a more suburban lifestyle.
What’s your take? How important are housing costs to the young adults that you know? What motivates them (you) to choose Connecticut or to choose other parts of the country/world? If you know people who have left the area, what might have kept them here if it had been available?
Choosing a Real Estate Agent
There are something like 350 real estate agents based out of the five main offices in West Hartford Center. The number grows rapidly as the rest of the towns in Greater Hartford are also considered. Most people know at least one agent, and some know many.
With so many agents out there, how do you choose an agent to use for your purchase or sale? We believe that the three main criteria should be activity level, capability, and service level.
Of the three, activity level is the easiest to research. You want an agent that is actively working with buyers and sellers so that they have a good feel for the current state of the market. Most brokerages show an agent’s recent transactions on their website. Individual agents sometimes also show their deals on their personal websites. Even if the information is not readily apparent, you can (and should) ask the agent how many homes they have sold in the past year. There’s no magic minimum number, but we would recommend working with agents that average at least a deal a month over the course of a year. About 12 deals per years is the minimum needed for an agent to support themselves as a real estate professional.
Real estate transactions involve large amounts of money, and are difficult to reverse. You want to do the right deal the first time and need to be sure that your agent is representing and protecting your interests throughout the process. On the buy side you want to work with someone who can help you figure out what kind of home you really want, help you find a home that meets your needs, and then work through the inspection process to make sure it’s in good condition. On the sell side you want to work with an agent that will be able to accurately price your home and market it effectively. Buyers and sellers both need an agent that will help them negotiate a favorable price based on condition, location, market activity, and all sorts of other factors.
Determining how capable an agent is can be a bit more difficult. There are no independent third parties that consistently review and rank agents, so most people ask for recommendations from their friends, family, and coworkers. Ideally you also want to learn more about how they approach the business, understand their attitudes, and see examples of their work. Agents should be able to quantify their performance somehow, whether it is looking at the ratio of sales price to list price for their deals or simply knowing the percentage of their clients that are willing to recommend them. Agents with websites might post client testimonials and would hopefully allow you to call a few of their past clients. Agents with blogs have much more information about them available. You can go through their posts to see what they think is important, how they approach different issues, and get a sense of their personality.
The final important criteria in selecting an agent is the service level they provide. Your agent is going to be your go-to person throughout the transaction, so you want to make sure that you are comfortable with them and feel confident that you can reach them when needed. This criteria is the least well defined and most subjective. The only good way to assess the service level of an agent is to talk with many of their past clients. Once again, agents should be able to provide the names of recent clients you can call.
Recommendations from past clients are one of the few ways to learn about an agent. Unfortunately, even they are not foolproof. Most people go through the home purchase/sale process infrequently. They work with one agent and have little basis for making comparisons between the capabilities and service levels of different agents. In addition, they have a strong incentive to say that the person they used was excellent, unless they were really, really terrible. Who wants to admit that they made a bad decision? It’s like asking parents which school is the best in town – they nearly always respond with the one their child attends.
At the end of the day, you have to make the decision to trust one agent or another. After you’ve done some asking around, and have researched as best you can to narrow down your choices, don’t be afraid to ask the remaining candidates to interview with you. They should be willing to spend some time talking about their approach and getting to know you better.
The good news is that there are many excellent agents in Greater Hartford, so you should feel confident that you can find one after doing a little research. Just remember, you want a full-time agent that is actively working with buyers and sellers, one that understands the local markets and is comfortable analyzing them, and finally one that is responsive and you feel comfortable working with.
Give us a call if you’re not sure where to start. True, we are agents and think we meet all these criteria, but we also know that we might not be the best fit for everyone. We’ve suggested people use other agents in the past and will not hesitate to do so again when it is the right thing to do.
Homebuyer Tax Credit Update
The Senate has overwhelmingly passed an extension to the hotly debated homebuyer tax credit. The updated version of the program has larger scope and is more generous than its predecessors. Note that the extension is not official until it is also passed by the House and signed by President Obama.
The new program offers people that have lived in their home for 5 years or more (move-up buyers) a $6,500 credit. It also increases the income cap to $125,000 for single return filers and $225,000 for joint return filers. Just like the previous incarnation, first-time buyers receive an $8,000 credit. Purchases must either close by April 30, 2010 or be under “binding contract” by that date and close within 60 days of April 30th. Homes must cost less than $800,000 to qualify, and buyers must be at least 18 years old to take advantage of the program. Once the final version is passed, we’ll link to all the specifics and details – this is a summary of the main points and changes.
Observations
1. “Move-up” buyers do not need to be buying a more expensive home. In fact, it seems likely that there will be lots of “move-down” buyers that take advantage of the program. Just imagine how many homeowners there are out there that have lived in their home for 20, 30, 50 years and are ready to downsize.
2. The expiration of the program is not very convenient for families with children in school, who often prefer to move over the summer. The absolute latest that a deal could close and qualify for the credit is 60 days after April 30th, which is Tuesday, June 29th. The last scheduled day of the West Hartford school year is Thursday, June 17th, with three snow make-up days taking the possible last day to Tuesday, June 22nd. If school did extend to the 22nd, then families would either have to move during the school year or try to move within one week of school ending.
3. In the Greater Hartford area, the “move-up” clause may be more effective in spurring real estate activity than the “first-time buyer” clause. We’ve already reported that we did not encounter many first-time buyers that were only making a purchase because of the credit. Nearly all were going to buy anyway and simply accelerated their purchase. The “move-up” credit, and the short window to claim it, could create a flurry of activity for people who were considering a move in the next year or two.
4. The “move-up” clause seems like it will encourage current homeowners who want to take advantage of the credit to put their home on the market early in the new year. They would need to find a buyer for their place, and then successfully bid on a new home to move to by April 30th.
5. The credit has been encouraging buyers to accelerate their purchases for the past year. At some point that trend will reverse and there will be a period in which real estate activity is unusually low. The most likely time will be just after the credit finally expires for good, though it’s possible it could happen while the credit is still available. The summer of 2010 seems like a good candidate.
6. Do we know how much this program is expected to cost the Federal government? I have not seen any projections as to how many “move-up” buyers are out there that could claim the credit. We know that over 1.8 million first-time buyers are expected to claim the credit in 2009. Presumably the shorter window of opportunity will be the main way in which the program’s costs are contained.