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Fred Yancy's Blog

Luxury Homes, Investment, and Property Management

By Fred Yancy, Broker | Broker in Woodstock, GA
  • Micro-apartments: The anti-McMansions

    Posted Under: General Area, Rental Basics  |  June 24, 2013 7:01 AM  |  487 views  |  No comments

    Micro-apartments: The anti-McMansions

    By Les Christie

    Move over McMansions: These days, pint-sized, micro-apartments are all the rage.

    Typically ranging between 180 and 300 square-feet, these tiny apartments are becoming increasingly popular among the young-and-single set and even some retirees, seeking affordable places to live in the nation's costliest cities.

    Nowhere is the micro trend hotter than in Seattle. More than 40 micro-apartment developments have been built in the city in the past three years, according to Jim Potter, chairman of Kauri Group, a Seattle-based developer. Many of these apartment buildings offer shared patios, roof decks and even communal kitchens. (Zoning laws in Seattle allow up to eight apartments to share one kitchen).

    Other emerging micro-apartment hotspots include San Francisco, Boston, Providence, R.I., New York and Portland, Ore., where Kauri is building a new complex.

    The key selling point is affordability. In Seattle, 250-square-foot apartments rent for under $800 a month, almost half the average $1,400 people pay for newly built studios of 400 square feet or more in the city, according to Potter.

    In San Francisco, Patrick Kennedy of micro-apartment developer Panoramic Interests, rents 295-square-foot apartments for $1,600, about a third less than the going rate for newly built studios in the area.

    Living in tiny spaces requires big lifestyle adjustments. When Aron Susman moved his commercial real estate information company, TheSquareFoot, from Houston to New York, the 30-year-old bachelor went from a 1,700-square-foot apartment to just over 200 square feet.

    "At first, it was shocking," he said. "I had a closet in Houston that, I swear, was bigger than my whole apartment now. It causes you to go out and do things. I spend less time in my apartment."

    He is able to walk to his office where he usually works late. During the evenings, he often meets up with friends, most of whom live in the neighborhood.

    New York has always been known for its shoebox-sized apartments. But its mayor, Michael Bloomberg, wants to add to the stock of small apartments. He recently sponsored a micro-apartment design competition aimed at combating the city's shortage of affordable places for its one- and two-person households.

    In some Manhattan neighborhoods, upwards of 70% of households consist of singles or couples, according to Eric Bunge, a partner in of nARCHITECTS.

    The city recently awarded Bunge's firm a contract to develop a complex of 55 micro-apartments ranging from 250- to 370-square feet. When it opens in 2015, it will be the first micro-apartment complex built in Manhattan since 1955, when the city banned new studios of under 400 square feet. Rents will probably be in the low $2,000s and the building will offer communal living areas, including dens, a rooftop garden, and a fitness room, he said.

    Many modern micro-apartments have innovative, efficient designs marked by flexible features. Dining room tables turn into beds. Excess vertical spaces hold shelves. Banquette lids open for storage space.

    Panaromic's recently completed 23-unit building includes a "Murphy Bed" that flips up and leaves a dining table behind that can seat five people, a work area, storage, exterior space, and Internet access -- all within 295 square feet. The kitchens have refrigerators, dishwashers and microwaves, but no conventional ovens.

    Somewhat surprisingly, many seniors have moved into the new micro-apartments, said Potter. These empty-nesters seek to downsize from their full-sized homes, looking for an affordable, less high maintenance option.

    No matter what your age, micro-apartments can take some getting used to -- unless you're already living in tight quarters. "We had a Japanese newspaper come and write a story about our apartments," said Kennedy. "Their conclusion was 'This is not a small space.'" 

    Fred Yancy, Broker

    Crye-Leike Realtors

    (678) 799-4663

    http://fredyancy.crye-leike.com

  • Trulia mapping rents, natural hazards

    Posted Under: General Area, Rental Basics, Rentals  |  May 31, 2013 6:00 AM  |  1,218 views  |  No comments

    Trulia mapping rents, natural hazards

    USGS, FEMA data on flood and earthquake zones on tap

     

    By Paul Hagey


    Are you willing to pay a lower rent to live in an area more prone to earthquakes and floods?

    Three new map tools from Trulia — one that tracks rents and two others that track the likely severity of earthquakes and floods at the neighborhood level — will allow home shoppers to visualize the answer to just that question for any neighorhood in the U.S.

    The new heat maps, which track the rental cost-per-bedroom and the likelihood of an earthquake or flood using U.S. Geological Survey and Federal Emergency Management Agency data, join Trulia’s suite of map visualizations, which also include home values, crime, school rankings, commute times and local amenities.

    “At Trulia, we use interactive map visualizations to present large amounts of information in an easy-to-understand format,” said Lee Clancy, vice president of consumer products at Trulia in a statement. “With our new rental maps, consumers can browse through color-coded neighborhoods and quickly focus their search on neighborhoods that meet their budget.”

    “After considerable damage in recent years, many consumers likely feel as if the frequency and severity of natural disasters is increasing across the United States, but up until now the risk of these events has traditionally been hard for homebuyers, sellers and renters to find,” Clancy said. “Now house hunters can use our maps to see flood zones and understand where earthquakes are more common in order to make informed decisions about where to move.”

    The new heat maps, also available to users of Trulia’s Android app.


    Fred Yancy, Broker
    Crye-Leike Realtors
    (678) 799-4663
    http://fredyancy.crye-leike.com

    Trulia mapping rents, natural hazards

    USGS, FEMA data on flood and earthquake zones on tap
    Paul Hagey
    Paul Hagey Staff Writer
    share this article
    May 28, 2013

    Screen shot of FEMA flood zones in Memphis, Tenn. displayed on Trulia.com.Screen shot of FEMA flood zones in Memphis, Tenn. displayed on Trulia.com.

    Are you willing to pay a lower rent to live in an area more prone to earthquakes and floods?

    Three new map tools from Trulia — one that tracks rents and two others that track the likely severity of earthquakes and floods at the neighborhood level — will allow home shoppers to visualize the answer to just that question for any neighorhood in the U.S.

    The new heat maps, which track the rental cost-per-bedroom and the likelihood of an earthquake or flood using U.S. Geological Survey and Federal Emergency Management Agency data, join Trulia’s suite of map visualizations, which also include home values, crime, school rankings, commute times and local amenities.

    Rental-map

    Screen shot of Trulia’s new rental price map visualization tool applied to San Francisco.

    “At Trulia, we use interactive map visualizations to present large amounts of information in an easy-to-understand format,” said Lee Clancy, vice president of consumer products at Trulia in a statement. “With our new rental maps, consumers can browse through color-coded neighborhoods and quickly focus their search on neighborhoods that meet their budget.”

    “After considerable damage in recent years, many consumers likely feel as if the frequency and severity of natural disasters is increasing across the United States, but up until now the risk of these events has traditionally been hard for homebuyers, sellers and renters to find,” Clancy said. “Now house hunters can use our maps to see flood zones and understand where earthquakes are more common in order to make informed decisions about where to move.”

    The new heat maps, also available to users of Trulia’s Android app, can be accessed here.

    Flood

    - See more at: http://www.inman.com/2013/05/28/trulia-adds-to-heat-map-library/#sthash.wNyU5kZn.dpuf
  • Winning Bidders Selected for REO-to-Rental Initiative

    Posted Under: General Area, Financing, Rental Basics  |  July 6, 2012 8:23 AM  |  658 views  |  1 comment
    Winning Bidders Selected for REO-to-Rental Initiative

    By: Esther Cho

    The winning bidders for the REO-to-rental pilot initiative have been selected and the deals are expected to close in the early third quarter, the Federal Housing Finance Agency (FHFA) announced Tuesday.

    The pilot program was first launched in February in select markets where inventory is high and rentals are in demand.

    Investors interested in bidding for properties were asked to submit an application to qualify and were evaluated based on factors including financial ability, asset management experience, property management expertise, and familiarity with select locations. There were about 2,500 single-family Fannie Mae owned REOs up for sale through the program.

    “FHFA undertook this initiative to help stabilize communities and home values in areas hard-hit by the foreclosure crisis,” said Edward J. DeMarco, Acting Director of FHFA. “As conservator of Fannie Mae and Freddie Mac, we believe this pilot program will assist us in achieving our objectives and help to maximize the benefit to taxpayers. We are pleased with the response from the market and look forward to closing transactions in the near future.”

    The program did face opposition in California, where 19 of the state’s lawmakers urged DeMarco to exclude California from the program. The lawmakers and the California Association of Realtors argued that the program would only further depress the housing market and said housing inventory is low throughout the state. Riverside and Los Angeles were two of the markets selected for the program.


    Fred Yancy, Broker
    Crye-Leike Realtors
    (678) 799-4663

  • Real House Prices and Price-to-Rent Ratio

    Posted Under: Market Conditions, Home Buying, Rental Basics  |  June 26, 2012 1:55 PM  |  715 views  |  No comments

    Real House Prices and Price-to-Rent Ratio

    by Bill McBride

    Nick Timiraos at the WSJ has a nice summary: Why Home Prices Are Rising Again (According to Case-Shiller)
    It wasn’t hard to see this coming: Home prices rose in April after a spring that bought more buyers chasing fewer homes.Yes, this was pretty easy to see coming. A key question is: Did nominal house prices bottom in March or will there be further price declines?

    I think it is likely that prices have bottomed, although I expect prices to be choppy going forward - and I expect any nominal price increase over the next year or two to be small.

    I've seen some forecasts of additional 20% price declines on the repeat sales indexes. Three words: Not. Gonna. Happen.

    Others, like Barry Ritholtz at the Big Picture, have argued that we could see an additional 10% price decline in the Case-Shiller indexes. I think that is unlikely, but not impossible. The argument for further price declines is that there are still a large number of distressed properties in the foreclosure pipeline - and that there are over 10 million property owners with negative equity, and that could lead to even more distressed sales. So even though prices are pretty much back to "normal" based on real prices and price-to-rent ratio (see below), the argument is that all of these distressed sales could push prices down further. Also, Barry argues that prices following a bubble usually "overshoot".

    Those are solid arguments, but I think that some of the policy initiatives (refinance programs, emphasis on modifications, REO-to-rental and more) will lessen the downward pressure from distressed sales - and I also think any "overshoot" will be in real terms (inflation adjusted) as opposed to nominal terms. It is probably correct that any increase in house prices will lead to more inventory (sellers waiting for a "better market"), but that is an argument for why prices will not increase - as opposed to an argument for further price declines.

    My view is prices will be up slightly year-over-year next March (when prices usually bottom seasonally for the repeat sales indexes). Some analysts see a small decrease (like 1% to 2%) over the next 12 months, but that isn't much different than a small increase (when compared to forecasts of 10% or 20% declines).

    And here is another update a few graphs: Case-Shiller, CoreLogic and others report nominal house prices, and it is also useful to look at house prices in real terms (adjusted for inflation) and as a price-to-rent ratio. Below are three graphs showing nominal prices (as reported), real prices and a price-to-rent ratio. Real prices, and the price-to-rent ratio, are back to late 1998 and early 2000 levels depending on the index.

    Nominal House Prices

    Nominal House PricesClick on graph for larger image.

    The first graph shows the quarterly Case-Shiller National Index SA (through Q1 2012), and the monthly Case-Shiller Composite 20 SA and CoreLogic House Price Indexes (through April) in nominal terms as reported.

    In nominal terms, the Case-Shiller National index (SA) is back to Q4 2002 levels, and even with the recent small increase, the Case-Shiller Composite 20 Index (SA) is back to March 2003 levels, and the CoreLogic index (NSA) is back to May 2003.

    Real House Prices

    Real House PricesThe second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

    In real terms, the National index is back to Q4 1998 levels, the Composite 20 index is back to March 2000, and the CoreLogic index back to February 2000.

    As we've discussed before, in real terms, all of the appreciation in the '00s is gone.

    Price-to-Rent

    In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

    Price-to-Rent RatioHere is a similar graph using the Case-Shiller National, Composite 20 and CoreLogic House Price Indexes.

    This graph shows the price to rent ratio (January 1998 = 1.0).

    On a price-to-rent basis, the Case-Shiller National index is back to Q4 1998 levels, the Composite 20 index is back to March 2000 levels, and the CoreLogic index is back to April 2000.

    In real terms - and as a price-to-rent ratio - prices are mostly back to late 1990s or early 2000 levels.



    Fred Yancy, Broker
    Crye-Leike Realtors
    (678) 799-4663

  • What Renters Are Willing to Sacrifice for a Home

    Posted Under: General Area, Home Buying, Rental Basics  |  June 23, 2012 9:37 AM  |  712 views  |  1 comment

    What Renters Are Willing to Sacrifice for a Home

    Daily Real Estate News

    Eighty percent of non-home owners are willing to give up certain luxuries in their life so that they can purchase their dream home, according to Century 21’s Spring Home Buyer/Seller Survey.

    So what are they willing to sacrifice in order to save for purchasing their dream home? The survey finds:

    • 50 percent would cut back on dining out.
    • 49 percent would trim their shopping for non-essential items, such as clothing, gadgets, and accessories.
    • 47 percent would give up luxuries, such as expensive cable packages and trips to the salon.
    • 39 percent would cut back on vacations.
    • 10 percent would contribute less to their 401(k).

    Why are these non-home owners so willing to make such sacrifices now? The survey finds that record-low mortgage rates and appealing home prices are making them want to act faster toward home ownership.

    “For those who are currently renting, purchasing a home is especially attractive right now,” says Rick Davidson, president and CEO of Century 21 Real Estate LLC. "In fact, home affordability reached a new all-time high for the first quarter of 2012.”

    So while renters are ready to sacrifice to get on the road to home ownership, many express concern that despite their sacrifices they’ll still struggle to get there. Forty-five percent of renters say they will likely be forced to wait to own a home because they cannot qualify for a mortgage or don’t have sufficient funds for a down payment, according to the Century 21 survey.


    Fred Yancy, Broker
    Crye-Leike Realtors
    (678) 799-4663

  • Home Values Mixed, Rent Continues to Climb

    Posted Under: General Area, Market Conditions, Rental Basics  |  June 20, 2012 4:21 PM  |  559 views  |  No comments
    Home Values Mixed, Rent Continues to Climb

    By: Esther Cho

    Home values rose in May month-over-month, marking the third consecutive month of increases, but fell on a yearly basis, according to Zillow’s Real Estate Market Reports.

    Prices moved upwards by 0.5 percent from the month before in April to $148,100, but home values continued their downward fall on a yearly basis, dropping 0.9 percent from May 2011, according to the Zillow’s Home Value Index.

    The upside to the yearly decline is it’s the smallest year-over-year drop since October 2007.

    “It is promising to see consecutive months of national home value increases, especially during a period in which we’d expected more downward pressure due to foreclosures,” said Zillow Chief Economist Dr. Stan Humphries.

    Humphries noted there’s a tug-of-war situation with inventory, where buyers want to buy but sellers can’t or don’t want to sell due to negative equity. This, he said, will make for a more volatile housing recovery than what was anticipated.

    Notably, Zillow’s measure showed home prices spiked in the Phoenix metro, increasing by 9 percent year-over-year and by 1.9 percent month-over-month in May. In the Miami-Fort Lauderdale metro, home values rose 5.2 percent year-over-year and 2.2 percent month-over-month. Denver and Pittsburgh also saw yearly increase at 2.8 percent and 2.4 percent, respectively.

    Chicago, on the other hand, saw its prices plummet by 6.8 percent over a year’s period, with Atlanta following behind closely at 6.3 percent.

    Rent prices also hiked up month-over-month in May by 1.8 percent and year-over-year by 4.6 percent, according to the Zillow Rent Index. The increase was seen across the board with rents up over a one-month period in 77 percent of the 344 markets covered by Zillow.

    Metro areas that saw the largest yearly increase in rent were Philadelphia(13.1 percent), Baltimore (10.4 percent), Pittsburgh (10 percent), Chicago (9.1 percent), and San Francisco (8.8 percent).

    The number of foreclosures took a dive in May, with 6.3 out of every 10,000 homes in the being foreclosed nationwide compared to 7.2 out of every 10,000 in April.


    Fred Yancy, Broker
    Crye-Leike Realtors
    (678) 799-4663

  • Pitfalls of renting apartment sight unseen

    Posted Under: General Area, Rental Basics  |  February 10, 2012 12:25 PM  |  660 views  |  No comments

    Pitfalls of renting apartment sight unseen

    Once lease is signed, resolving unsatisfactory living conditions can be a challenge

    By Robert Griswold

    a href="http://www.shutterstock.com/gallery-58922p1.html" target=blankFor-rent sign/font/div/div/div/div/div via Shutterstock.com.
    For-rent sign
    via Shutterstock.com.

    Q: I recently moved into an apartment complex and signed a lease for 12 months. Unfortunately, I found out very quickly that neither the terms of the lease nor the community rules and regulations were enforced.

    My particular concern is the lack of cleanliness of garbage areas, as well as the ongoing failure of the on-site manager and maintenance person to keep the common areas clean and attractive. Also, there are several tenants who seem to feel it is appropriate to use the common areas as extra storage for personal items.

    If I decide to stay, what are my options to try to encourage management to keep the property clean and neat and enforce the terms of the leases with my fellow tenants? If I decide to leave, will the manager's lack of ability/effort to have other tenants comply with lease and rules be sufficient cause to get me out of the lease?

    A: My first concern is how you have gotten yourself into this situation. The property's curb appeal would be clearly noticeable prior to signing the lease if you had done any sort of reasonable due diligence or inspection of the property.

    Unless you rented the property without visiting it prior to signing your lease, it would be rather unusual for you to not realize the significant and readily apparent problems in the common areas with the storage of personal items and the lack of cleanliness.

    I could see how you might not have checked out the trash disposal areas in detail, but the dirty common areas and the cluttered individual unit porches or balconies would be difficult to miss. As is so true with most customer service businesses that rely on aesthetics, the first impression will tell you a lot.

    But, let's assume that you did sign the lease without seeing the property, as that is happening more often these days with the Internet being so prevalent. Of course, many rental properties look great online because the pictures are carefully selected (and maybe even cropped) to show only the best views or highlights of the property.

    I have heard some tenants even accuse the landlords or their property managers of "touching up" or enhancing the photos; if the grass looks too good it might because it is artificial turf or the photo is digitally manipulated to the point that the grass is too green to be real!

    Remember that a lease is a binding legal contract and there are only a few specific reasons that the lease can be broken. Examples would include the landlord's failure to provide the leased premises in a habitable state or a landlord that fails to allow you as the tenant the right to quiet enjoyment or use of the rented premises.

    However, a word of caution is in order here. It is my experience that the inability or lack of effort by the on-site manager to enforce the rules about storing personal property in common areas would most likely be a long shot to use as a basis for breaking the lease.

    Unless the items create a serious health and safety hazard, it is likely the court will find that it is just poor housekeeping by the property manager.

    The court will most likely agree with you that it is aesthetically unappealing but not sufficient in most cases to be grounds for breaking a lease.

    However, I would suggest that you contact your local code enforcement department and file a complaint and have them inspect the property and cite the owner if there are any unsanitary conditions involving the property, especially the trash collection area. This may be what it takes for the on-site manager to get the message.

    But even before you contact your local municipality to complain about your on-site manager, you should contact the property management company and the actual owner of the property.

    They may not be aware of the conditions if the property has severely declined in the past month or so. You can casually ask some of your fellow tenants if these unsightly conditions are something new or the way the property has always been maintained.

    Another thought is to contact other like-minded tenants who are also frustrated with the deplorable conditions. The manager might not be worried if you try to break your lease, but if there are five to 10 additional tenants who all express the same concerns then you will definitely get the attention of your on-site manager.

    Even a manager who is "leisure-oriented" and does just the bare minimum will soon realize that a slew of vacant units will create a lot more work than just cleaning up the property and enforcing the rules.

    Higher-than-normal turnover of tenants or above-average vacancy would also be a catalyst for the property owner to visit the property and make changes, up to and including, a new manager.

    I think your best strategy is to make your concerns known and see what positive changes can be made over the next several months.

    If there are insufficient improvements, then you should give notice and not renew your lease. Chalk this up to a lesson learned, as you will be certain to carefully scrutinize all aspects of your next place of residence before signing a long-term lease!



    Fred Yancy, Broker
    Crye-Leike Realtors
    (678) 799-4663

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