Monthly Archives: September 2015

Historic Preservation Is A Serious Concern For Virgin Islands Homeowners

Most homeowners in the Virgin Islands feel that living in paradise is worth the occasional dramatic weather and the cleanup that comes with it. However, for owners of some of the area’s historic homes the aftermath comes at a greater cost. Storms like Hurricanes Hugo and Marilyn, can create such extensive damage that homeowners are unable to afford restorations that homes dating as far back as the 18th century require. Many owners are forced to abandon their properties, leaving homes that are in serious disrepair.

Over the years, the islands have seen an increasing number of abandoned, storm battered homes that are now weighted down with years of back taxes. What were once neighborhoods filled with rich history have become blighted areas that affect property values, tourist economy and the quality of life for islanders.

The island’s REALTOR® association took matters into their own hands, advocating for residents by leading the charge to preserve these endangered properties. Belton Jennings, RCE CAE CIPS, executive officer of the 292-member Virgin Islands Territorial Association of REALTORS® (VITAR), Legislative Chair April Newland and VITAR President Kerstin McConnell, led a campaign to get legislation passed that will not only preserve these endangered properties, but rehabilitate them to their highest and best use.

The association was not successful in passing similar legislation back in 2011 but are optimistic about the current campaign now that they are armed with a grant from the National Association of REALTORS® (NAR). “NAR’s support allowed us to put together a very effective, sustained campaign.” said Jennings.

A website and Facebook page were created to raise awareness and recruit residents to form the Community Alliance to Preserve Our Historic Neighborhoods. The NAR grant also funded a study by local architect and urban planner, Dr. Wanda Mills-Bocachica, who, with the help of students from the University of the Virgin Islands, compiled the first-ever in-depth survey of historic structures within the islands’ three National Historic Districts. The survey demonstrated that more than 400 historic buildings were in “fair to poor” condition – the point at which the damage becomes difficult to reverse.

The NAR grant also enabled the association to launch a high-profile advertising and public relations campaign, with REALTORS® Newland and McConnell making the rounds of every radio and TV talk show in the islands. “We made it clear that if we don’t act now, it’s going to affect the local economy and our attractiveness to investors.” said Jennings.

The bill developed by VITAR and the Community Alliance to Preserve Our Historic Neighborhoods must still clear the legislature’s powerful Rules Committee to be put to a vote on the floor of the legislature this fall, but Jennings believes they will succeed. The Governor has indicated that he will sign it into law, and then – the actual work of preservation and rehabilitation begins.

Pending Home Sales Rise Year-Over-Year For 12 Consecutive Months

Pending home sales retreated in August but remained at a healthy level of activity and have now risen year-over-year for 12 consecutive months, according to the National Association of Realtors®. A modest increase in the West was offset by declines in all other regions.

Lawrence Yun, NAR chief economist, says even with the modest decline in contract signings, demand continues to outpace housing supply and elevate price growth in numerous markets. “Pending sales have leveled off since mid–summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” he said. “Even with existing–housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago.”

According to Yun, sales in the coming months should be able to roughly maintain their current pace. However, he warns that there are looming speed bumps that have the potential to impact housing.

“The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being,” adds Yun. “Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales.”

Santa Barbara Housing Shortage Impacting Local Businesses

Recent Santa Barbara REALTORS® research cites new housing shortage concerns

The lack of available housing in the Santa Barbara area is having an impact on local businesses. The Santa Barbara Association of REALTORS, through its involvement in the Coastal Housing Coalition, has helped produced a new study detailing the developing problem.

Based on thousands of interviews with local employees, the study shows that 70% of area employees can’t afford to purchase a suitable home that is less than a 25-minute commute (one-way) to their place of employment. In addition, about a third of employees are priced out of the area’s rental market.

The study warns that the local economy will become increasingly dependent on the talents and skills of employees who cannot afford to own a home in the area. In fact, 44% of employees surveyed indicated that they’ve considered leaving the area entirely to live and work in a region where housing is more affordable.

The National Association of REALTORS® (NAR) recently released new research that makes it clear the issue of home affordability is an ongoing issue for both homeowners and local employers. NAR research demonstrates that cities across California continue to face housing shortages and unhealthy price growth due to low levels of new home construction, slow housing turnover and the diminishing supply of distressed properties.

The California housing shortage that is affecting prospective homeowners and businesses has the potential to impact the overall well being of Santa Barbara as well. The NAR study indicates that when housing shortages create an increase in workers’ commuting time, an increase in traffic congestion, wear-and-tear on infrastructure, and environmental side effects often follow.

Puerto Rico Attracting Homeowners From The Mainland

U.S. mainlanders are increasingly packing up and permanently moving to Puerto Rico. Besides the obvious appeal of the beautiful coastal landscape and gorgeous weather, Puerto Rico’s low income taxes are a big part of the appeal. “Puerto Rico is a U.S. Commonwealth. It is part of the U.S. but in some ways still independent. It’s tax system is a hybrid, part of the U.S. and well, not.” wrote Robert W. Wood in a recent Forbes article. Robert’s article goes on to state that, “income tax in Puerto Rico is only 4%. Compare that to your combined federal and state income tax burden you may pay now!”

The Puerto Rico Association of REALTORS® (PRAR) recently visited Washington, DC to discuss how they could help the island to continue to be a great place to live and work. One of the topics brought to the table was amending IRS section 1031 so that it would include Puerto Rico. Section 1031 allows homeowners in the U.S. and Virgin Islands to defer paying capital gains taxes if they reinvest their earnings in another property. Including Puerto Rico in this code would mean another incentive for homeowners to relocate as well as an economic boon to the area.

California Cities Lead The U.S. In Low Housing Inventory

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Cities like San Diego are experiencing a home shortage.

As local job markets continue to expand, the pool of homebuyers will only increase.

Prospective homeowners and home renters in San Francisco and San Diego continue to find it a challenge to find available properties to purchase. So what’s behind this frustrating home shortage? Slow housing turnover and a diminishing supply of buildable, distressed properties play a significant part. But according to the National Association of Realtors (NAR) it is the the low level of new home construction that is one of the largest factors behind the shortage.

New research from NAR confirms that the volume of new home construction relative to the larger number of newly employed workers is considerably lopsided. This is proving to become a widespread issue, with 146 metropolitan statistical areas (MSAs) throughout the U.S. underperforming in roughly two–thirds of measured metro areas.

“Our research shows that even as the labor market began to strengthen, homebuilding failed to keep up and is now contributing to the stronger price appreciation and eroding affordability currently seen throughout the U.S.” says Lawrence Yun, NAR chief economist.

And as most California natives will tell you, the homes that are available will cost you. “Affordability issues for buying and renting because of low supply are already well–known in many of the country’s largest metro areas, including San Francisco, San Diego and New York.” says Yun.

Looking ahead, Yun says there’s no question the homebuilding industry continues to face many challenges including; rising construction and labor costs, limited credit availability for smaller builders and concerns about the re–emergence of first–time buyers.

However, Yun forecasts that, “As local job markets continue to expand, the pool of homebuyers will only increase.” And indeed, we are beginning to see small, but measurable gains in single–family housing starts. “The demand for buying has drastically improved this year and is propelling home sales to a pace not seen since 2007.” says Yun.

Yun indicates that it is crucial builders to immediately shift their focus from apartment construction to the home market. Otherwise, Yun predicts that severe housing shortages and faster price appreciation will remain a burden for buyers trying to reach the market.

How will housing affordability challenges impact you and your family?

Fast Fact: Growing housing affordability challenges are unraveling the American Dream for millions. Even those who can afford a home won’t be immune to the impacts.

Over the past few years, home values have been rising faster than wages in over two-thirds of U.S. real estate markets.

At this point, over 60 million Americans now live in areas where housing is deemed unaffordable.

Incredibly, over 25 million of us live in areas where home prices are now less affordable than they were at the peak of the real estate bubble.

America’s affordable workforce and entry level housing shortage is getting worse, not better. New home construction slowed significantly over the past few years and remains sluggish. Of those homes that are being built, only about 20% are affordable. And our government is losing an estimated 10,000 affordable rental housing units each year thanks to a $25 billion maintenance and repair deficit.

When average working folks and potential first time home buyers can’t find an affordable home to purchase, the repercussions begin to ripple into their family and broader community:

  • Commute times lengthen leading to latch key kids, fast food dinners, highway congestion and expanded carbon footprints.
  • Housing challenges cause kids to enter and exit schools throughout the year, impacting entire classrooms.
  • Many are forced to pay rising rents, meaning less consumer spending to support the local economy.
  • Employers find hiring qualified local labor increasingly difficult.
  • Saving for a down payment and, later, retirement, becomes increasingly difficult.
  • Housing disparity only widens the already growing economic gap Americans are experienced today.

And it’s not only our country. Affordable workforce and entry level housing is a growing challenge around the world. The World Bank and United Nations now track global housing affordability.

In Western Australia, governments are experimenting with programs sharing home equity-appreciation, grants for first time buyers and government funded down payment savings accounts.

The Chinese government has tried a variety of incentives for developers and home buyers alike.

India is facing an estimated 18 million affordable housing unit deficit.

Here in the U.S., our federal, state and local governments have been using tax credits, reduced rate loans, down payment assistance and a variety of other tools to help bridge this growing housing gap with limited success.

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