Monthly Archives: October 2019

Clarity About Workforce Housing Could Help with Affordability

Moren Adenubi is not your average REALTOR®, but even still, three years ago she wasn’t exactly sure how to properly define “workforce housing.”

A Certified Commercial Investment Member (CCIM) and a Certified Property Manager (CPM), Adenubi often tries to find commercial property for businesses, especially in the Nashville area where she is based as the managing broker for Crown Realty Experts in suburban Goodlettsville.

So, when she listed a property that Minnesota-based Dominium – one of the largest affordable housing development and management companies in America – was interested in developing for an apartment complex in Nashville to build 261 units of “workforce housing,” Adenubi had to up her game.

Not because she’s not educated in real estate, but because she didn’t realize the many trap doors that exist when trying to develop affordable housing, especially in hot markets like Nashville where home prices are rising faster than wages.

“I was very unaware of the income discrepancy for what it takes someone to rent,” Adenubi said.

The Lack of Affordable Housing

According to WKRN news, in 2011 the average monthly rent for a two-bedroom apartment in Nashville was $825. In 2019, that price has nearly doubled to $1,536 per month.

That means that the average annual rent is $18,432.  According to Adenubi, a newly hired teacher in Nashville metro schools who has a Master’s degree makes an average salary of $45,629 annually and therefore would not qualify to rent a two-bedroom apartment.

“It was shocking,” she said.

And it’s a problem across America, not just Nashville. Many teachers who are starting a job for the first time are looking for a place to live close to the school and many find they can’t afford to live there. As such, they must live much further away and endure lengthy commutes just to get to the job, and often they will leave after just a year or two, making teacher retention such a difficult task for school districts to manage.

But it’s not just teachers. A lot of middle-income folks face the same housing issues. Nurses. Police officers. Fire fighters. They can’t afford to live in communities where they work.

So, it made sense to Adenubi to work with Dominium to acquire her listing and to develop apartments in a city like Nashville where affordable housing has grown scarce.

Neighborhood Opposition

Little did she know the fight she was going to be up against.

Dominium had placed a contract with zoning contingency on her listing – a tract of land for this development – which they called the Preserve at Highland Ridge – located on Dickerson pike about eight miles and a short 15-minute jaunt from downtown.

However, to develop this land, Dominium needed it to be rezoned. As such, a Zoning Board meeting commenced, and Adenubi was floored by what happened next.

“The people came out in droves to oppose this development,” she said. “I was stunned. Why would people be so opposed to building housing for middle-income earners?”

Adenubi quickly realized it was because of a lack of education on what exactly workforce housing is and a misguided belief about what workforce housing would bring to a neighborhood.

“They heard ‘workforce’ housing and they immediately thought it was Section 8 housing,” Adenubi said. “While some people who qualify for a Section 8 subsidy might end up renting apartments there, that’s not what’s going to happen with a majority of the units.”

These apartments would certainly be in line with the demographics of the neighborhood. According to Adenubi, the most affluent area in this part of Nashville is Mulberry Downs, where the top homes sell for approximately $250,000, which is basically the wheelhouse for middle-income homeowners.

But, juxtaposing “workforce housing” with “section 8” is what created a firestorm.

“Putting labels on these things is quite dangerous,” Adenubi said. “It became obvious that the community just needed to be educated better about this if we were ever going to make it happen.”

Bringing The Community Together

So, Adenubi reached out to former Nashville Metro Councilwoman Brenda Haywood because she represented the District that this new complex would be located, hoping to find an affordable housing champion.

Haywood told Adenubi that she completely understood what Adenubi was saying and that it made sense to her as an individual, but Haywood was reluctant to openly support the development, telling Adenubi it was her job to represent the people of her district and if they were opposed to it, then that’s what she had to support.

“I was impressed by that,” Adenubi said. “Too often, politicians have their own agendas. I respected her stance.”

However, Haywood, who left her position to join the staff for newly minted Mayor John Cooper, serving as deputy mayor for community engagement, wasn’t shutting the door completely, and worked with Adenubi to provide her with a list of objections to the development of this complex.

Haywood told her that if she could address the concerns of the constituents, she might be able to sway their opinion.

Educating Local Residents

So, Adenubi went to work. She looked at the list of objections and worked with Dominium to find someone who could speak fluently against each one and had them attend a community meeting with many of the same residents who complained at the community meeting.

“We were well-prepared,” Adenubi said. “I had a whole team of experts who were there to address every concern.”

The biggest concern was the income levels of the would-be residents as well as the possibility to bring more crime into the community, as there is a direct link between an increase in crime and lower income.

Moren AdenubiAdenubi put together a team of experts to address the community’s concerns.

To counter this, Adenubi worked with Dominium to bring in a Dominium resident manager to come in to speak about the application process, letting the residents know that not just anyone would be eligible to rent an apartment there. There is a vetting process that includes income confirmation as well as criminal background checks.

She also defined “workforce housing” for the uninformed public.

She told them that the Urban Land Institute defines workforce housing as “Housing that is affordable to households earning 60 to 120 percent of an area’s median income.” Housing can also be defined as affordable if the housing costs are no more than 30-40 percent of income.

“As a property manager, my company uses the lower 33.3 percent to qualify prospects on rent affordability,” she said. “The US Department of Housing and Urban Development (HUD) states that in 2018, $74,900 is the median income for Nashville, Tennessee.”

“The biggest concern was the income levels of the would-be residents as well as the possibility to bring more crime into the community, as there is a direct link between an increase in crime and lower income.”

Dominion also brought in one of the architects to talk about the layout of the property. Residents were floored to learn that these apartments would have some unexpected luxuries.

The Preserve will feature spacious common areas with high-end finishes. The community consists of one, two, and three-bedroom apartments. The apartment community has breathtaking view of the National Forest Preserve to the northwest, and downtown Nashville to the south.

The apartments will have open and spacious floor plans, nine-foot ceilings, fully equipped kitchens with energy star rated appliances, smart cabinets, granite countertops, balconies and in-home washers and dryers.

Community amenities include a furnished clubhouse with clubroom, kitchen, a yoga studio, a fitness center, an indoor children’s playroom, an outdoor playground, grilling stations and a pool. With a combination of outdoor and indoor amenities.

“Preserve at Highland Ridge is Dominium’s first new construction development project in the state of Tennessee, and the company’s first project in the Nashville metro,” said Dominium Managing Partner and Senior Vice President Mark Moorhouse. “Once complete, the project will help address the growing shortage of affordable housing in Nashville.”

A representative of the Metro Water Department was also brought in to ensure existing residents that the addition of 261 apartments would not have an adverse effect on their water intake or water pressure.

“It was pretty amazing, their opinions changed immediately on the same spot – that same day,” Adenubi said. “The key was our preparation. We needed to legitimize the project with information, present the right people to provide the facts and address those issues.”

The Outcome

Eventually, the zoning was approved. Finally, three years later, after cutting through more red tape to get the financing necessary to secure this development, Dominium broke ground on the Preserve last May.

The expectation is that the apartments will be available to move-in by October 2020.

“I think we just need better education as to what workforce housing is,” Adenubi said. “It doesn’t matter what we call it, it’s still going to get a stigma without understanding. Rather than worry about the name, we need to make sure people understand that workforce housing is quite simply affordable housing for working people just like you and me.”

For her part, Adenubi is now championing this as a pet project of sorts in Nashville. She is working with Dominium to find the next location for affordable housing in Nashville, but she has also taken it a step further.

She went to the Apartment Buildings Complex and Expo in Pasadena, Calif. In September where she was networking with other builders and developers who might be interested in investing in affordable housing in Nashville.

“I started learning more about Opportunity Zones, Qualified Census Tracts and Difficult Development Areas, Low Income Housing Tax Credit Financing and other programs to attract developers to come to Nashville,” she said. “Nashville is one of the top 10 cities with increasing rents so, we’re not the only ones facing this affordability crisis.”

Low Inventory Creates Sellers Market in Kansas

In September the impacts of low inventory continued. The average days on the market were down from 2018. Home sales and sale prices were up compared to September 2018.

The housing supply was at 3.1 months, down from 3.3 in 2018. The months’ supply of homes is calculated by dividing the total number of active listings by the number of sales.

Given the state of the market, now is an opportune time to sell. Low inventories are driving costs up and days on the market down.

Housing Stats

For more information, see “Kansas Housing Market Stats – September 2019” from the Kansas REALTORS®.

How Should You Approach Buying a Home For The First Time?

Becoming a first-time homebuyer is an exciting time in anyone’s life. But sometimes it’s hard to tell where the excitement begins and the anxiety ends.

That’s because while the good energy pumping through one’s veins is directly attributed to making the investment of owning a home, racing right alongside it at breakneck speed is the uncertainty and stress that comes from the process.

And the mixture of all the feelings and emotions that are stirred when buying a home for the first-time is especially intoxicating for Millennials and younger first-time homebuyers.

Soaring prices, dwindling availability, and the burden of things such as exorbitant student loan debt or wages that aren’t commensurate with the prices of homes in hot markets combined with unexpected costs and fees make the homebuying experience much more daunting.

According to the National Association of REALTORS® one-third of all homebuyers in 2018 were first-time homebuyers and the median age of those first-time folks was 32.

But there are a lot of different routes for first-time homebuyers to enter the housing market – and many of those roads are designed to help them traverse the sometimes craggily path toward homeownership.

For example, according to Freddie Mac, one-fourth of all first-time homebuyers used a gift or a loan from family members to buy their first home while an additional 10 percent received federal financial assistance.

Recently, the Providence Journal talked to several people who bought homes for the first time and identified how they approached buying a home for the first time and outlined them as a sort of menu for other first-time homebuyers to consider.

Here is a recap of each of the stories they presented:

The Married Couple (Herndon, Va.)

Who: Goncalo and Nancy Fernandes

Age: Goncalo (32), Nancy (33)

Career: Goncalo works in the auto industry while Nancy works in Medical Billing in nearby Ashburn, Va.

Budget: $400,000

The Story: The Fernandes’ were saving up to buy a home and weren’t quite ready to buy, but they started to panic when they saw prices climbing and mortgage rates rising in the Fall of 2018. Within a month, they made an offer on a townhouse in Leesburg, Va. Originally, planning to save enough for a larger down payment, they were at 12 percent at the time of the purchase. However, they were nervous about putting all that money down and wanted to save some of the cash, so they only put 5 percent down with a conventional loan geared toward first-time homebuyers. They are paying a private mortgage insurance (PMI), but that is customary for most loans with a down payment of less than 20 percent. They used the extra cash to do work on the house, since it was a bit of a fixer upper. As such, they negotiated with the seller to pay for needed repairs (a new water heater, resealing windows and a patch on the roof) and they used that money as a credit toward closing costs to save the extra cash for further home renovations. Since they were able to put less down and negotiate for work to be done to the property before the sale, they can get the updated property appraised soon and could possibly get rid of the PMI.

The Family of Four with an Unemployed Parent (Paradise, Md.)

Who: Sayed Shah, Rija Tofeeq and their two young children.

Age: Sayed (33), Rija (27)

Career: Sayed (unemployed student), Rija (nurse)

Budget: $400,000

The Story: Rija Tofeeq wasn’t sure if she and her husband Sayed Shah should buy a home or pay off her student loan debt. They were living with Tofeeq’s parents and she had $67,000 in debt and $50,000 in savings. That’s when Rija had heard about the Maryland SmartBuy Program which would allow her to pay off her student loan with a zero-interest second loan if they used the Maryland Mortgage Program to purchase a home. Shah held off on taking a new job to meet requirements. Tofeeq took out the loan in her name. She paid off $27,000 of her student loans and used another $20,000 as a 5 percent down payment on a single-family home in Paradise. The lender paid off the remaining $40,000 of Tofeeq’s loans and she took out a second loan on the house with the lender to repay that balance. The big deal for Tofeeq here is that as long as she stays in the home and pays off the loan at zero interest for five years, the rest of the loan will be forgiven.

A Single Mom and her Three Children (Washington, D.C.)

Who: Yaqueline “Jackie” Uribe Perez Clauss, three children aged 22, 17 and 6.

Career: High School Teacher

Budget: Low-income

The Story: Clauss moved to Washington D.C. with her three children in 2016. Unable to afford to buy a home, she rented a basement apartment, but always had her eye on the prize of owning her own home. Wanting to live close to where she worked in Northwest Washington, affordability was a real issue. That’s when she utilized two home buyer programs to help her get into her own house in the Fort Lincoln Park neighborhood of Northeast Washington. First, she entered the District’s Inclusionary Zoning Program which creates a lottery to offer loans to a qualified applicant to buy an affordable home. The program has many steps, including income restrictions and a requirement to take classes on homebuyer education. While she waited to see if she would hit the lottery, Clauss also qualified for a $30,000 loan to help with a down payment though D.C.’s Home Purchase Assistance Program. That coupled with $2,000 she had saved on her own was the lynchpin for her to secure her own home once she won the inclusionary zoning lottery.

The Single Woman (Fredricksburg, Va.)

Who: Maria Lynard

Age: 29

Career: Remodeling Company Employee

Budget: $200,000

The Story: Maria Lynard knew that the only way she alone could save money to buy a home was to live with her parents long enough to save the money needed for a down payment. So, she did, and when she was ready to buy a home, she spoke to a real estate agent who clued her in to homebuyer assistance programs in Virginia that are designed to help first-time homebuyers. Based on her status as a first-time homebuyer combined with her income, Lynard qualified for a Virginia Housing Development Authority grant of $4,000 to help cover her closing costs. This grant doesn’t need to be repaid because she took an online homebuyer class. Because of that assistance, she was able to put eight percent down on a $200,000 home that was move-in ready.

The Inheritance (Washington, D.C.)

Who: Walker Timme

Age: 35

Career: Charter School Teacher

The Story: Walker Timme rented a studio apartment for 11 years. Then, when her mother died, she inherited money that allowed her to pay cash for her first home. However, Walker had important requirements before she bought. First, she wanted a condominium. Secondly, it needed two bedrooms and two bathrooms, so her Dad would have a place to stay comfortably when he would visit. The place also needed to allow for pets (specifically her dog) and be close to a D.C. Metro station. Finally, she wanted front desk security. Importantly, Timme not only worked with a real estate agent, but also a lender to help her find the right place. It worked out. Her monthly expenses which consist of condo fees, taxes and insurance total fewer dollars than what she paid in rent at the studio each month for more than a decade.

Veterans Are Finding a Second Career in House Flipping

Veterans are discovering that real estate investing, or “house flipping” is a career path that is well matched with the skill sets they learned in the military. The article, 5 Reasons Veterans Make Great House Flippers, explains “Flipping a house can be a very stressful experience for the average person, but for our men and women in uniform, it’s a perfect fit of skill and temperament.”

Andy and Ashley Williams are veterans, home flippers and hosts of the show Flip or Flop Fort Worth on HGTV. After being discharged, both struggled to find a career that felt like a good fit. In the article, How Flipping Houses Helps Veterans Transition to Civilian Life Ashley recalls, “I got a new job and immediately my job said, ‘You’re great, you do your job awesome, but you’re too intense,’ She said I didn’t fit the culture because I was too direct.”

But the directness Ashley learned in the military was a trait that served her well when she and her husband began flipping houses. “Being direct has been a very effective tool because everyone knows exactly what is expected of one another,” Ashley says. “Since construction work has many areas of expertise, it is important to be able to describe exactly what you’re looking for to not confuse the contractor while and clearly defining your vision.”

For veterans interested in pursuing a career in house flipping, the following three tips can help you get started.

1. Find A Mentor

Andy of Flip or Flop Fort Worth shares that he often works with fellow vets who reach out for advice. “Oftentimes a veteran would call me, and I would mentor [them] then invite them to see what I do and how,” Andy says. “Other times I would go to an organization and select a veteran that I would see needing a mission, then empower them. The intent is that if I were to teach one, they would teach one to teach one.”

While Andy might be hard to reach, his philosophy of veterans helping veterans is not unique. The website Meetup.com is a good place to find local meetings where you can share ideas with like-minded military investors. The Meetup category VA Loan Groups lists gatherings across the United States, like The Military Real Estate Investing Network in OH and NYC/NJ Veterans in Real Estate Investing.

2. Learn About VA Financing

Investing in real estate using VA loans can be complicated, but it’s worth learning what you can and can’t do. The benefits VA loans offer, like no down payments and low interest rates, can translate into big earnings for veteran house flippers.

VA loans do come with requirements that make the real estate investment process quite different from civilian investing. To give you an idea, here are a couple of their requirements, as well as ways veteran house flippers can work within them.

Requirement: VA loans must be used to acquire your primary residence.

As a veteran you can use a VA loan to acquire a property that you intend to flip – if you use it as your primary residence during the renovations. That property can then be either flipped for profit or kept as a rental property.

There is currently no limit to how many times you can use the entitlement provided by your VA loan to purchase properties. VA loans can also be used to purchase multi-family units that you can rent for profit – provided you will be living in one of the units.

Requirement: VA loans are only given for property in good repair.

As an investor shopping with a VA loan, you won’t be able to buy a dilapidated property to overhaul. But you can buy properties whose value can be significantly improved with renovations that update the appearance of the home. Things like a new kitchen and new siding can go a long way in providing a return on your investment.

There is also something called an FHA 203K Rehab Loan that VA Home Loan Centers can help you acquire. Their website explains that an FHA 203K loan is government insured and allows deep renovations. It can be used to renovate foreclosures, unfinished construction, condemned buildings, abandoned properties and property flips.

The requirements for VA loans are frequently changing, so it’s important to be aware of the latest developments if you plan to use them for house flipping. Which brings us to our third and final tip.

3. Work with a REALTOR® that holds an MRP certification.

An MRP, or Military Relocation Professional certification, is given to real estate professionals that have completed training on how to work with veterans. This training includes a thorough understanding of the VA loan process, and all its current regulations.

REALTORS® with an MRP designation are going to be able to steer you towards investment homes that fulfill VA requirements. They’re also trained on how to negotiate with sellers who might be reluctant to work with a buyer using a VA loan.

House flipping is just one of many careers that discharged veterans are suited for. But the flexibility and the opportunity to build an independent business it provides, make it an especially good match for many.

The 3 Questions Veterans and Active Service Persons Should Be Asking Their REALTOR®

Working with a REALTOR® that’s a good match for you as a veteran or an active service member is key. Buying a home is no small feat, and it’s important that there is an advocate on your side who understands the unique needs of military home buyers and the ins-and-outs of the VA funding and appraisal process.

So how do you find out if your REALTOR® is armed with the knowledge you want behind you during the homebuying process? Below, are three questions you can ask during your search to help you find out.

Are You Certified to Work with Veterans and/or Active Service Members?

If you are only going to ask your REALTOR® one question, it should be “Are you certified to work with me?” A REALTOR® that can answer yes to that question is one that has spent time learning how to best serve you and your family.

There are a number of certification programs created to educate REALTORS® on how to work effectively with military home buyers, but the Military Relocation Professional certification (MRP) that’s taught by The National Association of REALTORS® (NAR) is one of the most well-known.

If your REALTOR® has completed MRP training they’ll be coming to you with a thorough understanding of the VA loan process. The Military Times article, Do your homework on military-friendly real estate agents, explains that in the MRP certification course “Attendees are walked through the with an eye toward helping their customers, but also toward educating fellow agents who may steer clients away from VA-related deals based on outdated information or speculation.”

MRP certified REALTORS® have been shown how to deftly handle the needs of active duty service members, like last-minute home relocations. Additionally, they are well prepared to provide resources and find homes for veterans that might need accommodations due to physical injuries or PTSD.

Before NAR grants an MRP designation to a REALTOR®, they must demonstrate that they are proficient and fully prepared to help you by scoring 80% or higher on the final exam. To make it easier for military home buyers NAR provides a searchable directory of REALTORS® that have completed their MRP certification.

Do You Know the Latest VA Home Loan and Appraisal Requirements?

Asking the first question about certification ensures that your REALTOR® has received solid, initial instruction around VA home loans. However, because there are always ongoing changes being made to the VA home loan and appraisal process – you’ll want to work with a REALTOR® that is making it their priority to stay current.

For example, the website Military.com explains that a new law called the Blue Water Navy Vietnam Veterans Act of 2019 is expanding VA disability benefits for veterans who were exposed to the herbicide Agent Orange. However, because of the way the law is structured it will actually benefit all future VA loan applicants.

At the time this article was written, there is a VA loan limit of $484,350 when no down payment is being made. (This figure is set by the FHA and varies yearly and may be higher in Alaska and Hawaii.) But once the Blue Water Law is put into place that limit will be lifted entirely.

“Starting Jan.1, 2020, when the new law takes effect, the VA will not cap the size of a loan a veteran can get with no money down, paving the way for veterans to buy higher-value homes.” A REALTOR® who is aware of changes like this one will be able to present you with a bigger range of homes.

Areas with low housing inventories can pose a big challenge for veterans and service families trying to purchase homes with VA loans. Kelly Hendrickson, a real estate broker and President of the Veterans Association of Real Estate Professionals (VAREP), gives an example, “Because the Seattle-Tacoma area is a sellers’ market, many home listings have requirements like ‘conventional loans and cash offers only’, making finding a home feel like an impossible task for military families and veterans working with a VA loan.”

Kelly explains that “One of the reasons sellers prefer cash offers and conventional loans over VA loans is because of how long it has been taking VA approved appraisers to come out.” To combat this, the Seattle-Tacoma VAREP office has been conducting Lunch and Learn sessions that bring real estate professionals up-to-date on the latest VA loan updates.

“One of the exciting changes we are able to convey is that VA appraisers were given a pay increase that puts them on par with what conventional appraisers make. A more desirable income has increased the number of available VA appraisers and incentivized the existing ones, speeding up the appraisal process.” REALTORS® armed with this knowledge are now better equipped to fight objections to VA loans.

Are You A Good Communicator?

There are several reasons that you should consider putting this question forward. The most obvious is that you want to work with someone that understands the importance of being available to you.

Veterans that have been displaced or disabled may need their REALTOR® to be available to multiple support sources. For newly discharged veterans, there may be potential career opportunities they want to discuss with their REALTOR®. Quite a few recently discharged veterans are finding that house flipping is a career path that aligns with the skill sets they learned in the military.

The article, 5 Reasons Veterans Make Great House Flippers, states “Flipping a house can be a very stressful experience for the average person, but for our men and women in uniform, it’s a perfect fit of skill and temperament.” Veterans choosing this path need a REALTOR® who will be responsive about quickly sharing new property listings.

Active service persons value communication because of the uncertainty of their timelines. The article, 9 Things a Military Family Wants Their Realtor to Know, sums up the situation well, “We have no control over anything with a military PCS. No control over dates, or the timeline, or how long we’re going to be there. None whatsoever.” Military families need to be able to get in touch with their REALTOR® and launch the home buying or selling process at a moment’s notice.

Military home buyers also shared that they value honest, straightforward communication because they may need to buy a home without ever having set foot in it. “We need the truth, up front, all of it.”

New Legislation Means Lower Insurance Premiums For Florida Homeowners

Homeowners in Florida have been paying higher home insurance premiums than anyone else in the United States. The National Association of Insurance Commissioners reports that an average, annual home insurance premium for a Florida resident is $1,918. And that rate has been increasing rapidly, having climbed 25% or $384 since 2007.

The obvious culprit behind the increases are national disasters like Hurricane Irma and Hurricane Michael. However, the unscrupulous actions of a group of contractors doing the repair work have played a large part in the rising costs.

Homeowners trying to recover from natural disasters or weather damage are usually asked by their contractors to sign something called an Assignment of Benefits or AOB. Contractors have explained to homeowners that by signing an AOB they would be able to complete repairs faster – because it gave them permission to work directly with the homeowner’s insurance company.

“Homeowners may finally be seeing premiums start to drop since an AOB reform bill was passed in July of 2019.”

Ideally, an AOB would benefit homeowners who are already overwhelmed by the to-do list they’re managing as a result of home damage. However, there were quite a few contractors in Florida who took advantage of AOBs to inflate repair costs and overbill insurance companies — oftentimes, bringing insurers who refuted questionable charges to court. All of which, ultimately left homeowners with much higher insurance premiums.

Insurance Business Magazine spoke with James Lynch, Chief Actuary and Vice President of Research and Education at The Insurance Information Institute (III), about the issue. “Most typical homeowners’ insurance companies will cover water damage claims. If the piping in your home suddenly springs a leak, you, as an insured, have an obligation to get that leak fixed as quickly as possible. You call up a contractor who asks you to sign an AOB. Some contractors might then be abusing that AOB by doing a poor job or an overly expensive job and then billing the insurance company an excessive amount.”

Homeowners may finally be seeing those premiums start to drop since an AOB reform bill was passed in July of 2019. The bill was backed by many concerned parties, including Florida REALTORS®, who wanted to give relief to homeowners who were becoming overwhelmed by the constant premium increases.

The passing of this bill was necessary, as the abuse of AOB’s reached critical levels in Florida. The Insurance Information Institute shared that AOB misconduct in Florida has risen 70% in the past 15 years. The number of lawsuits involving AOBs went from 1,300 in 2000 to 79,000 in 2018. The cost of these lawsuits ultimately being passed on to homeowners in the form of inflated insurance premiums.

Tom Butler, Public Policy Communications Director for the state’s REALTORS® shared why Florida REALTORS® backed the bill in a Florida Record interview. “AOBs are an important policyholder resource that allows them to streamline the claims process and make needed repairs to their homes quickly,” he said. “Unfortunately, in the past 15 years or so, some contractors and attorneys have found a way to abuse the AOB process by overcharging for repairs and suing when insurance carriers refuse to pay. With the rise in AOB abuse comes higher premiums, as insurers seek to recoup their losses.”

The new reform bill gives homeowners greater flexibility when purchasing home insurance. They now have the option of selecting a less expensive policy that doesn’t allow AOBs. The bill also lessens the severity of the cost insurance companies take on when contractors sue them over disputed charges. All of which, will ultimately translate to lower premiums for overburdened Florida homeowners.

Your Pet Can Increase Your Home’s Value

Imagine your dream home for a moment. Does it have a fireplace, eco-friendly bamboo flooring or maybe a spa-like master bathroom? What about a catio? A custom-built space for your felines to frolic and lounge. Sounds a bit silly, but pet customizations are becoming a standard wish-list item for many prospective homeowners.

The Houzz.com article, How to Design Your House Around Your Pets, mentions that in an American Institute of Architects Home Design Trends Survey, “architecture firms reported that client interest in built-in rooms or kennels devoted to pets spiked in the past year, with 30% of respondents reporting interest in comparison to 20% last year.” The stereotype of a doghouse in the backyard no longer holds true as Americans want their pet’s needs and comfort to be integrated into their home’s interiors.

Much of the demand has to do with the fact that the newest wave of homeowners own more pets than their predecessors. The CNBC article Millennials put pets first when buying a home reports the following statistics;

  • A full 73% of millennials currently own a pet, according to the American Pet Products Association.
  • A whopping 89% of millennials who bought a home so far this year own a pet, according to Realtor.com.

However, the trend isn’t just about the quantity of pets that come with millennial homeowners. The article also shared that of the demographic mentioned above, “79% of pet-owning homebuyers who closed on a property this year said they would pass up an otherwise perfect home if it didn’t meet the needs of their pets, according to a Realtor.com survey.”

The success of pet-centric businesses like Chewy.com, an online pet retailer with a $14 billion IPO, is a great indicator that investing in home upgrades that would appeal to future buyers with pets may be advantageous.

Despite some market fluctuations after the initial IPO, Nomura analysts are still advising tech investors to look to Chewy.com because “the demand for pet products has shown to be resilient during recessions.” In fact, the pet industry generally has a reputation for standing strong during market slumps. Perhaps another reason, adding a catio or integrating a pup bed into your kitchen island might be a savvy move for homeowners who want to add value to their home.

The Technology That’s Making Buying and Selling Your Home Easier

It doesn’t come as a surprise to most that technology has become a standard part of the home buying and selling process. It would be hard to imagine a house hunt that didn’t involve combing through online listings that contained virtual tours, or at least photographic slideshows.

But did you know that according to a Redfin survey 35% of homebuyers in 2017 purchased their house without even setting foot in it beforehand? That number jumped up to 45% when they looked exclusively at millennials, the most recent generation of homeowners.

“5% of homebuyers in 2017 purchased their house without even setting foot in it beforehand.”

In the Realtor.com article, I Bought My House ‘Sight Unseen,’ and Here’s What Happened, buyer Audrey Ference writes about her experience, “This is it,” I said, and turned the key in the lock, praying we hadn’t made a very expensive mistake. The door opened. We walked inside to find … exactly what we’d expected. Our new home was cavernous compared with our Brooklyn apartment. In fact, everything looked even better than in the few photos and video footage we’d seen.”

The advances in real estate technology are a big reason why homebuyers like Audrey are getting more comfortable making one of the largest and most expensive decisions of their lives from their laptops. REALTORS® are now able to do things like using drones to take aerial photographs – giving prospective homeowners a virtual birdseye view of potential properties and neighborhoods.

Below, are three innovations that are making virtual home shopping a reality for buyers and the process of putting a home on the market easier for sellers.

AI, Artificial Intelligence

While you won’t have to give your real estate agent a Turing test anytime soon, AI actually has been used in real estate for a while now. Some of the websites you may have visited in your home research, or let’s be honest, just for fun, like Redfin and Trulia have automated their property recommendations using AI.

According to readwrite’s article, Where Will AI Take the Real Estate Market in 10 Years? Redfin’s matchmaking AI knows what you want more than you do since users “click on the matchmaker’s suggestions more often than on properties that fit their own search criteria.”

The company Zenplace is working to make it even easier to buy your home sight unseen. “The startup developed a bot that comes with a tablet attached to a pole on wheels. It streams a live feed of a real estate agent who conducts the tour and steers the robot.”

VR, Virtual Reality

Up until recently, an online real estate listing would typically have either a photographic slide show or a 360 degree virtual tour. If you aren’t familiar with what a 360 degree tour would look like, imagine standing in the center of the room and turning in a circle to get the full scope.

Listings that use VR allow you to leave the center of the room and actually “walk” around rooms, providing a more immersive experience. Opendoor’s article, 5 technology trends that make buying and selling a home easier states that VR tours “can feel almost as real as being physically present in the space. Users can virtually look up and down, zoom in and out, spin around, climb stairs or walk from one room to the next.”

The article mentions that the San Francisco based Matterport is one of the leaders in the VR real estate field. If you own a pair of VR glasses, or want to DIY a cardboard pair for yourself, you can take a tour on Matterport’s website of a luxury home in southern California or a loft in Chicago’s west loop.

AR, Augmented Reality

Trying to sell an unfurnished home can be tricky as you are completely dependent upon the potential buyer’s imagination. Some prospects will be able to mentally fill the space up with their furniture, while others are more likely to buy if the house is staged with furniture and accessories.

But staging does not come cheap. According to Realtor.com homeowners can expect to spend $300 to $600 just to meet with a professional home stager – and then an additional $500 to $600 per room for staging. The budget for staging a room using AR is much less expensive, averaging $40 to $50 per photograph.

There are quite a few virtual staging companies out there, some will only work with your REALTOR® and others like Virtual Staging Solutions will work directly with homeowners. The type of services that companies like Virtual Staging Solutions provide can also be useful for buyers who want to visualize what a house for sale would look like with renovations before deciding to extend an offer. They can virtually knock down a wall or switch out the kitchen cabinets to glimpse at future possibilities.

There is no “right way” to buy or sell a home. If you’re not comfortable using technology in your home search or sale, your REALTOR® will work with you in whichever manner you prefer. But if you’re too busy to physically view every home you’re considering, or need to decorate an empty house without a furniture budget, the options to do so virtually are there for you.

The McMansions Are Empty

An article written about the McMansion housing style used the phrase, “crown-moldings-of-death.” While this word choice is a bit dramatic, it does reflect a very real trend – the death of the suburban architecture style known as the McMansion.

If you’re not familiar with the term “McMansion”, Business Insider defines a McMansion as “a cookie-cutter suburban home of between 3,000 and 5,000 square feet, the McMansion was considered the ultimate sign of affluence in the late 1980s, 1990s, and early 2000s, before the crash of the housing market in 2008.”

McMansions have been around since the 1980’s but it was in the 2000’s, when banks were readily handing out low interest home loans that they really saw an uptick. Couples who coveted the McCallister family property when they took their small children to see the movie Home Alone – suddenly had access to those same sprawling closets and granite countertops. Retirees who envisioned a full house of visiting grandchildren moved into multiple bedroom homes instead of downsizing.

Unfortunately, the difficulty in maintaining a large home and the housing crash translated into an inordinately large number of McMansions being put onto the market. The Sunbelt states, a favorite of retirees, currently has the largest number of empty homes.

The Wall Street Journal writes, “The area around Scottsdale, Ariz., also popular with wealthy retirees, had 349 homes on the market at or above $3 million as of February 1—an all-time high, according to a Walt Danley Realty report. Homes built before 2012 are selling at steep discounts—sometimes almost 50%, and many owners end up selling for less than they paid to build their homes, said Walt Danley’s Dub Dellis”.

While lower energy costs are encouraging the new generation of home buyers to look at the suburbs where these McMansions are located, the price is still too high. Business Insider stated that “Millennials buying their first home today are likely to pay 39% more than baby boomers who bought their first home in the 1980s.” Millennials also hold more student debt than the baby boom generation did, and contend with a stricter lending environment. All of which means that there will be an echo in many McMansions for a long time.