Cindy's Blog

Well, in the rush to keep up with the next new, best thing, I have (with much effort, I might add) obtained my GREEN designation from the National Association of Realtors. While I have had my Eco Broker Designation for two years, this was not endorsed or created by the NAR. Now the NAR has created their own version of this, and is trying to make it available more widely. My hope is certainly that everyone, every realtor, take this course, and learn more about what they need to know, what we all SHOULD now, about creating more energy efficient homes, selling more energy efficient homes, and making their clients more aware of ways that they can understand the impact that they have, and exactly what it means when we talk about our ecological footprint, and things like that.

So, while I am discouraged a bit that the EcoBroker designation, widely regarded and respected as superior, could not get the NAR's endorsment (because they wanted to create their own program), I am definitely heartened that the NAR has stepped up with their own program which is a good, solid program, not a fluffy, greenwashed course that just allows people to say they're "green realtors".

What is a bit discouraging is the fact that the original classes scheduled for Richmond and Fredericksburg were canceled for lack of attendance. Ouch! If this is something you're interested in, or think that agents should know more about green building, resources, TELL THEM! If we don't all demand the information, no one will think it's important, and they will not get it.

Well, today the Fed announced that they would keep the target for the fed funds rate unchanged, at a range of zero to .25%. You can't really go much lower than that, thus the prime rate stays at the current 3.25 percent. What does this mean for you? Interest rates will most likely remain unchanged for anything pegged to the prime (home equity lines, credit cards).

Of course, there are no more cuts tot the federal funds rate possible, but they do still have some tricks up their sleeves to stimulate borrowing, and they're starting to pull them out. For the last three months, the Fed has said that they would consider buying Treasuries, and now they have made the commitment to do just that, buying up to $300 billion in long term Treasureies over the next six months, with the goal of decreasing interest rates on loans to both business and consumers.

In addition to these moves, the Fed has committed to more than doubling its purchases of mortgage backed securities (this is the really good part!). This should really put a ceiling on the 30 year fixed mortgage rate, and should keep it at or around 5% or so for months as a result.

This could really be a huge boost for those folks that are on the fence about buying, or thinking that this may be a good time to buy. Even if you don't net quite what you want on your current home, you may still be in a terrific position, once you look at what your new payments would be with the lower interest rates, etc.

If you have any further questions, or want the names and info of some terrific lenders, that can really give you all of your options, email me, or give me a call!

With the current market conditions, many folks who don't have to move aren't, and those who do should know by now that you really need to bring your "A Game" to the table to get it sold. Either way, there is definitely more of a trend in getting things fixed up/ renovated/ improved, and absolutely lots more in the way of "green" buzzwords, and just enough information out there to confuse sometimes.

If you're thinking of getting your house ready for the market, or if you're staying put for a while, you may want to take a look at some of the greener options in renovations, both for your own and your family's improved health, energy efficiency, and of course making less negative impact on the environment.

Unfortunately, there is no standard definition for the word "green," and there are plenty of companies that are trying to profit off of the buzzword. That's where the certification programs come in, and even then, their standards vary, sometimes wildly.

Here's the lowdown on some green labels/ certifications you may run across:

LUMBER

Look for wood labeled "FSC certified," meaning it's certified by the Forest Stewardship Council. Unlike other certification systems, it prevents the conversion of natural forest to plantations, prohibits genetically modified trees and takes caution in wooded areas with high conservation value, according to one analysis (see: www.fscus.org/news/index.php?article=506). A campaign by several environmental groups – Sierra Club, Greenpeace, Rainforest Action Network, among others -- discourages consumers from buying wood bearing a competing Sustainable Forestry Initiative label ("SFI"); see their reasons at www.dontbuysfi.com.

APPLIANCES

Look for appliances with the Energy Star label (overseen by the US Department of Energy and US Environmental Protection Agency), AND go a step further and check how much energy your desired fridge, stove or other appliance will use compared to other Energy Star-rated options – there can be a wide range of energy use, even though they meet Energy Star standards. See anticipated energy costs listed on the yellow label attached the appliance. A home fully equipped with Energy Star products will operate on about 30 percent less energy than a house equipped with standard products. Read more at http://www.thedailygreen.com/2007/04/18/energy-star/892/. Find products and rebates at EnergyStar.gov.

SINKS, TOILETS, SHOWERHEADS

There's a new label in town – WaterSense -- and it addresses the need to be water-smart as well as dollar smart. Example: A WaterSense-labeled toilet uses at least 20 percent less water than standard toilets. According to the EPA, the average American home uses more water for flushing the toilet than running the shower. A family of four could save 16,000 gallons of water yearly by replacing a traditional toilet! Get info at www.epa.gov/watersense/index.htm.

NEW HOMES

Whatever you do, don't accept a builder's claim that a building is "green" without asking questions. What exactly does the green claim mean? What environmentally sound features and building techniques were used? Some homes are far more sustainably built than others; at times, builders simply follow standard building codes, add in the Energy Star appliances, then market their homes as green. To help you judge the validity of claims, some builders seek to meet the standards of national or local rating systems.

A quick look at the three national programs:

* LEED. What's evolving into the 800-pound gorilla among rating systems is a high-end program known as LEED (officially, it's the U.S. Green Building Council's Leadership in Energy and Environmental Design program). It sets standards for buildings that achieve a set number of benchmarks, from using locally derived building materials to the insulating ability of the windows. Chances are a new skyscraper near you is LEED-certified. The program is now expanding to offer standards for homes. Among them, homes will be rated not only based on the materials used, but also their location and orientation. If they reap passive solar benefits from their position relative to the sun, or are situated on a village block close to stores, schools and work, they will be rated more highly than those built to otherwise high standards in suburbia. See standards here: www.usgbc.org/leed/homes/.

* The National Association of Home Builders has its own green building program. Obviously they are a bit easier on themselves than an outside organization, but if you're looking at a home or builder that works with this program, get more information at www.nahbgreen.org/.

*The federal government's Energy Star program has already rated over 200,000 homes. These standards rate homes strictly on energy efficiency - a key part, but only one part of the LEED standards. For many people, the energy efficiency - as measured in electricity demand, pollution output and perhaps most importantly, dollars - is the most important facet of the environmental performance of their homes. For those who want to aim for a darker shade of green, watch for the specifics on the LEED and National Association of Home Builders standards. See Energy Star info here: www.energystar.gov/

*Locally, we have Earthcraft Virginia, a program originating in Georgia, and encompassing many facets of efficiency and the LEED standards, but developed primarily for our humid climate. This program, rather than a national one, is really focused on the best energy efficiency needs of this "zone" , and one that more and more builders are starting to use. For more information on Earthcraft, visit their site by www.ecvirginia.org/.

Well, if you read the last post, you should have seen that not only is it a great time to buy, because of the amount of inventory on the market, how much more willing sellers are (most of the time) willing to negotiate, and because the scales have finally switched back to buying as being preferable financially (for most people) to buy rather than rent.

The tax credit is also a great motivating factor for many folks, since it really does come right off of your taxes. If you owe $8000, with the tax credit, you will owe $0. That's right- zero. Of course, this is all vague, general information, and the most important thing you can do if you have questions is call your tax preparer and/ or your loan officer. There are some caveats to the program, where the available funds for the credit scale down to phasing completely out as your income level increases.

Another thing to be aware of, if you find yourself in trouble, as many folks have, and feel in danger of losing your home, missing payments, etc. is the HOMEOWNER AFFORDABILITY AND STABILITY PLAN.

There are two key parts of the plan- the first applies to people whose equity is less than 20% in their home, and the second attempts to lower the mortgage payments of those at risk of possibly losing their homes.

There are some tricky things about both of these, and I am by no means an expert- it's my business to know something about them, and to advise my clients to go speak to their lender. The best thing you can do if you even so much as think that either of these might apply to you, call your lender right away. All of the details have not been released, but there is potential there!

As news of the economy seem to just be getting worse and worse daily, there seem to be precious few who are really unaffected, or somehow impacted by all of the bad news. Having said that, there is actually some good news to be had. No, seriously. Whether you own a home currently, or have thoughts of perhaps buying one soon, there is some good news for you in the stimulus package, the Homeowner Affordability and Stability Plan, and the mortgage markets.

First of all, and perhaps easiest to understand, are the incredibly low mortgage rates. 30 year fixed rate mortgages are still hovering at or just above 5%, with some products even lower than that. These really are tremendously low rates, and very hard to pass up! With the shift in the markets now, including the mortgage rates, the scale has once again tipped back to the point of it being a better financial decision for most people (though by not means all- every situations, of course, is different) to buy rather than rent. This is a situation that is a bit different than what we have been seeing in recent months.

According to the plan, first-time homebuyers who purchase homes from January to November 2009 may be eligible for an $8,000 credit, or 10% of the value of the home tax credit (whichever is lower).

It's important to remember that the $8,000 tax credit is just that... a tax credit. It really is a dollar-for-dollar tax reduction, rather than a reduction in a tax liability.(That might only save you $1,000 to $1,500 when all was said and done)  So, if you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing. Sweet!

Even better, the incentive is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you're liable for $4,000 in income tax, you can offset that $4,000 with half of the tax incentive... and still receive a check for the remaining $4,000!

But Who Qualifies?

The $8,000 incentive starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000 and is phased out completely at incomes of $170,000 for couples and $95,000 for single filers. To break down what this all means, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase-out threshold is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer incentive to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible to reduce the tax liability by $2,800.

Remember, these are general examples. Borrowers should consult a tax advisor to provide guidance relevant to their specific circumstances.

What Type of Home Qualifies?

The tax credit is applicable to any home that will be used as your primary residence. Based on that, qualifying "homes" include single-family detached homes, attached homes such as townhouses and condominiums, and even manufactured homes and houseboats (if used for primary residence.)  Buyers will have to repay the credit if they sell their homes within three years, but overall, this really is a great deal.

Well, I think that's enough heavy info to process for the day. Don't forget to check out my market reports page, and see what things are doing in "your neck of the woods." As always, if you want some more personalized info, or a no obligation consultation, call or email me!!