October 19th, 2011
According to WSJ.com…
U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.
The good news? Two key measures now suggest it’s an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation’s ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.
Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter “throws money down the drain.” Whether buying is a better deal than renting isn’t a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.
But the math is turning in buyers’ favor. Stock-oriented folks can think of a house’s price/rent ratio as akin to a stock’s price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.
Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody’s Analytics. The average from 1989 to 2003 was about 10, so valuations aren’t quite back to normal.
But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren’t hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or “points.”) The latest rate is still less than half the average since 1971.
Homes are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index’s historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today’s buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.
For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer’s monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.
Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. “If you have good credit, a job and a down payment, you can get a mortgage,” Mr. Humphries says. “There’s more paperwork and scrutiny than five years ago, but things are pretty much like they were in the ’80s and ’90s.”
Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.
For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent “yield.” The median market’s rent yield is 9.3% and Detroit’s is 17.9%.
Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor’s 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.
A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody’s Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. “If the economy slips back into recession, however, we could easily see a 10% drop,” Ms. Chen says.
And property “flipping” can be dangerous even when prices are rising. That is because, absent a real-estate boom, house price gains simply aren’t that exciting. Research by Yale economist Robert Shiller suggests houses more or less track the rate of inflation over long time periods.
Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.
—Jack Hough is a columnist at SmartMoney.com. Email: firstname.lastname@example.org
June 27th, 2011
With oil prices increasing again, a return to pre-recession gasoline costs looks inevitable. My good friend Ryan, an attorney, a person who is not traditionally green says now: “I told you this was going to happen, that’s why I bought a Prius last year.” Additionally, while in a Walgreen’s parking lot in Chicago’s “West Loop” I saw my first parking lot charging station. The electric car chargers at are part of the “Putting the green in Walgreen’s” campaign. It looks like Ryan was right last year and now Corporate America is getting more behind being green.
Ford motor company is leading the way when it comes to new hybrid and electric cars. Ford has developed a home charging system to be released for its new electric Focus and other hybrid vehicles. It looks as though hybrids are here to stay. The wall-mounted charging unit will be powered by a standard 240V outlet. The system is set to retail at about $1500.00 making it 30% cheaper than competing, similar systems. The system will be available through Best Buy with installation by the GeekSquad to make the process seamless and as easy as any other appliance purchase. The unit is also move ready if you want to take it when you move residences.
The charger is built by Leviton with Microsoft programming and has the ability to offer a straight or value charge. The straight charge will charge your vehicle to full capacity in 3 hours about half the time it takes with a Nissan home charger. Additionally, if you are parking overnight or for an extended period, you can set the charger to value charge and tell the car when you need it to be fully charged by. From there, it will charge your vehicle at the cheapest demand rates from your local utility. This will save the homeowner money and also decrease peak loads. The charger also comes with a smart phone app to monitor the status of your charge from anywhere.
To see more about being green at Ford see:
June 20th, 2011
Most people are aware of the fact that installing and using ceiling fans are an efficient and cost effective way of saving money on heating and cooling costs during either the summer or winter. Basically, ceiling fans in the summer keep a room cooler by blowing air across your body increasing the evaporation of water off you thus cooling you down. A ceiling fan can make it seem 7 degrees cooler inside, therefore you can raise the thermostat and be just as cool. In the winter, ceiling fans operate to push warm air that rises down thus keeping the room warmer, longer. With heating and gas prices going up, ceiling fans are looking like a better and better investment.
However, now ceiling fans offer more savings than ever. An Energy Star qualified Ceiling fan and light is 50% more efficient than a conventional ceiling fan according to EneryStar.gov. The Modern Fan Company has just released five new Energy Star qualified ceiling fan models. If you are trying to be green, just looking for new fans, or a way to save more money, Lumens.com currently has 20% off fan models and free shipping on orders including the Modern Fan Company’s new five designs.
For more information take a look at:
June 13th, 2011
A report published by the Portland based Earth Advantage Institute documents home sales prices at a 30% higher sales price than homes that are not green. New green home sales prices are 8% higher than their non-green alternative. Additionally, these homes are selling faster than their non-green counterparts. The research is based upon sales in Multnomah, Clackamas, Columbia, and Washington Counties in Oregon and Clark County in Washington between May 1, 2010 and April 30, 2011. There are differences in the various counties, however, the data supports the notion that new and existing homes with a green certification have higher sale values. The Portland area is seeing about a 18-20% market share of certified new homes with a sizeable price premium. Earth Advantage has been keeping sales statistics and has noticed this trend continuing over the past few years.
Why are green homes outselling their competitors?
Ben Kaufman, owner of GreenWorks Realty in Seattle writes: “The reasons why buyers favor e-certified homes are not rocket science, but people have different motivations, Aside from wanting lower utility bills, some buy as a commitment to reducing climate change with the higher energy efficiency that green homes offer. Others buy because the homes are built with non-toxic materials which makes the indoor air quality cleaner than their traditional counterparts.” In addition to lower utility bills and increased air quality, there is a new wave of builder’s rebates, where a new home buyer can get a percent of the purchase price. Example: http://newhomesamerica.com is a directory of builders that let the home buyer get 1.25 rebate of their new home.
What does this have to do with Chicago you might ask?
Read our previous blog articles to see that Chicago is the greenest city in the country. Data is not currently available for green home sales in the City of Chicago, however, it is likely that green homes are selling for more here as well. The country is changing, green building is the way of the future.
June 6th, 2011
Modular homes are cheaper than your normal construction building within the city of Chicago. A modular home is built in a factory setting, which is never subject to adverse weather conditions, and can generally be built within a month time. The home is then shipped to its destination point, and assembled on site in a relatively short amount of time. The total build-out for a brand new, green modular home can take as little as 6 weeks from the initial factory order, to the final assembly on location. The home in Chicago was assembled in one day! Additionally, a green modular home can save up to 50% on energy costs in comparison to a traditionally built home. The home was designed by Square Root Architecture + Design and assembled by Chicago based company Helios Design + Build.
You think that modular homes aren’t as nice as a general construction home? Well you thought wrong! The new Chicago home looks like a work of art both inside and out, has 4 bedrooms, roof top vegetation, a rainwater collection system, and solar panels. Additionally, it is equipped with money saving and comfort based green elements including Energy Star appliances, WaterSense fixtures, high performance windows, a mini-split HVAC system, high performance windows, FSC-certified wood framing, low-VOC finishes, natural hickory and cork flooring.
For more information and photos visit:
May 10th, 2011
When first thinking about urban farming I laughed. This is a crazy idea!! Why would someone want to do this? Seemed to me like some weird fad or hobby. However, in honor of my grandmother, an avid gardener with a thumb as green as the Incredible Hulk, I decided to look into it for her 88th birthday today. My grandmother always preached about how growing plants and vegetables in a home garden put you in touch with the earth and also provided cheap delicious vegetables for meals. I looked into the topic and learned that my grandmother actually knew best yet again. Along with being possibly one of the most “Green” things that any homeowner or city resident could do, urban agriculture/farming provides tons of money saving possibilities.
Did you know that Chicago has been leading the nation in urban agriculture growth for the past 7 years?? Adding 500,000 square feet of urban agricultural land in 2010 alone (nearly a 30% INCREASE!) Or that in 2001, 10 years ago, Mayor Daley, in order to lead by example installed 20,300 square feet of vegetation on the roof of City Hall.
The government of the City of Chicago supports green roofs to mitigate climate change. Planting on top of buildings provides improved air quality, reduces heating and cooling costs, and extends the life of a roof by 2-3 times. Therefore, the initial expense of a green roof is earned back in energy savings and avoided environmental damage. The “Green” roof on City Hall saves the city an estimated $5,000 a year. Additionally, the City offers $5,000 grants and tax benefits to people installing residential or small commercial green roofs.
Environmentally, green roofs absorb the water that would otherwise run off and strain the sewer system. 3” to 5” of soil or growing medium absorbs 75% of rainstorms that are ½” or less. In addition to the roofs serving like a sponge, bacteria and fungi on the roofs also function to filter contaminants, breaking down and detoxifying pollutants. Green roofs also serve a cooling function that reduces pollution. The overheating of cities due to dense concentrations of asphalt that absorb solar radiation leads to increased energy consumption and deteriorated public health. The more temperatures increase, the more people rely on energy-intensive air conditioning. According to the city’s Department for the Environment, on summer days in Chicago, “temperatures atop the green-roofed City Hall are typically 25 to 80 degrees Fahrenheit cooler than the adjacent county office building, which has a black tar roof.” Therefore, Green roofs can make urban areas more sustainable and viable in the long term.
The city also boasts a number of community urban farming centers, to learn more check out: http://www.growingpower.org/chicago_projects.htm
To learn more on Green Roofs: http://www.urbanhabitatchicago.org/
May 2nd, 2011
With gas prices going through “the roof” and future projections on price decreases looking bleak there isn’t a better way to be green than to conserve on fuel. In terms of fuel consumption, being green means more green in you wallet and less pollution. My grandfather, is a small engine specialist and car enthusiast; he has restored engines in boats and cars dating back to the 1920’s and he has used this old technology frequently. My father also drives over 700 miles a week for work. Throughout my life through my grandfather and father, I have learned the tips and tricks to make your engine/car last longer and how to save money at the pump. Doing simple things to upkeep your car will make it last longer and burn less fuel.
1. Warm up your engine before driving, a cold engine can burn twice as much fuel as a warm engine.
2. Replace your air filter,
3. Regular tune ups and oil changes can increase fuel mileage 4%.
4. Having the proper tire pressure and steering alignment increases fuel mileage 3%.
5. Remove any excess weight from the vehicle. 100 lbs less in the trunk can increase fuel economy by 2%.
6. Avoid packing items on top of your car, a loaded roof rack or carrier creates wind resistance and can decrease fuel economy by 5%
7. Stay within the posted speed limits, fuel mileage decreases greatly above 60 miles per hour.
8. Stop aggressive driving, you can improve your gas mileage up to 5% around town if you avoid “jackrabbit” starts and stops by anticipating traffic conditions and driving gently.
9. Combine errands and use overdrive gears and cruise control when appropriate. They improve the fuel economy of your car when you’re driving on a highway.
10. Purchase products that will help your vehicle use less fuel. For example, motor oil that says “Energy Conserving” on the performance symbol of the American Petroleum Institute contains friction-reducing additives that can improve fuel economy. Additionally, Michelin Energy TM Saver A/S tires are 8% more efficient than any other tire; a special type oftread rubber, keeps the tire cooler — helping your engine improve fuel efficiency and reduce CO2 emissions.
11. Check your owner’s manual recommendations for the most effective octane level for your car. For most cars, the recommended gasoline is regular octane and in most cases, using a higher-octane gas than the manufacturer recommends offers no benefit.
12. Be skeptical of claims for devices that will “boost your mileage by an extra 6 miles per gallon, “improve your fuel economy up to 26 percent,” or the like. The EPA has tested over 100 supposed gas-saving devices — including mixture “enhancers” and fuel line magnets — and found that very few provide any fuel economy benefits. The devices that work provide only marginal improvements. Some “gas-saving” devices may damage a car’s engine or increase exhaust emissions.
For more information and a full list of tested products, check www.epa.gov/otaq/consumer/reports.htm.
To learn more about Michelin Tires: http://www.michelinman.com/tire-selector/name/energy-saver-a-s-tires
April 26th, 2011
Many would argue that being green is a recent, modern left wing conspiracy; something for the “tree huggers” in Hollywood, the Pacific Northwest or the Lower East Side in Manhattan. However, I would argue that being green has been going on for much longer than recent history suggests. Being green means being smart with our money and resources. Using less, reusing and conserving are all ways to save (money). For example one only has to look as far back as the Great Depression generation to see this at work. My grandfather although wealthy in his later years, still had the craziest ways to save money, and at their roots all of these ways were green. He grew up in a time when money was scarce and his family had lost almost everything. I remember him cutting up garbage with scissors before he put it into garbage bags and making the steel carrying bands from Chinese carry out containers into wire to hang paintings. I remember my father complaining to him at our family cottage when I was younger that he had to keep turning on the lights whenever he entered a room at night because my grandfather would walk around turning off all the lights. My grandfather always responded “you pay the bills then, I’ll forward them to you.” My grandmother was the first person I knew to switch to energy efficient CFL light bulbs, and she did it because, as she said “they are cost effective.” It just so happens that often times cost effective is green at the same time. Technology has provided us further advancements in green, cost effective items and the law has also provided impetus for change. Switch Lighting has just introduced new LED light bulbs, they rarely burn out, use little electricity, provide warm incandescent like lighting, and they are completely recyclelable. General Electric has also introduced a new hybrid bulb, a bulb marketed to those who don’t completely want to make the switch from traditional bulbs. The new bulb is a blend of three light bulb technologies; it has the shape of an incandescent, the efficiency of a CFL, and the immediacy of a halogen. The Energy Independence and Security Act (EISA) of 2007, requires 25% more efficient light bulbs starting in January 2012. Philips EcoVantage bulb is leading the charge in making these new bulbs. The Philips EcoVantage light offers 28% energy savings over traditional bulbs, a low price, and incandescent-style light. Soon, whether we like it or not the Edison incandescent light bulb will be a thing of the past.
To learn more:
Switch Lighting LED bulbs: http://www.switchlightbulbs.com/products.php
General Electric: http://www.genewscenter.com/Press-Releases/Three-Bulbs-in-One-GE-s-Hybrid-Halogen-CFL-with-Incandescent-Shape-Arrives-in-April-2f9c.aspx
Philips EcoVantage: http://www.lighting.philips.com/us_en/products/ecovantage/index.php?main=us_en_consumer_lighting&parent=7593748565&id=us_en_products&lang=en
April 21st, 2011
Happy Earth Day, Friday, April 22, 2011! Did you know that food accounts for nearly 15% of our nations trash, it is the third largest component of waste after paper and yard trimmings? That means that if you live in an urban environment and you don’t have a yard, bushes, or trees that food is second largest component of waste and likely a large percentage of your weekly garbage. The City of Chicago or most high-rise apartment buildings provide most of us with a means to recycle paper, plastic, aluminum, and glass but what are we going to do with the rest? Throw it out? No! We have other choices and urban composting is an easy, cost effective alternative. It takes only a little bit of money and time and you will be eliminating waste while at the same time saving money on garbage bags, and fertile soil for your potted plants.
To Learn more check out these links:
April 18th, 2011
At Green Brick Realty we understand being green. At its core, being green means respecting the environment and all of the creatures in it by using energy and resources responsibly and sustainably. It means recycling things that can be useful, reducing waste whenever possible and reusing things. However, that is not all that being green is about, it is also about giving back and creating a better future for the people and creatures living in it. That is why in addition to being a green company, Green Brick Realty has chosen to support our CEO Ro Malik in championing his cause to cure Thalessemia. We are partnering with Cooley’s Anemia Foundation to raise money for this cause.
Please help us by sending donations to: http://www.firstgiving.com/fundraiser/thalassemia/care-walk-2011
To learn more visit: http://www.cooleysanemia.org/