Home ownership means regular maintenance and repair chores, but some are more important than others. Here are 5 that should top your priority list:
1. Make sure your appliances aren’t being recalled.
Why it matters: The non-profit Consumer Reports magazine wrote an eye-popping piece about how often home appliances catch fire: more than 150,000 residential fires each year from 2006-2008, resulting in 3,670 injuries, 150 deaths, and $547 million in property damage. About half the fires appear to have been caused by faulty appliances. Some had been recalled for defects that could cause an appliance fire, but the home owners weren’t aware.
What you need to do: Write down the model and serial number of each appliance, then check at www.recalls.gov for recalls and what action to take if something you own is involved. Keep your list so it’s easy to recheck; it sometimes takes years for problems to become evident. Keep tabs at HouseLogic for notices about recalls.
Maintenance cost: Free
Worst case if you put it off: You don’t learn that your dishwasher or clothes dryer has a safety defect, and the machine catches fire and burns your house down.
2. Check for leaks and fix them.
Why it matters: Water does more damage to houses than anything else, since persistent leaks lead to mold and mildew, rot, and even termites and carpenter ants (they like chewing soggy wood since it’s soft). Yet if you fix a leak soon after it starts, there may be no long-term damage at all.
What you need to do: Inside, keep your eyes open for dark spots under pipes inside sink cabinets, stains on ceilings, toilets that rock, and of course drips. At least once a year, inspect the roof. If you find leaks, fix them immediately. Otherwise, call in a plumber.
Maintenance cost: Negligible for a simple fix, such as a new washer. A visit from a plumber might set you back $250; a roof repair, a few hundred dollars to $1,000.
Worst case if you put it off: Drips ruin the cabinet under the kitchen sink, and run down into the floor sheathing and joists underneath, so you need a structural repair, plus new cabinets and new kitchen flooring. Or the roof rots, so you need a new roof and repairs to rooms directly beneath.
3. Test your sump pump and backup pump (or install a backup pump if you don’t have one).
Why it matters: The middle of a storm isn’t the time to discover your basement sump pump is clogged, nor is it the time to begin planning for a backup pump. You need them ready before the water arrives.
What you need to do: Fill the sump pump pit with water and make sure the pump switches on and sends water out the discharge line. If you have a backup pump, repeat the test, but unplug the main pump first. If the backup pump runs on batteries that are more than two years old, replace your sump pump. If you don’t have a backup pump and are on municipal water, get one that runs on water pressure. If you’re on well water, your only option is the battery kind.
Maintenance cost: Testing is free; a water-powered backup sump pump, including installation, costs $150-$350; a new battery for a battery-operated sump starts around $200.
Worst case if you put it off: The pump or pumps don’t work when you need them and your basement floods, ruining everything in it and forcing you to tear out drywall and carpeting.
4. Renew the finish on your hardwood floors.
Why it matters: Every wood floor needs to be refinished periodically, but the trick is to get to the job before the old finish wears through. Then you can apply a fresh coat without having to sand into the wood. Since sanding wears away some of the wood, being able to skip that step can extend the life of your floor by decades.
What you need to do: If your floor is dull but OK otherwise, repair scratches and apply a hardwood floor refinisher ($6-$18 per quart). If the old finish is really scratched up, call in a pro to buff it and apply a fresh finish.
Maintenance cost: If you just need the refresher coat and apply it yourself, you can do 500 square feet for around $25. If you hire a pro, figure on $1 per square foot.
Worst case if you put it off: The finish wears through. If your floor is thick enough to sand, expect to spend $2.50 per square foot for a new finish. If the floor can’t be sanded, you’ll need a whole new floor — $8-$20 per square foot, if you stick with wood.
5. Protect your foundation.
Why it matters: If anything goes wrong with your foundation walls — serious cracks, uneven settling — you could be in for one of the most expensive home repair jobs possible.
What you need to do: Every year, check to make sure the soil around your house slopes away from your foundation walls at least 6 inches over 10 feet (rain gutter downspouts should extend at least 5 feet away from your house).
That slope keeps water from getting down right next to your foundation, where it could cause basement walls to lean, crack the masonry, and cause leaks. (For houses with crawl spaces, keeping water away makes sure excess water doesn’t pool underneath your floor, making for damp conditions that encourage mold, rot, and insects.)
Maintenance cost: Topsoil is $10-$20 per cubic yard, plus delivery. You’ll pay $50-$100 per cubic yard if you buy by the bag.
Worst case if you put it off: Hydrostatic pressure causes your foundation to settle, cracking your basement walls. A full excavation is necessary to stabilize, repair, and seal the foundation walls — a $15,000 to $40,000 job.
Jeanne Huber is the author of 10 books about home improvement. She writes a weekly column about home care for the Washington Post.
“Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.”
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2014 looks to be the year of the repeat home buyer, as interest rates rise and home prices increase, worsening affordability will discourage some first time home buyers. These won’t be the only changes. Foreclosures’ slow inventory will begin to stabilize and the process of getting a mortgage will be less hectic.
Barring any economic crises, the housing market should continue to normalize. Here are 5 ways that the 2014 housing market will be different from 2013:
• Home Prices Will Rise, Affordability Will Worsen. Buying a home will be more expensive in 2014 than in 2013. The median price of a home in Jackson County increased by 18.2% in 2013, bringing it up to around $195,000. Although this is still far below the 2005 median of $271,500, it’s a nice increase. Mortgage rates will also be higher in 2014 than in 2013, thanks both to the strengthening economy and to Federal Reserve tapering. We are still looking at an incredible low 4.5% interest rate, but this is up from the 3.5% interest rate of a year ago. As of September 2013, Trulia has reported that buying was 35% cheaper than renting nationally. Buying also beat renting in all of the 100 largest metros surveyed.
• Home Buying Process Improves and Inventories Increase. Home buyers in 2014 might kick themselves for not buying in 2013 or 2012, when mortgage rates and prices were lower, but inventory will be increasing and lenders will be less preoccupied. There will be more inventory on the market later this year, partly due to new construction, but primarily because higher prices will encourage more homeowners to sell – including those who are no longer underwater in their mortgages. Finally, mortgage approvals should be easier to get because higher rates have slashed refinancing activity and pushed some banks to ramp up their purchase lending. New mortgage rules coming into effect in 2014 will change which types of loans are more competitive. It seems like government backed loans will soon be less competitive to those offered by commercial banks, hopefully making them more willing to loan. All in all, more inventory, less competition, and more mortgage credit should combine to make the buying process easier in 2014 – for those who can afford to buy.
• The Year of the Repeat Buyer. 2013 was the year of the first time home buyer, but 2014 will be the year of the repeat home buyer. Investors will still be a factor in 2014 but higher prices mean that the return on investment falls. Repeat buyers selling their current homes which have risen in value, and either relocating or upgrading, will make up the majority market segment this year. The amount of Escapees from nearby states will continue to increase as Oregon has the largest percentage of people moving into the state vs. people moving out of the state compared to any other state. We will see a heavy increase in the amount of Retirees as they have been waiting through six years of recession to finally see their stock portfolios rebound and their home equity swell to make retirement possible. Retirees will find Southern Oregon and our unique combination of nature, culture, affordability and great health care to be a suitable place to retire.
• Foreclosure Activity will Slow. Foreclosure sales are likely to play a minimal role in the housing market in 2014. They are not gone but they are less important. Foreclosure inventory has dropped in the U.S. to multi-year lows, down nearly 33 percent since the end of 2012. The numbers of new foreclosures were down 39 percent in the third quarter of 2013 to the lowest levels since the second quarter of 2006. In 2013 foreclosures amounted to only 7.1% of the homes sold in Jackson County.
• Rental Market Continues to be Strong. Throughout the recession, investors bought homes and rented them out, sometimes to people who lost a home to foreclosure. Going into 2014, we will see fewer families losing their homes and fewer investors buying single family homes, preferring instead multi -unit complexes with higher returns. Increasing prices of both homes and mortgages will make it more difficult for renters to buy their first home. Ironically, the economic recovery means that the overall homeownership rate will probably decline, as young adults move out of their parents’ houses and form their own households they will add to the amount of renters, not buyers. In 2014, we will continue to see an increase in demand for single family homes for rent but a decrease in supply.
So, hang on! 2014 will be another year of great recovery for the housing market. We’ll see increasing equity for homeowners, continuing low interest rates, & increasing market inventory. Welcome to “The year of the repeat buyer”!
Jackson County has had an incredible year in the Real Estate Market. Home prices in most metropolitan areas of the United States grew significantly in 2103, with the national median price rising at its fastest annual rate in eight years. The good news is Jackson County has exceeded the national average with median price (meaning half the homes sold over this number and half sold under) of a home increasing by almost 20% in 2013*. This increase is due in part to home prices increasing and in part to the make-up of those homes that sold. For example, In Jacksonville the median price has increased by 77% mainly due to more than three times as many homes selling over $500,000 in 2013 than sold in 2012. All in all 2013 marked the first year of significant recovery with double digit growth and the return of the high end housing market.
Home sales for 2013 compared to 2012:
Bottom Line: Home prices have increased, selling closer to list price and moving quicker. High end home sales are back for the first time in seven years!
What does this mean for Sellers?
It depends if you need a loan or not. If you want to sell your home and buy a new home with cash then time is on your side as prices will continue to increase. However, if you want to sell your home and buy a new home requiring a loan, time isn’t on your side. Your home price will increase with time but interest rates will also increase so you may be better off selling sooner than later.
What does this mean for Buyers?
Buy now! We are at the point where both home prices and interest rates are climbing. So right now the timing is as good as it will get and time isn’t on your side.
What does this mean for Investors?
As home prices and interest rates both climb capitalization rates will decrease. The supply of homes has been limited with little to no building in the last seven years. Rental rates have climbed and will continue on this path. Cost of borrowing monies and purchasing a home is also climbing. Right now is as good as it will get for investors.
What does this mean for Renters?
As stated above the supply of rental homes has had little to no increase in the last seven years while the demand for rental homes has increased. The growing population combined with the decreasing percent of ownership has increased demand for rental homes. We foresee rents continuing to increase and the majority of tenants will actually pay less in a monthly mortgage then they are paying now for rent. So again, now is the time to buy!
2014 Forecast: Home prices will continue increasing
Three factors will determine how the housing market fairs in 2014 and if home prices continue to climb;
- Continue Quantitative Easing: The Federal Government has done a great job using “Quantitative easing” to create a cheap supply of money, giving us historically low interest rates which in turn have stabilized the economy and improved the housing market. Quantitative easing must continue until we achieve a healthier economy with high employment and higher wages. The soon to be Federal Reserve Chairwomen, Janet Yellen, has gone on record stating she will continue to stimulate the economy at current levels.
- Slow foreclosures: We have seen a drastic decrease in the number of bank-owned properties. Banks have written off the majority of bad home loans but have taken little to no action on thousands of home loans that are currently in default. As prices increase time is on the banks side and they can increase their efforts to refinance loans in default instead of pursuing foreclose process. It’s critical that the banks continue their slow pace of foreclosing and not flood the market with excess inventory.
- Ease lending requirements: The last few years we have seen strict lending requirements that require higher credit scores, no discrepancies in credit history, and higher income. The approval process that has become grueling with endless documentation. Some of these new requirements are positive but in many cases we have overcompensated and standards need to be loosened. Unfortunately, we don’t see these standards changing in 2014 but they will need to be addressed to increase the numbers of homes sold in the future and achieve a full housing recovery.
If in 2014 we experience the same rate of recovery as 2013 we will soon be well on our way to a fully recovery in the real estate market in Southern Oregon.
*Stats taken from Southern Oregon Multiple Listing Service. Because this article was written November 15th the stats are from the beginning of both years but ending on Nov 15th so they are for a 10.5 month period.
Ten Reasons Why Real Estate is a Superior Investment
by Graham Farran
Do you have enough money saved for retirement? Financial planners usually use the “25 Times Rule” to determine how much a portfolio should be worth for someone to safely retire. If you need $50,000 a year to live on when you retire, then, using the “25 Times Rule” you should have $1,250,000 in stocks, bonds and mutual funds. Then, at retirement, financial planners begin liquidating these assets using a “4-Percent Rule,” which simply means they liquidate 4 percent of the portfolio each year until it is down to zero after 25 years. If you retire at 65, you better hope you don’t live past 90 or you’ll be broke.
Compared to investors who rely on the stock market to accumulate assets for their retirement, real estate investments take a different approach. If you accumulate $2,800,000 in income-producing real estate it will pay $50,000 a year in income and continue to appreciate in value over the years, not only covering you indefinitely but also leaving you something to pass on to your children.
Here’s the interesting part, it only takes $700,000 in investment capital to accumulate $2,800,000 in real estate assets. By comparison, it takes about $900,000 in stock investments to achieve a $50,000 per year annual income, assuming that during 30 years of investing both types of investments yield a 4 percent return.
Real Estate has many advantages over investing in stocks, bonds or mutual funds. Real estate offers predictable cash flow; it appreciates in value, thus keeping up with inflation; it provides a higher return because of positive leverage; and it offers equity growth through debt reduction. During retirement, real estate is a self-sustaining asset while stocks are a self-liquidating asset. Which would you prefer, a self-sustaining asset or a self-liquidating asset?
Ten reasons to invest in real estate:
- Real estate has a predictable cash flow
Cash flow is the net spendable income derived from the investment after all operating expenses and mortgage payments have been made. A good real estate investment should provide you with 6% or greater cash flow.
- Real estate appreciates in value
Since 1968, appreciation levels for real estate have been 6 percent per year, including during the downturn in the economy beginning in 2007, according to the National Association of Realtors.
- Real estate can be leveraged
The most important advantage of real estate investing is LEVERAGE! It is the use of borrowed capital to increase the potential return of an investment. In real estate transactions, leverage occurs when a mortgage is used to reduce the amount of investor capital required to purchase a property. The annual return on a $200,000 property with a $20,000 net cash flow purchased with cash is 10 percent. If 75% of the money required to purchase the property is borrowed, even factoring in the cost of making the mortgage payment, the annual return more than doubles to 22 percent (assuming a loan of $150,000 is amortized over 30 years at 5 percent interest).
Once you have built up an equity position in an investment property, you can leverage that investment for cash in one of two ways: Secure a second loan against the increased equity or refinance the original loan amount plus the increase equity.
- Real estate provides equity buildup
Most real estate is purchased with a small down payment with the balance of the money being provided through debt financing from a lender. Over time, the principal amount of the mortgage is paid down, slowly at first, and then more rapidly toward the end of the amortization period. This principal reduction builds equity.
- Real estate is improvable
One of the most unique and attractive advantages of real estate is that it is improvable. Because real estate is a tangible asset made of wood, brick, concrete, and glass you can improve the value of any property with some “elbow grease” and “sweat equity.” Whether the repairs are structural or cosmetic, do it yourself or hire someone, the principle is the same.
- Real estate coincides with retirement
When real estate is purchased, the cash flow is lower and the principal reduction on the mortgage is less. Over time, the mortgage is paid down, or paid off, and the cash flow increases. In some respects it’s a forced savings program, yielding a greater amount as time goes by which is a perfect investment for retirement as it increases in cash flow down the road.
- Real estate is tax deductible
Tax codes allows various deductions for the normal expenses incurred in owning real estate, such as property upkeep, maintenance, improvements and even the interest paid on the mortgage. The deductions can offset income and reduce your overall taxes.
- Real estate is depreciable
Depreciation is a non-cash expense permitted by the tax code that depreciates in value of your investment property over time. However, the value of your investment property actually appreciates. The depreciation deduction allows a real estate investor to generate a larger positive cash flow while reporting a lower income for tax purposes. This creates a higher return than you may initially realize.
- Real estate has a lower tax rate
If your investment property is sold after a year, the gain is subject to capital gains tax rates which depending upon your individual tax bracket is generally 15% or 20% which is usually less than ones personal tax bracket.
- Real estate gains are deferrable
Our tax code, under a 1031 exchange, permits the gain on the sale of an investment property to be transferred from the property being sold to a new property being purchased, hence deferring the payment of any tax on the sale of the property.
There is one final advantage to a real estate investment and that it is understandable and easy for most everyone. It’s easy to purchase, it’s easy to finance and there are no insurmountable financial barriers to entry. It’s easy for most investors to improve their properties and it’s easy to use the tax advantages. While Wall Street is becoming more and more of a mystery and becoming the game of financiers, real estate investing is looking better and better.
Do you feel it? Do you see it? Something is different! The Rogue Valley has a deafening low level buzz rising in the air. It’s an energy that wasn’t here before: our Valley is coming back alive again! Big Corporations have taken notice – from Trader Joes to REI who opened their doors in the same month at the same plaza. I watch in amazement at the influx of new businesses and additional locations of existing businesses multiply in our Valley. What do they know? What growth studies are they privy to? Listen closely, do you hear it? Are we the newest up and coming place to live?
We’ve spent the last decade or so in the worst recession/depression since the 1920s. Being in real estate, I’ve had a front row seat. I’ve seen the tragedy of families losing their businesses, homes, and their hope. I had the privilege of helping many of them navigate through what seemed like impossible times. But now, things are changing.
We saw the first signs of this in real estate when home prices began to increase and buyers flocking back to the market driven by still low prices and low interest rates. Then we saw new construction starting up. What were once abandoned subdivisions are now fresh neighborhoods buzzing with big trucks, contractors, and homes popping-up in what seems to be overnight. From Ashland to Eagle Point, Medford to Jacksonville there is movement and activity everywhere. When you’re driving around, try to count the number of new buildings, new wineries, new breweries, new restaurants, big name national retailers with storefronts in our valley and local businesses who are thriving like never before. Try driving 5 miles without seeing a logging truck on the road! We even have a couple of proper sports teams to call our own now. Somehow, when we weren’t looking, our Valley not only rose out of its depression but it’s still rising and thriving. And how?
Local Businesses Thriving!
Harry & David have come back from bankruptcy to post a $13 million profit for its fiscal year ending June 29th. Lithia Motors passed the $1 billion mark in revenue during a single quarter and is seeing a 31.3% jump in profit over the last year. Boise Cascade reopened their White City plant and Brammo Electric Motor Cycles just purchased the empty Wal-Mart building in Talent to house their new assembly line. Rogue Credit Union purchased Chetco Credit Union on the Oregon Coast and Umpqua Bank purchased Sterling Bank. Peoples Bank has just completed construction of a multi story building off of Barnett. Erickson Air Crane has purchased two other helicopter companies, Evergreen and Brazilian Aerial. Raising Sun Farms Inc was listed in Fortune Magazine as one of the 5,000 fastest growing US companies. Amy’s Kitchen is planning a $19 million expansion in White City which could push its workforce to 800 employees by the end of the year.
National Retailers & Restaurants
Walgreens has announced their third new store to be built in Central Point. Wal-Mart has opened its third new Super Center in the Valley. REI, Petco and the long awaited Trader Joe’s (thank you!), Auto Zone and Verizon Store, (including that Time Square worthy billboard by the Rogue Valley Mall) have all arrived and settled in our valley. Natural Grocers out of Colorado opened a store off of North Pacific Highway and the Texas Steakhouse Restaurant has opened off of Hwy 62. The valley also has a new Starbucks, Pita Pit, and our very first Chipotle Mexican Grill. So what do all these big time national retailers know that we don’t.
Sports & Entertainment
The historic Holly Theater tours begin this month that will raise capital to complete the interior remodel of this 1200 seat grand theater, Mt Ashland is expanding their ski park and the Medford Rogues seem to have come out of nowhere to give us a great baseball team with a winning season at the Harry & David Field. The Southern Oregon Spartans are playing ice hockey in front of sold-out crowds… yes, ice hockey in the Rogue Valley as well as Go Kart Hero where we can drive up to 50 mph!
Ashland is about to see the construction of a new boutique hotel called “The Vine” on Lithia Way. Lithia Springs Resort in Ashland is being renovated and Windmill Inn in Ashland newly purchased is also going through a renovation. The Red Lion in Medford was purchased and will follow suit with the facelift, as well as a new name “Inn at the Commons”.
Lithia’s new multi-story corporate offices off of Riverside are now complete but construction continues on “The Commons” parks that surround it. Southern Oregon’s University’s massive dormitory complex just opened in Ashland. The “One West Main” construction project is underway, four stories, retail shops on the ground floor and housing of corporate headquarters for three local companies. The Federal Building in downtown Medford was demolished only to make way for a Jackson County Health high-rise building and parking lot. A residential/commercial complex is breaking ground on Lithia Way and there is a buzzing around, of a proposed 25 unit housing complex to be built above the parking lot on Central and 10th across from the Medford Library.
Wineries & Beer
We’re all enjoying a wave of new wineries such as Dancin, Kriselle Cellars, 2 Hawk, and Red Lily. The newest kid on the block, Bella Fiore Winery, is something straight out of Napa and is the most ornate production facility of 20,000 square feet, 3 stories of beautiful Italian style construction and a ballroom. In addition there is a 19,000 square feet Chateau with slate roof and turrets that may be reserved for special occasions. It’s not just the wineries that are bringing a claim to fame to our valley, beer fans are delighted at the opening of Caldera’s new industrial cool brew house in Ashland, which was named in September’s Sunset Magazine as the new “it” place to hang out in Southern Oregon.
Forgive me for everything I left out, but I’m just one person and this is just a list of what has caught my eye.
So next time you’re stuck behind that slow moving logging truck, just smile and be grateful for this low level buzz.