Helpful Real Estate Blog

Despite on the cooling housing market people still spend a lot of money on maintenance and repair work in order to ameliorate and modernize their live conditions. In accordance with some calculations homeowners drop about $155 billion annually on renovations. The main impediment they face to when deciding to make some changes is whether they should rely on their own skills and abilities or it would be better to refer to a specialist for assistance. The first case will help homeowners to save a considerable sum of money but the latter will guard them from gross blunders and guarantee sooner and proper outcome of the affair conceived. Moreover professionals (builders and contractors) are better award of the latest novelties, best construction materials, and the cheapest places to buy them.    
 Besides I doubt whether the overwhelming majority of ordinary homeowners are skilled on how to lay tiles, install sanitary engineering or stretch ceiling in the correct way. They can without any problems implement some kinds of demolition like ripping out old tiles and wallpaper, but putting the new ones require special knacks. It is not as easy as it may seem to the unpracticed do-it-yourselfer in the beginning to do such things as holding the marble tile so it wouldn’t crack when cutting it with the wet saw or to attach the tiles to the wall with the help of the special mortar. They probably don’t know that a saw for cutting tiles has a diamond blade which they should cool by water before using. Homeowners often don’t imagine that practice is required for spreading the mortar smoothly with a trowel without leaving gaps or dropping globs on the floor.
 

Thus every do-it-yourselfer when confronted with a challenging project faces a question whether to jump in and risk messing it up or to bow out and call in a professional. And they don’t fall to thinking that there is one more option that provides the solution of such a complicated task: they can refer to a professional and work with him or her to get the job done.
 Especially as nowadays many contractors are tending to let their clients apprentice with them in realizing their projects. These experts consider such fulfillment of a project with the participation of the homeowners as a paying job with a free assistant. On the other hand homeowners get a chance to make sure a tricky project is done properly and what is more to learn the skills they need to do similar work themselves in the future. You can also have recourse to myriad books and videos and in-store classes at retailers but all these will never substitute hands-on experience.
 

Partnering with a contractor are supported by many today’s professionals and considered as a rather good way to save on remodeling. Among such professionals who predict a radiant future of working in a tandem I want to mention Tom Silva, general contractor for the This Old House magazine and “This Old House” TV shows, Ted Welch, Chicago remodeling professional, Bobby Dodge, a builder in Garrison, N.Y.
 There are some forms of collaboration between homeowners and contractors, and through some of them besides of picking up new skills homeowners can save money, for example if they agree to do the so called dirty work like moving materials around a job site, demolition or cleaning up. There are many examples when homeowners contrived to save from $200 to $300 thanks to their participation in the implementing of repairs.
 

Many open-minded experts allow homeowners to participate in almost every part of the job. And such cooperation may be the most efficacious because of the vast range of additional knacks homeowners can gain. And one of the best terminations of the joint working day may be professional touch while having a cup of tea or coffee with your contractor.
 While working in a tandem with your contractor you can also master professional lingo, for example you will study such terms like “butter her up” (apply extra mortar on the back of a tile) and “cut it four and a quarter light” (a sliver smaller than 4¼ inches).
 

Thus dealing with professionals you will acquire necessary knowledge and skills for future repairs. But there is no guarantee that once referring to the specialists you will not need his assistance in the future since in time the newest materials and the newest technologies are appearing and the newest skills are required.
  But not all the professionals agree to collaborate with homeowners in doing their job owing to liability issues. Some professionals assert that inexperienced and untrained homeowners can inflict injuries or damage to themselves, thus contractors before agreeing to the participation of homeowner in the renovations should check insurance policies to be sure that injuries are covered. Other experts state that installation of some materials can be carried out only by professionals, thus it is impotent to look at a warranties on materials before committing their mounting to homeowners. Many contractors also complaint that homeowners often hold on the process of making repairs due to the absence of practical skills or different drawing away circumstances such as answering emails, phone or picking up the kids. But there are some solutions of this problem too. Firstly you should consider of nothing to draw away your attention, beforehand. And then, stipulate with your contractor pay by the hour. This step will compel you to do your best to fulfill the job faster and more intently.
 Despite on some drawbacks of homeowners’ apprenticeship with contractors I still completely assure that even though you are fairly confident about your abilities and going to carry out your tricky do-it-yourself project it would be better if you apply to a contractor who will do the job more correctly and tutor you.

As I have already noticed in my previous posts among the main tendencies at the real-estate market we observe market’s cooling, rise of mortgage interest rates, growth of inventory, slowing of price appreciation, and increase of apartment rent. In accordance with some economists, among whom I’d like to mention Sam Chandan, an economist at Reis Inc., a real-estate research firm, apartment vacancies are expected to tighten to 5.3% nationally this year, while rent growth reaches 5.5%, the strongest since a prior peak in 2000. Apartment investors have experienced total returns of about 20% a year from income and unusually high price appreciation in the past two years, as compared with the 12% annual average return for the previous 10 years. Thus Sam Chandan states out that “expectations for income growth are strong, so this is a good time to hold on to assets that you already own.”
 

Most of the private real-estate investors who can afford investments which require such a big sum of money as apartments are at the age of 50 and elder, according to Harvey Green, chief executive officer of the Encino, Calif., real-estate investment brokerage firm.
 

Whereas some economists (like Sam Chandan) and real-estate investors (like Kenneth Heebner mentioned in my previous posts) consider investments into apartments as attractive and profitable due to the rising apartment rent, many other real-estate investors are starting to sell these investments. And the reasons for acting in such a way I regard as quite forcible and that’s why try to partly describe them in this post.
 

But firstly I want to cite some instances illustrating the moving of investors’ equity into other forms of investments.
 

Marcus & Millichap maid an analysis of 700 apartment transactions ranging from $1 million to $10 million in the 12 months ended May 31 and found out that its apartment-investor clients who have recently sold their assets plan to move 59% of that equity to other properties, investments and cash.
 

One apartment and condominium developer from West Bend, Wis., James Shafer sold a 164-unit apartment complex in Menomonee Falls, Wis., that he built in 1990. He substantiates his decision by pestered plumbing repairs, poor managers and constant turnover. He also closed on two Eckerd drugstores — in Wilson, N.C., and Cambridge, Md., arguing that thus he has released himself from maintenance duties, repair work and taxes but lost just a relatively nice income.
Another example is Bob Morgan from San Diego who sold four San Diego apartment units in 2004 for about $816,000 (versus about $70,000 that he paid to build them in 1974) and purchased a preschool learning center in Kalamazoo, Mich., this year, paying approximately $1.55 million for it. He pays $3,000 a year in insurance, but regularly receives $10,000 a month. He considers his newest investment as also rather risky, but less-capital intensive than apartments.
 
As it is evident from the given examples apartments are considered by the vast majority of real-estate investors as rather capital intensive and that is the main reason why they are getting rid of such kind of investments and looking for less-intensive ones. Frequent apartment turnover requires repeated and expensive painting, cleaning and carpeting.

Besides of this, apartment investors are tied from myriad tenants’ service complaints connected with plumbing, sanitary engineering, sewerage, electric light, poor managers and many others.
 

Another reason why investors are refusing from investing into apartments is their wish to receive
stable, long-term cash flow that is not featured to apartments due to the frequent turnover.
And one more reason is requirement of good management and big responsibility.

Thus a great deal of investors give their predilections to other areas of commercial sector that are also attractive but featured with less hassle, such as office and industrial properties. Many apartment investors are redeploying their equity into single-tenant, net-lease properties, such as office buildings, warehouses or retail properties. They rent such property just to one tenant who is responsible for expenses, including taxes, insurance, maintenance and almost everything else. Such redeployment releases investors from management responsibility and allows getting stable, long-term cash flow.
So I’d like to mark out the chief reasons which impel many real-estate investors to refuse from the investing into apartments in favor of other kinds of investments (like office, industrial properties, etc.):
 

1) Capital-intensiveness of apartments, requirement of frequent maintenance, repainting, recovering.
 

2) Constant turnover.
 

3) Absence of stable, long-term cash flow.
 

4) High management responsibility.
 

Thus, the question is which realty to choose for investing your money. As for me, I think that the best way to save and multiply money is to invest them in property in any way connected with land especially located in ecologically clean picturesque areas or enriched with minerals.  You can make any choice you like. But whatever decision you make remember one thing: dealing with real-estate require careful deliberation and, what is better, applying to a good specialist for assistance.

As I’ve already mentioned in the previous posts investing in real-estate is rather risky and requires special knowledge, skills and good agility. This concerns especially real-estate-related shares. One can’t manage here without assistance of a specialist.
 

I think it would be advisable to consider the opinion of Kenneth Heebner, who since 1994 has managed the $1.2 billion CGM Realty Fund. This fund is characterized with the best 10-year record of all real-estate-focused mutual funds. CGM Realty Fund had an average of nearly 22% annual rise during the past decade.
 

CGM Realty Fund has approximately 25% of the stocks in mining stocks. Mr. Heebner regards mining companies’ stocks as attractive because of the land they use. He also sees significant opportunity in real-estate investment trusts, which account 69% of the Fund. And 6% the Fund has in commercial real-estate brokers.
 

According to Mr.Heebner today it is advisable to invest in office and apartment REITs (like Archstone-Smith Trust, Essex Property Trust Inc., SL Green Realty Corp. and AvalonBay Communities Inc). The Fund’s apartment REITs are focused basically in parts of the Northeast and California.
 

Due to the rising interest rates homes became less affordable for many consumers, which results in the increasing of apartments rents. Thus building companies should increase construction of rental apartments in areas where demand didn’t fall, but gradually goes up. This is featured mainly to the areas like Texas and some others.
 

Among the office sector Mr. Heebner marked out Vornado Realty Trust as well as SL Green.
 

As regards investing into home-builder stocks, I think that is hardly can be considered as expedient due to the difficult conditions in which home builders are turned out. I suppose that many economists, including Mr. Heebner, will support my opinion. Thus, according to Mr. Heebner, CGM Realty Fund bought home builders at the end of 2001 since these stocks were trading at six times earnings. But when the leaders of the fund understood that the growing demand for homes was caused mainly by people who maid purchases for investment purposes using borrowed money, they began to worry and started cutting back on home-builder shares at the end of the fourth quarter of 2004 and eliminated them during the first six months of 2005
 

Being guided by the strengthening of the global economy and strong growing demand for leisure travel I regard investing into hotel REITs as rather advisable. The weakening of the dollar will increase tourism. Rising supply of hotels during the next several years will make for a healthy environment for the REITs.
 

The governing body of the CGM Realty Fund gives its preferences to Host Hotels & Resorts, LaSalle Hotel Properties and FelCor Lodging Trust.
 

And in conclusion I’d like to repeat once more time that investing into real-estate, and especially into real-estate-connected stocks, requires special grounding and that is why inexperienced person should take advise from a good economist or real-estate agent. Meanwhile, as follows from this article the most attractive spheres for investment today are apartment REITs, office sector and hotel REITs, and one should not invest into home-builder shares.

The real-estate market is slowing and many economists believe a slowdown of the housing market could hurt the overall economy while others suppose that the strength of American economy in some ways supports housing market. A significant decline in prices and huge buildup of inventories are taking place at today’s housing market.
 

Among the most stricken areas are California, Arizona, Florida and others situated along the East Coast. As some economists point out markets in these areas could fall 50% from their peaks.
 

I think that a great deal of economists, homeowners, builders and anyone else who has any connection to the real-estate market are concerned about spheres of economy and people classes which can suffer from the slowdown of the housing market. In my opinion who will suffer the main loses are construction firms and organizations, in the first place, and also people who used aggressive mortgages in purpose to buy a property for further reselling.
 

The former lose from the huge inventory stalled at the market and lowing prices. Today’s supply of dwellings is not supported by strong demand in many areas, as compared with the recent situation when demand exceeded supply. Thus builders found themselves in unpleasant conditions. Using of incentives partly helps them to remedy the situation, but, as a whole, tough times have ensued for the building organizations.
 

Many people will also suffer great loses due to the risky mortgages they employed within the last two years. Such aggressive mortgages as interest-only and pay-option adjustable-rate mortgages have been widely used recently. These mortgages required no principal amortization and in some cases payment of only a fraction of the interest due. Thus they motivated people to purchase property for borrowed money in order to make profits. Thanks to mentioned mortgages borrowing became more attractive than home equity. Increasing number of people buying houses with risky mortgages led to the artificially inflated prices. As housing prices are falling people will find themselves in difficult situation and many of them will have to walk away from their homes. Those who used an aggressive mortgage now are struggling to meet the mortgage payments. In accordance with the statement of Kenneth Heebner, who since 1994 has managed the $1.2 billion CGM Realty Fund, we are going to see increasing foreclosures over the next several years.
 

I suppose it is obvious that those homeowners who don’t have a mortgage because they own their property outright will not experience the influence of slowdown trends at housing market. They accounts for more than 25%.
 

I doubt also whether such areas like Texas, Iowa City or Minneapolis will suffer much from the slackening of housing market. These markets didn’t see such a large lowing of price gain as California, Florida and others located along the East Coast.
 

According to the opinion of many economists the greatest losses will be suffered in those areas where prices were artificially raised too high (this bear a relation especially to mentioned above California, Florida, Arizona and other housing markets along the East Coast). But even despite on big size of some mentioned markets, economists suppose that the regional slowdowns will not reverberate throughout the economy. Mr. Heebner considers that “most people won’t have problems and much of the country will be fine”. He argue also that some regional slumps (or “pops” as he called them) “will reduce the growth rate of the economy, but they won’t precipitate a downturn”. In accordance with his opinion only the Federal Reserve can cause a downturn of the economy by means of his aggressive action.
 
 “I think the current pattern of higher interest rates reflects a decision to normalize rates after taking them to abnormally low levels to stave off potential deflation. When the extent of the housing slowdown becomes apparent, I think the Fed will pause, rather than take rates to a level that threatens an economic downturn. The only real threat to the economy is an overly aggressive Fed, and not a downturn in the housing market, which won’t by itself push the economy down,” said Kenneth Heebner.
 

Thus guided by the statements of some economists and by my own point of view I’d like to conclude that the slowing housing market will hardly hurt the overall economy. The great loses will be suffered mainly by people used aggressive mortgages and also by construction firms located in the areas situated along the East Coast. But the great bulk of population and the economy in general will be fine, especially if the Federal Reserve suspends its aggressive policy and stops to raise mortgage interest rates.  

I think that each situation either connected with the economic events or with the life as a whole has its advantages and drawbacks. While one gains another loses. Thus due to the growing home inventory and slowdown trends many of the real-estate markets in a matter of few months have become buyer’s markets. Buyers dictate rules of the game and make home builders to acquire refinement in selling vacant dwellings. Construction organisations have to offer rebates, big discounts and different creative incentives (such as trips, cars, sprees, etc.) to attract potential buyers.

One the most obvious case of the aforesaid is North Port (the Southwest Florida housing market). Thus, in front of Allstate Builders model homes on Lovette Road buyers can see the freshly buffed 1980 Corvette of Gary Grennell, the sales manager for Allstate Builders, which he offers passerby to win. They can also see giant balloons, the colorful banners and the hot dog vendor there, attracting their attention to the 20 homes. Besides of this Gary Grennell puts together the “circus’’ every weekend and says that “these days, you got to do the work to get them to see your product.”

And what is the most painful for the home-sellers but the most pleasant for homebuyers that keen-witted Garry is not alone in offering creative incentives. Among the most common incentives are $10,000 in free upgrades, $20,000 buyer’s bonus, homes starting below $200,000, a chance to win a trip to Bermuda, a $10,000 gift card to a Rooms To Go furniture store, free moving expenses, an eight-night hotel stay or a shopping spree at Wal-Mart.

I consider this example as a proof of fickleness and riskiness of the real-estate market and assure once more time that investment in realty (especially with the intention to earning money instead of saving them) requires consultation and assistance of a good specialist. If only a year ago North Port’s builders had a customers on waiting lists because the city was issuing more than 350 permits a month (in comparison with just 88 permits in April this year and 74 permits in May this year) and building firms couldn’t build fast enough, today’s situation is characterized with the decreased number of customers excessive supply.

In accordance with the local builders downturn in the Southwest Florida housing market was caused by investors who bought up houses in times of housing boom with the intention of flipping them instead of using as resident homes.

According to the investigation implemented by the National Association of Realtors almost 40 percent (or 3.34 million) of the homes and condominiums bought last year nationwide were bought by people who had little or no intention of living in them.

Activity of house-flippers motivated construction firms to increase building. All this has resulted in superfluous home inventory and put home-builders in difficult situation compelling them to reach out in new ways to attract buyers and move their stalled inventory. Thus, according to the estimation of some real-estate specialists approximately 5,000 homes are offered for sale in the city today. Among them more than 1,400 homes are listed for sale with real-estate agents and the rest are for sale by house-owners and builders. These homes are sitting at the market for a long time before moving to buyers.

As the Florida Home Builders Association points out the only other area in Florida where builders are trying to attract customers with such incentives is Orlando. With the softening of local real-estate market home-builders around Orlando begun to raffle off Mini Cooper cars, furniture packages and vacation getaways. The situation at the housing market is similar to that in the North Port. If for a long time builders couldn’t build fast enough to accommodate the sales, today’s Orlando’s market is glutted with dwellings.
 
 But as some members of the Florida Home Builders Association stand out “builders statewide are remaining optimistic and are not anticipating layoffs”. Builders express their confidence in moving extra inventory in the near future. Moreover they have a lot of reconstruction and rebuilding work due to the two years of recording-breaking hurricane seasons.

I suppose that Southwest Florida housing market illustrated quite well how scanty supplies of homes turn into excessive supply due to the activity of house-flippers, behavior of customers, natural calamities and other factors.

Studying the state of some local markets in the USA I came to the conclusion that while American real-estate market as a whole experiences a slowdown, every local market has its particular features and tendencies.
 

Thus despite on the overall cooling of the housing market the residential real-estate market in San Antonio is getting a boost from middle-class Mexican buyers. Mexicans tend to purchase homes between $100,000 and $150,000. The average price for a house in the city increased 9% to $131,900 in the first quarter of 2006 from $121,200 the year before. In accordance with some of local real-estate agents the number of Mexican clients doubled from the last years.
 

Slowing of the real-estate market and demand decline don’t apply to Austin also, where price gain and ready sales are still observed.
 

Other trends are taking place in the Southern California - the area which was characterized with bidding wars and word-of-mouth sales recently. Today’s local market in the state is featured with increased period of time which is required for selling a home. While it took 25 days to sell a residential property in April 2005 in Los Angeles County, this year homeowners need 34 days to sell their homes. In Orange County homeowners have been selling their homes for 39 days in comparison with 26 days last year, and in the combined San Bernardino and Riverside counties region – 39 days compared with 27. Parts of the Westside and Malibu especially excelled displaying the median time of selling a property amount to 85 days. To attract buyers homeowners are forced to cut prices sometimes by $200,000 and more. But despite on slackening of the market and decline of buyers’ demand California still remains one of the priciest areas with the median home price of $485,000, that is 9% up from April 2005’s median price.
 

Thus at the Southern California’s housing market prices are continuing to grow, but the duration of finding a buyer is also growing. And as one of the local real-estate agents in San Jacinto in Riverside County Hugo Florez said, “It’s not last year’s market anymore.”

Southwest Florida’s housing market is also loosing its former attractiveness. Growing home inventory forces builders to offer different incentives (such as free trips, cars and upgrades) to attract potential home-buyers in such cities as North Port and Orlando.
 

Oregonian’s property market is characterized with high prices and scarcity of buildable land. This is featured mainly to the Portland area. Scarcity of land impels builders to construct thin houses measuring 25-square-feet wide on smaller plots. Such houses constructed in high-density neighborhoods have little or no backyards. Due to the luck of land developers build also three-story houses squeezing 10 to 15 homes on an acre, versus four to six per acre of 10 years ago. The price of land in the Portland area today is $500,000 an acre.

In accordance with the PMI Mortgage Insurance Co. six American markets saw price appreciation of more than 20% over the year (Phoenix saw appreciation of 31.1%; Orlando, Fla., saw appreciation of 27.7%; Fort Lauderdale, Fla., saw appreciation of 25.7% and Miami saw appreciation of 24.7%). Four higher-risk markets saw appreciation drop to a single figures over the year (San Diego experienced 7.7% appreciation; Boston experienced 5.7% appreciation; Providence, R.I., experienced 9.5% appreciation, and Cambridge, Mass., experienced 5.2% appreciation).  

During the first quarter of 2006 more than half of the largest metropolitan areas (from 50) saw decrease of home affordability while 19 markets experienced slight increase of affordability due to slower price growth (five of the markets were in Texas and six were in the Midwest).

In this article I reviewed only a few markets but it was enough for me to arrive to some conclusions. Surveying changes that are taking place at the existing real-estate markets I make sure more and more that general market tendencies featured to the whole American market don’t spread to all the local markets. Every local market is excelled by its own particularities and trends. Meanwhile I must notice that overall tendencies capture the majority of markets.
 

Among the most common features of almost all today’s markets I’d like to note:
1) Slowdown tendencies;
2) Slackening of price gain;
3) Growing home inventory;
4) Decline of buyers’ demand;
5) Increased period of time required for selling a home.
 

But as I’ve already mentioned above there are some exceptions which were partly described.

In conditions of slowing real-estate market with such a large home inventories and decline in buyers’ demand home-sellers should get rid of habitual steps while selling their homes which they used during housing boom. Today it has become much more difficult to attract buyers and implement a good profitable deal, since in conditions of good choice homebuyers can afford to be choosy and fastidious. Thus it takes much more time to sell your home today.
 

Thanks to all the mentioned above today’s sellers are forced to lower their home-prices if they want to speed a sale and sometimes they have to sell their homes half a price they wanted.
 

If some months before those who intended to sell a house could set a price just looking at the prices of nearby houses for sale or local listings now they must be savvier to market trends. Before putting their home on the market and charging price home-sellers should investigate local market more carefully, they should study buyers’ preferences and which prices they regard as acceptable and attractive, homeowners also need to learn local asking prices by looking through local papers or real-estate publications. Some real-estate agents, like Kayser Dixon from Coldwell Banker Hunt Kennedy in New York, counsel home-sellers to visit area open houses to evaluate competition. “If you look at a price on a piece of paper, it doesn’t do anything for you,” he says.
 

Homeowners should be very prudent today when setting a price so that they didn’t overpriced their homes and scared away potential buyers. Buyers have a greater number of homes to choose due to the growing number of property on the real-estate market. Real-estate agents suggest to fix price just below than the market can bear. Thus Rob Gross, a senior vice president with Prudential Douglas Elliman in Manhattan, for a $1 million home in Manhattan asks for $995,000 to “get traffic”.
 

Nowadays homeowners can’t establish housing-boom prices any more. And if your neighbor got $1 million for the house like yours at the time of housing boom that doesn’t mean that you can ask $1 million for your home even though you regard it as similar or better one. Everything is changing and market conditions are also changing. Yet yesterday you could snatch a large sum for your property but today you can barely be thankful for small mercies. Thus homeowners must determine a price in accordance with the existing market prices at present that they can learn from their real-estate agents or online search, instead of looking at the gains received by their neighbors recently.
 

For attracting buyers and carrying out a deal it is not enough just to inform your real-estate agent about your intention of selling a home. I think that under the current competitive environment which is turned out at present market homeowners should draw everyone they can to imagine in the process of selling a home: they should email a property brochure to real-estate investment groups, encourage friends and relatives to talk up their house to anyone interested in purchasing a property, etc. It is advisable also to stipulate with your real-estate agent for possibility of commission discount in case of finding a buyer on your own.
 

I suppose homeowners should take into account further lowering in home-prices at many real-estate markets. Thus they must understand that the longer they sell their house, the more money they lose. They should be enterprising and prompt while making up their mind especially when the offer seems good enough. But they shouldn’t be too quick to turn down an offer if it doesn’t seem alluring enough, because in conditions of the housing market downward trends making a deal now, instead of later, can save them money in the end.
 

I think also that today’s home-sellers must be more flexible and pliable while negotiating with buyers since it is obvious that buyers are at the heard of the market today. Homeowners should offer concessions to buyers if they want to find and hold them.
 

One more thing that can help homeowners to hasten a sale and to enhance a chance of arranging lucrative bargain, in my opinion, is spending some time and money on heightening attractiveness of their homes. For instance, they can do minor repairs, clean out closets and garage, get rid of all the old needless things (which they can send to storage, donate it to charity or have a garage sale). All these arrangements will make a house more appealing and make it look bigger. It is also expedient to make a landscape. But real-estate agents suggest not to do too much expenditure and to use the cheapest things you will be able to find.
 

In order to save some amount of money home-sellers can apply to a discount broker instead of addressing to traditional real-estate agents. Discount brokers offer fewer services but charge a reduced commission.
 

Thus I’d like to conclude that as any other markets real-estate market has its fluctuations when firstly sellers are at the heard and determine rules and then another cycle ensues and the supremacy passes into the hands of buyers. The latter is featured for the current market, when homeowners must do their best to negotiate a deal but there are a lot of ways for this, offered by specialists and partly described in this post. 

I completely agree with those economists-analysts who find out it quite difficult to quote a home-price in conditions of volatile market. If some years ago it was enough just to have a look at your neighbor’s house-price and to add or cut a certain sum, nowadays as the housing market is slowing this strategy practically doesn’t work. So homeowners are at a loss about what price to establish on their houses.
 

In order to attract new buyers real-estate agents have to offer rebates on closing costs or outright discounts to their clients. While single home-sellers have to resort to different unusual strategies for charging prices because traditional pricing sources (such as Web sites that list comparable home sales and appraisal from real-estate agents) are not more acceptable in the circumstances of fickle market.
 

Among the most often used strategies of marking a price I’d like to mention the following:
 

1) Setting a Range. This strategy means that instead of establishing fixed price homeowners set price bounds within which they want to sell their houses. And then they consider offers from buyers and choose the most preferable one. Many brokers often use price ranges. Homebuyers usually offer a price near of below the low end of the range, and home-sellers accept the highest price from proposed. I compare this approach with a tender or auction, when you settle on an asking range and buyers begin bidding war.
 

This strategy is also known as “value range pricing”. It appeared initially in Australia in the early 1990s and was adopted by some California brokers afterward. Range pricing strategy is used by some real-estate agents throughout the USA, but it’s not widely practiced.
 

This approach is used, for instance, by Carlton Lund, a broker in Carlsbad, Calif., who proposes a spread of between 10% and 12% and says that the greater part of the homes he works with are sold at the higher end of the range. Thus he regards this strategy as quite convenient and advantageous.
 

But a professor at Florida Atlantic University and co-author of a related study published last August in the Journal of Real Estate Finance and Economics, Marcus Allen, has another point of view on this strategy. He calls it “a novelty pricing strategy” and point out that using a range increases the duration of selling a home by 5% and don’t affect final price.
 

2) Slashing Early. When choosing this strategy homeowners name a price and cut it in few weeks. Cutting the price is a common practice used by many real-estate agents. Sellers usually make a reduction in 30 or 45 days after the first charging of a price. According to Rob Cohen, a real-estate broker in Boston, this approach is quite acceptable and especially in the circumstances of slowing market, when price is often a moving target. He usually marks a price at or below market and hold for a while.
As for me I consider this strategy as rather acceptable for those who want to sell their homes at the highest prices. Thus, they should determine a price at such a high level at which they would like to sell their property and then just observe the respond of buyers. If buyers don’t accept such a high price they always can cut it, but while setting as high price as they like sellers have a chance to get the best possible deal.
 

3) Slashing Often. This strategy differs from the foregoing by the number of making reductions. While that approach stipulate cutting the price granted on one occasion only, “slashing often” strategy implies as many reductions as you like until you reach the lowest price you can afford to sell.
I think that in the volatile market this strategy is especially good.
 

4) Playing With Blocks. This approach envisages setting a price in accordance with the blocks in which buyers are distinguished.
The National Association of Realtors carried out investigations last year that revealed that eight out of 10 buyers begin their home search online and look for homes only within price bounds that they enter into search engines.
 

Melinda Noel, Houston real-estate broker, classified buyers into following blocks:
·        those who tend to look in $20,000 to $25,000 increments for homes under $500,000;
·        those who look in $50,000 increments for homes between $500,000 and $1                          million;
·        those who look in $250,000 increments for houses over $1 million.
Thus she suggests sellers to quote a price at the top of a break point and then if the buyers don’t respond to cut a whole notch – for example from $749,000 to $699,000.
 

I think that the main advantage of such naming a price is taking into account tendencies in buyer’s behavior.
 

Thus according to the existing approaches while setting a price on your property you can start with high price and cut the figure every few weeks, drop the price to a different bracket or give a range of numbers rather than one fix figure. So you can choose any strategy at your discretion.

Since housing boom is coming to the end and most of American real-estate markets are cooling all the participants of the markets from homeowners to real-estate agents are concerned about further changes in home prices.
 

I suppose those who want to forecast movement of home prices to apply to the USA Market Risk Index offered by PMI Mortgage Insurance Co.
 

Mentioned index is based on data from the Office of Federal Housing Enterprise Oversight, the Bureau of Labor Statistics and the PMI affordability index. It is measured from one to 1,000 and is calculated for 50 of the country’s largest metropolitan areas.
 

If an area has index score 100 this means that the area has a 10% risk its home prices will decrease over the next two years. Higher index values mean a greater chance of home-price decrease in the future.
 

The medium Market Risk Index for the country’s largest metropolitan statistical areas was 288 in the first quarter of the year; it raised one point from the last quarter and 70 points from a year ago. While 25 metropolitan areas had a rise in risk, 20 had a decline within the quarter. The quarter’s risk index was not calculated for the New Orleans area due to the impact of Hurricane Katrina.
 

According to the chief officer of PMI Mortgage Insurance Co. Mark Milner “this quarter’s data signals that in many areas the expansion of the housing balloon has slowed substantially”.
The risk index measured higher than 500 for thirteen metropolitan areas. The highest scores had such areas as San Diego-Carlsbad-San Marcos, Calif. (599), Nassau-Suffolk, N.Y. (589), Boston-Quincy, Mass. (588), Santa Ana-Anaheim-Irvine, Calif. (588), Sacramento-Arden-Arcade-Roseville, Calif. (585), Riverside-San Bernardino-Ontario, Calif. (583), Oakland-Fremont-Hayward, Calif. (582). Such index scores indicate a 50% or higher risk of home-price reduction in the next two years.
Five areas had index scores from 400 to 500: New York-White Plains-Wayne, N.Y.-N.J. (498), Las Vegas-Paradise, Nev. (481), Newark-Union, N.J.-Penn. (459), Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (441), Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va. (431).
 

Four top metropolitan areas had index values from 300 to 400: Miami-Miami Beach-Kendall, Fla. (359), Minneapolis-St. Paul-Bloomington, Minn.-Wis. (355), Detroit-Livonia-Dearborn, Mich. (337), Baltimore-Towson, Md. (307); two areas – from 200 to 300:  Tampa-St. Petersburg-Clearwater, Fla. (294), Virginia Beach-Norfolk-Newport News, Va.-N.C. (278).
 

For twelve areas index scores was from 100 to 200. Among them Warren-Troy-Farmington Hills, Mich. (184), Orlando-Kissimmee, Fla. (179), Phoenix-Mesa-Scottsdale, Ariz. (175), Atlanta-Sandy Springs-Marietta, Ga. (165), Denver-Aurora, Colo. (149) and others.
 

And thirteen metropolitan areas had a risk index less than 100. Among them Austin-Round Rock, Texas (93), Charlotte-Gastonia-Concord, N.C.-S.C. (87), Houston-Sugar Land-Baytown, Texas (83), Dallas-Plano-Irving, Texas (80), Nashville-Davidson-Murfreesboro, Tenn. (71). Pittsburgh had the smallest Market Risk Index, with a rating of 57.
 

After a small review of the Market Risk Index scores in the top 50 metropolitan areas, with the exception of New Orleans, I’d like to conclude that the most risky areas are situated along the coasts. Thus eight areas with the highest risk are located in California and five are in the Northeast.
And among the least risky states I want to mention Texas, Ohio and Indiana. So I think that if you want to save money while investing in realty it would be better to choose underlying areas for those purposes. Because the chance of home-prices decline within the next two years in that states is less then 10%.
 

But for full confidence I think it would be expedient to apply also to the S&P/Case Shiller Home Price Indexes, which were designed to measure the average change in U.S. home prices. The indexes based on 10 cities - Boston, Miami, New York, San Diego, San Francisco, Washington, D.C., Chicago, Denver, Las Vegas and Los Angeles - help homeowners to hedge against price fluctuations in their homes.

Today’s market is oversaturated with sophisticated software for home design that enables homeowners to try themselves in remodeling of their homes. So with the help of computer program they can put everything they want to any place at their discretion and see how it will look. And what is more, they can do so many projects as they like and choose the best one, which suits their taste. Thus they can place windows, doors, walls, partitions, furniture wherever they want and even see how shadows will fall at different times of the day.
 

People like to spend a lot of time on home remodeling, maintenance and repair with the help of design-it-yourself software. And despite the cooling of housing boom homeowners still spend enough money on their homes; they put money especially into kitchen and bathroom. Maintenance expenditures grew up to $215 billion in 2005 from $199 billion in 2004, according to the Census Bureau.
 

All this impelled companies to produce and put on the market new lines of home-design software. The latest programs possess realistic graphics, automatic processes for complex steps like adding cabinets, and thousands of materials, textures and even landscaping plants to choose from, versus cumbersome and crude computer-assisted design programs of the early 1990s.
 

Among the most sophisticated home-design programs I’d like to mark out the 495$ program produced by one of the two dominating at the home-design-software market software companies Chief Architect Inc. This program includes more than 1,500 sample plans and thousands of doors, windows, lighting and other furnishings that users can put into virtual rooms. There is also a scaled-down $149 version of the mentioned program and a $19.95 program called Picture Painter that allow users upload photos of a house to see how they look with different paint colors and materials.
 

Another big software company, Punch Software LLC, rolled out the program which contains more than 2,000 paint choices, hundreds of furniture options and even lets you to design a swimming-pool. And what is the most amazing to me that this program also allows the project-maker to see the way sunlight enters the home at various times of the day.
 

In accordance with NPD Group, a Port Washington, N.Y.-based research firm, interest in home-design software went up in 2005. So Americans’ expenses on home-design software increased 1.2% to $24 million in 2005 since, NPD says.
As for me, I would better apply to assistance of a good specialist (designer of architect) in order to work out a layout of my dwelling. I assure that all the sophisticated home-design programs which overfilled the market don’t give all the necessary information and knowledge on designing houses and inexperienced homeowners without impotent skills and accomplishments on construction and designing can make very serious mistakes which correction will require much money and time. Thus while saving money in architects’ and designers’ fees initially they run the risk of loosing much more afterwards. For instance most of the existing programs don’t take into account rules of state building codes. Or some less expensive software don’t enable to create the house’s frame, adjust wall thickness or customize rooflines.
 

There are so many examples when the absence of such essential construction elements as key beam or pipes in a toilet was discovered in home-made projects. Other projects placed the bathroom too far from the main plumbing lines, and the building and installment of such bathroom created additional difficulties and required extra expenses. That is, while dreaming up their design-projects homeowners don’t connect them to plumbing or central air system, and don’t take into account support walls. All this is explained by the luck of skills and knowledge. As says Ben White, vice president of a design and construction firm in Evanston, Ill. Benvenuti & Stein Inc., “Homeowners can draw to their heart’s content, but that doesn’t mean it’s legal or it’s buildable.” And I completely agree with him.
 

Thus the majority of those who appealed to the home-design software after spending a lot of time on working up their own projects were compelled to refuse them because of their discrepancy to the legislation or construction norms and standards, or because of their unfeasibility.
 

So I consider home-design software as auxiliary instrument for well-prepared specialists (designers and architects), which facilitate their work and allow them to save time and also to make visual demonstration for their clients. But such do-it-yourself products don’t fit for the use of ordinary homeowners. I am fully confident that only people with construction and designing education can model design-projects with the help of these programs. For others, in my opinion, it would be better just to tell their preferences to a good specialist and to rely fully upon his skills.