Archive for November, 2007

YouTube-HHT Documentary Series

Wednesday, November 28th, 2007


YouTube is one of the wonders (along with GOOGLE) of the times in which we live.

Thanks to YouTube.com, we can see things that were not possible several years ago - before amateur videographers roamed the earth documenting the everyday and the mundane. The theme of this selection is historic homes that have fallen from greatness to an abandoned and desparate state. There is hope for some, not for others, but all served as extraordinary vessels through which history has flowed.
  
On our website www.HistoricHomeTeam.com, we have begun a series based on the talents and hard work of those videographers who are documenting historic homes, restored mansions and Abandoned Treasures (see below or on our website). Select menu on the viewer to see all the video selections.


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“CHATS” About Historic Homes

Wednesday, November 28th, 2007


There are so many historic home stories and so many proud historic home owners, this is an opportunity to CHAT about our historic homes. Tell us about your house, your improvements, your problems & disasters. Make us laugh. Make us feel sorry for you. Share your historic home philosophy. This is an open forum and civil discourse does not require signing in. Post your story or comment and let the hand hewn chips fall where they may…

Enter your thoughts below and click “Submit Comment”.


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Another Rational Real Estate Market Article (Is this a Trend?)

Sunday, November 18th, 2007


     I know that this is my second blog this week about the positive aspects of this real estate market, but I am excited to read thoughtful and rational articles for a change in the national media. Those of us that are in it, have a different perspective from those who “report it”. Today’s Washington Post article by Kenneth Harney - Bits of Bad News Obscure A Big Truth About Wealth - echoes what most people in the business have been saying for over a year - yes, there has been an adjustment in home prices downward in the last year or so, but one has to be mindful that this pales next to the huge increase in the previous years. Harney begins his article - “With the daily bad news about the state of the housing market, it’s easy to lose sight of some larger economic realities: Despite declining prices in many markets, homeowners still control near-record equity holdings, just under $11 trillion.” He goes on to say, “The second-quarter equity number was down about $6 billion from the first quarter of the year but was $48 billion more than it was at the end of 2006.”  The numbers are large to be sure, but the proportions are not. As Harney continues, “in an $11 trillion marketplace, a $6 billion giveback in a cyclical correction is not a cause for panic.” In fact, it is extremely small .0005%. According to Standard & Poor’s Case/Schiller Home Index home prices in the Washngton DC area have more than doubled (over 100% increase) between 2001 and 2006, then dropped back 4.2% by August of 2007. Some areas are already showing price gains, but what if a housing market continues to show weakness, Harney is saying, “even 10 percent and larger average price drops in once-booming areas…have left owners with most of their paper gains intact.” If one focuses on the last year or so (as much of the media analysis has been), yes - the market does not present a pretty picture, but in the larger context, it is looking pretty darn good.  In fact, from 1997-2007, housing has beat stocks & bonds with an annual investment return of 10.93% (way ahead) and a volitility ranking of 2.07% (far lower). Harney concludes his article with - “The housing-price correction cycle continues in many — not all — parts of the country. It is sobering or painful for just about everybody except buyers. But in the absence of a recession or major capital-market crisis, the fact is that most homeowners’ equity stakes are intact, or even growing.”

      I believe that Mr. Harney has peeled away the bitter rind of speculation to which we are constantly exposed, inviting us to look into our own experience objectively with regard to the real estate market and assess if we are better off then when were before.  Think about it….if you purchased a DC area home in 2001 for $400,000 by investing $80,000 (20% down) and that house was then worth $800,000 in 2006, you made $320,000 on your original investment (not to mention the thousands in tax savings). What other market venue can make that kind of magic happen. If in 2007, your house is worth $720,000, then you made $240,000 over 6 years. The fact is a homeowner can expect substantial growth in their home investment, but it is a long term investment.

     The challenge for a seller is to appreciate the real estate market for what it is. He can still make a significant profit on the sale of his property, while being realistic about pricing, and then go on to purchase his next home benefiting from the low interest rates and large inventory. 

     The challenge for a buyer is to recognize that now is the time to invest in a home. It is a target rich environment, interest rates are historically low and many home sellers are pricing their properties attractively.


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News from the Real Estate Trenches! (Its pretty darn good!)

Tuesday, November 13th, 2007


     This 3rd quarter 2007 report - just out - from the MRIS (the DC area multiple listing and statistics monolith). It is very positive about the market conditions in the DC area. One can see that the statistics are in surprising conflict with gloomy media reports. The 22 PAGE REPORT.  I have pulled out the high points and placed them below, however, the conclusions of the report are very clear. The real estate market in the METRO DC area is off its high of several years ago, but it is by no means depressed. Alot of “qualified” people are buying homes - the prices in many METRO areas are increasing, days on the market are shrinking, and the market is stabilizing. In short, home buyers who do not listen to the ”national” media are benefiting from the exceptional inventory of well priced homes and historically low interest rates. The report concludes that their will be an “uptick” in sales in the spring and an improved market by summer. The buyers that I am working with already know that their best buying opportunity exists now. Come spring there will be more competition, less inventory and perhaps higher interest rates.  

     A word to historic home sellers, especially in the outlying areas of the METRO DC area. This report is a very positive. Already the Montgomery County market is heating up, with 4% price increases in many areas (re: statistics in this report). This will continue to encourage buyers to look further out for affordable, sensational historic properties.

 THE REPORT HIGHLIGHTS-

   After a languid winter and spring, many experts expected the slow pace of sales to continue through the summer, traditionally a slow time in the industry. The residential market remains in an adjustment phase at 3rd quarter 2007, though there are signs of creeping back toward equilibrium. Average metro-wide prices in July and August were more than 4% above prices the same time last year, and showed a slight increase in September. The average number of days on the market has consistently declined since the beginning of the year, indicating the market is on a path to stabilization.
But the gains are uneven, with desirable areas inside the Beltway showing strong price gains and shorter listings, while the reverse is generally happening as distance from Washington increases.
     According to Freddie Mac, the average on a 30-year fixed rate mortgage in September 2007 was 6.38%, down 2 basispoints from the same time last year, and up 22 basis points from March’s low of 6.16%. Uncertainty surrounding
interest rates paired with tighter lending practices have worked against buyer activity accelerating in the market.
     Today’s market requires REALTORS® to employ a bit more patience with clients, considering the inventory available, and to use creative marketing techniques to connect buyers and sellers. The Wall Street Journal recently reported that clients are becoming more demanding of their agents, who are increasingly being asked to help declutter homes and attend to other personal chores. But sellers recognize the importance of using a REALTOR® in the slower market. After sale prices declined more than 3% in 2006, an analysis of MRIS data shows an increase in sale prices eight out of nine months this year (on a trailing 12-month basis) for all housing types.

     Buyers continue to have more negotiating power because of the large supply of homes for sale. Today’s buyer enjoys a high level of negotiating ground for price and incentives. Unlike buyers five years ago, buyers should be mindful of staying in a home for its long-term investment value. The Washington Post recommended that buyers only enter the market if they plan to stay in a home for at least five years. Financing is also a concern for buyers. The Credit Crunch has caused banks to tighten lending standards, reducing the pool of eligible buyers in the market. Sellers have been forced to become more patient, as the number of days on the market remains above the long-term average of 76 days, averaging 90 days in the Washington metro through the 3rd quarter. Buyers lack confidence in the market, which continues to be a hurdle for sellers.

     Home price appreciation has slowed in many areas of the country, and is negative in a few markets that experienced rampant speculation. However, a dramatic drop in consumer spending has not yet been felt in the United States due to a strong economy with consistent job growth and wage increases. According to Freddie Mac’s Primary Mortgage Market Survey®, in the 2nd quarter the refinancing share of mortgage applications averaged 42%. The average age of the loan refinanced was 3.5 years old; the average home appreciation over that time was 23%. Homeowners who bought as the market was heating up in 2003 are now enjoying the appreciation of the past few years. In the Washington metro area, the Office of Federal Housing Enterprise Oversight (OFHEO) reported a 1.2% annual increase in home prices through the 2nd quarter of 2007, compared to 15.7% the prior year. (It is important to note that OFHEO and NAR use different methodologies to calculate price changes.) The Washington metro is following the same trend as some other metro areas around the nation, with home prices still rising but at a slower rate.

Reductions in price growth in most markets and elevated interest rates have taken away troubled borrowers’ options to access home equity or refinance their mortgages for recently purchased homes. This has led to a rise in subprime foreclosures in some areas, further exacerbating the inventory of unsold homes throughout the United States. In response to the rise in the subprime foreclosure rate, which many attribute to predatory lending and the lack of lenders properly educating borrowers on loans, organizations like NAR have begun to emphasize the importance of implementing responsible lending policies throughout the industry.

      Despite volume below the long-term sales rate, the Washington metro area housing market still showed strength in the 3rd quarter of 2007.An analysis of MRIS data shows that total sold dollar value was $6.9 billion in the 3rd quarter, compared with $8.7 billion in the 3rd quarter of 2006. Total volume year to date is $21.7 billion, compared with $26.1 billion in the same period a year ago.
     The Washington area economy continues to expand at a decelerating pace, with job growth and federal procurement
spending growth easing in the region. Washington area job growth continues to outpace the supply of affordable housing units. The housing market is still adjusting to the rapid price appreciation experienced in 2004 and 2005. Sellers have been slow to accept lower prices, but buyers have become reluctant to overextend themselves. Sales volume has dropped and the average number of days on the market remains above the long-term average of 76 days. Fluctuating interest rates and the Credit Crunch have affected the pool of buyers, causing the adjustment of the housing market to take longer than most experts predicted.
By spring 2008 we expect that consistent demand (generated by steady job growth, net migration, and a rising immigrant population) and a decline in construction will stabilize pricing, leading to an uptick in sales activity, with improvement in market conditions appearing by summer.


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Green Restorations of Historic Homes

Tuesday, November 13th, 2007


Cathleen McCarthy - Smart Homeowner
Whether it’s a cozy urban bungalow or a rambling Georgian mansion, renovating old houses is one of the best things homeowners can do for the environment. Not only are they preserving the cultural heritage and craftsmanship of a bygone era, they’re eliminating the environmental impact of constructing a new house. As preservation architect Carl Elefante of Quinn Evans Architects in Washington, D.C., puts it, “The greenest building is the one you don’t build.”But sustainable historic preservation can be tricky, as anyone knows who has tried insulating a drafty Victorian without destroying original plaster walls or leaded windows. Renovating an old house usually entails some sacrifice of the original structure to create a healthy, energy-efficient environment — but not as much as you might think.RELEARNING OLD LESSONS

Much of what we think of as modern green design was taken for granted a century ago, when most homes were built with local and recycled materials, reflective roofs, permeable walkways, operable windows, proximity to public transportation and natural-energy heating sources. “Greenbuilding is nothing new. We’re just relearning old lessons,” says Walter Sedovic, a New York architect who specializes in both historic preservation and sustainable design, and is certified by the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) program.

Alas, what works for building new green homes doesn’t always work for renovating historic ones. Preservationists complain that sustainable design advocates often promote new building at the expense of preservation and adaptive reuse. Even the term “sustainable building” seems to refer to new construction. “In most of the English-speaking world, historic preservation is called ‘heritage conservation,’ so there’s a direct parallel with resource and environmental conservation,” points out Mike Jackson, chief architect of the Illinois Historic Preservation Agency.

Many traditional materials and assemblies are not acknowledged by current greenbuilding standards. “Timber, for example, is considered inconsistent and prone to insect damage by today’s standards, but it’s actually far more resilient alone than with steel added [as braces and connectors], which makes it rigid,” Sedovic explains. “Buildings need to move with the seasons.”

Likewise, lime mortar and old bricks are softer, less consistent and more malleable than modern cement and bricks, qualities that have allowed old buildings to survive, Sedovic says, even through hurricanes. “There is a fallacy that stronger is better,” he says, “but with historic buildings, the ‘weakness’ of traditional materials is better suited to last for centuries.”

Going for the green in a historic home is, in many ways, the antithesis of achieving the solar-paneled modern house. Green preservation is all about invisible sustainability. “People want to say, ‘Aha! That’s the sustainable house, right there!’” says Sedovic. “But when it comes to a green historic home, what you will see is not something readily identifiable, just a traditional building doing what it was originally designed to do.”

HERITAGE ZONES

When undertaking a restoration project, it helps to divide the home into three levels of historic value, or heritage, according to Jackson. “Most important in terms of preservation is the front, the part visible to the world, and historical features just inside the front door like the fireplace, pocket doors and ceiling medallions,” he says. Original windows and exterior surfaces in this zone should be preserved if at all possible.

The sides and back of a house are considered a secondary zone, where materials like siding and windows are replaceable if necessary. The third zone is the part of the house that is invisible to the outside world, such as basements and attics, where alterations don’t affect the home’s historic appearance.

As long as it works aesthetically with the rest of the house, a kitchen can usually be updated without destroying heritage. “If you’re looking at a house built in 1900 with a kitchen from the 1970s, that history was already altered,” says Jackson. “People tend to remodel kitchens every 15 years, and the cycle is getting shorter. What you do with the kitchen is a modern question, not an authenticity question.”

Trying to make a home energy efficient is where preservation and green design objectives typically clash. But lighting and heating upgrades often can be done with minimal damage to historic features if major alterations take place in attics and basements, the least visible zone. Also, if there is sufficient space between lathe and frame, you can pump foam or cellulose insulation into the chambers behind plaster walls.

“With historic homes, the biggest issue is with windows and walls,” says Stephen Farneth, a principal at the Architectural Resources Group in San Francisco. “How do you insulate the wall assembly if the interior finishes are really outstanding? Sometimes we don’t. We find other ways of conserving energy.”

Insulating in that third zone, especially the attic and basement, should be the first step of any green restoration. Pay particular attention to the sill plate, the point where the frame meets the foundation, a notoriously leaky point in old houses. Use caulk and expanding foam where possible.

An energy audit by a utility company or energy contractor can help pinpoint trouble spots using infrared photography and/or a blower door test, in which a powerful fan device is set up in an exterior doorway to create a strong draft inside the house, making it easy to identify air leaks in the building envelope. “Owners of historic homes can cut 25 to 35 percent off their heating bills by doing an energy audit, then insulating attic and basement,” says Jim Cavallo, an energy auditor and associate editor of Home Energy magazine. Cavallo notes that he charges between $350 and $500 for an energy audit, depending on house size.

MYTHS ABOUT WINDOWS

Leaded and stained glass windows are integral to the character of an old house. Unfortunately, they are frequently as drafty as they are charming. Replacing them with vinyl or aluminum windows can drastically change the appearance of a historic house, but many people assume this is the only solution. Everyone knows double-glazed panes beat leaky, century-old singles, right?

Actually, the draft has only partly to do with glass. “At least half the problem is in the way the window meets the sash and wall structure,” says Sedovic. “Often, manufacturers’ claims of efficiency are actually a measure of the glass, not the window unit. As a result, poor choices are made relative to the expense and aggravation of doing window replacements.”

Preservationists sometimes suggest installing storm windows on the interior in order to maintain the outer appearance of original windows facing the street. However, replacement windows have pushed storm windows out of the marketplace, so you might have to look beyond your local home improvement store to find good ones.

Wooden storm windows such as the storm-and-screen combination sold by Marvin Windows and Doors are effective and authentic-looking. Less expensive options include weather-stripping and insulating wood frames with spray insulation, and reglazing panes. In general, restored wood windows look better, last longer and add more to the resale value of a historic home than vinyl or aluminum replacements.

Roofs on old houses can often be worse energy eaters than windows. “On a lot of old houses, the walls and windows are proportionally overwhelmed by the size, character and performance of the roof,” says Elefante. “In that case, don’t tear the windows out. Address the condition of the roof.”

Even a small roof can have a big impact. An experiment on a couple blocks of Philadelphia row houses a few years ago found that black tar on the flat roofs was absorbing sun and heating up the upper floors. Replacing the tar with a reflective silver coating not only reduced temperatures inside the houses but in the surrounding neighborhood as well.

A SCIENTIFIC APPROACH

Along with their aesthetic value, original materials also contain significant “embodied energy,” an environmental benefit destroyed by modern replacements. “You need to look at the fundamental quality of the materials — whether plaster walls, slate roofs, copper gutters or wood windows — and understand they have lasted a long time and will continue to last if treated reasonably well,” Sedovic says. “If a window has to be replaced in three to 10 years, how does that compare to something that’s been in place for 50 to 100? It’s important to look at the cost long-term.”

Unfortunately, there is not a lot of hard evidence to help owners of historic homes, who are contemplating “improvements” such as replacement windows, make the right decisions. “It’s hard to make a comparative discussion between the benefits of a historic casement vs. replacing it,” Sedovic admits, “because there is almost no data available.”

That may be about to change. Interest in sustainable building has led to experiments in green historic home renovation around the country. In Chicago, for example, the Historic Chicago Bungalow Association (HCBA) gathered a team of preservation and greenbuilding experts and began renovating abandoned 1920s brick homes five years ago, with the idea of sharing the results with local homeowners. Where possible, original exteriors, windows and walls are preserved and paired with various modern and efficient energy systems.

This partial insulation ended up being more cost-effective than the $10,000 geothermal system installed in a bungalow down the street.

Annette Conti, executive director of the HCBA, says she expects better results with a geothermal system the HCBA will install in a larger historic home this year. “The larger the house, the better geothermal works,” she notes. “Every project will be slightly different because every home is different and its energy use is different.”

Conti, whose background is in historic preservation, plans to focus on the issue of windows this year. “It alters an old house so much to lose the interesting old window styles,” she says. “The best compromise we’ve come up with is to save the windows on the front of the house and use [replacement] vinyl ones on the sides. Now we get to test it over the next 20 years and compare the performance of historic to vinyl windows.”

Likewise, the Green Building Program of the Office of Sustainable Development in Portland, Ore., is helping local owners of historic homes renovate responsibly. Since winters are relatively mild in Portland, insulating old houses is less of an issue than in Chicago.

Many preservationists say regional initiatives like these may be the key to preserving old homes in a sustainable way. After all, climates and conservation issues differ dramatically from one region to the next.

“What’s important in New England is very different from what’s important in Tucson, where water conservation is a big issue,” says Jackson.

One point is certain: American homes are getting older and we have to find ways to make them work effectively.

“Many people are intoxicated with the new,” says Elefante. “But step outside and look around. Everything out there has already been built. We can’t just find solutions in the cool stuff built last year. We have to find solutions to the stuff that’s already there. Tearing it all down and starting over — that’s just not a good solution.”


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