The Implications of Renting on Minimum Wage in a Major City

The following post is by Jennifer Riner of Zillow

Budgeting for an apartment on minimum wage isn’t easy, especially with rents continuing to rise in major U.S. cities. In fact, in most large metros, renters need to earn at least $24 per hour to afford a median-priced rental. So how do low-income leaseholders afford to live in the city?

First, many lower-income individuals spend far more than 30 percent of their incomes on rent. With extremely tight funds, living expenses like rent inherently consume large portions of total earnings. Further, the median rent price in any given city encompasses all neighborhoods, unit sizes and types of homes, with extreme variables manipulating general figures. Housing below the median rent price allows minimum-wage earners to rent – although options are often sparse.

Low-income individuals moving to major metros might be curious to know the percentage of income they must spend to afford the median rent. To calculate, assume single-income households work 2,000 hours per year and dual-income households work 4,000 per year based on a 40-hour work week and 50 weeks paid per year. Sometimes, median rent supersedes monthly income, in which case individual(s) must wait for new listings or look outside of city limits.

Chicago

The minimum wage in Chicago is $8.25, not far off from the federal rate of $7.25. With $8.25 per hour, a single-earning household makes about $16,500 per year or $1,375 per month. Assume a single-earner takes care of elderly relatives or young children and would therefore prefer a single-family home with easy wheelchair access or outdoor space for the kids. Given the median rent on a single-family home in Chicago is a whopping $1,700 per month, single-earning minimum wage households would have to budget 124 percent of their income toward rent – a clear impossibility.

While the city may price out single-earners, the suburbs welcome a wider range of budgets. Oak Lawn is a small community just southwest of Chicago. A 1-bed, 1-bath single-family property in Oak Lawn runs for $925 per month, costing a single-earner 67 percent of their monthly income. Although the portion of income spent on housing is still high, Oak Lawn has quality school options for children. Sward Elementary School, for example, is ranked 9 out of 10 by GreatSchools. Low-income families can afford rent without sacrificing their kids’ education.

Alternatively, dual-earner minimum wage households in Chicago make about $33,000 per year combined, or $2,750 per month. A young couple with this income searching for apartments in Chicago would be advised to only spend 30 percent, or $825 per month, on rent. Since the median rental price for 2-bedroom units is $1,550, minimum wage earners must spend 56 percent of their income on rent in the city, not allowing much room for lifestyle costs. While housing options for $825 per month exist, tenants should expect to sacrifice location and size at lower price points.

Denver

Although less populated than Chicago, the minimum wage in Denver is fairly comparable at $8.23 per hour. Using the same calculations as above and assuming an individual works about 2,000 hours per year, their total income equates to $16,460 per year, or $1,371.67 per month. Following the 30 percent rule, Denver singles should allocate $411.50 per month toward rent. Consider again a single-earner renting a single-family home. Similarly to Chicago, minimum wage workers in Denver cannot afford the median rent for a detached home in Denver – in fact, at $1,900 per month, the median rent for a detached house costs almost 140 percent of their total income. And although less expensive options within city limits aren’t impossible to find, school ratings tend to drop correspondingly.

A young couple looking to rent in Denver making a combined income of $2,743.34 per month should keep their rent budget around or below $820 per month. However, the median 2-bedroom price in Denver is $1,850, which would take up 68 percent of their total income, a larger portion than renters in Chicago with similar lifestyles and the same housing needs face.

Philadelphia

Philly offers the highest minimum wage out of the three cities on this list. At $12 per hour, minimum wage earners can expect to accumulate $24,000 per year, or $2,000 per month. Single-earners seeking rentals in Philadelphia with extra space can rent single-family properties for $1,300 per month (median), which compromises about 65 percent of one minimum wage paycheck. Although rent still consumes the majority of income at this level, individuals in Philly at least have the option to rent single-family homes on one paycheck, unlike in Chicago and Denver.

Dual-earners in Philly are even better off while renting. Somewhat surprisingly, median rent prices for 2-bedroom units are equivalent to single-family homes. Dual-earner households earning $4,000 per month and spending $1,300 on rent use about 33 percent of their income on rent – the lowest portion spent out of each scenario in all three cities. Philadelphians in this situation have the ability to allocate funds toward lifestyle needs and future savings – a financially responsible move potentially leading to home ownership down the road.

Out of the aforementioned cities, Philadelphia is the most affordable for minimum wage earners, given the median price points of varying rentals and the mandated pay rate.

Starbucks and Buying a Home

As frugal as I aspire to be (and yes, I do want to get better at it!), I do have my spending weaknesses.  One of them is coffee.  Well, it actually might be tea.  Regardless, it manifests itself in occasional visits to coffee shops.

I enjoy going to them from time to time, in order to get some work done in a relaxed setting.  It’s not for everyone, and not even for me all the time, but sometimes I do enjoy getting a coffee or tea while accomplishing some things.  Had the opportunity to do just that the other day, when my oldest was at an event that took several hours (and parents weren’t allowed there).

Actually, I couldn’t imagine not living near conveniences such as this.  I realize that growing up, I never had anything like this.  However, with the hectic pace of daily life, these are the types of things that just seem to be a part of the landscape.  No matter that I’m actually eating most meals at home, and working on an otherwise healthy diet (more on that in another post).

Anyway, apparently others value these types of things too.  According to this interesting article on Yahoo! Finance, homes in close proximity to a Starbucks have been more likely to increase in value.

Now, with any analysis such as this, there could be any number of questions.  The first is the whole chicken or egg concept.  What truly drove these home prices to go up? Is correlation an indicator of causation?

There could a variety of variables that could factor into this correlation.  Maybe there are other amenities or a similar profile that tends to accompany Starbucks in a community (disposable income, etc.) that play a role.

Whatever the case may be, it doesn’t surprise me to read something like this.  I distinctly remember a conversation with a couple who was looking for a house some years ago, where they were describing why they liked a certain community that happened to be very different from where they had been living.  The guy said, when talking about what they really wanted (paraphrased): “It would be great to be able to wake up on a Saturday morning and just go the Starbucks a block or two away”.

No mention of anything else right away, just the idea of being in a cozy suburb with a little downtown that had a Starbucks within walking distance.

Personally, I would like to think I put more value on:

  • School systems (see discussion of good schools or nicer home),
  • Safety
  • Proximity to employment centers
  • Proximity to downtown (I live in the Chicago area)

But you know, even though they aren’t important, coffee shops such as Starbucks and other dining establishments do add to a community.  I think that going through my past expenses might attest to my past behavior being consistent with that sentiment!

So I have to ask you:

What attributes are important to you when evaluating a community?

Are you surprised by the results of this study?

6 Cost-Effective Upgrades for Investment Properties

upgrades for investment propertiesRentals may be temporary solutions, but leaseholders can still be selective about the appearance of their units. Renters typically don’t invest in upgrading rental units because they can’t receive a return on their investment. At the same time, renters strive to be comfortable in their surroundings, albeit impermanent. Therefore, it’s in a landlord’s best interested to keep units neutral, up-to-date and clean to satisfy the majority of tenants.

With so many people choosing to rent, investment property owners must upgrade units to attract lessees. These six home improvements are inexpensive alternatives to complete demolition, but still transform dilapidated rentals into fresh, eye-catching spaces.

1. Paint

Painting is one economical, do-it-yourself project that transforms the look of rental units. Dark and dated interiors benefit from light paint colors that make rooms appear more modern and spacious. Even apartments equipped with ample natural light can optimize brightness by incorporating pale hues on walls. Don’t go too shiny – opt for matte, light gray or off-white tones. Incorporate one or two different colors throughout apartments to create harmonized design. While neutral tones may not be unique, they have universal appeal and widen the potential applicant pool.

Paint can go beyond the walls, too. Revamp builder-oak cabinets with basic white paint. Make sure to remove cabinet doors prior to painting to best ensure even applications. Use small brushes to reach inside divots to prevent missed spots in grooves and stenciling.

2. Floors

While more costly than a can of paint, upgraded floors create sleek atmospheres that dated carpet lacks. Hardwood planks are a popular and aesthetically-pleasing option, but may not be within budget – especially for larger townhouses and single-family rentals. However, linoleum floors mimic the appearance of wood while reducing overall expenses. Linoleum requires less upkeep and is actually a more practical option for rentals that see more wear and tear than average homes.

3. Countertops

Countertops can add or completely detract from well-designed kitchens. First, they must match the cabinets appropriately. While warm, brown tones and dark granites create coziness, white and sterile kitchens are trending. The “clean” look is imperative in rental properties, since prospective tenants might be concerned about multiple leaseholders and inevitable germs.

Quartz countertops are acid, scratch, heat, impact and stain resistant since they are non-porous. Quartz doesn’t need to be sealed like other natural stones and comes in various shades and patterns. Laminate is great for owners on tight budgets, and many new styles closely replicate stone, wood and quartz. Steer clear of butcher blocks, as maintenance is arduous and time-consuming. Similarly, natural stones might be more difficult to keep in good condition throughout the years.

4. Hardware

Replacing hardware is a quick fix to make interiors look updated at virtually no cost to owners. Swap out old and dirty ceiling fans for pendant lights. Purchase new kitchen drawer pulls to complement freshly-painted cabinets. Consider updating overlooked features, such as bathroom mirrors, with more polished frames. Changing many small things has a surprisingly large impact on the feel of homes. Existing hardware can be repainted if styles, but not finishes, already match the upgraded interiors.

5. Appliances

Top-of-the-line appliances aren’t necessities for rental units. Tenants might be thrilled just to have dishwashers or in-unit washers and dryers at their disposal. Skip the fancy gadgets and go with basic, trustworthy brands in stainless steel or all-white finishes. Renters don’t expect apartment appliances to have touchscreens, and can incorporate elaborate technology on their own.

6. Staging

While often overlooked, staging is important in homes for sale and rentals on the market. Add fresh flowers to kitchen countertops and small dining tables so future tenants can grasp a lived-in feel. Float furniture away from walls to make interiors feel spacious and be careful not to overcrowd staged units. Staging is especially helpful for couples who are downsizing or transitioning between single-family homes. They feel more comfortable knowing what size furniture fits well in smaller spaces and how they can optimize apartments to best suit their lifestyles. Don’t forget to take high-quality pictures for listings, preferably during the daytime and after upgrades are finished.

Landlords can’t possibly satisfy the needs of every potential tenant. Some people want more unique features or lavish finishes, but the vast majority of renters are pleased with simple, smart spaces.

10 Factors to Consider When Buying a Home

things to think about when buying a homeBuying a home has seemingly been a part of the American life experience for many years.  While this naturally isn’t the approach everywhere in the world, it’s a unique aspect of the pattern of life for many people here.  For better or worse, it’s almost an expectation for a lot of people, and a part of what’s called the “American Dream”. You’re not alone if you’ve contemplated the various benefits of buying a home.  Have you bought a home before, or perhaps had several home buying experiences?  My first purchase was a condo in Chicago, in a gentrifying “trendy” area.  It was a time when prices were increasing, development (and rehabbing of vintage properties) was occurring at a fast rate, and people weren’t too worried about long-term risks of buying a home.  Somehow, upon eventually selling it, I ended up getting out unscathed and actually made money in the process. Today, things seem to be a bit different than that.  Okay, that’s probably an understatement, but you get the idea.  We’ve hopefully learned some lessons from the ups and downs of the market, and where residential real estate truly fits into one’s financial picture. To that end, I’ve collected my thoughts on home-buying, and put together this list of 10 things to keep in mind when buying a home:

  1.  Keep in mind your true needs in life, and where buying a home fits in.  I know this might be an unconventional or perhaps surprising first tip, but it seems like many people might fall into the trap of getting consumed with buying a home that they lose sight of other financial needs.  If you have student loans and/or other debt to eliminate, medical bills, or find yourself with very little saved for retirement, you might want to think about how important buying a home really is.  It’s not for everyone at every single point in time.
  2. You don’t naturally deserve a “dream house”.   That is, unless that dream home fits into a smart budget, of course!   Romanticizing a home can lead people to buy places that are simply not a good fit with their finances and actual needs.  Buy a house that works for you and one that you could be happy in, and the latter is of course really important! But your budget comes first and lofty dreams come second.  Yes, I’ve written about the dream house idea before.
  3. Don’t borrow up to your loan approval limit.  I can’t tell you how many times I’ve heard people talk about taking out a loan based on their loan approval.  Just because you’re approved for a certain amount it doesn’t mean that you should borrow that much.  It probably makes sense for a lot of people to borrow much less than that.  After all, it’s still debt!
  4. Analyze comparable sale data.  I think this is a great step to take to ensure that the home you’re looking at is actually priced reasonable in relation to comparable properties in the area.  Or, better yet, you might be able to pick up a home at a cheap price relative to the alternatives!
  5. Pay attention to school district performance.  Even if you don’t have kids and don’t think you’ll have any soon, this is a factor that might matter to people who eventually buy from you.   The quality of the school district matters to many people, and it might be something that is important to you too.  Pay close attention to data and don’t just rely on word-of-mouth.  I know a few couples that bought homes while making assumptions about the local schools, without realizing until their kids were close to school age that their children could do better in other nearby districts.
  6. See the potential.  Let’s say a home looks really good, except is has walls painted in hideous colors.  Maybe one room has ugly carpet.  Are those reasons to turn away? Not at all, just make a few relatively minor, inexpensive updates and its all good! Caution though, because the other side of the coin is to be sure not to underestimate remodeling or updating costs.
  7. Consider your commute.  There’s something to that real estate mantra of “location, location, location”.  It really matters in so many ways, including the commute to work.  A long commute costs time and money that can add up.  Much like the tradeoff between quality of home and school district, this one is another to keep in mind!
  8. Visit the home multiple times before making an offer.  It seems like the photos we see online don’t always tell the full story about a home.  Visiting in person can give us much more context, both cautionary as well as good! Even asking to see a place multiple times is probably smart, as you can really take a close look at things before making any big decisions.  There is no need to be shy about it!
  9. Don’t be afraid to do some hard negotiating.   There is a lot of money at stake!  It seems like when making offers on homes, the magnitude of the total purchase price can distort the value of money.  As in, people sometimes don’t worry about a few thousand dollars here and there.  What we would otherwise consider to be large sum of money, we sometimes view as incidental in home purchases.  There is no shame in driving a hard bargain, even starting with an opening offer bordering on a low-ball one.
  10. Have fun!  Okay, I know the first nine tips above were intended to emphasize being practical versus overly emotional.  But buying a home actually is a little bit different than other purchases since you’ll be living there and making memories.  Plus, it’s an exhilarating experience buying a home.  Enjoy it!

My Questions for You Which of these tips have you incorporated into your home purchase process? Do you have any other tips or experiences to share?

The Best Tip On How To Buy Your Dream Home

how to buy a dream houseFirst off, I have to admit that I’d really like to have a “dream” home at some point in the future.  Now, that ideal home wouldn’t be as lavish as many that might be seen on certain real estate reality shows, or what we might cook up in our minds.  It would be a bit more modest yet still really nice, and probably very expensive.  To the point of being well beyond my current budget.

Keeping that last sentence in mind, it brings up the question of how to save money when buying a dream home.  After all, if a dream home offers many nice features and attributes, there’s a good chance it won’t be cheap.  So, how can it be done?

Well, here is my suggestion on how to do it.  It’s simple, and can be easily applied.

Don’t do it!

That’s right, don’t buy a dream home!

Forget about buying that dream home unless you’re wealthy to the point of having your current and future needs taken care of from a financial perspective.  Note the word “needs”.  We all have to distinguish between wants and needs, and this is a great time to do it.

Now, having a place to live is a need.  One look at the personal finance hierarchy of needs can tell us that having shelter is a base-level need.  We can’t live out in the wild!

However, if we live in a place that’s comfortable enough, safe, and within our budget – isn’t that meeting a need? I think so.  Does having all upgraded features, living in a posh upscale neighborhood, or feeling awesome about how we have “made it” really fit the classification of being needs?  Nah, I don’t think so.  Do you?

Now, to be sure, we all value different things and have different needs.  Depending on where one lives, it can be understandable to focus on buying a house in a good school district.

Or, perhaps you might really want to have a manageable commute.  It’s realistic to consider the high cost of having a long commute to work.  Some of those costs extend beyond the realm of money.

Anyway, all of that being said, we still have our own practical limits in terms of how much we should spend on a home.  Nevertheless, we hear a number of comments that take a different approach

  • “It’s good to stretch for the house you want”
  • “I deserve my dream home”
  • “Buying a home is different, because home is where the heart is”

These are paraphrased, but along the lines of actual comments I’ve heard.

The thing is, as the aforementioned hierarchy of needs puts into perspective, don’t we have other things that we need before having an aspirational home?  You know, expenses such as:

  • Food
  • Medical Care
  • Retirement
  • Transportation

One might also include emergency funds and offering at least some help to kids and their college expenses.   In terms of tradeoffs, it seems to be worth considering: am I shortchanging saving for actual needs, and instead allocating that money to a nicer house that I don’t need but simply want?

So there you go.  The best way to approach getting a dream house is to ignore the impulse to actually get one.  Rather, get a home that fits your budget and comfortably meets your needs.   It will make for a happier life!

How do you feel about the idea of buying a dream house vs. one that’s just good enough and within budget?

Please feel free to share this post with anyone you know who is considering buying a home

An Example of Why You Should Read the Fine Print

Some of us tend to be more detail oriented than others.  It’s just the way we’re wired, it seems.

Furthermore, sometimes we can be detailed with certain things, and not with others.  For me, it tends to be with things I really like, where I’m particularly detail oriented.  Or, with things that really matter or can be an all or nothing proposition where a mistake could really be costly.

I’m sure we have each made our own share of mistakes, I’m no different.  That being said, there are some mistakes that we just don’t want to make, for a variety of reasons.  A couple I know recently made such a mistake.

Now, first off, these are people I like and respect.  Nice people, and bright too.  You can’t help but like them, if you know them.

Those positive characteristics are what made it kind of hard to imagine that they found themselves in a position where they had to look for a home in short order.  Basically, they had previously sold a home and were living in a nice apartment for the short-term while looking for looking for a home to buy in the community they wanted to move to.  That’s not the issue, as that part of moving into the apartment was obviously planned.

What was not planned, it seemed, was the move out.  I didn’t get all the details from the her, but the wife of this couple told me that they were to be moving within a week (this was a few weeks back).  I was surprised, and asked something along the lines of why so soon.  It came out of nowhere, it seemed, though it had probably been a month or so since I last saw them.

Apparently, there was some sort of “mixup” with the apartment lease, where an extension wasn’t signed in time.  Lo and behold, the apartment’s management then leased out the space to an other tenant, to take residency before too long. 

You get the idea: they were soon to have no place to live!

Now, as I mentioned before, they were house hunting anyway while living in the apartment.  So it wasn’t like they were in dire straits in the big picture.  However, how can you buy a place and make a long-term commitment as a homeowner when you have to time to even make a purchase? It takes time to close on a home.

The next step for them was to scramble to find another place, which they did by finding a home to rent.  That of course means that they would have to move again when they find the home they want.  Those costs would have to add up, not to mention the inconvenience factor.

I feel for them, though I of course don’t know all the details of how this happened.  My real takeaway, however, is that this serves as another reminder that we should always pay attention to the details and read the fine print!

City or Suburbs: Where Do You Prefer to Live?

We each have our own preferences in terms of where we live.  Some of that is geographic, meaning we want to be in a certain part of the country or a specific metropolitan area.  For example, in my case I choose to live within the Chicago area and have a specific reason for doing so: family.  Who knows where I could be decades from now, but that’s the area for now.

Another aspect of where we choose to live can be broken down to a decision of city vs. suburbs.  Some people love living in a city and couldn’t imagine living in the suburbs, and vice-versa.  Now, we could also bring another type of location into the picture, which would be rural areas or locales far removed from a substantial city.

Why People Like Living in the City

It’s interesting how people who live in the city, here in Chicago, tend to view the suburbs.  I should clarify up front that I’m currently living in the suburbs.  Anyway, the stereotypes city dwellers I have known (many over the years) tend to have about the suburbs tend to paint the latter as being lame, for lack of a better word.  Accordingly, here are some of the advantages they tend to rattle off either directly or indirectly:

  • More “cool” people (as said by others)
  • Diversity of people
  • Fun, trendy restaurants
  • Much better nightlife
  • Cultural opportunities (museums, theatre, etc)
  • Quick access to major professional sporting venues
  • A more cosmopolitan environment

People tend to be willing to trade off space for location in the city.  Condo or apartment living are the options for most.  Not all, but most in the popular areas.

The suburbs tend to be viewed as one giant sinkhole of culture, all lumped together.  There isn’t much distinction in the thoughts of how very different each suburb might be in terms of character and quality of life.  To the loyal city person, they’re all bland and all cut from the same boring cloth.

Why People Like Living in the Suburbs

So, I’ve heard things from the other side of the fence as well.  From comments I get from people who are devoted suburbanites, it seems like some kind of foregone conclusion that “of course” a person would want to live in the suburbs.  Almost as if the city is not a “real” option to be considered.

Here are some of the reasons I’ve heard about why suburban life is preferred:

  • Safer, with less crime
  • Better schools
  • More family-oriented
  • Quiet
  • More spacious housing
  • Less congested
  • More green

I’ve heard people talk about the city as if it’s one big, angry place.  The notion is almost that one must always keep doors locked when driving, so the bogey man doesn’t chase you down at 40mph and carjack you.  You know, knee-jerk reactionary stuff.

People in the suburbs tend to characterize the city as having areas that are either bad, trendy, or for business (downtown).  Or, the city is seen as a place to visit a few times a year to get some culture and have some fun.  Perhaps see a show, visit a popular restaurant, or see a ballgame.  Then, high tail it back to the perceived security of the suburbs.

What Do I Think?

I realize that some of the things noted above are total generalizations.  Just things I’ve heard or picked up on.  They may not even be applicable to every city or area.  Every U.S city is different, and not all provide the same city experience – and not all have the same number or variety of suburbs.

That being said, it seems like people tend to fall into one of the two camps.  Some more entrenched than others!

For me, it’s really been a matter of timing.  As in, the stage of life I am in when I have to choose.

As I mentioned, I currently live in the suburbs.  So, you can see where I ultimately decided to live.  When looking at the advantages and disadvantages of each type of environment, suburban living won out.  Again, just based on this stage of life.

Currently, what I value most is safety and good schools.  I’ve talked before about how I think schools are important when buying a home, and how a lesser quality home in a great school district is absolutely my choice over a great home in an average district.  Not that I’m saying this is the only way to look at it of course, just the way I do.

Beyond schools and safety, I think nice cities have a lot more to offer.  Here, the city has the entertainment, cultural opportunities, and diversity of choices that appeal to me.  It’s more fun than being in a suburbs.  I prefer a cool neighborhood restaurant over some generic chain any day! Seeing a major league game played under the bright lights and national spotlight is better than seeing some minor league affair that has no real significance.

But, there is a time and place for everything.  When younger, I had a condo in the city.  It was great, and I enjoyed as much of the city as I could.  For a young professional, it was almost like an amusement park of sorts :)  With no kids, I had far fewer reasons to worry about schools, and was not stressed about safety.  But when your main responsibility is no longer yourself but other people, your priorities tend to change.  At least mine did.

So, suburban life it is. For now, anyway.  Who knows, as an empty nester many years from now, a move into this (or another) city might happen!

My Questions for You

What do you prefer, city or suburban life?  Why?

Could you see this changing at any time in your future?

The Selective Real Estate Rebound

We all know about the U.S. real estate boom that occurred in the first half the prior decade.  In the early 2000’s, real estate shot up in value in a ton of markets around the country.  Existing homes increased in market value, and renovations were all the rage.  New construction was popping up all over the place.

Then, as we also know, things came to a crashing halt.   Home prices started to decline, and in some places they simply cratered.  There have even been $1 homes for sale in Detroit! Now, I don’t live there – it’s suburban Chicago for me – and haven’t seen anything remotely like what’s happened in the motor city.  Nevertheless, even vibrant suburbs here have seen big price decreases in recent years.

Not long ago, things started to change again.  I observed this earlier in 2013, where I asked: is this good time to invest in real estate?  It seemed at the time that prices were stabilizing, and perhaps the window of opportunity to get great deals may be closing.  What I didn’t think, of course, was that the market had become strong again. Just stable.

Well, a very recent conversation I had with a couple makes it clear that the market is more than just stable in some places.  In certain markets, it’s apparently a seller’s market once again.  To the point where homes are selling quickly once on the market, as in within a few days!

This couple told me that they were looking for a home in a few suburbs that I would consider to be upscale.  They made it seem like they were looking for something at more of an “entry level” price point in those suburbs.  Now, an initial price point there might be in the half million range. Not exactly chump change, to say the least.

But this couple – really nice people – said that it was actually really hard to get a home in their target community.  The homes at the high end – for the truly wealthy – sat on the market for a while.  But the more reasonably priced homes were going very quickly, within a few days as I mentioned earlier.

Quite a difference from what was the case not too long ago.  I’m not sure how many locales would see real estate as being red hot in the last 5 years.  Even further, I think there are still many places where properties are not seeing buyers stampede to make purchases.  I say this because I’ve followed prices in a few other areas, not far away and a bit lower priced, where homes still seem to be staying on the market for a while.  Prices have stabilized to be sure, but no increases.

So, maybe there is a selective real estate rebound.  Some areas are seeing a seller’s market, while others are still a buyers’ market.  Even if the specific locales are close by each other geographically.

My Questions for You:

How is the residential real estate market near you doing?

Are you still noticing a buyer’s market where you are, or is becoming more competitive again?

Do you think we will see a full-scale housing rebound soon, or is this simply fool’s gold?

Waterfront Living Is Not Always Worth the Risks!

A number of times, I’ve heard a few people I know talk about how great it would be to live by the water.  This generally meant living by the beach,waterfront but in a few other conversations referred to living right next to a lake.  In any case, there is true appeal for some people to living next to a body of water, whether it’s for the scenic views, sunsets, sound of waves, or simply tranquility.  To the point that they’re willing to pay a premium for the privilege.

I guess I do see the appeal to some degree, but it’s not a big deal to me.  Having views would be kind of neat, but I don’t get any excitement out of living right next to water.  Certainly not to the point where I’d even consider paying any more to live there.  Actually, in some cases, I think it’s riskier to live right on the water, and that properties right there should be worth less money that those a bit further away.

In other words, perhaps some waterfront property should be discounted as inferior to property a little further inland.

The reason?  Natural disasters!

Really, think about how destructive water can be.  Some recent flooding around here has gotten me thinking about how flooding and water damage can really wreak havoc for homeowners.  The thing is, it shouldn’t be a surprise in many cases.  We know that weather happens, so to speak, so in many situations it’s a matter of time before there is an impact on our lives.

I think of this river that’s nearby here, which it seems like every decade causes flooding – with people feverishly working to sandbag and protect property.  I wonder why on earth they ever bought property by the river in the first place?  They had to know that there is flooding periodically, so why build or buy there?

Sometimes, tragically, we see a lot of destruction in hurricane-prone areas.  I don’t see the appeal to building a home or buying a home right on the ocean, in areas that historically are put at risk by hurricanes or tropical storms passing by.   The same concept could actually apply to tsunamis.  Driving down the coast of Oregon some years ago, I was taken aback by seeing a tsunami evacuation route sign.  I had never heard of major tsunamis hitting the U.S. mainland.  Well, then we saw the tragic tsunami in Japan occur, and out come a few stories about how one could hit our west coast at some point.

It seems like another example of emotions and home-buying being linked sometimes.  Logically, we know that we could be put at risk financially – or even personally – by living in certain areas.  But, the emotional appeal of living certain places sometimes overrides logic.  Sometimes it’s a matter of thinking through the science of risk, as one would in other financial situations.

Ultimately, is the risk worth the reward?  For some it is, but I’ve always had a different view on it.  Put me in a place that’s devoid of those types of rewards, and I’ll be totally fine!

My Questions for You

Why do you think it is that waterfront living is so popular?

Is it appealing to you, or are you basically indifferent to it like me?

Do you think many folks think through such risks?