The Evolution of Home


The Best Ways to Save Tons of Money on Your Home in 2016

By: Margaret HeidenryDesktop250-1

It’s New Year’s resolution time—when we vow to drop 18.5 pounds, start training for a triathlon, cut back on sodium, and maybe even give up our crippling HGTV addiction. What’s that you say? You want to make a resolution you might actually keep? OK, try this on for size: Resolve to save buckets of cash by making simple changes around your home, sweet home.

Whether you live in a mansion or a condo, homes consume a ton of expensive energy—whether in the form of electricity, water or gas. The good news? You can lower these bills—freeing up cash for all kinds of other pursuits such as that new kitchen renovation you’ve been dreaming of or even a vacation far from home. What’s more, these changes are far from painstaking; some are as simple as switching your light bulbs or tweaking the settings on appliances.

Collectively these tiny changes can add up to huge savings. Try a few or all to reap the benefits of a fatter bank account in 2016—and beyond.

Get an energy audit
Consider this a checkup for your home: Many local utility companies offer energy audits (often for free), where experts assess your home’s energy consumption patterns looking for improvement areas where you could cut back on guzzling electricity, gas, or water (and also lower your utility bills). Auditors may do this remotely by poring through your records, or they visit your home to examine everything from its windows to duct work to shower heads—saving you as much as 30% of your monthly bills.

For more information go to, or head to the Residential Energy Services Network, where you can enter your ZIP code to find an auditor near you.

Adjust your water heater
Most people set their water heaters on high. The amount of energy needed to keep gallons of water at scalding for no reason? A lot. Lowering it by just 10 degrees Fahrenheit will save you from 3% to 5% on your heating costs. Also, buy your heater a nice blanket to keep heat in and tack on an additional 4% to 9% in savings.

Swap your light bulbs
Switching to low-energy ligh tbulbs is a quick and easy way to reduce lighting costs. A 60-watt bulb retailing for $6 will save between $30 and $80 over its lifetime. The average household has 50 bulbs—so that’s a minimum $1,500 in savings! But there’s no need to go out and buy $300 worth of light bulbs all at once. Swap out the bulbs you use every day—kitchen and bedroom—and leave the barely used ones in basements or attics until they burn out.

Kill your home’s energy vampires
Those little lights all over your house that indicate printers and chargers are on but not in use? They’re “energy vampires” sucking dollars out of your wallet, an average of $165 a year for a typical U.S. household. The low-tech solution? Unplug these items before bed, which will save you as much as 10% on your energy bill. The high-tech solution? Power cords that will turn off equipment when it senses they’re not in use.

Wash your clothes this way
Switch to cold water washes. Yes, your clothes will still get clean—some stains come out more readily in cold water—and you’ll save about $60 a year. As dryers account for 12% of energy in an average household, consider line-drying clothes in nice weather to save you almost $200 per year. Or, if you do use a dryer, clean your vent, which will reduce energy costs by $9 to $12 per month.

Strip your windows in the winter
In the winter even the smallest gaps around a window or door frame allow air to leak inside. Experts say an eighth of an inch gap under a 36-inch wide door will let in as much cold air as a 2.4-inch diameter hole punched in a wall. That means in the winter, sealing cracks around windows and frames is a no-brainer that can bring down the heating bill between 10% and 15%.

Film your windows in the summer
And as for the summer, when the sun beats through your windows and bakes your home? For that, you can add window films—an imperceptible layer that acts like sunglasses, filtering out infrared and UV rays. A whole roll of it will run you around $25 but can translate to an average of 20% to 25% reduction in energy costs via the AC. Added benefit: It keeps colors in paintings and carpets from fading.

Cut the cord
Getting rid of cable and your landline will save you about $100 a month. Keep your fast Internet and consider buying a $35 Chromecast—a device that slings streaming shows from your cellphone to your TV.

Calling All First Time Buyers


Market Will Improve in 2016 but Not Without Challenges

Home sales activities in California remained solid in September, but the growth in sales has moderated since it peaked in July. In fact, the annual increase of 6.9 percent was the lowest since February 2015. The statewide median price also continued to improve at a moderate pace, with a year-over-year growth rate of 4.3 percent in September. The mild growth rate in price was attributed partly to the shift in the mix of sales, as sales activities in lowerpriced regions such as the Central Valley improved more significantly than the higher-priced San Francisco Bay Area in recent months.

According to California Association of REALTORS® (C.A.R.), sales of existing detached homes will increase 6.3 percent in 2016 to 433,000, and the statewide median price will rise with an annual growth rate of 3.2 percent in 2016. Despite the anticipated improvement in the housing market condition in the upcoming year, there are some challenges and uncertainties that the economy and the housing market will face in 2016. One such unknown risk is the timing and the magnitude of the federal funds rate increase. The Federal Reserve has an opportunity to raise the rate in December before the end of 2015, but given the pace of the current economic growth, it is very likely that the Fed will begin the rate hike in early next year instead. The increase in the rate is expected to be mild and gradual throughout the next two years.

Robust job growth in high-cost areas is another downside risk to the housing market. Due to the spillover effect of growth in high paying jobs, plenty of lower-paying jobs have been created, with many of these jobs being in the same geographic areas where the high paying jobs are being added. As such, income disparity in these areas could further complicate and deteriorate the housing affordability issue.

Global economic issues could also begin taking a toll on economic growth later this year and next year. Slow growth in China and other European countries, coupled with stronger growth in the US, have paved the way for higher interest rates and lead to a stronger dollar. As such, international trade will likely be a drag on growth, as slower global growth and the stronger dollar soften the demand for exports, while continued strong growth in consumer spending domestically pulls in even more imports.

Other potential risks that could have a negative impact on the California economy include the ongoing severe water shortage and the expected return of El Nino. Both could cause some economic losses, especially in the agricultural sector. However, the overall economic impact to the state of either risk is likely going to be small and may lead to minimal reduction in the employment growth rate for the next couple years.

Momentum Continues in the California Housing Market

Improved economic conditions and more job availability throughout the state benefited the housing market and continued to push sales higher. Mortgage rates returning back to near record-low levels in the first half of the year, coupled with an anticipated rise in the fed funds rate later this year, may also have prompted prospective buyers to feel a sense of urgency to enter the market.

The statewide sales in July exceeded 400,000 for the fourth consecutive month, and July 2015 was the month with the highest sales level since Oct 2012. The strong momentum in the first half of 2015 elevated sales in the first seven months to 407,060 (seasonally adjusted and annualized), an increase of 7.1 percent when compared to the same period of last year.

After reaching the peak in nearly eight years, the statewide median price in July dipped slightly to $488,260 from the previous month, but remained close to the recent high reached in June. The median price continued to improve at a moderate rate from the previous year, with a year-over-year gain of 5.4 percent in July 2015. While the median price continued to improve from the previous year, the rate of increase has been decelerating steadily in the last twelve months.

The combination of modest price appreciations and low interest rates kept housing affordability from declining further this year in most areas, despite higher prices. In fact, the statewide Housing Affordability Index (HAI) actually rose in the first quarter of this year to 34 percent before dropping back to 30 percent in the second quarter. With interest rates expected to rise in the second half of 2015, housing affordability will become a bigger challenge for many potential home buyers, particularly for those who reside in high-cost areas such as the Bay Area.

The California housing market should continue its momentum and have a solid performance throughout the rest of the year. Sales, however, could cool off slightly in the fall as mortgage rates gradually rise. With the economy growing faster and the labor market improving next year, more households will be formed as consumer confidence continues to rise. As a result, sales activity is expected to inch up in 2016.

Inadequate supply in high-end areas such as the Bay Area is exerting upward pressure on prices, but home sales in those regions are simultaneously being constraint. The constraint in home sales in the Bay Area could eventually lead to a decline in the share of high-end homes sales to overall home sales, which could also lead to a further slow-down in the appreciation in the statewide median price. As such, the statewide median price is expected to increase only modestly this year and in 2016.

Common First-Time Home Buyers Mistakes

Here’s a list of some common mistakes that many first-time buyers make when trying to find the right home. Avoid making these, and your home-buying experience will be much better.

Not Finding the Right Real Estate Agent

Working with the wrong real estate agent can be worse than not working with one at all. Your real estate agent is with you from the beginning to the end of your home search, and can either make the process easier or more difficult. The agent should be someone you feel comfortable working with. They should help you understand the process and not hesitate telling you things you may not want to hear.

Not Taking Care of the Financial Aspect First

This is a two-fold issue. First, you need to check your credit report to make sure everything is accurate. You should also make sure nothing bad is on there. If there are delinquencies or large outstanding debts, work to improve your credit before you begin house-hunting.

Second, you need to get pre-approved before you shop for a house. To do this the other way around is inviting disaster. If you find the house you love and then ask for a loan approval, you may find that the seller has accepted another offer in the meantime. This can be devastating to a first-time home buyer. They often don’t realize how emotional the process can be.

Loan approvals also set the guidelines for how much house you can actually afford and makes your offer look better against other buyers without their loan approval.

Skipping the Home Inspection

Even if the house is new or looks to be in good shape, you need to have a home inspection. You don’t know what costly repairs could be hidden by new flooring and new appliances. If you get a disturbing report, you can either walk away from the deal, or ask the seller to make the repairs. Alternatively, you can go into the deal knowing you will have added costs in the near future.

Not Planning for Closing Costs

Many people don’t realize that they will have to pay costs to close the loan so they can own their house. There are numerous fees involved with this process that you should be aware of. Some of these include:

-Credit report fee

-Inspection cost

Escrow fee

-Appraisal fee

-Property taxes

-Homeowner’s insurance fee

While you may be able to get the seller to pay some of these closing costs, you should anticipate bringing some money to the table. You can ask your real estate agent to estimate the amount you will need.

Buying More Than You Can Afford

This is one of the biggest mistakes you can make. Just because you’re approved for a loan amount doesn’t mean you should spend it all. While a lender takes into account your debt to income ratio, including debts such as credit cards or auto loans, they don’t know how much you like to spend on vacations or shopping. The mortgage payment will directly affect how much money you will have to spend on other things without breaking your budget. Be realistic about what you can afford before shopping for a home and stick with it.

Buying a home is a daunting experience. By avoiding these common mistakes, you can make the process easier.

Housing Prices Continue to Rise

It’s full steam ahead for housing prices in the second half of 2013 as they continue their upward move. According to the S&P/ Case-Shiller Index, housing prices are moving upward in all of the major cities around the nation.

Fast Moving Prices

And the prices aren’t just inching up, they’re moving in leaps and bounds. They are up by over ten percent in major metro areas and nationwide. Does this sound familiar? That’s because the last time prices increased at this rate was back in 2006, just before the crash.

No other economic sectors are seeing this kind of improvement. Jobs are increasing, but at a very slow pace. Wages are pretty steady with only slight increases in some industries.

Who Benefits?

Obviously, home sellers are happy to hear this news. It is also good news for real estate agents, builders, home improvement stores, appliance companies, and pretty much anybody else that gets involved in either new-home builds or renovations. Even state and local governments benefit from higher prices, because they get more in property taxes and transaction fees.

As people see an increase in the value of homes, they’re willing to spend more to get more. They will do those kitchen and bathroom renovations that they’ve been putting off. And it’s not just those who are selling their homes. Even those who plan to keep them for a few years see value in increasing the worth of their home. And anyone who works for a home improvement company or construction sees increased calls for work.

What about the Buyers?

This can’t be good news for the buyers, can it? Many experts say it won’t actually hurt buyers as long as they get busy and buy now before interest rates go up too high or house prices move up too far. While many people are concerned about this rate of increase, experts say it’s just moving the housing market back to where it was; when prices dropped so drastically below what they should have been worth.

Many analysts see this increase in price as a simple law of supply and demand. More people want to own their home instead of rent and others want to downsize. There are just not enough homes for the demand. This is good news for builders who can now start increasing the number of houses they can build.

Experts say this is what the economy needs now to continue the recovery process. There will be more jobs available, and more people will be able to buy as lenders reduce their restrictions on borrowers with the improvement in the market.

The areas that are seeing the biggest boom are the places that were hit hardest by the crash. So, while it looks like big numbers, these areas are really just getting back on track to where they should be. And that is good news for everyone, buyers and sellers included.

What Buyers Need to Know about Rising Rates

Gone are the days when everyone’s being encouraged to buy a home with record low rates. In fact, the average rate has increased by more than a percentage point since the record low. If you did not take advantage of those rates to buy a house, you may be kicking yourself. However, there is still time to buy. Here are some things you need to know whether you’re buying, selling, or even refinancing your current property.

Good Rates

Even though they’re not at their lowest, the rates are still good for homebuyers. If the economy continues to improve, the rates will keep climbing, but not immediately. It has been predicted that the rates will be around 4.7 percent by the end of 2014. Expect them to get as high as 6 percent by 2017. So now may still be a good time to buy rather than wait for later. You can also refinance as long as your current rate is higher. Sellers should also get in on the action because they will have more buyers who can qualify now than in the future.

Rising Prices

Not only are the interest rates rising, but so are the prices on homes. For this reason, it can benefit sellers to wait to list their homes. They don’t have to worry that the increase in interest rates will dampen buyer sentiment. The interest rates are climbing slowly enough to not make a mark on the housing market.

Fixed is Still Better

While adjustable rate mortgages (ARM) may look more appealing with their lower interest rates, they are still not competitive with fixed loans, particularly if you plan to keep the loan for a long time. As rates continue to rise, you will most likely see an increase in your loan if you choose an ARM. However, if you plan to be in your home for a short period (say five years), you may benefit from the lower initial rate of an ARM. The choice will depend on your long-term goals.

Lock In

Once you have a contract in place, experts recommend locking in quickly. This will avoid a spike in interest rates before you close. You generally won’t have to pay for a lock that’s only for 45 or 60 days. You should only pay for a 90- or 120-day lock if your loan appears to be closing slowly. The cost for a locked rate is usually a quarter of a point for every 30 days you want it locked in.

While you may not have taken advantage of the low interest rates when everyone encouraged you to do so, it doesn’t mean you can’t get a good deal now. However, if you do plan to buy, now may be the right time so you can get more house for your money.

Mortgage Rates Hit Their Highest Level in Over a Year

Mortgage rates recently touched a new 15 month high, nearing 4 percent. This has been the greatest climb for mortgage rates since the Federal Reserve initiated a stimulus program to keep interest rates low. In November of last year, mortgage rates reached record lows – the 30-year fixed mortgage rate was at 3.31 percent, and the 15-year fixed-rate was at 2.77 percent.

For homebuyers, rising mortgage rates could mean a more expensive home purchase, at least for those who must finance their home. Some industry insiders say the spike in mortgage rates is a result of speculation that the Fed is pulling back. Keith Gumbinger of the mortgage company HSH told CNN Money that “the Fed’s [stimulus] policy might start to be pulled back soon, perhaps as early as September.” On hearing the news, investors rushed to adjust their positions, driving market volatility.

The current stimulus program allows the Treasury to buy up as much as $85 billion per month in mortgage backed securities. When the Fed begins tapering off its buying program, ordinary buyers will have to pick up the slack. Those buyers will demand bigger returns, and so drive up interest rates. But when the rates rise, homeowners will be less keen to refinance. However, many experts say that rates will have to rise much further before it impacts homebuyer behavior. Potentially though, higher mortgage rates could limit the number of bidding buyers, driving down home prices.

What Should Homebuyers Do?
Despite the recent spike, mortgage rates are still at historically low levels. Mortgage servicing advisors recommend homebuyers and those looking to refinance to go ahead and lock in at current rates. “Locking is the smart move in my book as always,” said Mike Owens of Horizon Financial Inc.

Online finance advising website The Motley Fool found 2012 to be a record year for mortgage originations in refinancing, but since those rates have risen in 2013, the number of refinancers is dropping. In early May, financial analyst David Hanson of the Motley Fool said that 30-year fixed-rate mortgages were perfect around 3.95. In little more than a month, they’ve jumped to just over 4 percent. But is it a problem for potential homebuyers? Not really, Hanson seems to suggest. Even with the rate increases, refinancing activity makes up more than half of all mortgage applications.

If you’re planning on refinancing your home, now may be better than later. You might have missed those all-time record lows from last November through March of this year, but you’ll still take advantage of historically low rates before they jump to over 5 or 6 percent.

Has the U.S. Housing Bubble Returned?

There is much speculation of a second housing bubble. The rumors began as early as July 2012, when home prices accelerated at rates similar to those of the previous housing boom in the late ‘90s and early 2000s. In what the New York Times calls a “violent pricing cycle,” the history of housing bubbles indicates that we may be entering another bubble.

But before we dig into the latest speculation, we first need to establish some context for bubbles in housing. The most recent housing bubble, which sent the economy careening in a tailspin, was fueled by reckless banking behavior in subprime mortgages. These mortgages didn’t require a down payment and allowed many Americans to purchase homes far beyond their financial means. Reckless lending has in large part over-corrected today, with many banks requiring at a minimum very good credit to even qualify for a mortgage.

However, the reason for speculation of a new housing bubble is the constantly rising home prices. Kari Smith of Forbes Magazine explains that when one of the main drivers of a home purchase, like technology, regulation and preference, rises on a large scale, then home prices and rents are driven higher. For example, even though Philadelphia and Dallas have similar median incomes and populations, home prices in Philadelphia are much higher than in Dallas because more people want to live in the Northeast Corridor – a driver of preference.

Bubble vs. Stable Market
A stable housing market in today’s landscape would provide a sharp rise in home prices (what we are currently experiencing) followed by a tapering off of that growth as housing prices are maintained. A bubble in the market will most likely arise when lending standards are lowered, allowing homebuyers to qualify for larger loans and make larger offers, in turn driving home prices upward. “As standards go down, buyers rush in with more buying power and we enter a new bubble phase,” writes Smith in Forbes. “To my knowledge neither the government, the lending industry nor we as a society have done anything that promises to prevent this.”

Much of the speculation stems from today’s ultra-low mortgage rates, which the Fed has been keeping down to spur economic growth. If the Fed eases off its current buying trend, those mortgage rates will begin to rise, creating a bonanza for those home buyers who’ve already locked in a mortgage at today’s record low rates. Home buyers who entered the market at the right time will see home values soar, as inflation and interest rates rise.

What the housing bubble speculation means to potential homebuyers can be distilled to this: now is very good time to buy. With rates as low as they’re ever going to be, investing in a home with a fixed-rate mortgage is a great idea, so long as you plan on settling in that home for the long-term.