Home Energy Calculator

If you are thinking about buying a new home and want to estimate what you energy bills will be, or if you want some suggestions on ways to reduce your monthly expenses, the Department of Energy has an online Home Energy Saver that does both!

Start by going to http://hes.lbl.gov/consumer/ and enter your zip code. On the following pages, fill in as much information as you have about the house (size, type of windows, insulation levels, etc) as well as current energy pricing. If you don't have this information, estimate the best that you can (HINT: On my last statements, Clark Public Utilities charged 7.98 cents per kilowatt hour. NW Natural charged $1.077 per therm). Once you entered all the information, it will provide you with an estimate of your annual energy expenses.

The next page will give you suggestions on potential upgrades, as well as estimates on what each project could save you annually.

If you are a homeowner, be sure to keep records for any major energy upgrades you make, as those can be a helpful selling tool next time you move!

Average Remodel Costs and Return

Remodel Magazine recently released its annual cost vs. value report that compares the average price for various remodelling projects with the estimated value the project adds to the home. In addition to national and regional averages, the report includes reports for 80 US cities, including Portland. So what projects bring the best and worst returns?

According to the Remodeling Costs vs Value Report 2010-2011, one of the best projects you can do is replacing old siding with new, fiber-cement product. In Portland, the average cost for this project was $13,685 and increased the value of the home by $10,546, a 77.1% return. Other projects that bring a great return are remodelling an attic or basement, replacing your entry door with a new, steel door, and a midrange, major kitchen remodel. All of these projects provide near or over 70% return on investment.

What projects are the worst? In general, upscale remodels do not provide as good a return. An upscale master suite addition provides less than 50% return. An upscale major kitchen remodel comes with a high price tag...on average over $114,000, while returning less than $66,000.

In any project, there are lots of ways to save money. Find a contractor that will let you do some of the work yourself, such as painting or removing old cabinets. Do your homework! Research various products before talking to a contractor and get quotes from several different companies before starting your project.

To read the full Costs vs. Value Report, go to http://www.remodeling.hw.net/2010/costvsvalue/national.aspx

Local Market Conditions in Vancouver

The real estate market as a whole did not do well in 2010 - closed sales declined 4.8% and average sales price dropped 0.7%. Not all neighborhoods in Vancouver and SW Washington felt the pain equally. Average sale price increased in Camas (6.8%), North Hazel Dell (6.4%), and North Salmon Creek (11.8%), compared with 2009. The number of pending sales in both Hazel Dell and Salmon Creek were significanty higher than they were in December 2009, indicating that the market in those neighborhoods has started its recovery.

Other neighborhoods saw a far more dramatic decrease in price, compared with the area average. In the SW Heights, although the number of pending sales in 2010 increased 19.7% over 2009, the average sales price dropped 46.4%. This combination of falling prices but increased sales activity should result in a a higher average sale price in the upcoming year, making the SW Heights an attractive investment for savvy buyers.

New Home Sales Up 17.5%

New home sales rose dramatically in December 2010 to a seasonally adjusted annual rate of 329,000! This represents at 17.6% increase over the November rate. The most substantial increase occurred in the Western region, where estimated sales rose from 64,000 in November to 110,000. Nationwide, inventory of new homes dropped from 8.4 months in November to 6.9 months in December.

Housing Provisions Under the New Tax Law

In December, President Obama signed into law the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010." Although most of the publicity over this bill dealt with the extension of the income tax cuts established during President Bush's time in office, the bill also dealt with several tax provisions that affect housing issues. Here are the key points:

• A $2,000 tax credit for home builders that build highly energy efficient homes was extended (retroatively for 2010 and also for 2011).
• Private mortage insurance (PMI) will continue to be tax deductible on mortgages taken out after December 31, 2006 for those making less than $100,000 a year. The deduction is phased out for people making between $100k and $110k, and those making more than that are no eligible for the deduction.
• Perhaps the most popular tax credit program, which gave up to $1,500 for energy efficient remodel projects, was extended, but in sharply reduced form. The credit is currently maxed at $500, which includes any credit claimed on previous years taxes. So, if you claimed the full credit on last year's taxes, you would not be eligible for any credit on this year's. Furthermore, the credit is now only 10% of the cost of material (previously this was 30%). Other items, such as fans, hot water tanks, and HVAC components have a fixed dollar amount.

If you have questions about how any of these provisions might affect you, talk to your tax preparer or accountant.

December Market Report

The market stats for last month continue to be mixed. The good news: pending sales in December increased 4.5% over December 2009, and both closed and pending sales increased over November 2010 (16.8% and 0.5%). Combined with a drop in the number of new listings, the estimated months of inventory dropped to 9.1, compared with 11.7 in November 2010.

The bad news: both average and median sale prices dropped from both December 2009 and November 2010. Closed sales also dropped 17.8% from December 2009.

By every statistical measure, 2010 proved to be a more challenging year for real estate than 2009. The total number of closed sales dropped 4.8% while the average price decreased by 0.7%. The median price declined 1.7%.

There have been some other positive indicators in the economy in the last few weeks. The stock market has been consistently climbing, and the unemployment rate dropped to 9.4% in December. If we continue to see improvement in the employment data in the coming months, it would indicate that 2011 will be a recovery year in the real estate market.

More on the Double-Dip

The National Association of Homebuilders blog has a great piece on the recent Case-Shiller Housing Price Index. It explains why the recent release is not as catastrophic as some have made it out to be:

"The high volatility in house prices over the past 20 months is a side effect of the government assistance programs that have attempted to stem the decline in house prices and assist the recovery in the housing demand. The introduction and subsequent expiration of homebuyer tax credits provided a short boost to housing demand followed by a downturn. Overall, the tax credits were effective in stopping the free fall in house prices, and, despite the volatility in the HPI over the past 20 months, have led to an increase in overall house prices, with the CS20 index up 4% and the CS10 up 6% from their low in April 2009."

Read the full article here.

Are We in for a Double-Dip?

Last week Standard & Poor/Case-Schiller released their monthly index of home prices and the news was not good. In their 20 city composite, average sale price dropped by 0.8% in October. This followed a 1.5% drop in September. This has led some economic analysts to predict home prices are going to continue to decline, essentially a double-dip, in 2011. The chart below (from S&P) shows the change in home prices over the last twenty years. Note: this chart is not actual home prices, but hte amount of change over the preceding year.

You can see the rate of growth in home prices began to decline in 2006, and prices actually dropped in mid-2007. In 2009, the rate of decline started to slow and prices went up early in 2010. However, following the expiration homebuyers tax credit this postive trend reversed.

While this is certainly not good news, its perhaps not as terrible as some analysts have observed. Sales of new homes and existing homes grew over 5% in November, the same period as the drop in the Case-Schiller Index. The NAR sales index showed median prices actually increasing 1.2% over November 2009.

Real Estate Professor Susan Wachter from the University of Pennsylvania said in an interview with Bloomberg that while the months ahead may be bumpy, we should not expect a "double-dip" in home prices. She believes that we are still seeing some of the effects of the tax credit, but by the second half of 2011 the market will begin to improve.