Re-Post of February Newsletter

This is a re-post of my February newsletter send to my clients from Advanced Access.

Winter is the time for comfort, for good food and warmth, for the touch of a friendly hand and for a talk beside the fire: it is the time for home.

~Edith Sitwell

Featured In This Issue

Special Days and Events

Power Savers - Energy Efficiency in the Residential Sector

Tips to Manage Credit Card Debt

Special Days and Events

February 2 – Groundhog Day

February 14 – Valentine's Day

February 15 – President's Day

February 16 – Mardi Gras

February – Black History Month

The birth flower for February is the Violet. The birth stone for February is the Amethyst.

Power Savers – Energy Efficiency in the Residential Sector

According to the U.S. Department of Energy's 2008 Annual Energy Review, the residential real estate sector accounts for roughly a fifth (22 percent) of all energy consumption in the country. This considerable share of all energy consumption has led lawmakers to propose policies to improve energy efficiency in homes. At the same time, homeowners and home buyers are showing a greater preference towards energy efficiency for reasons varying from a desire to become more environmentally conscientious to cutting down on their monthly energy bills. When formulating policy, however, there are several factors to consider.

Older vs. Newer Homes

Older homes consume more energy than newer homes. According to the Department of Energy's 2005 Residential Energy Consumption Survey, homes constructed before 1970 consume roughly one and a half times what newer homes consume, on a per square foot basis. It should be noted that the average size of homes has been steadily increasing since the 1970s, though older homes still in existence tend to of similar size compared to recently built homes. However, recently there has been a decline in the median size of homes. This is likely due to the slowing of the housing market over the past couple of years as well as rising energy costs.

Also, according to the 2007 American Housing Survey, older homeowners tend to occupy a larger share of older homes. This is an important point as it may have ramifications in terms of public policy. Government restrictions or mandates that require energy audits or upgrades may place an excessive burden on older home owners who often are retirees with less flexible incomes or restricted in their geographic mobility.

Cost Variations

Regionally, great variations persist in terms of energy consumption and costs. Some of this is attributable to climate variation throughout the country. The Pacific and South Atlantic regions are generally warmer in the winter; in the case of the Pacific the weather is also milder in the summer than in areas like New England or the Middle Atlantic. This variation in climate means that certain regions have lower demand for heating or cooling.

Consequently, energy costs for the typical household can vary widely, according to the DOE's 2005 Residential Energy Consumption Survey. In the Northeast, the typical yearly energy bill was $2,319, compared to $1,491 in the West. Federal legislation regarding residential energy policy should take into account these regional variations when it comes to energy costs.

Similarly, energy consumption varies by state. For instance, the typical yearly energy bill for a home in New York was $2,409 while in California the typical bill was $1,396. A major reason for the difference is heating costs, which account for almost two–fifths of energy bills in the Northeast and Midwest, compared to approximately one–fifth in the South and the West.

Marketing Homes to Energy-Conscious Buyers

For homeowners looking to sell their properties (as well as the real estate professionals who assist them), they may want to take into account the fact that current home buyers are placing greater significance on homes' heating and cooling costs as well as energy efficient appliances and lighting in their home-buying decisions. According to NAR's 2009 Profile of Home Buyers and Sellers, 88 percent of recent home purchasers indicated a home's heating and cooling costs were at least somewhat important in their home–buying decision. In addition, roughly 70 percent said that energy–efficient appliances and efficient use of lighting was important. In fact, reducing energy costs through energy efficiency appears to take priority over other energy or environmentally friendly home features such as “Landscaping for energy conservation” and “Environmentally friendly community features” which about half of home buyers said were important to their buying decisions.

Homeowners may need to consider improving their homes or retrofitting in order for their current properties to be more energy efficient. A few things need to be considered such as the length of time home owners plans to own their homes (the median, according to NAR's 2009 Profile of Home Buyers and Sellers, is about 7 years) and the cost of the upgrades. There are a few ways that homeowners can benefit from upgrades. First, homeowners will save on energy costs. Some projects have longer payback periods (i.e., the amount of time that it takes to recoup the cost of the energy efficient upgrade through reduced energy usage), while others have a universally low payback period like programmable thermostats which are relatively cheap and easy to install. The energy savings from a programmable thermostat can be recouped in as little as a year. However, some projects may be more expensive to undertake and the payback period can vary greatly depending on the region where the home is located. For example, sealing air ducts or replacing windows may be much more cost effective with a shorter payback in regions where heating costs are greater. Second, since home buyers are increasingly aware of energy efficiency, certain upgrades may increase a home's resale value. Finally, there is the “peace–of–mind” benefit that homeowners may feel by being friendlier to the environment.

Potential Impact

Federal policy options should take into consideration a variety of factors like the variations in region, age of homes, and mix of homeowners when creating new laws. Likewise home buyers and sellers making updates to homes should be aware of such factors when making upgrades to their existing home or when purchasing a home.

Reprinted from REALTOR® Magazine January 2010 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2010. All rights reserved.

Tips to manage credit card debt

Loan consolidation has its ups and downs, but, if handled properly, it can help a family afford to get out from under debt.

The average American household had $8,329 in credit card debt in 2008, according to the Nilson Report in April. And that didn't depend on if the household currently had an active credit card open.

“Debt control and management is a possibility for everyone,” says Daniel Wesley at CreditLoan.com. “And there are many resources available – ranging from credit consolidation companies to credit counselors – that can help people bring their debt to a manageable level.”

Some tips to help evaluate if debt consolidation is an option for you are:

• Get organized

List all the debts you have, all the interest rates you're paying and all the annual income your family brings in. Having all this information in front of you will help you to determine the best steps for bringing your debts under control.

• Do the math

Calculate the interest rates for all the debts you're paying now, and then calculate what your new interest payments will be for all the different consolidation options. The concern is that the new single interest rate through your credit card or bad credit loans will probably be a higher amount, so you need to make sure your overall payments are fewer than what you're currently paying on multiple debts.

• Determine the risk

You can consolidate all your debt to one credit card that has a lower interest rate now, but there is the risk that those rates will increase in a year. And if you don't have your debt paid down that quickly, this type of consolidation probably won't make the best sense. Another type of consolidation is taking out a home equity loan, but with this, you have the risk of your home being taken away if you default on the payments.

Courtesy of ARA Content


Hope You've Enjoyed February’s Newsletter.

Please call or send an e-mail if you have any questions about buying, selling, or investing in real estate.