Energy Efficient Mortgages Reduce Your Monthly Housing Expenses

When a lender figures the monthly mortgage amount that a buyer can afford whether it’s a purchase or a refinance, the amount is calculated to include principle, interest, taxes and insurance or PITI.  But there’s another cost that is beginning to be taken into consideration—utilities.  If you buy an older home with old single pane windows, old appliances, an old furnace, poor insulation, etc., the monthly cost to own the home can increase dramatically.  If you don’t have the money to replace some of these items immediately you could spend hundreds of dollars more each month on energy   costs.  And if you decide to make some of the improvements or buy appliances on your credit card that just adds to your debt at pretty high interest rates.

But the FHA 203(b) loan, or Energy Efficient Mortgage (EEM) Program can help buyers and refinancers to make their homes more energy efficient and save a considerable amount on their monthly utility bills.  “The EEM Program recognizes that the improved energy efficiency of a house can increase its affordability by reducing operating costs.  Because the home is more energy efficient, the occupants will save money on utility costs” and significantly reduce the amount of money needed each month to operate the home. So here’s how it works.  When you take out an FHA 203 (b) loan you can add up to $8,000 to the loan amount even if it goes over the FHA maximum loan amount or over what you qualify for.  This additional amount is at the same rate as the original loan.  So if you lock in at say, 4.25%.  The additional amount is rolled right into the loan at the same rate. Here are some of the things you can do to improve your home’s value and energy efficiency: New windows, insulation, passive or active solar improvements, heating and air conditioning systems, appliances.  Now needless to say $8,000 won’t cover all these things.  So the borrowers needs to determine what things they want to do and how much it will cost.

Prior to settlement the borrower submits a home improvement energy package and the costs to the lender.  Then a HERS  (Home Energy Rating System) energy rater has to inspect the property to determine whether the cost savings over the life of the loan will be greater than the loan amount.  The buyer, seller, lender or agent can pay for the cost for the inspection.  Once the rating assessment has been done and a satisfactory rating has been determined, the lender can escrow the amount of money in the proposal.  All work must be completed within 90 days. Most lenders don’t even know about this loan or if they do they don’t offer it.  Don’t ask me why.  So I was very happy when I found a wonderful loan officer at PMG Mortgage who made it his business to research the loan and convince his company to offer it to borrowers. Vince Coyle  is ready and willing to work with borrowers on this loan product.

Given the low interest rates right now this loan is an excellent way to get a lot more bang for your energy efficiency buck.  Plus, after you make some of these improvements most states have some tax credits and incentives that you might be eligible for.  Here are the federal tax credits that are available now.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

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I Think I Need An “Ask Me About” Button

You’ve seen those buttons that people wear, right?  “Ask Me About” something or other. I think I want an “Ask Me About EcoBrokers” button.  I’ve been an EcoBroker for three years and have had the National Association of Realtors Green Designation for two years. I proudly announce this on my website, on my email signature, on Facebook and Twitter.  But buyers and sellers never ask me about it, or how having these designations make me different from other real estate agents.  Yet they do make me different.  When I’m showing houses buyers don’t tend to ask me about the things that will affect their bottom line once they’re in a home—like “how energy efficient is this furnace or do you think I should replace the windows?”  When I talk about how the home’s orientation will affect their energy use for better or worse that information doesn’t seem to enter the equation.  Likewise, when I discuss walkability and potential resale value there is a clear disconnect.

Yesterday at an open house I had on my name badge and a button that said EcoBroker (not “ask me about” though). I had booklets on energy efficiency and my cards which say I’m an EcoBroker. Not one person asked, “What’s an EcoBroker.  Not one person picked up the energy efficiency booklet or asked about them.  Maybe I’m just nosy, but I would have asked.

Now I’m not expecting buyer and sellers to become tree huggers necessarily.  I mean, they don’t have to build straw bale homes and put solar panels up to bolster their “green” creds.  And I’m perfectly okay with my role as educator—to reach out to my clients and help them to be more informed about the personal environmental consequences of their home buying and selling decisions.  I would like to see the conversation around home buying and selling include questions like “Can you find out if the seller has made any energy efficient upgrades in the past few years or, “Will you advertise the fact that I’ve put in dual flush WaterSense rated toilets and EnergyStar rated appliances?” The answer from me would be YES to both of those questions.

There is no doubt that the future of home building and home renovations are moving toward more sustainable practices, especially in energy and water use.  Buildings make up 40% of all the energy used in the US.  Buyers and Sellers should understand how these new practices will impact their buying and selling decisions. They should also be aware of greenwashing, the practice of making questionable green claims in order to sell a product.  As an EcoBroker and NAR Green Designee, I can help to sort through the new world of thinking sustainably as a home buyer or seller.  So the next time you see me, ask, “What is an EcoBroker?”  Here’s a video of me describing why I became an EcoBroker.

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Gayle Fleming  703-625-1358    www.goinggreenhomesva.com    gayle@goinggreenhomesva.com

What’s in a Footprint?–A Growing Market for Smaller Homes

A smaller house is a greener house, plain and simple–even if it doesn’t have EnergyStar this and EnergyStar that–even if it doesn’t have foam insulation, solar panels or a tankless hot water heater.  It’s greener because it’s carbon footprint is smaller.  A small house in a walkable neighborhood is even greener.

I have an adorable 1931 completely remodeled home listed for sale in the Clarendon neighborhood of Arlington, VA.  Clarendon is one of the most “sought after” neighborhoods in the city because of it’s proximity to shopping, metro, restaurants, night life, etc.  Because of it’s desirability, it’s a fairly pricy neighborhood.  The house has just under 1200 square feet–so not large.  But it has been opened up so that there’s a wonderful flow.  It has large windows and amazing light. The landscaped yard is lovely and low maintenance. And the fact that this small house was not knocked down to build a larger house makes it greener still.

Part of the neighborhood has a dense concentration of high rise condominiums. A condo with comparable square footage could run nearly $600,000 with a condo fee of over $400 per month.  Buildings use 40% of all of the energy used with high rise buildings using the majority of that.  Most high rise condo buildings are not very energy efficient.  So their carbon footprint makes a giant sucking sound.

Why I wonder, would someone be okay living in a high rise condo paying nearly $600,000 for 1100-1200 square feet and a $400 a month condo fee but feel that a 1200 square foot house with no condo fee is too small.  Now I have nothing against condos and I understand that condo living fits a certain lifestyle.  But I do wonder if there is also the perception that a house has to be bigger than a condo or apartment?  If so,  that perception is changing according to all recent studies.  The small home movement is growing.

When I was a child, which was admittedly a long time ago, the first home my parents bought had three bedrooms, one bath, a living room, dining room, kitchen and a big backyard with an apple and walnut tree.  There were four kids and I don’t ever remember thinking our house was too small.  I do remember yelling at my siblings to hurry up in the bathroom and I remember the nightly bath schedule.  By the time I was 13 we had moved to a house that had 4 bedrooms, one and a half baths and a den.  We thought we were living in the lap of luxury!

For many decades most families lived in homes about the size of the homes I grew up in.  Now there is a clearly defined trend towards smaller homes. The changing demographics of the average home buyer shows that  single women made up 21 percent of the homebuyers in 2009.  These women are professional with busy schedules and no time for the maintenance of a larger home.

The National Association of Homebuilders is reporting that the average size of new homes has been declining for the last four or five years and young people and empty nesters are flocking to smaller homes.  And the Wall Street Journal Development Blog reported just this month:

Gen Y housing preferences are the subject of at least two panels at this week’s convention. A key finding: They want to walk everywhere. Surveys show that 13% carpool to work, while 7% walk, said Melina Duggal, a principal with Orlando-based real estate adviser RCLCO. A whopping 88% want to be in an urban setting, but since cities themselves can be so expensive, places with shopping, dining and transit such as Bethesda and Arlington in the Washington suburbs will do just fine.

“One-third are willing to pay for the ability to walk,” Ms. Duggal said. “They don’t want to be in a cookie-cutter type of development. …The suburbs will need to evolve to be attractive to Gen Y.”

So my little beauty of a listing is right in line with the national trend. Small is beautiful! Have a look.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

Do We Still Want Such Big Houses?—Space and Efficiency VS. Square Footage

Thankfully, in my opinion, the days of Hummer Houses, McMansions and Super-Size Me homes are numbered.  The housing trend that began in the 90’s toward larger and larger houses for smaller and smaller families is reversing itself.  This has something to do with the fact that in this economic climate, people can’t afford to buy or maintain ostentatious mini-mansions.  Keeping up with the Jones is a time-honored tradition in the US.  So until the housing bust, people were buying the biggest houses that a lender would give them a loan for, whether or not they needed or could  afford it.  But the downsizing also has something to do with a greater consciousness about how large our ecological footprint is, or should be.

Since the average family has declined so dramatically over the past half century, why do people want such big houses? The average American home swelled from 983 square feet in 1950 to 2,349 square feet in 2004!  According to census data the average household size in 1950 was 3.37 people giving each household member 292 square feet person.  By 2006 the average household was 2.61 and the average square feet of a home had jumped to 2,349, giving each family member 900 square feet!  Is this progress?  Is it our God given and Constitutional right to take up more of the planet than we need?  I’m just asking.

 

 

I think what most people really want is a feeling of spaciousness, not necessarily humongous square footage.  As I show homes around the Northern Virginia area it’s impossible not to show older homes built anywhere from the 20’s to the 70’s that have closed in, crampy rooms with lots of walls separating each room from the next.  Without a doubt, buyers today—especially young buyers want open and flowing floor plans.  They want a kitchen that opens into a family or great room and the formal living room, in many cases, has gone the way of the model-T.  Why not use that space for a library, office or spare bedroom.  Buyers want a kitchen that has lots of counter space and maybe an island but it doesn’t have to be gigantic—just super functional.

Now I’m not saying there’s no justification for bigger homes.  More people work at home part or full time.  So they need an office.  Relatives no longer live next door, around the corner or on the other side of town.  They may live hundreds or thousands of miles away and space is needed to accommodate family visits.  But this doesn’t necessarily have to translate into thousands of extra square feet.  For example, that formal living room that’s no longer needed is now the office, which can house a pull out sofa or futon to become a guest room as needed.  Since most of us use laptops, we can have a portable office located in the kitchen desk area or on the extended kitchen countertop.

Wouldn’t looking at a home from the standpoint of higher performance in terms of space usage and efficiency rather than number of square feet make more sense?  Remember the first cell phones carried around in vinyl or leather cases, that were bigger than today’s land-line phones?  Cell phones got much smaller, with higher performance and much more efficient—oh, and less expensive too.  I mean, nobody wants a bigger phone, right?  Or remember the first laptops—expensive, large and heavy.  Fast-forward to today’s smaller laptops, netbooks and the Ipad.

Fortunately, builders are getting with the program and consciously building smaller but very space efficient homes, both for financial reasons and because they are seeing the same trend.  And counties around the country are putting the skids on overly large homes with new zoning regulations, higher taxes for homes over a certain size and/or using a green building checklist that the builder must adhere to.

All in all this trend and the changing model for home sizes is good for the home buyer’s wallet and for the fragile planet that we share with 7 billion other people.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

Pedal Pusher

I got an unusual real estate referral a couple of weeks ago.  A young woman from Colorado who is moving to the DC Metro area requested an agent who had an extensive knowledge of DC area bike trails.  Well, that would be me, of course.  It was the first time I’ve had such a request from a potential buyer.  Leisa will be working at Crystal City and absolutely wants to bike to and from work.  Her biggest fear was to wind up working with a real estate agent who would under estimate the importance of being able to cycle to work.  “When I asked a Realtor friend to refer me to a Keller Williams Realtor in the NOVA/DC areas, the most important request was not gender, not experience, not numbers. My future Realtor had to be a cyclist!  Because I intend to ride my bicycle to work, I wanted a realtor who understands the cycling routes and one who could relate to my bike-minded ways,” Leisa said.

Of course the DC Metro area has some of the best biking routes in the country. On a couple of occasions I have considered moving out of the area and each time, one of the main reasons I changed my mind was the lack of connected and extensive urban biking trails in the areas I considered moving to.

You might be thinking about reducing your carbon footprint or getting some needed exercise by biking to and from work. There isn’t a better area to safely pursue this goal.  I tell people all the time how amazing it is to be able to travel through the entire DC metro area including the states of Virginia and Maryland and the District of Columbia without using the city streets. And if you do have to use the city streets, bike lanes abound, especially in Arlington and DC.  Both Arlington and DC are making a concerted effort to reduce car traffic by increasing bike lanes in the city.  But if you aren’t ready to try cycling to and from work, you might just want to run some weekend errands by bicycle or see some Washington sights without the hassle of traffic and parking.  Sure you could take the metro but you won’t burn as many calories and it’s a much better view.

If you’re selling a home, being near a bike route is a great selling feature and the agent who markets your home should know this.  If you’re buying a home, even if you aren’t going to bike to work, having easy access to the bike trails is a real bonus.  I live about a mile from the W & OD, Four Mile Run and Mount Vernon bike trails.

Figuring out the bike routes is easy. DC has great maps for biking downtown to work.  We all use Google Maps right?  Well you can even map bike routes on Google! Bike Arlington is a wonderful site that features bike sharing, bicycle friendly businesses, all the news on biking in Arlington as well as route maps.

And how’s this for a real estate niche?  There is actually a real estate company that shows properties by biking to them. Petal to Properties is a full service real estate company with offices in Boulder, CO, Sonoma, CA, and Northhampton, MA. Hmmm, this has got me thinking………

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.


If It’s a “Green” Home, Can I Afford It–And What is a “Green” Home Anyway?

So you’re thinking about buying a green home. What does that mean, actually?  Does it mean buying a really big expensive home with “green” features?  Does it mean buying a really small home with a tiny ecological footprint?  Does it mean solar panels and a wind turbine in your back yard?   Does it mean you’re being a hypocrite if you don’t use rainwater barrels and stop driving your car?  Does it mean spending a lot more money than you ever would for a regular house?  “Forget it.  I’ll just buy a regular house.  It’s all to complicated, expensive and politically correct for me to figure out,” you might decide.

Or, you decide to sell your home that needs some work to get it on the market anyway.  So you decide to do all green upgrades.  Well, what does that mean exactly?  Do you have to replace your 5-year-old hot water heater with a tankless one?  Do you have to install all new windows that are triple paned and very expensive? Do you need to replace your oh, so ordinary hardwood floors, with bamboo?  Do you have to invest in solar panels to say your house is energy efficient? Will you recoup the investment?  “You know what, I’m just going to do the old standard stuff—paint, carpet, replace a couple of appliances and be done with it,” you might think.

NO, NO, NO and more NOs to all of these questions.  The myths about what a green home is, and how much it costs are many.  So I’m going to tackle some of the myths in my next few blogs and suggest some articles along the way.

The biggest myth is that buying a green home means buying a home that is many, many thousands of dollars more expensive than a regular home.  ­­First, there are nuances to what a green home actually is and that, in and of itself, is confusing.  Unfortunately green can be in the eye of the beholder.  Most new homes calling themselves green really just have some green features.  Until there are nationally agreed upon standards, what’s green will remain open to interpretation.

Buying a home with better insulation, a more tightly sealed envelope and EnergyStar rated appliances, HVAC systems and windows, does usually add a modest premium to the cost of the home.  But what is ultimately saved in energy costs and energy use, more than makes up for the additional premium.  But these are green features and do not give the builder the right to call the home a green home.  In fact, some new evidence is showing that homes that are tightly sealed but that still have VOC (volatile organic compounds) in cabinets,  carpet sealants, hardwood floor finishes, paint, etc—may be causing damage to the health of the home’s inhabitants!

There are some really great reasons to consider using sustainable standards when you buy or sell a home.  So, the bottom line is—buy or sell your home with an expert—someone who can guide you, advocate for you and protect you from greenwashing.  That would be ME–your EcoBroker certified, NAR Green designated Realtor.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

Literally Walking the Walk– Walkable Communities are Green Communities

The word pedestrian pertains to walking. But another somewhat derogatory meaning is: monotonous, dreary, commonplace, dull–which is what some diehard city dwellers often think of suburban living.  Well, tell that to the homeowners with a 70-100% walk score on www.walkscore.com even though they live in “the burbs”. Tell that to my clients whose home sold for $40,000 above list price in 2009 in the middle of a housing recession, partly because their 1938 cape cod was walking distance to the vibrant Clarendon section of Arlington, VA. Walkability is the new green and sustainable. All over the country “more and more buyers want to live where they can park their cars and use their feet.”  And even though that often means living in the city, it doesn’t always.  An August 2009 Study by CEOs for Cities, a national network of urban leaders, found that in 13 out of 15 markets they surveyed nation wide, home values were higher where there were substantially higher levels of walkability.  In their study “going from an average level of walkability to the 75th percentile raised the value of the median house by between $4,000 and about $34,000, depending on the market,”  The New York Times discusses the trend in Street Corner vs Cul de Sacs in a January issue.

In the May 2010 issue of Washingtonian Magazine, the cover article titled “Tales from the Boom and Bust–the Wild Ride of Local Real Estate”, there is a list of 100 neighborhoods and how they’ve fared in the last three years.  After studying this list carefully, it’s clear that the only neighborhoods that have posted an increase in value in the last three years are very walkable neighborhoods such as Adams Morgan, Dupont Circle and Georgetown in DC; Clarendon, Ballston, Crystal City and Rosslyn in Arlington; and Old Town and Del Ray/Rosemont in Alexandria. These neighborhoods have all posted a net gain in value in the last three years of at least 2%.  Cleveland Park has gained a whopping 23% in the last 3 years! This is a highly walkable neighborhood with an abundance of larger single family homes. The median home sale price in Cleveland Park went from $474K in 2008 to $625K in 2009! Contrast these neighborhoods to Great Falls (down 25%), Fairfax Station (down 16%), Ashburn (down 28%) and Gaithersburg (16%) to name a few, to see what I mean about the value of walkability. And even neighborhoods that haven’t posted gains have lost far less in value if the walkability level is high.

Now, if city living is just not your thing, more and more suburban communities are building walkability into their smart growth plans. The New Urbanism movement promotes mixed use walkable communities. Self contained suburban communities built around town centers and light rail systems are part of the new wave of community development. Ellen Dunham-Jones is the director of the architecture program at Georgia Tech.  She’s written a book called Retrofitting Suburbia: Urban Design Solutions for Redesigning Suburbs that is a fascinating look at the potential for turning gas guzzling, car focused suburbs into models of walkable neighborhoods. Locally we have a number of walkable suburban communities as another article in the May issue of Washingtonian points out.

Sustainable living is no longer decided solely by whether you have solar panels, geothermal heat, good insulation, bamboo flooring, tankless hot water heaters, etc.  Being able to walk or even bike to the important places in your life is not only healthy for your body and the planet, it’s money in the bank when sell your home. You may pay a premium for buying in a highly walkable neighborhood but what you save in transportation will surely make up the difference.  Think one car instead of two, lower insurance, less money on gas and lower car maintenance costs.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.