Are you familiar with the impact that Congress' energy acts will have on you and your clients?

Did you know that as of Jan 23, 2006, no more parts are being made for heating, ventilation and air conditioning (HVAC) systems with a seasonal energy efficiency rating (SEER) of less than 13?  This means that once the parts are depleted from the inventory if something breaks and can't be replaced with a part fitting a 13 or higher SEER system, the only alternative will be to replace the entire system.  Average replacement costs for an entire system are at about $7000.

Additionally, the new systems are larger than the less efficient systems.  Practically speaking this means the new system may not fit where the old system did.  Walls may need to be moved.  Fences may need to be moved, etc.  The new systems will be heavier.  This means if the system is housed on a roof then an engineer may need to ensure the roof can handle the extra load.

As of January 2010, all new systems will use R-410A (trade name Puron) refrigerant.  The current refrigerant R22 (trade name Freon) will be phased out.  This means maintenance costs for current systems using R22 will rise.

It is important that you and your clients understand how Congress' Energy act will impact you so you can make well-informed purchasing and negotiating decisions.  Your clients may wish to consult with a HVAC company or have the HVAC company inspect the home before making purchasing decisions.

I believe this may have a huge impact on the housing industry and I'm hoping this doesn't become a lawsuit liability for real estate agents and home inspectors.  I am adopting a new policy in my practice.  I have written an informational disclosure form and will be having all my buyer clients sign the form.  I want my clients to be as informed as possible.  I hope this blog helps somebody!

I live inside the city limits of Annapolis, Maryland.  During rush hour it can take me 10 to 15 minutes just to get from my neighborhood on to the main road leading out of town... and it's only going to get worse as 4,000 new condos and apartments fill up over the course of the next few years...  In my area it's become popular to complain about "greedy developers and builders" so I thought a letter to the editor from a builder that was published in The Capital was interesting...

The builder complained that they were unfairly getting bad publicity and that we really ought to be looking at our highly touted "Smart Growth" plan - a plan that has received a lot of attention and has been copied in many other locales...  Smart Growth restricts building to areas that are already highly developed - and keeps new building out of areas that are rural... It does sound great until you see the unintended consequences...

In the areas where growth has been permited, our schools are so overcrowded that the only new building permits being issued are for age-restricted communities - there are 6,000 new age-restricted homes being built in our modestly-sized county... and I am left wondering if we can possibly fill all these new homes and if this is the best use of all the land that is being destroyed for these new homes... Traffic congestion is a big problem and getting worse... and very little wooded areas are left standing...

In the areas where growth has NOT been permitted, residents do not have public water and sewer, roads and bridges are inadequate, and a general resentment has formed because area residents do not feel they are getting their fair share of the tax dollar at work for them.

Our bridges are not being upgraded despite the desperate need for more traffic lanes... the reason given by our governor is the "if you build it they will come" philosophy - in other words... he does not want to make it easier to access our less-developed areas because if we do, then those areas will become overdeveloped as well.  He thinks developing a ferry system is a much better alternative to more traffic lanes on a bridge... a laughable proposal at best and a serious waste of money and resources at worst...

My proposal is to limit development through the enforcement of building codes... Mr. Governor, if you feel our current building codes aren't sufficient to limit development then please come up with new codes... but in the mean time could you please get started on the long process of upgrading our bridges, highways and the extension of public sewer and water???  The ferries just aren't going to cut it...

Ginger Allen
Annapolis, MD http://www.thehomecoach.com

Open any newspaper or listen to any newscast and you're sure to hear frantic reports about the falling  real estate market.  In fact our local real estate market is doing just fine and prospects are good for a busy and productive 2008.

The local Anne Arundel County real estate market has had a good 2007 so far.  According to the Metropolitan Regional Information System (MRIS), average prices rose in the second quarter to $421,500, up from $412,400 - and the outlook for the third quarter is for another price increase.  Additionally we saw a decline in the average monthly unemployment rate.  And interest rates are still historically low, making mortgages very affordable for new buyers.  While we have seen a decline in the actual number of homes sold, the forecast is for a 13% decrease in sales for 2007 (MRIS)- not too bad considering the hysteria we hear on a daily basis...

Why are we hearing such negative reports about the housing market?  The media has created a self-fulfilling prophecy of gloom by concentrating on the sub-prime mortgage market and areas with high foreclosure rates.  However there is no such thing as a "National Housing Market" - each area has its own local housing market, and the National Association of Realtors (NAR) shows our area foreclosure rate is down by a whopping 25%.  Still, the public is inundated by reports of the lousy housing market and perception can become reality for those who don't know any better.

The MRIS reports on the local market: "There is a large pent-up demand accumulating that will be unleashed in a short matter of time - our best estimate is early 2008... even if all the 1.4 million subprime mortgage originations were to disappear - which no one expects - then the bottom has already been reached in terms of any impact from tightening credit standards... implying that the declines in home sales have been far greater than any tightening of lending availability.  Therefore, the additional decline in home sales must be attributed to other factors outside of subprime loan disruptions.  Is it jobs?  A resounding NO.  Is it due to lack of income and wealth?  Another resounding NO.  Is it due to higher home prices?  NO.  Is it due to higher mortgage rates?  Surely some impact, but the rates are only modestly higher.  What's the explanation then?  The primary reason seems to be a lack of confidence.  Constant reminders in the media of how "bad" the housing sector is has eaten in to buyer confidence...  Locally, home sales are forecasted to fall 13% in 2007 and then make a modest rise of 3% in 2008.  Home prices will be flat in 2007 and then increase 1% to 2% in 2008.  With all the subprime problems out of the way by 2009, the momentum will inevitably strengthen further."

So the message to prospective buyers and sellers is to hang in there and ignore the media reports.  Historically the real estate market has been very similar to the stock market - it has temporary periods of growth and decline but the long-term trend is to steady growth - making real estate a great investment.  I would add a caveat to the real estate investor who wants to buy and then quickly sell a home for profit - a practice known as "flipping" - now is not the best time to engage in this practice because you will most likely find that your acquisition and selling expenses in a flat market will leave you in a losing scenario.  However, to someone who is considering purchasing a home to hold on to for at least 5 years - now is a great time to buy!

Ginger Allen
Annapolis, MD http://www.thehomecoach.com