What Will be the Demographic of the Post-Tax-Credit Era Home Buyer?

Thinking About the Future...

While Realtors, Mortgage Brokers, Home Inspectors and Appraisers may have different views on the politics of Government (i.e., tax-payer) tax credits (i.e., subsidies) for home purchases, most of us can agree on one thing: a lot of us have benefited and will continue to benefit from tax credits for home purchases.  In the next 5.5 months, until the end of April, many offers will be made and accepted, many homes will be inspected, and many of us will pad our pockets—many will spend as the money comes in...

Then what?

For years I have seen how short sidedness on the part of real estate professionals (of all types) can lead to their own foreclosure and bankruptcy.  Many of the most successful Realtors and Mortgage Brokers that we worked with in 2003-2006 no longer own a house, and couldn’t qualify for one if they wanted it.  I know: I have inspected their former homes for new buyers.  Most of us struggle when we are handed a wad of cash—we want to spend it immediately, and we don’t think about tomorrow.

But we need to.

In that frame of mind, then… thinking about tomorrow… what will be the demographic of a Home Buyer in July 2010?  September 2010?  What will be the Post-Tax-Credit Demographic of a Home Buyer?  Who will be our client?  What do they look like?  Who is that person?  Have you asked yourself these questions?

Let’s think about this for a minute…

The new tax-credit for first time buyers will be $8,000, but the amount that the individuals or couples can make has increased.  The new tax-credit is also now extended to people who have lived in their present home for 5 years.  They will get $6,500. 

If that is the case, that pretty much covers the vast majority of home buyers.  And if that is true, who is going to wait until after April 30, 2010.  And if our answer is “few”, then you need to feel the pressure of the question again: what is the demographic of the home buyer in the post-tax-credit era?

If you fail to appreciate the importance of this question and you simply focus on the moment without preparing for “tomorrow”, you may wake up one day and be looking for a second job…

Your thoughts?

Brilliant Idea!

"Hey, Bobby, do you think that anyone will have a problem if we install the electrical panel in the bathroom on the same wall as the shower surround, and directly in front of the toilet?"

"Well gee-whiz, Frank, I can't imagine what the issue would be."

"Well, what about the fact that there is a lot of water in bathrooms... what if somebody cracks the shower surround while they are in there... the wires are right behind the shower surround."

"Well, I can't imagine a crazy thing like that would happen."

"Ok... if you say so."

Am I the only one that gets 1-5 sales calls a day on my cell phone?  "Hey, we have this directory that you should pay a rediculous amount of money for...", "Congrats!  You just one a trip to Las Vagas, with all expenses paid, including a free car, hotel stay for a week, three shows, and ten thousand dollars to spend... just give us your credit card", yada yada.

What *really* bothers me is when they call and I am working.  What do they expect?  Do people really think that I am sitting in my office waiting for an inspection and waiting for them to call at 1pm in the afternoon?  Hello?!

Lame.

What is Wrong With This Picture?

Can you see it?

The "issue" noted here is a very common problem found during home inspections.  It isn't a "huge problem", but you will wish you had repaired it if "something" happens down the road...

Some home inspectors don't mention it and are likely not required to, but I mention it on a regular basis.

Clues: it has something to do with the dishwasher, which is to the left of the unit.

Note: other issues could be noted (yes, the house has QEST plumbing, etc. etc., but I am not interested in that here...)

Take a stab!

After giving some people a shot, I will explain the issue in another post...

At a recent inspection, I was interested in what could possibly be causing the mildew to form in the picture shown in the left.  The house was not old (about 10 years), and there were no signs of leaks, etc. 

Now, before I continue, it is important for people to understand that it is not the inspector's job to determine why something is wrong or what has to be done to repair it.  It is the inspector's job to "observe and report"--to point out the defect and allow qualified professionals whose job it is to figure out the "whys" and what needs to be done.

That said, I have a very busy mind and if I am going to do inspections for the rest of my life it is going to have to be more interesting to me than "observing and reporting"--at least in my mind. 

So, as I was saying, there were no blatant reasons why the mildew was forming on the drywall...

My intial thought, once I realized that there were no leaks, etc. was that the home owners may have been heating the garage with space heaters and the uninsulated area above the garage (you don't have to insulate the garage) may have lead to condensation.  While I thought about this for a bit, I didn't really feel comfortable with that--at least in this climant.

Soon, however, I realized that the mildew may have something to do with the fact that the "laundry room" was in the garage--washer and dryer hook ups are in the garage.  My house is the same way.  I noticed that there was lint all over the garage floors and walls in the area where the dryer would be.  My conclusion was that the dryer wasn't fully inserted into the vent and that warm (picture on right), moist area was regularly blowing into the garage, meeting the ceiling (where it is much cooler) and causing the mildew to form there.  This theory would be enough alone, but the purchaser noted that the garage also had an extensive amount of storage in it--hence, low air flow.

I felt confident that this was the cause, even though the client fully realized that I am not there to determine the reason and I didn't make these conclusions in the report. 

In the end, my job was a little more interesting.  :)

A lot of people don't realize that pretty much all Water Heater manufacturers specifically state that insulation blankets are not to be installed on the water heater.  I just happened to be in the position to take this picture, and thought it would be a good example of the warnings that they put on the units.  This one is actually tempered (pun) when compared to some of the other warnings that I will see. 

In the end it is likely not a big issue, but they put all of the warning stickers on the outside of the water heater, and they likely have to tell people that if they block the stickers... they aren't being "warned". 

Some manufactures state that it voids the warranty on the water heater. 

How they would enforce that, I do not know.

And Now for a Major Contradiction:  The US Government Actually RECOMMENDS That You Insulate Them:

http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=13070

Oh, brother...

So, should you insulate a water heater? 

Jury is sort of out on this.  If the insulation blanket is on the water heater at the time of the inspection I certainly take a picture and document it (I keep this information to myself).  If a home inspection is "visual and non-invasive", an insulation blanket nicely tucked and sealed around water heater is a notable limitation to the inspection process...

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Do I need to add any commentary?

The bathroom vents were also going into the attic. 

(ok... I must.... somebody isn't going to get it... plywood shouldn't look like that... when warm moist air is blown from bathrooms and kitchens into the attic it can cause mildew to form on the sheathing...)  ;)

This is a first... the home owner's dog really liked me.  Well... ok... that is a first too.  But, I have never had a dog demand to go into the crawl space with me.  I think he did a great job, considering that it appeared to be his first venture into Dante's Crawlspacio.

Sparky notified me of a few defects... including fiberglass batting insulation that was installed backwards.  Sparky asked, "Justin, how on earth did they install the insulation backwards when it clearly says on the insulation that the paper/vapor barrier side of the insulation is to face the heated area of the home... I mean... they were in the crawl space for hours installing this and they never saw that."

To which I responded, "yeah... I have asked myself that before."

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Getting off the highway on my way to a home inspection association meeting I ran into (pun) this... The kid, shown in the picture, was attempting to explain how reasonable his accident was to the police.  I don't think they were buying it.  Somehow in a busy off ramp he drove his car up over the curb, and into a someone's fence.  Lukily he didn't go through... or he could have seriously hurt someone or ran into their house.

This kind of stuff I get to see everyday... I just forget to take my camera out of my shirt pocket and snap a picture.  :)

Will They Extend the Tax Credit?

Are We Trying to Push Off "The Inevitable"?

Are We Still Benefiting from the Sub-Prime Crisis?

The Times of Trenton just released and Op-Ed piece on the possibility of extending the tax credit.  Written by Staff Writer and Executive Vice President of the New Jersey Association of Realtors, JARROD C. GRASSO, this piece makes another "expected" case for the extension of the tax credit. 

What will be interesting is if we will see any realtors, brokers, mortgage brokers, inspectors, appraisers or anyone who stands to benefit in the short term from a tax credit step to the plate and offer an intriguing reason why an extension wouldn't be in the best interest of the economy.  Don't get me wrong: I have benefited and continuing to benefit from the tax credit, but I have read some things (not written by anyone who stands to benefit from the immediate impact of home sales) suggest that we are simply pushing off the inevitable decline. 

I don't know. 

I do know this: those of us (Realtors, inspectors, etc.) who are presently benefiting in this market are still simply benefiting from the market that cased the "crash" in the first place.  Yes: we are still benefiting from the sub-prime mortgage mess and nobody talks about this. 

Think about it.

The Right Side of the Pendulum:  This "right side" was the time when "anybody could get a loan".  While I see the sorry and personal aftermath of this issue everyday, let's get one thing straight: many of us made a lot of money from people purchasing homes they really shouldn't have purchased. 

The Left Side of the Pendulum:  We are simply now on the other side of the pendulum, but we are still benefiting.  People lost those homes, the markets were flooded, and incentives were set in place for home sales.  Some are natural (over supply drops the prices of homes, which creates demand), and others are unnatural (5-6% interest rates and $8,000 tax credits).  Why?  Because of the sub-prime mortgage crisis.

However you slice it, then, we are still benefiting from the same crisis.  Yet, nobody talks about this.

This leads then to an interesting observation and question:

Observation:  October, November and December (as far as I am concerned, basing it off of how many inspections we were doing in our area) was my "synthesis"-the pendulum passed from right to left.  It was really... really... slow.  Sure.  Are we busier than others: absolutely.  But slow for "us".  We knew something was not going right.  However, January came... then March... then came 60-80 hour work weeks for the last 6 months of my life. 

Question:  Was October-December 2008 simply a pre-cursor?  While the rest of the economy has struggled in this "recession", we have benefited.  But are we next?  Will all of us-Realtors, appraisers, inspectors, mortgage brokers, etc.-eventually see and feel the recession, but just later that the other segments of the economy? 

Does extending the Tax-Credit or creating another similar Tax-Credit simply push off the inevitable decline in our industries?

Certainly, I hope not.  I have a business to run, I have children to feed, and I have a wife who has expensive tastes, etc.

But... I wonder. 

What say you?

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