December 2019 Newsletter

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Greetings and warm wishes from the AARC! We hope you had a blessed Christmas and are making plans to ring in 2020 (since we’ll be “recruiting retirees in a new decade”). In these next few winter months, communities will be attending real estate shows and retirees will be making plans to visit over the next year.

In thinking back to what 2019 held for our organization: we hosted several informative webinars, a successful conference in Chattanooga with 15 states represented, and welcome and renew 34 communities and developments in our Seal of Approval program.

It has been a pleasure to serve as Chair for the last two years and an incredible experience learning more about our industry. We are looking forward to our continued progress in reaching our target audience and delivering more resources to our members. Please join me in welcoming your 2020-2022 Chair, Bill Houghton! Many of you know Bill as a current board member of AARC and Managing Principal, Community Marketing Advisors. As he leads us into the new year, the AARC will continue to be your resource and guide to reaching our retiree markets.

Best wishes for a prosperous New Year!

Rachel Baker Chair, The AARC

Pending Home Sales Expand 1.2% in November

National Association of Realtors | December 30, 2019

WASHINGTON (December 30, 2019) – Pending home sales increased in November, rebounding from the prior month’s decline, according to the National Association of Realtors®. The West region reported the highest growth last month, while the other three major U.S. regions saw only marginal variances in month-over-month contract activity. Pending home sales were up nationally and up in all regions compared to one year ago.

The Pending Home Sales Index (PHSI),*, a forward-looking indicator based on contract signings, rose 1.2% to 108.5 in November. Year-over-year contract signings jumped 7.4%. An index of 100 is equal to the level of contract activity in 2001.

“Despite the insufficient level of inventory, pending home contracts still increased in November,” said Lawrence Yun, NAR’s chief economist, noting that housing inventory has been in decline for six straight months dating back to June 2019. “The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”

At the recent NAR Real Estate Forecast Summit, the consensus forecast called for 2.0% GDP growth, a 3.7% unemployment rate and a 3.8% average mortgage rate in 2020. Home prices were projected to rise by 3.6% in 2020 after a 5% gain in 2019.

“Sale prices continue to rise, but I am hopeful that we will see price appreciation slow in 2020,” said Yun. “Builder confidence levels are high, so we just need housing supply to match and more home construction to take place in the coming year.”

November Pending Home Sales Regional Breakdown

The regional indices had mixed results in November. The Northeast PHSI slid 0.1% to 96.3 in November, 2.6% higher than a year ago. In the Midwest, the index rose 1.0% to 102.5 last month, 5.0% higher than in November 2018.

Pending home sales in the South decreased 0.2% to an index of 125.0 in November, a 7.7% increase from last November. The index in the West grew 5.5% in November 2019 to 98.4, an increase of 14.0% from a year ago.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

NOTE: Existing-Home Sales for December will be reported January 22. The next Pending Home Sales Index will be January 29; all release times are 10:00 a.m. ET.

Information about NAR is available at This and other news releases are posted on the NAR Newsroom at Statistical data in this release, as well as other tables and surveys, are posted in the “Research and Statistics” tab.

How to Make a Home More Sustainable

Barbara Ballinger, Realtor Magazine | December 3, 2019

The buzz in residential real estate is all about sustainability, and the good news is there are a plethora of ways to improve the efficiency and durability of a home.

Goals change; countertops fabricated from imported granite and showers lined with sprays that endlessly shoot water from head to toe are no longer at the top of all homeowners’ wish lists. Sustainable features are the latest trend to attract buyers. Houses marketed with low-flow toilets and showerheads, multipane windows, electric charging stations, and kitchen countertops made from locally quarried stone are what makes today’s home shoppers swoon.

According to the 2018 National Association of REALTORS® Sustainability Resource Guide, 61% of surveyed members said their clients are interested in sustainability and want more of these features in their homes—and it’s not just millennials requesting them. Almost every age group wants to save money, pare energy and water consumption, and remove toxins from the air they breathe. “Reducing utility bills is often the driver, but many also want to do the right thing,” says architect Tony Schmitz, sustainability director at Hoefer Wysocki, based in Leawood, Kan.

The good news is there are innumerable steps that homeowners can take, and the cost to act sustainably may be modest, adding an extra 5% to 10% to the purchase price, says Prentis Hale, principal at SHED Architecture + Designin Seattle, which has long practiced sustainability. One important caveat to remind clients is that a return on investment may not be immediate, and it hinges on both the cost to buy and install a product or system and the area’s climate.

Here are 10 tips real estate pros can use to advise their sustainable-conscious clients who are looking to purchase or update a home.

sustainable home designed by SHED

Size. Whether starting over or adding on, it’s essential to analyze needs and try to go smaller, says architect Duo Dickinson, author of Staying Put: Remodel Your House to Get the Home You Want (The Taunton Press). “Size is controllable, unlike the weather. Smarter almost always means smaller without sacrificing usefulness or delight,” he says. Hale encourages clients to keep homes under 2,500 square feet. One way to do so is by having small bedrooms, he says. Nick Rosen, who lives off the grid in a small house in Spain part of the year, stresses the importance of not overutilizing land, too. “Land is both an asset and a liability since it requires maintenance. Choose strictly what you think you will need and no more,” he says.

net zero construction
© Steffen Lehmann

Embodied energy. There’s growing recognition about the importance of the term embodied energy. Steffen Lehmann, dean of the University of Nevada, Las Vegas’ School of Architecture, defines it as the amount of energy consumed by all the processes associated with the production of a building, from mining materials to processing natural resources, and the manufacture, transport, and delivery of products. “It’s important for homeowners to ask builders and architects what they will do regarding this and how they intend to keep the embodied energy low,” he says. One strategy is to use only locally sourced and processed materials that don’t need to travel around the globe, he says. Another is to keep construction simple, so assembling components doesn’t require a lot of energy. By buying from local suppliers, a homeowner is more likely to find someone who will return and fix something, Rosen says.

  1. Insulation and heating. The first step a homeowner should take before making changes to a home is to have an energy audit conducted to gauge the efficiency of the home’s systems, says architect Nathan Kipnis, founder of Kipnis Architecture + Planning in Evanston, Ill. The next steps, based on the audit, would likely be to air seal the house by caulking gaps around windows, doors, and recessed lights. Poorly insulated windows should be replaced with multipane windows. Next up should be improving wall, attic, and basement insulation, based on the R value for the homeowner’s area, Kipnis says. Any home built before 1990 should have an updated heating and cooling system, says Schmitz. Kipnis likes a geothermal ground source heat or air source heat pump, both of which are electric and help to minimize carbon from a building’s energy use. A tight home in a cold climate also should have a heat recovery ventilator to bring in fresh air to keep the home healthy, Kipnis says. A programmable smart thermostat like a Nest is useful to save more energy since it learns a homeowner’s patterns and lowers temperatures when they are away.
    rain garden
    © SHED

    Landscaping and water use. As the cost of landscaping continues to rise, homeowners are more aware that sustainable choices will survive longer and require less water and maintenance, says author and landscape designer Michael Glassman, whose eponymous firm is based in Sacramento, Calif. Native plants, permeable pavers, and drip irrigation systems all pare water use, he says. Local codes must be considered, too. Seattle, for instance, updated its stormwater code in 2016 to require stormwater to be mitigated on a property rather than immediately discharged to the street or combined sewer, Hale says. Development size and site will dictate what can and must be done. “We frequently use strategies that include green roofs, bioretention planters or rain gardens, permeable pavers and concrete, and properly graded sites,” says Glassman, co-author of The Garden Bible(Images Publishing). Besides paring water use, landscaping with large shade trees can block sunlight and lessen the need for air conditioning. Trees must be planted on the right side of the house to work, ideally the west, and far enough from homes in areas prone to fires, which some local codes now require, he says.

    large home with solar panels
    © AJ Brown / Nathan Kipnis, architect, Kipnis Architecture + Planning

    Solar panels. The huge decrease in cost, along with the federal solar tax credit, have made solar panels a more affordable option for many homeowners, says Kipnis. The current tax credit at 30% of the system cost will end at the close of the 2019. It goes down to 26% in 2020, 22% in 2021, and 10% credit in 2022 and beyond. The panels can be used in combination with a battery storage system to provide homeowners with a way to store energy when the sun isn’t shining and to provide backup power. The cost of battery storage is dropping significantly year over year as battery technology research is starting to pay off commercially, Kipnis says. Some caveats with solar panels: First, efficiency keeps improving, so some may become obsolete not long after installation. Second, not all buyers view them as a plus because of how they look, says Schmitz. Clients who prefer a nonsolar, traditional shingle roof—the least costly choice—should opt for light-colored shingles that retain less heat, Lehmann says.

    germ fighting lighting from Ellumi
    © Ellumi

    Lights. Natural daylight is the least expensive form of light and should be maximized in new construction and renovations. But when it comes to artificial lights, LEDs are the preferred choice. Energy Star–rated products use at least 75% less energy and last 25 times longer than incandescent lighting, according to the U.S. Department of Energy. Besides saving money, the latest generation of LEDs offer other benefits. They render color more realistically than prior generations did, and can almost match incandescent light colors, especially when their measurement is at least 3,000 kelvin or higher, Kipnis says. Some LED bulbs such as Norb’s NorbSlEEP bulb can help modulate the body’s circadian rhythm so people sleep better. Others, like those manufactured by ellumi with proprietary technology from Vital Vio, stop bacteria and mold from developing, eliminating the need for chemical cleaners.

  2. Plumbing. Whether it’s a house with many bathrooms or many occupants, water figuratively and literally goes down the drain when people flush toilets, shower, wash dishes, or run the dishwasher frequently. Smart choices include low-flow toilets and showerheads, faucets with aerators, and front-loading washing machines. Schmitz likes tankless water heaters because they heat water on demand rather than continuously, but they require a gas source. Some utility companies offer rebates or incentives when homeowners buy water-saving appliances, so it’s wise for owners look for the EPA WaterSense label or Energy Star certification. Some utilities also offer smart meters and other systems so homeowners can program appliances to start at the least expensive time to use energy, according to the U.S. Department of Energy.
  3. Nontoxic, natural materials. Air quality also affects sustainability, so it’s smart to make choices that limit volatile organic compounds in paint, carpeting, and adhesives, says Schmitz. When possible, homeowners should also go for natural materials in the home, such as all-wool carpeting, quartz, and reclaimed wood.
  4. Transportation and walkability. Sustainability isn’t just about a person’s home but also what vehicles they drive and how often they use them. Charging stations have already become a hot amenity in housing, Hale says. But the more a homeowner can walk, bicycle, or take public transportation, the better, says Kipnis. Housing demand is only expected to increase in walkable areas, in both cities and suburbs, according the report Foot Traffic Ahead 2019, from the George Washington University School of Business and Smart Growth America.
  5. Recycle. Some states offer benefits to homeowners and developers who recycle construction materials during a remodel or teardown, says Kipnis. His state of Illinois is among those that have a deconstruction program in place, offering potential tax benefits associated with donation, revenue from material resale, and reduced waste management costs. There are also private companies that specialize in deconstruction and donation of building materials, such as Recyclean Inc. in Kenosha, Wis. Kipnis cautions that some materials are more recyclable than others (such as glass and metal versus concrete), and some materials are not recyclable if their materials are bound together, including certain countertops that mix aggregates, he says.

Educating the Multifamily Market

Single-family homeowners aren’t the only clients who are interested in sustainability and how to improve a property. Multifamily and commercial building owners are also considering sustainability—and many cities are insisting that the owners of buildings within their borders make improvements to decrease energy use.

For example, New York City began requiring owners of 50,000-square-foot and larger buildings to benchmark their energy use in 2012, and in 2016, broadened the requirement to include 25,000-square-foot buildings and up. This past spring, the city took it a step further by passing the Climate Mobilization Act, making it the first in the nation to put structures of more than 25,000 square feet on notice—come 2024, owners will have to pay a fine if they go over their allotted greenhouse gas emissions set for the building. The caps are determined according to occupancy classification (multifamily, retail, parking, etc.) and the buildings’ square footage for each of those areas.

“The goal for buildings of 25,000 square feet and larger is to reduce energy consumption,” says Kelly Dougherty, director of energy management at FirstService Energy, a subsidiary of FirstService Residential Property Management Company, which has an office in New York. As a result, many owners are making changes to lighting and HVAC systems and shifting to natural gas or electricity versus fossil fuels, says Dougherty, whose company manages a portfolio of 500 apartment buildings in the city, from affordable to super-luxury. She expects other cities will institute similar policies in the coming years.

Going off the Grid

While the overall goal of sustainability is lowering energy consumption and a building’s carbon footprint, some owners are going further by going off the grid completely. In fact, getting off the power grid is becoming easier for homeowners when they select systems such as solar panels with battery storage that help them to produce more energy than they use in a year. In some areas of the country, energy codes have gotten so strict that new houses or substantial remodels must get close to net-zero energy status, says architect Prentis Hale. However, it’s still not realistic for most homeowners to get off the grid completely, says architect Tony Schmitz, especially when it comes to water and sewer grids—cities usually won’t let homeowners disconnect from those due to local health codes.

Rain cistern as part of sustainable home construction
© Mark Woods for SHED

Nick Rosen, author of Off the Grid: Inside the Movement for More Spaces, Less Government, and True Independence in Modern America (Penguin Publishing), calls himself “a part-time off-gridder.” He has a home in London, but he has taken his small house on the island of Majorca in Spain off the grid completely. He’s outfitted the property with solar panels and a rain collection system. His advice for others wanting to do the same is to over provide if budget permits. “Put in a larger water tank than you think you will need, add more solar panels than are strictly necessary, and give yourself a few extra batteries,” he says. “Also, get together with other people in the area who are off-grid. No one person has all the skills and resources.”

3 Critical Steps for Homeowners Eager to Learn About Sustainability

1. Recognize that the most sustainable building is usually the one that exists (depending on condition). “Homeowners should try to reuse and improve an existing home rather than start over,” says architect Steffen Lehmann.

2. Heed those long-touted, simple conservation tips: turn off the lights, don’t let water run endlessly while brushing teeth or showering, and unplug small appliances and turn off the TV when not in use.

3. When a client is considering building new or taking on a major home renovation, advise them to hire professionals who are skilled and knowledgeable in sustainable design. “When interviewing [builders], the homeowners should ask if the person makes sustainable choices when selecting materials, systems, and construction methods,” says architect Tony Schmitz. Look at their website to see if sustainability is a focus. Just as important as what goes into a house is what builders do with waste. What goes into a landfill should be limited, says Marc Spiegel, co-founder and head of construction and demolition for Rubicon Global in Atlanta.

Barbara Ballinger

Barbara Ballinger

Barbara Ballinger is a freelance writer and the author of several books on real estate, architecture, and remodeling, including The Kitchen Bible: Designing the Perfect Culinary Space (Images Publishing, 2014). Barbara’s most recent book is The Garden Bible: Designing Your Perfect Outdoor Space, co-authored with Michael Glassman (Images, 2015).

The Way Millennials Buy Homes Is Different Than Older Generations — and It Could Put Them at Risk

Prachi Bhardwaj, | September 12, 2019

Millennials are making financial sacrifices in order to become homeowners — and some of the moves that are helping them buy homes could be risky.

The finances involved in buying a home are a bit more complicated for this generation than the ones before them. Housing prices are going up, student debt is at an all-time high, and rent prices are making it more and more difficult to save for a down payment, particularly in areas with high-paying jobs (think: New York, Bay Area, Chicago).

All of these factors help explain why 45% of millennials interested in buying a home said that cost of living is holding them back from taking the plunge, according to a new survey of 2,582 U.S. adults from Bankrate. Compare that to the 38% of Gen X respondents or the 31% of baby boomers who said the same, and it paints a fuller picture about a young generation of hopeful homeowners, willing to move mountains — and perhaps even dip into their retirement accounts — to make it happen.

That’s right, millennials are more likely to take money out of their retirement savings to fund their first home than Gen Xers or baby boomers. Some 13% of millennials said they used a portion of their retirement savings to help cover a down payment or closing costs while buying a home. Only 8% of Gen X and 7% of boomers did the same.

Dipping into your retirement savings is generally considered a personal finance no-no, since these funds grow in value over time and provide some cushion for later on, when medical bills inevitably ramp up. Many financial professionals would advise against messing with the money you set aside for your future self, and have you opt for something safer.

But the survey showed that millennials are firing harder on all cylinders to meet their down payment and closing costs. It’s not just a matter of going straight to retirement savings; millennials are more resourceful (probably out of necessity) than older generations when it comes to utilizing different ways to come up with enough money for a down payment and closing costs:

The good news is that dipping into your retirement savings isn’t necessarily a bad decision when you’re buying a house. But it can be viewed only as a smart move if it’s done responsibly, with the proper understanding of how your retirement savings works. Here are three major points to understand before deciding whether it’s wise to dip into your retirement:

  1. Be absolutely certain that you’ve exhausted all of the other options outlined in the chart above. It’s okay to borrow from your future self, but doing so means you’ll miss out on making some extra money.
  2. Look to your IRA savings account instead of your 401(k) savings account. Both require you to pay a fee if you take money out before you turn 59 ½ (that’s right, learn your half birthday). But unlike your 401(k), your tax-deferred IRA savings account gives you more flexibility for certain “big life milestone” or “emergency” expenses …like buying a home.
  3. Put the money back as quickly as you possibly can. Again: Your money makes more money when it’s sitting in your IRA account, meaning you essentially stop the growth process on those dollars when you take them out. The more quickly you reimburse the account, the sooner things will be right back on track.