AOL Real Estate - Blog

One-Buck Fixer-Up

Rick Hazeltine — 2010-01-05T12:30:00 00:00

Who says you can't get anything for a buck these days?

And we're not talking about McDonald's Dollar Menu. Forget the flimsy cheeseburger. In St. Paul, Minn., a buck that will get you a house.

Believe it or not, though, in this brutal real estate market, even a dollar is proving to be a tough sell.

With 2,000 vacant houses in St. Paul, city officials are getting creative with ways to revitalize neighborhoods hammered by foreclosures. The city recently purchased 11 houses in Dayton Bluffs, one of St. Paul's most historic neighborhoods. The plan is to sell the properties, lie the one picture here, at big discounts in hopes of attracting people who want to make Dayton Bluffs a place to call home.

The properties are priced from $1 to $50,000, depending on the condition -- many of them need substantial renovation after sitting vacant for so long. There are two homes currently listed for $1, and another 4 with a price tag of $5,000, according to the city of St. Paul's web site. Buyers still must qualify for loans of $140,000 to $190,000 and officials say they should expect to put $100,000 into the bargain properties.

The problem with the city's plan is that because there is so much inventory, buyers can find homes in other areas that are in much better condition for less than $100,000. City Council President Kathy Lantry told KARE Channel 11 that the city is even considering paying for some of the renovations to help move the properties.

"What I want people to do when they drive by three months or a year from now is to hear nothing but hammers and saws and see a revitalization of these gorgeous old homes," Lantry told the news organization.

Investors and speculators need not apply. Buyers are required to live in the homes, which have passed city inspections, that they purchase. City officials say if the Dayton Bluffs experiment pays off, they'll consider expanding the program to other neighborhoods.

That's certainly something to chew on the next time your sitting in drive-thru deciding between the cheeseburger or small fries for a buck.

Permalink | Email this | Comments

Think Twice Before You Start that Home Improvement Project

Rick Hazeltine — 2009-12-31T10:30:00 00:00

Filed under: Design

Home prices aren't the only thing that has plummeted recently. So, too, has the value of home improvement projects, according to Remodeling magazine.

Overall, homeowners can expect to see just 63.8 percent of their remodeling dollars added to the value of their home, according the the magazine's annual Remodeling Cost vs. Value Report. That's down a whopping 26 percent from the peak return of 86.7 percent in 2005. It's also the fourth consecutive year that the return on remodeling has dropped.
"Three or four years ago, a $50,000 or $100,000 kitchen was a sensible investment," Kermit Baker, director of the Joint Center for Housing Studies at Harvard University, told Remodeling. "Housing prices were increasing 6 percent, 8 percent or 10 percent a year. So you were adding to the value and letting the equity build up."

Not anymore. The Joint Center predicts home improvement jobs will decline 9 percent and remodeling will drop 3.5 to 4.5 percent in 2010.

The remodeling projects that will get done during the coming year mirror the mood of the market - robust is no longer a must.

Instead of granite countertops and designer fixtures, homeowners have become more practical, opting for replacing the roof, installing energy efficient windows or making small cosmetic changes, such as a new entryway door.

Homeowners trying to sell their property are concentrating on changes to make their home stand out in a market with too much inventory and not enough buyers. Even these owners are focusing on less expensive projects that improve their home's curb appeal.

So what home improvement projects provide the most bang for the buck? According to the report, they include:

- Installing a steel entry door costs an average $1,172 and returns $1,470 in resale value. It's not only the least expensive project on the survey, it's the only one that returned more than its cost at 128.9 percent.

- Adding an attic bedroom remains one of the best return on investment projects, returning 83.1 percent of its cost.

- Finding the cost of adding interior space prohibitive, homeowners are looking outdoors. A wood deck costing $10,634, returns 80.6 percent - about 10 percent more than a more expensive composite product.

- Installing vinyl siding not only returns 79.9 percent of its cost, it also improves curb appeal for a reasonable price. The average project cost $10,607.

- A minor kitchen remodel priced at $21,411 will get the homeowner back $16,773 or 78.3 percent.

- Replacing worn out windows with energy-efficient wood or vinyl models also has a good return. The example projects cost about $11,000 and returned approximately 77 percent.

Permalink | Email this | Comments

Apartment Building in Danger of Slipping into Sea

Rick Hazeltine — 2009-12-18T13:55:00 00:00

Filed under: News,Lifestyle

Residents in California are used to experiencing eroding real estate, although not quite as literally as the tenants of an apartment building overlooking the Pacific Ocean south of San Francisco.

Residents of the Pacifica building were ordered to evacuate on Thursday after a large chunk of land slid down the 50-foot cliff and into the ocean, threatening to take the building with it. Unusually high tides from a winter storm tore away at the base of the cliff, causing rain-soaked sections to collapse.

"If Mother Nature wants to take the place, then she's going to do it," four-month resident Kristy McClure, 37, told the San Mateo County Times.
Apartment buildings on either side of 330 Esplanade were being monitored but were not considered to be in danger. The owners of those buildings had placed a wall of boulders at the base of the cliff to protect it from the crashing waves.

Delfarid Fanine, co-owner of the endangered building, had recently received permits to install a similar rock barrier and work was scheduled to begin any day.

"Unfortunately, it all happened before anyone expected," Fanine told the San Francisco Chronicle. "It's nature. No one can beat nature.

The apartment building has 12 one-bedroom, one-bath rental units, according to public records published on Zillow.com. The valuation Web site lists the building as being worth $1.4 million.

Building department officials in this town of 38,000 said they believe the building can be saved and that there is enough time to install the boulder wall, called a riprap. When it's deemed safe, cranes atop the cliff will lower gigantic boulders to the ocean below to keep the waves at bay.

Tony Fortunato, a superintendent with Engineered Soil Repairs - the company that has been hired to try to save the building - has estimated that the cliff had receded as much as 15-feet in recent days.

"They had a lot more real estate last year," Fortunato told the Chronicle. "A lot of it is in the ocean now."

Permalink | Email this | Comments

Ski Home Prices on a Downhill Slope

Rick Hazeltine — 2009-12-14T12:00:00 00:00

Filed under: News

Although America's major ski resorts aren't feeling the frigid bight of foreclosures like many residential areas, they are experiencing one familiar phenomenon: Buyers looking for black diamond property and bunny hill prices.

From the Colorado Rockies to the Vermont Green Mountains, ski resort bargain hunters are out in force looking for deals. Unfortunately for sellers, a glut of homes has meant a downward slope for prices.

If nothing else, for those that need to sell, the real estate freefall is an equal opportunity scourge, hitting the well-heeled as well as the entry-level homeowner.

"I never thought I would see the day of million-dollar price reductions," Colorado real estate agent Karen Barrocas told ABC News. "It's definitely a buyer's market and the supply is much larger than the demand."
In Eagle County, home of ski havens Vail and Beaver Creek, sales have dropped more than 72 percent from the hey day of 2005 and 47 percent from 2008. And, as sales fall, prices drop. The area's prices have dropped 30 percent from their 2006 peak.

Despite the tough sales climate, ski resort property has been relatively insulated from foreclosures. A big reason is that many luxury resort buyers paid cash or put up large down payments, giving them a lot more equity than the toxic residential loans that have plagued the real estate market.

There have been just 38 foreclosures for the year in Vail and just one last month, according to RealtyTrac. Snow Mountain in Vermont had just three this year and none in nearby Mt. Stowe. Killington, Vermont had one each in the past three months.

The Colorado resort areas have been hit a bit harder than their Eastern counterparts, who are much closer to major population centers, such as Boston and New York, and are able to reach a greater audience.

But that hasn't deterred all buyers. Even in the Great Recession, there are those who have plenty of money. Ironically, some of the biggest real estate transactions in Vail history have occurred in 2009. Two homes sold for more than $15 million in Beaver Creek and a Bachelor Gulch home recently sold for $11 million.

The U.S. ski resort market isn't the only one hurting. Sales have also taken a dive at Whistler, British Columbia, host of the 2010 Winter Olympics that begin in February.

"Everywhere I've been working, real estate sales just dropped dead 15 to as long as 20 months ago," Paul Mathews, president of Ecosign Mountain Resort Planners in Whistler, told the New York Times. Mathews has been involved in the planning of 30 ski resort projects around the world in the past year.

Ski resorts are a lot like old time land speculation, when investors would buy up big chunks of property, develop amenities and then sell the lots. Unlike their fast-buck forefathers, today's ski resort developers are well capitalized and it's rare that one goes under.

Instead, resorts are biding their time, holding off on construction until the economy becomes more robust and pent up demand is unleashed.

Permalink | Email this | Comments