What are the Hot Remodeling Projects?

Deficit Debate Helping New Political Groups

Home Buyers’ Lifestyle Priorities in their Home Searches

Consumer Financial Protection Bureau Debuts

New Sales Tax Increase May Further Weaken the Economy

What are the Hot Remodeling Projects?

Remodeling Magazine Survey has the answers.

Remodeling Magazine's latest online Cost Versus Value Report 2010-2011 reveals how the declining housing market is affecting homeowners’ remodeling priorities. The report compares the average cost for 35 popular remodeling projects with the value those projects retain at resale. It also breaks down data for nine regions and eighty cities.

The study breaks down both upscale and midrange projects and compares cost to resale value. It also provides a percentage of the cost that could be recouped on the sale of their home, a helpful tool for planning. The costs for many projects in most areas have dropped over 10%, reflecting both more intense industry competition as well as homeowners becoming more price conscious in their choices. However, home values in many areas have been dropping even faster (nationally they have dropped almost 16%), and factors such as a large number of unsold homes in a neighborhood can have a dampening effect on the return ratios. The result is that although some projects can still return 100% or more of their costs, the return rate for many others has dropped, even though the cost of the projects has been dropping as well.

Although the costs are based on itemized estimates, the projects are hypothetical. Differences in the size of a project, or in the quality of finishes and accessories, can dramatically affect the price and the return. Homeowners can significantly reduce costs if they are able to do some of the end work themselves. The best candidate for those kinds of savings is work that occurs near the end of a project, such as painting or trim work. Many contractors these days are also more flexible in allowing homeowners to provide some of the components needed for the project. This enables homeowners to buy such things as appliances, light fixtures and even cabinetry in advance at deep discount when they are on sale at Lowes, Home Depot, or other home improvement stores. Many homeowners can save substantial amounts on projects and achieve 100% or better return on the costs by doing either or both.

Nationally the best returns on midrange projects are replacing a front entry door (steel), at 102%. Garage door replacements also provide a good return (84%). At the other extreme, you’ll only recoup about 48% of the cost for sunroom additions and backup power generators. You won’t do as well on upscale projects. Siding replacements (fiber/cement) will return 80%, but master suite and garage additions, as well as upscale bathroom additions will return only a little over 50% of the costs.

It is critical that homeowners select a qualified contractor. Homeowners can avoid many problems by good advance planning and by selecting a qualified contractor. Making changes while the work is underway is usually both time consuming and expensive, so take the time necessary to think out the project in advance so you won’t have to make changes after work has begun. Check with the state, county or local housing authorities to make sure the contactor and all subcontractors meet all licensing and bonding requirements. Find out if the contractor and all subcontractors are covered by workers compensation, property damage, and personal liability insurance, and are bonded. Ask to see a copy of the insurance certificate or the name of the insurance carrier so you can verify their coverage. Check with the local Better Business Bureau and/or government consumer agency to make sure there is not a history of dissatisfied customers. Ask for current references for the contractor and all subcontractors and check those references. The best are those with jobs just completed or still underway. Since both subcontractors and employees change over time this gives a better measure of their current capability and performance.

Ask if they are a member of the National Association of the Remodeling Industry, the National Association of Home Builders Remodelers Council, and/or any of the trade associations representing specific sectors of the remodeling industry. Most offer educational programs that keep members current on technology and management practices and many have certification programs. While there is no guarantee, membership in these trade associations is one likely indicator of the contractor's commitment to the trade and to professionalism.

Most importantly, always use a comprehensive written contract. Many disagreements arise between honest contractors and homeowners over details that weren’t addressed in advance. Have your attorney review any contract provided by the remodeling contractor, or use the American Homeowners Foundation’s generic remodeling contract . Our six page comprehensive contract was developed with the input of both real estate attorneys and remodeling contractors, and has spaces to describe all components and details of the work.

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Debt Ceiling Debate Helping New Political Groups

Evaporating respect for Congress is helping them along.

Only 6% of likely U.S. voters now rate Congress' performance as good or excellent, according to a July Rasmussen Reports national telephone survey. June had scored the previous record when Congressional approval ratings fell to 8% who rated its performance good or excellent. Well over half (61%) currently believe that national legislators are doing a poor job, an increase of nine points from June.

Other surveys reflect even greater anger. In the latest Washington Post-ABC News poll 80% described themselves as either “angry” or “dissatisfied” with the way Washington works, and 63% will vote for someone other than their current federal legislator in the 2012 election. Both are record highs. While public support for budget cuts is far greater than that for tax increases, both parties are getting low marks. While Democrats are often cited for their willingness to rely too much on tax increases, many voters believe Republicans are unwilling to make any compromises whatsoever.

Benefitting from gridlock are centrist organizations such as Americans Elect, which is focusing on gaining ballot access for a future independent third-party Presidential candidate, and No Labels, which is focusing on Congressional elections as well. Others include the Centrist Alliance, Votocracy and Ruck.us.

In past elections third party candidates and groups have had difficulty getting traction and raising money. This year may be different, because there has never before been such a large disaffected population. Many large traditional democratic and republican donors are equally disappointed with their party’s performance.

Though there are more centrist voters than either “pure” liberal or conservative voters, centrist legislators are a small and shrinking segment of Congress. A growth in funding for centrist candidates could reverse this trend in the upcoming election. The smaller number of current centrist legislators would have a bigger pot to draw on, and money would also be available for centrist challengers.

The American Homeowners Grassroots Alliance hopes that these centrist organizations are successful. At the end of the day the job description of every federal legislator includes passing legislation. Centrist legislators have long had a leavening influence, both reminding their colleagues at either extreme that there is a large segment of voters who are accustomed to compromise. The larger the ranks of centrist legislators, the greater their ability and leverage to help forge the compromises necessary to pass most legislation.

We recognize the right of legislators on the far left and far right to their convictions, and almost always there are fair points to be made on both sides. In the end the core function of Congress is to enact legislation. Unless your party controls both the House as well as the Senate (by enough of a majority to overturn Presidential vetoes and shut down filibusters in the Senate’s case), compromise is the only way that legislation can happen. This circumstance is the exception rather than the rule, and this Congress is no exception.

Wherever you may be on the ideological scale, the job of a federal legislator is not a good fit for someone who is unwilling to compromise on issues. When they do lose they will take their losses harder, and their collective intransigence (left + right) also hurts the country when it prevents the resolution of critical issues, such as in current the debt limit debate. For their own peace of mind, those legislators might want to consider new career opportunities, because there is a growing likelihood that their constituents might help them in that regard in the next election.

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Home Buyers’ Lifestyle Priorities in their Home Searches

Lifestyle priorities are the reason for 1 in 5 moves.

One in five U.S. homeowners have either moved from their home or would like to move because their neighborhood or community wasn't ideal for their lifestyle, according to an April 2011 survey by Better Homes and Gardens Real Estate LLC in collaboration with media and marketing company Meredith Corporation.

The findings prove that community and lifestyle decisions are important components of the home buying process. Most thoughtful home buyers probably have a couple of lifestyle related criteria on their search priority list. The study, which identifies eight different lifestyle categories, is useful to future home buyers because many may not have considered all of the potential lifestyle priorities that will impact their potential home choice. "While the relation of price to features has become very favorable in many areas throughout the country, ultimately the surrounding community may determine how happy you are with your home purchase," said Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. The findings are also the basis of its new "Lifestyle Search" real estate community selection tool on the bhgrealestate.com website that enables prospective homebuyers to perform a community search for important lifestyle preferences such as "Family & Community" and "Arts & Recreation."

Survey respondents noted they would place more weight on lifestyle criteria in future home searches, favoring family-friendly neighborhoods and easy accessibility to cultural activities such as museums and music venues. The following chart shows survey respondents' ranking of search criteria.
 

Consumer Financial Protection Bureau Debuts

The new Bureau will offer additional protections and consumer resources.

The new Consumer Financial Protection Bureau (CFPB) hit the ground running in July, launching functions and issuing a variety of required rules. The CFPB was the result of a variety of needs. Perhaps the most significant were the excesses in the financial services sector that caused the current recession and meltdown in the housing sector.

“Two years ago, the consumer agency was just barely an idea. A year ago it became law. And this week, the CFPB will open its doors and begin to make a difference in the marketplace,” said Elizabeth Warren, Special Advisor to the Secretary of the Treasury on the CFPB. “This agency is ready to be a cop on the beat for American families – and I couldn’t be prouder.”  President Obama has nominated former Ohio AG and Elizabeth Warren protégée Richard Cordray to head the Bureau. Professor Warren will return to Harvard and may run for Senate against incumbent Scott Brown, who holds the seat of the late Senator Ted Kennedy.

Cordray’s confirmation is opposed by the financial services sector and many Republicans. Until it has a director, the bureau won't be able to carry out many of its functions, such as developing rules for payday lenders and other nonbank financial institutions.

Consumers can file complaints regarding credit card companies and practices at the CFPB’s Consumer Response Center, online at ConsumerFinance.gov, and through a toll-free number. It will also refer distressed homeowners to housing counselors via the Homeowner’s HOPE Hotline. Over the coming months, the agency will expand its Consumer Response Center to handle complaints about other consumer financial products and services under its jurisdiction.

CFPB is also taking over responsibility for enforcement of the Real Estate Settlement Procedures Act (RESPA). The Department of Housing and Urban Development (HUD) previously handled RESPA enforcement. There are over 1,500 cases pending. HUD will continue to enforce RESPA's anti-kickback provisions, and recently announced the settlement of several cases where real estate brokerages were receiving illegal payments for referrals. It is illegal for mortgage brokers and real estate agents to receive or give kickbacks to other companies or individuals in the real estate sector.

However, some real estate sectors are seeking to weaken the Bureau or seeking carve-outs from CFPB’s anti-kickback provisions. The National Association of Realtors wants an exemption to kickbacks their members get from home warranty companies. Congresswoman Judy Biggert (R-Il) introduced the "RESPA Home Warranty Clarification Act of 2011," which would exclude home warranties from RESPA. The American Homeowners Grassroots Alliance opposes the measure. CFPB is also developing a new loan disclosure form which will be available on or before July 21, 2012. Financial sector interests are also backing a Republican bill to restructure the consumer bureau to a form favored by the financial services industry. Among the changes, it would replace the director with a board of directors.

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New Sales Tax Increase May Further Weaken the Economy

The proposed tax would increase the cost of online purchases and sales.

Despite overwhelming public opposition to new sales taxes on Internet purchases, legislation that would do just was introduced on July 29 by Senators Durbin and Thompson, and Representatives Conyers and Welch. The Main Street Fairness Act would force consumers to pay state and local sales taxes on most of their online purchases. It could also require homeowners who have small home-based side businesses or who hold their garage sales on Craigslist, eBay or Amazon to collect and remit sales taxes to the 7,000 state and local governments across the country.

State and local sales tax regimes were debated and created before the Internet. Those state and local governments have never sought public input or held a vote on whether to apply sales taxes, which pre-existed the Internet by many years, to online sales. Like their colleagues at the state and local levels, the sponsors of these bills apparently either assume that voters want their online purchases to be treated the same as their offline purchases or don’t care whether they do or not.

Voters are strongly opposed to online sales taxes. A 2008 survey by Parade Magazine, asked readers: “Should Internet sales be taxed?” Based on 3,125 survey responses, 85% opposed taxing Internet sales. Many types of tax increases are unpopular, but with 85% opposed, this one is surely among the most unpopular. It would also hurt low and moderate income taxpayers more than wealthy taxpayers in an extremely weak economy.

The sponsors might want to add “and Garage Sale Tax Collection Act” to the title of the “Main Street Fairness Act.” According to AC Nielson International Research, 1.5 million people have generated extra cash by having garage sales online. Sometimes the garage sale proceeds can be quite substantial, such as when a couple may be downsizing or retiring, or moving to another state. This legislation creates a Governing Board made up of unelected tax administrators who would determine at what sales level homeowners and other consumers would have to begin collecting sales taxes on their online garage sales. Nothing would prevent them from setting that amount very low.

Voters clearly believe that an Internet sales tax moratorium would be a much better public policy. There is clearly precedent for such a step. Over the years, state and local legislators and policymakers have established permanent sales tax exemptions for various categories of purchases, such as prescription drugs as well as temporary sales tax holidays for such things as back to school purchases.

Since more Internet purchases means less driving to the mall, an Internet sales tax moratorium would also reduce state and local government costs of maintaining and expanding their transportation infrastructure. Reduced demand for gasoline would also translate into lower gas prices and more savings for all consumers, and the environment will benefit from reduced auto pollution as well. Our cars will remain in our driveway, and the products will be delivered by the U.S. postal carriers, UPS, and FedEx trucks that go through our neighborhood every day anyway.

Many of the nation’s 70 million homeowners are suffering because of the economy and the housing crisis. They don’t need a tax increase that they overwhelmingly oppose and which hurts many consumers and small home-based businesses. The American Homeowners Grassroots Alliance urges Senators Durbin and Thompson, and Representatives Conyers and Welch to renounce the Main Street Fairness Act. In its place they should introduce the Internet Sales Tax Moratorium Act. They would have the support of 85% of their constituents, many of whom are hard pressed right now and could benefit from the tax savings.

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