Are Our Homes Safe?
 Five years ago, on September 11, 2001, the nation watched in
shock and disbelief as terrorists destroyed the World Trade
Center’s twin towers and killed hundreds working in the
Pentagon. American homes were not the primary target of the
attack, nor have they been the primary targets in subsequent
terrorist bombing attacks around the world. Still, terrorism
has now become a fact of life. Are homeowners at risk in the
future, and if so, what can they do?
Unfortunately by most assessments our first responder
communications are not up to major challenges like terrorist
attacks. In crisis situations fire, police and emergency
medical people need to coordinate with each other. When
their electronic communications equipment is not
interoperable (as is the case in 80% of 180 cities), they
cannot coordinate to save lives and protect property quickly
enough. This is a serious public safety issue. What first
responders need is shared systems that are designed to be
interoperable and that incorporate appropriate broadband
wireless applications. There needs to be greater public
outcry for more financial support for federal, state, and
local source funding for this interoperable share systems
approach.
Most vulnerable to the effects of terrorist attack are the
homes near the types of targets favored by terrorists. Most
of the attacks have been aimed at our government and
infrastructure rather than residential areas. Though the
effects are terrible, most homeowners are fortunate in that
to date the physical damage of the bombings has mostly been
confined to the physical targets. “Unfortunately even if a
home were to be damaged by such an incident, insurers would
probably deny coverage under the longstanding insurance
exemptions for war and warlike acts included in most
homeowners policies”, says William O’Brien, an Arlington,
Virginia based insurance broker.
While homes near a terrorist attack site may escape damage,
their market value is likely to be affected. The market
values of homes proximate to business centers and commuter
sources, such as subways and other commuter rapid transit,
is higher than similar homes located farther away. If a
subway or commuter rail station is destroyed by a terrorist
bombing, the equity in nearby homes will be undermined by a
combination of the loss of one of the key benefits of that
home’s location, and the fears of the location’s future
security.
For that reason the future availability of business
insurance that covers acts of terrorism is important to the
value of homes near attack sites as well as the jobs of
homeowners and other consumers. If a city or county can’t
get insurance that covers their transportation
infrastructure, or a business can’t get insurance that
covers their factories or workplaces, rebuilding will take a
lot longer and in some cases may not happen at all. The
values of homes near terrorist attack sites will remain
depressed until those sites are reconstructed.
After 9-11 Congress enacted the Terrorism Risk Insurance Act
(TRIA) which is a federally-backed insurance program that
provides a safety net for private insurers to protect
against the results of terrorist attacks. It was necessary
because insurers were unwilling to insure against risks
whose probabilities cannot be reasonably be predicted and
outcomes whose liabilities cannot be reasonably predicted.
Its existence means that should there be future terrorist
attacks in the U.S., the damage to private and public
infrastructure will be covered.
However, the Terrorism Risk Insurance Act expires December
31, 2007. Given the slow reaction time of Congress, it is
important that legislative efforts begin soon to make this
public-private partnership permanent to safeguard our
national economy and the value of Americans’ investment in
their homes.
It’s also important to remember that terrorism is not the
only threat to U.S. homes. The U.S. Department of Homeland
Security sponsors National Preparedness Month every
September. It is a nationwide effort to encourage Americans
to take simple steps to prepare their homes for emergencies
like fires, floods, power outages, and earthquakes.
Homeowners can be more ready for these challenges by:
1. Having a power outage kit handy;;
2. Knowing how and when to shut off utilities;
3. Having an evacuation plan in the case of a fire;
4. Making sure first responder numbers are programmed into
cell phones and are otherwise handy, and;
5. Having an emergency supply of food, water and medications
readily accessible.
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Remodeling May Be The
Answer
With the surge in homes
for sale in the U.S. many are languishing on the market.
Home buyers are in control in many parts of the country.
Sellers who must move because of job transfers or other
reasons have no choice but to deal as best they can in
market conditions that present them real challenges, but
remodeling can be a viable alternative for many others.
For homeowners who want to move up to a nicer home in
their own community, remodeling can be a cost effective
way to move up in place.
A popular option is the “pop-top”, adding an entire
second floor on top of a rambler, effectively doubling
the space. In most cases the bedrooms move upstairs and
the original first floor is also remodeled as
appropriate into daytime living spaces. Many upgrades,
such as upgrading dated kitchens or baths, can increase
the resale value of the home by an amount equal to the
remodeling cost. Additions are also popular.
There are challenges to remodeling, however. Major
remodeling is disruptive, and disputes between
homeowners and remodeling contractors are the most
frequent complaint received by the American Homeowners
Foundation. They are perennials to the Better Business
Bureau’s top three complaint categories as well.
According to a 2006 survey conducted earlier this year
by Opinion Research Corp. homeowners' top gripes
included delayed starts, sloppy workplace practices, and
jacking up prices after the work began. Very often
disputes arise not over the terms agreed to, but rather
over issues not addressed either verbally or in writing.
“It’s amazing the number of major remodeling agreements
that are based only on a one page bid sheet or a
handshake”, according to AHF President Bruce Hahn. “No
one or two page document can cover all elements of a
good agreement or even most of the potential problems.”
To help reduce disputes and improve relationships
between remodelers and homeowners, the Foundation has
developed a comprehensive generic eight page remodeling
contract that has space to fill in specific information
about the project. Homeowners, remodelers, architects,
and attorneys all provided input into its development.
“Its greatest value is that it helps both parties focus
on their responsibilities in advance”, according to Mr.
Hahn. “That’s the time to ask questions and make sure
the understanding of all parties is the same”. The
remodeling contract also contains two pages of general
provisions designed to provide fair and equitable
treatment to all parties. Among them are independant
alternative dispute resolution procedures designed to
reduce the incidence of lawsuits. The Remodeling
Contract is phrased in plain English because AHF
believes mutual understanding is the best way to prevent
disputes. Appropriate for all major remodeling projects,
the contract has space for:
· Payment schedule, by task
· Description of the work to be done
· Timetable for completion
· Special instructions and provisions
AHF's Remodeling Contract is available electronically
and by hard copy. Emailed contracts are available in
either MS Word format or Text format. Emailed contracts
are your best deal! Each emailed contract is fully
customizable, with FREE shipping and handling. E-mailed
contracts are $7.95 each. The email contract can be
purchased on our website,
www.americanhomeowners.org by
credit card through the Paypal website for instant,
secure, online purchase. The contract will then be
emailed to you, usually within a few hours. Hard copy
contracts are $7.95 with $3.00 shipping and handling. If
you'd prefer to purchase your contract over the phone,
please call 1-800-489-7776. Remodeling contractors may
purchase sets of 15 copies for $24.95 or may purchase
unlimited multiple use rights of electronic version of
the contract for $24.95. Shipping and handling is free
for e-mailed versions and $3.00 for any quantity of
contracts by mail.
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Federal Eminent Domain Legislation Running Out of Time
Over ten months ago, the House of Representatives passed
H.R. 4128, the Private Property Rights Protection Act of
2005, by an overwhelming majority of 376-38. This bill
would discourage eminent domain abuse by withholding federal
economic development funds for two years from local
governments that condemn private property for private
commercial development.
Since the U.S. Supreme Court ruled in Kelo v. City of New
London that private property can be seized through eminent
domain on the mere promise of increased tax revenue or jobs,
every home, business, church and farm across the country is
endangered - because anyone’s property could make more money
as something bigger and newer. Federal protections are
essential to curb the abuse of eminent domain, but this bill
has been languishing in the Senate since last November.
Nevertheless there is still a chance to pass the Senate
bill. We urge you to contact your Senators and urge them to
sponsor and vote for the House version of this important
legislation. You can reach your Senators through
http://www.senate.gov/general/contact_information/senators_cfm.cfm. Even if this bill doesn’t get through in 2006, your
efforts can help set the stage for early action in 2007.
There have been a number of successes at the state and local
level in the last several years. In May 2006, after two
years of contentious litigation, Camden, N.J. city and state
officials scrapped Cramer Hill's $1.2 billion redevelopment
plan that threatened to displace more than 1,000 families.
The project would have kicked people out of their homes to
make way for luxury housing, commercial space and a golf
course. Residents fought against the City's abuse of eminent
domain through the public and political processes,
Simultaneously, activists also launched a legal challenge to
the City's condemnations, and, after a February 2006 ruling
in their favor and the redevelopment plan abandoned, it
appears the homes and businesses in Cramer Hill are safe
from the government's wrecking ball--a victory against
seemingly insurmountable odds!
Sometimes, even a small pocket of principled opposition can
be enough to face down threats of eminent domain. In
Roseburg, Oregon city council members promised 18 parcels of
land in the Sweetbrier neighborhood to a private developer
for the purpose of unspecified commercial development.
Citing their sudden “discovery” that Sweetbrier was in fact
zoned for business and not for residential, they instructed
home and small business owners to vacate their properties or
be faced with condemnation for economic development. Four
property owners stood up to the threats of eminent domain
abuse and refused to give in, and the city council
ultimately backed down from those properties in January
2005—only after substantial public outcry and citizen
opposition.
Bowing to increasing pressure from local activists, New
York’s historic town of Cheektowaga, a suburb of Buffalo,
backed down in October 2005 from a controversial
redevelopment plan that would have wiped out the entire
neighborhood of Cedargrove Heights—including 300 homes and
700 apartments—and replaced it with a wealthier residential
and business neighborhood. Thanks in large part to a
grassroots community group called the Cedargrove Heights
Neighborhood Action Committee, the Town Board dropped
consideration of the proposal.
It cost Nancy and Dick Saha $300,000 of their retirement
savings and six hard years, but they prevailed in their bout
with the City of Coatesville in Pennsylvania. The couple
bought their Pennsylvania farmhouse in 1971, making lifelong
dreams of owning a small horse farm a reality. With their
five children, the Sahas moved to Chester County and
restored their charming 250-year-old residence. Truly a
family farm, two of their daughters married and built their
family homes on the land, giving Nancy and Dick the chance
to see their five grandchildren grow up next door.
When Coatesville threatened to take their property by
eminent domain to build a golf course—plans for which didn’t
even include their farm in the first place—the Sahas
remained fully committed to a grassroots battle. They
submitted three petitions, protested at local meetings and
took their fight to court. Ultimately, the city council
backed off when the Sahas pushed to elect new
representatives, agreeing to purchase 5 acres that the Sahas
had offered to give the government for free at the beginning
of the dispute.
Legislation to reduce eminent domain abuses will likely be
introduced in several states in 2007. The Castle Coalition,
the advocacy web site of the Institute for Justice (which
argued the Kelo Supreme Court case), has developed model
state legislation to achieve that objective. It is located
at
http://www.castlecoalition.org/legislation/model/model_moretorium.html. We urge you to share the model bill with your state
legislators and urge that they consider prefiling the bill
in 2006 for automatic introduction on the first day of their
state’s legislative session. Most state legislators can be
contacted through your state government’s web site.
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Home Buyers in the
Drivers Seat
There are more signs of a
slowing real estate market, and the slowdown is giving home
buyers more negotiating leverage. Most recent sales data has
shown actual declines in home selling prices in some of the
pricier U.S. markets, something many real estate agents saw
coming in advance because the price of most homes going to
settlement today were actually established in a contract
that was probably ratified at least a month ago. How low
will the market go, and how can home buyers make the best of
the situation?
Slightly more than half of 48 economists who responded to a
recent Wall Street Journal survey said they expected either
a flat or declining market. That isn’t good because a flat
market means the value of homes wouldn’t even be keeping up
with inflation. The Office of Federal Housing Enterprise
Oversight's home price index has never reported an annual
decline in home values since it started tracking prices in
1975, and only rarely has annual home appreciation not
surpassed annual inflation. The last time that happened was
a decade ago.
The National Association of Realtors (NAR) also believes
that home selling prices will decline in the near future. In
most markets, inventory is rising substantially, in some
cases to triple what it was last year. NAR attributes some
of the buildup to the reluctance of sellers to price their
homes to the changing market conditions. In some markets
declines are already substantial – higher end homes in the
San Fernando Valley have already dropped $50,000 according
to one report.
Still, not all home resale markets are in bad shape. Many
markets, especially those with lower priced homes whose
values didn’t run up that much during the last five years,
are holding up pretty well and some will probably continue
to appreciate.
A home buyer faces a real challenge in determining the fair
market value of homes in a rapidly changing market.
Historical figures are quickly outdated, and even recent
selling prices do not reflect the growing use of non-price
incentives to close the deal. Yet buyers in a declining
market need to make absolutely sure they don’t overpay since
home prices may drop further. And if they are also selling
their current home, as is typically the case, they have
another very good reason to develop a good understanding of
current resale values.
Under current conditions most home buyers would be wise to
work with a seasoned Exclusive Buyers Agent (EBAs only
represent buyers, never sellers). Experience and market
knowledge is valuable in a volatile market, and will usually
be well worth the investment. Not only will they have a
better sense of current market values, but also better
instincts about sellers’ negotiating flexibility and better
honed negotiating skills. The buyers have the negotiating
leverage right now, and with prices dropping in many areas,
they need to take every advantage of it.
It’s best for home buyers to avoid rookie real estate agents
– the entry standards of the real estate profession are very
low, and they haven’t yet gotten to know the best teacher -
experience. Don’t let a costly mistake in representing you
be part of that education. If possible it’s also best to
avoid real estate brokers and agents who practice “dual” or
“designated” agency, which occurs when the same broker
represents opposing parties in negotiations for the same
home. Internal pressure on the broker’s real estate agents
to conclude the deal regardless of the client’s best
interest is higher for a potential in-house sale, and home
buyers need an agent who will bargain hard for them in this
market. If there isn’t an exclusive buyers brokerage in your
market, next consider agents with a respected but smaller
independent broker rather that a dominant firm. This reduces
the likelihood of getting into a dual agency scenario.
It is important to hire an experienced exclusive buyers
agent. You should interview them very thoroughly, just as
you would a job applicant, for the quality of their services
is critical to your results. There’s a buyers agent
interview form in the American Homeowners Foundation’s book
The Complete Home Buyers Guide. The 160 page book has lots
of other valuable advice. It is available in many libraries
and bookstores and can be ordered on the Foundation’s
website at
http://americanhomeowners.org/AHF/books.htm.
Circumstances of sellers in the current market vary
considerably. There will always be sellers who are not under
economic pressure and/or are unrealistic in pricing.
Fortunately for today’s buyers there’s also a bigger
inventory of unsold homes in most areas, and other sellers
who will be flexible on price and/or incentives. Incentives
offered by sellers, such as assistance with closing costs
are becoming more common, as are gimmicks like a free car or
a free vacation for the buyer.
Most buyers should avoid the gimmicks, but they do
demonstrate that the seller is willing to grease the
transaction. The buyer can always propose to substitute a
more useful financial equivalent to any offered gimmick,
such as closing assistance, a decorating allowance and/or
partial seller financing. In some cases those concessions
can substantially increase the buyer’s initial home equity,
and perhaps enable some buyers to avoid the cost of private
mortgage insurance. Other opportunities for buyers in
today’s market include fixer uppers. With plenty of the
homes on the market in excellent condition, homes that are
not will see few offers. Those sellers may have to accept
very low offers in order to sell their homes. Any buyer who
can afford to take some time and has some flexibility in
what they want is truly in the catbird seat today, and
should take every advantage of that perch.
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Health and Long-Term Care Improvements Coming
A number of trends – political and technological –
portend significant improvements and/or cost savings in
U.S. healthcare. That will be welcome news for
homeowners and other consumers. On the technology side
telemedicine is rapidly evolving, and technologies are
improving the quality of healthcare and the quality of
life of the growing number of homeowners and others who
have the broadband Internet access needed to benefit
from it. On the political side there is wide public
support for extending the deadline for enrollment
Medicare part D, which may be enacted this year. The
increasing likelihood of a democratically controlled or
split Congress after the November elections will
increase the likelihood of legislative action on
prescription drugs.
At the state level Massachusetts and Vermont passed
legislation to ensure that all state residents have
health insurance in 2006. In Massachusetts,
every person in the Commonwealth will have health care
access by 2009. The legislation combines a number of
strategies to pull some 550,000 uninsured into the
system, including an individual mandate, a Medicaid
expansion, tax benefits for health saving accounts and
businesses that offer insurance, and low-cost targeted
plans for young people, ages 19-26. In Vermont the 2006
Health Care Affordability Act creates provisions which
will provide affordable, comprehensive coverage for
uninsured state residents. Despite growing support for
such state programs across the country (eight other
states considered universal coverage bills in 2006),
budget implications present major challenges to many of
them.
Many existing technologies and technologies currently
under development will improve the quality of life and
reduce medical costs. For example, the ability of
homeowners to confer with their doctor from home by
videoconference, and for chronically ill patients to
have their health status remotely monitored 24/7 from
home through wearable home medical monitoring devices,
can save the federal government and state government’s
substantial money. In the future it will be far less
expensive for many of the millions of chronically ill
patients who can benefit from these technologies to
receive medical monitoring in their own homes than to
move to facilities where that ongoing monitoring is only
available today. As savings materialize they will help
to drive down the cost of everyone’s health insurance.
And, virtually everyone would rather remain in their own
home than live in a facility in order to receive
continuous health monitoring, no matter how nice that
facility might be.
The continued expansion of the broadband Internet access
necessary to support these technologies means more
homeowners can benefit from them. Homeowners will also
benefit from increased broadband availability in other
ways as well. Broadband Internet access enables
teleworking, including both telecommuting to full or
part time for jobs, and the creation of home-based,
technology-dependant small businesses. Both are growing
rapidly in popularity. By July 2005 eBay alone was
providing more than 724,000 Americans their primary or
secondary source of income and another 1.5 million say
they supplement their income by selling on a more casual
basis. Teleworking has the added benefits of reducing
automotive and other types of pollution by reducing the
number of cars on the road as well the frequency of
traffic jams. Barriers to broadband deployment still
remain, most notably the economic challenges to
providing broadband to rural areas and underserved
populations. Rural broadband access will also help open
the research possibilities of the Internet to students,
offsetting many of the educational disadvantages faced
by students in rural areas. Broadband deployment to
rural areas will require creation of economic incentives
and/or investments by federal, state, and local
governments.
Broadband deployment may get an additional boost if
pending legislation to bring competition to the cable TV
market receives consideration. Not only will homeowners
and other consumers save as much as 30% on their monthly
cable bills if new competitors enter the market, but the
same cable that brings the TV services can also bring
another source of broadband access into the home. Sadly
the prospects for senate action before the end of the
year are unclear.
On the political side many senior homeowners have been
able to benefit from the prescription drug coverage
available to Medicare beneficiaries. Over 38 million
Americans (90% of Medicare beneficiaries) have
prescription drug coverage. The options available to
beneficiaries are complicated, however. Despite the best
efforts of the federal and state governments and AARP to
help seniors understand their options, some eligible
Medicare beneficiaries did not enroll in Part D by the
May 15, 2006 deadline, and are now facing a late
enrollment penalty.
AHGA strongly supports the bipartisan efforts of
political leaders and AARP to remove the late enrollment
penalty during the first year of this program which is
providing significant savings on prescription drugs for
millions of Americans on Medicare. Senators Charles
Grassley (R-IA) and Max Baucus (D-MT), and
Representative Nancy Johnson (R-CT) have introduced
legislation (S. 2810 and H.R. 5399) which would waive
the late enrollment penalty for the Medicare
prescription drug benefit for the remainder of 2006. The
bills have a lot of support, but due to the tight agenda
of Congress, they have only a modest chance of enactment
either before the election or in a lame duck session.
AHGA urges its members to ask their Senators and
Representative to support this important legislation.
There is also wide support for allowing Medicare to use
its bargaining power to negotiate lower prices for
needed prescription drugs, and to legalize the purchase
of prescription drugs from Canada. Both would
significantly reduce health care costs. The prospects
for passage of both in the next Congress will brighten
if the Democrats take over the House and Senate.
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When it comes to legislation and regulation many
homeowners sit on the sidelines and watch as their future
is decided for them. Others weigh in on the issues important
to them, and often one letter, email or phone call can make
the difference.
Are any of the issues in this month's Home Base of interest
to you? If so, please take the time to contact your
legislator and express your views. It's easy - you can reach
your legislator in a couple of mouse clicks, and you can use
the content in Home Base on our website to help you develop
your message. To look up the phone number and send an email
to your U.S. Representative or your U.S. Senators,
click here. The site can look up their names by zip code
for you if you don’t know them.
Many legislators also reserve office hours when they are
available in their home state or home district offices to
meet with constituents to discuss policy issues. You may be
able to arrange a personal meeting while they are home
on weekends or when Congress is not in session.
To find out federal
legislator’s availabilities for constituent meetings, you
can use our congressional search tool to look them up by
name or zip code, and contact their offices by email, phone,
or fax. Alternatively you can simply call the Congressional
switchboard at 202-225-3121 and ask to be connected to your
representative or either of your senators by name.
Are you interested in an issue that is important to you and
significantly impacts home owners or home ownership?
Any member may propose a position on an issue, so please
check the American Homeowners Grassroots Alliance's
2006 policy priorities. If your favorite position
isn't on the list, please send us an email and tell us why
you think the American Homeowners Grassroots Alliance should
be working on it.
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