Real Estate in Steamboat

Mortgage rates are in the process of crossing above 6.5 percent in panicky trading, and new economic reports are not the cause. Rates are going up because the Fed is pushing them up in unison with the Bank of Japan and the European Central Bank, which raises three questions: why are they going higher, how far are they going, and when are they going to do visible damage to the (global) economy?

The 10-year T-note, immobile below 4.5 percent during the first 13 quarter-point Fed hikes from summer 2004 through last December, began to move tick-for-tick with the Fed’s overnight cost of money in January. Fed to 4.5 percent on Feb. 1, bonds to 4.5 percent; as this week’s Fed meeting approached, 4.75 percent a certainty, bonds went to 4.75 percent. The Fed next meets on May 10, and bonds aren’t waiting around as they did before the last two meetings: the 10-year touched 4.9 percent today, sure to go to 5 percent in April.

Federal Reserve Chair Ben Bernanke’s first post-meeting minutes gave no hint that 5 percent would be a pause point; mid-range optimism says 5.25 percent on June 29 is the best hope, which would put mortgages near 7 percent. An increase to 5.5 percent in August is possible.

The Bank of Japan may not soon impose a cost of money (it’s been at 0 percent for years), but apparent economic health there will cause the BOJ to slow its flood of liquidity into the global economy. Nobody knows how much 0 percent yen borrowing has been used to speculate in the global bond market, but it’s been a lot; as speculators unwind, they are dumping a ton of bonds and mortgages. Ten-year Japanese bonds, stuck at 1.25 percent or lower for a decade, are all the way to 1.75 percent and still moving up.

The European Central Bank has inflation bejabbers, has taken its rate from 2 percent to 2.5 percent this year, and guesses run to at least three more .25 percent hikes in ’06. The German 10-year bund has departed 3.25 percent for 3.75 percent.

During the first 18 months of Fed hikes, former Fed Chair Alan Greenspan kept saying that he was going to “neutral.” We haven’t heard that word from the Fed since last fall. The Fed is tilting to tight against a traditional threat of economic overheating, seriously magnified by energy prices that are unlikely to enjoy a cyclical retreat, 70s- and 80s-style, and against the stimulus of low long-term rates.

The bond market opinion has been that the Fed’s hikes will hurt housing first, then the rest of the economy. Some historical perspective is in order. In the 31 years from 1969 to 2000, mortgage rates fell below 7 percent only once, during a few weeks in 1998. I doubt that a rise above 7 percent will be catastrophic. In the 35 years prior to 2001, the Fed funds rate was below 5 percent only during the 1993 recession trough and a few months in 1998-99. In 1994, the Fed raised its rate from 3 percent to 6 percent, and then backed off to 5.5 percent in 1995 at the dawn of one of the truly splendid economic intervals in American history. The centerline for mortgage rates then was 8 percent.

Housing is vulnerable because of its price overshoot in coastal regions, its conditioning to five years of free-money ARMs and HELOCS, and the abuse of innovative mortgage products. However, even if the overheated housing markets begin to decline modestly in price, I’m not convinced that will trigger a general economic slowdown. Serial housing crashes in the mid- and late-1980s (oil patch, and then Atlantic coast and New England) did not intercept a strong economy.

Although we’re in the midst of a bond-market sell panic, I think we are close to the end of the exercise, working through the surprise that the Fed will go as high as the 5.25 percent to 5.5 percent area. The Fed knows well that the economy fainted abruptly at the last two trips to 6 percent, and the BOJ and ECB know that their economic growth is slim and utterly dependent on health here.

In the meantime, before the Fed’s conclusion, try not to join the bond panic.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

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Copyright 2006 Lou Barnes

Q: I have 2-by-12 floor joists, and I plan to use R-38 batts to insulate my floor. Is it OK to go with un-faced batts, or do I need faced insulation with the Kraft paper face-up towards the floor? I do have 6-millimeter black plastic on the ground. –Rod G.

A: The purpose of the vapor barrier is to prevent moisture from inside the house from migrating through the floor and into the insulation, where it can reduce the R-value (the measure of resistance to heat flow) of the insulation and, in extreme cases, cause structural damage.

Today’s plywood subfloors utilize exterior-grade resins in their construction that will act as a vapor barrier in most normal vapor situations. So if you have a subfloor made from plywood, oriented strand board (OSB, also called waferboard), or other sheet materials, you should be fine with un-faced insulation. If your subfloor is individual boards of any kind, I would recommend that you use insulation with a vapor barrier face such as Kraft paper, and install it with the vapor barrier facing up toward the living space.

Q: Just after moving into our new home, the builder came around and told us we were going to be having freezing temperatures, and that we should close our crawlspace vents to prevent freezing the pipes, which we did. Several months later, we had a home inspector examine the house to be sure everything was OK. He said we should never close the vents because the crawlspace needs ventilation, and the pipes were all up in the floor joists and well protected from freezing. I’m confused–whose advice should we follow when the weather gets frigid? –Bill H.

A: I’m going to side with the builder’s opinion on this one. The vents are placed in the foundation to allow natural airflow under the house, which helps move any water vapor from ground moisture safely to the outside. Along with the plastic vapor barrier on the ground, this is typically enough to keep any moisture-related problems from occurring under the house.

In homes with insulated floors, where heat loss from the house is cut off, the crawlspace stays colder and there is an increased danger of freezing pipes. To help prevent this, plumbers will try and place pipes up between the floor joists where they will be covered by insulation. Where the pipes are not between the joists, the insulation contractors will wrap them with a couple of inches of fiberglass insulation for freeze protection.

So, in the normal course of things it’s OK to leave the vents open in all but the worst weather. However, during frigid temperatures it only takes one small section of pipe that didn’t get insulated properly for you to have a freeze problem, and having the vents open greatly increases that possibility, so I like to opt for a middle ground. Leave the vents open for most of the year for maximum ventilation, but close them during that part of the winter when freezing is an issue. In milder, damper climates, you may only have the vents covered for one or two months in the heart of winter, while in colder, drier climates they may be covered for four to six months. Assuming there are no water leaks or ground saturation problems stemming from poor grading, I have never seen a moisture problem in a crawlspace that has had the vents covered part of the year.

Q: Should the foil or paper on the insulation be toward or away from the floor? It seems the foil or paper would be easy to staple to the floor joists. –Gerry C.

A: This is actually a pretty common question, since those flanges that are built into the paper or foil face of the insulation batts look awfully tempting for attaching it to the floor joists. However, the facing is actually a vapor barrier, designed to prevent water vapor from the house from reaching the insulation. A vapor barrier always needs to be installed facing the warm surface–which is the inside of the house–so floor insulation always needs to be installed with the paper or foil face-up, against the underside of the subfloor. Whether you use faced or un-faced insulation, it needs to be supported from below with wood lath or rot-proof string attached to the underside of the joists, or with metal rods placed between the joists.

Remodeling and repair questions? E-mail Paul at paul2887@direcway.com.

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Copyright 2006 Inman News

We Americans are a puzzling bunch. We travel to Italy, France or Spain and come back smitten with the charmingly walk-able streets, close-knit houses, and humanly scaled public spaces we find there. Yet we seldom stop to wonder why our own built environment is so utterly lacking in those traits.

It’s no mystery: In spite of rising population and dwindling resources, America remains saddled with long outdated planning ideals that are the furthest thing from the European examples we admire so much.

America is a vast nation, and perhaps in consequence, our planners and engineers have historically been trained to think big. This tendency has produced some magnificent civil engineering projects such as railways, dams and bridges. Yet it hasn’t been nearly so successful at the scale of human habitation.

Thanks to the megalomania of our traffic engineers, for example, American cities are among the least pedestrian-friendly in the world. Each year, larger and larger swaths of urban and suburban land are paved over with ubiquitous six-lane thoroughfares bristling with redundant arrays of traffic signals. Aside from creating barren, monotonous and alienating cityscapes, such roads are also daunting barriers to people on foot, no matter how many kinds of whiz-bang pedestrian signals we install. Rather than drawing our cities together, our roads tear them apart, providing one more incentive for Americans to drive instead of walk.

Ironically, in the dwindling number of places where human-scaled roads still remain, city engineers are even now scrambling to widen them, always with the specious objective of easing congestion. Yet as both traffic studies and common sense can easily confirm, this so-called improvement is pure bunk. The only thing America’s incessant street widening programs really do–aside from keeping paving contractors in clover–is to invite even more automobile traffic.

Europeans are notably less obsessed with road widening. Unlike us, they recognize that the difficulty of negotiating their picturesque streets in a car is a blessing in disguise: It makes people prefer to take public transit, or to simply live within walking distance of their jobs. In short, Europeans design their cars to suit their cities, whereas we design our cities to suit our cars.

As for our homes, the much-adored human scale of European villages is all but unheard of in suburban America. This is no accident, either–our neighborhoods can’t help but be coarsely scaled, since our moribund zoning regulations typically still insist that houses be surrounded by useless strips of setback land.

The custom of spacing buildings far apart may have made sense a hundred years ago, when America was an agricultural nation and land was cheap and plentiful. Yet that day is long past. With today’s usual practice of shoehorning huge tract homes into postage-stamp building lots, the resulting sunless, 10-foot-wide gap left between houses has only one function: to let developers fetch higher prices by continuing to sell their units as “single-family detached.”

In older European towns, by contrast, even houses in wide-open rural areas are often clustered together in villages, their walls adjoining. The cumulative savings in otherwise useless setback land can then be devoted to public space that actually has some purpose.

The need to prize every little scrap of land has been central to Europe’s way of building for centuries. But it’s a lesson we Americans have yet to learn. When it comes to our professed admiration for Europe’s charms, we talk the talk, but we sure don’t walk the walk.

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Copyright 2006 Arrol Gellner

Thanks to abnormally low mortgage interest rates, home sellers had an extremely favorable “seller’s market” for the last few years. That means there were more qualified home buyers in the market than there were homes available for sale.

Homes often sold in just a few days or weeks. Typical home sale prices appreciated 10 percent or more annually for the last few years in many communities. Since 2000, the average U.S. home has doubled in market value, according to the National Association of Realtors.

Purchase Bob Bruss reports online.

But the 2006 home sales market pace has rapidly slowed down in most communities, mostly due to rising mortgage interest rates, according to home industry economists. The volume of home sales is down. But home sales prices are holding steady in most communities.

The result for this year’s peak spring home sales season appears to be a “buyer’s market.” That means there are more houses and condominiums available for sale than there are qualified home buyers.

As a result, home buyers can be more selective and negotiate harder even though mortgage interest rates remain remarkably affordable in the 6 percent interest range. To help home buyers negotiate their best possible sales price and terms, here are the five key questions home sellers and their real estate agents hope buyers don’t ask:

1.) WHY ARE YOU SELLING THIS LOVELY HOME?

Having bought and sold dozens of houses and condominiums for both personal use and as investments, this is my favorite and most revealing question to ask of home sellers and their listing agents.

Even if the home is run-down and shabby, I always try to use that word “lovely” to see if the seller and/or the listing agent have a sense of humor.

The primary reasons the home buyer needs to know why the seller is selling are to (1) tailor a purchase offer that will meet the seller’s needs, and (2) determine if the seller is highly motivated to sell.

To illustrate, if you learn the sellers are moving to a retirement residence, perhaps they will carry back a first or second mortgage, thus creating superb secured income earning around 6 percent for them and easy financing for you as the buyer. Or, maybe you learn the sellers are in foreclosure so the buyer needs to act fast to close the purchase before the foreclosure auction.

Unless the buyer asks, the listing agent is unlikely to volunteer the reason for selling. Occasionally, the buyer will be rebuffed.

For example, I recall I once asked this key question and the nasty listing agent said, “It’s none of your business.” Later, I learned the sellers were retiring to move to Palm Springs, Calif., and they would have been perfect candidates for a seller-financed mortgage.

2.) HOW MUCH DID THE SELLER PAY FOR THIS HOME?

In most communities, this information is a public record, which the buyer’s agent can easily obtain. The reason smart home buyers insist on knowing this vital information is it shows how much negotiation room the seller has.

A key follow-up question is, “What is the current mortgage balance and are there any other liens against the home, such as a second mortgage or home equity loan, judgment liens, and mechanics’ liens?”

The answer from the seller or the listing agent shows how much cash the seller absolutely must receive. If you learn the home is free and clear with no encumbrances, you just struck gold because the seller can then be flexible as to price and terms.

As a seller, when a home buyer asks me what I paid for the property, I politely reply, “I got a bargain purchase price when this was a run-down shack before I renovated it so my purchase price is irrelevant to today’s market value.”

If a smart home buyer, and his or her buyer’s agent, discover the seller paid a low purchase price many years ago, that means the seller has lots of room to negotiate. However, if you find out the seller bought the house in the last year or two with a large mortgage or two, the seller might not have much negotiation flexibility.

3.) WHAT DEFECTS DOES THE HOME HAVE AND HAVE THERE BEEN ANY RECENT PROFESSIONAL HOME INSPECTIONS?

In most states, home sellers must now provide buyers with written home sale disclosures revealing any material facts that affect the home’s market value or desirability.

Smart listing agents obtain the seller’s written disclosures at the time of listing and have it easily available to prospective buyers. Then buyers won’t be surprised later by discovering the home has major problems that were already disclosed by the seller.

Home sellers, at the suggestion of their listing agents, often have customary professional inspections completed before the home is put on the market. Then the seller can either have any defects repaired, or at least can make the buyer aware of them before the purchase offer is made.

Of course, after the seller accepts the buyer’s purchase offer in writing, the buyer should always hire his or her own professional inspector just to double-check the seller’s inspector. If the buyer’s inspector discovers any undisclosed defects, then negotiations can be reopened if the buyer included a professional inspection contingency clause in the sales contract.

A good source of quality home inspectors is the American Society of Home Inspectors. To find local ASHI members, go to www.ashi.org or phone 1-800-743-2744.

4.) WHAT PROBLEMS HAVE YOU HAD WITH THIS HOME?

An open-end question like this will remind the home seller of any problems that, hopefully, have been corrected.

For example, when I first moved to my current home I quickly discovered I couldn’t have a decent garden because the deer would eat virtually everything. So I constructed fences to solve that problem. A few years later, the wood shingle roof began to leak but new leaks kept reappearing after a roofer made repairs. About 20 years ago, I had a new metal “lifetime” roof installed and I have had no further roof problems.

In most states, court decisions and statutes do not require home sellers to reveal past problems that have been corrected. But it is still important for buyers to know if those past problems might again become future problems.

5.) WHAT IS THE QUALITY OF THE PUBLIC SCHOOLS?

If you don’t have school-age children, it’s easy to forget this important question. But top quality schools contribute to home values and future market value appreciation. Families prefer to buy in communities with superb public schools and are willing to pay extra for the privilege.

However, in many big cities where the public schools are poor quality, families who buy a house or condo there realize the low school quality contributes little or nothing toward residence values.

Because most home sellers do not have accurate information on public school quality, the buyer’s agent should provide their home buyer with the latest school quality statistics, usually based on standard test scores and high school graduation rates.

Most real estate brokerages have access to the Internet resource www.schoolmatch.com, which tracks over 14,000 public school districts. Over 7 million parents accessed School Match services last year. A related Internet resource is www.houseappreciation.com, which rates the top 32 percent of communities based on their school quality and home value appreciation since 1994.

SUMMARY: Home buyers should always ask the five key questions sellers and their listing agents hope you don’t ask. The answers help eliminate undesirable homes and maximize the home buyer’s negotiation information. More details are in my special report, “The 10 Most Important Questions Home Sellers Hope Their Buyers Don’t Ask,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2006 Inman News

DEAR BOB: I signed a contract with a real estate agent for a four-month listing to sell my home. But he has not done much. I decided not to sell my home; but is there any other way to get out of this listing contract legally and hire a better agent? –Vincent N.

DEAR VINCENT: Presuming you signed a four-month exclusive right-to-sell listing, the listing agent has a fiduciary duty to you to use “due diligence” to get your home sold according to the listing terms.

Purchase Bob Bruss reports online.

That means the listing agent must do at least what is normal and customary, such as placing your listing in the local MLS (multiple listing service), listing your home on the Internet at www.Realtor.com, having your home open for a weekday tour by local realty agents, and advertising your home in the newspapers and other media.

In addition, he might hold weekend open houses, send mailers to neighboring homeowners (who often have friends and relatives who want to move into the neighborhood), and print brochures.

Proving a lack of due diligence by a real estate agent, thus entitling you to cancel the listing, is very difficult. Of course, if the agent didn’t do any of these things listed above, then you could cancel the listing for lack of due diligence.

You say you decided not to sell your home. But in the same sentence you said you want to get out of the listing contract and hire a better agent.

Most agents will allow you to cancel a listing if you decide not to sell. However, they usually include a clause stating that if you decide to sell within 180 days, you will re-list with the same agent.

I suggest you have a frank discussion with the listing agent and the office brokerage manager to resolve your dissatisfaction. Perhaps your listing can be transferred to a better agent within the same firm to get your home sold.

HOW LONG DOES TENANT-AT-WILL HAVE TO VACATE?

DEAR BOB: I used to care for my late father in the house where I now live. After his death, the house was willed to my sister. It recently sold. How long do I have to vacate? Can they come and change the locks? My sister notified me verbally to move out. –Robert N.

DEAR ROBERT: Legally, you are known as a tenant-at-will, or possibly a tenant-at-sufferance if you aren’t paying any rent.

Depending on state law where the house is located, you should be given at least a 30-day written notice to vacate. That presumes you don’t have a written lease for a stated term.

If you fail to vacate after receiving a written notice to move out, the new owners can evict you through a court unlawful detainer proceeding. However, you don’t want to wait that long to move out. Start looking now for another place to live. For more details, please consult a local real estate attorney.

GETTING RID OF A LIFE TENANT ISN’T EASY

DEAR BOB: When our father died about five years ago, his will left his house to his five children from his first marriage, including me. But his will gave his second wife a life estate in the house until she dies or remarries. She has not remarried, but she is living in the house with her live-in boyfriend, who might as well be her husband. They are not maintaining the house very well and it looks like a dump. It needs a new roof, but instead of installing a new one, she has put an ugly blue tarp on the roof. She failed to pay the property taxes. When I went to see an attorney to get her out, he notified her, and the boyfriend paid the property taxes. Is there anything we heirs can do before she destroys our inheritance? –Byron R.

DEAR BYRON: Getting rid of a life tenant is never easy. However, failure to pay the property taxes, or committing physical “waste,” are valid legal reasons to terminate a life estate.

From your description, the life tenant’s failure to repair or replace the roof is waste, which can be legal grounds to terminate the life estate.

If she fails to pay the property taxes again, and if she hasn’t fixed the roof, it might be the evidence you need to bring a legal action to terminate the life tenancy. Perhaps you should find a more aggressive real estate attorney.

The new Robert Bruss special report, “How to Sell Your House or Condo for Top Dollar With or Without a Real Estate Agent,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2006 Inman News

Question: I live in an apartment on a month-to-month rental agreement and plan to move to another apartment if I find a better deal elsewhere. My question is about the 30-day notice to vacate. If I give my notice but don’t find another apartment, would it be possible to legally withdraw my notice? My friend says that it can be done as long as it is at least a few days before the 30 days are over. In other words, the apartment management cannot force me to move if I change my mind. Please let me know your opinion.

Property Manager Griswold replies:

Your friend is wrong! The notice is binding and any holdover beyond the expiration date could make you liable for damages incurred by the landlord or a new incoming tenant if you continue to occupy the rental unit. The landlord can voluntarily agree to let you take back the notice, but would typically only do so if they either had not yet rented your rental unit, or could reach an agreement with the incoming tenant to accept an alternative rental unit. I wouldn’t count on the cooperation of the landlord or a potential incoming tenant merely because you have changed your mind. If you refuse to leave, you could find yourself liable to an incoming tenant for his or her costs and damages of not being able to move in as planned. I suggest you only give your 30-day notice to terminate your tenancy when you are sure that you are moving and know exactly when.

Question: I recently rented a house that was advertised as a five-bedroom house. After I signed a year lease, I was told that the house has four bedrooms and a bonus room, which is being used as the master bedroom. When I moved in, I realized that the bonus room, which has closets, and an attached bathroom, is open to the living room. When we originally viewed the house, this area, which is on the second floor, was closed off with ceiling-to-floor blinds, and it just looked like a regular room to me. The landlady now says that she will enclose the space; however, she expects the job to take about eight to 10 days. I am uncomfortable with this, as we need that room to live in, and I have two small babies in the house, and don’t want to be living with construction. Can I break this lease without penalty?

Tenants’ attorney Kellman replies:

There are several ways to break a residential lease. One of the grounds is if you were induced to enter into the contract based on a significant misrepresentation as to the rental unit. In your case, it is clear that you were the victim of misrepresentation and that the house was indeed very different than as presented due to the intentional concealment of the true character of the house. The landlord advertised a five-bedroom house when it actually has only four bedrooms. Further, the true character and nature of the house were intentionally concealed from you. Based on your situation, it seems reasonable that you can declare the contract rescinded (i.e. broken) without a penalty. In fact, you may even make a claim for damages suffered by the misrepresentation. You will need to document that position correctly and return possession of the house to the landlord as soon as possible. There are other ways to break leases besides the method and grounds discussed above. Before declaring any lease broken, you should seek legal advice since if you do not properly protect your rights with breaking leases, you may be held liable for the rent for the balance of the lease term.

Question: I was renting a condo from a woman who lives in another state. Each month I mailed the rent check to her home address. She decided to sell the property recently, so I moved out of the condo. It has been over three months now and I still have not received my refund check or an accounting indicating any reason why she was not giving it back. The landlord has since sold the property and I know that she still lives in the same place. What is the best way to get my rent deposit back?

Property Manager Griswold replies:

I suggest you immediately send a written demand letter to the owner and require a response within 10 business days. If you do not receive a satisfactory reply then you should utilize the small claims court. Check with the process service requirements of your local court, but typically the small claims court can either serve her by mail or you may have to arrange with a local process server that has connections in her home state to get your lawsuit served. That is probably your biggest hurdle, but should not be a major problem since you have her home address. The owner would need to appear in person or send a representative. Of course, you may find that the owner is a no-show and then you have a judgment that is difficult to collect. In that case, I would recommend you turn the matter over to an aggressive national collection agency and see what they can do.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of “Property Management for Dummies” and co-author of “Real Estate Investing for Dummies,” and San Diego attorneys Steven R. Kellman, director of the Tenant’s Legal Center, and Ted Smith, principal in a firm representing landlords.’

E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.

Questions should be brief and cannot be answered individually.

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Copyright 2006 Inman News

The size of America’s most popular home of the future will continue to grow. The reason provided by one of the nation’s most respected analysts, sounds like a popular country-western song:

“I like it. I love it. I can afford it, so I’ll buy it.”

That’s the explanation offered by Gopal Ahluwalia, research specialist in the National Association of Home Builder’s economics department, when asked about the growing size of single-family homes, given the dwindling number of individuals living in U.S. homes.

“Three decades ago, homes were smaller and household size was larger,” Ahluwalia said. “Now, homes are 2,400 square feet and the average household size is 2.57 persons. There’s really no answer, other than it’s been an excellent investment.”

Since 1973, the average new home has increased in size by about 50 percent. The typical new home that year had 1,660 square feet and only 12 percent had three or more baths. Today, about one-quarter of all homes have at least three bathrooms. “It’s a lot like asking why a person would buy a $75,000 luxury automobile when the same results can be accomplished with a $12,000 car.”

Ahluwalia said future homes will reflect two basic influences–an aging population and an increasing number of minority buyers, specifically Asians, Hispanics and African-Americans who will purchase approximately 30 percent of all homes sold.

“Many different groups are used to having three generations living under the same roof,” Ahluwalia said. “We will be seeing more of this trend, and because of it, homes will be larger. Their customs also dictate where a home should be sited, how some of the rooms should flow and the use of different colors. It’s something many of our builders have not had a lot of experience dealing with.”

Karol Nickell, editor-and-chief of Better Homes & Gardens magazine, said the kitchen will remain king among housing rooms with added counter space, upgraded cabinets and appealing, recessed lighting. Upscale kitchens will be included in homes of all price ranges. Common amenities will feature central islands for food preparation and cooking, walk-in pantries, double sinks and table space for family eating. Wine storage racks will be regular features in average homes while built-in wine coolers will be included in most upscale homes.

Here are some other capsule highlights of the 2015 home, according to a new NAHB study:

• Homes will not shrink in total size. Today’s average homes of 2,400 square feet are expected to be in the 2,300-2,500 square-foot range in 2015.

• Ceiling heights, which have been rising in the past 10 years, are expected to be 9 to 10 feet on the first floor while upscale homes will have a standard ceiling of at least 10 feet (10- to 12-foot range) on the first floor and a 9-foot standard ceiling on the second floor.

• Front doors will be single and wider. Standard homes will have at least one light above the door while upscale homes will have lights on each side of the door plus one above it.

• The living room will disappear and change function in homes of less than 3,000 square feet and will be replaced by a den, parlor, retreat, library or music room. Living rooms will remain in homes larger than 3,000 square feet.

• Stairs, which often are in the front of the home, will move to the middle or rear of the house.

• The master bedroom will have two walk-in closets and have areas of specific use (sleep, dress, sit, work).

• The master bath will have larger shower stalls, a compartmentalized toilet, and linen closet. Mid-to-upscale homes will have a shower and tub and multiple showerheads. Upscale homes will continue to have whirlpool tubs even though they are rarely used.

• Yards will shrink. Now averaging 9,000 square feet, the American yard is expected to decline to 7,000 or 8,000 square feet in the next few years.

“The big challenge is baby boomers wanting energy-efficient homes along with features like 10-foot ceilings and lots of glass,” Ahluwalia said. “Their desires are in conflict.”

The 50-plus housing market has clearly been discovered and builders and re-modelers are racing to supply the structures and amenities demanded by these discriminating consumers. Industry analysts say that the amenity gap (features seniors say they want that developers are not providing) common to both a recent NAHB survey and an AARP study is the demand for grocery stores and drugstores within a planned community. Other wants/needs that are not being met are sidewalks, better transportation and home-meal service.

“Builders have done a good job in some areas in providing what the 50-plus market wants–including wider roads, grab bars in hallways and bathrooms and a master suite on the main floor,” Ahluwalia said. “But we need to continually take into consideration more services in our planning. It’s not feasible to have drug stores, grocery stores, hospitals in every neighborhood but better public and private transportation would go a long way to solving this.”

Tom Kelly’s new book, “Cashing In on a Second Home in Mexico: How to Buy, Sell and Profit from Property South of the Border,” was written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on www.Amazon.com and on www.TomKelly.com.

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Tom Kelly

Q: We are planning a bathroom remodel. We like the hardwood floors in the rest of our house very much and are considering hardwood in the bathroom too.

Contractors who are bidding the job have given us mixed responses. One said he thinks hardwood would be great, but two others strongly recommend against it because of potential water damage.

We are pretty neat and tidy people–no wet towels on the floor, etc. What are your thoughts? Are hardwood floors a good idea for the bathroom?

A: To put it bluntly, no. Regardless of how neat and tidy you are, water will wind up on the bathroom floor. We’ve said it before–wood and water don’t mix.

After taking a bath or shower it’s nearly impossible to exit the tub or shower perfectly dry. Water will drip on the floor.

And the tub and shower aren’t the only potential problem. Few things will take the finish off hardwood faster then urine. Face it; sometimes a guy’s aim is not what it should be.

Bathroom flooring should be impervious to water and easily washed and disinfected. Wood is neither.

Traditional hardwood is installed in single-board strips that are blind-nailed or face-nailed to the subfloor. This means lots of seams. Each seam is a potential avenue for water.

Over time, the joints in a hardwood floor will separate and allow water in. This is especially true in a bathroom, a humid and wet environment. The wood will absorb the moisture and warp. After a short time, relative to other types of flooring, you will be looking at refinishing or replacing the floor.

We agree that hardwood looks great, but in our opinion it is not meant for bathrooms. There are many other elegant options ranging from ceramic tile, to marble, to vinyl or linoleum.

We should say here that we’re not big fans of vinyl in bathrooms. Vinyl flooring is usually laid over particleboard, which soaks up water like a sponge.

The seam where the floor meets the tub or shower is virtually impossible to seal. Water seeps through the seam and compromises the underlayment and the floor is ruined.

We prefer the harder surfaces of marble or tile, both of which come in a variety of colors, textures and patterns and when properly installed look great.

If tile or marble seems too cold, consider looking into the possibility of radiant heat in the mortar bed when laying the floor. That way you would have the best of all worlds–a hard floor that not only is impervious to water but also is warm.

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Bill and Kevin Burnett

In early August 2000, homeowner Nancy O’Brien received a marketing call from Aames Funding Corp. She expressed interest in refinancing her home and paying off $15,000 in credit card debt.

Aames then arranged two mortgage loans for her to pay off the $83,492 first mortgage, consumer debt, property taxes, and transaction charges, for a total of $104,662.

Purchase Bob Bruss reports online.

On Aug. 31, 2000, O’Brien received a first mortgage loan for $79,500 from Aames. Associates Home Equity Services Inc. funded the second mortgage loan on Sept. 6, 2000, to bring the total loans to $104,662.

The Aames loan included a Truth in Lending Act (TILA) disclosure giving O’Brien until Sept. 5, 2000, to change her mind and cancel the Aames loan. She did not exercise her TILA right to cancel the Aames loan.

However, on July 8, 2003, O’Brien notified Aames and Countrywide Home Loans Inc. (which acquired the Aames mortgage) that she wished to rescind the Aames loan.

On Aug. 29, 2003, O’Brien filed this lawsuit for return of all money paid and for damages, alleging violations of TILA disclosures because the Associates second mortgage, which was part of the transaction, was not funded until Sept. 6, 2000.

If you were the judge, would you allow O’Brien to rescind the Aames mortgage three years after obtaining the loan?

The judge said no!

Congress enacted TILA to avoid the uninformed use of credit, the judge said. TILA requires lenders to disclose to the borrower information about the loan, such as interest rate, monthly payments, and total payments over the life of the loan, he explained.

TILA includes a notice allowing the consumer to rescind the loan within three business days after consummation of the transaction, delivery of the notice of the right to rescind, or delivery of all material disclosures, whichever occurs last, the judge emphasized.

“If the creditor fails to provide the required notice, the right of rescission continues for up to three years after the consummation of the transaction,” the judge noted.

On Aug. 31, 2000, Aames provided O’Brien with a TILA written notice of her right to rescind the Aames loan by midnight of Sept. 5, 2000, he continued, but she failed to cancel.

Now she argues she had up to three years to rescind because the Associates second mortgage was not funded until Sept. 6, 2000, he noted.

This fact is immaterial because O’Brien consummated the Aames loan on Aug. 31, 2000, the TILA statement correctly gave her until Sept. 5, 2000, to rescind, and she did not do so, the judge ruled. Therefore, O’Brien cannot rescind the Aames mortgage three years later, the judge concluded.

Based on the 2005 U.S. District Court decision in O’Brien v. Aames Funding Corp., 374 Fed.Supp.2d 764.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News

DEAR BOB: I own two houses in trust. One is in West Virginia. When my husband moved out of that house, he signed the papers to transfer title to me. I now live there for several months each year, but it is not my permanent residence. I cannot claim a homestead exemption there because I claim a Florida homestead. Can I use the tax-free $250,000 exemption on the West Virginia house if I lived there 24 months during the past five years? –Elinor T.

DEAR ELINOR: I presume by holding title “in trust,” you mean in a revocable living trust. If title to the residences is held in any other type of trust, such as an irrevocable trust, you are not eligible for the principal residence sale tax benefits of Internal Revenue Code 121.

Purchase Bob Bruss reports online.

For the sale of the West Virginia house to qualify for the Internal Revenue Code 121 principal residence sale tax exemption up to $250,000 (up to $500,000 if your spouse also qualifies and you file a joint tax return), you must have owned and occupied it as your principal residence an “aggregate” 24 of the 60 months before its sale. The 24 months need not be continuous.

However, it must truly be your principal residence during your 24-month occupancy time. If audited by the Internal Revenue Service, you must be able to prove principal residence indications such as a local bank account, car registration, driver’s license, voter registration, employment, and filing income tax returns from that address.

From your description, especially since you have a Florida homestead, it sounds like the West Virginia house doesn’t qualify for IRC 121 principal residence sale tax savings benefits. For more details, please consult your tax adviser.

CAN CONDO DIRECTORS HOLD AN INQUISITION OF NEW BUYERS?

DEAR BOB: I recently purchased a condominium. I received the condo association documents, along with an application to fill out. I was shocked as I own two other condos and was never asked to fill out any application to purchase a condo. This is not a cooperative apartment. I feel some of the questions are intrusive, such as what is or was your last occupation, household income, and your net worth? Then it is up to the condo board of directors to accept or deny my application. I presented my financial data to the mortgage company, but I do not feel this is the business of the condo board who are my future neighbors. Shouldn’t the real estate agent have warned me about this? –Shirley B.

DEAR SHIRLEY: Yes, the real estate agent should have clearly shown on the MLS (multiple listing service) information that buyers are subject to approval by the condo association board of directors.

Like you, I have never encountered a situation like this. But I have heard there are a few condo associations that hold such inquisitions of new condo buyers.

Frankly, I wouldn’t want to buy a condo in that complex because it could make the condo very difficult to resell in the future.

A major reason why cooperative apartments can be so hard to sell, and why they sell for less than comparable condominiums, is most co-op purchases are subject to approval by the board of directors, which doesn’t have to give any reason for rejecting a buyer applicant.

MUST HEIR WAIT TO TAKE TITLE UNTIL PROBATE IS COMPLETED?

DEAR BOB: I am inheriting my late mother’s home. It is currently in probate. Is it best to wait for probate to finish to take title? Are there any tax consequences to taking title before or after probate is completed? –Lorraine T.

DEAR LORRAINE: You can’t receive marketable title until the Probate Court approves the title transfer to you. If there are income or estate taxes to be paid for the decedent, those taxes must be paid by the estate before estate assets can be distributed to the heirs.

However, the probate estate need not be closed before property titles can be transferred. Title to the home can be transferred to you by the Probate Court although the estate might remain open for further proceedings on other estate matters. Some estates remain open for many years.

Now you know why I recommend property owners transfer title to their revocable living trusts so, after their demise, the assets can be promptly distributed without probate costs and delays. Presumably your mother died without a living trust or a will so probate proceedings were required. For full details, please consult a probate attorney.

The new Robert Bruss special report, “How to Sell Your House or Condo for Top Dollar With or Without a Real Estate Agent,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News