Can't Get to the Beach? Buy a House.

I’m not with the Chamber of Commerce, but I do feel guilty when people come to Florida to get away from the cold at home and well, it’s cold here.  Not like “up north” cold, but cold nonetheless.  You can tell the folks I mean when you stop in at Publix or Wal-Mart and see them in their flip flops and shorts when it’s 42 outside. (Up home it may be 9 below…but still.)

I started thinking what would be a good use of time for a visitor who--through no fault of his own--was limited from going to the beach due to the cold.  So I was checking through the newspapers looking at all the things there are to do here in Southwest Florida even on cold days—and there are a ton, ranging from ballroom dancing, to quilting to over 65 baseball and well, everything in between. But there’s one more that is not on the newspapers list: go shopping for a new house.  This might not sound like the optimal thing to do on some of these extremely cold days that we are seeing now, but it could prove to be successful for buyers who are willing to endure the chilly weather.

Traditionally, buyers are harder to find when temperatures hit the low numbers, and even here many people aren't inclined to go outside if they don't have to. However, if you can handle a little chill and some rosy cheeks, you might find that there are some excellent house-hunting opportunities out there due to fewer house-hunters. When you're shopping for a home in the cold winter months, you'll find that you're likely competing with serious buyers. Only serious buyers would endure looking at homes in the cold weather.

And visiting homes during colder weather will give you an idea of what to expect during the winter season. Just now most of the lawns have turned a winter shade of brown thanks to the cold, and many of the plantings around a home are leafless and dormant, so the curb appeal might not be as attractive, but there are other things that you can focus on that you might not have paid as much attention to in much warmer weather.

If there’s a fireplace, there's a good chance you'll see it in action if there's an open house. You can also really experience how well the heating system functions. You'll have the opportunity to check for any cold drafts in the home or damp areas that might indicate issues with insulation or weather stripping.

Be serious about your house hunting. You probably don't want to spend any more time than necessary out looking in the cold. That's why it's even more important to have a clear picture of the financing for the home. Know how much home you can afford.

Understand what your must-have items are and what things you're willing to compromise on or do without. Working in the chilly days is taxing, but if you clearly communicate to your real estate agent the neighborhoods and house types that you're interested in, you will have a good chance to find the home you want and need.

Cold weather house hunting can even bring some bargains because sellers might be eager to get their homes sold.  Dane Hahn is affiliated with Sarasota Realty Associates in Venice. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312.  See him on the net at www.danesellsflorida.com

 

Canadian Housing Market

Think of all the Canadian Snowbirds who winter in Florida, a paradise which is to them a “foreign” country—and how many things that between the two countries seem so similar but are somehow different. Fahrenheit verses Celsius, Canadian Healthcare verses our “whatever plan”; even the language is a bit different, eh?

Look for a moment at the two housing markets. There are enough similarities that it feels normal, but when you look a little deeper you'll find that the two systems have some fundamental differences.

When the sub-prime mortgage crisis hit the United States and the housing market collapsed, I owned a real estate franchise whose headquarters was based in Toronto, and I assumed Canada's housing market would soon suffer the same fate. That didn't happen. Canada's homeownership rate passed that of the U.S. and the country's prolonged housing boom continued. Prices kept going up and stayed strong.

Back then; new types of 'exotic' mortgages were offered in the U.S. in the years leading up to the economic downtown. These mortgages often featured 'teaser rates' that kept monthly payments artificially low, only to have them increase significantly later in the mortgage. Of course everyone knew they could always refinance—and nobody thought their home value would ever drop. Major Canadian mortgage lenders never adopted features such as this.

That sub-prime market never took hold in Canada.  In the U.S.  the vast majority of mortgages were originated by third parties and then packaged and sold to investors who often did not understand the associated risk. In Canada, on the other hand, most mortgages are originated and retained by the banks and institutions whose goal it is to maintain a long-term relationship with the borrower. (Like the old days here—think 1950 to about 1970).

Banks, trust companies and credit unions in Canada have a much broader relationship with their customers than just a mortgage; they are the financial experts and they offer investments, lines of credit and more.

And even though the countries seem so similar, their individual consumers are quite different. Younger Canadians have a homeownership rate that is double that of their American counterparts. Homeownership is also a key goal for new immigrants settling in Canada and contributes to the broad homeownership rate differences across the two countries.

The U.S. offers tax breaks to homeowners with the idea that a tax break will increase homeownership, Canada, does not have a policy goal of increasing the rate of homeownership and offers no such tax breaks. In the U.S. mortgage interest is tax deductible and so the larger the mortgage, the more tax benefit (interest that can be deducted.)

But because no such option exists in Canada, there's more incentive for Canadian homeowners to pay down their mortgages quickly. That has resulted in a large gap in the amount of equity Canadians have in their homes versus U.S. homeowners. Even if the Canadian homes lose value, homeowners continue to have much more equity.

During the U.S. housing crisis, many Americans whose mortgages exceeded the value of their homes simply walked away, leaving the banks holding the mortgages. In Canada, walking away is not an option. A borrower continues to be responsible for repaying the loan even in the case of foreclosure. In Canada, a foreclosure does not relieve the homeowner of the mortgage debt. Lenders can take legal action to recoup money from the homeowner if a foreclosed home is sold for less than the amount owing on the mortgage. (Short Sales)

Canadians spend a significantly larger share of their budget on housing-related items and services than Americans, spending about US$2,500 more a year on housing expenses.

Dane Hahn is a real estate professional with Sarasota Associates in Venice, He can be reached at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

 

 

 

Flood Insurance Continued

About ten years ago while we were still residents of NH, we had a flood in our home. In my last column I outlined the issues that led up to “our” flood, but in a nutshell, we lived on a lake, and following 30” of rain in 30 days and the snow melt up-country, our lake level went up 12 feet, and came into our lower level.

As the water began receding, a representative from FEMA knocked at our door. Our county had been declared an emergency and government aid was available. We qualified for a grant of $2,000 to begin the clean up, and we qualified for an SBA (low interest) loan to fix the damage to lower level. FEMA also gave us a plan for a concrete “flood wall” to build out front—and the one requirement to make all this generosity come to reality: we had to buy flood insurance.

I like to think of myself as a rational being, one who can evaluate issues and come up with some kind of a solution. But when the water is rising, and dozens of people are helping with sand bags, and then the water comes over the top and flows into your home; well I excused myself and went into my garage—and cried. There was just noting we could do to keep that from happening right then.

The FEMA plans for a flood wall--which could protect the home—were pretty simple. The wall was about 100 feet long and set 6 feet into the soil, with a very large footing. The wall itself was straight, with two delta wings back toward the house to give additional rigidity to this dam between me and the lake. This was the solution, they said, to avoid this happening again. And even though the flood was called a “100 year” flood, there's no telling when that might happen again. So I bought flood insurance .

As it turned out, the next 100 year flood happened again the next year, and the new wall held.

And if you think that a flood only makes all your stuff wet, you have another think coming. With the water comes mud, and fish, and frogs and snakes. And some stuff floats, and other stuff doesn't. I had tall steel shelving with paint cans and tools on them. On the bottom shelf I had placed large plastic tubs of stuff. The tubs floated and lifted the shelves up off the floor, naturally they tipped over, spilling all their contents, some of which opened and spread their contents on the water. Ugh!

The carpets were obviously under water as was the insulation in the walls. All this needed to be removed. The thermopane sliders filled with water up to the high water line. Somehow the water gets in, stains the glass, and can't get out, so there was water in there for some time. The hollow doors on that level all came unglued, they peeled and flayed out. The furnace, central air and hot water heater were all drenched, but somehow they dried out, and once “tuned up” seemed to be none the worse for wear. A month later we replaced everything except the working utilities.

You might think you could, but you can't live in a house with a flooded basement. The fire department pulled our electric meter, and told us to find a place to stay. Without electricity, all events around a house pretty well come to a halt. We engaged a cleaning company as the water finally drained out. The cleaning guys said they needed a week to dry the place out once the power was back on. They asked for permission to throw away everything, and brought in fans and a huge dumpster. (As a Yankee, I was reluctant to throw away everything, so we compromised on a few things)

But to let them have free access to the house and get me away from overseeing the mess, we came to our house in Englewood—it was Memorial Day, we went Tarpon fishing.

So this is what I know first hand about flood insurance. It's expensive, and if you read the newspapers you know it's getting more costly. When there is a flood, unless the county you live in is deemed an emergency area, you're not covered. You have to pay for it a year in advance. If you have a mortgage, it's required. Read the policy, it doesn't cover much, usually just the utilities and services on the lowest level (AC, hot water heater and the like), if water gets to the next level, they get more generous. The policy goes with the house. Meaning when you sell, the new buyer should be able to continue your policy. When we sold our house, the buyer looked into a new flood insurance policy and it was 3 times more costly than my existing policy, that's when we found he was able to assume our policy.

Also, FEMA flood maps are like the bible to a bank, even though they get redrawn all the time. God makes the floods, and they happen where the maps and even smart people least expect. There are floods in the lowlands, and along the Mississippi, but also in the mountains of Vermont and New Hampshire. So you never know. Dane Hahn is a real estate professional affiliated with Sarasota Realty Associates in Venice. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Flood Insurance (part deux)

Not too many years ago we had a flood in our home up in New Hampshire. Let me tell you a little about the event, and what a mess it made.

We lived on a lake that was about a mile long and half a mile wide, and because we were about 12 feet above the lake level--and the lake had a dam which purged water into a river--FEMA determined that flood insurance was not required. Well, to be clear, it had been required a few years earlier, but then the government cartographers redrew the flood maps and we were relived of having to carry flood insurance because all the “experts” were sure and 99.9% certain that no flood would ever bother us.

We bought that house right around the turn of the century, and got friendly with the neighbors during the first few months we were there. Neighbors are always knowledgeable of the history of the area and they were quick to tell us there had been a flood 10 years back and our house had been in the midst of the deepest waters. But the owners at that time had installed an earthen dam along the lake side of the house, and it was determined by those who knew this stuff, that the dam would most certainly keep out any future high water. The house had come with a flood insurance policy, which was required if we had a mortgage—which we did.

About three years into our owning the house, the insurance company called and said the new FEMA maps were just released, and they indicated we were no longer in a flood zone, (really?) and therefore flood insurance was no longer needed. We told them that there had been a flood once, but that didn’t matter they said. And secondly, they said, flood insurance, while cheap at that time, didn’t cover much anyway. So we cancelled the policy.

I think that was the same year we had our next 100-year flood. The earthen dam worked fine during the runoff from the snow melt and the 30 days of spring rains we had that year, until the county raised the dam to prevent more water from going into the river—as homes were being flooded by the river, downstream. That brought the water over the top of our dam. The fire department quickly responded and brought hundreds of sand bags, and we raised the top of dam maybe 8-10 inches with all the bags, but the water found a way in, and washed out our dam.

The house was an embankment ranch, meaning that it was a ranch style home on the street level, but one side of the lower level was set into the earth, the other side contained a finished playroom with glass sliders out to the lake. The lower level was carpeted, and furnished and had a Steinway piano and an antique melodeon, plus the usual collection of stereo equipment and speakers and TV and the rest, Plus there was a work-shop with a nice collection of power tools, and then a storage room with “good stuff”, family photos, yearbooks, skis and boots and things I was saving, not to mention the oil furnace, central A/C and electric panel.

The fire department came as soon as they heard the dam was breached and pulled the electric meter of the side of the house. We could no longer stay there. The water began receding about that same time and FEMA knocked at our door. Our county had been declared an emergency and government aid was there. Even though we didn’t have flood insurance, they handed us a check for a grant of $2,000 to begin the clean up, and documentation for an SBA loan to fix the whole lower level. They also gave us a plan for a concrete “flood wall” to build out front—and the one new requirement to make all this generosity come to reality: flood insurance.

For more information on floods, see: http://www.floodsmart.gov/floodsmart/pages/flooding_flood_risks/the_cost_of_flooding.jsp More on my flood and flood insurance next time. Dane Hahn is a real estate professional with Sarasota Realty Associates in Venice, he can be reached at 941-681-0312, or at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com -- Dane Hahn