The Fluctuating Housing Market and You

Reports came out last week that home construction in the U.S. is down by 14 percent. Several factors are to blame, but the most prevalent is that the recovery of the housing market is moving at a snail’s pace. In other words there are too many homes already available for sale and not enough buyers.

Weren’t they just saying a few months ago – maybe even in July – how the housing market was seeing an upswing? How is it that we’re here again? And what does all this fluctuating mean for you?

First, the Why

There are any number of factors that contribute to how well the housing market is doing, including:

• The Season – Generally speaking, home sell better in the spring and summer months because that is, ideally, when most people want to move. There are more buyers during these seasons, which means sellers will get better offers from interested parties.
• Construction – More new homes means more options for buyers to choose from.
• Lending Restrictions – There appears to be an increasing number of home buyers who think they qualify for a certain loan amount, only to find that they can’t. This leaves them buying smaller homes within their loan budget, meaning the larger, more expensive homes are left. 

For the Buyer

As a buyer in a fluctuating housing market, you have the advantage when supply outweighs demand because sellers get desperate and reduce the price in order to sell the home sooner. It also means that you have many more options to choose from and are more likely to find what you’re looking for in a home.

Then again, you may not be able to find what you’re looking for because in a slow moving housing market, the best homes tend to get swiped up quickly, leaving you to settle for a home that doesn’t quite hit the mark. But this is an opportunity that you can easily take advantage of if you’re able to visualize the potential a home has to offer.

If you can find a great deal – and typically you can these days because of the seller desperation – then you can make it your own quite readily with the help of a local contractor like Andy and his team. Outdated bathrooms in your dream home? No problem. HA Construction kind of specializes in bathroom renovation.

For the Seller

As a seller, you tend to benefit when the housing market is consistent, with supply and demand on a more even footing, and especially when there are more buyers than homes. Unfortunately, we haven’t really seen that much of a “seller friendly market” since historic 2008.

So, what can you do to make your home more appealing in a buyer’s market without plummeting your asking price? Make it more appealing to the buyer. This may take some additional investment on your part, but it may be worth it.

For example, let’s say you have carpet in your living room that, while not an eye sore, could stand to be replaced. You’ve resolved to leave that to the buyer, as is often the case. But in a buyer’s market, you’d see more success if you went ahead and replaced the carpet for them – because your providing incentive for the purchase of your “move-in ready home” over the house they saw that is also great, but needs more work.

Or, if your relocating for reasons like you’ve outgrown your current home or simply want something different, consider hiring a contractor to put on an addition or make changes so that the home you have is more you in the first place.

For the Contractor

You might be thinking that the contractor benefits regardless of the housing market’s condition, but this isn’t always the case. These days, a construction company has to show versatility in its services in order to keep work consistent. For example, a construction business that only does new construction could obviously be struggling with a 14 percent decrease in home construction around the country last month.

Whereas, a company like HA Construction, that provides a broad range of services from bathroom renovations to new construction… from commercial work to replacing windows… (and does a great job) will see success regardless of the housing market. Work may fluctuate as the housing market and seasons change, but consistency can be found in diversity. 

Reliable Contractor References

Let me tell you a story (the names have been changed to, well, you know… protect folks).

Steve needed a new roof on his home. So he did some research online and picked a few local contractors with a strong rating on the Better Business Bureau website and several years of experience. After meeting with a few, he chose A+ Roofing.

However, Steve’s new roof turned out to be a dud, with several leaks, wrong sized guttering and a number of other issues. Countless attempts to call A+ Roofing led to an irate owner yelling obscenities at Steve and his wife over the phone. It turns out that one of the contractors for A+ Roofing was pocketing the money from several jobs that he did poorly and then took off. And A+ Roofing didn’t feel the need to rectify the situation.

Don’t Put all Your Eggs in one Basket

Despite the cliché, as a consumer, you should never solely depend upon a BBB rating to determine if a construction company is reliable.  Granted, in Steve’s case, the owner of A+ Roofing was certainly handed a rotten situation (pun intended), but it’s how he handled it – allowing the stress of it all to make customer service non-existent – that reveals his business practices.

It’s almost a guarantee that this isn’t the first time the owner of A+ Roofing treated a customer horribly. So you need to first get references from a company.  In the interest of full disclosure, you shouldn’t trust all of the reviews you read on the Internet about a company either – at least not without a little more research. Because, unfortunately, we live in a society that is more than willing to plaster bad reviews all over the Internet when someone does them wrong (often before they’ve even tried to resolve the situation with the company), but those treated well rarely take the time to proclaim that in a public forum. It’s better to talk to several previous clients one-on-one to get an accurate assessment of a company’s strengths and weaknesses before you hire them.

Keeping in mind, however, that they are only going to give you contact information for happy clients (of course!). In which case, references still aren’t enough. What you really need to do is go beyond the commonly sought after sources and find out what else the company is involved in.

Memberships Mean Devotion

Another thing to consider is that, like any other service, in order to be listed on the BBB website, a company must pay annual dues. This doesn’t mean a lot, other than the fact that a company that can’t afford that fee won’t be listed, but could still be a viable company. This also means that a company that can afford to maintain a listing with the BBB is successful. And, such a company should have listings with other reliable sources to balance that out.

For example, HA Construction has a listing with the Better Business Bureau, but also with the Home Builders Association (HBA) of Greater Springfield, the Springfield Area Chamber of Commerce and the Springfield Contractors Association. All of these require membership, and HA Construction is happy to oblige in order to show current and potential clients how dedicated we are to providing quality work and customer service.

So it’s important to remember that you shouldn’t rely on just the Better Business Bureau to give you a complete picture of a company’s success rate, customer service and reliability. Consider the BBB as one in a number of reviews and association memberships you will verify before you hire a contractor, so that you’ll avoid being in a situation like Steve.

The Hassle of Connecting to the City Sewer System

Kelly, a Springfield, Missouri resident, received a letter from the City of Springfield a few months ago that she wasn’t prepared for. Her family was growing and attempting to move into a larger home to accommodate that, but the letter put a damper on plans. According to the letter, the city would be connecting Kelly’s northside home, and several others in the Woodland Heights neighborhood, to the city sewer lines. And Kelly’s family had few options.

Construction is to begin in October of this year, and the estimated cost per household is $16,000. While the city’s assistance program implemented in 1999 will put a cap on that cost at $8,300 (plus the expense of connecting their home to the sewer line through a plumbing service), this is still a large, unplanned expense for Kelly’s family (and likely many others).

While one would concede that connecting this homes to the city sewer line is probably a good idea, and that doing so is a strong recommendation (requirement?) through the EPA and Missouri Department of Natural Resources, it certainly isn’t without significant drawbacks. Inconvenient construction, torn up yards and a large bill make it virtually impossible for Kelly’s family to sell their home until the project is done and, even then, it will still be difficult.

The Cost

Let’s talk about the most obvious downside to a new sewer system: the wad of cash home owners have to pay out.  Upon completion of the project, the City of Springfield a tax bill to homeowners/business owner within that sewer district. The cost to each customer is calculated with the following formula: (District Cost / District Square Footage) * Property Owner Square Footage = Property Owner Cost. The City does offer repayment options, in addition to the cost cap, which are:

• Pay the tax bill in full within 30 days
• An installment plan that basically treats the tax bill like a 15 year loan, including interest. Property owners pay 1/15th of the bill once a year after the issuance of the tax bill. Payment in full can be provided at any time.
• Apply for a grant to cover the cost of the sewer line. However, if Kelly’s family qualifies for this option, they cannot sell the home within five years, or they have to pay back the grant.

The Need

As much of a nuisance as this is, if you live within the city limits of Springfield, or any other municipality for that matter, it really is to your benefit and the benefit of those around you to be connected to the city sewer system. Being a part of the city sewer system has the following benefits:

• According to the City of Springfield, it reduces the potential for health hazards and ground water contamination.
• The geology of the Ozarks is generally considered intolerable of septic systems, causing them to fail frequently.
• Scientific America points out that most people prefer to be hooked up to city sewer because, once you are, the burden of keeping the system running properly outside of your property falls on the municipalities.
• Less chance of backup (which can happen frequently with a septic system) because the water is sent to a treatment plant rather than resting in a tank on your property.
• City systems are better equipped to handle extended or heavy periods of precipitation that a septic system may not be able to bear.

Because of the risk of ground water contamination, Springfield and Greene Country require a minimum 30 acre tract size of land for septic systems and, obviously, most homes in the Woodland Heights neighborhood don’t meet that criteria. So, while Kelly and her neighbors are somewhat backed into a corner both legally (see our article on Easements) and, and the sale of their home will likely have to wait, being on a city sewer system is better in the bigger picture.

One might argue that the financial burden should solely fall on the city, with the exception of hooking a home or business up to the new system. But that is a post for another day.

What “Easement” Means for You, the Home Owner

Springfield and the surrounding metropolitan area (if you want to call it that – metro with down-home feel, you could say) seems to be ever growing. Sure, there are empty buildings on every corner too, but new ones are going up alongside them, the population grows, new businesses open, new homes built.

And more traffic. While we certainly don’t have to endure hour long commutes over a 20 mile stretch of highway like other Missouri cities, traipsing down National at 8:00 AM is no picnic.

Can you imagine living in one of those houses on National, just north of Sunshine? I always wonder what it’s like for career-minded individuals who live in that area and are trying to get to work in the morning. Or the moms and dads trying to get their kids to school on time.

Especially when the city decides that the road on one of these traffic heavy streets needs to be a little bit wider to lessen the jam-packed, bumper-to-bumper wait at the intersection.

In which case, the city will start digging up your front yard, and creating more chaos in order to squelch the chaos later (hopefully). This, my friend, is called “easement,” and it means your yard is partially owned by city municipalities to do with as they please.

The Legality of an Easement

First, any easement on your property will be laid out in writing within the title. If you’re uncertain whether there is an easement on your property, check there first, or call the county Assessor’s office. The most common form is a Utility Easement, which gives the city and is divisions (utility company, water company, etc) access to a certain portion of your land for repairs or renovations.

For example, the utility company may need to replace buried utility lines on your property and, with and easement, you must give them access (even if it destroys your landscaping). Likewise, the city may have an easement on the first several feet of yard along a road for homes on streets with heavier traffic, in case there is a need for expansion later.

Keep in mind, that there may be an unwritten easement on your property unassociated with any local municipality. For example, if your neighbor’s only access to his backyard garage is by utilizing your driveway, this is called and “Easement by Necessity” or a “Prescriptive Easement.” Basically, the law will recognize the neighbor’s right to access their land, even if yours is in the way. If their access to your land causes problems, however, you can fight in court to relinquish that access.

Conflict Over an Easement

It’s not necessarily impossible to dispute an easement, but it can be difficult. If the City of Springfield owns and easement on your property, then you can file an Application for Relinquishment of Easement. Ideally, you don’t want to wait until the city starts knocking on your door to inform you their going to be tearing up your yard next week to file this form. This is something you should do upon acquiring a property with an easement attached.

Keep in mind, however, that your reasons for relinquishment have to be more than an adverse reaction to your beautiful green grass in disarray. Of course, the city is pretty vague on what reasons they would approve.

In regard to fighting an easement of necessity, you would have to provide proof of some kind that it’s causing a problem to give your neighbor access to your property, such as property damage. This would likely be a small claims matter if you take it to court, but sometimes simply getting an attorney involved will solve the problem. Of course, you should attempt to work it out with your neighbor first, but we know that doesn’t always goes as one would hope.