The spectacle of our federal government this fall struggling to fund its operations and pay its bill is only one of the latest bit of STRANGENESS in what has been a STRANGE time in our country.  7 million jobs added in past 3 years, but the economy shed 8 million jobs during the downturn.  Rising home prices have pushed up net equity holdings by $2 trillion in last couple of years and stock gains have pushed total household worth to an all-time high, although concentrated in a small % of the population.  On an average, home owners have a median worth of nearly $200,000 & renters $4,000 & these ranks are GROWING.  From Lawrence Yum, chief economist of the National Association of Realtors.  So, we are living in the STRANGEST OF TIMES.  Let’s see what 2014 brings

During our Great Recession, home builders cut production sharply, as did the firms that produce the materials used to construct homes.  Now that the housing market is recovering, tight supplies are driving prices up.  This upward trend should be temporary, lasting only as long as it takes for suppliers to get back up to speed.  Then prices will settle back some.  Inventories in “hot” Texas spots like Austin, San Antonio, Houston, Dallas and areas where there is an oil boom have a 3 or so month inventory of homes on the market.  Tyler and our East Texas area have near a 10 month inventory as builders built during the Recession so more houses on the market, but prices are creeping up.  Tyler and East Texas are GROWING!

Figure 21.7% of the expense to build a $310,000 house goes to the LOT with 59.3% to total CONSTRUCTION costs.  2.1% for FINANCING , 5.2% for general expenses and OVERHEAD, 1.5% for MARKETING, 3.3% to COMMISSION and PROFIT of 6.8%.  YES, most builders will pay a REALTOR!  These statistics are from the National Association of Home Builders 2011 National Survey Results.  Will only somewhat depending on total price of home.  Lack of buildable lots is STILL A CHALLENGE.

WHY THE LONE START STATE IS AMERICA’S FUTURE!  Do pick up a copy of this week’s TIME magazine  and go to page 30.  It’s not by accident that 3 of the 5 fastest-growing cities are in Texas.  It’s more like destiny – by Tyler Cowen.  For $300,000 in San Francisco you get a 210 sf loft apartment, in Chicago a 900 sq ft for the same price, but in Austin 3,052 sq ft for a 4 bdr, 3 bath home.  Houston has NO zoning, but seems to work out OK.  Too many rules and regulations hamper other cities and states.  Yes, some jobs are low paying in Texas, but also more than their share of upper end salaries.  Texas is weak on social services and needs to strengthen that area.  In Texas people are friendly and look you in the eye.  The cost of constant stress is not appealing and moving to Texas where the cost is acceptable and a good time to START FRESH.

Some things never change, at least when it comes to what homebuyers want:  decent-sized bedrooms, nice kitchens and bathrooms and good natural light.  But other must-haves enter the real zeitgeist like gangbusters and leaves just as quickly – remember sunken living rooms, mirrored closet doors and olive-colored kitchen appliances?  Then we have older folks who want less space to maintain and move from 3500 sq ft to 2200 sf or similar.  According to other date, buyers still want bigger homes and homeowners’ biggest regret  was not buying a larger homes.  People are buying homes to stay in for 15, 20 and 30 years.  If the area is good and it’s the best house at the best price, THEY CAN LIVE WITH IT.

The share of space covered by the laundry room – which is present in the vast majority of homes, irrespective of their size – is 3.7% and varies only to a minor extent with the size of the house.  Entry foyers account for 3.4% on the average, kitchens get 11.9% of space in small homes, versus 11.1% in larger ones over 3000 square ft.  The family room accounts for just 11% in all size homes, while the living room accounts for nearly 12% in smaller homes and 7.5 in the large one.  All of this from the National Association of Home Building in the October 1 SPECIAL STUDY at HOUSINGECONOMICS.COM

Single-family price & cost breakdowns for a 20,614 sf lot & 2311 square foot house are:  (a) finished lot cost 21.7%, (b) total construction cost is 59.3%, (c) financing cost 2.1%, (d) overhead & general expenses 5.2%, (e) marketing cost is 1.5%, (f) sales commission 3.3%, (g) profit is 6.8% and total sales price 100%.  These are figures from a 2011 survey by the National Association of Home Builders (NAHB).  Percentages do not change much on the square footage.  MORE TO COME!

You just have to remember to spend time and maybe money with an architect or design person to get the room arrangement you want.  Some folks even measure room sizes and furniture and places the pieces on a drawing of the floor plan.  Storage space is so important.  We sold a medium-size garden home recently in a subdivision that allowed no outside storage bldgs, so the owner built a huge garage with 3 sizable storage rooms to store his belongings and lined the walls with shelves.  Clever way to handle storage!  We all need to spend time cleaning out closets, garages, storage bldgs and getting rid of “stuff” with a garage/estate sale, give to children or others or to your favorite charity.  JUST PLAN AHEAD!

5 to 6 months from permits to completion on spec. houses & as long as 7 months on custom-built homes.  This is a factor you need to weigh in on whether you want to build, as you need a place to live till completion.  Some folks do NOT want to be the owner of 2 homes.  This from the 2012 Survey of Construction (SOC) from the Census Bureau.  Spaces are similar with 2,000 square foot homes to 3,000 sf homes.  Bedroom space accounts for just under 29% of floor space in new homes, irrespective of overall size of the homes.  Bathroom space is allotted 12.3% of total floor area on average with more space allocated larger homes.  All this from the National Association of Home Builders.  Part 2 coming.

(1)  Starting November 2013 Fannie Mae down payment goes form 97% LTV to NOW a minimum down payment of 5%.  This will drive higher credit profiles to FHA, but is still a reasonable down payment.  (2)  Lenders are competing, so call for the best rate if you need to refinance a home that you owe LESS than $625,500.  It is the HARP Refinance Loan.  No out-of-pocket closing costs, close in 30 days or less and more.  Just call YOUR lender.