2023 Home and Design Trends to Watch

Sustainable design and warm, cozy spaces are on the rise in 2023.

By: Barbara Ballinger published on Realtor Magazine

While homeowners compile their holiday wish lists, we’ve compiled a list of 12 home and design trends experts think will be next year’s stars.

Architecture and design experts weigh in on what’s emerging in 2023. As the new year emerges, lifestyle changes due to the pandemic continue to hold strong. Cutting home expenses and conserving resources are top of mind for many. Move over, granite: These new countertop materials are coming in strong, and cozy comfort is taking the place of stark, minimalist design.

Home Office Updates

For many, hybrid work is here to stay, so home offices make the list, though changes are in order. Many crave some interaction, says Priscilla Holloway, a salesperson with New York City–based Douglas Elliman.

Architect Liz Peabody of Boston-based The Architectural Team says that open, partially open and glass-walled spaces are seen in houses as well as multifamily buildings’ common spaces and individual apartment units. Another change is that some offices are larger and have a window for a nice view, according to designers at The Plan Collection(link is external).

Induction Cooking

Though the change will be gradual, many homeowners are expected to switch to induction cooking from natural gas. Many are finding that their cookware is induction-safe, despite previously held beliefs, says Chicago kitchen expert Mick De Giulio of de Giulio Kitchen Design. Induction has many benefits: Water boils faster, food cooks quicker, and homeowners have more control of heat level calibration, he says. Additionally, the smooth surface is easier to clean.

Why now? Many cities are outlawing natural gas hookups in new homes and buildings to reduce fossil fuel emissions and better control environmental and climate challenges.

Eco-friendly Design

More real estate sites list eco-friendly design as a priority, from solar panels to energy-efficient windows, stronger builds that better resist severe weather, more tech features like programmable thermostats, gardening apps(link is external) and smarter, more environmentally friendly, hygienic toilets like Toto USA’s Washlet and bidet toilets. TOTO also manufactures domestically, reducing its products’ carbon footprints, says Bill Strang, president of corporate strategy, e-commerce and customer care. 

Why now? More homeowners know the importance of sustainable design due to climate change reports, how fossil fuels damage the environment and the importance of preserving resources.

Cozier Comfort

Tough times call for an antidote, and many are seeking a dose of comfort within the walls of their homes. The ebb and flow of COVID-19 in conjunction with other stressors has people wanting to feel as though they’re wrapped in a warm hug, says Chicago-based designer Tom Segal of Kaufman Segal Design. He suggests doing so with patterned wallpaper on both walls and ceilings. A tactile touch also works, he says. Think big, upholstered headboards; ’50s and ’60s lounge-style sections to sprawl, watch TV or eat; and colorful tufted or handwoven area rugs that resemble art.

Why now? Collective stress levels are at an all-time high, and people are finding they need a respite from the constant barrage of information available because of the digital age.

More Natural, Personalized Interiors

The biophilic, natural look prevails in appeal because of the benefit nature provides. Homeowners want organic furnishings, live plants and warmer colors in the clay palette, says Gena Kirk, vice president of Design Studio at Los Angeles–based homebuilder KB Home. The latest iteration reflects interest in embracing memories through personalized design aesthetics that display mementos and heirlooms, Kirk says.

Why now? During the pandemic, homeowners opted for cleaner, minimalist interiors to set a clear boundary between personal space and the outside world. They now want to return to a new form of nesting, through an accumulation of textiles, warmer colors, new hardware and fabrics for a welcoming, natural environment to live, work and play, Kirk says.

Dekton and Neolith Surfaces

Every few years, a new countertop surface takes center stage as the best in terms of durability, sustainability, color or novelty. The latest “it” surfaces are newer “sintered” stones, a combination of minerals that form a solid surface that can’t be etched, scratched, burned or stained. Dekton and Neolith appeal because they resemble marble and other high-end surfaces and are resistant to fading, says Boston designer Jodi Swartz of KitchenVisions. Milwaukee designer Suzan Wemlinger adds that because the slabs are large, there’s less need for seams, and they can be used in outdoor kitchens without cracking in extreme temperatures.

Why now? New technology processes have led to the development of these stain-resistant, strong surfaces, and kitchen counter durability is nearly always top of mind for homeowners.

Affordable Design Choices

Instead of tempting buyers with fancy cabinets, finishes and appliances, more homebuilders are turning to affordability as a feature. “Good design is not about spending the most money but offering well-designed homes, sometimes without bells and whistles,” says Mary Cook, founder of Mary Cook Associates, a Chicago-based commercial interior design firm. Builders are displaying predesigned packages of cabinets, countertops, appliances and flooring that keep costs down. They’re also cutting square footage to show that buyers can live well in smaller homes, Cook says.

Why now? Higher interest rates have put a pause on buyer frenzy. “We went from crazy busy to crazy slow,” one homebuilder says. Now is the time to see how affordability and quality design come together.

Zero Emissions

Master-planned developments are taking the guesswork out of emission-free living. Developer Marshall Gobuty of Sarasota, Fla.–based Pearl Homes shows how with his 18-acre Hunter’s Point development, the first LEED Zero–certified community in the world, he says. “There’s no energy cost associated with the 86 single-family houses except for a $35 monthly maintenance fee from Florida Power,” he says.

Why now? With the pandemic and overall inflation, energy costs continue to soar. Also, sustainable development helps communities adapt to challenges posed by climate change and protects natural resources.

In Multifamily: More EV, Fewer Additional Amenities

Few multifamily buildings are constructed without an EV charging station, says architect Peabody. Developers are including a handful and leaving infrastructure available to expand the number. At the same time, they are devoting less square footage to amenities since younger generations are less inclined to pay for features they may not use, especially after seeing how the pandemic shut down facilities. What most still want are lounges, coworking spaces and outdoor areas to exercise and unwind, Peabody says. Pet parks and spas still make the list as well, says Cook.

Why now? EV stations are essential as more people switch to electric vehicles. Just over half of passenger cars sold in the U.S. will be electric vehicles by 2030, according to Bloomberg(link is external).

Walkable, Affordable Boomer Living

More efforts are underway to create more options for the enormous boomer cohort as they age(link is external). Many want to give up owning a car, live where their location has a high walkability score and cut living costs by living in smaller, energy-efficient homes. One example is developer David Fox’s Passive House building in Northampton, Mass., to be completed in 2024; it will eliminate 80% of typical energy needs to heat and cool and be built with sustainable mass timber construction, solar panels, a community garden and a bicycle shed. The building’s 70 apartments will average 1,200 square feet; share a gym, lounge and roof area to exercise; and limit rent increases.

Why now? Boomers are the largest aging community to date, and as the country ages, more emphasis on how elders live is needed now.

Fire-Resistant Modules

On the east coast, building structures to withstand Category 5 hurricanes and floods are in high demand. On the west coast, however, San Diego–based modular builder Dvele focuses on manufacturing fire-resistant steel modular houses. The company started with 500-square-foot homes constructed from a single module design and now offers 4,000-square-foot homes from seven module designs. All are also highly energy-efficient due to self-powered solar panels, says Kellan Hannah, the company’s director of growth.

Why now? The National Interagency Fire Center statistics show that as of last October, almost 60,000 fires burned 7 million acres, above the 10-year average of 48,000 fires and close to 6 million burned acres. Fires are only worsening, meaning construction must adapt.

What’s NOT Hot?    

Several once-popular design choices are losing appeal, primarily because they require high maintenance or aren’t functional for today’s busy routines, says Gena Kirk with homebuilder, KB Home. She suggests letting go of these four in the year ahead.

High Pile Carpet 

While soft, shaggy carpet styles make a statement, they are difficult to keep clean and aren’t practical, especially in households with kids and/or pets. 

Gray Cabinets 

Gray cabinets have been popular but are cooling off as more homeowners shift to warmer hues to make their spaces more welcoming. 

Standard Subway Tiles 

Standard-size white, horizontal subway tiles are still popular, but many now prefer larger 4-by-10 inch or 4-by-16-inch tiles that run vertically to draw eyes up and give an age-old design a fresh look.

Open Shelves 

Most struggle with clutter, so even though some love the open look above, others are opting for the traditional closed cabinets since they find it easier to keep stuff concealed. These days there are countless custom interior organization systems to arrange contents in a neat fashion.

Posted on January 9, 2023 .

Using Gift Money for Your Down Payment

originally published by the Mortgage Gurus on 11.15.2022

Gift-giving season is upon us — and did you know that you can potentially use gift money to help cover your down payment? 

You most certainly can. However, there are some limitations and a few bases you’ll need to cover so your gift money is properly accounted for. Here are a few things to know: 

Amount

There’s no maximum dollar amount of gift money that can go toward your down payment. But there might be a minimum borrower contribution depending on your loan, so we’ll double-check whether this applies to you.

Source

You’ll need to provide proof of where your gift money came from. If possible, ask the donor to gift it in a manner that has a paper trail, e.g., a bank transfer or check.

If you receive a check, it’s best to deposit it in person so you can obtain a receipt. Make sure your gift money is deposited into the account you’ll be using for your mortgage.

Who

There are certain rules for who can give you money toward your down payment, but they differ depending on your loan type. 

Typically, any immediate family member, spouse or fiance is acceptable. Reach out if you’re unsure who can contribute gift money toward your loan.

Letter

A gift letter provides more information on the donor as well as written confirmation that they do not intend for you to pay the money back. Your letter should include key information such as: 

  • Their name(s), address and contact information.

  • Their relationship to you.

  • Exact dollar amount.

  • The date it was gifted or transferred.

Signed confirmation that the money given does not need to be repaid.

*For more information, please contact your lender/ bank!*

Posted on November 15, 2022 .

Is a Rent-to-Own Agreement Right for You?

First posted on Old Republic Title

Are you ready to purchase a home but your lack of a down payment and low credit score are getting in the way? Do you want to sell a rental property but you’re having difficulty doing so? A rent-to-own agreement may be an option worth exploring. Let’s take a look at how rent-to-own agreements work and the pros and cons associated with them.

How Rent-to-Own Agreements Work

A rent-to-own agreement allows prospective homebuyers to rent a property for a period of time (commonly two to five years) before purchasing it. There are generally two types of rent-to-own agreements: lease-purchase and lease-option.

A lease-purchase agreement consists of two separate contracts: (1) a residential lease agreement that identifies the rental term, monthly rent payment, and the responsibilities of the tenant/buyer and landlord/seller during the leasing period; and (2) a purchase contract that sets forth the agreed-upon purchase price and other applicable terms that will go into effect after the expiration of the lease. Rent payments for lease-purchase agreements are often set higher than the fair-market-value so a portion of it can be applied towards a down payment.

A lease-option agreement operates similar to the lease-purchase agreement in that it consists of two agreements and enables the tenant to purchase the property. However, the tenant does not sign a purchase contract but instead enters into an option agreement, which acknowledges that the tenant/buyer has the right to purchase the property but is not obligated to do so. A non-refundable option fee is often required to secure the option to purchase the property. The option fee typically runs between one percent and five percent of the purchase price.

Both agreements can include what is referred to as a cross-default provision, which assures that the breach of one agreement results in the automatic breach of the other. For instance, if the tenant/buyer stops making monthly payments, the lack of payment would be a breach of the lease agreement and would automatically breach the purchase contract as well.

Pros and Cons of a Rent-to-Own Agreement

Rent-to-own agreements have advantages and disadvantages for both the buyer and the seller. Let’s take a look at some top pros and cons:

PROS

Tenant/Buyer

Provides a homeownership trial run. Tenants can use a lease-option agreement to determine if they like the house and the neighborhood before purchasing it. This is particularly beneficial for individuals who want to explore a new location.

Opportunity to repair credit scores. In order to qualify for a conventional mortgage loan, most lenders require a credit score of 620 or higher. If a low credit score is getting in the way, a rent-to-own agreement can help tenants move towards homeownership while also taking steps to secure a viable credit score.

More time to secure a down payment. According to research conducted by the National Association of REALTORS®, since 2018, the typical down payment for first-time homebuyers has ranged between six to seven percent of the purchase price. Instead of having to come up with a lump-sum payment, a portion of the rent payment can be allocated towards the down payment.

Ability to build equity. If the market value of the property increases above the agreed-upon purchase price, the tenant/buyer automatically begins to build equity.

Avoid moving at the end of the rental term. If the tenant decides to purchase the home, there is no additional hassle or costs of moving.

Landlord/Seller

Additional way to attract buyers. Offering a rent-to-own agreement is a way for sellers to attract a wider range of buyers, particularly those who are ready to own a home, but need more time to secure financing.

Steady revenue and other financial incentives. A reliable long-term tenant secures a steady flow of income. Also, if the tenant defaults on the monthly payment or breaches the terms of the agreement, the landlord/seller may be able to keep the down payment and any other non-refundable fees and costs.

CONS

Tenant/Buyer

Non-refundable upfront fee. Depending on the terms of the agreement, an upfront non-refundable option fee may be required to secure the option to purchase the home at the end of the rental term.

Responsible for maintenance and repairs. The landlord/seller may include a term in the agreement that states the tenant is responsible for any maintenance and repairs to the house during the rental term, even though the title to the property still remains with the landlord/seller.

Lost down payment and any other non-refundable fees. At the end of the rental term, if the tenant decides not to purchase the house or is unable to secure financing, the seller may be able to keep the down payment and any other funds remitted by the tenant. The same may also be true if the tenant defaults on monthly payments at any time during the rental period.

Vulnerable to scams. There is the risk that the transaction is a rent-to-own scam, which exploits the tenant/buyer. These include situations in which the seller does not actually own the property, the property is delinquent in mortgage or property tax payments, or the house requires a laundry list of repairs that are not disclosed to the tenant/buyer.

Landlord/Seller

Tenant/buyer can default on payments. If the tenant/buyer defaults on monthly payments, not only is there a breach of the rent-to-own contract, but the landlord/seller may also be forced to perform an eviction. Eviction proceedings involving a rent-to-own contract can be complex and must adhere to state laws.

Tenants do not always end up purchasing the home. With a lease-option agreement, there is no guarantee that the tenant will purchase the home at the end of the lease period.

Unrealized appreciation. If the agreement included a locked-in purchase price, the seller will be obligated to sell the house at that price, even if the market value appreciates.

Making the Choice

Rent-to-own agreements allow individuals to rent their future home until they’re financially ready to purchase it. Potential homebuyers and sellers should do their due diligence when reviewing the terms and conditions of a rent-to-own agreement, assessing the condition of the home and considering the pros and cons before signing the dotted line. Seeking the assistance of a real estate professional or attorney who specializes in rent-to-own homes or utilizing a rent-to-own program can help those considering this option navigate the process and put both parties at ease. For more helpful resources on the home buying and closing process, visit Old Republic Title.

 

This material is for educational purposes only and does not constitute legal advice. Old Republic Title strongly recommends that consumers obtain guidance and advice from qualified professionals, including attorneys specializing in real property law, probate law, or tax law to get more detailed and current information as to their particular situation.

Posted on November 1, 2022 .

Housing inventory uptick expected within 6 months

originally posted on https://www.housingwire.com/articles/home-inventory-uptick-expected-within-6-months/

April 6, 2022, 2:57 pm By Kate Douglas

Nearly 65% of homeowners planning to sell this year expect to list by the end of summer, which should provide a much-needed influx of inventory that should slow the explosive home price growth seen during the pandemic, according to a Realtor.com survey of prospective sellers.

Realtor.com Wednesday released the results of the online survey of 3,000 consumers conducted in February by HarrisX. More than six in 10 prospective 2022 sellers said they intend to put their homes on the market within the next six months, suggesting some upcoming relief to one of the worst housing shortages in history, it found.

“While sellers are expected to hold the upper hand in 2022, navigating the listing process remains a challenge – particularly for those also buying in today’s fast-paced market,” said George Ratiu, Senior Economist & Manager of Economic Research at Realtor.com. “Homeowners who are ready to move forward with pandemic-delayed plans will find plenty of opportunity this spring and summer. Although accelerating inflation is leading to higher housing costs and living expenses, many buyers remain interested in finding a home. At the same time, recent housing trends suggest demand is beginning to moderate as higher mortgage rates push monthly payments out of some buyers’ budgets, underscoring the long-term need for more affordable inventory.” 

Whether the nearly two-thirds of potential sellers follow through with their plans to list in spring or summer will prove integral to buyers hoping to make a purchase before interest rates inch up even higher, according to the news release from Realtor.com.

“In a positive sign that homeowners are serious about listing, many sellers are already getting their home ready. However, they’re doing so with great expectations of the current market, which means buyers should prepare for sellers asking for high offer prices, quick closes, waived contingencies and more,” it said.

Posted on April 18, 2022 .