The last few years I have observed a number of trends that I can only attribute to what is known as the HGTV Effect.  The power of television is certainly changing the way people see real estate. HGTV has influenced viewers in ways that printed media never could. The results are clear in a number of ways.

First, it is cool to be a landlord again.  If you doubt it, check out Craig’s List.  I cannot remember a time when so many individuals were managing their own properties.  This is also evidenced by the burgeoning short-term rental market, which is very much dominated by an entirely new variety of landlord.

The second result of the HGTV Effect is apparent in what I refer to as the dumpster craze.  In my neighborhood, we currently have at least four homes with roll-off dumpsters in front of them . . . and a couple of storage Pods. In the not too distant past, most homeowners thought of remodeling as painting their stained cabinets white and installing wood or tile floors.  I now refer to that as a phase one update.  Now that HGTV has shown Americans how fun and profitable remodeling can be, at least on “reality” TV, everyone seems to want in the game.

This recent, overwhelming urge to remodel and update has been a boon to small builders.  When I was building in the early seventies to the early 90s, most homebuilders avoided remodeling, instead preferring to stick to new construction.  Now small builders have a very difficult time competing for lots with the big national firms and they have warmed up to the large, more profitable complete make-overs.

The third way that the HGTV Effect is evident is obvious when marketing dated homes.  We now see that homes either need to be old enough that they are prized for their well-preserved condition, or they need to be largely updated and well maintained.  Houses which still look as they did when built in the 80s are being heavily discounted by buyers – if considered at all.  Many buyers are looking for solid, but dated homes to remodel, but they will only consider those houses at a heavily discounted price.  The question then becomes, do homeowners need to launch into a major remodel before marketing their home, or do they just discount it for the work that needs to be done?  That is the biggest question listing agents deal with every day.  The short answer is that it depends on the area, and of course the skills of the owners. Remodeling is extremely expensive and an owner has to be into the property at low price in order to come out with a profit.

Jeff Stewart, CCIM, SRES

Stanberry & Associates, REALTORS

jstewart@stanberry.com

     The age old saying is that a rising tide floats all boats, but does the same hold true for lakes?  Now that Lake Travis is above its seasonal average level for this time of year, one would wonder of waterfront prices might rebound?

After a number of drought years, waterfront sales on Lake Travis had stalled out.  Sales were very far and few between.  In fact, for the first time in my memory, we had a few waterfront foreclosures.  No doubt about it, Lake Travis waterfront homes have had rough run.  First, the flood plain elevation was raised six feet, catching hundreds of homes.  Then came the drought . . . Lake Travis was down to almost 30% of Conservation Capacity (681′).  The combination of little to no water to float a dock and the added need of expensive flood insurance had a chilling effect on sales.

Now the lake is relatively full again thanks to record May rainfall and things are back to normal . . . right?  Well, maybe.  The lake looks like it is back to normal, but buyers seem to still be very hesitant.  On July 3rd, I listed a waterfront home with a dock on Lake Travis.  So far it is getting almost no attention.  All I can think is that buyers are skeptical that the water is truly back. Who can blame them?  No one knows what the future holds.  In a time where water shortages have been in the news for several years, how is one to reconcile the heightened concerns about water demands with the momentarily full lake?  I do not have an answer.

Almost twenty years ago, the former head of the LCRA once told me that he believed that increased water use would result in a lower Lake Travis.  His comment was, “In ten years, the lake will probably be about an average of ten feet lower and in twenty years, it will probably be an average of twenty feet lower.”  I have repeated that to other LCRA employees and they always refute that statement and tell me that I misunderstood.  If I did, I misunderstood it twice since I heard him say it on two different occasions.  Was that a formal LCRA projection?  No.  It was simply an educated guess, by an expert that recognized the growing demands on the resource.

Having had a home on the lake for almost 35 years now and having served ten years on LCRA panels and committees, I have arrived at a few thoughts of my own.  I think the prediction that the lake will be a lower average level makes sense.  The demands are growing.  We will continue to experience the occasional “rain bomb” and random flood events.  These events will serve to fill up the lakes in the future just as they have in the past.  The difference, I believe, will be the increased speed at which the water is drawn down.  Of course, all of this is subject to politics.  All of us who own farms and ranches are convinced that at some point, the cities will have the votes to take away the water from agricultural users.  Therefore if the cities eventually  have the clout to stop releases to the rice farmers, then perhaps the lake will remain at high levels.  Until that happens, expect more uncertainty.

Jeff Stewart, CCIM,SRES

Broker Associate

Stanberry & Associates, REALTORS

jstewart@stanberry.com

The past several months I have been helping a number of clients clean up an assortment of complicated issues so they can sell their properties.  Expired or open building permits, unpermitted add-ons, encroachments in public utility easements or a neighor’s property, improvements in flood plains, and ever-changing codes and ordinances are just a sampling of the issues my clients have encountered lately.  None of these issues are new, but the repercussions are so much greater now.  What is the reason for that?   It seems to be increased technology and a litigious environment.  With computers and Internet capability, it is now possible to access  deed records, maps, permit histories, plats, tax records, aerial photos-current and historical-and so much more. If it can be easily accessed, then loan and title company underwriters seem to want a copy in the file. We are in information overload, but that is just the way our business is these days.  Many seemingly insignificant situations now have grown into full-blown show-stoppers.

For instance, I have listed a waterfront home that had no legal right to have a dock for the last sixty years-but it did.  No one was the wiser until recent  tax plats were overlaid on aerial photos.  We got it straightened out by purchasing a portion of the land under the dock, but it cost time and money that the seller did not have in his budget.

Time may take care of some things, but often real estate problems get more complicated to cure as the years slide by.  Documents are lost, key individuals die or cannot be found, or the solution just grows more excpense as time marches on.

One of the most recent hassles I have seen affect numerous Austin homeowners is the problem of open or expired permits.  This is very common.  It would appear in most cases that the contractor (AC, plumbing, pool, etc.) has taken out a permit.  Unfortunately in many cases, it woud appear that the contractor took final payment and left without calling for the final inspection.  This can lead to a real problem when the next building contractor tries to secure a permit only to be denied because of the expired one which may have been many years before.

Wnat to check your property’s permit history? Go to austintexas.gov and find “permits” under the development tab.

Jeff Stewart, CCIM, SRES

Broker Associate

Stanberry & Associates, Realtors

jstewart@stanberry.com

In my last letter, I explained how the cost of FEMA flood insurance is steadily climbing as the federal government moves toward the goal of no longer subsidizing flood policies. After the poorly thought-out Biggert-Watters Act raised FEMA insurance to the point that many homeowners absolutely could not afford it, the National Association of REALTORS helped negotiate the subsequent Homeowner Flood Insurance Affordability Act of 2014.  The newer legislation once again made the federal flood insurance obtainable, but still with the stated goal of moving the FEMA insurance toward being self-supporting without government subsidies.

Virtually every lender requires homeowners to have flood insurance if their house is in the 100-year flood plain. A 100-year flood plain is an area that has been determined by engineers to have a 1% annual chance of flooding.  Not only do I urge my clients to not purchase anything in the 100-year flood plain, but I am very concerned about the area adjoining it as well. It is important to stress that properties just barely out of the flood plain may not be required to have insurance by the lenders right now, but flood plains almost never go down.  Instead, they usually go up as surrounding property is developed.  Besides, is the “103-year flood plain” really that much safer than the 100-year flood plain?  The reassurance of being slightly above the 100-year zone is a misleading one.

The old FEMA maps were not very detailed, and it was difficult to determine exactly what was where.  The MLS now has flood maps superimposed over good aerial photos, and it is easy to see what is in and what is out of the different zones. Many Central Texas areas have been remapped in recent years, and some have changed dramatically. This is not a situation one can afford to ignore. If you have concerns that your property is in or near a flood zone, call me and I can check the maps and e-mail copies to you.

Jeff Stewart, CCIM

Broker Associate

Stanberry & Associates, REALTORS

jstewart@stanberry.com

Anyone who has insurance or may eventually need insurance needs to understand how their actions might be reflected in a C.L.U.E. ® report.  Comprehensive Loss Underwriting Exchange or C.L.U.E. ® as it is usually known is one of several entities designed to help insurance companies evaluate their risk when offering insurance. This risk factor is a significant factor in pricing most auto and home policies.  While other exchanges exist, C.L.U.E. ®, which is owned by LexisNexis, is the best known. For this article I will just refer to C.L.U.E. ® but know that the following information is likely the same for all.

C.L.U.E. ® is an established nationwide data base that keeps a historical record of claims and losses.  The records are maintained on individuals and properties.  When pricing new insurance for a homebuyer, the insurance carrier considers both the individual’s history and the claims history of the property.

Common questions:

• Do you get dinged for calling and asking a question, or is that up to the individual agent? The short answer is that you may well end up with a claim report. Companies may report you for losses, even if no claim was paid.    It is important to distinguish the difference between an inquiry and a claim. An inquiry would be a call to the company representative to discuss the extent of coverage.  If the insure discloses a loss during the conversation, the company representative may submit the information to C.L.U.E. ®  as a loss.  It is probably advisable to call the insurance agent and NOT the claims department – especially when making any inquiry as to coverage.  ***Make certain the agent understands that it is an inquiry only!***

• Do some companies report your calls more than others? The people at C.L.U.E. probably could answer that, but otherwise it is difficult to say. No doubt, some are probably more lax than others when reporting inquiries. 

• What types of losses are recorded in C.L.U.E. ® reports? L.U.E. ® maintains two sets of data – one for auto losses and one for residential property. 

• Are there different degrees of CLUE dings? Claims for water damage not as a result of a natural catastrophe and fire claims usually have limits to be acceptable risks for insurance companies. 

• Do C.L.U.E. ® reports only relate to addresses, or also to individuals? As stated above, C.L.U.E. ® maintains records on both and the combination of the two histories is used in determining the risk of a particular property. 

• Can an insured correct incorrect information on the C.L.U.E. ® report? The insured can contact LexisNexis directly to report the problem or to submit a personal statement to be included in the report. 

• How long does a claim reside on the C.L.U.E. ® report? Up to seven years. 

• Can I get a copy of my C.L.U.E. ® report? Under the Fair Credit Reporting Act, you can request a copy from LexisNexis toll free – 866-312-8076. 

• Who has access to my CLUE report? Your C.L.U.E. ® report falls under very similar law as your credit report. When you apply for insurance, you give the insurance company permission to access the information they think necessary for the underwriting process.