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American-Statesman – May 3rd, 2013

Young couples are still choosing to purchase instead of rent

Most in US want to continue to own or plan on buying a house

PRINCETON, NJ — Americans’ dream of owning a home is alive and well, evidenced by the fact that most Americans own a home and plan to continue to do so (56%), or don’t own a home but plan on buying one in the next 10 years (25%). Eleven percent of Americans don’t own a home and have no plans to buy one, and 3% own a home but plan on selling it and renting in the next 10 years.

Overall, 62% of Americans say they own their primary residence, with 34% renting and the remainder having other arrangements. Both homeowners and non-homeowners were asked questions about their future plans. The results give little indication of a desire on the part of current American homeowners to sell their home and begin renting, and an apparently strong desire on the part of U.S. non-homeowners to buy a home in the future.

These data are based on Gallup’s annual Economy and Personal Finance survey, conducted April 4-14, involving interviews with more than 2,000 Americans and 1,400 homeowners. Gallup earlier this week reported results from this same survey on Americans’ perceptions of home values and the key factors they considered in deciding to own a home or to rent. The complete results of the questions on which this analysis is based are included on page 2.

Overall, while 62% of the American population currently owns a home, a considerably larger 81% own a home and express a desire to continue to do so, or don’t own a home but express a desire to buy one within the next 10 years. These results certainly suggest that the “American Dream” of owning a home is still very much alive, and that the real estate industry should expect a continuing demand for homeownership in the years ahead.

A number of additional factors could affect the future trajectory of homeownership in the U.S. There will be a continuing stream of young people entering the 18 and older segment of the population going forward, and it is possible that they will have a different attitude toward homeownership than those who came before them. Also, changes in the economy and culture could lead to changes in the way Americans look at their housing, particularly among the huge baby boom generation now entering its senior years.

Younger Americans Highly Likely to Say They Plan on Buying a House
Nearly 7 in 10 Americans aged 18 to 29 currently do not own a home, but plan on buying one within the next 10 years. Coupling this with the 21% of younger Americans who say they already are homeowners leaves few adults under 30 who say they don’t own a home and have no plans on buying one.

The majority of those aged 30 to 49 own their home, and most of the rest say they plan on buying a home in the future. Few (9%) in this age group say they have no plans to buy in the foreseeable future.

The 71% of those aged 50 to 64 who own a home and plan on continuing to own a home in the future is the largest across age groups. Most in this group who want to buy a house apparently have already done so; few (5%) say they don’t own a home but are going to buy one. A larger 15% don’t own and don’t plan on changing that status, while 3% say they will move from homeowner to renter status in the future.

Although it might be expected that a significant number of those 65 and older who currently own a home might plan on selling it in the future and move to renting status, that doesn’t appear to be the case. In fact, seven in 10 Americans aged 65 and older own a home and say they will continue to own for the foreseeable future. Although the 7% who plan on selling and becoming renters is the highest of any age group, it’s still low on a relative basis.

Homeownership Highly Related to Income

Income is a major predictor of homeownership. Three-quarters of those making at least $75,000 a year own their home and plan on continuing to own, while another 15% say they will buy a home within the next 10 years.

Still, it is apparent that the hope of being able to buy a house is relatively strong even in the minds of those with below-average incomes, given that between 35% and 40% of Americans making less than $50,000 a year say that while they currently don’t own a home, they plan on buying one in the future. About a third of those making less than $20,000 a year say they don’t own and have no plans to.

Bottom Line

Gallup data on homeownership provide strong support for the idea that the American Dream of owning a home continues to be alive and well. The majority of Americans who own a home plan on continuing to do so in the future, and most of those who don’t own a home plan on buying one.

These results align with the finding that the primary reasons why Americans don’t own a home are financial, and not a more practical decision that renting is the better way to go.

Gallup has not asked about future homeownership before, so it is unclear whether these attitudes have shifted over the decades — and particularly whether they are different now than they were before the recent housing crisis. Gallup’s long-term trend on owning a home — 62% of Americans do — is currently the lowest it has been since the question was first asked in 2001. Thus, some of the desire to buy a home may reflect the fact that a segment of Americans has been shut out of the market due to the mortgage and economic crisis.

Survey Methods
Results for this Gallup poll are based on telephone interviews conducted April 4-14, 2013, with a random sample of 2,017 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.

For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ±3 percentage points.

For results based on the total sample of 1,426 homeowners, one can say with 95% confidence that the margin of sampling error is ±3 percentage points.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample of national adults includes a minimum quota of 50% cellphone respondents and 50% landline respondents, with additional minimum quotas by region. Landline telephone numbers are chosen at random among listed telephone numbers. Cellphone numbers are selected using random digit dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted to correct for unequal selection probability, nonresponse, and double coverage of landline and cell users in the two sampling frames. They are also weighted to match the national demographics of gender, age, race, Hispanic ethnicity, education, region, population density, and phone status (cellphone only/landline only/both, cellphone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2012 Current Population Survey figures for the aged 18 and older U.S. population. Phone status targets are based on the July-December 2011 National Health Interview Survey. Population density targets are based on the 2010 census. All reported margins of sampling error include the computed design effects for weighting.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

Remodel your home

Planning to tackle some home remodeling projects? Before you get out your tool belt, you may want to do some prep work.

Why? Because doing your pre-project homework will help you avoid any slip-ups down the line, says Aaron Gordon, a licensed contractor in San Francisco, Calif., and owner of Aaron Gordon Construction, Inc.

“Rushing a remodeling project before you have thought through all the details is one of the biggest renovation mistakes you can make as a homeowner,” Gordon says. What kind of mistakes are we talking about? Anything from higher costs to project delays, notes Gordon.

Worried you could be a little underprepared for your big remodeling project? Keep reading to learn how to avoid these six remodeling mistakes, so your home improvement project can run smoothly.

Mistake #1: Not Getting a Permit

Sure, “going rogue” and building without a permit may save you money up front, but most likely it will end up turning into a big mistake down the line.

“If you don’t build to code, you’ll end up stuck with fees and fines (numbers vary, depending on the city, but could be hundreds more than the cost of the permit), and you’ll most likely have to redo it if you’re found out by a city home inspector,” says Gordon.

Not only that, but if you add on another room to your house and don’t get a permit, it can’t be factored-in as part of your home’s square footage, adds Gordon. For example, if the additional bedroom is 1000 feet, that’s 1000 feet that the appraiser may not include in the total square footage, which means you’ll be losing money on your home’s total value when you try to sell.

The bottom line is you should absolutely talk to your city’s Buildings Office or your contractor about any permits you may need before starting a project.

Mistake #2: Buying Cheap Cabinets

We’ve all heard the phrase “It’s too good to be true.” Well, it couldn’t be more applicable to getting a great “deal” on kitchen cabinets.

“Customers have a tendency to buy cheaper cabinets, which can make it harder for the contractor to install,” says Gordon. Cheap cabinets can be flimsy and difficult to secure in place.

And poor quality cabinets can also be a time-drain, says Gordon says. Buying lower-end products means you’ll be spending more time at the hardware store returning them, trying different ones, taking them back again – you get the idea.

Want to avoid the headache? Talk to your contractor about cabinet selection before you go on a “deal hunt” – or just let your contractor do the shopping for you.

Mistake #3: Not Hiring a Contractor for Big Jobs

Re-doing your kitchen? Overhauling your bathroom? Exciting times! But if you don’t hire a general contractor for big projects like these, your life could become a coordination nightmare.

“Unless you have a background managing subcontractors, a lot could go wrong,” says Gordon. Subcontractors are the people hired by the general contractor to perform a certain job, be it plumbing, cabinet instillation, or tile work. The general contractor is the one that runs the show – and for good reason.

Why is it so important to have a general contractor? First, the subcontractors often don’t talk with each other, so without a general contractor, there’s going to be a major lack of communication, and the project won’t run smoothly, says Gordon. For example, the kitchen plumbing needs to be fixed before the new backsplash is put in. But if they don’t know that (and neither do you), the tile worker may show up to do the job before the plumber.

Additionally, there’s no way of determining a fair price for a subcontractor, unless you have a contractor that has your back. Without one, you could end up paying way too much for the job.

Mistake #4: Measuring Inaccurately

Measuring a square room? Not too difficult. But if you’re measuring a whole kitchen, from the cabinets to the backsplash, there’s a lot of room for error.

If you’re an inch off measuring your refrigerator space, and then you buy the wrong refrigerator size, you’ll delay the entire kitchen project waiting for returns and deliveries. But a contractor knows better, says Gordon: “As a contractor, you try to be there before a customer makes those measuring mistakes.”

Even measuring something as seemingly simple as a window frame can be quite difficult due to the ridges and edges. But if you want to give it a shot anyway, many websites offer thorough how-to-measuring instructions. Another option to help avoid this mistake? Consult the pros.

Mistake #5: Hiring the Wrong Contractor

In 2011, the Better Business Bureau (BBB), an organization that works to create an ethical marketplace, received over 6,000 complaints against general contractors, an 11 percent increase from the previous year, according to the article “Hiring a Home Contractor – Do you Know the Red Flags?” To make sure you don’t become another statistic, it’s important to do a little research first.

It’s also important to make sure the contractor is licensed, says Gordon. The BBB advises homeowners to not only get the name of the insurance carrier but also confirm with the carrier that the contractor has coverage.

But your research certainly should not stop there. Gordon advises reading reviews about potential contractors online and then asking contractors for references. When you speak with references, ask if you can see the finished project or have the contractor take you there, so you can decide if you like the work.

And if you like what you see? Well, it’s time to relax because you’ve likely found a contractor who can take all of the guesswork out of your home remodel.

Install custom windows

There is more to replacing windows than choosing the glass and the frame. Existing openings may need to be changed to accommodate new windows. Energy efficiency upgrades or stricter building codes may dictate which models you can choose from. Additional expenses required for carpentry may also determine whether you go with custom or standard window sizing. Either way, it’s best to review the options and compare the final costs before making the decision to go with custom windows.

Deciding to Go Custom

When deciding to replace your windows, you must first determine whether you really need custom windows. If the openings are an irregular size, compare how much it will cost to make the hole bigger or smaller to accommodate a stock window. This is a better option if you’re putting in a smaller window, but since it will still require patching, filling, and trimming or the services of a contractor, this option may cancel out any savings from buying off the shelf. If you’re making the opening larger, you might have expensive adjustments to the load-bearing parts of the wall. In all, it’s best to have a professional review the situation and give you an estimate so that you can really compare numbers.

Nonstandard sizing is not the only reason to go custom. Replacing existing windows that don’t complement the design of your house is easier with custom windows that allow you to buy whatever style or shape you want. Upgrading to energy-efficient models is another great reason to opt for custom windows, especially if you are replacing a treasured signature window like a bow, bay, or oriel. Custom ordering allows you to determine the features and measurements you need.

Before you place your order be sure to check out different manufacturers. A size, option, or shape that is non-standard at one company may be standard at another, says Jeffrey Lowinski, vice president for technology marketing at the Window & Door Manufacturers Association. A third company may have a standard size you can use with minor modifications. “Shopping around to find a standard size that fits your opening may save you some money,” Lowinski says. You may also want to see if using several standard windows, instead of a large custom one, works in your space.

When ordering custom windows, make sure you have them made with the energy-efficiency and performance options best suited for your climate and region. Custom windows are generally available in the same materials as standard windows—vinyl, wood, aluminum, fiberglass or composite—and with the same options, including coatings, gases, impact resistance and light-transmittance values. Also, ask about the warranty: Most companies provide the same warranty on their custom windows as on their standard ones. The custom windows should also maintain the same performance ratings assigned by industry groups as the standard products.

Replacement Windows or New Windows

Once you’ve decided to go custom, you have several options. If the existing frame is in good condition, you may not have to replace the whole window; that can save you money and let you keep the same interior and exterior trims and appearance. You might be able to just order custom panes, unless they’re glued into the frame or you want to upgrade to a thicker glass. The next cheapest option is to order a custom sash—the removable glazing and support—if it’s compatible with the old frame. You can also order a custom replacement window, which is a new unit held together with a thin frame that’s inserted into the existing frame. The most expensive option is replacing the entire unit with a new window, including the frame, sash, and trims.

Cost

There’s a good chance your custom windows will cost more and take longer to order than standard ones. “Generally you will pay a premium for a custom-sized product,” says John Lewis, technical director of the 400-member American Architectural Manufacturers Association. Still, it depends on the manufacturer and the flexibility of its equipment. Many companies do “just-in-time production,” which means they don’t make anything until they have a specific order. At these factories there may be little cost difference between standard and custom windows, and the price per unit will be the same whether they make one window or 50. However, at a company that has to set up the equipment to make a specific window, you might be able to negotiate a cheaper per-unit price by ordering a greater number. If that’s the case and you plan to replace more of the same windows in the future, it might be cheaper to order them all at once.

Measuring and Installing

Unless you really know what you’re doing, it’s best to let an expert do the measuring before ordering your custom windows. “That’s a fatal error right there if you mis-measure the openings,” Lewis says. And once they’re made, you want to make sure they’re installed right. You can have the best, most expensive custom windows, but you will have wasted your money if they leak air or water, so make sure to have them professionally measured and installed.

The reality of remodeling is that there are many unexpected costs you may never see coming.

“We usually recommend people add 10 to 20 percent onto the budget, because there are always unforeseen things,” says Jeff Gorszczyk, certified remodeling project manager with Cook Remodeling & Custom Construction in Mesa, Ariz.

In fact, a survey on the “Top Five Remodeling Headaches” from Consumer Reports supports Gorszczyk’s projection: Half of the respondents faced unexpected remodeling issues that cost hundreds to thousands of dollars, according to senior editor Daniel DiClerico.

But hiring a qualified contractor – and heeding their advice regarding budgeting and potential problems – will go a long way toward preparing yourself financially and emotionally for these unexpected budget-crushers.

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“A good contractor can’t see through walls,” DiClerico says, but will know what to check for to help ensure there are no surprises down the line. “They will do the necessary poking-around to find out what’s going on behind the walls before asking you to sign a contract,” he says.

Want to see what’s behind the curtain of your home remodel? Here are few of the most common-yet-unexpected expenses people run into on remodeling projects, and how to plan for them.

Unexpected Expense #1: Pest Control

If only these walls could talk! Many unexpected remodeling costs come from issues that are concealed behind a home’s walls and floors. In fact, insects and other pests that are drawn to the food and moisture found in kitchens and bathrooms may remain hidden behind walls, says Consumer Reports in an article titled “‘If only I had known that before…’ and other remodeling headaches.”

That was the situation that blogger and retro-décor enthusiast Pam Kueber encountered during a renovation of her home office. Kueber, who blogs at RetroRenovation.com, uncovered a nest of carpenter ants within the walls, resulting in a $350 charge from the exterminator.

The good news is that some insects, like termites, do leave tell-tale trails that a good contractor should spot, DiClerico says. And even if your state doesn’t require a pre-remodeling inspection, it might be smart to get one so that you know what costs you could incur.

Unexpected Expense #2: Rotten Flooring

While unseen, slow-but-steady leaks from a toilet or shower can cause serious damage. Water can eventually rot the wood that supports everything in a room – creating not only a dangerous situation but a very unexpected remodeling expense.

This is what contractor Jim Casey, of Jim Casey Construction in Athens, Ga., experienced during a bathroom remodel. A previously undiscovered shower leak had rotted the floor joists underneath the shower. To provide the proper support, the entire floor and sub-floor had to be replaced – adding a significant amount to the cost of the project.

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Moral of the story? If you’re remodeling a kitchen or bathroom, be sure to consider this scenario, as the damage can be widespread and costly, DiClerico says.

Unexpected Expense #3: Outdated Wiring

For a remodeling project to pass electrical inspection, the wiring must be brought “up to code.” This refers to compliance with the National Electrical Code (NEC), which most states and municipalities have adopted, according to the National Fire Protection Association.

But it’s not always easy to tell if the wiring has been updated prior to beginning a remodeling project. While upgrades require a permit and must be reported to the county, that doesn’t always happen, Gorszczyk says, so it’s not always easy to know the age of a home’s wiring. And once the contractor comes across outdated wiring, “We have to upgrade it or we’re liable,” he says.

This kind of project can quickly snowball into a major shock to your budget – if you aren’t prepared. For an average-sized home, updating wiring will cost $3,500 to $8,000, according to the National Association of Realtors’ HouseLogic’s article titled “Do you need an electrical service upgrade?” Costs can also range as high as $20,000 if a home is particularly large or the wiring is difficult to access.

Unexpected Expense #4: Structural Issues

Like electrical upgrades, structural revisions made by a previous homeowner might not always appear in the property report that your contractor will pull prior to beginning work, DiClerico says. In some areas, renovations made to homes may even pre-date the local jurisdiction’s documentation system.

This means it can be difficult to detect if weight-bearing walls and joists – which carry the serious load of supporting the overhead floors – have been compromised by moisture, or if drywall has been weakened by high humidity or a water leak, notes Granite Transformations, a granite countertop company in Miramar, Fla.

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Other unrecorded structural issues may not pose a threat to your safety, but they can endanger your budget.

In an article by the National Kitchen & Bath Association titled “What to Expect…When Expecting a New Kitchen or Bath: Part I,” kitchen and bath designer Molly Erin McCabe recalls a project that uncovered an abandoned chimney in the wall where the light switches were to be installed. Because it wasn’t cost-effective to remove the chimney, they moved the light switches, and likely incurred an additional charge for the plan change.

Unexpected Expense #5: Asbestos Removal

The building blocks of homes built in the 1970s or earlier – insulation, flooring, wall materials – usually don’t look much different from modern-day materials, but they may contain asbestos. And what you can’t see could hurt your wallet, and even your health.

That’s because disturbing these materials through remodeling can release fibers that have been found to increase your risk of developing lung disease, according to the U.S. Environmental Protection Agency. And unfortunately, the only way to know for certain if an older home has asbestos is to hire a licensed inspector to take a sample for testing.

If the asbestos material is in bad shape, a professional may need to seal or cover it, according to the EPA, and that comes with additional costs.

Unexpected Expense #6: Plumbing Update or Repair

While many homeowners don’t include new plumbing in their budget – opting to work around the existing system, it’s usually cheaper to do any necessary repairs while the system is exposed during remodeling – and before any minor issues have developed into leaks or breaks that cause costly water damage.

That’s why the National Association of Realtors, in the article “Do you need to replace your plumbing?”, suggests checking for corrosion, discoloration, dimpling, stains, or flaking in the tubing. By checking before the work begins and including the cost in the budget, you might avoid the shock of this unexpected expense.

In addition, plumbing systems can be damaged by remodeling work, notes Conover Plumbing in Culver City, Calif. While this dilemma can’t be anticipated, homeowners can plan ahead by knowing where the main water shut-off is located in order to minimize damage.

Is downsizing your home worth it?

The McMansion generation is in downsizing mode.

Millions of Americans age 50 and older are looking around their spacious homes and are deciding they don’t need all that room anymore. The kids are gone, maybe a spouse, too. And they could really use the money from a sale to bulk up their retirement funds.

But downsizing isn’t always simple, painless—or even all that beneficial financially. With the real-estate market still fragile, many baby boomers are getting a lot less than they expected for the old homestead. All too often, they have little cash left over after buying a new place, and their monthly expenses don’t fall as much as they thought—or may even rise instead.

Then there’s the emotional pain of scaling back. Many baby boomers are finding they lack the stomach or stamina to dismantle their lives. They can’t bear to sort through or part with all those boxes in the basement, or argue with the adult children who want to keep the house where they grew up. Sometimes they downsize only to find they miss their old lifestyle and stuff.

“Don’t make any broad assumptions that downsizing is going to save your retirement,” cautions Jeff Bogue, a certified financial planner in Wells, Maine. “It may help your finances, but I’ve seen plenty of people who find that it doesn’t pan out as they had thought.”

It’s a challenge lots of boomers are going to face. All told, more than 40% of Americans ages 50 to 64 plan to move within the next five years or so, according to the Demand Institute, which is jointly operated by the Conference Board and Nielsen Co.

Dominated by “the many baby boomers who delayed retirement during the recession,” prospective downsizers exceed would-be “upsizers” by nearly 3 to 1, says Louise Keely, chief research officer at the Demand Institute.

Here’s a look at some of the problems you might face as you scale down—and how to overcome them.

SELLING IN A FRAGILE MARKET

Many baby boomers are looking to downsize to make up lost ground in their retirement portfolios. But even when the housing market was robust, many downsizers had little left over after paying off the mortgage and covering moving costs.

Consider a study from Boston College’s Center for Retirement Research that looked at older adults who moved in the 1990s and early 2000s due to a change in circumstances, such as a job loss or divorce. The report found that while these movers generally chose to downsize, they didn’t get much in the way of a financial windfall. In fact, on average, they plowed almost all of their home equity into their new homes, freeing up an average of just $26,000.

These days, with the real-estate market still depressed in many parts of the country, missteps can be especially costly, says Honore Frumentino, a real-estate agent at Prudential Rubloff in Northbrook, Ill.

Marian Crapanzano and her husband, John, both 67, recently forfeited a deposit on a condominium in Rockland County, N.Y., because they couldn’t sell their three-bedroom home in nearby Stony Point. “We had our house on the market for eight or nine months, and we didn’t have any offers,” says Ms. Crapanzano, a paralegal. “People weren’t even coming to look at it.”

To protect against getting stuck with two houses, downsizers should sell one before buying the next, “even if it means moving twice,” says Jeanne Bradford-Odorico, a financial adviser in San Diego.

The real-estate market can also trap those who move only to find they aren’t crazy about their new surroundings. That’s something Joanne Abrahamian, 60, discovered when she downsized to a three-bedroom home on a golf course in Kanab, Utah, in 2008. A retired executive assistant for Verizon Communications Inc. from New Jersey, she had vacationed in Kanab and liked the area’s lower cost of living, but she didn’t appreciate just how remote the town of 4,000 is. “I have to drive an hour and a half to do my major shopping,” says Ms. Abrahamian, who says she also misses the “seasons and the ocean.”

Because of Kanab’s depressed real-estate market, however, she is stuck. Since 2008, the value of her new home has plunged to $195,000 from $295,000. As a result, Ms. Abrahamian’s mortgage now exceeds her home’s value by $34,000.

DEALING WITH EMOTIONAL TANGLES

Putting a big house on the market, and clearing out decades’ worth of possessions, can be cathartic. But for most, it is overwhelming.

Among homeowners age 60-plus, 60% recently told researchers from the University of Michigan’s Health and Retirement Study that they have “more things than they need,” according to David Ekerdt, director of the Gerontology Center at the University of Kansas, who crunched the numbers. Three-quarters said the sheer volume of their possessions has made them “somewhat” or “very” reluctant to move.

For others, emotional attachments get in the way. Dan Garramone, 59, says he started to think about selling his six-bedroom home in Deerfield, Ill., shortly after his wife, Debra, died five years ago. But whenever he raised the topic with his four children—now ages 23 to 28—he says he “got flak.”

“It’s their childhood home and they were in transition, trying to figure out what they were going to do after college,” Mr. Garramone says. “The last thing they needed was yet another change.”

In May, with his youngest child preparing to leave the nest, he sold the house and moved to a two-bedroom condo in nearby Wheeling, Ill. To make the move easier for his children, he put his wife’s silver, crystal and furniture in storage and promised to pay the $90-a-month rent for a year. “After that,” he says, “they will have to decide what to do.”

Betsy Rubin, 57, has been downsizing since 2003, when she and her second husband, Michael Aaron, 56, combined households. The following year, Ms. Rubin’s mother died, leaving the Chicago resident with the task of emptying her parents’ apartment. “I’m sentimental,” says Ms. Rubin, who still has about 50 boxes in the basement of her townhouse. “Things take on a deep meaning for me because of their connections to people, places and events.”

Ms. Rubin says she has relied for assistance on her cousin, Alice Abraham, 51, a senior-move manager in Jamaica, Vt. To help Ms. Rubin part with a broken rocking chair that had been in her childhood room, Ms. Abraham says, she “gradually inched the chair closer to the front door” until, one day, it was on the sidewalk.

Marcia Ramsland, a professional organizer and author in San Diego, suggests taking pictures of a home before dismantling it. “You save the memories and don’t have to save all the stuff,” she says.

BIG SAVINGS? MAYBE NOT

The potential problems don’t end once downsizers move into their snug new abodes. With fewer square feet to heat, mow and pay property taxes on, many downsizers assume they’ll slash their monthly expenses. But unless you’re willing to move to a part of the country with a lower cost of living, the savings may prove modest, cautions Beth Blecker, CEO of a financial-planning firm in Pearl River, N.Y.

Among older Americans who pull up stakes, a “large majority” settle within 20 miles of their previous homes, according to a 2009 Boston College study. While this lets them stay close to friends and family, it also leaves them paying similar prices for food, utilities and other essentials. “If you move to a retirement community with a pool and fitness center, your monthly expenses may even go up,” Ms. Blecker adds.

Indeed, those who downsize often find it difficult to cut back on the lifestyles to which they have become accustomed. “Most people are really attached to their lifestyles,” says Esteban Calvo, co-author of the Boston College study that looked at home equity and now an associate professor at Diego Portales University in Santiago, Chile. “They tend to look for a home that will allow them to maintain the same routines.”

In 2011, Jim and Donna Hayes sold, for $400,000, a 2,300-square-foot home with a pool and basketball court they had built in Cherry Valley, Calif. With Jim turning 80, they figured it was also time to unload their motorcycles, jet skis, four-wheelers and recreational vehicle.

“We decided we were through with them,” says Ms. Hayes, 72.

But shortly after moving to an age-restricted community three miles away, the couple started to re-create aspects of their old life. They spent about $50,000 to install plantation shutters, tile floors, an entertainment system and new appliances in the two-bedroom home that had cost them $245,000.

They also bought a 2012 Holiday Rambler Ambassador for $230,000 and paid more than $50,000 for a storage facility. “You have to keep moving,” says Ms. Hayes. “You can’t just sit around the house.”

The Hayeses say they have no regrets, since the move has freed them from the responsibility of maintaining a large property. James Beman, the couple’s grandson and financial adviser, says the spending hasn’t put his grandparents at risk financially.

“But with interest rates being so low, they are definitely eating into their assets,” he adds. “Downsizing isn’t always going to save money. In the end, it doesn’t always make financial sense.”

SQUEEZING INTO TIGHT QUARTERS

One of the biggest problems people encounter after downsizing is also one of the most obvious: It can be crowded. “You’re used to all this space, and suddenly, it feels like you’re living in a milk carton because you kept too much,” says Julie Hall, an estate-sale professional and author from Charlotte, N.C.

Susie and Ron DePaul knew space would be tight when they moved east to be near their daughter and son-in-law. They were leaving a three-bedroom home in San Diego for an 800-square-foot furnished rental in Brooklyn, N.Y. So, they took only what they could cram into the Volvo sedan they drove cross-country in June. The native Californians sold or gave away everything else, including Ms. DePaul’s aunt’s antique end tables and their bedroom set.

“We have plenty of room for what we brought,” says the 61-year-old Ms. DePaul, a retired elementary-school principal. But the couple has less privacy than they’re used to. “It’s hard not to be able to go into the backyard when I feel I need to get away,” Ms. DePaul says.

In recent years, new breeds of professionals have sprung up to help people declutter, organize and move their possessions. Among their recommendations: sort your belongings a little at a time so you don’t get overwhelmed; don’t make judgments about what your spouse should or should not keep; and take only what fits your current lifestyle. “If you don’t entertain anymore, don’t bring a ton of serving platters to your new home,” says Ann Bass, a senior-move manager in Asheville, N.C.

Ms. Bass, 60, also advises clients to arrange their homes so each person has some personal space. She speaks from her own experience: In 1998, Ms. Bass and her husband, Bill, a retired engineer, sold their 1,700-square-foot home near Scranton, Pa., and relocated to a smaller house in North Carolina.

In the process, Mr. Bass, now 81, traded a 28-by-44-foot garage for a “man cave” in the basement, and Ms. Bass installed her sewing machine and home-based office in the guest room.

But in September, these arrangements were upended when Ms. Bass’s 96-year-old mother moved into the guest room. To prepare for her mother’s arrival, Ms. Bass purged clothes, record albums and sheet music. Then she reorganized the family room to carve out space for her office and hobbies.

“Everyone still has a little corner,” she says.

Home prices will continue to rise, anywhere from 5 to 7 percent in 2013 from 2012.

These prices will be driven by continued competition among investors in the distressed market, as well as a return to the market of organic move-up buyers. A lack of supply in some local markets could push prices there even higher, but the concern is that prices would rise faster than incomes, which could leave some potential buyers on the sidelines.

Mortgage availability will be further curtailed by new regulations coming out of Dodd-Frank.

Rules governing risk retention and a borrower’s ability to repay a loan have yet to be released, but mortgage bankers are already warning they could make loans more expensive. Mortgage rates will likely rise off their historic lows, but not significantly.

Apartment rents will stay elevated and vacancies low despite the improvement in the housing market.

First-time home buyers are still having trouble returning to the home buying market, despite rising household formation. With lenders requiring higher down payments and complete documentation, these buyers who usually make up over 40 percent of the market are at barely one third of home sales. We will only see the tide turner with far more robust job creation.

Mortgage delinquencies and foreclosures will remain elevated, but continued principal reduction modifications as well as a high level of short sales will alleviate much of the distress.

Foreclosure sales will continue, but the banks are unlikely to flood the market with bank-owned properties, as they have no desire to put downward pressure on prices.

As home prices continue to rise, more borrowers will come up from underwater.

This gain in home equity will help to fuel the renovation market and benefit remodeling retailers like Home Depot, Lowes and Masco.

It can be a very overwhelming feeling when choosing a new contractor.  Whether it is a simple kitchen or bathroom remodel, or even finding a builder to build your new home from scratch, here are five things you have to consider when choosing your new contractor.

1) Interview Several Contractors before choosing – Too many people will meet one contractor, or get a referral from a friend or family member, and never look any further.  You certainly didn’t marry the first person you started dating, and you should not decide to go with the first contractor you interview.  I would recommend having at least 3 interviews before you start making any decisions.  Secondly, trust your gut feeling; if you are not 100% comfortable then keep looking.  If you spend a little more time with this first step it will pay huge dividends for you; you will save lots of time, reduce your stress and save thousands of dollars during the construction process.

2) Make sure that your contractor is licensed, bonded and insured – if something goes wrong during the renovation, remodel or construction, you want to make sure that you are protected.  If a contractor is not licensed or insured and something goes wrong, there is a good chance he will disappear and you will have to hire another contractor, not only to do the remodel but to also fix the mistakes.  Hiring a cheaper contractor that is not licensed or insured can end up costing you a lot more in the long run.  Also, most professional licensed and insured contractors will offer a warranty.  So in the circumstance that something were to go wrong, you have the peace of mind that you are covered in the future.   If you think hiring a professional is expensive, just wait until you hire an amateur!

3) Look for Online Reviews – Once you have selected your contractor, or at least narrowed it down to the last several choices, hit the internet and see if you can find any reviews.  Please remember to take it with a grain of salt.  Most people who have a bad experience write bad reviews, but not many who had a great experience take the time to write a positive review.   If you see a bad review, feel free to ask him about it.  If he can’t be honest about it and explain the situation, that may be a good indication to not choose that contractor.  A more accurate source than the internet would be to check with the local Chamber of Commerce or the Better Business Bureau and see if there have been any legitimate filed complaints against the contractor.

4) Have a Contract – No matter how simple the job is, you want to make sure that you are protected and have a contract.  The contract should clarify the following:

• When the work will start and end
• How disputes will be taken care of
• What happens if the project is delayed, or if it goes over budget
• Include a set of drawings
• Describe in detail the scope of the work included
• How much the contractor gets paid and when they get paid

Also, make sure that both parties have signed the contract.  In order for it to be legal, binding and enforceable, both parties have to agree and sign it!

5) Ask lots of Questions – There is no such thing as a bad question.  If you don’t understand something, or need more clarification, you need to ask.  If the contractor gets short with you, or wont explain in detail it is best you find out how they deal with things before you get into the middle of a large project together.  Feel free to ask them how long they have been in business, if they have done similar projects.  You can ask for a couple past clients/referrals if you want.  Ask what happens if the project is delayed or if it goes over budget. 

6) Don’t Pay for the Whole Project Up Front – It is fairly common to pay the contractor a third of the cost up front on the start day, another third roughly half way through, and then the final third at the completion.  Sometimes if they get paid in full up front it is very hard to keep them motivated throughout the rest of the project and your project will fall to the bottom of their priority list.  By paying him a good portion at the completion ensures that they are motivated to get it done on time.  Additionally, you should never make the last payment until you are 100% satisfied with the work.

Four Seasons Master Bathroom Finish

The Four Seasons Austin Hotel originally opened in 1986, and has since then been a very important part of the Austin social scene. Ardent Residential, a local Austin based development company, purchased the land next to the Four Seasons Hotel and subsequently was able to partner up with them to create the Four Seasons Residences Austin.
The location is amazing, located in the heart of downtown and since the Four Seasons sits on the Lady Bird Lake waterfront, it is one of the few condo properties in Austin that has direct access to the lake. The synergy of the brand and the condos is obvious. Four Seasons is known for providing the very highest quality environments, both for hotel guests and residents. They have exceptionally well trained staff and they can therefore provide the highest of quality services to the residents on a day to day basis.
When you arrive at the front entrance, you will be greeted by a friendly doorman, followed by the professionally trained concierge. The lobby has a couple large original works of art by renowned artists.
The condos have large floor to ceiling windows, allowing expansive views all across Austin. The developers also decided to design the outdoor balconies as large as possible to essentially create an outdoor living room for each condo. The bedrooms are also large and spacious.
The amenities are located on the top floor, the 32nd floor. Unlike most developers who put the penthouses on the top floor, Ardent Residential decided to put the amenities on the top floor so that they can be enjoyed by all the owners of the building. On this floor you can find a large fitness center, pool, entertaining space and library. Owners can work with Four Seasons to help cater their parties.
Of the majority of buildings located in downtown Austin, most of them are rental. Four Seasons being 1 of 3 luxury choices, gives the higher end buyer in Austin an excellent choice. With no new luxury condo buildings on the schedule to be developed it is only a matter of time before the building is completely sold out.