Friday, December 16, 2016

Interest Rates Are Going Up

If you have not been listening to the news this week, the Federal Reserve has raised the base interest rate by 1/4 point yesterday. This is good in that it signals the Federal Reserve has a certain level of confidence in the economy that we have only seen one other time during the past 8+ years and that they now believe we are on a path toward growth and prosperity. But this also means that loans and mortgages will begin to cost banks more and therefore cost consumers more than they have for the past several years. This is a move toward putting the nation on a path toward supply and demand, rather than the artificially depressed interest rates.

While we are still about 2-3% points lower than the average interest rate over the past couple of decades and home ownership is incredibly affordable, this increase of 1/4 of a percentage point will increase monthly mortgage payments on new loans by as much as 2.5%--that's about $50 a month more on a $200,000 mortgage.

So, what does this mean to you and me? 

Investors--take note. The financials of new investments will likely continue to change over 2017. All time lows in interest rates is something that is mostly likely going to begin a slow transition to a more market driven number.

First time home buyers--now is still a great time to look at buying a new home. Sit down with your Realtor and your Mortgage Lender to determine if you are ready to buy your first home. 

Sellers--this may be a good time for you to consider selling, especially if your home is on the cusp of a price bracket that the changing interest rates make your home less desirable due to higher monthly payments--like a price point in the entry segment of the market.

Buyers and Sellers in general--take note, weigh your options and know that while the interest rates are going up, price brackets may start to stabilize or flatten out to accommodate shifts in interest rates with time. Real Estate is a dynamic industry and changes do occur over time. In Austin, we have not seen a significant change in the market away from the steady increase in home values over the past 5+ years. Whether this will or will not change depends on a whole host of factors. With the increase in jobs in Central Texas and the continued population growth, my expectation is that prices will get flat as the first sign of a change in our market. That has not happened yet. We shall see if and when that does happen. 

Happy hunting! tT

DISCLAIMER: i am not a mortgage banker or broker.  i do not claim to be an expert on matters of mortgages or banking and I am not a Seer of the future. buyer-beware! do your own research. read. ask questions. consult experts. come to your own conclusions. my opinion is just that--my opinion and I have been wrong a couple of times in the past when it comes to predicting the future--as I am sure you have.

Thursday, December 1, 2016

Is Your Home TOO SMART?

Let me start by saying, I am a advocate of smart home technology. I think there are a lot of cool and useful things that you can do by making your home "smarter". However, I personally believe that there are inherent risks in making your home "too smart".  That may bring images of Arnold's Terminator conspiracy movies to mind. If we make them too smart, maybe they will end up taking over the world (or the house)? Well, no, I don't think that is a big threat, but I do think the accumulation of data about individuals, individual patterns, individual routines and our schedules may be a risk to users of smart home technology if your home gets hacked. So, can you have a smart home and leave yourself less vulnerable to data hacking? Yes, I think it is possible.

Here are the big over-riding questions that we should consider when choosing smart home technology:
"How connected do I need to be to make my home smart, but not too smart?"
And: "Am I adding this feature of smart technology because it is really helpful to my life or because it is just really cool and let's me save 1 min a day by putting this task on my WIFI network?"

When I was a boy, the TV had four channels and my brother and I were the remote controls. "Go change the channel to CBS." Today, my TV has hundreds of channels (plus internet access) and I can watch is from anywhere, anytime, any day. The problem is, this does not necessarily make me more productive. In fact, if I don't manage the tool, it can make me VERY unproductive and this convenience can be very time consuming. Same is true of my internet habits. Tools of productivity. Or Bottomless pits of time consumption. So, how does this relate to smart homes? Let's look at smart devices individually.

Smart thermostats. I like having the ability to remotely program, check, monitor and correct the settings of my thermostat--especially when we are traveling and our Texas weather goes from 70 degrees one day to 30 degrees the next day. Very helpful. What I don't like about smart thermostats are the ones that try to learn when I am home, when I am coming home, when I am on vacation, etc. If this information is hacked from the cloud or from my cookies, this turns my schedule into an invitation for thieves to come visit.

Lights. I like smart lights. Lights that can be programed to come on and go off on private schedules, but can also be turned on and off remotely. Side benefit: I have holiday projectors in my attic that run at night and when I want to turn them off, I can do it from my phone without having to get into the attic. That is convenient and can apply to any number of remote switches that can be controlled from your phone regardless of where you are at that moment in time.

Vacuum cleaners. I wish I did not own an older version of iRobot, because the new versions have remote access and control. What a cool thing to be able to turn on your vacuum cleaner any time of day from work, from shopping, from the car. It works for you, whether you remember it when you leave or you schedule it to happen during the day while you are out.

Now, here comes one of the coolest things since Siri--whole house smart devices. Ala, George Jetson or Star Trek. Just talk and things happen. How cool is that?! Well, cool has a price and the price is that this device is learning about you. Everything about you that it can learn. George Orwell could not have possibly imagined that we would pay to have our bio's written so completely, from when we are home, to what we like, what we don't like, what we want to buy, and most importantly--everything we say is getting sucked into these devices and recorded. Again, I am not trying to create a conspiracy, but do you really want your entire like to be recorded and put into databases where you can be sliced and diced and mainframes can begin to profile everything that it thinks it knows about you? Do you really want more advertising brought to your home 7 x 24 for everything that you say and do? And when this information is hacked, what does this tell others about you? Does this put you in a place of risk when your personal information is opened up to the world? I don't know the answers, but I suspect we are going to start seeing some negative side effects of these kinds of devices during the coming months and years.

Locks. Here is another one that I think has great potential benefit and potential risks. There are two kinds of digital locks available today. The key pad locks that only work from a manual code entry or fob in your pocket, and the ones that are also connected to your local WIFI network. How risky is it to put your house on the internet for Troll-ers to pick up and detect? Do you really want to take the risk of your WIFI network being hacked and leaving your home open to strangers?

Cameras. I love security cameras placed outside the home and at entrances to your home (and non-WIFI baby monitors fall into this same category), but again, do you want to put your family at risk by placing camera's inside your home? Hackers love it when you open up your home to let them know who is home, where they are and what they are doing. Forget how creepy that is--this is a major security risk to your family if it is hacked. Personally, I would not put cameras inside my home and then put them on my WIFI network to tempt hackers to troll my neighborhood and try to hack my network.

Sprinkler systems. Great way to change, check and monitor your irrigation systems from anywhere--any time. I love it. And we will see more and more of these sorts of innovations coming on the market. Some may not be as helpful as they are fun for a few days (e.g., smart refrigerators for home use), but I think we will see more and more useful smart technology that will help us become more productive and more secure.

So, my advice to you, my friends, consider smart home technology from all sides--the convenience, the security enhancements, the helpfulness of the features and the risk of its use--before you start making your home too smart and too tempting for criminals.

Live long and prosper, my friends.

Wednesday, November 30, 2016

Landlords and Homeowners: When Your Gas Water Heater Fails

Here is a handy little bit of information that could save you $800 or more when your gas water heater stops working and you can not relight the pilot light. For some of us, our go-to response is to simply call a plumber. The problem is, you may not know a good and honest plumber, so when the plumber tells you that your 10 year old water heater is dead, and he is going to credit you the $125 service call to your bill to replace the old one with a new gas water heater, if you are like most of us you will probably try to get the best price possible from him and let him replace the unit. Well, you may have some options before replacing the water heater if you understand the fundamentals of gas water heaters before you call the plumber.

I have learned from personal experience that after about ten years, water heaters start having some issues. The pilot lights go out. And sometimes the pilot light won't stay lite. In fact, houses in general start having some issues around 10 years. This can be a maintenance year or years for several things in your home. Maybe a new fan motor for your HVAC. Minor roof repairs. Perhaps some minor electrical repairs. Maybe time for a new dishwasher in your rentals (especially if they have not been taken care of by your tenants). And very likely time for a tune up of your gas water heater when the pilot light goes out.

If a gas hot water heater is not holding it's pilot light, not sparking or having to relight the pilot frequently, you may have a $12 problem. $12 in parts--that is. The thermo-coupler is a device that is attached to a bracket next to the gas pilot flame. The pilot light is the source of fire when the heater kicks on and start heating the tank. So, there are three pieces of technology that work together here to keep you gas water heater working: the pilot, the electronic ignitor (the thing that sparks and lights the pilot light) and the thermo-coupler. The job of the thermo-coupler is to make sure the pilot is always lite. If the pilot goes out, the thermo-coupler senses the loss of heat and turns off the gas to the pilot light--so it is not leaking gas from the pilot pipe when the pilot is not lite. Well, if that sounds complicated, it is not. And replacing the thermo-coupler is a pretty straight forward process as well that may take you about an hour or so to do. With a little experience, a plumber could replace one in about 20-30 minutes. Thermo-couplers are available at your local hardware store for about $12. I have replaced two of these during the past year or so on two different homes that were both about 10-11 years old. It is not simple-simple, but it is not rocket science either.

Once you get everything taken apart to replace the thermo-coupler, two additional things you should check are the carbon build up on the tip of the electronic ignitor. Take a piece of fine sand paper and clean all sides of the tip so that it looks like new metal. Also, blow or sand off any rust that is on the burner tip for the pilot and the burner plate grill. Lightly. Nothing too aggressive.

So, the next time you have a problem with your water heater, you may find that the old unit just needs a little attention and maintenance, not a full blown replacement. Water heaters are not free, so when you replace yours, make sure you know why it is not working.

Good luck to you! And when you have a problem like this, be sure to go watch about 5-10 video's on Youtube of people explaining how to fix the problem. The more information you have at your disposal, the better. Even if you are not going to do the work yourself, when you call the plumber and you ask him to check and replace the thermo-coupler first, he will be impressed and much more likely to not try to sell you a new water heater to replace this $12 part. In fact, buy a universal thermo-coupler and having it waiting for him when he gets there. He will be shocked.

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