Delaware Home Equity & The Law of Retirement Motion
You might have had a science teacher who explained to the class why perpetual motion machines aren’t possible. He would have had some common sense to back up his point (everybody knows nothing lasts forever). But the actual scientific explanation had to do with physics and Newton’s Laws: in the end, perpetual motion just isn’t in the cards.
When it comes to real estate, however, for a lot of happy residents, their Delaware home equity comes awfully close to being a kind of perpetual income machine.
There may not be a Newton’s Law of Retirement Motion, but for anybody planning their long-term future security, there should be. It would be straightforward:
For every mortgage principal payment, there is an equal and opposite addition to your home equity.
This simple Law has a profound effect in the real world. The PEW Research Center tells us that the typical median family’s expenditure for housing = 23% of after-tax income. That figure is for households with two earners and two children. If retirement will mean a reduction in those two earners’ income (as is usually the case), unless they reduce the size or quality of their housing, the percentage of income it claims will have to rise further. Not a very desirable outcome.
But apparently the majority of Americans have already taken our fanciful Law of Retirement Motion into account. According to the U.S. Census Bureau, among American homeowners who are 65 and older, a whopping 65.3% have no mortgages payments to make. They own their residences free and clear. For them, the home equity effect is, as financial adviser Robert Christman describes, “…almost as if you had saved enough extra to provide a monthly income equal to your mortgage.” It’s like a Newton’s Law of Perpetual Income.
The practical effect of owning your Delaware home outright isn’t as fanciful as are the non-existent Newton’s Laws—it’s darned real! Which is one reason my job helping clients land the right home at the right price ends up being so satisfying.
- Written by Russell Stucki
Home Design Trends Reflect Changing Environment
Delaware real estate—like all real estate—is a supremely local activity. Area homeowners who like to keep an eye on Delaware and national trends do so because some of them may surface in future buyer preferences. For Delaware homeowners in a remodeling frame of mind, it doesn’t hurt to be aware of “what’s hot.”
When it comes to nailing down the latest home design trends, there’s no shortage of commercial firms whose publicity departments are determined to make convincing arguments that their products are in the vanguard. Since the National Association of Realtors® isn’t selling anything, that’s one good reason to give special attention when Realtor Magazine puts out its annual “Home Design Trends” roundup.
This year, though, much of what they reported had more to do with American community and social environments than with the kind of details Delaware homeowners will find very useful. Those wider trends included a continuation of consumer preferences for “walkability”—in suburbs as well as in urban areas. Homes “far from everything” lose out in the “walk scoring” calculation. In a similar vein, as more and more people spend more and more time on social media and in front of computer screens at work, there is growing awareness that typical Americans crave more actual live human interaction: hence, proximity to social gathering places (clubs and clubhouses; community centers) is being newly emphasized in real estate sales materials.
But some more traditional kinds of home design trends were mentioned, as well, such as the finding that “taupe is the new gray” and a movement toward “naturally renewable, warmer surfaces.” Taupe’s slightly rosier tone conveys a friendlier feel than plain gray, which fits in with the turn away from colder black, white, and metallic palettes. Natural cork is one low-maintenance material offered as an example: it adds aesthetic appeal to walls and flooring. (Besides, it bounces back when dented)!
Other specifics include a shift toward away from traditional log-burning hearths to natural gas and even alcohol-burning fireplaces. Delaware homeowners who have done without fireplaces entirely may take note: since they don’t require vents, alcohol burning hearths can be installed just about anywhere with minimal construction expense.
One home design trend that is definitely applicable in Delaware is a consequence of the ever-diminishing size of today’s electronic technology tools. For those whose careers make working from home at least part of their professional work week, it means that the necessity for a full-room home office is gradually waning. Now almost any corner of the home can suffice. When designers speak of “dual-purpose areas” with “dual-purpose furnishings,” they probably have this trend in mind. A further step into the future is the “movable wall concept.” That’s not here yet: it’s projected for the futuristic Home of 2050. (I, for one, am willing to wait).
- Written by Russell Stucki
Worst 9 Delaware Home Improvement Notions
When it’s one of those weekend days when the Delaware weather has refused to cooperate with outdoor plans, one way to fill the idle time is to go online in search of home improvement ideas. You may not follow through with any for your own Delaware home—but it’s amusing to review the almost unlimited number of clever and inventive notions people have put online.
When it comes to the kitchen, for instance, there are bounteous home improvement ideas. There’s the herb garden wall (in addition to a green thumb, a powerful sunlamp in the ceiling is required) or the pool table top that slips right over the center island. That one wouldn’t work if your kitchen’s island is plumbed: the water faucet would stick up and ruin everything.
But among the clever and innovative home improvement ideas you will also find some that are totally impractical—or just plain terrible. Here are nine of the silliest I’ve found—
- Hammock Over the Stairs. A space-saver, yes. An attractive idea? Just, no.
- See-through Bathtub. Glass walls for the tub = a housekeeping nightmare (among other drawbacks).
- Fire Pit Coffee Table. Again: just, no.
- Ping Pong Door. This one is complicated: the closed door has pins halfway up that allow it to tilt horizontally, whereupon the plastic net is slid into notches provided in the door frame…anyway, it’s a really small ping pong table.
- Cat Transit System. A CTS consists of 8” diameter tubes running throughout the house just below ceiling level. Exit openings are provided at various points. Added feline-pleasing features: windows cut into the tubes at various key viewpoints.
- A Wall That Plays Music When it Rains. This is an exterior wall idea. You install metal tubes, funnels, bamboo water chimes and tin pans to route rain water down the side of the wall as noisily as possible to splash and bang through twists and turns and waterfalls. This looks to produce the same quality of music a vacuum cleaner makes.
- Beach Sand Under Work Desk. Like an on-the-job vacation; facilitates barefoot computer working. But—alas—another housekeeping nightmare.
- Forest Chandelier. This one is a chandelier that looks like dozens of snakes coiled around one another: when lighted, it casts creepy shadows on ceiling and walls that “turn your room into a forest.” In a bedroom, certain to cause sleepless nights.
- Glass Floor Over an Open Shaft. This home improvement idea is available only to Delaware condo dwellers in buildings with abandoned elevator shafts. Since there aren’t any, we’ll never have to experience the horrendous effect (there’s actually a picture of this, in a bathroom, on a site called boredpanda).
- Written by Russell Stucki
Liquidity Dimension for an Investment in Delaware Real Estate
Buying a home as a place to live certainly has important financial implications, but they are only part of an equation that has major lifestyle implications. A given house may be a really terrific deal—but if it turns out that you aren’t comfortable living there, buying it will probably wind up being a mistake.
When the motivation for an investment in Delaware residential real estate is purely financial, it’s a less complicated decision. Taking all factors into account, when a property pencils out as a likely financial winner, it’s a matter of weighing it against the risks and rewards of available alternative investments. In one risk-minimizing longer-term strategy, for instance, the risk that a rental property might go vacant is minimized by setting its monthly rental at little more than the cost of maintenance and mortgage payments. The plan is to patiently await the blissful moment when the mortgage is paid off—at which point a substantial net income begins to flow.
In all cases, any real estate investment in Delaware should be part an overall strategy. It’s likely to represent diversification within a mix of other investment vehicles. Equities and bonds don’t have the “reality” that a deed conveys, but do have the advantage of being less complicated to buy and manage. To the extent that they can be sold more quickly, they are rightly thought of as being more liquid…which brings up the point, here.
Knowing when you can cash out to free equity for other purposes is a positive, for sure—but there are liquidity options for Delaware real estate investments, too:
- Home Equity Loans. Carrying a fixed or variable interest rate, “seconds” are usually easier to arrange than primary home loans—and are often free of closing costs.
- HELOCs. These tap home equity to collateralize a line of credit. They are often described as functioning like low-interest credit cards—amounts are borrowed in increments the borrower wishes up to the credit limit; then paid off over time.
- Cash Out Refinance Loans. These are like home equity loans taken in amounts more than the amount owed. The difference is freed for investment elsewhere (or for any other purpose).
As Investopedia’s Robert Stammers writes, “increasing concerns about the future long-term variability of stock and bond returns” explains why a tactical investment in real estate “is known for its ability to serve as a portfolio diversifier and inflation hedge.”
- Written by Russell Stucki