Tuesday, November 29, 2016

Solar Panels and Home Values

Does the HOA even allow that?
Unsightly pieces of legally installed, value adding junk?

Hey, Dr. Harold D. Hunt (hhunt@tamu.edu) is a research economist with the Real Estate Center at Texas A&M University.  He's not an alternate energy goof.  He's a noted economist.  

This REALTOR(R) reluctantly passes Dr. hunt's insight on to you, those stupid panels make a difference, and do apparently add value at your home's resale.  Read on... 

Residential solar photovoltaic (PV) systems are rising in popularity as they continue to fall in price. Different from "passive" solar systems that use the sun to heat thick interior walls during winter months, solar PV panels actively generate electricity from sunlight.
A driving force behind their popularity is a direct reduction in a home's monthly electricity bill as well as a hedge against future rate increases. Many homeowners now enjoy monitoring their level of electricity generation and energy savings on their smartphone in real time. However, a solar PV system's contribution to the market value of an existing home at resale has proven much harder to quantify.
One problem with estimating any value premium from solar PV has been system owners themselves. Academic studies have shown that people installing active solar systems tend to remain in their homes much longer than average.
Whether they are installing the systems for economic reasons, environmental reasons or both, they typically plan to enjoy their investment for an extended period. As a result, homes with solar PV seldom turn over. This has led to a scarcity of comparable sales for appraisal purposes.
A number of real estate professionals and academics have begun to look into these and other related issues in recent years as more systems have been installed. A key goal has been to expand awareness and market acceptance of residential solar.
This article examines the solar PV sector and recent research involved in accurately estimating any market premium for the systems at resale.

Grid-Tied System Most CommonThe three types of solar PV systems are grid-tied, grid-tied with backup power, and off-grid. Grid-tied systems are most common. The solar panels produce DC current that is then changed or "inverted" to AC current and fed back into the local utility lines.
Although not mandatory in Texas, some utility providers allow "net metering," in which any excess electricity generated is fed back through the homeowner's electric meter for a credit against power used. A homeowner's electrical meter can even run backward when more power is being generated by the solar panels than is being used in the home.
"The most popular misconception I've experienced from homeowners with grid-tied systems is their belief that the panels will continue to produce power for the home when their utility provider has a power failure," says Paul Roebuck, president of Texas Professional Real Estate Inspectors Association. But that is not always the case.

Home Inspection ExemptionRoebuck also notes that under the Texas Real Estate Commission (TREC) Standards of Practice, solar PV systems are exempt from home inspections. Although inspectors are allowed to examine systems more thoroughly than required by TREC, Roebuck says they rarely do. Randy Barfield, owner of Barfield Inspection Services in Cedar Park, agrees.
"I just note in my inspection report that I carried out a visual inspection of the system to see if it's running," says Barfield. "I actually don't know of a place I could go to obtain a certification to inspect a solar PV system." Barfield suggests that potential homebuyers looking at an existing home with solar PV should try to contact the system's installer to obtain more detailed information.
Some negotiation between buyer and seller may be required if the solar PV system has been financed and the note is not yet paid off, Barfield says. Installers report that companies financing solar systems may or may not use a mechanic's lien to insure payment of the loan.

Innovative Financing Options IncreasingOne reason for the increase in residential solar popularity has been the development of innovative financing tools. Some specialty lenders advertise that they will finance solar PV systems for as long as 15 years. However, almost none of this financing is being done by local lenders. 
Grid-tied solar with back-up power is the second-most common system. A bank of batteries is installed at the home to continue providing power in the event of an outage. The length of time backup power will be available is a function of the size of the battery system and the ability of the solar panels to continue charging the batteries during the power failure. 
The least common system is off-grid solar PV, where the home is totally dependent on electricity generated by the solar panels and stored in a bank of batteries. Off-grid systems are usually installed in homes located in remote areas and are often integrated with backup generators to lower the size of the battery bank needed.

Alternatives to Roof MountsResidential solar systems are usually mounted on the roof of the home but can be mounted on the ground or on special-purpose structures such as garages, carports, or pergolas. South-facing rooflines are most desirable but not mandatory. 
Roof-mounted systems are generally the easiest and least expensive to install and put little stress on the roof. "A roof-mounted system puts about five pounds of pressure per square foot on a roof deck," says Scot Arey, owner of Solar CenTex, a solar PV system installer in Harker Heights, Texas. These systems should be removed by professional installers when a new roof is needed.
Ground-mounted and special-purpose systems may be more expensive, depending on the level of support structure that must be built and the distance from the utility tie-in. However, the additional cost may be offset by the dual functionality of a solar carport or pergola. 
Solar PV systems are generally mounted in a fixed position, but ground-mounted versions that track the sun throughout the day are another residential option. "A two-axis tracker will produce about 36 percent more power than a fixed system," says Arey. "Although the trackers are more expensive, the economics of the extra power can outweigh their extra cost in some cases."

Growing, But Still Far to GoAccording to the Solar Energy Industries Association (SEIA), a national trade group for the solar sector, almost 500 solar-related companies are located in Texas, employing over 7,000 people. The companies provide a variety of solar products and services, including installers and component manufacturers.
Arey says he is seeing a growing interest in solar-related employment. "More people are looking at solar as an industry of the future," says Arey. "Folks coming out of the oil and gas sector have really shown an interest lately as those jobs have disappeared."

Cost Continues FallingAlthough government and utility-based incentives have helped make active solar PV systems more affordable, their cost can still be significant. However, the cost of solar PV systems continues to decline. Nationally, the total installed cost of a rooftop solar PV system has dropped about 66 percent since 2010 according to the SEIA. 
Bloomberg recently reported that solar panel costs alone have fallen about 69 percent during the same period and may decline another 15 percent by 2017. With global panel manufacturers fighting for market share, 90 percent of sales are now going to just a handful of large companies that have been able to survive the price declines. 
Cost reductions discussed above reflect reductions before any federal, state, municipal, or utility-based incentives or rebates are considered. In December 2015, Congress passed a last-minute multiyear extension of the federal investment tax credit (ITC) for solar installations.
30 Percent Federal Credit Until 2020 
Looking ahead, homeowners will continue to receive the current 30 percent federal dollar-for-dollar credit if they install a solar PV system by the end of 2019. The credit will then step down to 26 percent in 2020 and 22 percent in 2021. The tax credit will expire entirely in 2022 unless Congress chooses to pass another extension before then. Currently, the ITC has no cap. 
For other incentives, the North Carolina Clean Energy Technology Center offers a comprehensive source of information on available energy efficiency funding programs and rebates by state, including those for solar systems at http://www.dsireusa.org. 
Recent academic and government-sponsored studies have shown that although the size of residential solar PV systems can vary a great deal, they generally average about 3 to 5 kilowatts (1 kilowatt equals 1,000 watts or 1kW). 
The most current studies also reveal a "gross" installed cost per watt of about $3.00 to $5.00 before incentives. The "net" cost would be at least 30 percent less assuming a homeowner takes advantage of the federal ITC at a minimum.
Based on a gross cost of $4.00 per watt for a 4 kW system, a homeowner would pay $16,000 before incentives. The net cost would then drop to $11,200 after the homeowner received the cash benefit of a reduction in federal income taxes by taking the ITC. Payback periods to recoup the initial investment in a system can be five to eight years or longer, depending on a number of factors including lifestyle and local power cost.

Value-per-Watt Best Resale MetricSeveral recent academic studies have found that solar PV systems do contribute to the value of an existing home. An in-depth eight-state study funded by the U.S. Department of Energy (DOE) in 2015 concluded that a net installed solar PV system cost estimate calculated at the time a home is listed for sale may be the best proxy for a solar market premium.
The study analyzed almost 4,000 homes equipped with residential solar between 2002 and 2013. Texas was not one of the eight states.
Academics generally agree that a "value per watt" is the appropriate metric for valuing PV systems, not a premium as a percentage of the home's sale price. Using a percentage value resulted in too much variability due to large differences in size of PV systems and price of homes.
The most recent academic study published in the winter 2016 edition of the Appraisal Journal demonstrated that the cost and income approaches can also be used to calculate residential solar PV premiums.
Unfortunately, several studies have revealed that some lenders' underwriters require appraisers to use the sales comparison approach exclusively when a home with solar PV is being appraised. As a result, if one of the comparables is not a similar home equipped with a solar PV system, some underwriters will assign zero value to the PV system.
The Appraisal Journal study also estimated an average PV system value premium of $3.78 per watt. Using an example of an existing home listed for sale that has installed a 4kW system, the value contribution from solar PV would be just over $15,000. All PV systems in the study were less than 12 years old.
Major Barriers: Documentation, EducationAvailable financing, reduced costs, and financial incentives have begun to aid in the growth of residential solar. Alternately, two major barriers to stronger solar PV growth are lack of documentation and lack of education.

DocumentationAcademics have suggested that, although difficult, states should aspire to implementing the following documentation improvements.
Develop a public database regularly updated by system installers, utilities, and permitting authorities that allows practitioners to verify PV system details. It should include the PV system's size, year of installation, and state whether the system is owned or leased. 
Label the electrical box with the same inputs found on page 3 of the Appraisal Institute's Residential Green and Energy Efficient Addendum, making a permanent record onsite. 
The addendum should also be placed in the multiple listing service (MLS) listing as an attachment for potential buyers, other sales agents, and appraisers to use in understanding or valuing the system during the listing period.MLSs should include searchable PV fields that include system size in kW, system age, warranty term, and system location (ground, roof, other).  An appraiser would ideally review the owner's utility bill for the past year to verify the home's utility rate and system output. They should also have access to net solar PV costs. 
Currently, most of these suggestions are not in effect in Texas. However, there are states where such efforts have been successful. In 2009, the Colorado Energy Office (CEO) pioneered implementation of a common set of "green" fields in all 16 MLSs across the state. 
CEO worked with key partners throughout the state, including MLS and Realtor associations, the Colorado Coalition of Appraisers, and the Colorado Chapter of the Appraisal Institute. The three largest home inspection organizations in the state, lenders, underwriters, and related professional organizations took part in the effort as well.

Real Estate Agent Online CourseThe Appraisal Institute currently offers a two-day course titled Residential and Commercial Valuation of Solar to assist appraisers in attaining competency. However, as of 2015 only a few hundred appraisers nationwide had taken the course. 
The National Association of Realtors (NAR) offers a 12-hour green designation class, of which about 40 minutes to one hour is a discussion of solar PV systems. "There are 4,500 to 5,000 NAR Green Designees nationwide, but only 260 are located in Texas," says Amanda Stinton, director of sustainability and green designation at NAR. 
Elevate Energy recently received a $445,000 grant from the U.S. Department of Energy's SunShot Initiative to create three distinct classes about residential solar.
"Real estate agents will be offered a three-hour class via the web and through NAR's online education outlet Realtor University for continuing education credit," says Pamela Brookstein, market transformation specialist at Elevate Energy.
Two other classes will be developed specifically for appraisers and appraiser regulators. The first online class should be completed sometime in May 2017. 
Certainty of Payback is CriticalResidential solar PV systems are still a niche product in Texas. But studies have shown that clear identification of the contributory value of solar PV systems will help sustain their growth. Although reduced electric bills are an important incentive, homebuyers will be much more willing to pay a premium for the systems if the market reflects at least some incremental increase in their value at resale.

Tuesday, November 8, 2016

Plano Real Estate $400.00 per sq. ft.????

Yup.  Well, a Plano business tower has certainly raised the price ceiling for suburban real estate!

Steve Brown of the Dallas Morning News – Reports that Boston-based Intercontinental Real Estate Corp. has purchased the Legacy Tower from Trammell Crow Co. and Principal Financial.  Intercontinental paid nearly $140 million, or over $400 per sf, for the two-year-old office tower, the highest per sf price ever in Dallas' northern suburbs.

The previous high point was the $120 million, $375-per-sf sale of the Encana Tower​ in 2012.
Located at the Dallas North Tollway and Legacy Dr., the 13-story, 342,033-sf office tower is near the $3 billion Legacy West development.

Tuesday, August 2, 2016

Changes in the Riveting World of Mortgage Finance

MIB: Men in Black?
...not, not, MIB, no...

BMI: Body Mass Index?

PMI.  No... that's BMI, Body Mass Index... even more boring than PMI.

IPA: India Pale Ale... yum!

Nope, that's IPA, India Pale Ale.  The most interesting or appealing of the wrong answers but wrong.
PMI.  Private Mortgage Insurance.
C'mon people...

The business of mortgage insurance has been changing--like a baby going through diapers I say. Although most private mortgage insurance companies adhere to a fairly standard pricing model, you might see a difference here and there.

Starting in April 2016 year, most PMI companies made some pretty big changes to mortgage insurance premiums to make mortgage insurance more attractive for some buyers. This change has lowered the monthly payment for some higher credit score consumers. You might have buyers who now qualify for a more expensive home than they would have earlier in the year. Unfortunately, you might also have buyers who see higher premiums.

For the whole story, read Scott Hevel's article here: CCAR.NET

Tuesday, July 5, 2016

Murphy Marketplace Under New Ownership!

Real Estate Editor Steve Brown at the Dallas Morning News reports that An Ohio-based real estate investment company has purchased a major shopping center in Collin County.  Phillips Edison Grocery Center REIT I Inc. said that it has bought the Murphy Marketplace, a 218,598 square foot retail center located just east of Plano in the Collin County town of Murphy.  Built by Dallas' Langford Property Co. starting in 2007, the 48-acre retail center is anchored by... [Lowes,] Michaels, 24 Hour Fitness, [En Fuego cigar lounge,] and Tuesday Morning stores.
The retail buildings are constructed around a series of small parks and landscaped pedestrian trails. New owner Phillips Edison Grocery Center REIT I of Cincinnati owns and manages 149 shopping centers totaling approximately 15.9 million square feet.
Terms of the North Texas purchase were not disclosed.

Tuesday, June 28, 2016

How much do first-time Texas homebuyers make?

Lindsay Wilson of CultureMap Dallas says that First-time Texas homebuyers make nearly as much as the average U.S. homebuyer, according to data from MortgageHippo.

After looking at over 5,000 buyers, the majority of them millennials, the site determined that the average first-time homebuyer in the U.S. ​​makes around ​$65,000 yearly and has a credit score of 730.

First-time buyers in Texas come close with an average income of $60,000 and a credit score of 710. While Texans have fewer available assets—$16,000 com​pared with the nation's $20,000—they shell out a down payment of $12,000, only $3,000 less than the national average.

Buyers across the country plan to stay in the home for around nine years. 

The available inventory​ of homes is affecting first-time buyers the most, but millennials are still gaining traction as the largest group of homebuyers in the nation.

Tuesday, March 29, 2016

Spring Home Shoppers Will Find a Little More in the D-FW Market this Year

Columnist Steve Brown at the Dallas Morning News reports that the number of new listings in the area's housing market was up 20 percent in February from a year ago, according to data from local real estate agents.  

The total inventory of single-family homes listed for sale with area real estate agents was 4 percent higher than a year ago, marking the first spring in five years that there aren’t fewer houses for sale in the area.

This is an encouraging indicator but more listings are need to balance the market inventory.  DFW's market remains tight by historical standards.

In February there was only a 2.1-month supply of preowned single-family homes for sale in North Texas, according to Texas Real Estate Center data. That's about half the national average. A “normal” housing market has about a 6-month supply of homes. 

Tuesday, February 23, 2016

Black History Month: Barbara Jordan

Barbara Jordan (Born 21 February 1936 – Died 17 January 1996) was a lawyer, educator, an American politician, and a leader of the Civil Rights movement. A Texas Democrat, she was the first African American elected to the Texas Senate after Reconstruction, the first southern black female elected to the United States House of Representatives, and the first African-American woman to deliver a keynote address at a Democratic National Convention

She received the Presidential Medal of Freedom, among numerous other honors. She was a member of the Peabody Awards Board of Jurors from 1978 to 1980. On her death, she became the first African-American woman to be buried in the Texas State Cemetery--final resting place of Governors, Senators, Legislators, Congressmen, Judges and other legendary Texans who have made the state what it is today.

Jordan taught political science at Tuskegee Institute in Alabama for a year. In 1960, she returned to Houston, passed the bar and started a private law practice.
Jordan campaigned unsuccessfully in 1962 and 1964 for the Texas House of Representatives. She won a seat in the Texas Senate in 1966, becoming the first African American state senator since 1883 and the first black woman to serve in that body. Re-elected to a full term in the Texas Senate in 1968, she served until 1972. She was the first African-American female to serve as president pro tem of the state senate and served one day, June 10, 1972, as acting governor of Texas; albeit for one day, to date Jordan is the only African American woman to serve as governor of a state (excluding lieutenant governors).  During her time in the Texas Legislature, Jordan sponsored or cosponsored some 70 bills.
In 1972, she was elected to Congress, the first woman to represent Texas in the House in her own right. She received extensive support from former President Lyndon B. Johnson, who helped her secure a position on the House Judiciary Committee. In 1974, she made an influential televised speech before the House Judiciary Committee supporting the process of impeachment of Richard Nixon, Johnson's successor as President. In 1975, she was appointed by Carl Albert, then Speaker of the United States House of Representatives, to the Democratic Steering and Policy Committee.
In 1976, Jordan, mentioned as a possible running mate to Jimmy Carter of Georgia, became instead the first African-American woman to deliver a keynote address at the Democratic National Convention.
Jordan retired from politics in 1979 and became an adjunct professor teaching ethics at the University of Texas at Austin Lyndon B. Johnson School of Public Affairs. She again was a keynote speaker at the Democratic National Convention in 1992.

In 1994 and until her death in 1996, Jordan chaired the U.S. Commission on Immigration Reform, which advocated increased restriction of immigration, called for all U.S. residents to carry a national identity card and increased penalties on employers that violated U.S. immigration regulations. Then-President Clinton endorsed the Jordan Commission's proposals.  While she was Chair of the U.S. Commission on Immigration Reform she argued that "it is both a right and a responsibility of a democratic society to manage immigration so that it serves the national interest." Opponents of modern U.S. immigration policy have cited her willingness to penalize employers who violate U.S. immigration regulations, tighten border security, oppose amnesty or any other pathway to citizenship for illegal immigrants, and broaden the grounds for the deportation of legal immigrants. In 1994, President Clinton Awarded her the Presidential Medal of Freedom and The NAACP presented her with the Springarn Medal. She was honored many times and was given over 20 honorary degrees from institutions across the country, including Harvard and Princeton, and was elected to the Texas and National Women's Halls of Fame.

Thursday, February 4, 2016

Black History Month: Ida B. Wells

"The Winchester rifle deserves a place of honor in every black home." said the 4'6" African American school teacher.  The Winchester repeating rifle was the "assualt rifle" of it's day.  And here in the dark days after the American Civil War, is a black school teacher and eventual icon of African American History recommending that EVERY black household have such a weapon at the ready and help in conscious reverence!

What Ms. Wells lacked in stature she made up for beauty and many times over in spirit.  Few in the black narrative have had so little to lean upon and propped up so many from so far down.  Ms. Wells survived what Professor Johnson labeled the nadir of black history.  The lowest, darkest point in the experience.  Yes, lower than the days of slavery.  For in the middle and late part of the 19th century freedmen had graduated from slaves to victims and targets.  Lynchings were rampant. Blacks were killed indiscriminately and terribly and the law was seldom on their side to protect, defend, and certainly not to provide justice.

In this treacherous environment the diminutive Wells struck blow after blow for justice and security for the black community in America.  She initially sued railroads for discrimination and abuse of black passengers.  However, her greatest victories were against the horrific practice of lynching. The modern day American has no clue that in the 1890's if you accused a black man in the south of any crime, chances were that within 24 hours he would hang by the neck (or worse) until dead .  Nevermind the police, courts, lawyers--fairy tales in 1890--black men and women were slaughtered because a white person said they did such and such.  This simple violation of core human rights was the target of Well's keen aim and the justification for her call to arms.

She advocated, wrote for multiple papers and publishers and artfully refuted both white and black detractors. Her discovery, declaration, and condemnation of lynching was the chief accomplishment of her life's work.  Americans of every race, then and now, were and are largely ignorant of the number of killings that took place via the sham-justice of the lynch mob.  Black folks were emblazoned by oratory servants like Wells to fight back against the KKK, Jim Crow, and lynch mobs.  Godly whites were awakened to help and often opened the door for leaders like Wells, W.B. DuBois, and others who eventually became the NAACP.  It was a slow, bloody, fiery struggle.  Through forceful effort even to victory, Ida B. Wells-Barnett earned her place in Black History.

*My thanks to Professor Nicholas Johnson of Fordham Law School and his book Negroes and the Gun: the Black Tradition of Arms. 2014, Prometheus Books.  And some wikipedia stuff too. 

Tuesday, February 2, 2016

Black History Month: Frederick Douglass

Frederick Douglass advised the best defense against slave catchers was a good revolver. I think that detail was omitted from my history lesson as a child.  Douglass knew that in 1854 the law could not be relied on to protect blacks straining to regain their natural state of freedom and liberty.  The Fugitive Slave Act of 1850. Interestingly, Abolitionists began to fight the measure as an overreach of the federal government. But while politicians debated and citizens resisted, the black man was hunted, kidnapped, or worse.

The most inspiring story I've read of Frederick Douglass is the moment young Fred Bailey stood up to the "N***er-Breaker" Mr. Edward Covey.  This despicable fellow was known for breaking the will of strong willed slaves by any means necessary.  Young Fred defeated Covey and another white man with nothing more than his fists, dignity, and perhaps Divine blessing. For that moment of resistance began the inevitable evolution of Fred Bailey the slave to Frederick Douglass the orator, abolitionist, freedman advocate, and statesman.

Consistently and advocate for self defense rather than political violence, Douglass was welcomed by both ethnicities bent on freedom for all men--and his enemies could never match his wit and mind in civil discourse.  At the 1888 Republican National Convention, Douglass became the first African American to receive a vote for President of the United States in a major party's roll call vote. Ever the orator and advocate Douglass is one of the most important figures in African American history.

A man's rights rest in three boxes.
The ballot box, jury box and the cartridge box. 

--Frederick Douglass

*My thanks to Professor Nicholas Johnson of Fordham Law School and his book Negroes and the Gun: the Black Tradition of Arms. 2014, Prometheus Books.

Friday, January 1, 2016

29 Texas Walmarts among 154 closing nationally
​BENTONVILLE, Ark. (Walmart) – Walmart is closing 154 stores across the country — 29 in Texas.

The company said 95 percent of the stores impacted are within ten miles of another Walmart.

Walmart also announced plans to open at least 50 Supercenters and at least 85 Neighborhood Markets over the next 13 months. In the same period, Sam’s Club plans to open at least seven new stores.

Except where noted, all Texas stores will close Jan. 28. Stores are:

Walmart Express
  • 721 Dale Evans Dr., Italy
  • 221 S SH 274, Kemp
  • 504 W Pine St., Edgewood
  • 301 Hwy 69 S, Whitewright
  • 122 Commercial Ave., Anson
  • 1003 Telephone Cir., Merkel
  • 5 N 14th St., Haskell
  • 1010 N Main St., Winters
  • 501 N Main, Godley
  • 416 N Third St., Grandview
  • 420 S US 69, Leonard
  • 428 N Dallas St., Palmer
  • 440 E Pine St., Frankston
  • 1787 US 259 S, Diana
  • 1005 Texas Ave. E, Waskom
  • 870 Taylor St., Hughes Springs
  • 914 North Main St., Lone Star
  • 504 WL Doc Dodson, Naples
  • 12522 FM 1840, Dekalb
  • 114 Redwater Blvd. West, Maud
  • 14091 FM 490, Raymondville
  • 7480 Padre Island Hwy, Brownsville
  • 8201 N FM 620, Austin
  • 7075 FM 1960 Rd W, Houston
Neighborhood Market
  • 2218 Greenville Ave., Dallas (Greenville)
  • 2740 Gessner Rd., Houston
  • 2201 West Southlake Blvd., Southlake
  • 1901 S. Texas Ave., Bryan
  • 4268 Legacy Dr., Frisco (closing Jan. 17)​​