For Rent: Curing the Housing Depression

It’s no surprise to anyone that the world’s economy has been hit with some hard economic problems, and we’re not doing any better in the United States. With an enormous federal deficit, record high unemployment rates, and general public unrest, it’s hard to see any end to our troubles.

One of the main contributors is a poor housing market, which affects the weak economy. The weak economy then further affects the housing market. It is a vicious cycle. In a recent article, Peter Orszag, Vice Chairman of Global Banking at Citigroup and columnist for Bloomberg View, draws a global example and considers that, even if the European banking system remains stable, the U.S. economy may still flounder because of the housing market’s current state. Orszag goes on to admit that breaking the vicious cycle will be a painful, time-consuming process.

An Excess of Homes

In a normal housing market, it’s expected to have some vacant homes for sale. It’s part of the process of matching buyers with sellers. During the 90s, the average vacancy rate was about 1.5 percent. By 2008, the amount nearly doubled to 2.9 percent.

This year, the number has only come down slightly to 2.5 percent. Although that single percentage point difference from the historical average seems miniscule, it amounts to an excess of almost 1 million vacant homes. This excess of owner-occupied housing puts downward pressure on prices.

Renting Homes Out

Peter Orszag’s suggestion to ease the current housing depression: allowing tax write-offs for investors who buy empty properties and rent them out. Shifting vacant homes into the rental market would help stabilize prices.

Based on calculations by Richard Wagreigh of Citigroup’s Financial Strategy Group, the annual costs on real estate investment would be reduced by about a third when applying the tax break. The policy would also allow for more rental units, lowering the overall price, and encouraging others to move out of existing homes into their own rental units. To avoid letting the tax break outlive its purpose, the policy would be tied to the supply of vacant homes for sale.

As an example, let’s assume the tax break policy produces an extra 250,000 housing units that can be purchased and rented out each year, as well as 500,000 other units bought and rented even in the absence of the tax break. If the average price of those homes is $250,000, the 10 year total cost to the government would be less than $50 billion each year; most of this amount would return to the government in the future, based on full deductions. The cost would then be about $10 billion for each year the tax break is in place.

Staging Your Kitchen for Resale

Arranging your home in a way that is accessible to potential buyers is a surefire way to sell your home more quickly and at a higher price. Staging is important, but staging the kitchen is crucial as it is a major selling point of a home. Your potential buyers should be able to visualize themselves in the kitchen as if it were their own home. Check out these easy tips on how to stage your kitchen for resale.

Before you even begin to stage, you need to go over the kitchen with a fine tooth comb for anything that needs to be fixed. Noisy refrigerators, scratched cabinets, or chipped floor tiles should be taken care of.  Give the walls a fresh coat of paint if they’re looking dull. You don’t need to spend thousands of dollars on a brand new kitchen to sell the place. Make sure everything looks good and is working. Stainless steel appliances and granite counter tops are great, but if your kitchen is in perfect working condition it will sell just as well.

Your kitchen should absolutely sparkle. It should be so clean that potential buyers would feel A-Okay eating things from the floor. That would be fine too because you should have had the floors mopped and baseboards scrubbed before they came over. Polish everything until it shines. Wipe down cabinets, dust the ceiling fan and make sure that the counter is free of spills, drips and crumbs.

Once your kitchen is spotless, start clearing out the clutter. Take down the magnets from the fridge and tuck countertop appliances into the cabinets. Nothing should be on the counter. Make sure that nothing is in the sink or dishwater (clean or dirty) and hide all of the cleaning products from view. If you have a cupboard that hurls Tupperware at you when you open it, this is your opportunity to clean it up! Potential buyers are going to open up doors and drawers so everything needs to be neat.

Highlighting the best parts of your kitchen and minimizing problem areas is very important when staging. For example, a custom bookshelf that you’ve left empty is a great built-in feature to highlight. Do so by borrowing a few cookbooks from your friends and setting them up. Let buyers see the potential in the space. If they see how they could use it if they lived there, they’re more likely to remember it. Set the table in an eat-in kitchen to make it look like you eat there every morning, even if you don’t. Make your potential buyers believe that this is the most functional kitchen they’ll see.

The key to great staging is to make a space look livable without looking lived-in. Fresh flowers adds to the homey appeal as does a decorative rug. Pull back the curtains and let in some sunlight to highlight all of that exhausting cleaning you’ve done. Hang some generic art, something that would be easily accessible to everybody.

Once you’ve cleaned, de-cluttered, and artfully arranged your belongings your kitchen will be ready for potential buyers to fall in love with!

This article was written by Erie Construction. Follow Erie Construction on Twitter for more updates on home improvement.