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There is a home equity crisis going on in the US. First there was the economic crash of 2007 (yes that is still rearing its ugly head), then real estate foreclosures, and now those who have managed to hold on to their homes are facing negative equity. To show just how bad it really is, consider the statistics released by CoreLogic in June of 2011. According to their data, 22.7% of homeowners have negative equity. In Canada, it?s less than 3% (according to the Canadian Association of Accredited Mortgage Professionals in May 2011).
Having little, zero or negative equity in an investment means you actually owe more than your assets are worth and are basically utilizing the property on borrowed time. It is definitely a scary place to be, especially if covering the mortgage payments and taxes is nearing impossibility. When homeowners get to this point, they usually want to sell the property and downsize. That is when negative equity will become a real problem. Not only will you walk away from the home with no money, but you won?t have a place to live or means to purchase another home. If it is at all possible, homeowners struggling with negative home equity are best advised to try and ride out the storm.
Of course the other option is to make home improvements that add value to the home, which may then add to the sale price enough to get you out of the hole just a little bit. At the very least, some improvements should reduce the energy costs both for your immediate benefit and the benefit of a buyer. Let?s begin with a few green ideas.
Assess the energy efficiency of the home. Are there a lot of cold voids in wall cavities, attics, crawlspaces, covered decks etc? Do windows and outer doors seem to ?leak? air? Does it seem to take awhile for a room to heat up when the thermostat is turned up? If so, then your home is literally leaking home heating and cooling dollars. The use of spray foam insulation will make a huge difference, even if it is just in the attic. Closed cell polyurethane foam can seal up even the smallest crack or space, thus stopping air flow. In addition, a closed cell foam is water resistant so there is no fear of mold or mildew should a leak occur. Oh, and critters can?t dig their way in either.
Continuing with the subject of greening the home, it would be a great idea to change all incandescent light bulbs over to energy efficient fluorescent ones. Converting showerheads to high pressure water saving devices is an excellent way to save cash as well. Disconnect heaters in places that do not really need to be heated, like hallways, bathrooms, entryways and garages. Set up a clothesline so laundry can be air dried in good weather, rather than using the dryer. Use cold water for laundry and start doing the dishes by hand on a regular basis instead of using the dishwasher. The savings will begin to add up and no doubt you will see a reduction in home energy costs.
Taking energy savings measures definitely attracts home buyers, but larger improvements are also quite beneficial. Let?s begin with the big ticket item: the building exterior. Adding a maintenance free-exterior to the home may cost a bit of money, but it will certainly play a huge role in attracting buyers. Since so many families are forced to have both parents working for longer than previous generations, there is little time for extra home maintenance. Having an exterior that does not require painting or plastering every two to five years is a very attractive prospect. Plus, a new exterior will give the home a whole new face, making it look brand new again. That alone may increase the value of the property.
Kitchens are the core of the home. They may also be the most used room in the house, so they get a lot of abuse. Does your kitchen need a makeover? Since the kitchen is so important to homeowners, ask yourself if you would want your current kitchen as it is right now. If your answer isn?t a resounding ?yes?, then it?s time to renovate. Painting is a good start; even re-facing the cabinets might be a good idea. However, if money is short then it may be prudent to assess the need to replace the counter against the need for cabinet re-facing. If possible, update the appliances to current models. There is no need for top of the line stainless steel behemoths, few functional kitchens can accommodate them and most people don?t want them anyway. A mid-range model will do just fine. Also, add a few cabinet organizers if possible. It is a small gesture that goes a long way towards enticing a buyer. When there is organization, they can visualize themselves stocking the cupboards.
Negative equity in a home is not the end of the world. If it is at all possible to ride out the storm, then do your best. In the meantime, making the above improvements will empower you as a homeowner. You will begin to see the real value in your home, not just what the mortgage statement says.
Mark Munns is a representative of Spray Foam Direct. We supply quick and easy do-it-yourself foam insulation kits which will save you money and energy.Visit us online today or check out our blog at sprayfoamdirect.com!
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