'I bought a house for $1,000'

NEW YORK (CNNMoney)

Antjuan Wyatt and his wife recently closed on a three-bedroom, 1,500-square-foot house in a leafy, middle class Detroit neighborhood.

The house needs some work -- new furnace, new plumbing, new windows. But that's OK, because Wyatt bought the place at auction for $1,000.

"We were looking for a home in the suburbs, but the prices were too high," said 27-year old Wyatt, who works at a local Chrysler plant and dabbles in real estate on the side. "I was surprised I got this for $1,000."

In four months (and $30,000 in repairs), Wyatt hopes he can move into the refurbished gem with his wife and their two kids.

Wyatt bought his home through a new program run by the Detroit Land Bank, an entity charged in early 2014 with addressing the huge number of vacant homes in the city. While some cities struggle to find innovative ways to build new housing, Detroit struggles to manage the homes in place.

The problem is hard to overstate. In the early 1950s, 1.8 million people lived in the city. Last year, the population was 700,000.

"We have housing stock for over a million people who don't exist anymore," said David Szymanski, chief deputy treasurer in Wayne County, which includes Detroit. There are currently 80,000 dilapidated properties in Detroit and 100,000 empty lots -- a third of the city's total. Tens of thousands more homes face foreclosure.

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The county tries to auction these homes, but it doesn't always work, said Szymanski. Of the 30,000 homes auctioned in the last three years, owners of 22,000 didn't pay property taxes. This lack of tax revenue is a main reason why Detroit can't keep the lights on and the streets clean, which leads more people to leave the city, which leads to more foreclosed and eventually abandoned homes.

In many cases, the taxes aren't paid because unscrupulous landlords or speculators would intentionally let the county foreclose, and then just buy the house back at auction for a fraction of what was owed in back taxes.

The county is trying to fix this, and has enacted a rule allowing a home to be seized if it isn't torn down within six months or improved within two years of purchase.

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The land bank is trying to avoid this altogether. Its auctions only let people buy one home a month -- discouraging speculators and developers. They also require that buyers not owe any back taxes or have any housing code violations.

"We want people moving into them, we want families moving into them," said Craig Fahle, a land bank spokesman. "That's what's going to reestablish the real estate market in this town."

 

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The idea is to get more people into homes like Kate Daughdrill, who bought a three-bedroom house at a county auction in 2011 for $600.

Daughdrill, 29, has since bought seven other vacant lots around her house, and now runs an urban farm in addition to working as a visual artist. The first year after she bought her home, she raised a pig and traded the meat for electrical work.

While Detroit's population is still declining, these cheap homes have proven popular with creative types like Daughdrill, who can then spend more time on their passion and less trying to pay the rent. Equally important is the chance to help with the rebuilding of Detroit.

"When people are present and show care for a home, they can transform that home and that whole block," she said. "Having a presence starts that shift."

James Haddrill, a 35-year old sculptor who grew up in the Detroit suburbs, bought a three-bedroom house a block away from Daughdrill at a 2011 county auction for $500. When he bought it, it was being used as a crack house.

James Haddrill in front of the hosue he bought for $500

"It was filled with clothes, couches, mattresses," said Haddrill, who evicted the occupants himself and now uses the house primarily as a studio. "Cleaning it was one of the craziest experiences of my life."

All these people said buying a home through the land bank or the county was a relatively easy process. Haddrill suggested they market the program to artists in other cities -- like New York -- where space is becoming prohibitively expensive.

Wyatt said city offerings -- especially the schools -- will have to get a lot better before more people move to Detroit.

Both the county and the land bank are marketing these homes, but buyer interest will have to grow quickly if they want to avoid even more vacant buildings -- the county is set to foreclose on a record 80,000 homes in 2015.

What's innovative about your city? Let us know by posting your photo and description to #CNNCities on Instagram. 

One property insurance claim can hike your premiums by hundreds

File just one property claim to your insurer and you can expect to see your premiums soar by hundreds of dollars in some states.

On average, filing a single claim -- for anything ranging from a stolen bicycle to tornado damage -- will result in your monthly premium being raised by 9%, according to a report released by InsuranceQuotes.com. File a second claim and premiums climb by an average of 20%.

"Winning a small claim could actually cost you money in the long run," said Laura Adams, InsuranceQuotes.com's senior analyst. "Homeowners need to be really careful. Even a denied claim can cause your premium to go up."

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And the size of the claim has little impact. Filing a small claim increases your rates by just about as much as filing a catastrophic one. "The insurers have found that people who make a claim are more likely to make another," said Adams. "You've become a riskier customer."

Yet, the type of claim does matter. Liability claims, such as from personal injuries, are the most expensive type of claim, with insurers raising premiums by an average of 14%, InsuranceQuotes.com found.

 

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Other claims that lead to big premium increases are theft and vandalism, which often indicate that the home is in a neighborhood that is unstable or falling prey to blight. In bad neighborhoods, these crimes can recur, and the high premiums reflect that.

The premium increases also vary greatly by state. Homeowners in Wyoming saw the biggest increase in their premiums -- an average of 32% -- after a claim was filed. While the hikes are high, the state tends to charge fairly low premiums of about $770 a year, considerably lower than the $978 national average.

Policyholders in Connecticut, Arizona, New Mexico and California also saw large hikes of 18% or more.

Meanwhile, homeowners in Texas, where insurers are not allowed to raise premiums on the basis of a single claim, saw no increase. And homeowners in New York and Massachusetts paid very little more after filing claims.

Average premiums range from a low of $513 a year in Idaho to $1,933 in Florida, where frequent hurricanes drive insurance costs up.

Once your premiums are raised, it can be difficult to get them reduced.

Insurers keep a database called the Comprehensive Loss Underwriting Exchange, or CLUE, which tracks seven years' worth of your auto and property insurance claims, as well as any inquiries you may have made about a claim. The database then compiles a report based on your claims history that is then used to determine whether to cover you and how much to charge.

The information is available to all insurers so even if you switch providers, your rate with the new carrier may be just as high.

Related: Damaged home? How to get an insurer to pay up

"You can't escape your claim history," said Adams.

But you are not completely without hope. Here are some ways to try and keep your homeowner's insurance costs down:

Raise your deductible. But not so high that you can't afford to pay out-of-pocket costs if damage occurs.

Don't make small claims. Getting a few hundred dollars back if a tree limb falls on your shed may feel good but you could be paying that back to your insurer over the next few years -- and then some.

Don't use homeowners insurance as a maintenance tool. Don't file a claim to pay for small repairs, such as when wind blows some old shingles off your roof. Use it for catastrophic repairs only.

Shop around often. Look for quotes once a year. There's lots of competition in the industry and you may be able to buy equal coverage and service for a lower price. 

Why everybody is moving to Texas

NEW YORK (CNNMoney)

More Americans moved to Texas in recent years than any other state: A net gain of more than 387,000 in the latest Census for 2013. And Austin was the fastest growing major city.

Jobs is the No. 1 reason for population moves, with affordable housing a close second.

"It take two things to draw people inland in big numbers: jobs and housing affordability," said Nela Richardson, chief economist for the real estate broker Redfin.

Texas and other heartland states have two advantages that translate into affordable housing: Plenty of cheap land around cities and easy regulations that enable developers to build quickly.

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Nine of the top 10 fastest growing U.S. metro areas last year were ones where homes were more affordable than the U.S. average, according to Redfin. Many were in Texas, Oklahoma, Utah and other heartland states.

Five Texas cities -- Austin, Houston, San Antonio, Dallas and Fort Worth -- were among the top 20 fastest growing large metro areas.

Some smaller Texas metro areas grew even faster. In oil-rich Odessa, the population grew 3.3% and nearby Midland recorded a 3% gain.

 

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Jobs was the main driver in Austin, where population rose by 2.6% between 2012 and 2013. That's nearly four times faster growth than the United States as a whole.

Jobs are plentiful in Austin, where the unemployment rate is just 4.6%. Moody's Analytics projects job growth to average 4% a year through 2015.

Just as important, many jobs there are well paid: The median income of more than $75,000 is nearly 20% higher than the national median. The median home price is $243,000, higher than the U.S. norm, but a price level that income can support.

Related: Mansions for under $1 million

During the boom years, population actually grew faster in high-priced markets like New York and San Francisco.

 

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Rapid price gains made buyers less concerned about overpaying for homes. Plus, they had banks lining up to lend them money.

Once rapid home price jumps were taken out of the equation, affordable housing markets with strong economies became even more attractive to people looking to relocate. 

Make a shipping container your home for less than $185K

NEW YORK (CNNMoney)

One of the biggest Chinese imports to the United States these days are affordable, eco-friendly houses -- or at least the building blocks for them.

Most international freight today travels in huge steel containers that can stack on the decks of ships and be offloaded onto the backs of tractor trailers. Sometimes the containers get shipped back to Asia. But most of the time, they sit idle around U.S. ports.

Architects have figured out a way to make these containers useful: Convert them into guesthouses, studios, even single-family homes.

Architect Adam Kalkin's Quik House, for example, is a 2,000 square-foot home that is made out of six shipping containers. The two-story home offers three bedrooms and two and a half baths, a laundry room, pantry, mudroom and other amenities.

The basic price of the Quik House is $119,000, which includes the six modified containers with stairs, walls, glass for windows, pre-fitted electrical and plumbing systems and aluminum glazing frames that are factory installed.

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But there is still a lot of work to be done: Buyers are responsible for buying the land, securing building permits and getting the home hooked up to local water and sewer lines and the gas and electric grid, among other things.

The typical cost to assemble and hook up the Quik House and make it habitable is about $184,000.

But there are add-ons, too. Like a stainless kitchen package, with Viking stove, dishwasher and a fireplace for an extra $25,000.

 

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And while the home is pretty eco-friendly from the get-go (you're already recycling six shipping containers), you can also add on options like a solar power system or "green" roof.

Related: A $400 million apartment in Monaco

Getting your own Quik House can be, well, quick. It can be delivered within 10 weeks and assembled on site in a day, according to the builder. From ordering it online to the day you move in shouldn't take longer than six months. (There is currently, however, a six-month waitlist.)

Here's how much it will cost you to make a container your home: 

From container to home: Breaking down the cost

Item	Cost
Base price for six factory modified containers	$119,000
Site preparation (excavation, laying foundation, etc.)	$14,000
Assembly	$2,500
Heating and cooling system	$7,000
Plumbing	$7,000
Electrical	$7,000
Roofing	$3,000
Insulation	$5,500
Flooring	$5,000
Shelves and closets	$2,000
Doors and hardware	$2,000
Glass installation	$4,000
Wall finishes and painting	$6,000
Total	*$184,000, plus shipping

Source: Quik Build LLC.
Note: Does not include the cost of the land. Shipping costs can range from $3,000 to $12,000 depending on how far the home is from Quik Build's factories in New Jersey or Liverpool, England.

Baby Boomers face big housing crunch

NEW YORK (CNNMoney)

America's Baby Boomers are facing a serious housing crunch, with many expected to struggle to afford their homes come retirement.

By 2030, the number of adults age 65 and older will more than double to 73 million, according to a report by the Harvard Joint Center for Housing Studies and the AARP Foundation.

And many of these retirees will need to put so much of their income toward housing -- more than 30% --that they will have to cut back on other expenses like transportation, medical care, even food, the report found.

A big part of the problem: many Baby Boomers will enter retirement with less savings and more debt than previous generations.

A growing number of seniors are carrying mortgage debt into retirement, with more than 70% of younger Boomers ages 50 to 64, and 40% of those age 65 and older still owing money on their home in 2010. Even worse, they owed even more money on their loans, which is putting many older Americans in a "financially precarious" position, the report found.

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Meanwhile non-housing related debt among the 65-plus crowd climbed from an average of $4,300 in 1992 to $7,200 in 2010, mainly as a result of credit card and auto loan debt.

Adding to Boomers' burdens, less money is expected to come in. Over the next decade, the number of households age 65 and older living on less than $15,000 a year -- below the poverty level for a two person household in 2014 -- is projected to grow by nearly 40%.

Related: Why many retired women live in poverty

The authors of the report argue that the government isn't doing enough to help low income seniors. In 2011, just one-third of low income seniors who were eligible for federal rental assistance received any assistance at all.

 

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The report recommends a variety of fixes, including property tax relief for seniors, increased federal rental assistance and improved programs to help seniors "age in place" in their homes, instead of in costly institutions. 

Mortgage rates hit 2014 low

Mortgage rates have dropped to their lowest level in over a year.

The average rate for a 30-year loan now stands at 4.1%, according to Freddie Mac. That matched its lowest level since June 2013, when it stood at 3.93%. The average 15-year fixed was 3.23%.

Related: Best housing markets for Millennials

The government's stimulus program has helped keep borrowing costs down. The Federal Reserve has been purchasing Treasury Bonds and mortgaged-backed securities for years, providing a steady market for mortgages.

But the Fed has cut back on its purchases, and plans to end the buying program entirely in October, reducing demand for mortgage bonds. That should eventually cause rates to climb.

Low mortgage rates and home prices that are climbing more slowly should boost the housing market, said to Keith Gumbinger, spokesman for HSH.com, a mortgage information company.

"That should provide a solid foundation for home sales this fall," he said.

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It was a strong summer.

Sales of existing homes rose 2.4% in July to an annualized rate of 5.15 million homes, according to a different report released Thursday by the National Association of Realtors

Stronger job growth has boosted the market, according to NAR's chief economist, Lawrence Yun, and a larger inventory of homes on the market give buyers more to choose from.

"That's making prospective buyers less hesitant about entering the market," he said. 

In some housing markets, all-cash deals still rule

All-cash deals made up 38% of all home sales in the second quarter, according to RealtyTrac.

NEW YORK (CNNMoney)

Buying a home? You still have to compete against the big money bringing all-cash. But it's getting a little easier.

All-cash deals made up 38% of all home sales in the second quarter, according to RealtyTrac, down from 42% in the prior quarter.

One reason is that big institutional buyers, those buying at least 10 homes a year, are finding fewer deals.

They accounted for 4.7% of all homes sold, down from a peak of 6% in 2013.

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As the housing market recovered, these investors were buying up homes in deeply troubled markets, like Phoenix and Las Vegas.

Those bulk buys helped to reverse the slide in home prices.

But now, home prices are up more than 20% from their 2012 lows.

This has created a "classic good news/bad news scenario" for the housing market, said Daren Blomquist, a spokesman for RealtyTrac.

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The good news is that first-time homebuyers have more of a shot. The bad news is that some of them may already be "priced out of the market," said Blomquist.

Cash buyers are much more attractive to sellers because they know the investors are able to act quickly and that the sale will almost certainly go through.

There are still plenty of markets where cash rules.

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In Las Vegas, a recent spike in defaults has sparked an increase in cash sales to more than 50% of all home sales. Detroit, Kansas City, Cleveland and Philadelphia all had at least 45% of sales in cash.

Cities attractive to foreign investors are also seeing a lot of cash exchange hands. In the Miami metro area, with its huge demand from Latin Americans, a whopping 64% of sales were all cash. Other Florida cities like Orlando, Cape Coral, Sarasota and Tampa scored nearly as high. In New York, 48% of sales were cash. 

'50 Shades of Grey' apartment building red hot

The view from the living room of the biggest penthouse in the Escala apartment building in Seattle. 'Fifty 

The "Fifty Shades of Grey" books have made British author E.L. James very rich. They have also made a certain Seattle apartment building red hot.

Ever since the trailer for the "Fifty Shades of Grey" movie came out last month, Erik Mehr's phone has been ringing a lot.

Mehr is the real estate broker for the "Fifty Shades apartment."

Yes, the upscale apartment building in Seattle where fictional billionaire Christian Grey lives -- and does lots of kinky things -- actually exists. It's called Escala.

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It's overwhelmingly women ages 19 to 50 that call Mehr's firm, begging to spend a night or two in the famous penthouse or, at least, get their photo somewhere in the building.

"Our silly phone calls have spiked again where people want to rent the room," Mehr told CNNMoney. "I don't think they realize that this is a condominium building that residents live in and there is no red room."

E.L. James heard about Escala, which was completed in 2009, and wove it into her story, although she did take a number of liberties. For example, there isn't a helicopter landing pad on the roof.

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Escala had to increase its security measures since the first book came out in 2011 and fans became a little too eager to get close to "the apartment."

The most expensive penthouse at Escala doesn't have a red room. A family from Oregon bought it in 2013 for $6.2 million.

But the building does have some famous people with ties to the building. Escala has had as many as three Major League Baseball players as residents. San Francisco Giants pitcher Tim Lincecum owned one of the "sub penthouses," but he sold it earlier this year.

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While the "Fifty Shades" trilogy and movie have caused some headaches for Escala residents, there have also been perks.

E.L. James gave a private book signing to building residents, according to Mehr, and the film crew took shots of Escala's exterior (with the owners' consent) that are likely to appear in the movie.

But the greatest benefit of all has been the skyrocketing home values since the book's release.

According to real estate website Zillow (Z), the median sales price for a Seattle condo has risen about 10% since 2010. The median sales price for Escala apartments, however, have surged over 75%.

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Only six apartments remain unsold in the building. Most are going for around a million.

Still, Mehr attributes the phenomenal rise more to the improving economy and Seattle's rising popularity than the book.

"Most of the unit owners are like you may expect -- they're business people or a bit older, so the book wasn't on their radar," says Mehr. "For the most part, they would rather downplay where they live."

But it's notable that much of the price jump occurred since the first "Fifty Shades of Grey" book came out in the spring of 2012. The median sale price rose 62% since then, according to Zillow.

That's the kind of economics ruthless businessman Christian Grey would likely approve of. 

Zillow buys Trulia for $3.5 billion

By Les Christie  @CNNMoney July 28, 2014: 3:03 PM ET

The two biggest names in online house hunting -- Zillow and Trulia - are joining forces in a stock deal valued at $3.5 billion.

Trulia shares jumped 12% on the news that it's selling to Zillow.

Zillow will continue to operate two separate websites, where consumers can search listings of homes for sale. Zillow and Trulia together attract more than 130 million visitors a month.

Both companies post detailed listings of homes for sale, and charge agents to post their names alongside their listings. Some agent teams spend $20,000 a month with Zillow, Trulia, or both.

Still the websites' revenue only add up to about 4% of the $12 billion the real estate industry spends on marketing via newspaper and television ads, billboards, direct mail and the like. Zillow CEO Spencer Rascoff sees an opportunity to capture more of those marketing dollars via mobile.

"Mobile is becoming the medium of choice for home shopping," said Rascoff.

Trulia's current CEO Pete Flint will continue to head Trulia's operations and report to Rascoff.

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The two real estate portals have transformed the housing market over the past decade by making information that was once only available through realtors easily accessible to consumers. The sites have made the home buying process much more transparent and stripped real estate brokers of their traditional role of gatekeepers of information.

Zillow, for instance, has its own home value algorithm called Zestimates. Trulia offers extensive rankings on crime, public transit and schools.

 

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The ultimate fear: Zillow and Trulia could make brokers irrelevant.

The new Zillow will still have plenty of competition from other sites such as Realtor.com, Homes.com as well as from Coldwell Banker, Re/Max, Century 21 and other real estate brokers.

But it will give the combined company the leverage to charge realtors more, said Steve Murray, editor at Real Trends a real estate communications and consulting company.

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Shopping for million-dollar homes comes with perks

Jack Cotton, a realtor in Cape Cod, Mass., will take potential buyers out on his powerboat. He works with properties on the high end, which he defines as the top 10% of the market.

"That's kind of our secret weapon," he said of his boat. His clients enjoy cruises of the nearby inland waterways to "experience the lifestyle of being here."

He mentioned his counterparts in Colorado will take their clients out skiing, and Manhattan realtors take potential buyers out in limos.

Ken DeLeon, a realtor in Atherton, Calif., the highest-earning zip code in California, recently took delivery of his own private plane. He uses it to give buyers -- particularly overseas investors -- aerial views of what could essentially be their next backyard.

California real estate agent Ken DeLeon speaks to clients in front of his new private plane.

But a plane isn't the only way to give clients a birds-eye view of a property.

Realtors are now using drones, and drone technology, as a way to stay on top.

"The high-end market is very competitive," said Colette Harron, a real estate agent in Essex, Conn. "So whatever it takes." Her company recently used photographs taken by a drone to showcase a large, multimillion-dollar home in Connecticut. The drone was able to capture the stunning water views of nearby Long Island Sound.

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Buyers in the well-heeled River Oaks neighborhood of Houston are offered something new from builder Al Ross, who's putting up several large houses in the $4 million to $5 million range.

He includes a personal concierge service with each home. Good for one year, the service includes seasonal flower and plant renewal, cleaning of the home's exterior and gutters, touch-ups to walls that are scuffed or scraped, and other services.

Clients "want to know that you are there for them when they need you," Ross said.

Each home also comes with a three-year warranty on its construction. If anything breaks, he'll fix it, no questions asked. "It's no different than buying a very luxurious car," he said. "You expect everything to function properly."

Picnic, anyone? Realtor Jack Cotton said boating is part of the lifestyle in Cape Cod, Mass.

For others, selling a high-end property is about creating an experience, and making a buyer understand the lifestyle that comes with a certain property.

Los Angeles realtor Eric Lavey used to produce sleek, narrative-driven videos with professional actors that gave potential homeowners the ability to see what life might look like in the properties he markets, which usually go from $10 million and up.

Now, he says, the market is so hot he doesn't have the time to create videos, and instead focuses on getting his clients properties with the two must-haves for his area: views, and a substantial master bathroom.

Related: America's top-earning zip codes

But wooing the potential buyer may take more than that.

Michael Meier at the Meier Group in New York City goes truly over the top when it comes to imagining a certain lifestyle. In a recent shoot for a downtown loft, he added a scantily-clad lingerie model to the scene. In one shot, she relaxed in bed with two male models.

"People dress themselves in jewelry to make them look good. I dress homes in beautiful people to make them look good," Meier said of the shoot, in a recent video on his website.

Related: Crazy requests for the luxury concierge

Meanwhile, Cape Cod realtor Jack Cotton said he doesn't believe in staging for the high-end buyer because "it's not real, it's contrived, it's pretend ... people in the high end don't want to be played," he said. "They want the truth." He doesn't even believe in the old trick of baking cookies before a home's showing.

He contends that it all comes down to knowing the buyer.

"You have to adapt to the market that you're in," he said.