Water and Real Estate

You may think this is a story on waterfront properties or maybe even water in basements, but you would be mistaken. When one talks about basic human needs, generally it includes food, water and shelter. It is in many ways ironic that our government’s focus has been more sharply drawn to fossil fuels rather than water. Fossil fuels fired the industrial revolution of the past two hundred years, but there are alternatives to this ancient, soon to be exhausted fuel. Water, however, has been a pre-requisite of virtually all life, particularly human life. It is also incongruous that there is a water shortage particularly given the fact that the majority of the surface area of the planet is water.

There are some arid facts:
36 States will face severe water shortages over the next five years.
The U.S. used a total of 148 Trillion Gallons of Water in 2000 (last available statistics). That was for every purpose: commercial, manufacturing, residential, agricultural, etc.
That translates to 500,000 gallons per person in the US. (Brian Skoloff Associated Press)

California uses 23 Trillion Gallons of water a year. Much of that is from the Snow melt in the Serra Nevada Mountains. Global Warming will reduce that reservoir.

There are 1000 desalination plants in the United States. The larges in Tampa Florida produces 25 million gallons of water a day, only 10% of the area’s daily demand.

Climatologists predict the Southwest United States drought will last 90 YEARS.

The rest of the world is in a more serious situation. The Continent with the most people has the lowest supply of water. Asia. While the ‘water wars’ in the western United States are fought in court, that may not be the case in the rest of the world. Water is not a luxury. It is absolutely necessary.

While living in Rhode Island, the Ocean State, may ‘insulate’ one from
the most serious water shortage challenges, it does not allow us to ignore it.
Some self evident truths: We need water for life. Businesses, also, need water to provide jobs. We need a State-wide water policy, (not necessarily a single water provider). A pro-active water policy would promote conservation. We need to ‘reuse’ waste water for irrigation, and non human consumption needs. We need to encourage new technologies to save water. (The Chinese are now growing aerobic rice.). We also provide businesses with reliable, fair and consistent commitments for water. Maybe we should consider building a major desalination plant here. Good government is a steward of its resources. Great government anticipates. It prepares for crisis. But more importantly, great government looks at the future with plans in place. The Constitutional Convention was all about governance. A Rhode Island Water Summit to create the architecture and the opportunities for the future of Rhode Island is now appropriate. It is fitting that a potential model for 21st century water stewardship would emanate from Rhode Island. Slater Mill on the Blackstone River is where the Industrial Revolution began on this Continent. We have been given fair warning. It is time to respond. www.phippsrealty.com

Snowbirds, Splitters and Super-splitters

About this time of year you hear, particularly at East Greenwich’s better watering holes, conversation includes the successes of the Patriots and the Red Sox. But there is another conversation underway: When are you going south? Are you spending Thanksgiving in Naples this year? Many people have delayed their departures this year due to the weather and the World Series, but the fact remains that many are on route. While no really precise numbers exist, it is accurate to suggest that the number is significant. One area condominium will see seventy percent of the members going south. Some of these people are true Snow-birds, people who travel to Florida, Georgia, the Caribbean, etc for the winter. Snow-birds lead the North and spend winter in the warmth. Snow-birds are an indigenous species here in Rhode Island. Every winter they migrate south.

There is another group called Splitters. WCI, the large Florida developer, coined the phrase: “people who own at least two homes and split their time between them for recreation, work-life balance, or to connect with family and friends.” Splitters are distinct from snowbirds as splitter travel back and forth between their homes four or five times, while snowbirds do so once maybe twice. Some splitters travel between their homes four and five times a month. Incidentally, super-splitters, Nicholas Cage, Oprah, Mel Gibson and the like, have multiple homes. Some of my recent clients fit into that category with a main residence in Florida, a home in Manhattan, a home in Stowe, Vermont and a getaway in Rhode Island.

Not sure how many snowbirds and splitters there are in Rhode Island, but there are many. The number is also increasing. How many former Governors are actually legal residents of Rhode Island?

Many of the migrant Rhode Islander rely on family to look after there homes while they are gone. Some people rely on electronic monitoring. Your security company can monitor unauthorized entry, low temperatures, water in the basement etc. Some ‘smart homes’ can be supervised remotely by sellers from any location on the globe. Obviously, leaving a home vacant increases the chances for more serious problems, but careful planning and preparation can minimize those risks.

Some people have opted to compliment their electronic monitoring with professional management services. These services actual go to the property on a scheduled basis to identify minor issues before they become major. The building is checked for security, maintenance, and necessary repairs. Typically they charge a monthly fee to monitor, and then a fee if they need to organize repairs and service people. When one looks at the cost of home and the potential risk, these services are inexpensive. There are a few companies in the area, including Phipps Real Estate Services that are engaged in the business.

So whether you want to hire professional help, or have family resources, make certain to have a plan to protect you home as you migrate to your winter nest.

Log into www.phippsrealty.com for more information

Real Estate Reflections Fall Harvest 2007

Have you ever noticed that the only news that makes the headlines is bad news? Real Estate has had a lot of head lines lately. So is it as bad as the headlines suggest? The answer is not necessarily. So what is going on? The stats are conflicted. Real Estate across the country has seen a slow down and in some areas a reduction in median price.
That is also true in Rhode Island and in East Greenwich in particular. What is most interesting is that more single family, East Greenwich homes sold in the first nine months of 2007 versus the first nine months of 2006. Yes homes are in fact selling. More of the less expensive properties are selling, but they are selling. It is also true that average price of homes has come down over the past two years. So what explains the increase in sales? The market had suffered from a language barrier between sellers and buyers over the past two years. That barrier has begun to disappear. Sellers finally understand that the market is a buyers’ market. If they want to sell they need to be flexible, specifically with price. Those sellers who have not adjusted their price expectations have not sold. Those sellers, who have looked closely at the market value, reduced their price, have generated offers and sales. For many East Greenwich sellers the assessment at the peak of the market had given them a significantly inflated perception of value. The buyers, on the other hand, have been most effective in finding the best value. Buyers look at comparable sales and also analyze the motivation of the seller. A seller who needs to sell will be a better ‘target’ for the potential buyer. One of my clients recently focused on properties that had been on the market for more than six months. When we looked at properties, his approach included a comprehensive questioning of the sellers motivation. Do they really want to sell? He was very effective in purchasing a house twenty percent below original list and fifteen percent below assessment. In short, he got a great buy. The truth is that he is more representative of buyers. Price is the deciding factor.

There are some over arching demographics that we should acknowledge. Between 1980 and 2006, the number of households in the United States increased from 80 million to 115 million. Rhode Island has seen a more modest increase, but the housing supply as related to households is not in surplus. Very simply we have enough families to fill our housing stock. Value is ebbing now as credit has been more difficult and people are nervous. One of the curious outcomes of the difficulty in selling properties is that more properties have been rented. For some sellers this is a very workable alternative.

With every challenge there is opportunity. The correction in average value has made it possible for more people, based on their ‘real income’ to buy that first home. Affordability is always a major concern. The great news is that lower average price results in more people being able to buy. Additionally, many of the multi-families are now revenue positive. The rents will cover the cost of ownership. This is great for investors looking to purchase. There has been some comment in national media that foreign investors are going to use the strength of the Euro to buy American rental property as a long term investment. Clever.

At the end of the day residential real estate meets a basic need: shelter. The real estate professionals have refocused on that purpose. You need to be able to afford the financing before buying, but it is a time of great buys. So if you can buy, you ought.