Attics and Basements – Good Idea?

You’ve decided to add on to your home instead of trading up. And we all know adding in additional bedrooms, bathrooms, and a living room can pay off with increased living space. But what about finishing a basement or an attic?  And what if you don’t have them? Should you add them in?

Existing Basements

Finishing off an existing basement can give you safe storage room for holiday decorations, and get them out of your garage. In addition, if you expand the basement to be full height (7′ or more), you have additional living space such as a playroom for the kids, or a place to put in your media room with a large screen television and surround sound. Think how great it will sound with the thick walls. The main things to ensure you take into account for any basement are:

• controlling moisture
• adding ventilation and light
• finding a way around existing drain lines, ductwork and wiring

Finish off a basement is less per square foot than adding on an addition.

Adding In Basements

The only time it would probably ever be a good idea to add in a basement is if you needed to replace the foundation. To add in a basement, you’d need to lift up the house and dig it out, which could get very expensive.

Finishing Off an Attic

The first thing to do before finishing off an attic is to evaluate the space carefully. If you have rafters that are in the shape of a W, you won’t be able to finish off the space, but if it’s in the shape of an upside down V, you’ve got the possibility for a hidden attic hideaway.

The next thing to think about is how you’ll get up there. If you put in a staircase, how will that affect the rest of the house, and the amount of space in the attic.

Finally, you’ll need to think about headspace. Like the basement, you’ll want at least 7′ across most of the attic space.

You may need to add in skylights or windows to allow for better lighting during the day. And like the basement, you’ll want to look into ventilation and working around existing wiring, ducts, etc.
Plus, in an attic, you’ll need to add in flooring, and ensure that the extra weight will be distributed correctly so the ceiling doesn’t buckle below.

Adding In an Attic

The best time to add in an attic is when you’re re-roofing. You will need a professional to evaluate your home’s structures to ensure that you can add in the attic, and what type of roofing you should add on afterwards. They’ll look into:

1. Can the foundation handle more weight
2. Do you have any local restrictions against 7′ dormers added on to the roof
3. Changing out the framing in the attic to be able to meet code for insulation
4. Additional reinforcement or reframing to maintain the integrity of the home

So, the bottom line is, if you already have the space, it may be cheaper to finish it off than to add on to the house.  But if you don’t have the space, it could be very expensive to add it in unless you’re already going major renovations.

Would you prefer a finished basement or finished attic?

This Week’s Market Commentary

This week brings us the release of only three economic reports that are relevant to mortgage rates, in addition to a couple of Treasury auctions and the minutes from the last FOMC meeting that have the potential to be influential on the bond market and mortgage pricing. Corporate earnings season also kicks off this week, which could be instrumental in driving stock prices significantly higher or lower.

There is no relevant economic news scheduled for release today or Tuesday. The first events of the week will come Wednesday afternoon. One is the release of the minutes from the last FOMC meeting. Market participants will be looking at them closely as they give us insight to the Fed’s current thought process and individual Fed member opinions. Any surprises in the 2:00 PM ET release, particularly about inflation or the likelihood of an adjustment to their current bond buying program, could cause afternoon volatility in the markets Wednesday and possible changes in mortgage pricing.

The two Treasury auctions are scheduled for Wednesday and Thursday. There is a 10-year Treasury Note sale Wednesday and a 30-year Bond sale Thursday. We could see some weakness in bonds ahead of the sales as participating firms sell current holdings to prepare for them. This weakness is usually only temporary if the sales are met with a decent demand. The results of the auctions will be posted at 1:00 PM ET each day. If the demand from investors was strong, the bond market could rally during afternoon trading, leading to lower mortgage rates. If the sales were met with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing Wednesday and/or Thursday afternoon.

Friday has all of the week’s highly important economic data scheduled. The Labor Department will start the day by posting March’s Producer Price Index (PPI) at 8:30 AM ET. It will give us an important measurement of inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, inflation fears may hurt bond prices since it erodes the value of a bond’s future fixed interest payments, leading to higher mortgage rates. A good size decline in prices would be good news for the bond market and mortgage rates. Current forecasts are calling for a 0.1% decline in the overall reading and a 0.1% rise in the core data.

Also early Friday morning, the Commerce Department will release March’s Retail Sales data. This piece of data gives us a measurement of consumer spending levels, which is very important because consumer spending makes up over two-thirds of the U.S. economy. Forecasts are calling for no change in sales from February to March. If we see an increase in spending, the bond market will likely fall and mortgage rates will rise as it would indicate consumers are spending more than thought, fueling economic growth. However, a weaker than expected reading could push bond prices higher and mortgage rates lower Friday, especially of the PPI gives is favorable results also.

The final release of the week is the University of Michigan’s Index of Consumer Sentiment at 9:55 AM ET Friday. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers’ willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a sizable decline from March’s 78.6 reading. Current forecasts are calling for a reading of approximately 78.0.

Overall, look for the most movement in rates the latter part of the week, particularly Friday. The PPI and Retail reports are the biggest names on the agenda. Either of them can cause significant movement in the markets and mortgage rates. Look for the stock markets to also influence bond trading and mortgage rates the a good part of the week as traders react to the earnings news, but I believe we will see the most movement in rates the latter part. I am expecting it to be an active week for the mortgage market, so please maintain contact with your mortgage professional if still floating an interest rate.

Farmers’ Markets vs. CSA Boxes

With Spring comes visions of tender peas, strawberries, and fresh radishes. Maybe your garden isn’t producing yet, or maybe it’s not large enough to produce all that you want. (But definitely get something planted, even if it’s just basil). Your next best bets for good, organic and locally grown produce are farmers’ markets or join into a Community Shared Agriculture (or CSA).

Either way, you’ll be guaranteed super fresh produce regularly. And you’ll also get introduced to new varieties of fruits and vegetables that you can have fun experimenting with.

 

Farmers’ Markets

A farmers’ market is a physical retail market featuring foods locally created sold in vendor booths, stands or tables. Some vendors sell prepared foods like hummus or sauerkraut, and others just sell tomatoes or honey. Some farmers’ markets are open year round, and others will start to open up now that the weather is nicer. Some markets are open the mornings on weekends, and others are in the evenings during the week.

Farmers’ markets are a wonderful place to hang out as they also usually have street performers and food vendors, and can be a great social activity with friends or family.

Another bonus with farmers’ markets are when your garden starts producing, you can buy only what you need.

The downside is that not all vendors show up ever week, so if you were hoping for something specific, you may be disappointed.

Here is a directory of farmers’ markets in California.

 

CSA

Community-shared agriculture is sometimes also known as community-supported agriculture. It’s a network of individuals who have pledged to support one or more local farms. CSA members pay at the beginning of the growing season for a share of the anticipated harvest. Then as the harvest progresses, the members get a weekly box with their part. Some CSAs deliver, and others have pickup sites. Some CSAs include bread, eggs, dairy products, cut flowers, honey, fruit and meat as options.

The downside of a CSA is that you are locked into what they deliver.  If you don’t like kale, and you get two bunches, you’ve got to get creative or find a friend who does like kale. Some people love the surprise factor and still others enjoy the challenge of cooking what you have.

If you have more than you need, you may want to look into preserving techniques like canning, freezing, or dehydrating to have additional vegetables in the winter.

 

Bottom Line

The nice thing about the CSA is that they email you what to expect so you can plan accordingly, and fill in gaps with a trip to the farmers’ market where you can enjoy the social aspect. Another idea is to find a friend or neighbor and share the share with them. By alternating weeks, you can still support the CSA and have the flexibility to get other items from the farmers’ market.

Do you want to try some new vegetables this year?