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Residential Sector Slow to Embrace GreenThe green movement may have a strong foothold in commercial real estate. "But an overall lack of consumer demand for green housing has kept the movement from gaining the same amount of traction in the residential sector,” say participants at Urban Land Institute’s recent Developing Green conference held in Pittsburgh.

Participants cited a recent homebuyer preference survey conducted by RCLCO, a real estate advisory and strategic planning firm in Bethesda, Md., which found that only 10 percent of buyers based their purchasing decisions on energy savings, and just 3 percent based their decision on the use of green materials in construction.

In his presentation at the conference, Shyam Kannan, director of research and development at RCLCO, predicted that consumer interest in residential green will rise as “more homebuyers make the connection between health and wellness and green homes.”

What Kind of 'Green' Are You?

In the future, demand for green residential construction will be driven primarily by a group of buyers that Kannan calls Healthy Greens. They're “highly educated, more affluent cultural creatives, who equate energy conservation with healthy living,” he says.

Other categories of buyers, according to Kannan, are Forest Greens, who have little purchasing power but buy for altruistic reasons, and Greenback Greens, who are interested in eco-friendly housing, but base purchasing decisions on cost.

Echoing the Commercial Sector

Overall factors that will push the green trend forward in the residential sector are similar to what's driving green construction in commercial buildings. Among the top reasons for embracing sustainable designs:

Growing concern in society about global climate change

Rising energy prices

Growing public demand for products and services that promote health and wellness

Mounting proof that green buildings don’t cost significantly more to build, and in fact, generates energy savings that quickly offset upfront costs

How much home can I afford?

Debt-to-Income Ratios

To determine your maximum mortgage amount, lenders use guidelines called debt-to-income ratios. This is simply the percentage of your monthly gross income (before taxes) that is used to pay your monthly debts. Because there are two calculations, there is a "front" ratio and a "back" ratio and they are generally written in the following format: 33/38.

The front ratio is the percentage of your monthly gross income (before taxes) that is used to pay your housing costs, including principal, interest, taxes, insurance, mortgage insurance (when applicable) and homeowners association fees (when applicable). The back ratio is the same thing, only it also includes your monthly consumer debt. Consumer debt can be car payments, credit card debt, installment loans, and similar related expenses. Auto or life insurance is not considered a debt.

A common guideline for debt-to-income ratios is 33/38. A borrower's housing costs consume thirty-three percent of their monthly income. Add their monthly consumer debt to the housing costs, and it should take no more than thirty-eight percent of their monthly income to meet those obligations.

The guidelines are just guidelines and they are flexible. If you make a small down payment, the guidelines are more rigid. If you have marginal credit, the guidelines are more rigid. If you make a larger down payment or have sterling credit, the guidelines are less rigid. The guidelines also vary according to loan program. FHA guidelines state that a 29/41 qualifying ratio is acceptable. VA guidelines do not have a front ratio at all, but the guideline for the back ratio is 41.

Example: If you make $5000 a month, with 33/38 qualifying ratio guidelines, your maximum monthly housing cost should be around $1650. Including your consumer debt, your monthly housing and credit expenditures should be around $1900 as a maximum.

Why use a Realtor?

When you're looking for help buying or selling property, it's important to remember that the terms “real estate agent” and “Realtor” are not synonymous. Realtors can provide an extra level of service, and to be a Realtor you must be a member of the National Association of Realtors (NAR). It is a non-profit trade organization that promotes real estate information, education and professional standards.

The National Association of Realtors also has earned a strong reputation for actively championing private property rights and working to make home ownership affordable and accessible.

Code of Ethics
NAR members adhere to a strict code of ethics founded on the principle of providing fair and honest service to all consumers. Realtor business practices are monitored at local board levels. Arbitration and disciplinary systems are in place to address complaints from the public or board members.

This local oversight keeps Realtors directly accountable to the individual consumers they serve. Real estate licensees who are not Realtors, work solely under state/provincial licensing regulations.

Definition of a Realtor®
A Realtor® is a licensed real estate agent who is a member of the National Association of Realtors—a membership organization of some 720,000 real estate agents in the United States. A licensed real estate agent does not have to be a member of NAR to practice real estate.

Isn't every agent a REALTOR®?
No. The single, most outstanding characteristic that sets REALTORS® apart from other real estate practitioners is their willingness to voluntarily accept and abide by a Code of Ethics that governs their business behavior. This Code is stricter than even state law in many instances and is responsive to changes in the industry, law and accepted business practices. As a result of the Code's influence, the term, REALTOR® , has come to stand for competency, fairness and integrity.