A PUBLICATION OF THE CAPITAL CITY WEEKLY
SOUTHEAST ALASKA
May 2017
Tail of a Humpback Whail (Megaptera novaeangliae), photographed while diving in Alaskan waters. Photo By Jiri Vondrous
•YAKUTAT
N CHILKOOT•
HAINES•
•SKAGWAY
TABLE OF CONTENTS On The Cover: Courtesy of Matthew Wilkinson 4 Ricker Real Estate Consulting AlaskaUSA Mortgage: Minerva Carandang Platinum Real Estate Valley Auto Parts 5 Ask a Broker: Priced Out?
•GUSTAVUS ELFIN COVE• PELICAN• HOONAH• •JUNEAU
6 Selling your Home: 5 Tips for a Successful Showing 7 AlaskaUSA Mortgage The Housing Market: Availability 8 The Cautionary Tale of the Toxic Home
TENAKEE SPRINGS•
•SITKA
•ANGOON
9 Curb Appeal: Ache Prevention Exit Realty
•KAKE •PETERSBURG •WRANGELL
10 Home Values: Rising Rates First-Timers Surge 11 First Bank Mortgage 12 Coldwell Banker: Gwen Place Try this on the Grill 13 The Young Americans 14 Curb Appeal: Planning
CRAIG•
15 Residential Mortgage State Farm: Malia Hayward
•KLAWOCK HYDER•
•KETCHIKAN •HYDABURG METLAKATKA•
16 Southeast Alaska Real Estate: Karen Wright
The Southeast Alaska Home & Real Estate Guide is a publication of the Capital City Weekly a division of Morris Communications www.capitalcityweekly.com 3100 Channel Drive Juneau, AK 99801 Capital City Weekly: 907-523-2250 Fax 907-789-9097
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May 2017
ASK A BROKER By Peter G. Miller QUESTION:
With rising interest rates and steeper home prices, does it really pay to go house hunting? Aren’t many people now priced out of the market? ANSWER:
As a borrower, your goal is to find the cheapest financing you can get, not only because of smaller cost but because less expensive mortgages will allow you to borrow more if you want. It’s true as of this writing that mortgage rates are up relative to, say, last summer. That’s the headline, but the details might surprise a lot of borrowers. Let’s start with perspective. Today’s rates – even if “higher” than rates in the recent past – are ridiculously low. Lawrence Yun, chief economist with the National Association of Realtors, says mortgage rates in the 1970s “averaged 8.9 percent; in the 1980s, 12.7 percent; in the 1990s, 8.1 percent; and in the first decade of the new century they came in at 6.3 percent. The in-and-around 4 percent rate is only a recent phenomenon from the year 2011 to today.” While perspective is nice, as a borrower you don’t really care how much parents and grandparents may have paid to borrow mortgage money. Your concern is here and now. According to Freddie Mac, the price for a 30-year, fixed-rate, prime mortgage was 4.19 percent during the last full week in January. That compares with 3.79 percent a year earlier. If you borrow $125,000 the monthly cost for principal and interest is $581.74 at 3.79 percent versus $610.54 at 4.19 percent. That’s an increase of $28.80 a month or $346 a year. Is such a hike in monthly costs enough to force some borrowers out of the marketplace? For a small number of borrowers, yes. For a lot of people? Probably not. The individuals most likely to be impacted by the rate increase are marginal borrowers that no longer qualify for as much funding as they would like. However, while they may not have as much financing power as before, borrowers still have an ability
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to get financing. At 4.19 percent and with a $581.74 monthly payment for principal and interest, a qualified borrower can get financing for roughly $119,000. The problem going forward is that rates may increase further, thus impacting more borrowers. For instance, NAR predicts that in 2017 “mortgage rates are expected to reach around 4.6 percent.” We’ll see. However, while the Fed effectively sets bank rates it does not control mortgage pricing. Right now the supply of cash is overwhelming — some $50 trillion in cash is said to be available worldwide. It’s entirely possible that the Fed increases bank rates this year while at the same time mortgage costs actually fall — this is largely what we saw during the first half of 2016.
While housing remains in high demand, Juneau has moved towards having more affordable housing options.
Find out more:
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peter@ctwfeatures.com Peter G. Miller is author of “The Common-Sense Mortgage.' Have a question? Please write to peter@ctwfeatures.com.
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SELLING YOUR HOME By Erik J. Martin
The goal of a home showing is to have the potential buyer envision him or herself living there, not the current owner says Peggy Patenaude, real estate agent at William Raveis Real Estate, Andover, Mass. “It’s about the potential use of space, not the current use of space.” She suggests the following five tips for a successful showing:
➤
Remove the clutter Simplify and depersonalize your home. Put away any collections or trinkets that can be distracting and make your home feel less spacious. A minimal look gives buyers a chance to use their own imagination.
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Evaluate the layout of your space and the furniture you’re using. If a couch or table is too big, for example, it will make the room feel smaller.
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Tame your colors Asses your home's color choices carefully. A fresh coat of neutral-colored paint will make a living space appear newer, brighter and bigger.
➤ Space matters. Don’t store an overflow of belongings in the basement or cram stuff into your closet, as buyers will look there, too.
➤
Seek help Home staging experts will know where to rent the ideal furniture, what needs to be placed in storage and how to see past personal taste to exhibit your space properly to buyers.
Make yourself and your family scarce. “Home sellers should not be in the house for at least two hours during the showing,” Patenaude says. “And prior to the showing, make sure to get rid of pets and any evidence of pets.” After the prospective buyer leaves, gauge their feedback from your agent, but adopt a thick skin and business-first attitude without getting emotional.
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May 2017
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THE HOUSING MARKET By Jesse Darland About half of potential homebuyers consider rising interest rates to be one of their top concerns, according to a recent survey from Zillow Group Mortgages. This is the first time in several years interest rates have been a major concern. The recent mortgage rate increases have been a direct result of the U.S. presidential election and federal rate hikes in December 2016 and March 2017. Because additional federal rate increases are expected in the near term – likely two more – interest rates have the potential to have a serious impact on market activity and overall affordability. The survey was conducted among respondents currently searching for or buying a home. Their top concern was their ability to find an affordable home despite low available inventory (65 percent of respondents). Concern over rising interest rates was the second most reported (53 percent of respondents). This is a change from the last time the survey was conducted in 2015. In that survey,
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homebuyers rated interest rates third on their list of concerns (50 percent) behind saving for a down payment (59 percent) and their ability to find an affordable home (73 percent). In spite of these worries, most potential homebuyers don’t expect any immediate changes to their plans. More than 4 out 5 buyers (83 percent) intending to make a purchase within the next three years plan to stick to their plans even if rising rates increase their monthly payment by $100. Nearly half
(49 percent) would continue with their plans even if the rising rates add an additional $200 to their monthly payment. Still, rising rates will have an impact. A quarter of respondents stated they would consider looking for a smaller home or a home in a cheaper community if monthly payments were to increase by $100. That number rises to 38 percent if monthly payments increased by $200. “For years, falling interest rates have been a boon to the U.S. housing market, keeping monthly mortgage payments low for first-time and move-up buyers alike, even as home values rose,” said Erin Lantz, vice president of mortgages for Zillow Group. “As rates rise this year, first-time buyers and those looking to buy in expensive markets where affordability is already an issue will feel the pinch of higher rates on their budget. That said, for most borrowers, there is quite a bit of head room for rates to rise before home-buying becomes unaffordable.”
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The
Cautionary Tale
Toxic Home
of the
How to avoid buying a home with hidden hazards Prospective buyer beware: that home for sale you’re eyeing could be a ticking time bomb – perhaps a termite headquarters, leadbased paint mecca, former meth lab site, or environmentally polluted property. And you won’t know for sure unless you do your homework, say the experts. Alarmingly, a new ATTOM Data Solutions report reveals that 17.3 million single-family homes and condos worth a collective $4.9 trillion in estimated market value are located in zip codes with high or very high risk for at least one of four environmental hazards: poor air quality, industrial pollution, Superfunds (categorized by the EPA as being contaminated with hazardous waste), or brownfields (a property that may contain a hazardous substance, contaminant, or pollutant). These homes represent 25 percent of the 68.1 million total residences evaluated in the report. The study indicated that, in general, properties within higher environmental hazard risk areas suffered from lower home price appreciation, decreased home values, and increased rates of underwater mortgages. 8
“These findings suggest that, in addition to being better for your family’s health and safety, buying a home in an area with low risk for environmental hazards can be a smart investment decision,” says Daren Blomquist, senior vice president for ATTOM Data Solutions in Irvine, Calif. “The major takeaway here is that it’s important to go into a home purchase with eyes wide open about all the benefits and risks that come with that purchase, including environmental hazard risk, which can potentially negatively impact not only your health but also your wealth.” Blomquist warns that, while some environmental hazards are required to be disclosed before you purchase a home, they often won’t be disclosed until the closing process, “which could be at the last minute when you’re buried in a mountain of paperwork you’re signing at the closing table. That means it’s in your best interest to perform what we call a ‘pre-diligence’ of homes you are considering to buy early on in the buying process – well before you reach the closing table.” The first step is to hire an independent property inspector whom you select carefully instead of blindly trusting in a home inspection done by your mortgage company.
“Buyers should always make sure to have a careful home inspection performed by someone they trust to reveal the good, bad and ugly about a home,” Blomquist says. Cheryl Reed, director of external communication for Angie’s List in Indianapolis, recommends testing the home for radon, lead, mold, asbestos and meth production. “It’s really important to test for meth these days, because you don’t know if a previous owner produced math on the premises but was never caught,” says Reed, who says meth test kits cost around $50. “If you find evidence of any contaminant, don’t hire the inspector to correct it –enlist a qualified, reputable mediator.” John Risvold, attorney with The Collins Law Firm P.C. In Naperville, Ill., recommends learning all you can about your property’s water source. “Ensure that the water is safe to drink and free of chemicals. Be aware that toxins from Superfund and brownfield areas can also seep into soil and groundwater and infiltrate your home through a process called vapor intrusion, resulting in serious health hazards,” says Risvold. Scott Reidenbach, attorney/founding principal of Wayne, Pa.-based Reidenbach & Associates LLC, says prospective buyers can negotiate for additional time to perform due diligence either before going under contract or during. “During this time, look for nearby manufacturing or chemical operations that could be polluting the air or ground water or that would create quite a mess if they were to catch fire or have an accident. Water runoff and storm water issues are huge concerns, too, as is noise pollution,” says Reidenbach. “Walk the community yourself and talk to neighbors who have lived in the area for years.” Additionally, you should visit the local municipal records building or village hall to request public records for the home and nearby area. You can also find valuable information online about the home you are considering buying; visit the EPA’s MyEnvironment site (www3.epa.gov/enviro/ myenviro), the EPA’s Brownfields site (epa. gov/brownfields), and ATTOM’s HomeDisclosure.com, which provides environmental hazard information for many forsale properties. May 2017
Avoid Aches & Pains when Gardening
Veteran gardeners can attest, gardening can contribute to nagging aches and pains.
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Gardening is a physical activity that, despite its peaceful nature, can be demanding on the body. Use ergonomic gardening tools. Ergonomic gardening tools are designed to prevent injuries or aches and pains affecting the back, wrists and hands and other parts of the body. Even arthritis sufferers who love to garden may find that ergonomic tools make it possible for them to spend more time in their gardens without increasing their risk for injury. Alternate tasks. Repetitivestrain injuries can affect gardeners who spend long periods of time performing the same activity in their gardens.
By alternating tasks during gardening sessions, gardeners can reduce their risk of suffering repetitive strain injuries. Alternate tasks not just on muscle groups worked, but also level of difficulty. Remember to include some simple jobs even on busy gardening days so the body gets a break. Take frequent breaks. Frequent breaks can help to alleviate muscles or joints that can become overtaxed when gardening for long, uninterrupted periods of time. When leaning down or working on your hands and knees, stand up to take breaks every 20 minutes or the moment aches and pains start to make their
presence felt. Maintain good posture. Back injuries have a tendency to linger, which can keep gardeners indoors and out of their gardens. Remember to maintain good posture to prevent back injuries. Gardening back braces can protect the back by providing support and making it easier for gardeners to maintain their posture. Tool pouches attached to gardening stools or chairs also can be less taxing on the back than gardening belts tied around the waist. Gardening might not be a contact sport, but an ounce of prevention can help keep gardners healthy, and out out of doors in their gardens.
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HOME VALUES By Erik J. Martin
Up, Up and Away What rising home values and flattening rents mean to buyers, sellers, and renters
Over the past few years, real estate headlines have been dominated by news of rents rising out of control in many markets. Yet new research shows rents are flattening; in fact, rent appreciation stabilized at an annual growth rate of 1.5 percent, clocking in at less than half the pace rents increased by last year, based on data published in Zillow’s December Real Estate Market Reports. Today’s median monthly rent payment is $1,403. By contrast, home values grew 6.8 percent during the past year, per the same report, which found that the median home value in America is now $193,800 – a notch below the highest value recorded in April 2007. “The trends that helped define the 2016 housing market are having an effect on the start of the 2017 market,” says Svenja Gudell, chief economist for Zillow in Seattle. “Home values and rents have been trending in opposite directions for the past several months. It’s great news for current owners but could cause hardships for buyers. And for renters, it reduces the pressure to purchase in order to lock down a steady mortgage payment.” Indeed, judging by the aforementioned numbers, common sense would tell you that renters should continue leasing, prospective buyers should sit out and wait for prices to drop, and owners eager to sell their homes should list licketysplit. Not so fast, some experts say: that logic may or
The real estate market will see a huge increase in first-time homebuyers in 2017, according to Realtor.com’s Active Home Shopper Report. Based on a survey of users of the website in September 2016, the new report took a look at the responses of shoppers that plan to purchase a home in spring or summer 2017. The survey
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may not apply, depending on each group’s circumstances. “Flattening rents should allow for more renters to save for a down payment and closing costs on a home,” says Jamie Slavin, mortgage sales manager for Bellco Credit Union in Greenwood Village, Colo. “And mortgage interest rates are still very low. With home prices projected to continue their increase, renters and applicants who have been considering purchasing should actually get off the sidelines before rates and prices go higher.” Additionally, owners have to remember that unloading their homes in a seller’s market can have repercussions. “People looking to list their homes to take advantage of the market would probably need to pay more for the next home they would look to purchase,” Slavin adds. Hence, instead of being in a rush to list their properties, “this could lead more owners opting for home equity loans and lines of credit to pursue renovations so that they can get the top dollar for their homes when they do sell.” Peter Vekselman, real estate investor and principal with RBP Investments in Atlanta, on the other hand, says prospective purchasers may want to sit out a few quarters. “As more homes come onto the market and more new construction kicks in, prices should level off toward mid-year or fall, and that could mean a savings difference of several thousands of found a higher demand for suburban homes and growing concern among homebuyers regarding affordability and mortgage qualification. More than half (52 percent) of prospective homebuyers are expected to be first-time shoppers in 2017, according to the survey. For comparison, in 2016 only 33 percent were first-time homebuyers. Millennials are the largest growing age group, with 33 percent of potential buyers under age 35. The report expects that affordability will replace low inventory as the biggest concern holding back the real estate
dollars,” says Vekselman. “Buyers will have to weigh the benefits of postponing a purchase to get a lower price as opposed to paying a higher rate of interest in the long-term.” Ryan Hoffman, broker with Watervliet, N.Y.headquartered Leverage Real Estate LLC, says it’s important for buyers, sellers and renters to understand their local market. “A broad spectrum of data from Zillow’s national index is not enough. Buyers should use this information as a starting point to compare to their immediate market,” says Hoffman. “Doing research in your local neighborhood can reveal areas that lean more toward buyers. Not every market is a seller’s market, and there could be nuances at play that could save buyers money – such as certain style homes selling for much less than other types.” Renters, meanwhile, “may find it financially beneficial to wait and see where prices shakeout, especially with less housing supply available today,” Hoffman adds. Looking ahead, Gudell believes home prices will continue to head north as 2017 continues, with rent appreciation maintaining its slowdown. “We will see continued high demand for housing, especially with many millennials starting to reach the home buying age and tight inventory lingering,” she says. “These two forces will keep home prices rising, albeit at a slower rate than we saw in 2016.” market. While 2016’s survey showed that 40 percent of shoppers believed low housing inventory was their biggest barrier, this new survey shows, instead, that 37 percent reported gathering funds for a down payment is their biggest obstacle. In addition, 30 percent stated their problem was finding homes within their budget. About 2 in 5 millennial shoppers (39 percent) showed a strong preference for single-family homes, while 34 percent listed townhomes as their top choice. Half of all respondents stated that they prefer suburban homes.
May 2017
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TRY THIS ON THE GRILL
Time to clean your grill for Summer parties 12
• Turn the grill off. Unless you own a charcoal grill, chances are your grill has dials that govern how hot the grill gets when cooking. Make sure these dials are turned to the off position before you start cleaning. If your’s is a gas grill, disconnect the gas while wearing gloves to reduce your risk of accident or injury. • Use the residual heat to make cleaning easier. The sooner you start cleaning the grill after you cook, the easier it might be to make the cooking surfaces sparkle. That’s because the residual heat can make it easier to remove any leftover buildup from barbecue sauce or seasoning that stuck to the grill after you removed your food. • Use a wire brush to clean the cooking grates. Wire brushes are ideal for cleaning cooking grates. Such brushes can quickly remove grease and food particles, saving grill owners the trouble of scrubbing away with traditional sponges. Once the wire brush’s work is done, you can then clean the grill with a soapy sponge. • Remove food that fell into the well. Food inevitably falls into the well of a grill no matter how skilled a grillmaster might be. If left to fester in the well, such foods can pose a safety risk and promote the growth of bacteria. • Clean the remaining areas of the grill. Marinade, sauce or condiments may find their way onto areas of your grill, and if left unattended, such substances can make a grill very dirty over time. Remove these substances after each barbecue to keep your grill looking new through the summer. May 2017
TRENDING By Erik J. Martin Contrary to popular belief, the vast majority of Generation Y, better known as Millennials, want to own a home – and most actually do, new data suggests. That’s good news for boomerang parents whose twentysomething-aged offspring moved back home in recent years due to the economic downturn. The findings of a new study by survey firm Qualtrics indicate that 53 percent of Millennials currently are homeowners and 88 percent in this demographic who don’t yet own desire to do so. “Those are higher numbers than I thought,” says Jason Polancich, co-founder of HomePocket, a Miramar Beach, Fla.based online real estate listing service. Polancich found the data surprising, “But it shows that homeownership remains an important part of the American DNA. And with trillions of dollars changing hands to the Millennials in the next decade or two from inherited wealth alone, I think homeownership will be even higher in this group than for earlier generations.” The Qualtrics findings echo those reported by ValueInsured, whose recent homebuyer survey reveals 83 percent of t o d a y ’s Millennials believe owning a home is an important part of their personal American dream. “The misconception that Millennials somehow don’t want to own a home lies in the fact that they want to own a home differently than their predecessors,” says Joe Melendez, founder/CEO of Dallasheadquartered ValueInsured. “Understand that Millennials grew up in a technology age that drives new consumerism in trial size, short vignettes, and forms of sharing. For them, mobility is the new normal – they change jobs now on average every 2.8 years, according to the latest U.S. Census employment data.”
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THE YOUNG
AMERICAN A d d it io n a l l y, consider that a Millennial who graduates today carries, on average, more than $37,000 in college debt, Melendez says. That kind of financial pressure contributes to the need to delay homeownership. “ P a r t l y because of this high personal debt and an increase in moving and travel i ng, Millennials are also getting married and having children later. Obviously, these have traditionally been the major life-stage precursors to home buying,” Melendez says. Jeff Benach, principal of Chicago-based Lexington Homes, which sells a good portion of its new construction units to Gen Y, says it’s no secret why Millennials shied away from the real estate market over the past several years. “Most of them came of age just prior to and during the recent recession. Many young Millennials flocked to purchase homes during the go-go years of 2003 through 2006, but once the economy started imploding in 2007, housing values plummeted for several years. This scared them away from the risk of homeownership,” Benach says. “But as we get further away
According to a pair of new studies, Millennials’ disinterest in owning a home is a myth
from that and continue to see a steady increase in overall housing values being more the norm, they’ll start to feel more comfortable that the reward outweighs the risk.” Millennials who want to increase their chance of purchasing a home need to get their financial houses in order first. “Pay off your debts, maximize your FICO credit score to qualify for the most favorable loans, and don’t be shy about asking to borrow from your parents for a down payment,” Melendez recommends. In addition, establish a realistic monthly budget. “Consider what you can afford for a monthly mortgage, down payment and home repairs and upgrades,” says Melinda Wilke, wealth management advisor for Northwestern Mutual in Hales Corners, Wis. “Your total monthly housing expenses should not exceed 28 percent of your pretax income or 36 percent when combined with all other monthly debt like student loans, car payments and credit cards. Work with a real estate agent and financial representative to understand what you’ll need to cover, when and for how much.”
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Almost everyone knows great curb appeal is a major come-on in selling a house, but some of the projects that inspire the biggest oohs and aahs in a yard – an all-sod lawn, mature trees, water features and fancy outdoor kitchens – can add up quickly. Yet, there’s so much that can be done to make a landscape appealing both to potential buyers and for the homeowners themselves at an affordable price point. Here’s a round-up of suggestions to consider as days grow longer and flowers pop out their colorful heads: Get a snapshot of what looks good and what doesn’t Sometimes it’s hard to be objective about your own property. Doug Burnett, president at Burnett Realty in Des Moines, Iowa, thinks the best way to see your front yard clearly is to head to the street and snap photos. You can head to the farthest point in the back yard to do the same. “The photos will show you what’s really there such as toys all over the yard, dead grass patches, a fence tilting, old beds filled with weeds and thinned out mulch,” he says. Walks and driveways with cracked pavers and missing gravel are additional eyesores.
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Tackle problems first - before you add anything new, he adds. Incorporate a variety of elements Just as you tweak or remodel your indoor rooms to include all the essentials, do so outside. Burnett says most buyers look for a lush green lawn; bushes and trees with different textures and heights and also some that remain green all year; handsome hardscaping for walks and the driveway; some color from flowers and berries; an architectural feature or two such as a gazebo, pergola, fireplace or fire pit, fence, bench, bird feeder and maybe a water feature. A water feature needn’t be big and expensive. Something as simple as a sculptural heron or other bird that recirculates water will look nice and add a pleasant sound. In making selections, pay attention to scale, color and texture; and have some be able to do double duty for cost effectiveness. The number of flowers and bushes, for instance, should relate to the scale of the house, its style and price and shouldn’t be too elaborate or colorful, or they might resemble a shopping mall’s landscape rather than a residential one.
Spruce up FOr outdoor living After remodeling kitchens and bathrooms, one of the best investments homeowners can make is to fix up an existing outdoor living area, such as a deck, patio, terrace or screened porch.. Besides being sure the area looks neat and clean-sometimes by repainting, re-staining or at least power washing the surfaces to get rid of mildew and dirt, be sure all its furnishings look new. Complete the setting with the same accessories you use indoors - rugs, cushions, pillows, candles and lighting - but ones that will stand up to temperature changes. lighting Is the finishing touch Lighting is among the most underutilized but highest payback features you can install, says Burnett, and it’s another relatively inexpensive addition these days. He suggests up-lighting a few trees and corners of the house rather than lighting everything so it resembles an airport runway. He also suggests putting the lights on timers or motion sensors for the biggest cost savings.
May 2017
TEXTING AND DRIVING MAKES GOOD PEOPLE LOOK BAD. STOPTEXTSSTOPWRECKS.ORG
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APRIL 2015