Friday, October 29, 2010

Professor: Now Is The Time To Buy A House


NPR

Highlights from NPR's interview with Professor Karl Case:

  • The
    Case-Shiller Index is one of the best measures of home values.
  • Eventually, when [house] prices get down
    low enough, people are going to buy this property, all right? And
    they're going to buy it up and they're going to live in it. And by all
    historical standards, they're getting a pretty good bargain right now.
  • It certainly is the best time [to buy a home] we've seen in the last four, five
    years, and maybe in my lifetime. And if you look at some of the property
    values that are out there, one of the things that people forget is that
    a house is a consumer durable good. It's not just an investment. If
    you're going to hold it for a long time you live in it and you derive
    from it housing services that have a real value.
  • So if you don't think of housing just as something to earn you
    capital gains in the long run, but something you're going to live in and
    you can afford to make the payments on it, it looks to be a pretty good
    deal. And by the way, the income - that form of income is completely
    tax free.
Listen to the whole story here: http://www.npr.org/templates/story/story.php?storyId=129800154

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Wednesday, October 27, 2010

September Existing-Home Sales Show Another Strong Gain



Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, jumped 10.0 percent to a seasonally adjusted annual rate of 4.53 million in September. In addition the inventory of homes continues to diminish. All good news for builders, and a continued call to buyers that great deals are happening right now...

See the full article here: http://www.calculatedriskblog.com/2010/10/september-existing-home-sales-453.html

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Wednesday, October 20, 2010

Top Ten Consumer Tips for Buying a New Home




Noted homebuilder, R. Randy Lee, CEO of Leewood Real Estate Group, was recently asked to give his top ten tips for buying a new home. This is what he had to say:

1. Before you buy, research programs that may help you to buy a home, even if you think wouldn’t qualify. Mortgage programs and programs that reduce down payments to as little as a 3% all make buying a home easier financially. Often, these programs go unused because so many people assume that they won’t qualify, when in fact many of them target a very broad income range.

2. Think long term. Your house should be a minimum five to seven year investment, so if you don’t think you will be in the same place for at least that amount of time, rethink whether buying a home is right for you. Thinking long term also means buying a home that you can really afford and that won’t overextend you even if your financial situation changes.

3. Be a knowledgeable buyer by doing your homework before you search. Be able to answer questions like: Which neighborhoods appeal to you, what are your family’s housing needs now and in the next ten years, what types of homes are right for your family. Also have a basic knowledge of your municipality’s zoning laws and their future plans. The idea is that you don’t want to buy a new home next to a corn field only to find out later that it is zoned for manufacturing.

4. Hire a real estate agent with experience matching home buyers with the right new home and who is trustworthy based on positive experiences from friends and family. An agent will need to know quite a bit about what you are looking for and how you want to live to be able to effectively match a home with your needs. It is important to rely on recommendations from people who have had personal experience – everyone looks good on paper!

5. Get preapproved for a mortgage before you start looking for a home. Learn what the mortgage process entails, find out what your credit scores are with a copy of your credit report, find out what the current interest rates are, and then shop for around for the best loan. Being preapproved lets you know what you can afford, shortens the buying process, avoids disappointments and gives you more power as a buyer. Same as with choosing a real estate broker, you need to rely on a personal recommendation when choosing a bank or mortgage broker.

6. Give your real estate agent a detailed list of things you are looking for in a home, including your price range. Being specific about items are absolutely necessary and which items would be nice to have but aren’t crucial will help your agent find the right home for you and your family faster.

7. Buy in a good school district even if you don’t have children now or plan to have children in the near future. When it comes to reselling, your property will be worth more than a comparable property in a lower rated school district, and will broaden the market of buyers.

8. After you have seen some homes and are deciding which one is right for you, list all the pros and cons of each. Better yet, have a good friend or family member make their own list and compare to see what things you may have missed. Remember to think of the pros and cons of the neighborhood as well, and for new homes to research the builder and check out their reputation.

9. Retain an attorney who has a strong track record of representing home buyers. Remember that you don’t need to a contract until you’ve worked out every detail of the sale to your comfort and satisfaction. Also ask the attorney what typical closing costs are for homes in your price range.

10. Be financially prepared. Save money aggressively for the down payment and closing costs. Avoid making major purchases of any kind or opening new lines of credit when you’re about to buy a new home, including credit cards. The foregoing may affect your ability to obtain a mortgage in the amount and at the terms that would be most advantageous to you.

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Tuesday, October 19, 2010

Should You Rent or Buy Your Next Home?

house-shopping

Reposted from: Ryan Guina's article on GoBankingRates.com



Whether you are moving for a new job or simply want a change in scenery, deciding whether you should rent or buy your next house is one of the biggest financial decisions you will ever make. There are many factors to consider before deciding which option is right for you, your family and your finances. Here we look at some advantages and drawbacks of both buying and renting a home.

Pros of Buying Property



Traditionally considered one of the largest and potentially best investments a person can make, home ownership offers the following benefits:

  • Housing payments remain the same. If you avoid adjustable mortgages and opt for a fixed-rate mortgage, you will know immediately what your monthly payment will be from the first day forward. The cost of rent typically increases over time.
  • Build equity. You build home equity as you make your mortgage payments and when you complete your payments, you own a home. You don't own anything when you rent. Though the housing market has hit troubled times in recent years, housing typically appreciates in value, making home ownership a decent financial option in the long run.
  • Tax advantages. There are certain tax advantages associated with home ownership that are excluded from renters. Mortgage interest is usually considered a tax deduction when you file your tax return.

Cons of Buying Property


On the flip side, home ownership is not always what it is cracked up to be. Consider the following drawbacks before committing yourself to a mortgage:


  • Home ownership is expensive. Home ownership is almost always more expensive than renting. Consider the cost of property taxes, homeowner's insurance, maintenance and utilities before buying a home.
  • Potential loss of your home. If you are unable to meet the terms of your mortgage, you risk not only losing your home but all of the money you have invested into it up to the point of foreclosure.
  • Additional expenses. Renters do not have to worry about paying for a new roof or fixing a broken furnace, but homeowners do not have that luxury. One of the biggest deterrents from home ownership beyond the cost is the time and energy required to maintain a home.

It would stand to reason that what is considered a disadvantage to home owners is a benefit to renters and vice versa. There are additional pros and cons to consider if you are considering renting.


Pros of Renting


  • Smaller initial investment. Where a home owner may be required to invest a healthy down payment, renters are required to put up much less money in a security deposit. This makes it more affordable (initially) to rent.
  • Flexibility. Beyond a lease arrangement, which is generally one year, there are not other commitments made by a renter. If your job changes or your finances improve over time you are free to look for another property.
  • Few maintenance costs. Beyond utilities and rent increases, you should not see any other expenses while you live in a rental home. Property taxes, most maintenance costs and many other costs are incurred by the property owner.

Cons of Renting


  • Less stability. As long as your landlord acts within the laws, you are always at risk of losing a place to stay.
  • The property is not your own. Since you are only renting a space, you do not have the freedom to paint, remodel or decorate as you would in your own home.
  • No equity or tax advantage. Renters are not able to recoup the money spent on rent through tax advantages or growing equity in the property.

The Verdict: Should You Rent or Buy?


There is a lot to think about when you are deciding to rent or buy your next house. Take these pros and cons into consideration, as well as your future personal and financial goals.


How long will you live in the area? Do you plan on expanding your family? Do you have money for a substantial down payment? Can you afford ongoing maintenance costs? The answer to these questions and the pros and cons listed here can help you make the decision that is best for you and your family.

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Thursday, October 14, 2010

The Fight Against Detractors of Homeownership

http://www.jumperrealty.com/wp-content/uploads/2009/11/House.jpg

Excerpts from the National Association of Homebuilders' article:

Joining a sizable backlash against recent articles in Time magazine and elsewhere disparaging homeownership and attacking long-standing government policies to help families become home owners, major national news media have been publishing articles arguing in housing’s favor and disputing its critics.

“Since the bursting of the housing bubble, there has been a steady drumbeat from the factories of futurist punditry that the notion of owning a home will, and, more importantly, should become out of reach for most Americans,” Joel Kotkin writes in the Sept. 14 issue of Forbes magazine.


However, he points out in his article, “Why Housing Will Come Back,” home owners and those aspiring to become home owners “now represent the core of our economy without which a strong recovery is likely impossible. Houses remain as a financial bulwark for a large percentage of families, the anchor of communities, and, increasingly, home-based businesses.”

Despite the voices that have been raised against it, Kotkin concludes that homeownership, both in the single-family and multifamily markets, “is not likely to fade dramatically for the foreseeable future. The most compelling reason has to do with continued public preference for single-family homes, suburbs and the notion of owning a ‘piece’ of the American dream. This is why four out of every five homes built in America over the past few decades, notes urban historian Witold Rybczynski, have less to do with government policy than ‘with buyers’ preferences, that is, What People Want.’”

As part of the return to normalcy in the nation’s housing markets, Kotkin says that the historic balance between incomes and prices needs to be restored to where it takes two to three years of median household income to purchase a median-priced home, down from a ratio of 4.6 at the peak of the boom. That process is nearing completion in a large part of the country.

Among factors he cites working to housing’s long-term advantage: the U.S. population is projected to expand by 100 million by 2050; 60 million strong, the children of the baby boom are in their 20s and poised to start buying houses; in their pursuit of the American dream, immigrants are heading to the suburbs as fast as they can get there; multigenerational households are on the rise back to 1950s levels; and single-family houses are increasingly able to provide space for part- and full-time offices.

Painting the Room Purple

Responding specifically to the Time article by Barbara Kiviat, in the Sept. 21 Realty Times Bob Hunt, from the National Association of Realtors®, takes the author to task for blaming homeownership for “foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago.”


“But she is mistaken,” writes Hunt. “All those regrettable events were not caused by homeownership; they were caused by reckless lending programs.”

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Wednesday, October 13, 2010

New York’s consumers see a bright future for the real estate market


The New York Homeownership Survey was published by The New York State Association of Realtors, in partnership with the Siena Research Institute (SRI). The survey found some very interesting statistics, including that almost all respondents are satisfied with owning their home, and that 81% of homeowners considered their home to be a comfort rather than a burden. 81% of New Yorkers believe that homeownership is a better investment that the stock market.

The study also investigated consumer sentiment about the market. The study revealed that New Yorkers expect that the overall real estate market and the value of property to increase over the next year. Consumers see this as a very good time to buy a home.

According to SRI Director Dr. Don Levy, "New Yorkers see value today and recognize that this may be one of the best times in a while to buy. And it is heartening to see that the housing market bedrock remains strong with future sentiment overall, and attitudes toward both buying and selling are positive looking forward."

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Tuesday, October 12, 2010

No Money Down Returns

http://www.creativemortgagelenders.com/graphics/clipart/mortgage/ZeroDown.jpg

Exotic mortgages from shifty mortgage lenders hailing "no money down" was one of the culprits of the housing bubble, allowing people who did not have good financial statements creep into the market and fuel what would become the foreclosure nightmare.

Yet no money down mortgages do have their place. In instances, there are renters who make enough to own a house, but simply lack the wherewithal to be able to accumulate a large enough down payment to get into a home. With home prices much higher in urban areas than in the past, it is often now the case that down payments come from family members, or friends. But those without are stuck.

Fannie Mae is now introducing a new program that cautiously allows people to get into homes with no or very little money down mortgages. This makes home ownership within reach for many that wouldn't otherwise be able to own.

While the program is not yet available in New York, it is worth keeping an eye out for.


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Monday, October 11, 2010

The Wick and The Stick



Today, quick detour from our usual housing news to highlight an interesting exhibition taking place here on Staten Island, at the Snug Harbor Cultural Center and Botanical Garden.

George Way, whom we have featured here before, has mounted another exhibition, this time focused on early lighting pieces from the Renaissance to the Victorian era. The pieces, drawn from his extensive collection of antique furniture and from the Jonathan Z. Friedman, Esq. Collection, are displayed with paintings, etchings and other decorative arts pieces that explore the crucial role candlelight played in daily life and how it was used for metaphorical ends by artists.




Mr. Way, an affable gentleman who is often on hand at the exhibition to answer questions, has quietly amassed a collection that is one of the largest privately held antique furniture collections in America, all on a deli counter worker income. His pieces are often comparable or better than those at The Metropolitan Museum of Art and even the Victoria and Albert Museum in London. Mr. Way has lent many to museums around the country, but is working on giving his collection a permanent home here on Staten Island.

For more information on the exhibition, which is running now till May of 2011, visit the Snug Harbor Cultural Center and Botanical Garden website.

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Thursday, October 7, 2010

Existing-Home Prices Continue to Stabilize

Prices of existing single-family homes rose by 3.2% in July, compared to the same month a year ago, according to the S&P/Case Shiller Home Price Index, which tracks prices in 20 major U.S. cities monthly. S&P released these data on Tuesday morning, Sept. 28.

Read more the article here.

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Tuesday, October 5, 2010

The Real Estate Market is not Dead



The media has given the public at large that the housing market is dead, that people are waiting to see what happens with the economy and to keep renting homes or live in situations not suited to their needs until the economy provides more positive signs that everything will be o.k.

What's the mass media not telling you?

Well, first of all the fact that an overwhelming majority of Americans think that now is a fantastic time to buy a home. According to a recent survey by Fannie Mae, 70% of people believe that now is a good time to buy a new home. That same survey also said that "Of those surveyed, 47 percent believe home prices have bottomed, and 31 percent said prices would increase over the next year. The combined 78 percent of those not expecting further declines is up from 73 percent at the beginning of the year. "

That certainly does not sound like what the major news sources tell people at all. People are interested in buying new homes and that now is a great time to do it.

The second thing that the media is telling us is that the market is dead. The picture for this post shows an advertisement for a builder who has shown the exact opposite. McBride Homes has been selling an average 150 homes per month this year, and is on track to close 24% more homes than in 2009. They have accomplished this through aggressive marketing and discounting the homes. Buyers are looking for the best deal around in a market that is truly a buyer's market.

Combine those two facts and what you have is that there is a great opportunity for buyers to get into a new home right now at great prices, and that there is a lot to choose from. Smart buyers have a veritable smorgasbord of new homes to choose from.

The real estate market isn't dead... the deals are there, the buyers are there, but smart buyer are just finding and getting in on the best deals.

Read more about the McBride phenomenon here.

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