4 Financial Reasons to Buy Now
by THE KCM CREW on APRIL 12, 2011 ·
As Dean Hartman said last week, the purchase of a home is a personal decision. However, we want to give everyone four great financial reasons why you should not wait before taking the plunge into homeownership.
Interest Rates Are Increasing
Interest rates have increased almost 3/4 of a point in the last six months. Most experts expect rates to continue to increase through the year. Interest rates along with price determine the overall cost of a home. Even with prices softening, if interest rates rise, it may be less expensive to buy now rather than wait.
The 30-Year Mortgage May Disappear
There has been much debate regarding government’s role in providing support for homeownership. There are several experts who believe If Fannie Mae and Freddie Mac’s roles are eliminated, or even limited, it may be the end to the 30-year mortgage. This concern is addressed in MSN Real Estate’s Is it curtains for the 30-year mortgage?
QRM Requirements Could Be Much More Stringent
Here are proposed changes to the requirements for a ‘qualified residential mortgage’:
Certain mortgage types would be eliminated
You would need to put a minimum of 20% down
You would need a minimum 690 FICO score
The ratios of income to both the mortgage payment and overall debt would become much more conservative (28% and 36%)
There would be loans available to purchasers who don’t qualify under the new rules. However, they will probably be more expensive to the buyer (both in rate and costs).
Rents Are Expected to Increase
The supply of available rentals is decreasing and the demand is increasing. That will lead to an increase in rental costs throughout the year. The Wall Street Journal this week quoted a report by Reis, Inc:
“Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace.”
Bottom Line
You may be waiting on the sidelines to see if prices will continue to depreciate before you purchase a home. The mortgage expense is a major piece in the overall financial picture of homeownership. Make sure you consider it when timing your decision.
4 Financial Reasons to Buy Now
12 April 2011
06 April 2011
05 April 2011
OK. You Win. Stop Listening to Real Estate Agents!
OK. You Win. Stop Listening to Real Estate Agents!
by THE KCM CREW on APRIL 5, 2011 ·
Each day we attempt to give truthful insight on the current housing market. If we report what is perceived as negative news, some in the real estate community come down on us hard. However, when we explain that we think now is a great time to buy, we get an avalanche of feedback from the general public attacking us for being nothing more than puppets for real estate agents across the country. Today, we don’t want you to listen to what we think about the opportunities that exist for buyers in this market. Instead, we want to report on what some members of the investment community are saying.
The Wall Street Journal
Jim Woods wrote an article earlier this year for Market Watch, part of the Wall Street Journal’s digital network. Its title: Why your best investment is a house. Mr. Woods compared the investment potential of real estate against other asset classes such as stocks and precious metals. Here was his conclusion.
One reason your best investment right now could be a home has to do with the relative upside of getting in on an asset class while it’s at the bottom versus buying into other asset classes that could be near a top. Consider for a moment the tremendous upside we’ve seen in stocks, precious metals and agricultural commodities over the past 12 months…
If you’re a long-term investor looking to put money to work, now is not really the best time to get into any of these three asset classes. However, with home sales starting to improve, and with prices now possibly forming a bottom, real estate could well be the asset class that represents the best low-risk buying opportunity out there today…
Mr. Woods went on to talk about the financing portion of the purchase:
Yes, mortgage rates still are near historical lows, but if we see these rates rise, then the cost of a new home could climb significantly. So, now could really be the best time to pull the trigger on that home purchase — and it could also be your best investment right now.
Fortune Magazine
Shawn Tully, senior editor at large for Fortune penned an article last week which was titled: Real estate: It’s time to buy again. In the article, Mr. Tully explained:
Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.
Let’s state it simply and forcibly: Housing is back. Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction … The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.
Bottom Line
Neither of the two media sources mentioned above has ever been accused of cuddling up to the National Association of Realtors. However, both have come to the same conclusion. It’s time to buy real estate. Perhaps we should listen to them.
by THE KCM CREW on APRIL 5, 2011 ·
Each day we attempt to give truthful insight on the current housing market. If we report what is perceived as negative news, some in the real estate community come down on us hard. However, when we explain that we think now is a great time to buy, we get an avalanche of feedback from the general public attacking us for being nothing more than puppets for real estate agents across the country. Today, we don’t want you to listen to what we think about the opportunities that exist for buyers in this market. Instead, we want to report on what some members of the investment community are saying.
The Wall Street Journal
Jim Woods wrote an article earlier this year for Market Watch, part of the Wall Street Journal’s digital network. Its title: Why your best investment is a house. Mr. Woods compared the investment potential of real estate against other asset classes such as stocks and precious metals. Here was his conclusion.
One reason your best investment right now could be a home has to do with the relative upside of getting in on an asset class while it’s at the bottom versus buying into other asset classes that could be near a top. Consider for a moment the tremendous upside we’ve seen in stocks, precious metals and agricultural commodities over the past 12 months…
If you’re a long-term investor looking to put money to work, now is not really the best time to get into any of these three asset classes. However, with home sales starting to improve, and with prices now possibly forming a bottom, real estate could well be the asset class that represents the best low-risk buying opportunity out there today…
Mr. Woods went on to talk about the financing portion of the purchase:
Yes, mortgage rates still are near historical lows, but if we see these rates rise, then the cost of a new home could climb significantly. So, now could really be the best time to pull the trigger on that home purchase — and it could also be your best investment right now.
Fortune Magazine
Shawn Tully, senior editor at large for Fortune penned an article last week which was titled: Real estate: It’s time to buy again. In the article, Mr. Tully explained:
Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.
Let’s state it simply and forcibly: Housing is back. Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction … The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.
Bottom Line
Neither of the two media sources mentioned above has ever been accused of cuddling up to the National Association of Realtors. However, both have come to the same conclusion. It’s time to buy real estate. Perhaps we should listen to them.
01 April 2011
Home buying more than an investment question - Chicago Sun-Times
Q. Home prices keep falling and we’ve been waiting to buy our first home. We’ve saved up enough for about a 15 percent down payment. But now we’re beginning to wonder if we should buy at all — or keep renting.
A. Well, you’re right about home prices. The most recent Case-Shiller Home Price Index shows that prices fell 3.1 percent, year over year, compared with January 2010. The 20-city composite index, as of January, has fallen 31.8 percent from its peak in July 2006.
In fact, there’s talk of a “double-dip” housing recession, which would be defined by the Case-Shiller 20-city price index hitting a new low — even lower than the bottom made in April 2009. As of January, the 20-city index was only 1.1 percent above that low point.
The decline in home prices, combined with previous lenient lending standards, has resulted in nearly 25 percent of homeowners having a mortgage that is larger than the current market value of the home. (Keep in mind that nearly one-third of the homes in America are owned free and clear, without a mortgage.)
You don’t need to be an economist to realize that homes have not been a great investment for the past eight years. And you don’t have to have a crystal ball to predict that this situation could continue for quite a while, since there are so many foreclosed homes on the market, along with desperate sellers, all combining to push prices down.
But the real question is: Why were you thinking of buying a home? If you ask your grandparents, if they’re still around, they would probably never mention “price appreciation” as one of the significant reasons they bought a home 50 or 60 years ago.
They probably would have said something about wanting something that was all their own, that they could “fix up” the way they wanted it (unlike rental housing in those days). They planted trees and expected to be around to see them mature, along with their children.
Your grandparents would have talked about “raising a family” in this home, and about the memories they would build — not the equity. In fact, their goal was to have the mortgage paid off before they retired, so they could live in this home for most of their lives without the burden of a monthly payment in retirement.
That was the American dream of home ownership. If you share that dream, to any extent, then there’s no reason not to buy a home right now. You said you have the down payment money, and, I presume, the good credit to qualify for a mortgage.
Mortgage rates are low, and so are prices. And if you’re pretty sure you’ll be living in the same area for at least five years, and pretty sure that the home will fit your growing family, then this is a wonderful time to buy a home.
But if your question is whether buying a home now is a good investment — well, that depends. It depends on the price you pay, and on your time horizon, and on the rest of the economy. The price of a home reflects more than supply and demand; it reflects the availability of financing and the mood of the public as it evaluates whether future inflation will make assets, including houses, more valuable.
Right now Congress is deeply in the mode of “locking the barn door after the horse is out.” After years of pushing for credit availability for low-income home buyers (Rep. Barney Frank) and easy mortgage standards so banks could profit by making loans (Sen. Chris Dodd), the game has changed.
Now the Dodd-Frank banking reform bill named after these two Washington insiders has reversed the playing field. New “standards” are likely to make it more difficult for first-time home buyers. A 20 percent down payment will be required to get the lowest rates. A more limited financing market could impact the demand for homes, and the prices sellers can expect to receive.
I think this is a good time to buy a home for both financial and lifestyle reasons. No one ever picks a “bottom” — but despite (or because of) all the negativity, we could be close. And I do believe in the American dream of home ownership as a place to raise a family and build a community.
But just in case I’m wrong about that evaluation, there’s one other good thing about buying a home: This is the one investment you can live in , if you happen to make a mistake in your timing. And that’s The Savage Truth.
Terry Savage is a registered investment adviser.
Home buying more than an investment question - Chicago Sun-Times
A. Well, you’re right about home prices. The most recent Case-Shiller Home Price Index shows that prices fell 3.1 percent, year over year, compared with January 2010. The 20-city composite index, as of January, has fallen 31.8 percent from its peak in July 2006.
In fact, there’s talk of a “double-dip” housing recession, which would be defined by the Case-Shiller 20-city price index hitting a new low — even lower than the bottom made in April 2009. As of January, the 20-city index was only 1.1 percent above that low point.
The decline in home prices, combined with previous lenient lending standards, has resulted in nearly 25 percent of homeowners having a mortgage that is larger than the current market value of the home. (Keep in mind that nearly one-third of the homes in America are owned free and clear, without a mortgage.)
You don’t need to be an economist to realize that homes have not been a great investment for the past eight years. And you don’t have to have a crystal ball to predict that this situation could continue for quite a while, since there are so many foreclosed homes on the market, along with desperate sellers, all combining to push prices down.
But the real question is: Why were you thinking of buying a home? If you ask your grandparents, if they’re still around, they would probably never mention “price appreciation” as one of the significant reasons they bought a home 50 or 60 years ago.
They probably would have said something about wanting something that was all their own, that they could “fix up” the way they wanted it (unlike rental housing in those days). They planted trees and expected to be around to see them mature, along with their children.
Your grandparents would have talked about “raising a family” in this home, and about the memories they would build — not the equity. In fact, their goal was to have the mortgage paid off before they retired, so they could live in this home for most of their lives without the burden of a monthly payment in retirement.
That was the American dream of home ownership. If you share that dream, to any extent, then there’s no reason not to buy a home right now. You said you have the down payment money, and, I presume, the good credit to qualify for a mortgage.
Mortgage rates are low, and so are prices. And if you’re pretty sure you’ll be living in the same area for at least five years, and pretty sure that the home will fit your growing family, then this is a wonderful time to buy a home.
But if your question is whether buying a home now is a good investment — well, that depends. It depends on the price you pay, and on your time horizon, and on the rest of the economy. The price of a home reflects more than supply and demand; it reflects the availability of financing and the mood of the public as it evaluates whether future inflation will make assets, including houses, more valuable.
Right now Congress is deeply in the mode of “locking the barn door after the horse is out.” After years of pushing for credit availability for low-income home buyers (Rep. Barney Frank) and easy mortgage standards so banks could profit by making loans (Sen. Chris Dodd), the game has changed.
Now the Dodd-Frank banking reform bill named after these two Washington insiders has reversed the playing field. New “standards” are likely to make it more difficult for first-time home buyers. A 20 percent down payment will be required to get the lowest rates. A more limited financing market could impact the demand for homes, and the prices sellers can expect to receive.
I think this is a good time to buy a home for both financial and lifestyle reasons. No one ever picks a “bottom” — but despite (or because of) all the negativity, we could be close. And I do believe in the American dream of home ownership as a place to raise a family and build a community.
But just in case I’m wrong about that evaluation, there’s one other good thing about buying a home: This is the one investment you can live in , if you happen to make a mistake in your timing. And that’s The Savage Truth.
Terry Savage is a registered investment adviser.
Home buying more than an investment question - Chicago Sun-Times
24 March 2011
are you ready at all times???
1. Be Ready for the Pre-appointment Appointment
In order to best take advantage of the opportunities this year will bring, make sure you are ready to speak real estate at any moment. Whether it is at the food store, the movies, or at your child's ball game, people are again talking about real estate. Be prepared to intelligently articulate answers to the questions that come up. Ensure this by being very mobile with your information (smart phones, iPads, or tablets).
KCM Members receive updated charts, graphs, and other visuals for their mobile devices every month. Learn more about KCM and discover the benefits of being a member by visiting www.KeepingCurrentMatters.com/KCM.
2. Understand the Advantages of Owning Over Renting
We sell real estate for a living. We must be prepared to be an evangelist for homeownership. Know that owning is less expensive than renting in 72% of the country. Be able to explain all the financial benefits of owning a home and learn the non-financial reasons people buy a home.
3. Know That Today's Mortgage Opportunities Will Never Exist Again
Today, a buyer can purchase a home with a 5% interest rate guaranteed for 30 years. These low rates will disappear as the economy improves. If the lending reform that many are calling for happens, there is a chance that the 30 year mortgage will also disappear. For more on this point, click here.
4. Realize the Wealthy Are Back in the Market
In 2010, sales of homes under $1 million were down 2.8% from the previous year. Yet, home sales of properties priced over $1 million were up 18.6%. That means that the people who best understand the principle "cost vs. price" best think now is the time to buy real estate.
5. Don't Forget It's Still About "Supply and Demand"
There will be a steady supply of buyers purchasing homes this spring. Houses will sell; many houses. Don't allow this increase in demand to fool you or your homeowners. Home prices will not appreciate on increased demand alone. Price is determined by the ratio between supply and demand. Make sure you know the month's supply of inventory available for each category of house you have listed. Only then can you give great counsel on pricing.
In order to best take advantage of the opportunities this year will bring, make sure you are ready to speak real estate at any moment. Whether it is at the food store, the movies, or at your child's ball game, people are again talking about real estate. Be prepared to intelligently articulate answers to the questions that come up. Ensure this by being very mobile with your information (smart phones, iPads, or tablets).
KCM Members receive updated charts, graphs, and other visuals for their mobile devices every month. Learn more about KCM and discover the benefits of being a member by visiting www.KeepingCurrentMatters.com/KCM.
2. Understand the Advantages of Owning Over Renting
We sell real estate for a living. We must be prepared to be an evangelist for homeownership. Know that owning is less expensive than renting in 72% of the country. Be able to explain all the financial benefits of owning a home and learn the non-financial reasons people buy a home.
3. Know That Today's Mortgage Opportunities Will Never Exist Again
Today, a buyer can purchase a home with a 5% interest rate guaranteed for 30 years. These low rates will disappear as the economy improves. If the lending reform that many are calling for happens, there is a chance that the 30 year mortgage will also disappear. For more on this point, click here.
4. Realize the Wealthy Are Back in the Market
In 2010, sales of homes under $1 million were down 2.8% from the previous year. Yet, home sales of properties priced over $1 million were up 18.6%. That means that the people who best understand the principle "cost vs. price" best think now is the time to buy real estate.
5. Don't Forget It's Still About "Supply and Demand"
There will be a steady supply of buyers purchasing homes this spring. Houses will sell; many houses. Don't allow this increase in demand to fool you or your homeowners. Home prices will not appreciate on increased demand alone. Price is determined by the ratio between supply and demand. Make sure you know the month's supply of inventory available for each category of house you have listed. Only then can you give great counsel on pricing.
22 March 2011
14 March 2011
REALTOR® Magazine-Daily News-6 Most Promising Real Estate Markets for 2011
REALTOR® Magazine-Daily News-6 Most Promising Real Estate Markets for 2011
WE ARE #2!!!!!! Buffalo-Niagara Falls, N.Y.: This metro area for the last year has boasted a low delinquency rate and one of the lowest foreclosure rates in the country. It also has one of the fastest-rising median list prices in the nation.
▪ Median sales price (Q4 2010): $126,500
▪ Median sales price % change (Q4 ’09-Q4 ’10): 14.3 percent
▪ Foreclosure activity rate (2010): 1 in 322 units
WE ARE #2!!!!!! Buffalo-Niagara Falls, N.Y.: This metro area for the last year has boasted a low delinquency rate and one of the lowest foreclosure rates in the country. It also has one of the fastest-rising median list prices in the nation.
▪ Median sales price (Q4 2010): $126,500
▪ Median sales price % change (Q4 ’09-Q4 ’10): 14.3 percent
▪ Foreclosure activity rate (2010): 1 in 322 units
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