3 Financial Reasons to Buy a Home NOW! (Part I)

March 25, 2013 By EmmanuelFonte 1 Comment

This week, we are going to look at the three financial reasons to buy a home now instead of waiting: prices are rising at an accelerated rate, interest rates are increasing and rents are skyrocketing. – The KCM Crew

Part I – Prices Are Rising at an Accelerated Rate

The price of a home is the major consideration when deciding whether or not it makes financial sense to purchase a house. Experts are not only projecting that house values will increase in 2013. They are also more optomistic in the level of appreciation they are projecting as the market begins to heat up. Here are some examples:

The Home Price Expectation Survey

The latest survey of a nationwide panel of 118 economists, real estate experts and investment and market strategists reveals they project home values to end 2013 up an average of 4.6% according to the first quarter. This is after they had projected a 3.1% increase just three months ago.

Bank of America

In a report titled, Someone Say House Party?, Bank of America analysts revised their projections upward:

“Home prices continue to show momentum amid shrinking inventory and record high affordability, prompting us to revise up our original forecast of 4.7% for home prices this year. We now expect national home prices, as defined by the S&P Case Shiller home price index, to increase 8% this year.”

Capital Economics

According to a report in DSNews, Capital Economics also upgraded their prediction:

“Strong demand and tight inventory have brought existing home sales back to ‘normal’ levels, and further gains are possible, according to the latest market report from Capital Economics. Additionally, market conditions may prompt lenders to “loosen the purse strings slightly” and lend a little more freely.

These conditions, combined with broader economic indicators, lead Capital Economics to revise its previous forecast of a 5% price gain this year up to 8%.”

Morgan Stanley

In an article from HousingWire, Morgan Stanley joined the party:

“Strong momentum in home prices as well as housing activity gave Morgan Stanley analysts enough confidence to upgrade their home price appreciation projections to roughly 7% (from 5%) for 2013, according to its latest global securitized credit report…

“The momentum in most metrics of housing activity is running well ahead of the pace we had expected,” said James Egan, Jose Cambronero and Vishwanath Tirupattur, analysts for Morgan Stanley.”

Not only are prices projected to appreciate. Experts are actually revising their projections upward as demand maintains its momentum.

Tomorrow, we will look at increasing interest rates.

by THE KCM CREW

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment

Rent or Buy: How they stack up

March 23, 2013 By EmmanuelFonte Leave a Comment

According to Trulia’s 2013 Rent vs. Buy Report, buying is cheaper than renting in the top 100 metro areas across the nation says Forbes. While asking home prices climbed 7.0 percent last year, rent went up by 3.2 percent. Currently, it is 44 percent cheaper to buy versus rent, compared to 46 percent one year ago. Low mortgage rates have contributed to housing affordability. Households can save more dollars buying over renting in the Midwest than in San Francisco, Honolulu, San Jose, and New York, where the savings gap is narrower.

Buying is a great option when these key factors apply:

Low-interest mortgage rates are available;
Households itemize deductions on tax returns, including the mortgage interest and property tax payments for first and second homes;
Households stay in the home three years or longer, because buying and selling a home incurs settlement or closing costs that may be recouped after that period.

Buying is 44 percent lower than renting for families that stay for 7 years, 35 percent for those staying 5 years, and 20 percent for 3-year inhabitants.

The Bipartisan Policy Center forecasts that five to six million new renter households will emerge over the next decade due in part to the low inventory of homes, according to HousingWire. Barry Zigas, Director of Housing Policy for Consumer Federation of America, said that even though young households want to purchase, the current housing supply can’t support that demand. Tighter credit, more substantial down payments, and decreased wealth among new households also contribute to the rise in rentership.

A research study from Florida International University concludes that the U.S. is trending toward becoming a renter nation even though the financial and non-financial benefits of homeownership are still tangible for many households. While buying is a good option for most, it is particularly positive for those who plan on staying in a home for more than three years or who are looking for rental properties to grow their wealth over time.

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment

Greater Seattle: Where You’ll Want to Be In 2016

March 23, 2013 By EmmanuelFonte Leave a Comment

The Seattle metro area continues to attract migrants from other states, boosting residential and commercial development. Real estate experts offer their top picks on the next hot spots for sub(urban) growth in 2016, reports Seattle Met.

Sammamish, a suburban city located on the East side, could boast a European-inspired centralized plaza complete with a town hall, retail, and small-unit homes by 2016. Sammamish has easy access to 520 and I-90, making it an attractive location for young families who want solid schools, a relatively shorter commute, and proximity to both Bellevue and Seattle. CNN Money Magazine named Sammamish one of the best places to live in 2011.

The Central District, located on the southern edge of Capitol Hill, appeals to young families who want a house and proximity to Seattle and Bellevue. A mostly residential area, the Central District is located east of Cherry Hill, west of Madrona and Leschi, south of Capitol Hill, and north of Rainier Valley. Historically, the Central District has been one of Seattle’s most racially and ethnically diverse neighborhoods.

South Lake Union is the headquarters of Amazon and home to Denny Park, Seattle’s oldest public park. This urban and walkable community touts the beautiful Lake Union, new and emerging condominium units, and amenities. For professionals who work in the SLU region, the options to live there are becoming increasingly abundant.

Columbia City is a newly revitalized part of the Rainer Valley, a mulitcultural community located southeast of downtown Seattle. Expansion of mass transit makes the Rainer Valley area communities attractive to those who want to stay close to downtown. The Valley includes the historic district of Columbia City and immediate neighbors, Genesee, Lakewood, Seward Park, Beacon Hill, Mt. Baker, and Hilman City, which rounds out Seattle Met’s top 5 best places to live in 2016.

Filed Under: Blog, Economy, Real Estate Updates

Improve Your Credit Score, Improve Your Life

March 22, 2013 By EmmanuelFonte Leave a Comment

Filed Under: Blog, Economy, real estate financing Tagged With: credit

Homebuilding Soars to Highest Level in 4 Years

March 20, 2013 By EmmanuelFonte Leave a Comment

Housing starts surged in February as well as future permits for future construction to the highest levels since 2008 — a sign that the new-home market is picking up steam just in time for the spring buying season, the Commerce Department reported Tuesday.

Overall housing starts rose 0.8 percent in February to a 917,000 annual rate. Single-family housing starts, which make up the biggest bulk of that total, reached their highest level since June 2008. Meanwhile, multifamily starts rose 1.4 percent in February to 299,000 units.

“Demand for new homes and apartments is definitely rising as the spring buying season approaches and more young people move out on their own,” said Rick Judson, chairman of the National Association of Home Builders. “Builders are responding to this improved demand by putting more crews back to work and pulling more permits for future construction, though this positive activity is being constrained by continuing issues with appraisals and credit availability for both builders and buyers, and also by newly arising challenges such as lot shortages and increased costs for labor and materials.”

While housing starts have shown a big improvement in the past year, economists say that homebuilding is still less than half of what it was during its prerecession peak and is near levels in the early 1990s.

Source: National Association of Home Builders and “Housing Starts at Highest Level Since 2008,” Reuters

Filed Under: Blog, Economy, Housing Market, Real Estate Updates

1.7 Million Home Owners Regain Equity in 2012

March 19, 2013 By EmmanuelFonte Leave a Comment

Rising home prices have helped more home owners make their way above water again, with 1.7 million residential properties regaining equity in 2012, according to the latest figures from CoreLogic. The number of mortgaged home owners with equity now stands at 38.1 million.

More home owners are expected to soon join them: About 1.8 million homes will regain equity if home prices rise by another 5 percent—which most economists have forecast for this year.

“In the fourth quarter we again saw an improvement in the equity position of households,” says Mark Fleming, chief economist for CoreLogic. “Housing market improvements, particularly in the hardest hit states, are the catalyst for households to regain equity and become participants in 2013’s housing market.”

While the numbers are improving, many home owners are still underwater: About 21.5 percent—or 10.4 million—of all residential properties with a mortgage still retained negative equity at the end of the fourth quarter of 2012. That number is down 22 percent, year-over-year.

Nevada has the highest percentage of homes with negative equity (at 52.4%), followed by Florida (40.2%), Arizona (34.9%), Georgia (33.8%), and Michigan (31.9%). These five states alone account for 32.7 percent of the total amount of negative home equity in the U.S., according to CoreLogic.

Some additional findings from CoreLogic’s latest report:

The majority of homes that have equity tend to be on the higher end of the real estate market. Eighty-six percent of homes valued at more than $200,000 have equity, compared to 72 percent of home less than $200,000.
About 3.9 million home owners with negative equity have both first and second liens. Their average mortgage balance is $296,000 and their average underwater amount is $80,000.

Source: CoreLogic

Filed Under: Blog, Economy, real estate financing, Real Estate Updates

Money Magazine: The Real Estate Market is Back

March 19, 2013 By EmmanuelFonte Leave a Comment

Last week, I posted a Market Update that showed that the real estate market was coming back. Some may feel that the information was from a survey of industry players that may have a natural bias. For the doubters, here is the cover of the latest edition of Money Magazine released this past weekend.

The magazine supported their case by explaining:

In the last year, home prices increased in 92 of the country’s 100 largest metropolitan areas
Homes are more affordable than they’ve been in 40 years
The number of houses for sale is at the lowest level in a decade
Price increases are projected for most of the country this year

It seems that even the unbiased realize that Housing is Back!

Filed Under: Blog, Economy, Housing Market, Real Estate Updates

Survey: Americans Dream Big About Home Ownership

March 18, 2013 By EmmanuelFonte Leave a Comment

Eighty-seven percent of Americans recently surveyed say that owning a home is something they dream about, according to a survey by JPMorgan Chase.

“Owning a home is at the heart of most Americans’ dreams,” says Kevin Watters, CEO of mortgage banking at JPMorgan Chase. “And people are saving as much as possible to achieve home ownership.”

Sixty-six percent of Americans surveyed say that they believe home ownership is a good financial investment. Seventy-five percent say it’s a crucial part of raising a family.

First-time home buyers are getting more optimistic about being able to achieve home ownership too. The number of potential first-time home buyers who say they are optimistic about being able to put money down on a home over the next six months doubled in the last six months, compared to previous survey results.

“First-time home buyers are crucial to the housing market and the overall economy—and to their communities,” says Watters. “As families buy their first home, they are investing in their communities and enable other families to move up. That will eventually spur more new construction, generating additional jobs.”

Source: “Survey shows homeownership is still the American Dream,” HousingWire

Filed Under: Blog, Economy, Housing Market, Real Estate Investment, Real Estate Updates

Real Estate: If You Waited to Sell, You May Be Brilliant

March 13, 2013 By EmmanuelFonte Leave a Comment

Many homeowners look back on 2006 house values and wonder why they didn’t sell at the height of the market. They lament the money they may have lost by not selling. However, there is another side to that story. If they did sell back in 2006, they would have still needed to live somewhere.

Looking back at the euphoria that permeated the real estate market at the time, many may have sold and moved into an even nicer, more expensive home. With the benefit of 20/20 hindsight, we can now calculate the financial consequences of such a move.

Let’s look at a house that would have cost $400,000 in 2006. For the sake of this example, we are going to assume that values in this region dropped 25% since. To compute total cost (principal and interest payment) we needed to research mortgage interest rates at the time also.

Here is the comparison:

You saved over $1,100/month on your mortgage payment. Maybe it wasn’t horrible that you didn’t sell in 2006. Perhaps, it was a great decision!

via: KCM

Filed Under: Blog, Economy, Housing Market, real estate financing, Real Estate Investment