Archive for November, 2009
To Rent or To Buy, That is the Question
If monthly payments are affordable buying a home can make more sense than renting
A question that surfaces on most people’s mind at some point is, whether to rent or to buy. The first thing that pops to mind is affordability but there are other factors, such as job stability, relocation possibilities and lifestyle. If you intend on being in an area for at least two more years, your income is steady and purchasing a home fits your lifestyle then it is time to break out a pen, paper and a calculator and see if buying makes more sense financially than renting.
At first glance buying a home makes more sense than renting because of the ability to gain equity in a home. While the past few years have shown this factor to be a bit shaky, the reality is that if you keep a property long enough, or get in at the right time, buying real estate can be a worthy investment.
There is no sense making a two column list when it comes out to equating the cost of renting and buying. Renting is a fixed equation, the monthly number typically doesn’t change. To compute your costs for buying a home you look at the following:
- Purchase price
- Down payment amount
- Loan Amount
- Loan Term
- Interest rate
- Property taxes
- HOA fees
- Monthly mortgage payment
- Home owner’s insurance
- mortgage insurance
Your monthly costs will include your mortgage payment, property taxes, insurance, and any HOA dues that may exist. If these numbers add up to an amount you can afford it could make sense for you to purchase a home instead of rent. The important thing to remember is that once you buy a home you are not going to have a landlord to rely on to make repairs so factor in putting aside some extra money for a home repair and maintenance account.
Buying a home is an important decision and one which can add to future security and financial stability if done with great thought and evaluation.
Impressive October Real Estate Sales Show Signs of Recovery
Real Estate data indicates that the overall housing market is slowly improving
Price declines are getting smaller, sales volume is getting larger and the overall real estate market appears to be mending. October sales were up for pre-existing home sales, 23.5% up compared with October of 2008. Homes sales for October were predicted to be 5.70 million, but the sales volume turned out to be 6.1 million.
Encouraging words are being spoken about real estate by NAR’s chief economist who stated that, “Existing home sales have already bottomed. Home prices are almost there. We are seeing less of a decline in house values.”
Approximately one third of home sales in October were made by first time home buyers taking advantage of the first time home buyer tax credit. The median home price fell 7.1%, still affected by distressed properties which accounted for 30% of October’s home sales .
In addition, inventory of homes for sale has dropped slightly, indicating that the housing market is indeed recovering slowly. Tax incentives, low mortgage rates and decreasing home values continue to make their mark, helping real estate sales to increase. The housing market’s recovery will hopefully seep into the minds of consumers, giving a bit of peace and spurring on recovery in other sectors.
Click here for a Yahoo Real Estate article about real estate sales.
Extending the Good News for Home Buyers
Extending the Good News for Home Buyers
By Lawrence Yun, Chief Economist, NAR Research
Let’s first turn to the terrific news regarding the housing stimulus. Earlier this month, the U.S. Congress overwhelmingly passed and the President signed into law new measures to maintain the momentum for a housing market recovery. The home buyer tax credit, originally scheduled to expire at the end of November will now be available through the middle of next year and more potential buyers will be able to take advantage of it. The income limit was also increased and many move-up buyers – not just first-timer purchasers – also will qualify. Furthermore, loan limits will not shrink as was planned for next year; in high-cost areas, the loan limit will remain at near $730,000 in 2010, thereby permitting more consumers to tap into the historically low mortgage rates.
Green Fields
Today, heading south on Bellfountain Road to preview a home, the sky was full of dark rain clouds and the fields were this bright green color that was incredible. It was as if the ground had been painted a bright green. It was so intense that it looked unreal… almost like a painting. The contrast from the dark clouds and the bright green grass was so intense. It was absolutely gorgeous. One of the reasons I love it here in Corvallis. Too bad I didn’t have my camera with me. My cell camera would not have done it justice. Just one of the benefits of the rain and the Willamette Valley.
Real Estate Appears to be Leveling Out
Real estate appears to be stabilizing across the Country
A recent report shows improvement in real estate across the country. The well known S&P/Case-Schiller index shows that the 10 city index and the 20 city index a marked improvement in real estate in the majority of cities that it tracks. What the reports displays are small improvements or minimal devaluation in home values. Home values are up anywhere from .1% to 3.4% in ten cities. In other areas real estate values have remained flat and in harder hit areas home values are decreasing at significantly lower rates.
While the news is certainly not staggering it is encouraging because it indicates that real estate markets across the Country are leveling out. Home values are falling less sharply and people are being drawn back into the real estate market. It is no surprise what is stimulating the market. Low home values, low interest rates and the First Time Home Buyer Tax Credit have combined to create an ideal buyer’s market.
For more information on the latest info click here for a report from Yahoo real estate.
Senate Approved Expanded Tax Credit For Home Buyers
The Senate has approved an extended and expanded tax credit for home buyers
On Wednesday the senate passed an expanded tax credit. The First Time Home Buyer Tax credit has been seen as a huge success and its expiration on November 30 has had many feeling nervous about what its end will mean. Those fears can now be put aside. While the bill still has to pass through the House, which it is expected to do next week, is was overwhelmingly approved by the Senate in a 98-0 vote.
What is new and improved with the extended and expanded tax credit? The new and improved tax credit is still for first time home buyers but will also include home buyers who have owned their current home for 5 years or more. The credit is up to for $6,500 for these current homeowners and remains at up to $8,000 for First time home buyers or home buyers who have not owned a home for the past three years. The tax credit is income restricted, an individual cannot make more that $125,000 annually and a couple cannot make more than $225,000 jointly. A home must be a primary residence and valued at $800,000 or less. Buyers must have a property under contract to purchase by April 30, 2010, and the property must close by June 30, 2010.
The passing of this extended, expanded tax credit is good news on the real estate front and is expected to be the last tax credit offered for a long time to come.
Forecast Expects Foreclosures to Decrease in Coming Year
Foreclosures are expected to subside in the coming year
The latest data released by UFA L.L.C., a firm located in Ann Arbor Michigan that researches mortgage activity, states that foreclosures are expected to decrease in the next year. After four years on the rise there is no doubt that it will be nice to see foreclosures start to subside.
Improvements in the foreclosure arena are seen linked to tighter lending practices, home prices stabilizing, and an improving economy. The one element working against foreclosures is the increasing unemployment which will leave some without the ability to make their mortgage payments.
The onslaught of no-doc loans and inflated home prices led to four years of increasing foreclosures. The decline of real estate values is largely attributed to an elevated rate of foreclosures. A decrease in foreclosures will be a welcome sign for a real estate market that has seen better times.
Click here to read an article at Business Week about foreclosure rates.
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