Real Estate Market: It’s Time to Buy a Home

Still on the fence about what to do? We believe very strongly that now is the time to buy a home. Some will say we are just saying this to create real estate transactions and commissions. Because of that, today we will quote what those outside the real estate profession are saying to the people who look to them for financial advice.

The Wall Street Journal

Last week, in an article entitled It’s Time to Buy That House, the WSJ told their subscribers:
“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”
In an article two weeks ago, MarketWatch.com (the on-line blog for WSJ) told their readers:
“Now could be the best time in history to buy a home.”

Forbes.com

In a report to their subscribers, Capital Economics reported that:
“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.”
Why is this important? Last week, Forbes explained to their readers:
“If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).”
They went on to explain the advantages of homeownership during retirement:
“Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement… At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference not to mention the impact of NOT having to pay a mortgage.  How much less would you have to save for retirement if you didn’t pay the mortgage?

Bottom Line

When the iconic financial newspaper and the iconic financial magazine say that it now makes financial sense to purchase a house, perhaps it’s time to buy a home.   Contact The Lee Ann Miller Team today and let us find your dream home!   SOURCE: KMC Blog

Real Estate: New First-Time Homebuyer Guide

We are excited to share the latest news from the Allen Tate Company – launch of our new Allen Tate First-time Homebuyer Guide, found at www.firsthome.allentate.com. Designed to help make the home buying process easier, the new Homebuyer Guide includes fun videos, interactive tools and great resources for beginners – as well as experienced – buyers. Do you know someone who might be interested in exploring homeownership for the first time? If you do, we hope you’ll forward this email to them, or let us know and we will contact them and offer our assistance. We hope you enjoy the new site. If you have any questions or we can help you with any homeownership needs, please let us know. Sincerely, The Lee Ann Miller Team

Real Estate: Your First Home – Maintain a Home Maintenance Budget

 Something that often surprises new homeowners is the cost of home maintenance and repairs. But the investment (both time and dollars) of routine home maintenance is minimal, compared to the cost of replacing a heating system, gutters or roof.   Professional home appraisers estimate that a neglected home can lose 10 percent of its appraised value. Appraisers determine depreciation (the rate at which a house is losing value) based on the home’s economic age (the number of years the home is expected to survive).   According to the U.S. Census, the annual cost of home maintenance costs average more than $3,300. Lending institutions estimate 1 to 3 percent of the price of the home, which means $2,000 to $6,000 annually for a $200,000 property. Your budget should increase as your home ages.   Think of your home like your body. If you treat it with preventive medicine and regular check-ups, there’s a good chance you will offset problems, or at least, catch them when they are small and manageable. Researchers at Syracuse University suggest that maintenance actually increases the value of your home of about 1 percent each year – similar to how wellness activities help improve your biological age.   An easy way to be prepared is to create a “reserve for replacements” – cash to be used strictly for home repairs and maintenance. Experts also advise regular inspections to get a jump on potential problems. Tackling one room a year is a good way to manage home upkeep. It’s also a smart idea to keep a notebook of all repairs and upgrades that can be shared with potential buyers.   Allen Tate Home Services is a great resource to help with home maintenance and repairs. It would be our pleasure to introduce you.  

Real Estate: 3 Questions You Must Answer Before Buying a Home

  If you are thinking about purchasing a home right now, you are surely getting a lot of advice. And most of that advice is probably negative. Why buy now with prices still falling? Don’t you realize real estate is no longer a good investment? Don’t you know that people who bought five years ago lost their shirt? We understand the concern your friends and family have. However, let’s look at whether or not now is actually the perfect time to buy a home. There are three questions you should ask before purchasing in today’s market: 1. Why should I buy if house prices are still depreciating? We believe that in most parts of the country prices will in fact soften in 2011. Price is the major concern for anyone selling a home. When you are buying, COST should be your primary concern however. Your monthly payment (cost) is definitely impacted by the price of the home you purchase. The other major component is the interest rate. Waiting for prices to bottom out while rates are increasing can wind up costing you more over the life of the mortgage. Over the last seven weeks, rates have increased over 1/2 a point going from 4.17 to 4.86. Looking at the attached chart shows this increase. Waiting for prices to bottom out seems to make perfect sense. Yet, at a time when rates are increasing, it might NOT make sense. Make sure you have a mortgage professional help you with this math before making a decision. In an article last week CNN Money reported: “You can kiss those record lows goodbye,” said Greg McBride, chief economist for Bankrate.com. Keith Gumbinger of HSH Associates, a provider of mortgage information said that the market reached a new plateau. “I don’t think we’re going back to a 50-year low anytime soon without an economic collapse,” he said. “Rates will probably never revisit those levels.” 2. When will I begin to see appreciation if I buy now? This is a great question. Macro Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey in 2010.  They ask 100+ housing industry experts to project housing prices through 2015. The most current survey shows that the experts are predicting prices to soften until 2012. The experts then project prices to rise reaching a cumulative appreciation of over 10% by 2015. Purchasing a home today makes great sense from a financial standpoint. Think of the old axiom: You want to buy low and sell high. We may be at the low point regarding the COST of a home. But, this decision should not only be a financial one. That leads us to our third and final question: 3. Why am I buying a home in the first place? This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. The Fannie Mae National Housing Survey shows that the four major reasons people buy a home have nothing to do with money:
  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of the space
What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the reason whether you decide to purchase or not. Bottom Line The COST of a home will probably remain relatively unchanged even if prices continue to depreciate. Don’t allow money to get in the way of you making the right decision for you and your family. In the long run, the finances will work in your favor anyway. by The KCM Crew