Real Estate Information

Thinking about buying a home but not too sure? The KCM Group gives us four great reasons as to why NOW is the time to buy! Take a look…

1.     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.

2.     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. 

3.     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).

4.     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.”

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.

-Orly

Loved this article from KCM so wanted to share...

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.

 So...are you going to listen?

-Orly

I just read a great article from the KCM Group about home values. A lot of people think that if they keep waiting, their value will go up. But is this necessarily true? Take a look and see what KCM had to say...

Sellers in any real estate market are looking to get the best possible price. If you are looking to sell in the next year, today’s price may well be the best price. Home values stabilized somewhat in 2010. Many hoped that was a sign that values had bottomed out and we would see price appreciation in 2011. Studies released this week have painted a different picture.

If we look at CoreLogic’s January Home Price Index (HPI), we see that prices are again beginning to decline:

National home prices, including distressed sales, declined by 5.7 percent in January 2011 compared to January 2010…

Mark Fleming, chief economist with CoreLogic, said, “A number of factors continue to dampen any recovery in the housing market. Negative equity, which limits the mobility of homeowners, weak demand and the overhang of shadow inventory all continue to exert downward pressure on housing prices. We are looking out for renewed demand in the coming months as the spring buying season gets underway to hopefully reduce the downward pressure.”

They are not talking about the spring market increasing or even stabilizing prices. They hope it will “reduce” the pressure to drive prices lower.

Radar Logic’s RPX Composite Price comes to virtually the same conclusion:

Radar Logic believes the RPX Composite price will continue to exhibit year-on-year declines throughout 2011 due to a growing supply of homes for sale and in the inventories of financial institutions, and weakening demand due to the reduction of government incentives for home buyers. Moreover, banks are facing uncertainty over whether they will be forced by regulators to expand mortgage modifications, and may reduce lending and tighten standards as a result.

“No matter what you call it, a ‘double dip’ or the continuation of a long process of deterioration, the current trend in home prices is evidence that housing markets are continuing to languish,” said Quinn Eddins, Director of Research at Radar Logic. “We expect the negative trend to continue under a severe supply overhang that includes a large and growing ‘shadow inventory’ of homes in default or foreclosure.”

Bottom Line

It seems that prices have again begun to fall nationally. With the overhang of existing and shadow inventory, prices will probably continue to decline throughout most of 2011. If you’re thinking of selling, now might be the best time. Check with a local real estate professional to see how this might impact your area.

There are those currently debating the financial advantages of owning a home. Some are looking at studies and reporting that homeownership has never really been a great investment.

One of these people is Jack C. Francis, a former Federal Reserve economist and professor at Baruch College. He said in a recent CNBC article:

“For generations, parents and grandparents have been telling us that the way to get ahead was to buy a house and keep making payments with a fixed interest rate and after 20 or 30 years it would be way up in value and that was your nest egg in old age. You could either live in it rent free or sell it and use the proceeds to rent an apartment.”

The article goes on to explain the rest of Mr. Francis’ comment:  

That was good advice until 2006 when home prices collapsed, he says, and it “may become good advice 10 years from now, but right now it’s not.”

Mr. Francis bases his conclusions on a study he completed which covered the years 1978 through 2008. In his study it showed that home prices increased annually by 5.7% and that the S&P 500 increased by 10.8%. Based on this information, Mr. Francis gives the following advice:

To students who come to him for guidance on whether to buy or rent in the near term, however, Francis has one word of advice: wait. “I keep telling them this is not the time to buy,” he says.

Let’s take a closer look at this conclusion.

1. We have our own study.

Mr. Francis did a study over a thirty year period which did not include the last 3 years. If we look at the same categories since January 2000 (covering one of the worst decades in American real estate history), we find that home values GAINED 42% while the S&P LOST 4.7%. It all depends on which set of data you choose to use.

2. The proper comparison is rent vs. buy.

All of these comparisons claim that putting your money into a different investment vehicle other than real estate might make sense. What they are not taking into consideration is that the investor will still have a housing expense. They will still need money for shelter. They cannot just take their money for shelter and buy other assets with it. A person can’t live in their 401k or their IRA. This leads us to…

3. In most markets today, owning is LESS expensive than renting.

Trulia recently came out with their Rent vs. Buy Index. The report shows:

 that it is more affordable to buy than to rent a two-bedroom home in 72 percent of America’s 50 largest cities.

For more on this issue including a 50 city breakdown, click here.

4. Current mortgage opportunities may never be available again

The government has driven mortgage interest rates to all time lows. You can still get a 5% rate and guarantee it for 30 years. Both of these opportunities may soon disappear. Mortgage rates will increase as the economy improves and the Fed no longer feels pressure to keep rates low. The 30 year mortgage may soon be a thing of the past if suggested mortgage reforms come to be. You can lock in your housing expense for 30 years if you purchase. Renting is like having an adjustable rate loan with no cap that readjusts EVERY year. Which way do you think a landlord will readjust it?

For more on this, click here.

5. Most Americans see more to homeownership than financial value.

Last week, Fannie Mae released the National Housing Survey. The survey reported:

• 96% of all homeowners said homeownership has been a positive experience.
• 84% of Americans still believe that owning a home makes more sense than renting. Even 68% of renters believe owning makes more sense.
• 2 in 3 Americans believe that lifestyle benefits of homeownership (65%) are superior to the financial benefits (32%).

Bottom Line

There are more and more studies being done on the value of homeownership. We think we will trust in what our parents and grandparents said. Your mortgage payment is money you put into your savings. Your rent payment goes into the garbage.

Many people have thought about refinancing their home with today’s economy. Refinancing can save you a lot of money but you must know the facts.

Home refinancing is a great option for people looking to lower their monthly payments, get money for home improvements or even avoid foreclosure.

Realestateabc.com put together some great tips to ensure you are considering all that needs to be considered before refinancing your home.

Interest rates are still at historic lows but the end may be in the near future. Now is the best time to determine if refinancing is the right option for you.

Consider these 3 things:

1. Understand lender fees and points.
Be sure to discuss and ask questions regarding the lender fees and points on your new loan. Making sure you understand the parameters of the loan ensures that there are no surprises, such as last-minute closing costs or higher than expected interest rates.

2. Research prepayment penalties
Depending on the contract details, some mortgages have penalties for prepayment. Call your current mortgage lender and ask them about prepayment penalties. Even if you have a penalty, it might still make sense to refinance based on the amount of money you'll save.

3. Obtain a variety of refinancing quotes
Shopping around for quotes from a variety of companies is a smart idea because each one will offer you something different. Comparing quotes and contract details helps you pick the best refinancing offer for your situation.

 -Orly

Homes and streets continue to be flooded in North Jersey due to Sunday’s rains.

Most residents escaped significant damange but the forecast is predicting 2 to 4 more inches of rain later in the week, reports northjersey.com.

A flood watch has been issued by the National Weather Service for Thursday morning into Friday morning.

This could mean more flooding for already waterlogged areas where waterways are spilling into yards and streets.

To help everyone deal with this massive amount of water, I have included some Flood Safety Tips from the NYS Office of Emergency Management.

Act Now To Be Prepared

• Learn the safest route from your home or business to high, safe ground should you have to leave in a hurry.
• Develop and practice a 'family escape' plan and identify a meeting place if family members become separated.
• Make an itemized list of all valuables including furnishings, clothing and other personal property. Keep the list in a safe place.
• Stockpile emergency supplies of canned food, medicine and first aid supplies and drinking water. Store drinking water in clean, closed containers.
• Plan what to do with your pets.
• Have a portable radio, flashlights, extra batteries and emergency cooking equipment available.
• Keep your automobile fueled. If electric power is cut off, gasoline stations may not be able to pump fuel for several days. Have a small disaster supply kit in the trunk of your car.
• Find out how many feet your property is above and below possible flood levels. When predicted flood levels are broadcast, you can determine if you may be flooded.
• Keep materials like sandbags, plywood, plastic sheeting and lumber handy for emergency water-proofing.

During the Flood

• Monitor the National Oceanic & Atmospheric Administration's (NOAA) Weather Radio or your local radio and TV station broadcasts for information.
• If local officials advise evacuation, do so promptly.
• If directed to a specific location, go there.
• Know where the shelters are located.
• Bring outside possessions inside the house or tie them down securely. This includes lawn furniture, garbage cans, and other movable objects.
• If there is time, move essential items and furniture to upper floors in the house. Disconnect electrical appliances that cannot be moved. DO NOT touch them if you are wet or standing in water.
• If you are told to shut off water, gas, or electrical services before leaving, do so.
• Secure your home: lock all doors and windows.

Travel With Care

• Leave early to avoid being marooned on flooded roads.
• Make sure you have enough fuel for your car.
• Follow recommended routes. DO NOT sightsee.
• As you travel, monitor NOAA Weather Radio and local radio broadcasts for the latest information.
• Watch for washed-out roads, earth-slides, broken water or sewer mains, loose or downed electrical wires, and falling or fallen objects.
• Watch for areas where rivers or streams may suddenly rise and flood, such as highway dips, bridges, and low areas.
• DO NOT attempt to drive over a flooded road. Turn around and go another way.
• DO NOT underestimate the destructive power of fast-moving water. Two feet of fast-moving flood water will float your car. Water moving at two miles per hour can sweep cars off a road or bridge.
• If you are in your car and water begins to rise rapidly around you, abandon the vehicle immediately.

After the Flood

• Listen to the radio or TV for instructions from local officials.
• Wait until an area has been declared safe before entering it. Be careful driving, since roads may be damaged and power lines may be down.
• Before entering a building, check for structural damage. Turn off any outside gas lines at the meter or tank. Let the building air out to remove foul odors or escaping gas.
• Upon entering the building, use a battery-powered flashlight. DO NOT use an open flame as a source of light. Gas may be trapped inside.
• When inspecting the building, wear rubber boots and gloves.
• Watch for electrical shorts and live wires before making certain the main power switch is off.
• DO NOT turn on electrical appliances until an electrician has checked the system and appliances.
• Throw out any medicine or food that has had contact with flood waters.
• Test drinking water for portability. Wells should be pumped out and water tested for drinking.
• If the public water system is declared 'unsafe' by health officials, water for drinking and cooking should be boiled vigorously for 10 minutes.
• Shovel out mud with special attention to cleaning heating and plumbing systems.
• Flooded basements should be drained and cleaned as soon as possible. Structural damage can occur if drained too quickly. When surrounding waters have subsided, begin draining the basement in stages, about 1/3 of the water volume each day.

The Hidden Danger - Low-Water Crossing

• Nearly half of all flash flood fatalities are vehicle related! When driving your automobile during flood conditions, look out for flooding at highway dips, bridges and low areas.
• Even the largest and heaviest of vehicles will float. Two feet of water will carry most cars away.
• As little as six inches of water may cause you to lose control of your vehicle. Do not drive through flowing water!
• A hidden danger awaits motorists where a road without a bridge dips across a creek bed.
• Motorists develop false confidence when they normally or frequently pass through a dry low-water crossing.
• Road beds may have been scoured or even washed away during flooding creating unsafe driving conditions.
• Those who repeatedly drive through flooded low-water crossings may not recognize the dangers of a small increase in the water level.
• Driving too fast through low water will cause the vehicle to hydroplane and lose contact with the road surface.
• Visibility is limited at night increasing the vulnerability of the driver to any hidden dangers.
• Heed all flood and flash flood watches and warnings.
• Remain aware of road conditions!

 Be safe out there!

-Orly

With more than a month left in the “snow season,” the Department of Transportation is one storm away from setting a record for its most expensive winter of snow removal, reports nj.com.

New Jersey has racked up $44.4 million in snow removal costs on state roadways this winter. That is more than twice the state’s $20.3 million ration.

The snow season for us began with freezing rain on December 12^th and the state is on track to easily surpass the previous record of $45 million during the 2002-2003 winter season.

The state has already gone through the following amounts compared to last winter:

The bigger the storms, the more the state has to call on outside contractors — making an average of about $130 an hour — for assistance.

The DOT is currently transferring money from its other accounts to pay for snow removal.

The snow has drained budgets across the state.

It’s unfortunate because the money spent on snow removal could be going towards pavement, asphalt, bridges and other road care.

Hopefully this winter will help everyone better prepare for the future. And hopefully this winter is one of a kind and doesn’t repeat itself next year!

We all just have to take Mother Nature with a grain of salt and handle the cards she deals. This winter has just been a bit of a struggle all around.

It just helps us get that much more excited for springtime to roll around!

-Orly

Realty Times shared a great article about the importance of a Real Estate Agent and I wanted to share some of their points with you. Now that the weather is getting nicer and spring is right around the corner, many people start listing their home for sale.  

Many buyers will do it alone. They start looking on online listings and start visiting open houses. However, they tend to forget a very important part of their ventures – the real estate agent.

The real estate agent is not a go-between paper shuffler, says Realty Times. Your real estate agent is the connection to the inside world of real estate. You can find a lot of information on the internet…a lot of right information AND a lot of wrong information. A knowledgeable real estate agent is your best bet for accuracy and efficiency during your house hunt.

It can be a jungle out there. Navigating through the foreclosures, short sales, and excessive inventory can make some buyers feel overwhelmed. The result? They continue to rent!

If you have the right team of experts surrounding you and looking out for your best interest, you won’t find yourself in a bad situation you can’t get out of. An agent is there to help you get precisely what you want and the best deal possible.

Visiting real estate offices and meeting with their staff is a great way to explore who will fit with your personality and match your needs. Contacting friends for referrals is a good start, but don't just hire your friend's agent or realtor because the real estate transaction worked out for your friend. Spend a little time to effectively communicate your needs, goals, and desires, and then listen carefully to how the agent or realtor responds.

It may not be a marriage but it's certainly a relationship that could last a lifetime, creating a successful financial situation for all.

I would love to be your friend during this time in need. I can answer any questions you may have so please feel free to contact me with any and all concerns/desires/wishes.

-Orly

The housing buble burst in 2007 and markets tanked. This we all know, right? Things have been difficult for many people because of the economy and the prices of homes.

Home values are resetting and having to correct from all this stagger. Millions and millions of homeowners bought at the top of the market and are now finding themselves upside down in their loans not knowing what to do or where to turn.

Despite the state of the economy, there are still many buyers on the market. Are you one of those buyers? If so, do you know how much you can really afford?

Home affordability is dependent on a range of factors presented by Realty Times. The factors they spoke about included:

Employment status
Do you have a stable job and income? Lenders will want to know if they can rely on you to make monthly payments for many years to come. With an unemployment rate near 10 percent, it's no wonder a record number of homes are currently in foreclosure. Another way lenders assess your risk is by examining your credit score.

Credit Score
Over your adult life you have been building up a credit score. Every card and loan you have opened has figured into a 3 digit number from 300 - 850. The higher your number, the less "risk" you are perceived to be, and thus, the more likely you'll be extended higher sums of credit for a lower rate. Car loans, student loans, home loans, credit cards, and personal loans. How faithfully you've repaid them, and how many of them you have open, dictates your score.

Number of Dependants
Do you have children or aging parents for whom you are financially responsible? If so, consider medical bills, schools tuition, and daycare when calculating a reasonable budget.

Desired Location
A 2,000 square foot home in rural Nebraska costs dramatically less than the same 2,000 square foot home in the heart of New York City. Prices even range widely by suburb and neighborhood.

Savings
You will need money for a downpayment. Financial Expert Suze Orman recommends you put at least 20 percent down. That means on a $200,000 house, for example, you should have $40,000 in cash to put down. You will also need additional cash for closing costs, as well as repairs and maintenance that are inevitable with homeownership.

Emergency Fund
Do you have a separate savings account worth 8 months of bills? You must have an emergency fund. Just ask the 15 million unemployed. Things do and will happen. If you don't have this fund, you can't afford a house. You may be able to "borrow" money for a house ... but in reality you really can't afford one.

Interest Rates
Interest rates are at historical lows. At this writing, the 30-year fixed rate mortgage is 4.74 percent. To put this in perspective, rates in the 1980's were anywhere from 13 to 18 percent. This means big savings if you are in the position to buy.

Monthly Payments
If you have ever bought a car, one of the first things a salesman will ask you is, "Where do you want your monthly payment to be?" It's all about rates and downpayments with lenders. Yes, it is important that your monthly mortgage payment is no more than 1/3 of your monthly income, but don't be coaxed into buying a home you can't really afford just because the monthly payments are appealing (hello, subprime mortgage crisis).

The bigger the better, right?! That tends to be the kind of society we live in. We live in a culture of debt. Now, really, what would be so terrible about buying a smaller house in a less popular neighborhood?

No, I’m not kidding. I know it’s hard to not strive for the best of the best but what about striving to be happy with what you can afford.

After reading this factors, please consider the type of home you NEED rather than what you WANT so you do not find yourself hurting and suffering later down the road.

If you have any questions about what is right for you, your family and your situation, please do not hesitate to contact me and I will be more than happy to help you figure things out.

-Cheryl