10 Reasons to Buy a Home

Be sure to click the registration link below to register for a free online event on September 28, featuring Howard Glaser, principal, The Glaser Group and Lawrence Yun, chief economist, NAR.

Time magazine is being overly pessimistic in its recent cover piece that called into question the benefits of homeownership. In fact, now is a great time to buy. And, what’s more, tomorrow will be a great time to own, because the fundamental strength of homeownership hasn’t changed.

Why is now a great time to buy? Here are 10 reasons:

1. You can get a good deal. Prices are down 30 percent on average. They’re at a level that makes sense for people’s income.
2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.
3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.
4. It’ll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?
5. You can get a better home. In some markets, it’s simply the case that the nicest places are for-sale homes and condos.
6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.
7. It’s risk capital. If the economy picks up, you stand to benefit from that, even if you’re goal is just to have a nice place to live.
8. It’s forced savings. A part of your payment each month goes to equity.
9. There is a lot to choose from. There are some 4 million homes available today, about a year’s supply. Now’s the time to find something you like and get it.
10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.

Source: Wall Street Journal, Brett Arends (9/16/10)

[Editor’s note: To learn about the homeownership issues being raised in the media and what the facts are, REALTOR® Magazine is hosting a webinar Tuesday, Sept. 28, at 3 p.m. Eastern Time, with NAR Chief Economist Lawrence Yun and housing policy analyst Howard Glaser of the Glaser Group. Registration link.]

New Price Reductions

Links have been updated.

New Price Reductions

Links have been updated.

NAR: Home Prices Are Firming

Lawrence Yun, NAR chief economist, says the correction in home prices appears to have ended in 2009. “All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” he said. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market we don’t expect any consequential movement in home prices for the foreseeable future. Very low inventory of newly built homes also will help to support home values.”

Yun urged caution on interpreting price data. “The median price is influenced by the mix of homes that were sold and do not reflect pure appreciation or depreciation,” he says. “The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. Now as more normal, non-distressed home sales are occurring, the median price in many areas is showing higher values.”

Total state existing-home sales, including single-family and condo, rose 9.1 percent to a seasonally adjusted annual rate of 5.61 million in the second quarter from 5.14 million in the first quarter, and were 17.3 percent above the 4.78 million-unit pace in the second quarter of 2009.

Source: NAR

New Price Reductions

Links have been updated.

Record Lows Continue for Mortgage Rates

The 30-year fixed mortgage rate fell to a new low of 4.54 percent this week from 4.56 percent last week and an average of 5.25 percent a year ago.

The 15-year fixed loan rate also hit a record low of 4 percent, down from 4.03 percent a week ago and 4.69 percent last year. The five-year adjustable-rate mortgage averaged 3.76 percent, compared to 3.79 percent last week and 4.75 percent a year earlier; and one-year ARMs averaged 3.64 percent, down from 3.7 percent and 4.80 percent, respectively.

Source: The Wall Street Journal, Nathan Becker (07/30/10)

Budget Basics Worsheet

First Time Home Buyers, the first step in getting yourself in financial shape to buy a home is to know exactly how much money comes in and how much goes out. Use this worksheet to list your income and expenses below.

Let me know if you have trouble printing this, I can email you a copy.

INCOME
Take Home Pay (all family members)
Child Support/Alimony
Pension/Social Security
Disability/Other Insurance
Interest/Dividends
Other
Total Income

EXPENSES
Rent/Mortgage (include taxes, principal, and insurance)
Life Insurance
Health/Disability Insurance
Vehicle Insurance
Homeowner’s or Other Insurance
Car Payments
Other Loan Payments
Savings/Pension Contribution
Utilities (gas, water, electric, phone)
Credit Card Payments
Car Upkeep (gas, maintenance, etc.)
Clothing
Personal Care Products (shampoo, cologne, etc.)
Groceries
Food Outside the Home (restaurant meals and carryout)
Medical/Dental/Prescriptions
Household Goods (hardware, lawn, and garden)
Recreation/Entertainment
Child Care
Education (continuing education, classes, etc.)
Charitable Donations
Miscellaneous
Total Expenses
Remaining Income After Expenses (Subtract Total Income from Total Expenses)

Update on the California 2010 Tax Credit for New Home / First-Time Buyer

Due to the number of duplicate applications submitted for the First Time Home Buyer tax credit the California Franchise Tax Board is still accepting applications.

Applying for the 2010 First-Time Buyer tax credits: Applications must be faxed afterThe New Home tax credit still has about $40 mil to go.

, we receive the 2010 application before May 1, 2010, or we receive the application before escrow closes.is used escrow closes. We will deny the application if the 2009 form

Reserving a New Home Credit Before Escrow Closes: Taxpayers who qualify for the New Home Credit may, but are not required to, request a reservation prior

Good luck! into before May 1, 2010.was entered a reservation if they have entered into an enforceable contract on or after May 1, 2010, and on or before December 31, 2010. Taxpayers may not reserve a credit if the contract request, as a reservation will “hold the taxpayer’s place in line” until 2 weeks after escrow closes. Taxpayers may only is reached to the close of escrow. Reservations will become important as we near the $100 million cap for homes that may not close escrow before the cap

Three Things Condo Buyers Should Know

All true….especially in SoMa where there are buildings that the banks will no longer lend on or require a large down payment.

Now could be a great time for home buyers to find a great deal on a condominium.

Here are three things that potential buyers of condos should consider:

1. Is this condo likely to fall further in price? Part of the answer is in falling or rising local inventory – even if sales have picked up recently.

2. Is this a fair price? Condo prices are more volatile than single-family homes. One big consideration is whether buyers in this particular complex are likely to be able to qualify for a mortgage. If the complex has too many renters, for instance, the Federal Housing Administration won’t approve loans to buy units.

3. Is the condo association in good fiscal shape? Are they maintaining the grounds and the amenities as well as staying on top of needed structural improvements?

Source: Money Magazine, Beth Braverman (06/29/2010)

For Sale Inventory Continues to Recede in San Francisco Allowing Sellers to Gain Leverage in Negotiations: Market Conditions Still Favor Buyers

The San Francisco Association of Realtors and the Rosen Consultant Group recently issued their Market Focus report for June. Below are some of the highlights. If you would like a full copy of the report drop me an email and I will send it your way.

Growing confidence in the San Francisco economy and its housing market has revived home sales activity in the City by the Bay. Home sales activity continues to accelerate, while inventory levels recede from recent highs, according to the latest Market Focus report issued jointly by the Rosen Consulting Group of Berkeley and the San Francisco Association of REALTORS®.

“As closed sales activity has rebounded, sellers have regained some leverage in negotiations,” says John Lee, president of the San Francisco Association of REALTORS®. “Prices at the low-end of the market are stable while pricing volatility in higher-priced segments remains,” according to Lee.

The Rosen Consulting Group believes that despite the pause in median price appreciation and anticipated slowdown during the summer months, the underlying housing market trend remains positive and will continue to improve through the remainder of the year.

Although recent stock market volatility driven by the European debt crisis continues to rattle investors and potential home buyers, the Market Focus report observes that the crisis effectively pushed mortgage rates back to historically-low levels.

In May 2010, the median single-family home price in San Francisco improved to $752,500, a slight increase from May 2009. But Rosen Consulting Group states, “While the rate of growth in the median sales price flattened, the market is still in much better shape than it was one year ago when home prices were in free fall. Rising housing affordability, driven by attractive pricing and low mortgage rates combined with a more optimistic view of the economy assisted by government incentives have brought buyers back to the market. Recognizing the shifting market conditions, sellers who have been waiting for more favorable market conditions to place their homes on the market should begin to do so in coming months.

Although the Rosen Consulting Group expects to see some effects of expiring tax credits on future home sales in San Francisco, Lee believes that the pent-up demand in the market matched with a rise in hiring activity into the second half of the year, should counterbalance the anticipated fallout from expiring government programs, sustaining the market’s recovery.