Monday Mar 26, 2012

Home buying much cheaper than renting

NEW YORK (CNNMoney) -- It's the eternal question in real estate: Should I buy or rent?

The answer has never been clearer: Buy.

In 98 of the top 100 housing markets, buying a home is more affordable than renting, according to the online real estate company Trulia. Only Honolulu and San Francisco buck the trend.

There are several reasons. Home prices are falling. Mortgage interest rates are at historically low levels. And rents are on the rise.

Of course, many renters are not in a position to buy. For one, it's hard to get a mortgage these days, despite low rates. And paying rent can push them further away from being able to afford to buy.

"Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face," Jed Kolko, Trulia's chief economist.

The nation's cheapest buyer's market is Detroit, where purchasing is only 3.7 times more expensive than renting.

Other top five metro areas where buying is much better than renting are Oklahoma City, Dayton, Ohio,Warren, Mich. and Toledo, Ohio.

Rankings like these, however, can obscure the factors that go into each decision.

Housing markets, even within a single metro area, typically have local submarkets. Take New York City, for example. Renting in Manhattan is more affordable than buying. But in suburban Westchester County just miles to the north, buying is the more affordable option.

The size of the home can also make a difference. In some markets, renting can be a better deal on larger hom

In San Francisco, for example, studio and one-bedroom apartments sell for 13.1 times rent, while three bedrooms or larger sell for more than 18 times rent.

The Trulia survey does not take into account home price trends, which are another factor for individuals choosing whether to buy or rent.

"People will pay more for a home if they expect prices to rise and give them a better return on their investment," said Kolko.es, according to Trulia.

Those calculations are about to change, according to Ken H. Johnson, a professor of real estate at Florida International who has studied the buy-vs-rent question extensively. He believes home prices nationally have bottomed.

"The ship has turned," he said. "Markets should slowly start to recover. Housing will return to its traditional role of a safety investment."

If so, that adds an incentive to buy. And investing in many of the most expensive markets may be even safer.

Kolko pointed out that places like Honolulu, San Francisco and Boston have strong long-term growth prospects. They also have little physical space to grow, a factor that tends to keep prices strong.

On the other hand, old areas that aren't growing much -- while cheap -- may not return much in the long run.

"Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare, like Detroit and Cleveland, where prices are unlikely to improve much in the future," he said.

Posted at 07:48AM Mar 26, 2012 by Lori Kehoe in Real Estate | Comments[0]

Tuesday Mar 13, 2012

Mortgage rates flirt with record lows again

NEW YORK (CNNMoney) -- Mortgage rates dipped into record territory again, with the 15-year fixed-rate falling to its lowest level in 60 years and the 30-year fixed-rate just a tick off its own record.
A popular choice among homeowners looking to refinance, 15-year, fixed-rate mortgages averaged 3.13% last week, down slightly from the record low of 3.14% set in early February, according to Freddie Mac. The average rate on 30-year fixed-rate mortgage fell to an average of 3.88%, a mere 0.01 percentage points above its previous record low.
The record low rates have helped make housing as affordable as ever, according to Frank Nothaft, Freddie's chief economist.
"With these historically low rates and declining house prices, the typical family had more than double the income needed to purchase a median-priced home in January," he said.
According to the National Association of Home Builders/Wells FargoHousing Opportunity Index, 75.9% of all new and existing homes sold during the three months ended Dec. 31 could have been comfortably purchased by families earning the national median income of $64,200.
Monthly payments for a $200,000 15-year fixed-rate loan at 3.13% come to just $1,394 a month. A year ago, when the industry was marveling at the persistently low mortgage rates, borrowers were happy to get 4.15%, 15-year mortgages. At that rate, they would have been paying $1,494 a month, $100 more than at the current rate levels

Posted at 10:23AM Mar 13, 2012 by Lori Kehoe in Real Estate | Comments[0]

Friday Mar 02, 2012

New home sales exceed expectations

NEW YORK (CNNMoney) -- New home sales exceeded forecasts in the latest government readings Friday, another sign of a long-awaited recovery in the battered housing market.

The Census Bureau reported that the pace of new home sales hit a seasonally-adjusted annual rate of 321,000 in January, up from the previous reading for December and better than economists' forecasts. Census also revised the December figure higher to a rate of 324,000, mhe supply of new homes for sale once again fell, the 11th straight month the inventory of new homes on the market has been at a record low level. The continued decline in supply comes even as other government readings have shown an increase in housing starts by home builders in recent months.

The tight supply, which was at 151,000 new homes in January, helped to lift prices, as the median price of a new home sold in the month rose slightly to $217,100, up $600 from December.

There are other signs that the long-suffering housing market is finally improving. The pace of sales of existing homes in January was at the highest point since the end of an $8,000 home buyers' tax credit in 2010. Mortgage rates have been at record lows until a slight increase this week.eaning that the pace of sales was about 6% stronger that month than the original estimaThose low financing costs, coupled with years of price declines and some improvement in the job market have made home ownership more affordable than it has been in decades.

But home prices are still depressed, hurt by the large inventory of foreclosed homes still on the market. The price of existing homes sold in January fell to a 10-year low.. And even with the slight increase in new home prices in January, prices are still lower than the annual average for 2010 or 2011.

Posted at 08:30AM Mar 02, 2012 by Lori Kehoe in Real Estate | Comments[0]

Wednesday Feb 15, 2012

Home repairs: Which jobs come first?

(MONEY Magazine) -- Lean times call for budgetary triage. But while you should clearly opt for orthodontics before Disneyland, the choice is tougher when it comes to home maintenance.

Should you get a paint job or a new furnace? "There's no homeowner's manual that tells you when to do what," says Naperville, Ill., home inspector and structural engineer Mark Waldman.

Emergencies aside, the project that could cause the most damage and expense if left unfixed is the priority. Below, the order in which to tackle your biggest repair needs.

1. Electrical system

Wiring problems claim the No. 1 spot for good reason: They can lead to fires and electrocution. "That trumps everything," says Waldman.

Danger signs: Circuit breakers that trip frequently, lights that dim when you turn on the vacuum or outlets that are loose, hot, or accept only two-prong plugs.

How to check: Spend $300 to $500 for a licensed electrician to open up your main panel to look for trouble and to tighten any loose connections. He'll also spot-check switches, outlets and light fixtures to ensure that the wiring is in safe working order.

Replacement cost: $4,000 to $10,000 to rewire the house.

Prolong its life: Flip every circuit breaker off and on again once a year to prevent corrosion. Add new circuits ($100 to $500 each) to take the heaviest electrical loads, like window air conditioners, off the old wires.

2. Basement

Structural problems downstairs mean shifting and cracking upstairs -- at the very least -- so there's little point in doing other repairs until you've fixed the building's foundation.

Danger signs: Bowed or split beams, rotted posts, piles of sawdust (evidence of wood-boring insects), tiny mud trails (indications of termites), or large cracks in the masonry foundation -- especially if the cracks are horizontal, which tends to indicate a bigger problem.

How to check: A contractor will usually take a look free of charge. If he recommends significant repairs, hire a home inspection engineer (find one at nabie.org) to investigate ($350 to $500).

Replacement cost: Major foundation work can cost $3,500 to $8,000; new posts or beams could run $1,200 to $2,500.

Prolong its life: Water is the cause of cracked concrete, rotten timbers and wood-eating pests. So keep your basement dry by making sure the landscape slopes away from the house and maintaining the next two items on the list: the roof and gutters.

3. Roof

Water leaking into your home from above can lead to a host of pricey problems: rot, insects, electrical shorts and mold.

Danger signs: Dampness or stains on ceilings; curling, missing, or broken shingles; smooth spots where the granules have worn away; green algae growth.

How to check: Have a roofer inspect your home. This is typically free, but the pro, of course, is looking for business. So check the company's reputation at angieslist.com ($5 a month).

Replacement cost: $5,000 to $15,000

Prolong its life: Prune tree limbs so they're at least 10 feet from the roof to keep squirrels away and to let moisture evaporate quickly after storms. If shingles blow off, replace them immediately, and repair small leaks promptly.

4. Gutters

Your gutters are just as important as the roof. The only reason they're lower on this list is that if you replace gutters first, they're likely to get damaged when you reroof later. So if you need a roof too, it's better to wait -- or do both projects at the same time.

Danger signs: Dented or disconnected gutters, pooled water around your home's foundation, or basement flooding near the downspouts.

How to check: Head outside during a rainstorm and watch the gutters in action, says Caitlin Corkins, stewardship manager for Historic New England, which maintains dozens of historic properties. "The best time to see clogs and overflows is when the system is working," she says.

Replacement cost: $1,500 to $3,000

Prolong its life: Hire a gutter company to clean, check, and repair your gutters ($100 to $200) at least once a year -- two or three times if you're in a wooded area. And have someone clear the eaves of deep snow to prevent icing, which can split open gutters or rip them right off the house.

5. Exterior walls

"People think paint is just a decorative element, so they let it go," says Robert Niemeyer, a Winston-Salem, N.C., handyman, contractor, and electrician. But without a weather-tight seal, water can infiltrate the siding, causing rot and attracting wood-damaging insects. Still, leaks from a vertical surface generally aren't as quick or lethal as ones from a roof and gutter.

Danger signs: Paint that's peeling, cracking or blistering

Replacement cost: $4,000 to $10,000; make sure the painters replace loose putty around the window glass and caulking gaps around molding.

from Cnn.com

Posted at 06:05AM Feb 15, 2012 by Lori Kehoe in Real Estate | Comments[0]

Friday Dec 16, 2011

Average 30-year loan rate ties record: 3.94 pct.

WASHINGTON — The average rate on the 30-year fixed mortgage fell back down to 3.94 percent, the record low set earlier in the fall.

Low rates offer a historic opportunity for those who can afford to buy or refinance. Still, few people are able to take advantage of the record-low rates or have already done so.

[Read More]

Posted at 03:33PM Dec 16, 2011 by Lori Kehoe in Real Estate | Comments[0]

Friday Dec 02, 2011