Recently Time magazine ran an article suggesting that buying a home is not a wise investment. This isn't the first time that credible news sources have cast dire predictions about the housing market.
The Miami Herald said, "If you are looking to buy, be careful. Rising home values are not a sure thing anymore."
Money magazine said, "Mos economists, agree... a home will become little more than a roof and a tax deduction, certainly not the lucrative investment it was."
Kiplinger's Personal Financial Magazine said, "Financial planners agree that houses will contiue to be a poor investment."
These three quotes are not recent; they were printed between 1947 and 1993. They may have seemed true at the time but each time the real estate market not only recovered, it was followed by a boom.
It is an incredible time to be a home buyer.
Jim
Saturday, October 30, 2010
Monday, October 4, 2010
Home Equity
Recently the Federal Reserve reported that homeowner's net equity holdings have increased from $5.9 trillion to $7 trillion for the time period spanning the first quarter of 2009 to the end of the second quarter 2010.
How could this be happening when many homeowners are underwater with their mortgages? Some homeowners, not most to be sure, have experienced an increase in value of their homes during this 15 month period. A few parts of California have actually seen some double digit rises in price after being hammered. Some of the increase in equity is due to homeowner improvement and some of it is due to homeowners paying down their mortgage balances.
Hopefully the housing market has bottomed out here in our area. For a variety of reasons, total household debt in our country is declining. This is good news.
How could this be happening when many homeowners are underwater with their mortgages? Some homeowners, not most to be sure, have experienced an increase in value of their homes during this 15 month period. A few parts of California have actually seen some double digit rises in price after being hammered. Some of the increase in equity is due to homeowner improvement and some of it is due to homeowners paying down their mortgage balances.
Hopefully the housing market has bottomed out here in our area. For a variety of reasons, total household debt in our country is declining. This is good news.
Friday, October 1, 2010
Low Down Payment Options for Buyers
Homes have lower prices today than they did two and three years ago. If you are thinking about taking advantage of this great opportunity but are concerned about the downpayment take a look at the Home Possible 97 Mortgages program. You can get in a home for a very small amount down. This program is open to first time buyers, move up buyers, or someone looking to downsize.
I write a fishing blog called Mr. P.'s Blog and an inspirational blog called A Few Words. Check them out.
You can see my real estate web page at HomeProResults.com It is loaded with useful tools for both buyers and sellers. When you are ready to buy or sell a home, give me a call; I'll take good care of you.
I write a fishing blog called Mr. P.'s Blog and an inspirational blog called A Few Words. Check them out.
You can see my real estate web page at HomeProResults.com It is loaded with useful tools for both buyers and sellers. When you are ready to buy or sell a home, give me a call; I'll take good care of you.
Wednesday, September 22, 2010
News on Asking Prices and Michael Jackson's home
Trulia.com reports that across the country sellers continue to lower their asking prices. They report that nationally, approximately 26% of sellers lowered their asking price in August. For some observers this is a problematic trend. Trulia points out that in August the number of price reductions declined in almost half of our largest cities compared to July. Hopefully this is a sign of prices stabalizing.
The mansion in California where Michael Jackson lived up until his death more than a year ago is for sale. Heck, even his home has come down in price. In 2008 it was listed for $39 million and now it is all the way down to $29 million. Fans of Micheal's are not allowed to look through the home. There is an extensive screening process and credit check required before someone is shown the home.
Here in the Puget Sound Area we have seen price declines but thankfully not to the extent that has been experienced in California, Arizona, Nevada, Michigan, and Florida.
Call me when you are ready to buy or sell a home. I'll take good care of you.
The mansion in California where Michael Jackson lived up until his death more than a year ago is for sale. Heck, even his home has come down in price. In 2008 it was listed for $39 million and now it is all the way down to $29 million. Fans of Micheal's are not allowed to look through the home. There is an extensive screening process and credit check required before someone is shown the home.
Here in the Puget Sound Area we have seen price declines but thankfully not to the extent that has been experienced in California, Arizona, Nevada, Michigan, and Florida.
Call me when you are ready to buy or sell a home. I'll take good care of you.
Friday, September 17, 2010
Is Now a Good Time to Buy a Home?
Time magazine recently ran an article about why owning a home isn't a good idea. Just yesterday, the Wall Street Journal published an article giving 10 good reasons to buy a home.
Here is the bulk of the text from that article.
"Enough with the doom and gloom about homeownership.
Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.
After all, at the peak of the bubble five years ago, Time had a different take. "Home Sweet Home," declared its cover then, as it celebrated the boom and asked: "Will your house make you rich?"
But it's not enough just to be contrarian. So here are 10 reasons why it's good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
Brett Arends discusses why he thinks now is a particularly good time to buy a home.
2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said
5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.
6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.
7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.
9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.
10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town."
It is an amazing time to be in the real estate market.
I write a fishing blog called Mr. P.'s Blog and an inspirational blog called A Few Words. Check them out.
You can see my real estate web page at HomeProResults.com It is loaded with useful tools for both buyers and sellers. When you are ready to buy or sell a home, give me a call; I'll take good care of you.
Here is the bulk of the text from that article.
"Enough with the doom and gloom about homeownership.
Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.
After all, at the peak of the bubble five years ago, Time had a different take. "Home Sweet Home," declared its cover then, as it celebrated the boom and asked: "Will your house make you rich?"
But it's not enough just to be contrarian. So here are 10 reasons why it's good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
Brett Arends discusses why he thinks now is a particularly good time to buy a home.
2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said
5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.
6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.
7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.
9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.
10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town."
It is an amazing time to be in the real estate market.
I write a fishing blog called Mr. P.'s Blog and an inspirational blog called A Few Words. Check them out.
You can see my real estate web page at HomeProResults.com It is loaded with useful tools for both buyers and sellers. When you are ready to buy or sell a home, give me a call; I'll take good care of you.
Back to It
I have been working on my other blogs; it is enjoyable but definitely takes time. I also enjoy the email, the comments, and the feedback.
I have neglected this blog for too long. It is time to get back to it and make it happen.
I have neglected this blog for too long. It is time to get back to it and make it happen.
Friday, January 8, 2010
Going to the Dentist
There are a lot of reasons to like your dentist. I don’t know, maybe you personally can’t think of a single one. Heck, maybe you hate going to the dentist. Maybe you could easily make a list of 50 things you hate about the dentist. Not me. Nope. I like going to the dentist.
My 6 month appointment to get my teeth cleaned was this week. Karen, the hygienist, is good at what she does and she is very funny. That’s enough of a reason to like going to the dentist.
I’ll admit my liking going to the dentist is certainly colored by only having had two fillings and one root canal in my whole life. One of the fillings also had to be replaced. Since most of this work was so long ago I have forgotten having my mouth clamped open, the pain, the sound of the drill, the smell of smoking teeth from the drill, and the whole side of my face slipping off my skull when I was driving home, you know, stuff like that. Fifteen years ago when I got a filling the dentist I had then asked me if I could feel any pain from the drill. I said, “Yes.” He said, “That’s not an appropriate response.” Seriously, that’s what he said. He waited a bit and started again. He asked me again if I could feel any pain and again, I said yes. He told me that wasn’t an appropriate response so I asked why he bothered to ask. I suggested that he get a card with three answers on it like 1. Yes, 2. No, and 3. I’m really not sure. I suggested that he could just point to the answer he wanted from me when he asked a question and I would just agree. You know, it would save us both time and it would save him the frustration and aggravation of having a patient who didn’t know how to answer simple questions. That was my old dentist.
These days I like going to the dentist.
When I arrive at the office I am greeted by Jill, the office manager. (She is a real estate client of mine also.) She has a winning smile and is always friendly. See, going to the dentist is nice. This week when I arrived Jill was eating Christmas cookies. I really thought my personal quest to gain 6 or 8 pounds through serious “Christmas cookie plumping” was over for this year. She offered me some but I was strong. I reminded her that I was there to get my teeth cleaned and that Karen would have a lot of extra work if she had to use those darn “pickers and diggers” she has to get cookie gunk out of my teeth. Jill had another cookie and said Karen needed to work hard and it would be okay if I had one. I was strong; I said, “No thanks.” Pretty impressive, don’t you think? Well, almost “No thanks.” It was more like, “No thanks. For Now.” I asked Jill if I would have two cookies when I came out.
I enjoy Karen, the hygienist, and certainly enjoy Dr. Fjeran, the dentist. Some years ago, Greg (Dr. Fjeran) replaced a filling of mine. He didn’t even need to give me the response card. His work is very competent and I appreciate his caring and concerned demeanor. This week, Karen did x-rays, along with cleaning my teeth and then Greg did an exam. Everyone in the office is great so going to the dentist is just fine with me.
Oh, and when I was leaving, Jill gave me a bag of Christmas cookies. See, how could I not like going to the dentist? I get cookies!
Those cookies have made me smile beyond the brief enjoyment they gave my mouth. As I think about them it reminds me to take pleasure in simple things.
It’s the weekend. Please be good. Drive you car carefully. Ride with people who drive carefully. Treat yourself with respect. Spend time with people who treat you with respect. Treat other people with respect. Talk nice to yourself; you deserve it. I look forward to hearing from you or seeing you. Keep yourself whole physically and emotionally.
P
PS I can’t take a picture of the whole bag because I ate most of them already. I’m thinking about going in today and asking for a refill.
PPS My dentist is better than your dentist. Just sayin’…
My 6 month appointment to get my teeth cleaned was this week. Karen, the hygienist, is good at what she does and she is very funny. That’s enough of a reason to like going to the dentist.
I’ll admit my liking going to the dentist is certainly colored by only having had two fillings and one root canal in my whole life. One of the fillings also had to be replaced. Since most of this work was so long ago I have forgotten having my mouth clamped open, the pain, the sound of the drill, the smell of smoking teeth from the drill, and the whole side of my face slipping off my skull when I was driving home, you know, stuff like that. Fifteen years ago when I got a filling the dentist I had then asked me if I could feel any pain from the drill. I said, “Yes.” He said, “That’s not an appropriate response.” Seriously, that’s what he said. He waited a bit and started again. He asked me again if I could feel any pain and again, I said yes. He told me that wasn’t an appropriate response so I asked why he bothered to ask. I suggested that he get a card with three answers on it like 1. Yes, 2. No, and 3. I’m really not sure. I suggested that he could just point to the answer he wanted from me when he asked a question and I would just agree. You know, it would save us both time and it would save him the frustration and aggravation of having a patient who didn’t know how to answer simple questions. That was my old dentist.
These days I like going to the dentist.
When I arrive at the office I am greeted by Jill, the office manager. (She is a real estate client of mine also.) She has a winning smile and is always friendly. See, going to the dentist is nice. This week when I arrived Jill was eating Christmas cookies. I really thought my personal quest to gain 6 or 8 pounds through serious “Christmas cookie plumping” was over for this year. She offered me some but I was strong. I reminded her that I was there to get my teeth cleaned and that Karen would have a lot of extra work if she had to use those darn “pickers and diggers” she has to get cookie gunk out of my teeth. Jill had another cookie and said Karen needed to work hard and it would be okay if I had one. I was strong; I said, “No thanks.” Pretty impressive, don’t you think? Well, almost “No thanks.” It was more like, “No thanks. For Now.” I asked Jill if I would have two cookies when I came out.
I enjoy Karen, the hygienist, and certainly enjoy Dr. Fjeran, the dentist. Some years ago, Greg (Dr. Fjeran) replaced a filling of mine. He didn’t even need to give me the response card. His work is very competent and I appreciate his caring and concerned demeanor. This week, Karen did x-rays, along with cleaning my teeth and then Greg did an exam. Everyone in the office is great so going to the dentist is just fine with me.
Oh, and when I was leaving, Jill gave me a bag of Christmas cookies. See, how could I not like going to the dentist? I get cookies!
Those cookies have made me smile beyond the brief enjoyment they gave my mouth. As I think about them it reminds me to take pleasure in simple things.
It’s the weekend. Please be good. Drive you car carefully. Ride with people who drive carefully. Treat yourself with respect. Spend time with people who treat you with respect. Treat other people with respect. Talk nice to yourself; you deserve it. I look forward to hearing from you or seeing you. Keep yourself whole physically and emotionally.
P
PS I can’t take a picture of the whole bag because I ate most of them already. I’m thinking about going in today and asking for a refill.
PPS My dentist is better than your dentist. Just sayin’…
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