Monday, October 29, 2012

Rising Home Prices Expected in 2013.

Recently released research data project rising residential prices in 2013. The October 2012 Economic Survey by the Wall Street Journal panel of economists forecasted home prices as increasing at an annual rate of 3.25 percent in the forthcoming year. A similar National Association of Business Economists survey projected a 2.8 percent increase in home prices by the end of 2013.
Based on information from the latest Realtors Confidence Index, REALTORS® are projecting a 3 percent increase in home prices in the forthcoming year. Both practitioners and economists are in good agreement on this one: prices are projected to increase.

Jed Smith, Managing Director, Quantitative Research

Jed Smith is Managing Director, Quantitative Research with the National Association of Realtors®. He has worked on real estate issues for the past 20 years, providing input on a variety of housing, commercial real estate, tax, and planning issues. Recently he has been involved in several international studies.

History of the Fixed-rate Mortgage

What a Deal!

A 30 year fixed-rate mortgage hasn't always been the standard. As part of FDR's New Deal in 1934, the Federal Housing Administration was created to help Americans purchase homes with affordable terms.

Prior to then, many loans had an amount due at the end of the term called a balloon. Most mortgages had adjustable interest rates even though some might be fixed for a short time. While banks would loan money on a home, they retained the right to call the note due at any time which could exert considerable stress on borrowers.
FHA, during this time, introduced mortgages that offered a fixed rate of interest to the borrower for a 30 year term. This fully amortized loan provided borrowers a financial vehicle that would help them achieve the American Dream while minimizing the risk of having a loan called without the resources to pay it off. It brought long-term stability to the housing market and helped stimulate the economic recovery at a very difficult time in our nation's history.
Roughly, a third of the mortgages created in 2011 were less than 30 year terms. Many homeowners, similar to those after the Great Depression, would like to get their home paid for as soon as possible. Shorter term mortgages typically have a lower interest rate but higher payments due to fewer years to amortize the mortgage.

Friday, October 26, 2012

DISTRESSED REAL ESTATE SALES

Distressed Properties

Distressed homes, which include foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 24 percent of the September total, up from 22 percent in the prior month, today’s report showed.
All-cash transactions accounted for 28 percent of last month’s sales, and investors, the majority of who are all-cash buyers, accounted for 18 percent.
Private-equity firms such as Colony Capital LLC and Blackstone Group LP, have converged on Phoenix, Atlanta and other distressed areas in search of low-priced properties to buy and rent out, helping to stabilize the markets. These types of investors have raised as much as $8 billion to buy as many as 80,000 single-family homes to manage as rentals, according to a Sept. 21 report by Keefe Bruyette & Woods Inc.
American households may also be drawn into the market as a falling jobless rate helps bolster confidence. Unemployment dropped to 7.8 percent in September, the lowest since PresidentBarack Obama took office in January 2009. The Bloomberg Consumer Comfort Index last week climbed to a six-month high, and a similar measure from Thomson Reuters/University of Michigan jumped this month to a five-year high.

Tuesday, October 23, 2012

Charting the difference: Rent or Buy a House.

Judy Dendy, TLP, Relocation, ECertified
Prudential Ada Reators
westwinds4jc@aol.com

Rent or Buy? - 10/22/2012

The question plaguing every tenant who wants a home of their own is whether they should continue to rent or is it the right time to buy?

The combination of good prices and low mortgage rates make it considerably cheaper to own than rent in most markets. Assuming a person is qualified with a down payment and won't be moving for several years, there may not be a better time to buy a home.
In the example below, the total house payment is $1,281.01 compared to $1,500 to rent the same home. Before you consider any of the financial benefits attached to home ownership, it's cheaper to own than to rent.
The net cost of housing falls to $764 or just more than half the house payment when you consider the principal reduction due to normal amortization, a modest appreciation and the tax savings along with a reasonable maintenance expense that a tenant would not have to pay.
One of the biggest benefits is the growing equity. As the value goes up, the unpaid balance goes down. A favorable leverage causes their low down payment to grow to $40,609 in a short seven years based on a modest 1% appreciation.

There's an expression often heard in real estate circles: "Whether you rent or buy, you pay for the house you occupy." You're either buying it for yourself or you're helping the landlord buy it.
Check out a Rent vs. Own to see how your numbers will compare to this example or call me to do it for you

Friday, October 19, 2012

Halloween Home Disaster Costs.

The Real Costs of Halloween Home Disasters: Serial Killers, Phantasms, and Floods of Blood

By:

Published: October 25, 2010

HouseLogic estimates the home repair costs in Poltergeist, Scream, The Shining, and other horror classics.

The Shining

When little Danny Torrance saw a river of blood surging down the hallway, there’s one thing that was probably not on his mind: What’s it going to cost to clean up this mess? He was a little more concerned with evading his possessed, axe-wielding father. But the answer depends entirely on whether the Overlook Hotel was covered for flood insurance. Let’s just hope they opted for maximum blood coverage.

Disaster: Flooding

The average flood claim for a residence is about $33,000.

The average annual cost of flood insurance for a residence is $540.

Poltergeist
When considering a new home, save some money, have it inspected—and make sure it’s not on an unmarked burial ground. You’ll disrespect the dead, and as we learned in Poltergeist, phantasms can get pretty miffed. They’ll suck children into other dimensions and even push coffins through the back yard, ripping up the landscaping and inflicting serious damage.

If ghosts do turn your yard into Swiss cheese--and your house doesn’t get sucked into a void like the Freelings’--you’ll need to redo your landscaping. Consider hiring a certified landscape architect to design a plan that includes irrigation, lighting, soil conditioning, and repotting (or removing) those pesky coffins. You might also want to consider planting a few new trees which, when properly placed for shade, will save you up to $250 a year in energy costs.

Disaster: Destroyed landscaping

A landscape consultation costs about $100 to $150.

A detailed plan can run from $300 to $2,500.

New sod installation is 30 to 50 cents per square foot.

Total sod cost for the average suburban yard: $2,000.

Three 15-foot trees cost a total of $300 to $600.

Scream

Going up? When Ghostface caught this beered-up victim in the too-small cat portal of a garage door, he scored a memorable kill, but shorted out the garage door opener in the process. While this party girl never made it to a sequel, the home owners lucked out with an easy repair. So easy, they might even consider a whole new garage door. But, of course, spring for a bigger cat door.

Disaster: Broken garage door

A replacement garage door opener costs about $300.

Installed garage doors range from $550 to $1,650 for a single door, and $800 to $2,500 for a double door.

The Amityville Horror

Bolts of lightning might have blown out the windows of this infamous Amityville residence, but whole-house surge protectors would have kept the lights on and things running smoothly—at least until Father Delaney and the Devil battle it out over who has to pay for window replacements. Spoiler alert: bet on the Devil.

Disaster: Broken windows

Replacement windows cost $250 to $800 each.

Interview with the Vampire

Tom Cruise and Brad Pitt had a great time slurping the life out of the residents of New Orleans, but you wouldn’t want the same drain on your homestead. That’s why you need to be vigilant about the waste caused by vampire energy, also known as standby power consumption—unneeded electricity usage that sucks up to $100 out of your wallet annually.

Most common culprits are computers, monitors, printers, and stereo subwoofers. Try plugging devices into a power strip and get in the habit of turning them all off at once. Or try a “smart” power strip that senses when you’ve shut off your computer and cuts the juice. It works much better than garlic.

Disaster: Energy drain

Power strips are $10 each

“Smart” power strips cost $30

Thriller video

When Michael Jackson and his zombie buddies broke into an old house to terrify his girlfriend, costly damage ensues—destruction that could have been avoided if only the undead had turned the doorknob.

Unfortunately, zombies aren’t too dexterous, and the hapless home owners got stuck with the cost of a new steel exterior replacement door. If only they had installed a home security system, those zombies would be singing an entirely different tune.

Disaster: Zombie attack

A replacement door costs about $1,200.

A home security system installation costs $500, with a monthly fee of $35 to $75.

Thursday, October 18, 2012

Foreclosures fall to 5-year low

By Les Christie @CNNMoneyOctober 11, 2012: 2:21 AM ET

I'M REPRINTING THIS ARTICLE BUT I'M NOT AS EXCITED AS THE AUTHOR. I FEEL ITS ARTIFICIAL FALL BEFORE THE ELECTION. WE'VE BEEN TOLD A SHADOW INVENTORY IS OUT THERE WAITING UNTIL AFTER THE ELECTION TO COME ON THE MARKET.

NEW YORK (CNNMoney) -- The wave of foreclosures hitting the nation's housing market has been much less severe than anticipated, with foreclosure filings at their lowest level in five years last month, according to a report out Thursday.
Foreclosure filings -- including default notices, scheduled auctions and bank repossessions -- were reported on 180,427 properties in September, a 7% decline from August and down more than 16% from a year earlier, according to a report released Thursday by RealtyTrac, an online marketer of foreclosed properties. That's the lowest number of filings since September 2007.

"[Foreclosures are] making little noise in the housing market -- at least on a national level," said Daren Blomquist, RealtyTrac's vice president.
Blomquist had been waiting for another wave of foreclosures to hit the housing market ever since the $25 billion mortgage settlement was reached in April.
Lenders put the brakes on many foreclosures as their procedures were put under the microscope after the robo-signing scandal came to light in September 2010. The mortgage settlement had cleared the way for them to proceed again by laying out clear guidelines on how they could pursue borrowers who had missed payments and clear their backlogs of delinquent loans.
As a result, Blomquist and other industry experts expected the market to be flooded with repossessions. "That's not the way it's playing out," he said. "It has been a much more managed flow."
Related: Obama's housing scorecard
The decline in foreclosures has been especially steep lately in states like California and Texas, in which foreclosures do not go through the courts. In these "non-judicial" states, foreclosures were handled relatively quickly once the banks started to process foreclosures again. In judicial states where the courts are involved, like Florida, Illinois, New York and New Jersey, the banks have been careful to make sure all their paperwork is complete and accurate which has slowed the process significantly.

Part of the reason for the overall improvement is that the government's and the banks' efforts to prevent homeowners from falling into foreclosure have taken hold. The government sponsored Home Affordable Modification Program has helped more than a million borrowers obtain more affordable mortgages.
Banks too, are looking for ways to keep delinquent borrowers from falling into foreclosure, opting to either refinance their loans or agreeing to more short sales where the lender agrees to a sales price that is less than what is owed on the mortgage. Lenders prefer short sales over foreclosures because they lose less money on the transactions and they involve fewer legal costs and other expenses.
Related: Economists: Housing recovery finally here
Record low mortgage rates have also helped struggling borrowers hold onto their homes, said Mike Larson, an analyst with Weiss Research. Many borrowers have refinanced their mortgages to lower rates and sharply reduced their payments, helping them to avoid default, he said. The improving economy has also meant fewer job losses.
"That takes some pressure off," said Larson. "Fewer people are falling behind on their loans."
As a result, the number of distressed properties that threaten to come onto the market is starting to shrink and Blomquist expects fewer bank repossessions going forward. Foreclosure starts, homes in the first stage of the foreclosure process, were down 15% in September compared with 12 months earlier.
"Foreclosures are still a headache, but they're less of a headache than they were," added Larson.

Tuesday, October 16, 2012

Why Owning Rentals Makes Sense

Contributing Factors

Rental properties have four primary factors that contribute to a return on investment. Based on market conditions and investor strategies, the individual motivating factor can change for property owners.

There was a time when the benefit of tax savings to offset income from other sources was considered important to some investors. However, in today's environment, they are more likely valued as incidental benefits.
Some investors expect appreciation to deliver the satisfactory results which can be reasonable over time if a reliable appreciation rate is used. Savvy investors today are using conservative estimates for long-term holding periods.
Leverage occurs when borrowed funds are used to control a larger asset. Positive leverage can actually increase the yield on an investment.
The fourth component that contributes to a property's yield is the cash flow. When the rents are greater than the expenses of operating the property and servicing the debt, there is a positive cash flow. A property with a good cash flow doesn't have to go up in value to justify the investment.
The combination of lower prices, incredibly low mortgage rates and rising rents are attracting investors to rental properties that include single-family homes in predominantly owner-occupied neighborhoods.
Even if you were to ignore the benefits of tax savings, potential appreciation and leverage, the attractive cash flows make rental property a very smart investment alternative. If you're curious, contact me for more information

Making Small Rooms Feel Larger

8 Ways to Make Small Rooms Feel Larger

On October 15, 2012, in Staging Tips, by Melissa Tracey

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By Melissa Dittmann Tracey, REALTOR® Magazine
When selling a home, you don’t want buyers to step foot in a room and suddenly feel cramped. They will quickly start questioning whether they’ll be able to fit their belongings in there and whether the home is too small.
What can you do to open up some of the tight spaces in your listings?
1. Remove furniture. Rooms packed overly full of furniture will not allow buyers to visualize their things in the space. Keep the furniture basics in each room, and then haul away the extras to a storage unit or somewhere else in the home that could use more furniture. Make sure the furniture is fit to the size of the room. For example, that canopy bed may be commanding too much attention in the master bedroom, making the room feel cramped and even blocking the walkway through the room.
2. Declutter. This is an obvious way to make a space feel bigger. It can have one of the biggest impacts to the perception of a room’s size. Have your sellers go through their closets and box up about a third of it. They can take the load to a storage unit or put into bins to store elsewhere in the home. When buyers open up a closet, you want them to see the spaciousness, not it filled top-to-bottom with your sellers’ belongings.
3. Find secret storage spots: Ottomans that can double-up as storage units too can help your sellers clear away clutter in a hurry. These can be useful particularly for sellers with children who need a quick place to throw toys and clothes prior to a showing.
4. Lighten the color. Dark colors on the wall can make a room feel more closed-in, whereas lighter tones on the wall can open it up. Cream colors and soft tones of greens and blues can help open up a space. Monochromatic color schemes, which is using colors all from the same color family, can go a long way in creating flow in a home and making a space appear larger too.

5. Let the light flow in. Tieback–or better yet, take down–the curtains and open up the blinds to let the natural light flow in from the windows. The more natural light that flows in, the more a space can appear larger.
6. Hang some mirrors. Mirrors can reflect light and give the illusion of depth to a room.
7. Opt for plain fabrics. Upholstery that is plain and neutral can make a space feel larger than upholstery with bold prints or stripes. To avoid the neutral blahs, however, liven up spaces by incorporating textured or small patterned items, such as with throw pillows on the sofa.
8. Make smart furniture choices. See-through furniture, such as glass tabletops, can open up a space. Also, armless chairs or sofas can make a space feel larger too. For desks, try stools that can be tucked underneath and show off more floor space than a bulky desk chair. Also, remove any floor lamps and instead use desk lamps or ceiling light fixtures for light.
Bottom line: The more floor space you can see in a room, the more open and bigger it will feel.

Thursday, October 11, 2012

Service Providers in Amarillo, TX

Who Do You Call?

While the Internet is a great resource to locate information about food, travel and a number of other things, it isn't necessarily the best place to find a local service provider.

Sure, you can run the search, get quick results and may even see some fairly impressive websites. The problem is that sometimes, those sites are run by companies that sell the leads to providers who may not be as experienced as you're expecting.
Instead of taking a chance on a total stranger, a personal recommendation could yield you more satisfactory results. Most real estate transactions require some work to be done to the house either in preparation prior to the sale or to meet requirements from the buyer or inspector after the sale is made.
Looking for a service provider on the Internet is easy. Contact me for a recommendation is easier still and you can trust that they'll be reputable and reasonable. I want to be your personal source of real estate information.

Wednesday, October 3, 2012

Pros and Cons of Rental Real Estate

he Pros and Cons of Rental Real Estate

By Tom Sightings

September 25, 2012 RSS Feed Print

We retirees know we don't get any interest income from our bank deposits. And who can blame us if we don't trust Wall Street enough to invest our hard-earned savings in the stock market? Therefore, owning and renting real estate may be an investment option that looks more and more appealing to people no longer working. If you play it right, you can generate a regular, unending stream of extra monthly income. And we all know one thing: Rents never go anywhere but up.
As many as 19 percent of retirees say they receive some income from rental properties or similar types of retirement income, according to a recent Gallup poll of 344 retirees. But it will take some work to put some rental income into your retirement pocket. Here are some pros and cons:
Pro: Real-estate prices have come down a lot in the past five or six years, and mortgage rates are at historic lows. If you do your homework, you should be able to find a good deal that over time will give you substantial appreciation, especially since many experts now claim the market is finally getting better. Some people say single family homes offer the best values these days. That may or may not be true, but a one-bedroom condominium is definitely easier to rent and maintain.
Con: The days of flipping real estate for a quick profit are long gone. You have to be in it for the long haul. Also, the days of no-money-down mortgages are a distant memory. Mortgages are cheap, but it's harder for investors to qualify for loans than it is for people who live in their own homes. As an investor, you will need to post a substantial down payment as well as have the extra cash for closing costs, legal fees, possible renovations, and maybe some carrying costs if you're without a tenant for a period of time.
Pro: With the current low prices, and as a long-term holder, you should be able to manage a rental unit to produce a positive cash flow right from the beginning, generating extra income every month.
Con: You will be a landlord, and will have to take on the responsibilities and the extra demands on your time. You have to find tenants, check their references, collect the rent, and fix the leaks. You can hire an agency to manage your property, but an agency will likely eat up most or all of your profit.
Pro: The government offers preferential tax breaks for owners of rental properties, such as depreciation, which allows you to use paper losses to offset any profit you make on the rental. Losses generated by depreciation can also be used to offset other taxable income you might have.
Con: If you didn't have an accountant before, you'll need one now. And while you do benefit from tax deferral on depreciation, eventually the piper has to be paid. When you sell, you must recapture the depreciation, although that may be when you're in a lower tax bracket.
Pro: Some people buy a place at the beach or on a golf course. They use it for vacation and rent it out when they're not there. It's a way to enjoy a "free" vacation, establish a retirement beachhead where you might want to live someday, and maybe even make some money while you're at it.
Con: Profits on a vacation property are not guaranteed. If the place is more than an hour or two drive from your home, you will probably need to hire a property manager. You'll also have to pay for the inevitable repairs that come with renting to vacationers. Plus, it's unlikely your unit will be rented all the time. If it is rented out of season, it will bring in less money. If your property is doing double duty, it's more likely you'll be adding to your monthly bills rather than supplementing your monthly income.
Owning rental property can be an effective method to produce extra income. But it's not a way to come up with fast cash. Do your homework, assess your own interests and capabilities, and have faith in the future prospects of the area you choose. Then set your sights on being a long-term holder who collects a regular and steady stream of payments to supplement your retirement income.
Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.

Tuesday, October 2, 2012

When is Too Soon to Refinance?

Refinancing Too Soon?

Some people believe they shouldn't refinance more often than once every two years. The determining factors are if you'll lower your payments and plan to stay in the home long enough to recapture the cost of refinancing. If so, you should consider refinancing.

Interest rates have actually come down significantly in the past 12 months and even more in the past 24 months. According to the Freddie Mac Primary Mortgage Market Survey®, rates on a 30 year fixed rate mortgage are down to 3.6% in August, 2012 compared to 4.27% one year earlier.
Refinancing in the example below would save the homeowner $67.04 per month and they would recapture the cost of refinancing in 3 years and 9 months based on approximately $3,000 of closing costs.
Click Here to make your own projection on a Refinance Analysis calculator.

Monday, October 1, 2012

Texas Land Board Helps Disabled Veterans

As a realtor in Amarillo, I work alot with veterans, especially disabled veterans. Texas is one of the best states for these special people when it comes to real estate.

The Texas Land Board gives a discount to veterans below the going mortgage rate on homes and remodelling. The offer a third kind of loan, for land, at a set rate in the 7% range. If you are 40% or more disabled, you get an additional .5 discount. Last week this rate was 2.42%. Can you imagine how much this low interest rate saves you on mortgage payments over 30 years.

I am a preferred realtor with the Texas Land Board in Potter and Randall County, and I love working with this program.

There are only 3 lenders in Amarillo who do these loans, as they make less money on them. They are PrimeLending (who I usually use), Wells Fargo, and Herring Bank. I love working with Donna Presley on these loans, as she's an expert with these and can push them through in 30 days usually. They don't charge any points; although the Land Board charges 1%, and you can usually get your seller to pay your closing costs and include this in those costs.

The Texas Land Board will let you have one of each of the three loans at one time, and once you pay one of them off, like a remodelling loan, you can get that same kind of loan once again; and YOU NEVER USE UP any credits, as in VA.

The TLB also has cemeteries, nursing homes, and other benefits for veterans, and you only have to live in Texas one day to qualify. They will require some of your service documents, and you can find those on their website.

So call me, and let's get you into a new home at a low interest rate!!

Judy Dendy, Prudential Ada Realtors, 3300 Danvers, Amarillo, Texas 79106, 806-355-9601 or
806-672-3082.

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