Wednesday, October 22, 2008
Financial Crisis Fails to Hurt Confidence in Florida Real Estate
GAINESVILLE, Fla. — The national economic crisis has failed to rattle Florida real estate experts, who, despite serious concerns about the availability of financing, remain surprisingly calm about market conditions within the state, a new University of Florida survey finds.The most recent quarterly survey of Florida real estate trends completed in September shows the investment outlook for various types of properties remains steady, said Wayne Archer, executive director of UF’s Bergstrom Center for Real Estate Studies.“People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest,” he said. “We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in.”Although Florida’s housing crisis is worse than other states, over the long term Florida stands to benefit from the migration of new residents, particularly as baby boomers age, Archer said. The Sunshine State’s mild climate and outdoor amenities make it an attractive retirement destination, despite high property taxes, insurance rates and hurricanes, he said.Unfortunately, the plunging stock market combined with the fall in housing prices and tightening of home financing requirements will likely temporarily delay plans baby boomers may have to retire and move to the state, he said.For the state’s real estate market to recover at all in the short term, banks and other financial institutions must ease credit restrictions, Archer said.“If the financial crisis continues, that would really change the picture,” he said. “Our respondents, I think, are keeping the faith that they may have seen the worst and the shock will not be overwhelmingly severe.”One sign of optimism is the trend in the latest survey toward a more favorable view of new single-family home development, Archer said.“The respondents actually moved in a somewhat guarded but positive direction,” he said. “It suggests to me that they believe we may have already reached the bottom in that category.”Although the survey does not include the market for existing single-family homes, one respondent said houses were beginning to sell in Lee County, once dubbed the foreclosure capital of the world, indicating perhaps the market is beginning to stabilize, he said.Several neighboring counties in southwest Florida are likely to be in trouble for a long time, however, along with the Miami condo market, where an estimated 40,000 units are for sale, Archer said. Prospects are particularly bleak for higher-end condos in the city’s downtown, he said.The weak dollar and general confidence in the United States as a safe harbor for investment could lure international investors to Miami, but that would be unlikely if the economic crisis deepens into a worldwide recession, he said.While condo markets throughout the state face problems, which are likely to persist in the foreseeable future, the outlook for apartment rentals bounced back a little from the last survey in June, Archer said. “There was an expectation that occupancy rates would be falling, and while they’re not great, they are viewed as stable,” he said.The weakest rental markets are in retail, which has been particularly hard hit by the economy as consumers spend less money, Archer said.“After seeing what’s happening to their home values and watching the news, they are deferring purchases,” he said. “As a result, most retail organizations are curtailing their expansions and consolidating their operations and stores, which is creating higher vacancies.”Perhaps the most negative survey result was that respondents’ perceptions of their own business outlook, which has declined steadily for 11 quarters, took an even larger downturn this quarter, Archer said.“This is in marked contrast to their views of the market as a whole,” he said. “Although keenly aware of the downturn in the availability of capital, they remain surprisingly calm.”The latest survey is based on 392 responses and is 12th in a series. It is the only Florida-centered survey of leaders and professional advisers in the real estate industry. The largest group of respondents was appraisers, about 51 percent, followed by brokers and other service providers
Monday, August 18, 2008
Four Tips for Buying Foreclosures
RISMEDIA, August 18, 2008-(MCT)-Foreclosed houses are everywhere you turn in this market. But while their sticker prices are low, buying one can be a risky endeavor. This is mainly because you won’t have the same protections as you would for a conventional house.
From Consumer Reports magazine, here are four ways you can protect yourself if you’re in the market for a foreclosed home:
1. Don’t pay a fee for property listings. You can find free information on foreclosed homes in your area by checking with a local agent. Usually there will be someone who specializes in foreclosed properties at the broker’s office. This person is a great free resource.
2. Invest in a home inspection. This is always a good idea whenever you buy a house, but for a foreclosed property it is especially the case. The property may have been vandalized. Fixtures and appliances may be missing. Also, with utilities shut off it will be impossible to test for the water pressure in the shower. Try to arrange for the utilities to be turned on before you buy. The inspection will cost between $250 and $400, but it will end up saving you if there is a problem with the home’s structure or its systems.
3. Don’t assume the sale is final. In some states, a homeowner may have up to 180 days after the foreclosure to pay any outstanding debts and reclaim the home even if it has been bought by someone else.
4. Buy some title insurance. The title insurance will protect you against any liens that you might not know about. It will also prevent a previous owner from making a successful claim on the house after you buy it.
© 2008, MarketWatch.com Inc.Distributed by McClatchy-Tribune Information Services.
From Consumer Reports magazine, here are four ways you can protect yourself if you’re in the market for a foreclosed home:
1. Don’t pay a fee for property listings. You can find free information on foreclosed homes in your area by checking with a local agent. Usually there will be someone who specializes in foreclosed properties at the broker’s office. This person is a great free resource.
2. Invest in a home inspection. This is always a good idea whenever you buy a house, but for a foreclosed property it is especially the case. The property may have been vandalized. Fixtures and appliances may be missing. Also, with utilities shut off it will be impossible to test for the water pressure in the shower. Try to arrange for the utilities to be turned on before you buy. The inspection will cost between $250 and $400, but it will end up saving you if there is a problem with the home’s structure or its systems.
3. Don’t assume the sale is final. In some states, a homeowner may have up to 180 days after the foreclosure to pay any outstanding debts and reclaim the home even if it has been bought by someone else.
4. Buy some title insurance. The title insurance will protect you against any liens that you might not know about. It will also prevent a previous owner from making a successful claim on the house after you buy it.
© 2008, MarketWatch.com Inc.Distributed by McClatchy-Tribune Information Services.
Tuesday, August 12, 2008
Housing Bill Creates Great Environment for First-time Buyers, Says Industry Leader
Commentary by J. Lennox Scott, chairman and CEO, John L. Scott Real Estate
RISMEDIA, August 12, 2008-Buying smart in today’s market got a little easier recently following the signing of the Housing and Economic Recovery Act of 2008 by President Bush. There are significant benefits aimed at helping buyers, such as a repayable first-time home-buyer tax credit. First-time buyers are important to the health of the housing economy because their home purchases help to stimulate sales up the price points. Through the home-buyer tax credit, buyers who are purchasing for the first time or who haven’t owned a property in the last three years can now qualify for a tax credit equal to 10% of their home purchase price, up to $7,500.
Further qualification requires that the home purchase be made between April 9, 2008 and July 1, 2009. The credit phases out if the buyer’s income exceeds $75,000 for an individual or $150,000 for a couple filing jointly and it must be paid back over a 15 year period in equal installments. The credit can be claimed on the buyer’s 2008 tax return even if the purchase is made in 2009 (it’s important to note that this is a tax credit and not a tax deduction).
Another component of the housing bill includes much needed FHA modernization which aims to adjust loan limits so that they are more in sync with current home values. The bill allows Fannie Mae and Freddie Mac to serve more home-buyers by raising loan limits in high cost areas above the standard conforming limit to 115 percent of the median house prices and up to 150 percent of the conforming loan limit.
The Housing and Economic Recovery Act is expected to play a critical role in strengthening the housing market and overall economy. The last time Congress passed legislation like this in the 1970s, the housing market saw a significant increase in activity. Using history as a guide, Lawrence Yun, chief economist of the National Association of Realtors believes the Housing Act could represent a boost of 10% in the number of homes sold.
The passing of the Housing and Economic Recovery Act marks the beginning phase of the next ten-year housing cycle in which prices in the more affordable markets will only continue to appreciate (affordable refers to homes priced at or below a market’s median housing price). Contributing to rising prices is population growth, the impact of Generation Y, inflation, and growth management. Homes in the more affordable price ranges in many markets have already adjusted and the new housing legislation will continue to boost this positive momentum. Increased sales in the more affordable markets will set a new foundation for housing, helping to stabilize the overall real estate economy.
About John L. Scott Real EstateJohn L. Scott Real Estate was founded in 1931 and is currently led by third generation chairman and CEO, J. Lennox Scott. With more than 4,000 sales associates in 145 offices in Washington, Oregon, and Idaho, John L. Scott is considered one of the most productive real estate companies in the nation. Last year, John L. Scott closed over 44,000 transactions for 14.6 billion dollars in volume sales. The award-winning website, www.johnlscott.com, receives over one million user visits a month.
RISMEDIA, August 12, 2008-Buying smart in today’s market got a little easier recently following the signing of the Housing and Economic Recovery Act of 2008 by President Bush. There are significant benefits aimed at helping buyers, such as a repayable first-time home-buyer tax credit. First-time buyers are important to the health of the housing economy because their home purchases help to stimulate sales up the price points. Through the home-buyer tax credit, buyers who are purchasing for the first time or who haven’t owned a property in the last three years can now qualify for a tax credit equal to 10% of their home purchase price, up to $7,500.
Further qualification requires that the home purchase be made between April 9, 2008 and July 1, 2009. The credit phases out if the buyer’s income exceeds $75,000 for an individual or $150,000 for a couple filing jointly and it must be paid back over a 15 year period in equal installments. The credit can be claimed on the buyer’s 2008 tax return even if the purchase is made in 2009 (it’s important to note that this is a tax credit and not a tax deduction).
Another component of the housing bill includes much needed FHA modernization which aims to adjust loan limits so that they are more in sync with current home values. The bill allows Fannie Mae and Freddie Mac to serve more home-buyers by raising loan limits in high cost areas above the standard conforming limit to 115 percent of the median house prices and up to 150 percent of the conforming loan limit.
The Housing and Economic Recovery Act is expected to play a critical role in strengthening the housing market and overall economy. The last time Congress passed legislation like this in the 1970s, the housing market saw a significant increase in activity. Using history as a guide, Lawrence Yun, chief economist of the National Association of Realtors believes the Housing Act could represent a boost of 10% in the number of homes sold.
The passing of the Housing and Economic Recovery Act marks the beginning phase of the next ten-year housing cycle in which prices in the more affordable markets will only continue to appreciate (affordable refers to homes priced at or below a market’s median housing price). Contributing to rising prices is population growth, the impact of Generation Y, inflation, and growth management. Homes in the more affordable price ranges in many markets have already adjusted and the new housing legislation will continue to boost this positive momentum. Increased sales in the more affordable markets will set a new foundation for housing, helping to stabilize the overall real estate economy.
About John L. Scott Real EstateJohn L. Scott Real Estate was founded in 1931 and is currently led by third generation chairman and CEO, J. Lennox Scott. With more than 4,000 sales associates in 145 offices in Washington, Oregon, and Idaho, John L. Scott is considered one of the most productive real estate companies in the nation. Last year, John L. Scott closed over 44,000 transactions for 14.6 billion dollars in volume sales. The award-winning website, www.johnlscott.com, receives over one million user visits a month.
Tuesday, July 22, 2008
Real Estate Market Expected to Improve with New President
RISMEDIA, July 22, 2008-Nearly half of all home buyers (44%) believe the housing market will improve once the new President takes office in January, 2009, according to a new survey recently released conducted by Harris Interactive® and commissioned by Move, Inc., operator of Realtor.com®.Forty-eight percent of women and 41 percent of men who plan to buy a home in the current market said they think the housing market will get better once the new President is in office.
At the same time, 81% of home buyers are still nervous about the current housing market and report the existence of barriers between them and homeownership. Today’s home buyers perceive the cost of a down payment (28%), their annual income level (20%), lack of confidence in the economy (26%) and high home prices (31%), especially in the Western states (39%) as barriers to buying a home.
Despite these reservations, the survey indicates underlying demand for homeownership is healthy. While nearly half (41%) of current homeowners do plan to purchase a home again, 80% of all renters plan to purchase a home someday with 47% planning to purchase a home within the next five years. More people who plan to move will do so for space-related (26%) and life-stage change reasons (17%), such as having children (2%) or downsizing to a smaller residence (9%), not financial ones including an increase in rent (2%) or an expensive mortgage (less than 1/2%).
Most home buyers (78%) are also willing to make sacrifices to save and earn extra income for down payments and will compromise on neighborhood features and residential amenities in order to buy a home in the current market. Many of their choices may reflect changing values, including a growing concern over the environment, the importance of community features and the rising cost of fuel.
“These findings show that despite the difficulties home buyers face in the wake of the subprime crisis and their concerns about economic uncertainty, underlying demand appears relatively strong. Consumers see better times coming,” said Lorna Borenstein, president of Move, Inc. “This is great news to us and our colleagues in the real estate industry. As the leader in online real estate, we pay close attention to consumer perceptions and behaviors. This important feedback enables us to identify ways in which we can enhance the search experience so it meets the needs of today’s consumers who will become the homebuyers of tomorrow.”
Buyers Face Barriers to Homeownership
While about four out of five home buyers (81%) say they face barriers to buying a home in the current market, the greatest single barrier to homeownership today is high home prices (31%), a concern that was much higher in the West (39%), than in the South (27%) or Midwest (26%).
The second greatest barrier keeping buyers out of the current market is coming up with the money for a down payment (28%), with lack of confidence in the economy (26%) ranking third. Financial concerns generally are higher among people in the West (45%) compared to the South (33%) and about one-third of those ages 18 - 34 said lack of money (38%) or poor credit (18%) is a concern compared to only 11% and 5% (respectively) of those 55+.
Four out of five adults (84%) say there is something about buying a home that is intimidating, and one out of three (34%) say money-related issues being a concern. Finding the right home is the most intimidating part of the home-buying process for about one out of five (19%). About two thirds of adults (62%) have visited an online real estate web site and once on the site, 23 percent are looking to purchase and 52 percent are looking at what’s on the market.
“This survey surfaced important feedback that Realtor.com addresses by delivering the largest and freshest collection of listings and new features like Find a Neighborhood and Find Home Values to empower consumers,” said Realtor.com President Errol Samuelson. “We want to help remove uncertainties from the home buying process by making it as transparent and as consumer-friendly as possible. Providing the most comprehensive information, relevant tools and connections to local Realtors are only a few of the many resources consumers will find at Realtor.com to help make the process of buying and selling a home easier and less stressful.”
Trade-offs Favor Community, Environment
Today, adults rank crime rates (56%), proximity to daily conveniences (47%) and property taxes (46%) as the top three factors in choosing a neighborhood. Home buyers are more willing to sacrifice cultural and recreational amenities (18%) than green features (16%) like solar heating and energy-saving appliances, or forego proximity to work (7%) and daily conveniences (11%) to buy a house in today’s real estate market.
Concern over the cost of gasoline and the importance of community is evident in the importance buyers place on accessibility. Only seven percent of home buyers would be willing to sacrifice proximity to work and six percent, proximity to shopping. Only three percent would give up proximity to public transportation in order to buy a home in today’s real estate market.
About half of adults (49%) say green features like solar panels, energy saving appliances and low usage water heaters are “important” features. More care about green features (49%) than luxury amenities (31%), yet some would give up green features (9%) before storage (7%), luxury amenities (7%) or numbers of bedrooms or bathrooms (6%). Women rate green features higher than men (52% to 46%) and consumers aged 18 - 34 years of age rate green features the lowest (40%).
Kitchens (67%) and the number of bedrooms (69%) are the most important features today’s buyers are looking for in a home. Storage space (66%) and the number of bathrooms (62%) rank three and four on their list of priorities.
Mortgages Are a Mystery
Understanding mortgages and the financing process during these times of change in the credit industry is a major issue with a large number of buyers. Eighty-one percent of today’s home buyers and three quarters of adults (78%) say they wish the process of taking out a mortgage was easier to understand. In fact, some say that either understanding financing (9%) or the uncertainty of the mortgage process (6%) is the most intimidating part of buying a home.
For many buyers, changes in the amount of a down payment required for a mortgage is a significant issue. The lack of cash for a down payment is keeping about one quarter (28%) of buyers out of homes–more than those who have poor credit (15%), low household income (20%) or those who lack of confidence in the economy (26%).
Seventy-eight percent of home buyers are willing to make sacrifices to save money or earn extra income in order to be able to buy a home in the current real estate market. First to go would be spending (65%) on items such as personal luxuries (46%) and clothes, shoes and accessories (43%). Next, home buyers would go out less often (52%). Nearly half would clip coupons (47%) and 27% would cancel a vacation.
About the survey
The Homeownership study was conducted online within the United States by Harris Interactive on behalf of Move, Inc. between May 21 and 23, 2008 among 2,462 U.S. adults ages 18 and older, of whom 1,377 plan to buy a home in the current real estate market. These online surveys are not based on probability samples and therefore no estimates of theoretical sampling error can be calculated. For full survey methodology and all survey results please contact Lindsay Scalisi at 415.844.6217.
For more information: www.move.com or www.harrisinteractive.com.
Sure electing a new president may temporarily spark consumer confidence during the first year, but it won’t solve the real issues that our facing out country such as social security reform and our dependence on foreign energy. Until we address and solve those issues we will always be in an uncertain economic state, in my opinion.
I do believe though that if you can afford to purchase a home that right now is the time to buy. Prices in Gainesville have fallen, but seem to be leveling out in most areas, and the interest rates are still low, so if you have the means now is a great time to get more for less!
At the same time, 81% of home buyers are still nervous about the current housing market and report the existence of barriers between them and homeownership. Today’s home buyers perceive the cost of a down payment (28%), their annual income level (20%), lack of confidence in the economy (26%) and high home prices (31%), especially in the Western states (39%) as barriers to buying a home.
Despite these reservations, the survey indicates underlying demand for homeownership is healthy. While nearly half (41%) of current homeowners do plan to purchase a home again, 80% of all renters plan to purchase a home someday with 47% planning to purchase a home within the next five years. More people who plan to move will do so for space-related (26%) and life-stage change reasons (17%), such as having children (2%) or downsizing to a smaller residence (9%), not financial ones including an increase in rent (2%) or an expensive mortgage (less than 1/2%).
Most home buyers (78%) are also willing to make sacrifices to save and earn extra income for down payments and will compromise on neighborhood features and residential amenities in order to buy a home in the current market. Many of their choices may reflect changing values, including a growing concern over the environment, the importance of community features and the rising cost of fuel.
“These findings show that despite the difficulties home buyers face in the wake of the subprime crisis and their concerns about economic uncertainty, underlying demand appears relatively strong. Consumers see better times coming,” said Lorna Borenstein, president of Move, Inc. “This is great news to us and our colleagues in the real estate industry. As the leader in online real estate, we pay close attention to consumer perceptions and behaviors. This important feedback enables us to identify ways in which we can enhance the search experience so it meets the needs of today’s consumers who will become the homebuyers of tomorrow.”
Buyers Face Barriers to Homeownership
While about four out of five home buyers (81%) say they face barriers to buying a home in the current market, the greatest single barrier to homeownership today is high home prices (31%), a concern that was much higher in the West (39%), than in the South (27%) or Midwest (26%).
The second greatest barrier keeping buyers out of the current market is coming up with the money for a down payment (28%), with lack of confidence in the economy (26%) ranking third. Financial concerns generally are higher among people in the West (45%) compared to the South (33%) and about one-third of those ages 18 - 34 said lack of money (38%) or poor credit (18%) is a concern compared to only 11% and 5% (respectively) of those 55+.
Four out of five adults (84%) say there is something about buying a home that is intimidating, and one out of three (34%) say money-related issues being a concern. Finding the right home is the most intimidating part of the home-buying process for about one out of five (19%). About two thirds of adults (62%) have visited an online real estate web site and once on the site, 23 percent are looking to purchase and 52 percent are looking at what’s on the market.
“This survey surfaced important feedback that Realtor.com addresses by delivering the largest and freshest collection of listings and new features like Find a Neighborhood and Find Home Values to empower consumers,” said Realtor.com President Errol Samuelson. “We want to help remove uncertainties from the home buying process by making it as transparent and as consumer-friendly as possible. Providing the most comprehensive information, relevant tools and connections to local Realtors are only a few of the many resources consumers will find at Realtor.com to help make the process of buying and selling a home easier and less stressful.”
Trade-offs Favor Community, Environment
Today, adults rank crime rates (56%), proximity to daily conveniences (47%) and property taxes (46%) as the top three factors in choosing a neighborhood. Home buyers are more willing to sacrifice cultural and recreational amenities (18%) than green features (16%) like solar heating and energy-saving appliances, or forego proximity to work (7%) and daily conveniences (11%) to buy a house in today’s real estate market.
Concern over the cost of gasoline and the importance of community is evident in the importance buyers place on accessibility. Only seven percent of home buyers would be willing to sacrifice proximity to work and six percent, proximity to shopping. Only three percent would give up proximity to public transportation in order to buy a home in today’s real estate market.
About half of adults (49%) say green features like solar panels, energy saving appliances and low usage water heaters are “important” features. More care about green features (49%) than luxury amenities (31%), yet some would give up green features (9%) before storage (7%), luxury amenities (7%) or numbers of bedrooms or bathrooms (6%). Women rate green features higher than men (52% to 46%) and consumers aged 18 - 34 years of age rate green features the lowest (40%).
Kitchens (67%) and the number of bedrooms (69%) are the most important features today’s buyers are looking for in a home. Storage space (66%) and the number of bathrooms (62%) rank three and four on their list of priorities.
Mortgages Are a Mystery
Understanding mortgages and the financing process during these times of change in the credit industry is a major issue with a large number of buyers. Eighty-one percent of today’s home buyers and three quarters of adults (78%) say they wish the process of taking out a mortgage was easier to understand. In fact, some say that either understanding financing (9%) or the uncertainty of the mortgage process (6%) is the most intimidating part of buying a home.
For many buyers, changes in the amount of a down payment required for a mortgage is a significant issue. The lack of cash for a down payment is keeping about one quarter (28%) of buyers out of homes–more than those who have poor credit (15%), low household income (20%) or those who lack of confidence in the economy (26%).
Seventy-eight percent of home buyers are willing to make sacrifices to save money or earn extra income in order to be able to buy a home in the current real estate market. First to go would be spending (65%) on items such as personal luxuries (46%) and clothes, shoes and accessories (43%). Next, home buyers would go out less often (52%). Nearly half would clip coupons (47%) and 27% would cancel a vacation.
About the survey
The Homeownership study was conducted online within the United States by Harris Interactive on behalf of Move, Inc. between May 21 and 23, 2008 among 2,462 U.S. adults ages 18 and older, of whom 1,377 plan to buy a home in the current real estate market. These online surveys are not based on probability samples and therefore no estimates of theoretical sampling error can be calculated. For full survey methodology and all survey results please contact Lindsay Scalisi at 415.844.6217.
For more information: www.move.com or www.harrisinteractive.com.
Sure electing a new president may temporarily spark consumer confidence during the first year, but it won’t solve the real issues that our facing out country such as social security reform and our dependence on foreign energy. Until we address and solve those issues we will always be in an uncertain economic state, in my opinion.
I do believe though that if you can afford to purchase a home that right now is the time to buy. Prices in Gainesville have fallen, but seem to be leveling out in most areas, and the interest rates are still low, so if you have the means now is a great time to get more for less!
Saturday, June 28, 2008
PRICE REDUCTIONS...
PRICE REDUCTIONS
3 bedroom 3 bathroom 1800 square foot condo in Sparrow now ONLY $129,000
1 bedroom 1 bathroom condo with garage parking one block from UF now priced at $137,000
4 bedroom 4 bathroom condo close to campus and on a bus route priced to sell at $160,000
Rebecca Johnson Bosshardt Realty Inc. is a full-time Florida REALTOR® who specializes in Gainesville, Florida and communities in Alachua County, Florida. To find out more information about her real estate services please visit www.RebeccaJohnsonRealtor.com or to contact her by phone at 352-275-9900 or by email at Rebecca@RebeccaJohnsonRealtor.com
3 bedroom 3 bathroom 1800 square foot condo in Sparrow now ONLY $129,000
1 bedroom 1 bathroom condo with garage parking one block from UF now priced at $137,000
4 bedroom 4 bathroom condo close to campus and on a bus route priced to sell at $160,000
Rebecca Johnson Bosshardt Realty Inc. is a full-time Florida REALTOR® who specializes in Gainesville, Florida and communities in Alachua County, Florida. To find out more information about her real estate services please visit www.RebeccaJohnsonRealtor.com or to contact her by phone at 352-275-9900 or by email at Rebecca@RebeccaJohnsonRealtor.com
Thursday, June 26, 2008
What the Fed decision means for you
For months mortgage rates have shot up while the Fed has slashed interest rates. What's going to happen now?
NEW YORK (CNNMoney.com) -- If you have a mortgage, carry credit cards and are considering a home equity loan to cope with soaring food and energy prices, you should be paying attention to what the Fed has to say. On Wednesday, the Federal Reserve held a key short-term interest rate steady, following a series of steady rates cuts - a move that signals to some that rates are about to change direction. And most assume that means consumer lending rates will rise as well.
But the central bank had cut rates seven times since September in an effort to bolster the lagging economy and spur economic growth. And during that time, mortgage rates were increasing. So what gives? And what should consumers expect loan rates to do next?
How it worksThe fed funds rate is often thought of as a benchmark to set rates paid by consumers on many types of loans, from mortgages and home equity lines of credit to credit cards and business loans. Generally, the Fed lowers rates when it is concerned about the economy slowing and raises rates when it is more worried about inflation. In times of lower interest rates, consumers tend to spend more because of the cheap cost of borrowing. But people incorrectly equate the Federal Reserve's actions with changes in consumer interest rates, cautioned Eric Tyson, author of "Personal Finance for Dummies." There is not a direct connection, he explained, but an indirect one. "Rates are set by market forces and they have been trending higher in part because of inflationary concerns and, in part, because of Fed expectations." So with inflation fears on the rise and many investors expecting the Fed to raise rates again, mortgage rates have already begun to tick higher. Rates on 30-year fixed mortgages have surged to a 9-month high on growing concerns about inflation, according to a recent report by mortgage backer Freddie Mac. And rather than track the fed funds rate, which is the rate banks charge one another for overnight loans, fixed mortgage rates are more closely aligned with the yield on the 10-year treasury note, which offers a long-term look at a fixed investment. While the lagging economy has bolstered the yield on the benchmark 10-year note, it still remains at a relatively low level, Tyson said. Unlike fixed-rate mortgages, adjustable-rate mortgages can fluctuate in response to a number of rates, depending on the terms of the loan. Many are pegged to the Libor rate, an international interbank lending rate. Others follow the prime rate, which is generally three percentage points higher than the federal funds rate (presently the prime rate is 5%).
Credit card companies also tend to move the rates on their variable rate credit cards in line with the prime rate of interest. "Credit cards are generally tied to the prime rate which usually moves in lock step with the Fed's actions," according to Scott Hoyt, senior director of consumer economics at Moody's Economy.com. Why it mattersEven as the Fed leaves rates unchanged, what they say about the economic picture could also influence consumer interest rates in one direction or another. "Most likely they will express concern about inflation," said Keith Gumbinger, vice president of HSHAssociates.com, an online publisher of consumer loan information, which could send consumer interest rates higher as people take that as a cue that the Fed intends to start raising rates soon. So if you are in the market for a house, now could be the time to pull the trigger before rates rise even further. As Tyson points out, yields on 10-year treasury notes are still relatively low, an indication that 30-year mortgages could still be a good deal. Financing conditions for lines of credit, including home-equity lines, will be tighter than they have been for years. "Keep in mind that it will be difficult to leverage your home's value to greater than 90%," Gumbinger said. So if you do need to borrow against your home equity, now might be a better time than in the near-term future. And it is likely that credit card issuers will switch back to variable interest rates to ride the future rate hikes, according to Robert McKinley, CEO of credit-card tracker CardWeb.com. "Consumers should be weighing carefully all card offers they receive in the mail or via the Internet to lock in a good promotional rate or long-term rate, before rates head north again," McKinley advised. If you carry a balance on your credit card, now is a good time to pay that down as well. But generally speaking, "if you have consumer debt you should get rid of that anyway," Tyson said. But since no one can predict for certain what the economy will do, and how the Fed will react, it is generally not a wise idea to make critical financial decisions based on expectations about what will happen with interest rates, he added. First Published: June 25, 2008: 2:30 PM EDT
NEW YORK (CNNMoney.com) -- If you have a mortgage, carry credit cards and are considering a home equity loan to cope with soaring food and energy prices, you should be paying attention to what the Fed has to say. On Wednesday, the Federal Reserve held a key short-term interest rate steady, following a series of steady rates cuts - a move that signals to some that rates are about to change direction. And most assume that means consumer lending rates will rise as well.
But the central bank had cut rates seven times since September in an effort to bolster the lagging economy and spur economic growth. And during that time, mortgage rates were increasing. So what gives? And what should consumers expect loan rates to do next?
How it worksThe fed funds rate is often thought of as a benchmark to set rates paid by consumers on many types of loans, from mortgages and home equity lines of credit to credit cards and business loans. Generally, the Fed lowers rates when it is concerned about the economy slowing and raises rates when it is more worried about inflation. In times of lower interest rates, consumers tend to spend more because of the cheap cost of borrowing. But people incorrectly equate the Federal Reserve's actions with changes in consumer interest rates, cautioned Eric Tyson, author of "Personal Finance for Dummies." There is not a direct connection, he explained, but an indirect one. "Rates are set by market forces and they have been trending higher in part because of inflationary concerns and, in part, because of Fed expectations." So with inflation fears on the rise and many investors expecting the Fed to raise rates again, mortgage rates have already begun to tick higher. Rates on 30-year fixed mortgages have surged to a 9-month high on growing concerns about inflation, according to a recent report by mortgage backer Freddie Mac. And rather than track the fed funds rate, which is the rate banks charge one another for overnight loans, fixed mortgage rates are more closely aligned with the yield on the 10-year treasury note, which offers a long-term look at a fixed investment. While the lagging economy has bolstered the yield on the benchmark 10-year note, it still remains at a relatively low level, Tyson said. Unlike fixed-rate mortgages, adjustable-rate mortgages can fluctuate in response to a number of rates, depending on the terms of the loan. Many are pegged to the Libor rate, an international interbank lending rate. Others follow the prime rate, which is generally three percentage points higher than the federal funds rate (presently the prime rate is 5%).
Credit card companies also tend to move the rates on their variable rate credit cards in line with the prime rate of interest. "Credit cards are generally tied to the prime rate which usually moves in lock step with the Fed's actions," according to Scott Hoyt, senior director of consumer economics at Moody's Economy.com. Why it mattersEven as the Fed leaves rates unchanged, what they say about the economic picture could also influence consumer interest rates in one direction or another. "Most likely they will express concern about inflation," said Keith Gumbinger, vice president of HSHAssociates.com, an online publisher of consumer loan information, which could send consumer interest rates higher as people take that as a cue that the Fed intends to start raising rates soon. So if you are in the market for a house, now could be the time to pull the trigger before rates rise even further. As Tyson points out, yields on 10-year treasury notes are still relatively low, an indication that 30-year mortgages could still be a good deal. Financing conditions for lines of credit, including home-equity lines, will be tighter than they have been for years. "Keep in mind that it will be difficult to leverage your home's value to greater than 90%," Gumbinger said. So if you do need to borrow against your home equity, now might be a better time than in the near-term future. And it is likely that credit card issuers will switch back to variable interest rates to ride the future rate hikes, according to Robert McKinley, CEO of credit-card tracker CardWeb.com. "Consumers should be weighing carefully all card offers they receive in the mail or via the Internet to lock in a good promotional rate or long-term rate, before rates head north again," McKinley advised. If you carry a balance on your credit card, now is a good time to pay that down as well. But generally speaking, "if you have consumer debt you should get rid of that anyway," Tyson said. But since no one can predict for certain what the economy will do, and how the Fed will react, it is generally not a wise idea to make critical financial decisions based on expectations about what will happen with interest rates, he added. First Published: June 25, 2008: 2:30 PM EDT
On the path to a housing rebound
On the path to a housing rebound
The pain that homeowners and homebuilders are feeling now is a sign that things are going to get better.
By Shawn Tully, editor at large
Last Updated: June 25, 2008: 9:08 AM EDT
NEW YORK (Fortune) -- The news that housing starts have fallen to their lowest level in 17 years sounds like one more reason to be depressed about the shrinking value of your home. In fact, it's an almost certain sign that the path to a housing recovery is finally in sight.
If prices are going to stabilize, let alone rebound, the United States needs to produce far more first-time home buyers than new houses. That's the only way to tame the glut of "For Sale" signs dotting front yards from the Inland Empire of California to the Gold Coast of Florida.
Builders constructed far more homes from 2002 until 2006 - the peak bubble years - than could possibly be absorbed by the normal growth in households.
As a result, the market is now swamped with one million new and existing homes for sale that aren't occupied, and hence need to sell quickly. That's a multiple of the figure in most downturns, and it testifies to the duration and girth of the bubble.
"For the recovery to begin, builders need to eliminate the standing inventory of finished, unoccupied new homes," says Mike Castleman, founder of Metrostudy, which assembles sales data on four million subdivisions across the U.S.
The massive overhang of unsold inventory has remained stubbornly high. Sure, builders cut back, but sales dropped just as quickly.
Now that excess supply is finally beginning to shrink. In April, the number of new homes for sale stood at 456,000 according to the U.S. Commerce Department, still a big number, but 93,000 below the mountainous figure a year ago.
The return of the first-time buyer
The key player in any recovery scenario is the first time buyer. The housing market operates with a pronounced laddering or ripple effect. When entry-level buyers flood the market, they not only stimulate production of new homes, they purchase existing homes. Those purchases, in turn, allow the sellers to move up to bigger houses.
But when the first-timers are absent, the entire buying chain gets frozen.
Today, newbies are coming back. Why? For the first time in years, entry-level homes are affordable. Builders have slashed prices, and what they're building tends to be far smaller than the McMansions of the boom, selling for far lower prices. KB Home's average selling price dropped to $248,0000 in its February quarter, versus $267,000 a year earlier. In 2006, KB's basic model in Victorville, Cal., a former boomtown east of Los Angeles, took up as much as 3,800 square feet and sold for $328,000. Today, its stripped down offering goes for $220,000, at less than half the size.
So the first time in a decade renters can carry the mortgage payments and taxes on a new house for what they're paying a landlord. Call it the New Affordability.
Here's how the numbers play out: Single-family housing starts are now running at fewer than 500,000 a year. The normal demand for housing, based on immigration and household formation, is around one million units.
We won't get back to that figure for a while because so many people rushed to buy homes during the boom.
But with first timers returning, sales should rise to almost 700,000 units by the end of next year, according to Bernard Markstein, senior economist for the National Association of Home Builders. That means sales will soon exceed new production by as much as 250,000 units a year.
That margin forms the foundation of the housing revival that comes in four steps.
Step 1: First, the return of first-time buyers will shrink the overhang of new houses for sale.
Step 2: Second, because so few new homes are being built, first-timers will start buying existing homes from owners who want to move up but have been trapped by the dearth of buyers. Their improved fortunes, though, come with a big caveat: The prices of new homes are now lower than comparably-sized existing homes. It's as if used cars are selling for more than new ones. That can't last. So move-up buyers are going to have to accept less than they had hoped to get for their current homes.
They'll get a big break as they trade up, however. Unless they bought at the height of the boom, they'll still sell at a profit. They can then use that equity to buy bigger homes at bargain prices. During the bubble, homebuilders started pushing up home sizes to 3,500 square feet or more. It's those behemoths that are selling for the steepest discounts today.
Step 3: Next, housing starts should start rising, probably next year. The increase, however, will be slow and gradual. For the next two years at least, homebuilders will compete ferociously with existing home sellers for customers.
Step 4: Eventually, the glut of existing homes will disappear as well. The excess of new-home buyers over new homes being built makes that inevitable. But the oversupply is so enormous that the healing process could take as much as three more years. Only then will prices in former bubble markets start rising again.
What could go wrong?
One event has the potential to slow or even derail the recovery: A sharp rise in interest rates. Right now, the first-timers are gorging on 6% loans guaranteed by the FHA. But rates may not stay there.
If they rise to 8% or higher because inflation rebounds, it would take a far bigger drop in prices to make new and existing homes affordable.
The New Affordability is now in place. But if rates rise, we'll have to establish a New New Affordability - at even lower prices.
First Published: June 24, 2008: 10:44 AM EDT
The pain that homeowners and homebuilders are feeling now is a sign that things are going to get better.
By Shawn Tully, editor at large
Last Updated: June 25, 2008: 9:08 AM EDT
NEW YORK (Fortune) -- The news that housing starts have fallen to their lowest level in 17 years sounds like one more reason to be depressed about the shrinking value of your home. In fact, it's an almost certain sign that the path to a housing recovery is finally in sight.
If prices are going to stabilize, let alone rebound, the United States needs to produce far more first-time home buyers than new houses. That's the only way to tame the glut of "For Sale" signs dotting front yards from the Inland Empire of California to the Gold Coast of Florida.
Builders constructed far more homes from 2002 until 2006 - the peak bubble years - than could possibly be absorbed by the normal growth in households.
As a result, the market is now swamped with one million new and existing homes for sale that aren't occupied, and hence need to sell quickly. That's a multiple of the figure in most downturns, and it testifies to the duration and girth of the bubble.
"For the recovery to begin, builders need to eliminate the standing inventory of finished, unoccupied new homes," says Mike Castleman, founder of Metrostudy, which assembles sales data on four million subdivisions across the U.S.
The massive overhang of unsold inventory has remained stubbornly high. Sure, builders cut back, but sales dropped just as quickly.
Now that excess supply is finally beginning to shrink. In April, the number of new homes for sale stood at 456,000 according to the U.S. Commerce Department, still a big number, but 93,000 below the mountainous figure a year ago.
The return of the first-time buyer
The key player in any recovery scenario is the first time buyer. The housing market operates with a pronounced laddering or ripple effect. When entry-level buyers flood the market, they not only stimulate production of new homes, they purchase existing homes. Those purchases, in turn, allow the sellers to move up to bigger houses.
But when the first-timers are absent, the entire buying chain gets frozen.
Today, newbies are coming back. Why? For the first time in years, entry-level homes are affordable. Builders have slashed prices, and what they're building tends to be far smaller than the McMansions of the boom, selling for far lower prices. KB Home's average selling price dropped to $248,0000 in its February quarter, versus $267,000 a year earlier. In 2006, KB's basic model in Victorville, Cal., a former boomtown east of Los Angeles, took up as much as 3,800 square feet and sold for $328,000. Today, its stripped down offering goes for $220,000, at less than half the size.
So the first time in a decade renters can carry the mortgage payments and taxes on a new house for what they're paying a landlord. Call it the New Affordability.
Here's how the numbers play out: Single-family housing starts are now running at fewer than 500,000 a year. The normal demand for housing, based on immigration and household formation, is around one million units.
We won't get back to that figure for a while because so many people rushed to buy homes during the boom.
But with first timers returning, sales should rise to almost 700,000 units by the end of next year, according to Bernard Markstein, senior economist for the National Association of Home Builders. That means sales will soon exceed new production by as much as 250,000 units a year.
That margin forms the foundation of the housing revival that comes in four steps.
Step 1: First, the return of first-time buyers will shrink the overhang of new houses for sale.
Step 2: Second, because so few new homes are being built, first-timers will start buying existing homes from owners who want to move up but have been trapped by the dearth of buyers. Their improved fortunes, though, come with a big caveat: The prices of new homes are now lower than comparably-sized existing homes. It's as if used cars are selling for more than new ones. That can't last. So move-up buyers are going to have to accept less than they had hoped to get for their current homes.
They'll get a big break as they trade up, however. Unless they bought at the height of the boom, they'll still sell at a profit. They can then use that equity to buy bigger homes at bargain prices. During the bubble, homebuilders started pushing up home sizes to 3,500 square feet or more. It's those behemoths that are selling for the steepest discounts today.
Step 3: Next, housing starts should start rising, probably next year. The increase, however, will be slow and gradual. For the next two years at least, homebuilders will compete ferociously with existing home sellers for customers.
Step 4: Eventually, the glut of existing homes will disappear as well. The excess of new-home buyers over new homes being built makes that inevitable. But the oversupply is so enormous that the healing process could take as much as three more years. Only then will prices in former bubble markets start rising again.
What could go wrong?
One event has the potential to slow or even derail the recovery: A sharp rise in interest rates. Right now, the first-timers are gorging on 6% loans guaranteed by the FHA. But rates may not stay there.
If they rise to 8% or higher because inflation rebounds, it would take a far bigger drop in prices to make new and existing homes affordable.
The New Affordability is now in place. But if rates rise, we'll have to establish a New New Affordability - at even lower prices.
First Published: June 24, 2008: 10:44 AM EDT
Tuesday, May 6, 2008
The Housing Crisis Is Over!!??
The Housing Crisis Is OverBy CYRIL MOULLE-BERTEAUXMay 6, 2008; Page A23
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York
Wednesday, March 26, 2008
College Towns: Still a Smart Investment
Article Money Magazine, March 13, 2008
The opportunities in investing in student housing can be rewarding from the viewpoint of a professional real estate investor to buying a condominium for your child to sell after they graduate from UF.
Not every University in the nation creates such a niche market. There are several different factors that need to be present to do so and the University of Florida in Gainesville has them all.
University of Florida's Bed-to-Student Ratio
The first feature of a University that creates this niche market is the Bed-to-Student ratio. The University’s on-campus student housing, Bed-to-Student Ratio, needs to be low to show that there is a need for housing in the area. At College Campus' nationwide, the average is that almost 65 percent of college students rely on off-campus housing.
The following is the University of Florida’s bed-to-student ratio.
University of Florida Beds………………..….... 7,352
University of Florida Enrollment (2007)…….... 51,725
University of Florida’s Bed-to-Student ratio….. 14%
This means that 86% of UF’s students live off-campus! This percentage of students that rely on off-campus housing creates one of the lowest Bed-to-Student ratios in the natio. This entail creates a niche real estate market because of it's unique strong demand for student housing.
This bed-to-student ratio will also continue to get smaller in upcoming years for two reasons.
No future plans for on-campus housing. UF continues to see an increase in financial pressure due to state budget deficits. With the decreasing amount of money budgeted to UF, the university is spending it on classrooms & educational products; not beds.
An increasing enrollment. Over the last seven years, the University of Florida has been actively increasing its enrollment an average of 2% a year with a total increase of 14% since 2000.
Echo-Boomers are heading to College
Another reason the bed-to-student ratio will continue to get smaller and the student enrollment will continue to rise is because the Echo-Boomers are heading to college. There are 80 million Echo-Boomers turning 18 over the next decade. The Echo Boomers are the children of the Baby Boomers and they make up a population as numerous as that of their parents. Not only is the population of potential student housing increasing in size, but also the choice to pursue a college degree is increasing in popularity.
A large number of these students are choosing to go to school in states like Florida because of the climate that’s offered and the increasing number of young adults going to college is being welcomed by the University of Florida
College towns insulated from current real estate market conditions
Another reason why investing in the niche market of student housing in the current state of the real estate market is because the housing demand in college towns, like Gainesville, is insulated by the University of Florida and Shands. It doesn’t fluctuate with the job market, local industries, or nearly anything else. It is fed by the consistent turn over of students every semester and enrollment is only rising.
The opportunities in investing in student housing can be rewarding from the viewpoint of a professional real estate investor to buying a condominium for your child to sell after they graduate from UF.
Not every University in the nation creates such a niche market. There are several different factors that need to be present to do so and the University of Florida in Gainesville has them all.
University of Florida's Bed-to-Student Ratio
The first feature of a University that creates this niche market is the Bed-to-Student ratio. The University’s on-campus student housing, Bed-to-Student Ratio, needs to be low to show that there is a need for housing in the area. At College Campus' nationwide, the average is that almost 65 percent of college students rely on off-campus housing.
The following is the University of Florida’s bed-to-student ratio.
University of Florida Beds………………..….... 7,352
University of Florida Enrollment (2007)…….... 51,725
University of Florida’s Bed-to-Student ratio….. 14%
This means that 86% of UF’s students live off-campus! This percentage of students that rely on off-campus housing creates one of the lowest Bed-to-Student ratios in the natio. This entail creates a niche real estate market because of it's unique strong demand for student housing.
This bed-to-student ratio will also continue to get smaller in upcoming years for two reasons.
No future plans for on-campus housing. UF continues to see an increase in financial pressure due to state budget deficits. With the decreasing amount of money budgeted to UF, the university is spending it on classrooms & educational products; not beds.
An increasing enrollment. Over the last seven years, the University of Florida has been actively increasing its enrollment an average of 2% a year with a total increase of 14% since 2000.
Echo-Boomers are heading to College
Another reason the bed-to-student ratio will continue to get smaller and the student enrollment will continue to rise is because the Echo-Boomers are heading to college. There are 80 million Echo-Boomers turning 18 over the next decade. The Echo Boomers are the children of the Baby Boomers and they make up a population as numerous as that of their parents. Not only is the population of potential student housing increasing in size, but also the choice to pursue a college degree is increasing in popularity.
A large number of these students are choosing to go to school in states like Florida because of the climate that’s offered and the increasing number of young adults going to college is being welcomed by the University of Florida
College towns insulated from current real estate market conditions
Another reason why investing in the niche market of student housing in the current state of the real estate market is because the housing demand in college towns, like Gainesville, is insulated by the University of Florida and Shands. It doesn’t fluctuate with the job market, local industries, or nearly anything else. It is fed by the consistent turn over of students every semester and enrollment is only rising.
Friday, February 29, 2008
Seven Places to Retire During an Economic Downturn
There have been several articles out this year voting Gainesville the #1 place to live. This one attached below is the latest.
by Kelli B. GrantFriday, February 29, 2008
Following the flock of other retirees to warmer climes may seem like the best way to spend one's golden years. But it may not be the smartest — especially during economic downturns.
"A retiree always needs to be careful about where he or she chooses to spend retirement, but with economic conditions changing so quickly it's even more important to make a good choice," says Warren R. Bland, author of "Retire in Style: 60 Outstanding Places Across the USA and Canada." Not all places are created equal when it comes to weathering economic woes like the current real estate slump, credit crunch and slowing job market, he says. Choosing the wrong place could carry serious ramifications.
"If you don't have a healthy local economy, it's like a cancer," says Bert Sperling, founder of Sperling's Best Places, which publishes reports on the best places to live based on data analysis. "There's less money for social services, for police patrols, even for infrastructure like fixing potholes." The widening subprime mortgage crisis makes ending up in the wrong part of town all too easy as well. "You could find yourself living in a deserted neighborhood," he warns, "where everyone else has fled" — or been forced out.
After all those decades of stashing money away for retirement, retirees should look for a place that will not only make them happy, but also keep their nest egg intact. Areas with a track record of slow, steady economic growth and home price appreciation are ones that will hold onto their value best, notes Walter Molony, a spokesman for the National Association of Realtors. These same places are also more likely to rebound quickly when nationwide economic conditions improve.
Here are seven recession-proof places our experts believe soon-to-be retirees should consider:
1. Gainesville, Fla.
The University of Florida keeps Gainesville's economy thriving and that's enough to turn most retirees into die-hard Gators fans. "Because colleges are relatively immune from recession, they provide a very stable local economy," says Sperling. The local AARP Senior Community Employment Program also ensures paid work is available to retirees, helping them compete against students for part-time jobs in the local retail and health-care industries, as well as at the university itself.
Last year, Gainesville ranked as the No. 1 place to live in the "2007 Cities Ranked and Rated," put out by Sperling's Best Places. "In a relatively small package, you get all the amenities you'd get in a much larger city," says Bland. The University of Florida Health Science Center provides excellent medical care, and residents can audit courses or attend any of the university's guest lectures, performances and exhibits.
The cost of living is on par with the national average, and the state's lack of income tax helps bolster retirees' savings. Local real estate has also remained steady. The average sale price for existing homes was $211,100 in 2007, down just 1% from 2006. Buyers get plenty for their money. "For prices that would be unbelievably low anywhere else, you'll find fairly large, contemporary houses on huge, half-acre or bigger properties," says Bland.
2. Ithaca, N.Y.
Ithaca not only boasts a breathtaking landscape of hills, gorges and waterfalls, but — as home to Cornell University and Ithaca College — it's also a smart place to retire. While education is the city's primary industry, there's a fair share of manufacturing and high-tech jobs as well. Unemployment stands at just 3.1%, nearly 2% below the national average.
Like the best college towns, there's little that progressive Ithaca lacks. The local music and arts scene is bustling, aided by a downtown pedestrian mall stocked with bookstores and an independent cinema, among other mom-and-pop retailers.
Ithaca is also one of the most affordable places to live in the United States. Almost three-quarters of the city's homes are priced at values that residents earning the median income of $64,500 can afford, according to the National Association of Home Builders' Housing Opportunity Index. The median home sale price in 2007 was $149,000.
3. Orlando, Fla.
For retirees, Florida's biggest perk isn't the warm weather but the lack of income tax. "Taxation, or the potential for taxation, can be a big chunk of your monthly budget when you're living on a fixed income," says Alfred Peguero, a partner with PricewaterhouseCoopers' Private Company Services, which advises clients on retirement issues.
Compared with other major cities in this retiree-friendly state, Orlando has a slightly lower cost of living and much steadier home values. The average sale price for existing homes in Orlando was down 3% last year, to $261,300. Meanwhile, homes in Sarasota dropped 7% to $310,900, and those in Fort Myers dropped 6%, to $252,100.
While Orlando's theme parks and convention centers aren't immune to hard economic times, other industries, such as engineering and electronic gaming, are booming. Orlando has also earned the nickname "Hollywood East" for its growing number of film and television companies.
Seniors won't have to go far to find quality health care. One of the city's biggest nonprofit hospitals, Florida Hospital, repeatedly ranks as one of the best in the nation, according to U.S. News and World Report. Its neurology department treats more stroke patients than any other hospital in the state.
4. Pittsburgh, Pa.
"Pittsburgh has this reputation for being a smoky, industrial city — but that's just not the case anymore," says Bland. Steel and chemical manufacturing have largely given over to the burgeoning high-tech industry, particularly robotics and biomedicine. The city also hosts seven Fortune 500 companies, including PNC Financial Services Group, Mellon Financial Corp., and electric distributor Wesco International.
In his "Places Rated Almanac," author David Savageau named Pittsburgh "America's Most Livable City" in 2007, citing its cultural amenities and vibrant downtown. The cost of living here is 5% lower than the national average. And while the median sales price of existing homes nationwide fell 1.4% last year to $218,900, Pittsburgh's increased by 1% to $120,700, according to the National Association of Realtors. Seniors can save on taxes as well. The average state and local tax is 8.9%, vs. 9.7% nationwide.
Other bonuses: a low crime rate (compared with other cities its size) and more than 20 quality hospitals. U.S. News and World Report named the University of Pittsburgh Medical Center among its "Best of the Best," in 2007, and awarded its geriatric division a No. 8 spot.
5. Portland, Ore.
"Hip. Unaffected, yet cosmopolitan. Portland is on everyone's short list of hot cities these days," says Sperling. Careful land-use planning rescued the city from economic decline in the 1960s, and today Portland is known for its burgeoning arts and music scene and eco-friendly vibe.
Compared to other West Coast metropolitan areas, Portland is affordable but by no means cheap. The cost of living here is 14% above the national average. And the credit crunch has put many residential areas out of reach for retirees with less-than-stellar finances, cautions Molony. While the National Association of Realtors reports that the average sales price for an existing home was up 5% to $295,200 in 2007, properties in popular areas like Irvington and Alameda Ridge can sell for well over $600,000.
Those who can afford to buy here, however, will find the city packed with retiree-friendly amenities, including public transportation and 30 senior centers. There are also plenty of jobs — both paid and volunteer. Nike and Intel call Portland home, as do plenty of other technology and health-care companies.
6. San Antonio, Texas
Stroll along San Antonio's River Walk and it's clear the city's economy is booming. The walkways feed into an expansive downtown district of restaurants, museums and boutiques adored by tourists and locals alike. While the city relies heavily on tourism to the Alamo and other area attractions, industries such as financial services, health care and national defense have kept the unemployment rate fairly steady at 4%, one percentage point lower than the current national average.
San Antonio's cost of living, at 7% below the national average, makes it one of the more affordable retirement destinations. Groceries, for example, are an incredible 22% cheaper than other metropolitan areas, notes Bland. "For a city with more than 2.5 million people living in the metropolitan area, that's really unusual."
Continued development has kept housing prices in San Antonio 10% lower than the national average. The average sale price for an existing home was $153,200 in 2007, according to the National Association of Realtors. Yet, despite the nationwide housing slump, home values here have increased 8% since 2006. Retirees will find the lower taxes an added relief, adds Peguero. Like Florida, Texas doesn't tax income. The average state and local tax burden is 7.8%, almost two percentage points lower than the national average.
7. Tucson, Ariz.
A warm, sunny climate and rich cultural heritage have long kept Tucson at the top of retirees' list of winter vacation destinations. However, with a cost of living that's 3% below the national average, a strong job market and steady home prices, there's plenty to enjoy about this city all year-round.
"Tucson is a dynamic, growing retirement spot, so there are plenty of job opportunities — although the pay is often low," says Bland. While it's not quite a college town, Tucson relies heavily on the University of Arizona as its second-largest employer. Technology and tourism (mostly from snowbirds) also provide plenty of jobs.
Steady expansion and new developments have kept housing relatively affordable, with costs at about 20% below the national average. The average sale price for existing homes dropped just 0.01% in 2007, to $244,800. Expect real estate prices to remain solid, thanks to increasing interest in the area as a retirement destination. The most popular areas are planned communities (retirement-specific and otherwise) northwest of the city, including Oro Valley and other towns in the foothills of the Santa Catalina Mountains.
Copyrighted, SmartMoney.com. All Rights Reserved.
by Kelli B. GrantFriday, February 29, 2008
Following the flock of other retirees to warmer climes may seem like the best way to spend one's golden years. But it may not be the smartest — especially during economic downturns.
"A retiree always needs to be careful about where he or she chooses to spend retirement, but with economic conditions changing so quickly it's even more important to make a good choice," says Warren R. Bland, author of "Retire in Style: 60 Outstanding Places Across the USA and Canada." Not all places are created equal when it comes to weathering economic woes like the current real estate slump, credit crunch and slowing job market, he says. Choosing the wrong place could carry serious ramifications.
"If you don't have a healthy local economy, it's like a cancer," says Bert Sperling, founder of Sperling's Best Places, which publishes reports on the best places to live based on data analysis. "There's less money for social services, for police patrols, even for infrastructure like fixing potholes." The widening subprime mortgage crisis makes ending up in the wrong part of town all too easy as well. "You could find yourself living in a deserted neighborhood," he warns, "where everyone else has fled" — or been forced out.
After all those decades of stashing money away for retirement, retirees should look for a place that will not only make them happy, but also keep their nest egg intact. Areas with a track record of slow, steady economic growth and home price appreciation are ones that will hold onto their value best, notes Walter Molony, a spokesman for the National Association of Realtors. These same places are also more likely to rebound quickly when nationwide economic conditions improve.
Here are seven recession-proof places our experts believe soon-to-be retirees should consider:
1. Gainesville, Fla.
The University of Florida keeps Gainesville's economy thriving and that's enough to turn most retirees into die-hard Gators fans. "Because colleges are relatively immune from recession, they provide a very stable local economy," says Sperling. The local AARP Senior Community Employment Program also ensures paid work is available to retirees, helping them compete against students for part-time jobs in the local retail and health-care industries, as well as at the university itself.
Last year, Gainesville ranked as the No. 1 place to live in the "2007 Cities Ranked and Rated," put out by Sperling's Best Places. "In a relatively small package, you get all the amenities you'd get in a much larger city," says Bland. The University of Florida Health Science Center provides excellent medical care, and residents can audit courses or attend any of the university's guest lectures, performances and exhibits.
The cost of living is on par with the national average, and the state's lack of income tax helps bolster retirees' savings. Local real estate has also remained steady. The average sale price for existing homes was $211,100 in 2007, down just 1% from 2006. Buyers get plenty for their money. "For prices that would be unbelievably low anywhere else, you'll find fairly large, contemporary houses on huge, half-acre or bigger properties," says Bland.
2. Ithaca, N.Y.
Ithaca not only boasts a breathtaking landscape of hills, gorges and waterfalls, but — as home to Cornell University and Ithaca College — it's also a smart place to retire. While education is the city's primary industry, there's a fair share of manufacturing and high-tech jobs as well. Unemployment stands at just 3.1%, nearly 2% below the national average.
Like the best college towns, there's little that progressive Ithaca lacks. The local music and arts scene is bustling, aided by a downtown pedestrian mall stocked with bookstores and an independent cinema, among other mom-and-pop retailers.
Ithaca is also one of the most affordable places to live in the United States. Almost three-quarters of the city's homes are priced at values that residents earning the median income of $64,500 can afford, according to the National Association of Home Builders' Housing Opportunity Index. The median home sale price in 2007 was $149,000.
3. Orlando, Fla.
For retirees, Florida's biggest perk isn't the warm weather but the lack of income tax. "Taxation, or the potential for taxation, can be a big chunk of your monthly budget when you're living on a fixed income," says Alfred Peguero, a partner with PricewaterhouseCoopers' Private Company Services, which advises clients on retirement issues.
Compared with other major cities in this retiree-friendly state, Orlando has a slightly lower cost of living and much steadier home values. The average sale price for existing homes in Orlando was down 3% last year, to $261,300. Meanwhile, homes in Sarasota dropped 7% to $310,900, and those in Fort Myers dropped 6%, to $252,100.
While Orlando's theme parks and convention centers aren't immune to hard economic times, other industries, such as engineering and electronic gaming, are booming. Orlando has also earned the nickname "Hollywood East" for its growing number of film and television companies.
Seniors won't have to go far to find quality health care. One of the city's biggest nonprofit hospitals, Florida Hospital, repeatedly ranks as one of the best in the nation, according to U.S. News and World Report. Its neurology department treats more stroke patients than any other hospital in the state.
4. Pittsburgh, Pa.
"Pittsburgh has this reputation for being a smoky, industrial city — but that's just not the case anymore," says Bland. Steel and chemical manufacturing have largely given over to the burgeoning high-tech industry, particularly robotics and biomedicine. The city also hosts seven Fortune 500 companies, including PNC Financial Services Group, Mellon Financial Corp., and electric distributor Wesco International.
In his "Places Rated Almanac," author David Savageau named Pittsburgh "America's Most Livable City" in 2007, citing its cultural amenities and vibrant downtown. The cost of living here is 5% lower than the national average. And while the median sales price of existing homes nationwide fell 1.4% last year to $218,900, Pittsburgh's increased by 1% to $120,700, according to the National Association of Realtors. Seniors can save on taxes as well. The average state and local tax is 8.9%, vs. 9.7% nationwide.
Other bonuses: a low crime rate (compared with other cities its size) and more than 20 quality hospitals. U.S. News and World Report named the University of Pittsburgh Medical Center among its "Best of the Best," in 2007, and awarded its geriatric division a No. 8 spot.
5. Portland, Ore.
"Hip. Unaffected, yet cosmopolitan. Portland is on everyone's short list of hot cities these days," says Sperling. Careful land-use planning rescued the city from economic decline in the 1960s, and today Portland is known for its burgeoning arts and music scene and eco-friendly vibe.
Compared to other West Coast metropolitan areas, Portland is affordable but by no means cheap. The cost of living here is 14% above the national average. And the credit crunch has put many residential areas out of reach for retirees with less-than-stellar finances, cautions Molony. While the National Association of Realtors reports that the average sales price for an existing home was up 5% to $295,200 in 2007, properties in popular areas like Irvington and Alameda Ridge can sell for well over $600,000.
Those who can afford to buy here, however, will find the city packed with retiree-friendly amenities, including public transportation and 30 senior centers. There are also plenty of jobs — both paid and volunteer. Nike and Intel call Portland home, as do plenty of other technology and health-care companies.
6. San Antonio, Texas
Stroll along San Antonio's River Walk and it's clear the city's economy is booming. The walkways feed into an expansive downtown district of restaurants, museums and boutiques adored by tourists and locals alike. While the city relies heavily on tourism to the Alamo and other area attractions, industries such as financial services, health care and national defense have kept the unemployment rate fairly steady at 4%, one percentage point lower than the current national average.
San Antonio's cost of living, at 7% below the national average, makes it one of the more affordable retirement destinations. Groceries, for example, are an incredible 22% cheaper than other metropolitan areas, notes Bland. "For a city with more than 2.5 million people living in the metropolitan area, that's really unusual."
Continued development has kept housing prices in San Antonio 10% lower than the national average. The average sale price for an existing home was $153,200 in 2007, according to the National Association of Realtors. Yet, despite the nationwide housing slump, home values here have increased 8% since 2006. Retirees will find the lower taxes an added relief, adds Peguero. Like Florida, Texas doesn't tax income. The average state and local tax burden is 7.8%, almost two percentage points lower than the national average.
7. Tucson, Ariz.
A warm, sunny climate and rich cultural heritage have long kept Tucson at the top of retirees' list of winter vacation destinations. However, with a cost of living that's 3% below the national average, a strong job market and steady home prices, there's plenty to enjoy about this city all year-round.
"Tucson is a dynamic, growing retirement spot, so there are plenty of job opportunities — although the pay is often low," says Bland. While it's not quite a college town, Tucson relies heavily on the University of Arizona as its second-largest employer. Technology and tourism (mostly from snowbirds) also provide plenty of jobs.
Steady expansion and new developments have kept housing relatively affordable, with costs at about 20% below the national average. The average sale price for existing homes dropped just 0.01% in 2007, to $244,800. Expect real estate prices to remain solid, thanks to increasing interest in the area as a retirement destination. The most popular areas are planned communities (retirement-specific and otherwise) northwest of the city, including Oro Valley and other towns in the foothills of the Santa Catalina Mountains.
Copyrighted, SmartMoney.com. All Rights Reserved.
Monday, January 28, 2008
Great Advice…….
This article was published on: 02/01/2008 FEATURE: House & Home
Maintenance Must-dos First-time buyers often don’t know much about home maintenance. You can help by giving them a maintenance schedule that’ll prevent small problems from turning into big headaches.
BY JOHN N. FRANK
First-time buyers often don’t know much about home maintenance. You can help by giving them a maintenance schedule that’ll prevent small problems from turning into big headaches. Our maintenance checklist was compiled with the help of Lou Manfredini, Ace Hardware’s home improvement spokesperson and star of the “Mr. Fix-It” show on Chicago’s WGN-AM radio, and Frank Lesh, president of the American Society of Home Inspectors and head of his own home inspection company, Home Sweet Home Inspection Co., in Indian Head Park, Ill.Inside Tasks
Change your furnace filters monthly. “It’s so easy to do but so critical,” says Lesh. Clogged filters decrease furnace efficiency and can cause breakdowns.
Drain your water heater at least once a year. Sediment will drain out along with the water from the water tank. Removing sediment can prolong the heater’s useful life.
Clean the coils. If you have baseboard heating units that use hot water, clear dust from the coils inside the units to maximize heating efficiency. Clean dust whenever you see it accumulating. If you have a hot water boiler/furnace, you should also oil the pump inside the furnace twice a year, says Lesh. Look for the three spots on the pump designated for oiling.
Check your circuits. Test the performance of the circuit breakers in your electrical circuit box twice a year by flipping them off and back on. If you have a circuit that keeps shutting off with normal daily electrical use, call an electrician. A faulty circuit breaker could indicate a short in the wiring inside your walls.
Watch out for drips. Check under sinks periodically to look for leaks or water stains that might indicate leaks. Catching a small problem early can prevent water damage. Use a plunger to clean out sinks and tubs whenever water doesn’t drain normally.
Replace regularly. Water heaters, furnaces, roofs, and other key components of your home should be replaced before they fail, based on their average useful lives (see schedule below).
Schedule for Replacement
Average life span (in years)
Exterior painting
5–10
Furnace
15–50
Roof
13–15
Water heater
7–15
Wood deck staining
4–7
Outside Tasks
Keep the wet out. Water is a major enemy of your house. Check each season for signs of water damage to your home. Flashing, the metal pieces used to seal the areas between roofs and chimneys and around doors and windows, are especially vulnerable to damage by wind or age. Loose flashing can let water seep under a roof or inside walls, which in turn can cause mold.
Get to the bottom of things. Check your home’s foundation for cracks or gaps that could let in water or varmints. Also look at the ground around your house. As homes age, they often sink slightly below the surrounding ground. This settling lets water puddle against the foundation and possibly damage it, notes Manfredini. Doing major landscaping work also can cause changes to the ground’s pitch that let water flow toward the house.
Look up. Chimneys take a great deal of weather abuse. Visually inspect them each year for signs of loose mortar or loose or missing bricks. Have the insides of chimneys cleaned every two to three years. Also check your roof for loose shingles or dangling gutters.
Everyone should be doing regular maintenance on his or her home regardless of weather your are a first time home buyer or an experienced home buyer. You would be surprised how many homes I see on weekly bases that do not perform simply tasks to keep their home in a maintained manor. Many times I will go to visit a home, to see and decide if it is a listing I will be accepting, and many homeowners consider theses “regular maintenance” items upgrades. Maintaining your home will pay in the end when you go to sell. Most buyers are looking for a home they can move into and continue to maintain, not rebuild.
Maintenance Must-dos First-time buyers often don’t know much about home maintenance. You can help by giving them a maintenance schedule that’ll prevent small problems from turning into big headaches.
BY JOHN N. FRANK
First-time buyers often don’t know much about home maintenance. You can help by giving them a maintenance schedule that’ll prevent small problems from turning into big headaches. Our maintenance checklist was compiled with the help of Lou Manfredini, Ace Hardware’s home improvement spokesperson and star of the “Mr. Fix-It” show on Chicago’s WGN-AM radio, and Frank Lesh, president of the American Society of Home Inspectors and head of his own home inspection company, Home Sweet Home Inspection Co., in Indian Head Park, Ill.Inside Tasks
Change your furnace filters monthly. “It’s so easy to do but so critical,” says Lesh. Clogged filters decrease furnace efficiency and can cause breakdowns.
Drain your water heater at least once a year. Sediment will drain out along with the water from the water tank. Removing sediment can prolong the heater’s useful life.
Clean the coils. If you have baseboard heating units that use hot water, clear dust from the coils inside the units to maximize heating efficiency. Clean dust whenever you see it accumulating. If you have a hot water boiler/furnace, you should also oil the pump inside the furnace twice a year, says Lesh. Look for the three spots on the pump designated for oiling.
Check your circuits. Test the performance of the circuit breakers in your electrical circuit box twice a year by flipping them off and back on. If you have a circuit that keeps shutting off with normal daily electrical use, call an electrician. A faulty circuit breaker could indicate a short in the wiring inside your walls.
Watch out for drips. Check under sinks periodically to look for leaks or water stains that might indicate leaks. Catching a small problem early can prevent water damage. Use a plunger to clean out sinks and tubs whenever water doesn’t drain normally.
Replace regularly. Water heaters, furnaces, roofs, and other key components of your home should be replaced before they fail, based on their average useful lives (see schedule below).
Schedule for Replacement
Average life span (in years)
Exterior painting
5–10
Furnace
15–50
Roof
13–15
Water heater
7–15
Wood deck staining
4–7
Outside Tasks
Keep the wet out. Water is a major enemy of your house. Check each season for signs of water damage to your home. Flashing, the metal pieces used to seal the areas between roofs and chimneys and around doors and windows, are especially vulnerable to damage by wind or age. Loose flashing can let water seep under a roof or inside walls, which in turn can cause mold.
Get to the bottom of things. Check your home’s foundation for cracks or gaps that could let in water or varmints. Also look at the ground around your house. As homes age, they often sink slightly below the surrounding ground. This settling lets water puddle against the foundation and possibly damage it, notes Manfredini. Doing major landscaping work also can cause changes to the ground’s pitch that let water flow toward the house.
Look up. Chimneys take a great deal of weather abuse. Visually inspect them each year for signs of loose mortar or loose or missing bricks. Have the insides of chimneys cleaned every two to three years. Also check your roof for loose shingles or dangling gutters.
Everyone should be doing regular maintenance on his or her home regardless of weather your are a first time home buyer or an experienced home buyer. You would be surprised how many homes I see on weekly bases that do not perform simply tasks to keep their home in a maintained manor. Many times I will go to visit a home, to see and decide if it is a listing I will be accepting, and many homeowners consider theses “regular maintenance” items upgrades. Maintaining your home will pay in the end when you go to sell. Most buyers are looking for a home they can move into and continue to maintain, not rebuild.
Tuesday, January 22, 2008
Interesting article regarding Amendment 1.....
Jan 22, 2008 – Bradenton Herald
Yes on tax cut
Florida's politicians have put voters between a rock and a hard place with Amendment 1. And in this era of sky-high property taxes and runaway government spending, we support passage.
We need to send a strong message to politicians and bureaucrats. Taxes and budgets are out of control. Residents cannot afford to pay them any longer.While Amendment 1 does not fix an inequitable tax system, it does put an estimated $9.3 billion back into taxpayers' hands over five years. That will help rein in government spending, and that's a good thing - one we hope is just the beginning of more meaningful tax reform to come. The public outcry for that needs to continue.
One of the amendment's provisions would increase the homestead exemption from the current $25,000 to $50,000. That would not apply to school property taxes, which usually account for 40 percent of a bill. In effect, the extra exemption makes for a total of $40,000. The average annual savings amounts to $240, and while that is too little, it's a beginning. We rank that as a plus.
Another key provision - portability - enables homeowners to carry their Save Our Homes benefits to another house. Save Our Homes limits annual increases in assessed value to either 3 percent or the level of inflation, whichever one is lower. Thanks to soaring property values during the past few years, longtime homeowners can take up to $500,000 in tax breaks when they move into another house. That's a significant savings on a tax bill, one that many hope will pump life into a wheezing real estate market. That's a plus, too.
A third component gives businesses a tax exemption on the first $25,000 of tangible property like supplies and fixtures - another plus.The amendment also would put a 10 percent cap on non-homesteaded property, though that, too, does not apply to school taxes. Snowbirds, businesses and owners of investment properties would benefit. That 10 percent mark, though, would only come into play during years of skyrocketing real estate values. The jury's still out on this provision.
Now, the one big minus.
We cannot ignore the argument that Amendment 1 serves to make an inequitable tax system even more unfair. Recent homebuyers, snowbirds, investment property owners and business owners already pay a disproportionate share of property taxes compared with longtime homeowners, thanks to Save Our Homes. Boosting the homestead exemption will add to that disparity. The portability provision also favors longtime homeowners whose property values have shot up.
But we have to begin attacking property taxes somewhere. Government must get the message: Stop spending.
We find the outcries about severe cuts in services unconvincing. Before the run-up in property values, we somehow managed to build schools and educate children, provide police and fire protection, and maintain water and sewer lines. Yes, we'll see a drop-off in services. We appreciate the fact that you get what you pay for.
We'll manage just fine.
Our overriding concern is the fact that taxpayers have been footing too big a bill of late. Some critics say the average annual savings of $240 is a joke, only enough to buy an iPod. We say it's a start.
The Legislature may not have the political stomach to bite into property taxes in the coming session. Lawmakers already have billions in budget cuts on their plates thanks to plunging sales tax revenues.
Amendment 1 is far from perfect, but it's all we've got. And it's a start.We urge a Yes vote.
My Comments/Thoughts:
I know we will all be going to the polls on the 29th to vote and while I don’t think the amendment is close to helping people in the long run it is a start. I don’t think it is enough to just write amendment to give temporary tax breaks.
Our city government has made all kinds of ridiculous threats saying that a vote for amendment one will cause a decrease in public safety. My comment to the City of Gainesville would be “then how did you make room in the budget to spend $21,000 dollars to send mail outs to the citizens of Gainesville telling the not to vote for amendment one?” Absolutely ridiculous! That $21,000 dollars should have been spent to synchronize the lights on Archer Road, fix pot holes, or to hire a new fire fighter. Deep down we all know that even if amendment one passes the City will still charge us just as much the will just change the verbiage from “property tax” to “special assessment”.
I think that we, the citizens, need to send a message to our local governments telling them we ware tired of being taxed to death. Every week I have a local resident of Gainesville tell how much they would like to move or downsize, but can’t afford the taxes. One woman even said she “feels like a prisoner of her own home”.
If you are tired of being tax to death send our City and County a real message vote yes on Amendment 1 and then vote the wasteful spending officials!!
Yes on tax cut
Florida's politicians have put voters between a rock and a hard place with Amendment 1. And in this era of sky-high property taxes and runaway government spending, we support passage.
We need to send a strong message to politicians and bureaucrats. Taxes and budgets are out of control. Residents cannot afford to pay them any longer.While Amendment 1 does not fix an inequitable tax system, it does put an estimated $9.3 billion back into taxpayers' hands over five years. That will help rein in government spending, and that's a good thing - one we hope is just the beginning of more meaningful tax reform to come. The public outcry for that needs to continue.
One of the amendment's provisions would increase the homestead exemption from the current $25,000 to $50,000. That would not apply to school property taxes, which usually account for 40 percent of a bill. In effect, the extra exemption makes for a total of $40,000. The average annual savings amounts to $240, and while that is too little, it's a beginning. We rank that as a plus.
Another key provision - portability - enables homeowners to carry their Save Our Homes benefits to another house. Save Our Homes limits annual increases in assessed value to either 3 percent or the level of inflation, whichever one is lower. Thanks to soaring property values during the past few years, longtime homeowners can take up to $500,000 in tax breaks when they move into another house. That's a significant savings on a tax bill, one that many hope will pump life into a wheezing real estate market. That's a plus, too.
A third component gives businesses a tax exemption on the first $25,000 of tangible property like supplies and fixtures - another plus.The amendment also would put a 10 percent cap on non-homesteaded property, though that, too, does not apply to school taxes. Snowbirds, businesses and owners of investment properties would benefit. That 10 percent mark, though, would only come into play during years of skyrocketing real estate values. The jury's still out on this provision.
Now, the one big minus.
We cannot ignore the argument that Amendment 1 serves to make an inequitable tax system even more unfair. Recent homebuyers, snowbirds, investment property owners and business owners already pay a disproportionate share of property taxes compared with longtime homeowners, thanks to Save Our Homes. Boosting the homestead exemption will add to that disparity. The portability provision also favors longtime homeowners whose property values have shot up.
But we have to begin attacking property taxes somewhere. Government must get the message: Stop spending.
We find the outcries about severe cuts in services unconvincing. Before the run-up in property values, we somehow managed to build schools and educate children, provide police and fire protection, and maintain water and sewer lines. Yes, we'll see a drop-off in services. We appreciate the fact that you get what you pay for.
We'll manage just fine.
Our overriding concern is the fact that taxpayers have been footing too big a bill of late. Some critics say the average annual savings of $240 is a joke, only enough to buy an iPod. We say it's a start.
The Legislature may not have the political stomach to bite into property taxes in the coming session. Lawmakers already have billions in budget cuts on their plates thanks to plunging sales tax revenues.
Amendment 1 is far from perfect, but it's all we've got. And it's a start.We urge a Yes vote.
My Comments/Thoughts:
I know we will all be going to the polls on the 29th to vote and while I don’t think the amendment is close to helping people in the long run it is a start. I don’t think it is enough to just write amendment to give temporary tax breaks.
Our city government has made all kinds of ridiculous threats saying that a vote for amendment one will cause a decrease in public safety. My comment to the City of Gainesville would be “then how did you make room in the budget to spend $21,000 dollars to send mail outs to the citizens of Gainesville telling the not to vote for amendment one?” Absolutely ridiculous! That $21,000 dollars should have been spent to synchronize the lights on Archer Road, fix pot holes, or to hire a new fire fighter. Deep down we all know that even if amendment one passes the City will still charge us just as much the will just change the verbiage from “property tax” to “special assessment”.
I think that we, the citizens, need to send a message to our local governments telling them we ware tired of being taxed to death. Every week I have a local resident of Gainesville tell how much they would like to move or downsize, but can’t afford the taxes. One woman even said she “feels like a prisoner of her own home”.
If you are tired of being tax to death send our City and County a real message vote yes on Amendment 1 and then vote the wasteful spending officials!!
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