Thursday, March 27, 2014

Where Prices are Headed over the Next 5 Years

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like theHome Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey
The latest survey was released last week. Here are the results:
  • Home values will appreciate by 4.5% in 2014.
  • The average annual appreciation will be 3.94% over the next 5 years
  • The cumulative appreciation will be 19.7% by 2018.
  • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of almost 11% by 2018.
Individual opinions make headlines. We believe the survey is a fairer depiction of future values. Full Article 

Monday, March 24, 2014

4 mortgage-rate trends for 2014

A lot of attention has been paid to the fact that mortgage rates are expected to rise throughout 2014. As mortgage rates creep upward in this year, borrowers need remember that rates will still be historically low and nowhere near the interest rates consumers faced in the early 1980s.
Four unique trends will unfold in 2014 that will influence the direction of mortgage rates throughout the year.
© Comstock Images/Jupiterimages

No. 1: Conforming loan rates are rising

While no one can know for certain what will happen with mortgage rates in 2014, Cameron Findlay, chief economist at Discover Home Loans in Irvine, Calif., believes rates for 30-year fixed-rate mortgages will reach 5.25 percent by the end of 2014.
Bob Walters, chief economist for Quicken Loans in Detroit, Mich., says conforming rates are driven by market and institutional forces such as fees charged by Fannie Mae and Freddie Mac to lenders which are embedded in your interest rate.
"A planned increase in guarantee fees has temporarily been put on hold, but it would have increased mortgage rates by about one-eighth percent," says Walters. "In order for the market to push rates up significantly higher, the economy would have to be running on all cylinders with wage and employment growth. That's not happening yet, so I think rates will range from 4.5 to 5.5 percent this year."
Walters says current fees from Fannie Mae and Freddie Mac add as much as 0.5 to 0.75 percent to conforming rates and could be raised later this year. Walters suggests homeowners who want to refinance act early in 2014.
"If you want to buy a home, make sure you're ready and know where you want your family to live, but if you do, then you should act earlier rather than later, too," he says.

No. 2: ARMs are low and making a comeback

Qualified Mortgage (QM) rules have virtually eliminated interest-only loans and loans with 40-year terms, often used by borrowers to afford a costlier home. Some borrowers may look to ARMs, with their lower initial interest rates, to stretch their budget in 2014. Walters says borrowers mostly choose ARMs when the gap widens between adjustable and fixed rates.
"Right now the difference is almost a full percentage point, so we're seeing more interest," says Walters. "ARMs are right for more people than are using them right now, such as first-time buyers who are likely to sell their starter home in five years as their income and family size increase, or for people who are transferred often."
ARM borrowers have to qualify at the fully adjusted rate and within tight debt-to-income ratios, so even if you’re using this to stretch your budget you’re doing it within the construct of fully qualifying for the loan, he says.
No. 3: Fixed-rate jumbos priced lower than conforming loans
"Two factors are driving rates lower on jumbo loans," says Findlay. "First, these loans typically have a lower loan-to-value, often as low as 60 percent. Also, the Federal Reserve is paying banks to have excess reserves on hand, which creates excess liquidity. Lenders are concentrating on offering jumbo loans because these loans require very high credit scores and a lot of equity so they're considered very low risk."
Walters says that jumbo rates are also priced lower because they're private loans that don't carry the fees charged by Fannie Mae and Freddie Mac.
Lenders are more competitive with jumbos, too, because they can earn higher fees on larger loan balances and are therefore more likely to offer lower interest rates to entice customers, says 

No. 4: The Fed's influence over mortgage rates will wane

"The Fed's likely to continue removing itself from the mortgage market even if the economy isn't as strong as we'd like, in part because [Quantitative Easing] isn't working as well as it did in the beginning," says Keith Gumbinger, vice president of in Riverdale, N.J. "Mortgage rates didn't go back down to rock bottom rates even after the Fed initially delayed tapering their bond-buying activity. They'll still have influence over short-term interest rates, but direct manipulation of the mortgage market is likely to stop." Full Article

Thursday, March 20, 2014

10 Low-Cost Tweaks to Help Your Home Sell

1. Quick-clean the exterior and landscape. They don’t call it curb appeal for nothing. Check for loose or clogged gutters and broken or missing flashing materials, which help prevent leaks behind the gutters. Cut the lawn and trim the bushes. Make sure the garage doors open and close properly. Wipe down lawn furniture. Fix any dangling shutters. Estimated costs: Completely replacing gutters can be expensive; replacing just parts is more economical. A 10-foot gutter starts at $6; downspouts start at $8. High-end garage doors cost $1,000, but a decorative garage door hardware kit starts at $19.

2. Make that door (and doorbell) stand out. Many homeowners don’t come in through the front door, but prospective buyers do. “While the Realtor is fiddling with the lockbox, trying to get the door open, the buyer is standing there looking around,” says stager and interior designer Deborah Goode of A Goode Start Decorating and Home Staging in Annapolis, Maryland. Fix cracked or peeling doorways with a fresh coat of paint and be sure the bell actually rings. Estimated costs: Exterior paints start at $30 a gallon; doorbells are $10 and up.

3. Evaluate every entrance. It’s not just the front door that will get the once-over. “Doors offer a huge bang for the buck visually,” says Chris Neumann, director of operations for Pyramid Builders in Annapolis. Update interior doors or at least replace hinges and knobs, he suggests. “And replace any junky bifolds with double-swing or heavier solid-core doors,” he adds. Estimated costs: Bronze door hinges can cost $3; solid-core, unfinished pine interior doors start at $99.

4. Look down. People walk in and wipe their feet. One of the first things they’ll notice is the condition of the floor, says Goode. Stained carpets, raggedy rugs and scratched floors are fairly easy fixes. Estimated costs: You can rent a carpet steam cleaner for $60; the cost of area rugs varies significantly.

5. Select the right scent. Beware the four most dreaded words in real estate: “What is that smell?” Buyers will associate musty odors with mold damage or disrepair, so eliminate any nose agitators. Clean out litter boxes, make sure your animals are bathed, banish the kids’ stinky sports equipment to the basement or garage, and throw out that science experiment in the fridge. Find one scent (or complementing scents) you love and use it throughout the house to avoid scent overload. Estimated costs: Scented candles can cost $10; plug-in odor eliminators start at $17.

6. Spot treat any blemishes. Walls are an excellent canvas, but they also clearly display age, dirt, indifference, even foundation issues. Fix any scuff marks, nail holes and paint cracks. “Remove all peeling wallpaper and repaint in neutrals to maximize the natural light,” says interior designer Jana Abel, president of J. Abel Interiors in Silver Spring, Maryland. Estimated costs: Spackling paste starts at $18; interior paint costs $28 a gallon and up.

7. Have a place for everything. If buyers see that your stuff doesn’t have a home, they won’t want your home. “I always advise my clients to take out at least a third of what they have in closets,” Goode says. Make sure anything that’s not on display — shoes, coats, papers, pots, pans — is tucked away and neatly organized. When closet space is at a premium, repurpose other areas for storage. “Finish the garage walls and floors and add some simple storage to make the room part of the home,” says Abel. Estimated costs: Attractive bins and baskets cost $20 and up; basic shelving systems start at $200.

8. Check the tracks. You may no longer notice that lopsided utensils drawer, but potential buyers will. New cabinetry may be out of the question, but fix bent drawer tracks and slides, replace dangling pulls and tighten screws and handles. Estimated costs: Basic rail-drawer-track kits start at $3; decorative cabinet knobs start at $4 each.

9. Give the appliances some elbow grease. Buyers want stoves that shine, not evidence of last week’s tuna casserole. Clean the oven, refrigerator, microwave, sink and any other appliance that will be included in the purchase of the home. Estimated costs: Most cleaning products start at $4; elbow grease is free.

10. Finish with finishes. Bathroom gut jobs can be pricey, but replacing finishing elements such as faucets, showerheads, towel racks and toilet paper holders can significantly brighten a room. “If you have polished chrome faucets or shower valves, you can pick up any chrome accessories and they will match, unlike satin nickel or oil-rubbed bronze,” says Abel. New shower curtains, towels and mats also will help the room look updated and clean, she adds. Estimated costs: Showerheads can cost $40 and up; bath towels start at $10; faucets are $70 and up. Full Article 

Monday, March 17, 2014

5 Reasons to Buy a Home Now

Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five major reasons purchasers should consider buying.
1. Competition is about to Increase
Every spring a surge of prospective purchasers enter the housing market. Like you, they will want the best homeavailable in the best location at the best price. They will be competing with you for the ‘steals’ in the market. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy available today that no longer be available as the market heats up..
2. Price Increases Are on the Horizon
Nationally, home prices are projected to appreciate by 4.5% in 2014 and by over 19% from now until 2018. First home buyers will probably pay more both in price and interest rate if they wait until the spring. Even if you are a move-up buyer, it will wind-up costing you more in net dollars as the home you will buy will appreciate at approximately the same rate as the house you are in now.
3. Owning a Home Helps Create Family Wealth
Whether you rent or you own the home you are living in, you are paying a mortgage. Either you are paying your mortgage or your landlord’s. The Federal Reserve, in arecent study, revealed that the net worth of the average homeowner is 30 times greater than that of a renter.
4. Interest Rates Are Projected to Rise
The Mortgage Bankers Association, the National Association of Realtors, Freddie Mac and Fannie Mae have all projected that the 30-year mortgage interest rate will be over 5% by the spring of 2015. That is an increase of almost 3/4 of a point over current rates.
5. Buy Low, Sell High
Most would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’ compared to where it will be next year. It’s time to buy.

Thursday, March 13, 2014

Seattle growing faster than suburbs, first time in 100 years

It only took 100 years.
Census data show that for the first time since 1910, Seattle is growing faster than its King County suburbs.
Nobody could have guessed, back in 1910, that suburban growth would soon outpace the city’s. At that point, Seattle’s population had exploded, nearly tripling over the previous 10 years.
But since then, the areas of King County surrounding Seattle have been unstoppable. Decade after decade, the suburbs attracted new residents at a faster clip than the city.
And suburban King County never experienced a population downturn as the city had. While Seattle was losing residents in the 1960s and 1970s — the “Boeing bust” period — King County still experienced double-digit growth.
Although Seattle bounced back in the 1990s and 2000s with healthy population increases, the suburbs grew even faster through those decades.
But then something changed.
Census estimates show that from 2010 to 2011, Seattle and suburban King County grew at almost exactly the same rate.
The most recent data suggest that this wasn’t a fluke. Between 2011 and 2012, Seattle’s population grew at a rate 25 percent faster than that of surrounding King County. During this period, Seattle’s growth rate was 67 percent faster than Bellevue’s.
Some economists believe it’s just a temporary side-effect of the housing bust, with young Americans unable to take the plunge into homeownership in the suburbs, as their parents had done at that age.
This reversal isn’t unique to Seattle. Since 2011, most big cities across the country have outpaced their suburbs when it comes to population growth.
But others think we might be witnessing a major demographic shift, with younger people rejecting a culture of sprawl and car-dependency associated with suburbs, and instead choosing the lifestyle offered by dense, walkable cities.
Signs of Seattle’s success are not difficult to spot. Everywhere you look there seems to be a new apartment building under construction. As reported in The Seattle Times, more apartments were opened in 2013 than in any of the previous 20 years.
And the people needed to fill all those new units are showing up. Seattle gained more than 23,000 residents between 2010 and 2012, for a total population of about 635,000 (King County’s population, not including Seattle, stands at about 1,370,000). Census data show that among the 50 most-populous U.S. cities, Seattle has had the eighth-fastest rate of growth.
Who knows? It may be the beginning of a new, 100-year trend. Full Article 

Thursday, March 6, 2014

7 Best Money Tips from Warren Buffett

Chances are, you know who Warren Buffett is. He’s one of the richest men in the world, and he’s famous for his ability to spot a good investment. He’s also a famous penny pincher who makes it a point to get good value for whatever it is he buys. He also famously gave one of the best pieces of investment advice out there when he suggested that the time to buy is when everyone else is fearful.
Recently, Buffett signed on to voice an animated version of himself in a financial literacy show aimed at children, “Secret Millionaires Club.” Buffett spoke with Yahoo! Finance about money, and the show, and financial education in general. Here are some of my favorite pieces of advice from the piece, with my own thoughts added:
The best investment you can make, is an investment in yourself.
What you learn, and how you develop your own talents and skills can have a big impact on how much you can ultimately earn. One of the best things you can do for yourself is develop a marketable skill. Take the time to invest in yourself, from getting an education (it doesn’t have to be a formal education) to developing skills and expertise that others can benefit from.
The more you learn, the more you’ll earn.
I think this goes beyond just formal schooling. This also includes learning about money — especially how money works. When you put that knowledge to work, you make better financial decisions, and you can even put your money to work on your behalf.
Learn to Spend Less than You Have
Warren Buffett also pointed out that you shouldn’t spend more than you have. The whole “spend less than you earn” things is pretty basic, yet it’s surprising how many people struggle with this. (Although I prefer to flip that to “earn more than you spend” since it seems more active.) In the end, it’s about the importance of learning how to properly manage your cash flow.
Great partnerships make any job easier.
Sometimes, we think that we have to do everything on our own. This isn’t the case. Finding the right people to help you can be a great way to make the most of your situation. Whether you find a mentor to help you improve your career, or find a great business partner, you really can build something that is worth more than the sum of its parts. Don’t forget, though, that you should, in turn, help others when you can.
Don’t Borrow without a Plan to Pay it Back
This was an interesting bit of true business wisdom. Many of us think that all borrowing is bad all the time. Instead of putting a blanket ban on borrowing, Warren Buffett emphasizes the importance of making smart financial decisions, and having a plan to repay any money you borrow. Before you take out a loan, you should have an idea of what you will do to repay it.
Save for the Unexpected
You never know what’s going to happen next. Saving up for setbacks is a good way to be prepared. When you don’t have an emergency fund, any financial setback can turn into a catastrophe. With a little savings, you can protect yourself to some degree. You don’t have to borrow as much if you can handle the situation on your own, with money from your emergency fund.
Learn from your mistakes, and the mistakes of others.
No matter how hard we try, we’re going to make mistakes. I’ve made my share of money mistakes, and I’m sure you have, too. The important thing is to learn from your mistakes. Take your setbacks as learning experiences, and figures out how to do it better. On top of that, you can also learn from others’ mistakes. Reading about the things others have been through can help you improve your own situation, and learn to make better decisions over all. Full Article