Posts Tagged with homes
Investment opinions are like, um, noses: Everyone has one. Buy stocks, sell bonds? Go long steel and short copper? Buy sheep, sell deer?Investing
Bill Sikes, AP
A sign advertises a pending residential real estate sale in Framingham, Mass.Enlarge
Bill Sikes, AP
A sign advertises a pending residential real estate sale in Framingham, Mass.Sponsored Links
It's pretty easy to see both sides of an investment argument. But it's hard to argue against buying a house now, assuming you can get a loan.
The housing cycle is a long one, in part because buying a house moves at a glacial pace, at least compared with the time it takes to buy a stock or bond. If you're not pre-approved for a mortgage, you have to submit to a credit check, which, these days, is only slightly less intrusive than a CIA background check. You have to get the home inspected. You have to figure out the various fees your bank charges, including the one marked "Just because we can."STORY: Mortgage rates top 3.5% for a second week COLUMN: Timber could be growth industry if housing soars
How long is a housing cycle? Pretty long. A relatively modest housing bubble, by today's standards, occurred in Boston in the late 1980s. Average home prices, adjusted for inflation, hit $310,000 in October 1987. Home prices didn't hit that level again until May of 2000. Someone who bought at the high had a long wait to get even — particularly in light of the standard broker's commission of 6%.
Home prices bottomed, however, in March 1993 — roughly six years after the top. History doesn't repeat itself precisely, but it's interesting to note that the top of the last housing bubble was six years ago, in 2006.
By Steve Cook
It’s still a buyer’s market for properties selling for more than half a million. Tight inventories driven by negative equity and slow foreclosure processing and rising prices are having much less impact on luxury homes than on less expensive homes.
According to the Institute for Luxury Home Marketing’s weekly market report, the average days on market were 186 for luxury homes. Inventories for the luxury segment are about the same as they were in November. Median prices in the 31 markets that ILHM tracks have stayed fairly stable. Days on market range from a low of 111 days in Silicon Valley to 268 in New York.
By contrast, the national median age of all homes in the June REALTOR.com® inventory dropped to 84 days in June, down -9.67 percent on an annual basis. The size of REALTOR.com’s ® inventory of homes for sale was 19.35 percent below a year ago. Prices are up 2.68 percent on a year-over-year basis, according to the Realtor.com Trend Data released today. List prices increased in 101 markets of the 146 markets covered by REALTOR.com®, held steady in 26 markets, and declined in just 19 markets.
Several factors are causing the inventory drawn down among lower price properties. Negative equity is keeping many potential sellers out of the market, which keeps a lid on inventory and complied with the reduced flow of REO properties has led to much tighter market conditions for lower priced properties, particularly in the hardest hit markets, according to CoreLogic Economist Sam Khater. Khater estimates that lower tier properties are appreciating three times faster than expensive homes as a result of tighter inventories.
Luxury brokers around the nation report little change in their markets in recent months, unlike the tight inventories and rising prices among entry-level homes found in almost market in the country.
If you invest in a savings account, you'll make less than 1% and will have to pay income tax on the earnings. On the other hand, contribute something extra to your house payment on a regular basis and you'll essentially, earn at the mortgage interest rate which is certain to be more than you're earning in the bank.
Making additional principal contributions on your mortgage will save interest, retire debt and build equity. An extra $100 a month in the example shown will save thousands in interest and short the term of the mortgage as well.
Reducing your cost of housing is another way to improve the investment in your home. Becoming debt-free is a worthy goal that is achieved with discipline and good decisions. Suggestions like this are part of my commitment to help people be better homeowners when they buy, sell and all the years in between.
As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Call or e-mail me today! :)