Should Buyers Try to Beat the Tax Credit?
Some potential home buyers say they’re holding out until the tax credits expire on the theory that prices will decline once the buying incentive is gone.
One person who commented on the dilemma on Zillow.com wrote: “I’ve seen prices in my neighborhood jump up over $30k since the credit started.”
In some markets, waiting is clearly the wrong move. A renter in Las Vegas told the Wall Street Journal that he’s been outbid eight times trying to buy a house. He doesn’t believe the expiration of the credit will make any difference.
Source: The Wall Street Journal, Emily Friedlander (02/25/2010)
Topeka Market Report – January, 2010
There were 94 closed sales in the month of January, up from 84 for January of 2009, or an increase of about 12%. We’re still down from 134 (-29.9%) in 2008 and 199 (-52.8%) in 2007. The absorption rate (number of months to exhaust current supply, given current number of sales) for single family units (all price ranges) was 13.7 months at the end of January, compared to 14.0 in 2008, 9.3 in 2008 and 6.2 months in 2007. Our average and median list and sale prices are down a bit, and the best showing is in days on the market. From listing date to contract date, DOM at the end of January was 62, compared to 89 in 2009, 93 in 2008 and 72 in 2007.
What do I think of this? I’m not sure. We have property listed that all-of-a-sudden there is a huge increase in interest; other properties are showing no activity whatsoever. I do see buyers scrambling to get the extended & expanded tax credit. I’m not sure what to expect when that ends – we won’t have the incentives, but we’ll have a market that has hopefully continued to improve, and it will be great weather, I hope.
Should You Rent Or Buy?
I read yet another article today that stated “Well, if you ask a Realtor, then it’s always a good time to buy.”
Not so with us. It’s not always a good time to buy, and buying isn’t for everyone. We’ll tell you that.
There are many things to consider before buying a home, rather than just “the home will appreciate” vs “why pay for someone else’s property.”
There are a number of good rent vs buy calculators (just Google it) on the internet that consider some (but not all) of the dizzying number of things to consider:
—What is the average appreciation of a home in your target market?
—What kind of down payment to do you have?
—What is your credit score? (just a small glitch in your credit can cause a drop in your score and cost you thousands more over the life of a loan if you are unable to someday refinance). You don’t want to end up with a predatory lender. Work on repairing that credit score before applying for a loan.
—Will the mortgage interest and taxes allow you now itemize on your tax return? If so, perhaps there are other items you’ll be able to now itemize, whereas previously you had to just take the standard deduction.
—What is the local rental market like? It’s likely that over time, your rent will increase, while with a fixed-rate mortgage, your mortgage payments will stay the same – though your property taxes, insurance and maintenance costs could very likely increase.
—Are you “handy” or willing to learn how to be “handy?” If you cannot perform minor (or major) repairs yourself, you will have to pay someone to do these things for you.
—How secure is your job? Are you likely to be fired or laid off? If it happens, how likely is it that you can find another job at comparable pay? Is it likely you might have to relocate within the next 3-5 years? If so, selling costs, could more than eat up any gains you may have made.
—Just because a lender gives you an amount that you can “afford” or qualify for, you need to decide for certain whether you really can or not. Be sure to consider maintenance, property taxes, homeowners insurance and any homeowners insurance fees in your monthly budget vs. gains you will have in potential appreciation, tax deductions, etc. Don’t forget to include more longer-term items and make sure you’re able to start setting aside money in a fund for those things so they don’t cripple you when they occur: some day your home will need a roof, or a paint job, or a water heater, or a furnace, or an air conditioner.
—After your acquisition costs (downpayment, loan and document fees, etc.), do you still have a rainy day fund?
—Do you generally manage your money well?
In some markets currently (and possibly for the forseeable future), it would make much better sense to rent than to buy. For example:
In Austin, Texas, a $230,000 single-family house would rent for approximately $1,250 per month; in Irvine, California, a $587,000 single-family home would rent for $2,832, on average, per month. On those numbers, renting in Austin saves $94,800 over buying that same house over a 10-year period.
The present value of the benefits of owning that house in Austin is approximately $47,000 using these calculations. In Irvine, the renter saves a whopping $144,000 over a 10-year period over buying the same house; the present value of the benefit of ownership is about $142,000.
Fortunately, in Topeka, we have seen very few areas that have experienced price declines during this past recession, and even then, they are very minimal. We are fortunate to have a boringly stable economy in Topeka – while we haven’t seen the high appreciation during the boom years, we haven’t seen the high depreciation during the recession.
If you can afford to purchase a home, and you do it in a practical and educated manner, buying a home in Topeka can make great economic sense and be one of the smartest moves you can make. Home ownership builds wealth in two ways: through the forced savings of paying down a mortgage, and through appreciation — the rise in the homes value over time.
There is much to consider, and we can help you through that process – whether it’s professional representation in a purchase or fee-based consulting. But if we think it may be best that you don’t purchase a home at the current time, we’ll be the first to tell you .
Top 9 Scams Of 2009
The National Consumers League released their top 9 scams of 2009 findings, based on the scams that get reported to their fraud center. An interesting trend is that business opportunity and fake scholarships scams made the list this year, no doubt capitalizing on the recession.
1. Fake Checks 42.01%
2. Internet: General Merchandise 24.87%
3. Prizes/Sweepstakes/Free Gifts 9.57%
4. Phishing/Spoofing 7.17%
5. Nigerian Money Offers (not prizes) 2.88%
6. Business Opportunities/Franchises/Distributorships 2.02%
7. Advance Fee Loans, Credit Arrangers 1.82%
8. Internet: Auctions 1.17%
9. Friendship & Sweetheart Swindles* 1.00%
Copyright 2010 The Consumerist. THE CONSUMERIST™ and CONSUMERIST™ trademarks are owned by Consumer Media. Reprinted with permission.
Caller ID Blocking Doesn’t Work When Calling a Toll-Free Number
Being in the marketing business, I just assumed everyone knew this. I found out this week that most people don’t know it!
This from the marketing website of tollfreenumber.org:
Why Use An 800 Number?
Track Calls with call-capture
Do you want to have a list of everyone who has called you? We employ a service called Real-time Automatic Number Identification (ANI) which identifies the caller’s ten-digit phone number. This means that anytime someone calls you, we will unblock their caller ID even if they are calling from a blocked phone number. There is no extra charge for this service and it doesn’t require any special equipment.
This makes tracking leads effective and simple. You’ll also generate more leads since every incoming call will be accounted for.
