Home ? Home Services ? Finance ? New Report Finds Waiting to Buy a Home Could Cost Thousands
With interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today’s market have become very steep, according to the inaugural Opportunity Cost Report released recently by realtor.com®, a leading provider of online real estate services operated by News Corp subsidiary Move, Inc.
The proprietary report examines a wide range of factors, including the long-term financial impact of owning versus renting a home, the likely monetary gain renters forego in waiting to buy and the financial benefits of homeownership by market.
“Current market conditions give buyers the opportunity to build substantial wealth in the long-term, compared with renters and later buyers, in advance of the projected increase in mortgage rates and continuing price appreciation,” says Jonathan Smoke, chief economist for realtor.com®. “The problem is inventory is low, which has many would-be home buyers –especially first timers – standing on the sidelines and missing out on potentially material financial gains.”
Nationally, the estimated wealth an average buyer would accumulate over a 30-year period based on today’s dollars totals $217,726. Although some markets are more buyer-friendly than others, national data shows homeowners see significant financial benefits as compared to lifetime renters. In 88 percent of MSAs, buying a home produces a financial benefit of at least $100,000 over 30 years.
Ten markets offer an especially considerable upside to owning, with estimated 30-year financial gains above $500,000, and opportunity costs of waiting three years as high as $200,000. These MSAs, in California and other Western states, are relatively expensive markets with strong housing demand and limited supply. The potential long-term wealth in these areas is the greatest nationwide, and likewise, the long-term financial penalty for delaying ownership is substantial, due to price appreciation, escalating rents, and higher mortgage rates on the horizon.
“This analysis looks solely at the financial reasons to buy a home, based on assumptions about rising mortgage rates and changes in home values,” Smoke says. “It’s important to remember that a home purchase decision is deeply personal. Potential buyers need to consider factors such as upcoming life events, job security and potential relocation, in addition to financial benefits, because they too can have a significant impact on ownership.”
Home ? Home Care ? Tips for keeping your home safe while away
Going away on vacation should be a tranquil experience, but worrying about the safety of your home while you’re away can defeat the reason you left in the first place. It only takes a little pre-planning to ensure your home is safe and sound when you return. If a house sitter is in your budget and you know someone responsible and trustworthy, it can be the best solution for taking care of your home while away. For many of us, this isn’t the case, so here are some measures that can help protect your home while away on vacation.
If you’ve got a helpful neighbor, ask if they will pick up your mail/newspaper daily. If not, contact the newspaper to stop delivery and tell the USPS to put a hold on your mail during the time you will be away. It’s a good idea to have a friend or neighbor come by and check periodically to be sure the newspapers and mail have stopped, just in case. Also, they can pick up any packages that have been delivered or materials that solicitors may have left behind.
If you have a gardener, keep them on schedule while you are away to water (or check sprinklers), mow, and keep your yard clean. Weather effects such as a broken limb in the driveway or knocked over pots, left for weeks, is a sure sign no one is home. If you live in a windy area, be sure all furniture and plants are secure.
Unplug computers and other expensive electronics that could be affected by power surges. Unplug all small appliances such as coffee makers, toasters etc. Many appliances use power even when turned off.
Install a timer switch for a few lights inside and outside your house. One or two lights on a timer will give the appearance of someone being home. Outdoor motion detector lights also work well for security. Leaving lights switched on the entire time you are gone is a waste of electricity, and having lights on all night may draw even more attention. Check out your local home improvement store or online resources for a variety of timer options.
Be aware of your chatter on social media. Letting everyone in your social network know you are gone for the month in the tropics could get the word out beyond your circle and potentially make your home a target.
Consider turning off the water lines to the inside of the house (unless you have appliances requiring water such as an icemaker.) A burst washing machine hose, leaky faucet, or cracked toilet tank could be disastrous while away. If you have a sprinkler system outside which you plan to keep on, have someone check on it periodically.
If your water heater has “vacation mode”, set it. It will run less and save energy.
If you have an alarm system, be sure you have a sign/sticker visible. This can act as a deterrent. Be sure to leave the code/key with someone you trust. Let the alarm company know you are away and give them the contact number of that person.
Posted: 27 Jul 2015 04:00 AM PDT
"So far in 2015, [sellers] are realizing the biggest gains in home price appreciation since 2007. In June, sellers sold for above estimated market value on average for the first time in nearly two years."
Posted: 22 Jul 2015 04:00 AM PDT
“Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future."
Posted: 20 Jul 2015 04:00 AM PDT
“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”
Posted: 21 Jul 2015 04:00 AM PDT
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”
“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”
The US housing market is exploding.
On Friday morning, Census Bureau data showed that housing starts surged 9.8% to an annualized pace of 1.174 million, a level not seen since July 2007.
Building permits, which indicate the pace of future construction, climbed 7.4% to an annualized pace of 1.343 million, also the highest level in about eight years.
"With a nearly 30% increase in housing starts compared to June of last year, the residential market recovery is here, and it is strong and sustainable," said Peter Ciganik, managing director of GTIS Partners, in a note Friday.
"The increase is the result of a strong job market, rising consumer confidence, and a moderate and much needed improvement in the supply of mortgage credit."
Pantheon MacroeconomicsBuilding permits are at multiyear highs.
And so if anyone is looking for a bright spot in this economic recovery, the housing market is where to find it. The continued strength of this corner of the economy is feeding into other crucial areas.
"Housing 'caught fire' in a positive sense this spring helping to heat up an economy that was frozen stiff in the cold winter months," PNC economists Stu Hoffman and Gus Faucher wrote in a note Friday. "This will continue to add construction jobs to more than make up for the loss of jobs in the energy economy."
On Thursday, the National Association of Homebuilders' homebuilder-sentiment index rose to the highest level in nearly ten years.
Pantheon Macroeconomics' Ian Shepherdson noted that while it's not a solid indicator of ongoing construction, the index "does add weight to the increasing pile of evidence suggesting that a real housing upswing is underway."
The Federal Reserve's beige book — a collection of anecdotes on the US economy — released Wednesday showed that "several" of the 12 districts noted an uptick in real estate activity.
As Business Insider's Shane Ferro noted, most regions showed signs of either a housing boom or an increase in residential and commercial real estate.
One contact in Boston told the Fed that the city's office-leasing market is the strongest it has been in 50 years. Another in New York said new construction is at a level not witnessed in a decade. Some in Chicago were even worried that the commercial-real-estate market is overheating.
The signs of a boom are everywhere.
What's also obvious is that the cost of housing is soaring, to the point where it's again growing unaffordable.
On Friday, we got data on consumer prices, and the headline print of 0.3% came right in line with expectations.
However, the rent component jumped 0.4%, the highest since October 2006, with primary rent rates up 3.5% year-on-year, and owners' equivalent rent up 2.9%.
The value of each square foot of housing surged during the housing bubble, plunged during the recession, and has been on the rise since 2011.
At the same time, houses have gotten larger, with the area of new houses over 3,000 square feet roughly doubling since 1999. Meanwhile, rental vacancies have shrunk.
And so it's not hard to understand why home ownership has plunged. In the first quarter, the home-ownership rate fell to 63.7%, the lowest level in 25 years.
Morgan StanleyMost people would rather rent than own.
This is particularly concerning for millennials — the cohort between the ages 15 and 35 with an average age of 25 — who are in the prime stage of their lives to buy their first homes.
So far, they are mostly opting to rent instead, or worse, still living in their parents' basements.
But what's encouraging for some economists is that the fundamentals of the economy are strong.
For many experts, the first-quarter contraction was a blip in what's remained a bullish uptrend in an economy strong enough for the Fed to raise interest rates, however slowly it decides to do so.
"Job and income gains, low mortgage rates, good affordability, an easing in lending standards, and a gradual return to homeownership are all supporting single-family building," PNC's Hoffman and Faucher wrote. "New mortgage rules designed to support home buying, especially for first-time home owners, are also a positive. Residential construction will provide a big boost to GDP growth in the second quarter, and through the rest of 2015."
The second quarter is crucial. After a contraction in the first, economists are forecasting a better print when the first estimate for Q2 gross domestic product is released on July 30.
If economists' estimates are accurate, the housing-market recovery will have played a key role in rebounding and sustaining an economy on the mend.
Posted: 15 Jul 2015 04:00 AM PDT
“Over the past quarter century the largest single source of wealth for all but the richest households nearing retirement age has been their homes, which accounted for about two-fifths of net worth in the early 1990s and accounts for about one-third today.”
“Home equity is an important source of wealth for middle income households, accounting for more than one-third of total net worth for the second, third, and fourth quintiles of the net worth distribution… The fifth quintile has a much larger share in business equity—almost a quarter—than any other quintile. (The figure leaves out the bottom quintile of households because they have negative net worth. It is likely that these households will rely almost exclusively on Social Security in retirement.)”
Posted: 14 Jul 2015 04:00 AM PDT