In a recent survey about renting versus owning, homeowners made up the majority of the respondents -- by a factor of more than 2-to-1 -- and yet 76 percent of all those surveyed deemed renting a better deal than owning a home in today's housing market.
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Deadline Newsroom - With the chances of home value appreciation looking dim, the continued risk of foreclosure and the cost of maintenance growing as a home ages, maybe owning a home isn't such a good idea right now.
That's what U.S. homeowners seem to be concluding. In a recent survey about renting versus owning, homeowners made up the majority of the respondents -- by a factor of more than 2-to-1 -- and yet 76 percent of all those surveyed deemed renting a better deal than owning a home in today's housing market.
As a homeowner, it's simply tough to shell out maintenance and upkeep cash on a property that offers little if any equity to tap for the expense. And with so much uncertainty in the job market, homeowners aren't sure they can hold on to what they've got.
Even if ownership comes with the promise of appreciation over the long haul, renters just don't want to risk what homeowners are already suffering in the current economic environment.
A Harris Interactive Survey for the National Apartment Association (NAA) said the number of people who believe renting is better than owning right now is up 5 percent over the 2008 survey for several reasons.
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
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"Multigenerational homes are certainly wonderful for older and younger Americans on an emotional level, but aside from this, it may be a necessity. As our population ages and lives longer than ever before, we're beginning to turn to our children and other family members for financial, physical and emotional help as we age."
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Deadline Newsroom - The nation's First Family mirrors a growing housing trend in America.
Marian Robinson, lives with her daughter, Michelle Obama; her granddaughters, Malia and Sasha; and her son-in-law, President Barack Obama.
The primary reason other families triple up is often an economic one that doesn't impact the First Family, but the White House home it is an example of why multigenerational living isn't only about hard times.
"To have grandma and grandpa living with their grandkids, getting to know them better, bonding and caring for each other is a an experience they would not have had living separately," said Diann Patton, the Coldwell Banker's real estate consumer specialist.
Over the past year, more than one in three Coldwell Banker real estate professionals surveyed said they've noted an increase in home buyers looking to create a multigenerational household. (Also see the Pew Research Center's "Return of the Multi-Generational Family Household")
A multigenerational household typically is one in which there are more than two generations, say grandparents, parents and children, including adult children, but it can also include aunts, uncles, cousins and other family members.
A U.S. Census's report, "Current Population Survey (CPS) - America's Families and Living Arrangements: March 2009" says there were nearly 5.5 million multigenerational households in America last year. In households with parents and their kids, nearly 2 million households also included both grandparents; another 2.8 million included a grandmother; and another 655,000 included a grandfather.
Gardena, CA-based Geriatric care manager, Dr. Marion Somers, Ph.D. (AKA DrMarion.org) says having an older person in the house helps keep the family roots firmly grounded.
Multigenerational households are a way, in the oral tradition, to learn about ancestors and family history and to reincorporate old, long lost family traditions.
For many ethnicities, multigenerational living is simply a cultural way of life.
"Multigenerational homes are certainly wonderful for older and younger Americans on an emotional level, but aside from this, it may be a necessity. As our population ages and lives longer than ever before, we're beginning to turn to our children and other family members for financial, physical and emotional help as we age," Dr. Somers said.
Indeed, topping the list of why families are huddling more generations under one roof is a financial decision.
Thirty-nine percent of Coldwell Banker agents cited financial reasons as the trend's driving force. Sharing the mortgage and having adult children paying rent makes housing more affordable.
"The current economic climate has certainly contributed to the increased demand for multigenerational housing. Not only are we seeing parents with dwindling retirement accounts move in with their children, we're also seeing children move in with their parents," said Kurt Gleeson, vice president of sales for RealEstate.com
Likewise, sharing other household costs -- insurance, property taxes, upkeep, groceries, etc. -- helps keep a roof over head.
"My mom was a single mother. My sisters and I lived downstairs and my grandparents lived upstairs," said Kim DiBenedetto, a real estate agent with Coldwell Banker Del Monte Realty-Junipero in Carmel.
"It's good for children because they have grandparents around, as well as the savings on property taxes, utilities and other shared expenses. If you are pooling resources you can get something larger and nicer, also" she added.
Health care
Among Coldwell Banker agents approached about multigenerational living, 29 percent said health care was a reason. The bottom line, again, is saving on the cost of assisted living or other health care facilities, but there's also the psychological benefit of not shipping older relatives off to some strange place.
"The current economy just reinforces the fact that nursing homes, assisted living facilities, and other care facilities may no longer be financially-viable options. We're only going to continue to see more of this trend," said Dr. Somers
Family bonding
Family bonding was another prominent reason for multigenerational housing being on the rise, according to Coldwell Banker agents surveyed. Grandparents, as well as aunts, uncles and cousins under the same roof creates a stronger connection, a close-knit family.
"I think this is one of the unexpected surprises that come with multigenerational living," said Patton.
You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Gone is the practice of using home equity like an ATM. Lost home values and job uncertainty is forcing homeowners to lower their mortgage bill and leave in place what little home equity they have left.
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Deadline Newsroom - Lost home values and job uncertainty is forcing homeowners to lower their mortgage bill and leave in place what little home equity they have left.
In the fourth quarter 2009, the share of "cash-out" refinancing dropped to the lowest level since Freddie Mac started tracking the statistic -- 27 percent.
Likewise the number of borrowers who refinanced their mortgage to lower their principal balance -- on a "cash-in" basis -- also hit a record 33 percent.
That's in stark contrast to the heyday of skyrocketing home equity levels during 2006 and 2007 when as many as 88 percent of homeowners refinancing took cash out and as few as 4 percent refinanced on a cash-in basis to lower their principal or payment.
Since then, home values have crashed by as much as 50 percent or more in some areas and many of those cash-out homeowners are living with upside down mortgages -- loans larger than their home is worth.
In the fourth quarter of 2009, the median appreciation of refinanced property was a negative two percent.
Other homeowners are among the millions suffering foreclosure, short sales or other types of financially transmitted distress.
Freddie Mac says the cash-in share of refinancings is the highest it's been since 1985. The cash-out share is the lowest it's been since 2003 when the record was 33 percent.
"One half of borrowers who refinanced their conventional loan during the (fourth) quarter (2009) lowered their annual mortgage interest rate by at least 0.9 percentage points below the old rate. In aggregate, the lower interest rate translates into about $2 billion in payment savings for these homeowners over the first 12 months of the new loan. For families that paid down their mortgage balances when they refinanced, the monthly payment savings are even greater," said Frank Nothaft, Freddie Mac vice president and chief economist.
A 1 percentage point reduction in a mortgage rate would mean a savings of about $300 a month on a $500,000 mortgage initially financed at 6 percent.
"This transformation from a cash-out refi market to a cash-in refi market is consistent with other data we've seen on households reducing their overall debt burdens, particularly revolving credit like credit cards. From September of 2008 to November of 2009, consumers cut $100 billion dollars in revolving debt from their obligations, according to the Federal Reserve Board," Nothaft said.
Financial experts have always advised tapping home equity through a refinance or home equity loan, is by it's very nature, an equity-depleting loan. Use it and lose it.
The best investments include certain home improvements, education for the kids, new business finances, a second home and other financial moves that provide an equal or better return on your money than the cost of the loan.
"Home equity use has been the equivalent of home equity abuse over the past several decades," says Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Looking to weed out fraud, the Internal Revenue Service recently released new forms and instructions for taxpayers filing for the home buyer tax credit.
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Deadline Newsroom - Taxpayers filing for the homebuyer tax credit had better have all their verifying docs in a row if they expect to collect the windfall of up to $8,000.
Even with the correct documents, home buyers seeking the extended and expanded tax credit can't file electronically. So they can expect to wait to get their credit or any refund several weeks longer than taxpayers who aren't filing for the credit.
You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
In the midst of the Great Recession, it's gotten tougher for the seasonal home buying cycle to pick up steam, so NeighborWorks America is rolling out the red carpet with consumer outreach efforts that support affordable, sustainable and healthy homes and neighborhoods.
The event has since been expanded to the entire month of June as National Homeownership Month, a month-long celebration to coincide with the time of year the home buying cycle begins to kick in.
In the midst of the Great Recession, it's gotten tougher for the seasonal cycle to pick up steam, so NeighborWorks America is rolling out the red carpet with consumer outreach efforts that support affordable, sustainable and healthy homes and neighborhoods.
"This month (we) are launching increased marketing and social media efforts to put the right information in the hands of potential homeowners so that they achieve the American Dream of homeownership for the long-run," said Ken Wade CEO of NeighborWorks America.
Join the party and get the inside scoop on buying and owning a home.
• They've also included a series of podcast interviews with homeowners discussing "What homeownership means to me," on NeighborWorks America's YouTube channel.
You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
The Obama Administration's newest efforts to save the economy focus on greater Hope for Homeowners, stiffer regulations for mortgage brokers and cracking down on mortgage fraud.
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Deadline Newsroom - A new one-two legislative combination punch may not put the housing crisis down for the count, but it should keep more homeowners on their feet and put real estate fraud on the ropes.
"These landmark pieces of legislation will protect hardworking Americans, crack down on those who seek to take advantage of them, and ensure that the problems that led us into this crisis never happen again," said President Obama in a prepared statement.
• Modifications to Federal Housing Administration (FHA) and federally guaranteed farm loans - This provision targets FHA, federally guaranteed farm loans and rural loans with loan modification help. • Increasing the flow of credit -- Provisions to expand the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Association (NCUA) include extending the temporary increase in deposit insurance; increasing the borrowing authority of the FDIC and increasing the borrowing authority and creation of a stabilization fund for the NCUA. The efforts are designed to enhance the availability of credit to consumers. • Increased housing consumer protections - Provisions provide for new protections for renters, including Section 8 tenants, living in foreclosed homes; establish the right of homeowners to know who owns their mortgage so they know who to contact when trouble comes; provide resources for the homeless including more direct aid to the homeless; provide for the consolidation of homelessness programs to streamline their administration and targets assistance to families with children.
• Adding private mortgage brokers and others to enforcement efforts - More than 50 percent of subprime mortgages were originated by private mortgage institutions and similar entities not currently covered under federal bank fraud criminal statutes. FERA extends mortgage fraud enforcement to these companies and all private mortgage brokers and companies not previously regulated or insured by the feds.
• Extending prohibition of mortgage lending manipulation to private operations - Previously, making a materially false statement or willfully over valuing a property to influence a mortgage lending decision was a crime applying only to federally-regulated institutions. Under the new law enforcement is extended to private mortgage brokers and other private lenders.
• Further funding enforcement efforts - For fraud prevention and enforcement the new law authorizes $165 million in new resources for 2010 and 2011 to hire fraud prosecutors and investigators.
Also to strengthen the federal regulatory and enforcement capacity the legislation authorizes $140 million for the Federal Bureau of Investigations (FBI); $50 million for U.S. Attorney's Offices ($20 million for the Criminal Division, $15 million for the Civil Division, $5 million for the Tax Division); $30 million for the US Postal Inspection Service; $30 million for the Inspector General at the Department of Housing and Urban Development; $20 million for the Secret Service; and $21 million for the Securities and Exchange Commission.
• The new law also creates a bipartisan Financial Crisis Inquiry Commission to investigate the financial practices that contributed to the current financial crisis, in order to prevent future economic calamity.
Need a break from doom and gloom in the housing market? Get off the beaten news track and stop by the DeadlineNews Group's Offbeat News Examiner outlet for a few laughs.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
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Consumer post for SV lawyer in Obama Administration
First-time home buyers are optimistic, but many homeowners who fear foreclosure and unemployment appear more pessimistic and are cutting back on the fun and frivolity to remain homeowners.
The Yellow Brick Road is paved with good intentions, but Emerald City just ain't what it used to be.
First-time home buyers are optimistic, but many homeowners who fear foreclosure and unemployment appear more pessimistic and are cutting back on the fun and frivolity to remain homeowners.
The housing market just isn't, well, in Kansas anymore.
Only one in five Americans say they plan to buy a home in the next five years, while most, 52 percent, are concerned they or someone they know will face foreclosure in the next six to 12 months, according to the National Homeownership Survey commissioned earlier this year by Move, Inc., the operator of Realtor.com.
The Move survey also indicates, in hindsight, it probably would have been a good idea to pay attention to "the man behind the curtain."
• Nearly one in five homeowners (19 percent) plan to take advantage of the Obama Administration's Making Home Affordable program to help prevent foreclosures.
• More than one in five homeowners (21 percent) said they contacted a lender to modify their mortgage. Half were successful, 5 percent still awaited an answer. For some time lenders foreclosed rather than modified.
• More than one in five adults (27 percent) feel they or someone they know may default on their mortgage due to recent unemployment (27 percent), future unemployment (29 percent), or because they owe more on their home than it's worth (26 percent). One out of eight (15 percent) is having a hard time making mortgage payments because they've recently increased debt or have too much debt (19 percent).
• To keep afloat with what's often an upside down mortgage, 72 percent of adults reduced spending in the past year in order to make monthly mortgage or rent payments. Most, 75 percent, cut discretionary spending on vacations, entertainment and eating out; 72 percent cut down on clothing, personal care and personal luxuries; and 72 percent reduced their gasoline and utility costs.
Optimism behind the curtain?
"It's not all doom and gloom. We found Americans are optimistic about homeownership despite concerns. Even more impactful are numbers that show interest in home ownership is strong as nearly a quarter of all adults plan to buy a home in the next five years," said Move, Inc., CEO Steve Berkowitz.
• While nearly 6 percent plan to purchase a home in the next 12 months, nearly 13 percent of Americans say they plan to buy a home in the next two years, and 11 percent plan to purchase a home in two to five years.
• More than 53 percent of those planning to buy in 2009 are first-time homebuyers. The National Association of Realtors says 41 percent of homebuyers were first-timers in 2008.
• The survey also revealed more than 18 percent of adults plan to buy a home this year in order to take advantage of a $8,000 federal tax credit.
Some Californian home buyers hit the mother lode of home buyer tax credits with an additional, though less liberal, state tax credit of up to $10,000 for first-time home buyers.
• Unfortunately, while more than 18 percent of first-time home buyers do plan to buy this year because of the tax credit, half said they weren't aware of the credit and more than 29 percent said it wasn't large enough to encourage them to buy.
Need a break from doom and gloom in the housing market? Get off the beaten news track and stop by the DeadlineNews Group's Offbeat News Examiner outlet for a few laughs.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
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We recently sat down in a question-and-answer session with Olivia Edwards, 2009 President of the San Mateo County Association of Realtors (SAMCAR), to glean advice for homeowners, home buyers and home sellers in the region.
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Deadline Newsroom - With so much uncertainty in the housing market, it's a good time to seek insight from real estate leaders who have their fingers on the pulse of this market.
Edwards has been a full time real estate agent since 1984 and earned entry into the top 1 percent of all sales associates nationwide. As a Realtor with the Platinum Group of McGuire Real Estate in Burlingame, CA, she is a Certified Residential Specialist, ePro, Certified New Homes Specialist, and has a National Association of Realtors GREEN Designation.
Edwards reads and writes Chinese, is also a productivity coach and guest lecturer at the College of San Mateo.
She's married to Gary Edwards and share two Corgi "girls," Emma and Sara.
Edwards is also busy as the leader of SAMCAR.
Q: What is SAMCAR?
A: SAMCAR is a trade organization serving 3,100 members with education, information and tools necessary to be successful realty professionals. SAMCAR is also a legislative advocate, supporting private property rights and home ownership opportunities.
The trade group enforces professional standards and a code of ethics to help protect consumers. SAMCAR members also benefit from the group's affiliation with the California Association of Realtors and the National Association of Realtors.
Q: What is your role as president of SAMCAR?
A: My role is to carry out our mission; unify the real estate community; inspire and harvest great ideas and future leaders; to direct and support strategic planning; to motivate members to contribute to the community; and to always lead by example.
Q: The housing crisis is on the minds of everyone, especially homeowners who are struggling to pay their mortgages, potential home buyers and those who want to sell their home. What steps are you, in your role as president, and SAMCAR taking to help homeowners keep their homes?
A: First of all, not everyone should keep their home. It is very important for homeowners to face reality head on. They need to seek counsel and or answer the following questions honestly:
• Why are we struggling to pay the mortgage? Loss of job? Illness? Higher monthly payments? • Is the mortgage more than the market value of the home? If so, this is not a good reason to discontinue making the mortgage payments. • What were my goals when I purchased my home? • How long did I plan to hold onto my home? • What will happen financially if I continue to make the mortgage payments? • Am I "unable" or "unwilling" to pay the mortgage? • If I'm unable to pay the mortgage and do not wish to sell my home, have I contacted the lender about options or to start the loan modification process? • If I want to keep the home, have I considered options, including getting a second job, renting out a portion of the home to help? • If I can't afford to keep the home, have I contacted and Realtor to look into a short sale?
Q: Likewise, what can home buyers expect from the association?
A: Part of our mission is to ensure professionalism, protect property rights, and promote the ownership of real property. Home buyers should use SAMCAR as their resource.
Q: How does the association assist homeowners who want to sell their home?
A: This is the primary role of our members. We have a public website to help connect buyers and sellers with our members. Go to and click on "Find a Realtor" for a Realtor specializing in your city. You can also click on "statistics" to learn about what is happening in your area in terms of sales of other homes.
Q: There have been some complaints from the real estate industry that the media is not fair in its coverage of the housing crisis. How can the media assist the association and the public in terms of reporting about the crisis and other housing issues?
A: Report the good and the bad. Describe the half empty glass, as well as the half full glass. Share what we lost and what we have. State the challenges and opportunities. Every story of someone losing value in their home should be balanced with the current affordability level for a new homebuyer. For each challenge there is an opportunity and that is rarely communicated.
Q: What advice do you think home sellers need most in the current housing market?
A: Home sellers need to know why they are selling. If the answer is to try to get the price they were able to get a few years ago, they should not bother to put it on the market. If they do need to sell, they should accept the current market value. I would suggest they work with a professional Realtor or a team who will listen to their needs. To get the highest price for the property in today's market, they need to understand strategies, including proper pricing, property condition, staging, completing reports up front, disclosures, easy access, intensive marketing (signage, descriptive color brochures, Internet exposure, photos, weekly open houses), and working with a reputable Realtor.
Q: What advice do you think home buyers need most in the current housing market?
A: They need to do their research and identify what kind of lifestyle they want. They need a down payment, and they need to find the amount of a monthly mortgage payment they feel most comfortable paying and they need to get pre-approved. they also need to understand all of the aspects of owning a home, including benefits and responsibilities, type of home wanted and buying for the right reason. Buyers need to take responsibility for their education and when in doubt, ask questions and trust gut instincts. Working with a Realtor or a team is imperative.
Q: What advice do you think homeowners most need in the current housing market?
A: Always go back to why you bought your home in the first place. Ask yourself how long you planned to stay in the home when you first bought it. Remember, it's a home and an investment. In the meantime, continue to enjoy your life in your home and fix it up the way you want. Be smart with your money in an up or down market and live within your means.
Q: Are there any comments you'd like to make to your constituency, consumers or the public at large?
A: Real estate is the American Dream. This dream can be achieved through careful planning. Your home is a place for you to build your future. Your home is not an ATM machine. Regardless of how the market is, always go back to the basics, know your finances, have a budget and live according to your means. Spend less than you make, have a savings plan, keep educating yourself on finance, real estate, tax savings, negotiation, communication and goal setting. Furthermore, take advantage of your tax write offs, and participate and contribute to your community.
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Need a break from doom and gloom in the housing market? Get off the beaten news track and stop by the DeadlineNews Group's Offbeat News Examiner outlet for a few laughs.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
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We recently sat down in a question-and-answer session with Julia Truesdale Keady, 2009 President of the Silicon Valley Association of Realtors (SILVAR), to glean advice for homeowners, home buyers and home sellers in Silicon Valley.
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Deadline Newsroom - Uncertainty in the housing market makes it a good time to seek insight from real estate professionals, leaders who have their fingers on the pulse of the housing market.
Keady is also a Realtor with Alain Pinel Realtors in Palo Alto and has been an active, top-producing real estate agent on the San Francisco Mid-Peninsula since 1985.
She's married to Michael Morris and together share a full house of children -- Ashley, Daniel, Kate and James -- and two grandchildren, Kierra and Danny.
In Keady's spare time she travels, and enjoys golf, hockey, hiking and opera.
She also has her hands full leading SILVAR.
Q: What is SILVAR?
SILVAR is a professional trade organization representing more than 4,000 Realtors and affiliate members engaged in real estate business on the San Francisco Peninsula and in the South San Francisco Bay Area. SILVAR promotes ethical standards in real estate practice and serves as an advocate for homeownership and homeowners, while representing the interests property owners in Silicon Valley. SILVAR members are also members of the National Association of Realtors and the California Association of Realtors.
Q: What is your role as president of SILVAR?
A: My role to ensure our members have a competitive advantage in the market. Working with SILVAR's board of directors, I am committed to maintaining the level and quality of services for our members, and to provide the tools necessary to help our members survive and succeed in business. Tools include business meetings, educational programs, marketing opportunities and access to current market trend reports.
Q: The housing crisis is on the minds of everyone, especially home owners who are struggling to pay their mortgages. What steps are you, in your role as president, and SILVAR taking to help at-risk homeowners keep their homes?
A: We are educating our members about property issues. Our government affairs staff keeps an eye on proposals at the local, state, national government levels that might significantly impact home ownership, private property rights and housing opportunities. At the national level, we are working with the National Association of Realtors (NAR) to preserve the mortgage interest deduction, tax credits for first-time homebuyers and higher conforming loan limits. At the state level, we oppose mandates on the sale of homes that would ultimately result in increasing the cost of buying a home. We also support the expansion of diversified housing opportunities for families of all income levels in Silicon Valley.
Q: What advice do you have for homeowners, in general, in terms of maintaining the value of their homes in a tight market? For those who choose to stay put right now, what might they be overlooking in terms of retaining and maintaining their home as a valuable asset?
A: Good home maintenance is key to preserving a home's value, and impressing potential buyers. Making homes safe with smoke detectors and carbon monoxide detectors, keeping the electrical system and plumbing in good working order are important steps. Routine preventive maintenance is also important. Repair roof leaks, seal gaps in siding, paint bare wood, replace damaged decking, patch cracks in concrete, and caulk around tubs and showers. Also important: a programmable thermostat, weather stripping for doors and windows, fixing leaking faucets, upgrading insulation, and replacing leaky windows. Home owners should also consider environmentally-friendly materials for windows, doors, siding, decking, fencing, roofing, flooring, and insulation. And always get rid of clutter, open up spaces, update window treatments to allow in more light, and organize closets and storage. Q: What advice do you have for home buyers in the current market? Some buyers have decided to sit out the recession and wait for the bottom of the market. Other buyers have decided to buy now because prices have already dropped and mortgage rates are low. What advice do you have for each type of buyer?
A: If you have a solid job and you can afford to buy a home, now is an ideal time.
Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels. Inventory is up, which means buyers have more homes from which to choose, and with that comes more negotiating power. Interest rates and state and federal incentive programs out there for buyers are the best I have seen in my long career.
There are some (job-loss mortgage insurance) programs in our marketplace today that will protect a first-time buyer's mortgage payment for some months in the event buyer loses their job in the first year of home ownership.
Even if the market were to lose some value from here, if the interest rates bump up even a small percent, the long-term cost of a home purchased later would be greater than buying today at our current rates. Real estate has always been considered a long-term investment. Homeownership builds wealth over the long-term.
Make sure you consult a professional, experienced Realtor, who is knowledgeable about market conditions in your area. Q: Likewise, what advice do you have for home sellers, some of whom have decided to wait until the market improves and others who, for one reason or another, must sell now? How can they best approach their decision to sell or not to sell?
A: If you want to sell, seek advice from an honest, competent, and experienced Realtor about why you are thinking about selling. Write down all the positive and negative reasons. One list will stand out and your decision will be easy.
If you decide to sell, price your home correctly. Seek the help of a Realtor to evaluate a realistic market value for your property. Do not price your home only to test the waters. Today, under present market conditions, real market pricing is key to selling your home right away. If you set your price unrealistically and are forced into a price reduction, you will ultimately be chasing water downhill. Your Realtor can give you recommendations as to how to make your home look and feel like the home buyers seek in your neighborhood.
Q: What can you tell residents in Silicon Valley about the current state of the housing market? The median price in March, $450,000 for single-family homes, was less than it was nearly 10 years ago in March 2000, at $524,250. The March median this year was also about half the median price of $830,000 in March 2007, the year the market peaked. How did that happen? How does that pan out for home values? Have homes lost half their value in just a couple of years?
A: This is very discouraging at first glance. While all areas have felt the recessionary impact of lower home values, some areas have been hit particularly harder than others.
The drop in median price overstates the decline in the value of the typical Silicon Valley home. At present, the median home price is reflecting the fact that more of the lower-end, discounted homes are selling in this market, so there is a softening of high-end sales, which are now under-represented in the statistics.
The housing market can differ from one street to the next, depending upon the school district and other assets of a neighborhood. To know what effect the current economic climate has had on a given property, residents should consult with a Realtor to obtain an evaluation of that property.
Don't forget, homeownership is a long-term investment and a good one. According to the Federal Reserve Board, a homeowner's net worth is 46 times that of a renter's. When purchased for the long-term, housing is still one of the safest investments consumers can make. In addition to the savings accumulated through a buildup of equity and tax advantages, a home provides shelter. No paper investment provides this benefit.
Also, the benefits of home ownership go beyond the checkbook or 1040 forms. Studies show high and stable rates of home ownership rates boost the quality of life in communities by supporting education and civic involvement, while lowering crime rates and welfare dependency.
Q: Is it a buyer's or seller's market? Why? When will the market return to a "normal" market that's fair and balanced for both buyers and sellers?
A: Actually, "fair and balanced" describes the current marketplace. If priced realistically, homes sell. Sellers may not now enjoy the value they had in 2007, but their home will sell if priced realistically.
Bargain hunters are more likely to find a good deal when the supply is ample, like now. Buyers can take their time and buy subject to the sale of their current home more easily than in recent years. That puts buyers in a better position to negotiate than they were a couple of years ago.
With interest rates so low and these other great incentives, including the tax advantage of the mortgage interest deduction, now is a perfect time for first-time and even repeat buyers.
Q: Are there any additional comments you'd like to share with your constituency, consumers or the public at large?
A: Times are tough, sure, but we are very fortunate here in the Silicon Valley region. We still have more jobs than housing units and it is a wonderful and vibrant place to live. Our employment diversity, fabulous educational institutions, world renowned healthcare and exceptional weather are golden and we will be a desirable place to live forever. People buy homes here to live in and pay off so, in their golden years, they will have an asset that will help support them throughout their lives. Investment opportunities also abound. Rental property purchased and held for the long term is a very tried and true strategy employed by many.
I would urge consumers who are considering selling or buying a home to contact a Realtor in their local market. A Realtor can help them begin to build their future through homeownership. A Realtor and affiliates can help you with home inspections, home financing, home buyer and home selling. Visit SILVAR's Web site to contact a Realtor.
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Struggling homeowners in California and other high cost housing markets will benefit less from the Obama administration's "Homeowner Affordability and Stability Plan" than those in lower cost housing markets.
The $275 Billion Plan, with a March 4 rollout, includes a refinancing program for "responsible" borrowers who haven't missed payments and whose loans are larger than the value of their homes, and a loan modification provision with incentives for lenders to modify certain mortgages.
Many Californians and others in high cost areas may not see much immediate relief but federal aid earmarked for those areas could follow.
Refinancing
Under the refinancing provision, homeowners with less than 20 percent equity in their homes, who now find it difficult if not impossible to refinance, will be able to get new loans at lower interest rates provided the new note doesn't exceed 105 percent of the home's value.
A refinanced mortgage replaces the old loan with a new one. The plan targets 4 to 5 million homeowners.
For high cost areas, the problem with the refinancing provision is that it only applies to mortgages held by Fannie Mae and Freddie Mac.
During boom times Fannie Mae and Freddie Mac loans were only up to a maximum of about $417,000. The limit was temporarily raised to $729,750 in 2008, when fewer people were buying. This year the limit went back to $625,000, until the latest federal economic stimulus package (American Recovery and Reinvestment Act) Obama signed put it back at $729,750, at least for 2009.
An estimated 60 percent of the home loans made in the state in 2006 and 2007 were larger than Fannie and Freddie loan limits. During 2008 about 33 percent of home loans were above those so-called "conforming" levels, according to the California Association of Realtors.
"When I saw 'Fannie Mae and Freddie Mac' I said his (President Obama's) team needs to come to Silicon Valley," said Quincy Virgilio, president of the Santa Clara County Association of Realtors.
"This isn't going to help many people here," he added.
Virgilio said the bulk of California's home-owning population lives in major metropolitan areas where housing costs are high.
Loan modification
The loan modification part of the plan targets 3 to 4 million "at-risk" homeowners, those with a high mortgage debt-to-income ratio and those with mortgages larger than the value of their home and "under water."
A loan modification, unlike a refinance, changes the terms of the existing loan without writing a new one.
Also called a "workout," this provision is open to anyone including those who haven't missed payments, but may be at risk of missing payments. A modification is designed to get payments down to 31 percent of the homeowner's income. That could be accomplished by a reduction in the interest rates or principal, or an extension of the term of the loan, or perhaps a combination.
The modification plan is open to anyone with any loan that has a balance under Fannie Mae and Freddie Mac limits, which now as high as $729,750.
The modification program, also designed to standardize a hodge-podge of modification efforts by lenders, also comes with incentives for both homeowners and lenders.
Loan services get up to $4,000 for modifying mortgages and borrowers got a principal reduction of up to $5,000 over five years for paying on time.
Credit market boost
Obama's plan also calls for an infusion of $200 billion into the government-owned Fannie Mae and Freddie Mac. The bundle should help lower interest rates and spur more borrowing.
Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California-Berkeley and the Rosen Consulting Group, told the San Jose Mercury News more relief could come to high-cost areas.
Rosen told the Mercury News, "I think this is the first tranche in a series of things that are going to happen. Until we see the details we won't know."
It also seeks to change bankruptcy rules to allow judicial mortgage modifications to reduce mortgage balances to fair market value provided the borrower sticks to a court-ordered payment plan.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location! DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Under President Barack Obama's sensible, but long-awaited homeowner relief plan, you won't have to wait until you are delinquent on your mortgage to get help.
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Deadline Newsroom - Under President Barack Obama's homeowner relief plan, you won't have to wait until you are delinquent on your mortgage to get help.
Get to the White House to learn all the details about Obama's bailout of homeowners.
In a stark departure from the Bush administration, which relied mainly on having servicers voluntarily modify troubled mortgages, Obama's plan will make it easier for homeowners to afford their monthly payments by refinancing or through mortgage modifications.
The president is broadening the scope of government help by focusing on homeowners who are still current in their payments but at risk of default.
His plan will also put billions of federal funds into enticing servicers to modify the loans of those who've already stopped paying.
The housing plan President Obama unveiled Feb. 18 could directly help up to 9 million people -- but indirectly, it will help the economy in general.
"In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to continue to deepen. But if we act boldly and swiftly to arrest this downward spiral, every American will benefit."
Refinancing help for four to five million homeowners who receive their mortgages through Fannie Mae or Freddie Mac.
New incentives for lenders to modify the terms of sub-prime loans at risk of default and foreclosure.
Steps to keep mortgage rates low for millions of middle class families looking to secure new mortgages.
Additional reforms designed to help families stay in their homes.
"The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly," the President said, "by refinancing loans for millions of families in traditional mortgages who are underwater or close to it; by modifying loans for families stuck in sub-prime mortgages they can’t afford as a result of skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments."
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location! DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Withdrawing all your home equity loan cash is new financial disaster preparedness advice that may not be as radical as it sounds. However, some say it's risky "pretzel logic" business and the fundamentals should still apply when it comes to using what's likely your most valuable asset as an ATM.
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Deadline Newsroom - If hard times loom and you have a home equity loan, consider tapping it out now. Withdraw all you think you'll need and squirrel it away -- just in case.
That only sounds like radical mattress-stuffing financial advice.
Homeowners have long had hammered into their heads that home equity is best used for capital improvements -- investments with a high probability of a decent return -- or, perhaps, for emergencies. Otherwise, leave it alone.
But in the new credit-starved economy old axioms don't always hold sway. Not everyone agrees to an equity-grabbing approach, but there is a consensus among financial experts that your lender could grab back your equity loan money if you don't grab it first. "My understanding is that all banks are moving to de-leverage to reduce the amount of loans outstanding. They are reducing their commitment on home equity loans. If you think you will need it, it's a good time to take advantage of it before it goes away," said Bob Kresak, a certified financial planner and managing partner of the Silicon Valley headquarters of a financial planning and wealth management firm, Founders Financial Network, in Cupertino.
In an economy plagued by failing financial institutions heavily invested in mortgage securities and real estate, with investors fleeing "ultra-safe" money market mutual funds and with the Federal Reserve and U.S. Treasury Department asking Congress to pass a $700 billion bailout package for the nation's choked credit market, advice to homeowners to secure their home equity isn't surprising.
More advice to grab equity money and run also comes from the CMPS Institute, an organization created to certify mortgage bankers and brokers who counsel consumers on mortgage and real estate equity management, as well as home loans.
"A lot of lenders in San Jose and the San Francisco area are cutting off or reducing the credit limits on lines of credit so they can limit their exposure to all outstanding lines of credit," says Gibran Nicholas, chairman of the CMPS Institute.
"If you counted on an unused home loan line of credit for liquidity and safety, this is not a smart strategy, if you need it in this environment. Draw it all out now and put it an FDIC-insured account and have access to your money when you need it," he advises.
Nancy Osborne, chief operating officer at the Santa Clara-based online mortgage brokerage Erate.com, isn't so sure an equity money grab is the right thing to do. She says once a homeowner draws on a line of equity, payments begin, with interest.
"Home equity isn't free money after all. The entire concept sounds like pretzel logic. Isn't the fact that our economy has been over-leveraged by debt what got us all in this mess in the first place?" asks Osborne.
Also if you snatch all the equity and max out your home equity line of credit you could lower your credit score if only by a few points. Those few points may not be enough reason not to max out your home equity, if your lender reneges on the credit. If you have a home equity line of credit at, say $50,000 and you've used $20,000 and the lender decides to cut your limit to $2,000, it looks to the credit scoring computer like you've maxed out you home equity anyway.
Proponents insist the advice really isn't a radical shift from the fundamentals. The new advice just allows you to keep your home equity loan in a more liquid state. And from Wall Street giants to Main Street homeowners, today, liquidity is key.
Home equity is the difference between the value of your home and your mortgage balance. When you buy a home with a down payment of, say 20 percent, you have a 20 percent equity stake in your home. For example, if you buy a $500,000 home and manage 20 percent down, your equity stake is $100,000. In the past, such a position would allow you to borrow against that equity and obtain a second mortgage or home equity loan for as much as $100,000 or more.
The "more" was because equity can increase over time, due to mortgage payments that pay down the mortgage balance and appreciation -- the result of positive supply and demand market forces increasing the value of your home.
Unfortunately, depreciation -- negative market forces -- can reduce your equity stake, as is the case for many property owners in today's market. Today, risk averse lenders are suffering the financial fallout of foreclosures due to over-burdened homeowners -- some of whom already tapped too much equity. Evaporated equity forced lenders put the squeeze on how much you can borrow against your equity. Few lenders are willing to allow more mortgage debt (your first and second mortgages combined) than 80 percent of the value of your home.
"You are going to have a tough time now getting a line of credit. The appraisal has to come in at the right value. You'll have to document your income. It's a much bigger deal to get one today than it was six years ago," said Nicholas.
But even if you can get it, lenders can just as quickly take it away. If you don't use it, as the saying goes, you can lose it.
Otherwise, there are two older schools of thought on home equity use.
The most conservative approach suggests leaving your home equity in place. The idea is to eventually pay off your mortgage and when you are retired and living on a fixed income you'll be home free with no mortgage payment. Along with the fixed income and retirement investments, you'll also have the home's equity to tap should the need arise. All that's fine if you never need your equity until your home is paid off.
A less conservative approach to home equity use surfaced in recent years, due to generally softening economic conditions, before the housing crash. This approach suggested, even if you didn't need to spend the money, it wasn't a bad idea to take out a home equity loan anyway to tap during hard times or emergencies.
The strategy came in handy, especially for those facing pink slips. If you waited until you were unemployed and attempted to get a second mortgage and the lender checked for income, your application likely would have been rejected. However, if you already had a home equity loan you could use it to drive around looking for a new job all while maintaining the household budget. Likewise, if you are suddenly out of work, using home equity to consolidate other bills -- provided you cut up all the credit cards and actually close the accounts -- can also give you some financial breathing room.
A equity loan bird in the hand (held or tapped) is also frequently advised for emergencies, including unexpected medical care, especially among older homeowners who have few if any other visible means of support.
In any event, that less conservative strategy to get an equity loan in place -- just in case -- has evolved today into an even more disaster-preparedness approach. Don't let your home equity loan or line of credit just sit there. Tap some or all of it and sock it away, safely, so the lender doesn't take it back.
"If you are not disciplined and you go out and blow the money, of course this is not a good idea," said Nicholas.
Quincy A. Virgillio Jr., president elect of the Santa Clara County Association of Realtors says while an "equity depletion strategy" can be a way of saving an asset from declining value, it is risky business. He says equity use should come with a return that's greater than the cost of borrowing.
"And that's something that may be hard to achieve given the current yields that are being earned in today's markets. It becomes an issue if the returns are eliminated or diminished, making this a risky proposition," said Virgillio, also broker owner of the Mortgage Network in Campbell.
Generally both conservative and more liberal financial experts alike agree, that if you've got equity to use and don't need to hold onto it as a safety net, the best use is as a prudent capital investment.
That includes home improvements with high cost-vs-value returns, education for the kids, financing a sound new business, and other financial moves that have a good chance of providing an equal or better return on your money than the cost of the loan.
Avoid buying big gas guzzling cars, boats, RVs, vacations, home theaters and other items that don't give you a return on your money.
"That's where a lot of people went wrong in recent years, blowing it on vacations and new boats, products and things that weren't going to give value in the long term," Nicholas said. Today, if you can afford it, buying another home or real estate investment property, while prices are down and falling, can be a good capital investment use of your equity, but only over the long haul, five, 10 years or more.
You'll have to be sure any rental income will offset all or most of your carrying costs until home appreciation returns, or you'll have to have some other means of carrying the investment risk until it pays off. When that will be is anyone's guess.
"To some extent we would never advise someone to borrow money to invest. The example being that of Bear Sterns, Lehman Brothers and Merrill Lynch who were less prudent than most and leveraged themselves 50 times over and when the market went down, it caught them in the squeeze," said Kresak.
"It (a real estate investment) definitely isn't a one-time, short-term profit operation. You'll have to be in it long term. It is a good time to get in the market, but it could still go down further," he added.
Also, don't forget. When it comes to equity loans, even when you do use it, you lose it. A home equity loan, by it's very nature, is an equity-depleting loan.
• From the Deadline Newsroom, read more home equity news that really hits home. • Also visit DeadlineNews.Com's Home Equity Center.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's news that really hits home! DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
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