Home improvements that sell

Six hundred real estate agents nationwide were surveyed to determine the top 10 low cost, do-it-yourself home improvements people need to perform for the most bank for their bucks.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - One of the few things you can do in today's market to shore up or protect the value of your home is to give it a makeover.

That's especially true when it's time to sell your home.

In its "Home Sale Maximizer" survey, HomeGain.com recently announced home improvement and home staging efforts that get the job done.

The work doesn't have to cost a lot of money.

Six hundred real estate agents nationwide were surveyed to determine the top 10 low cost, do-it-yourself home improvements people need to perform for the most bank for their bucks.

"Sellers need to prepare their homes for sale before putting them on the market," said Louis Cammarosano, General Manager at HomeGain.

"Homes that have initial appeal have a better shot at selling faster and closer to the asking price than homes rushed to the market with no improvements," Cammarosano added

Right now, home owners who beat the spring rush and get in a contractor's pipeline of work orders can have a negotiating edge.

With new home construction at low levels, more materials and labor are available for remodeling resulting in shorter project schedules and often lower project costs.

But those low costs aren't going to last forever according to the latest A New Decade of Growth for Remodeling report from the Joint Center for Housing Studies at Harvard University.

"As both the economy and the housing market stabilize, so too will homeowner improvement spending," says Abbe Will, a researcher at Harvard's Remodeling Futures Program.

Over the coming years, remodeling expenditures are expected to increase at an inflation-adjusted 3.5 percent average annual rate, below the pace during the housing boom, but sharply recovering from the recent downturn.

Market fundamentals -- the number of homes in the housing stock, the age of those homes, and the income gains of homeowners making improvements -- all point to increases in remodeling spending.

"Metropolitan areas with rising house prices, older housing stocks, higher incomes and home values, and a larger share of upscale remodeling expenditures, such as Boston, San Francisco, and Los Angeles, are well-positioned for an upturn in remodeling activity," says Eric Belsky, managing director of the Joint Center.

From HomeGain, the top home improvements that real estate agents recommend to home sellers nationwide, based on average cost and the return on the investment (ROI), are:

Cleaning and de-cluttering: $290 cost; $1,990 price increase; 586 percent ROI; 99 percent recommended.

Lightening and brightening: $375 cost; $1,550 price increase; 313 percent ROI; 97 percent recommended.

Home staging: $550 cost; $2,194 price increase; 299 percent ROI; 80 percent recommended.

Landscaping: $540 cost; $1,932 price increase; 258 percent ROI; 93 percent recommended.

Repair electrical or plumbing systems: $535 cost; $1,505 price increase; 181 percent ROI; 92 percent recommended.

Update kitchen or bathroom: $1,265 cost; $3,435 price increase; 172 percent ROI; 75 percent recommended.

Replace or shampoo carpets: $647 cost; $1,739 price increase; 169 percent ROI; 98 percent recommended.

Paint interior walls: $1,012 cost; $2,112 price increase; 109 percent ROI; 96 percent recommended.

Repair damaged floors: $931 cost /$1,924 price increase; 107 percent ROI; 93 percent recommended.
Paint outside of home: $1,467 cost; $2,222 price increase; 51 percent ROI; 81 percent recommended.

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Property tax assessment too high? Quick! File for a review

Obama busted for blue jeans
Gets away with weak slider

Santa Clara County Assessor's office has already reduced the assessed value of some 90,000 properties, among 200,000 properties the office reviewed for the current 2009-2010 tax year. Among those properties with already reduced assessed values, the reduction averaged $181,000 -- that's nearly a $2,000 annual savings. With another 10,000 other homeowners already in line ahead of you for a similar reduction, if you think your assessment is too high, you'd better file for a review quickly.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Take a good hard look at your property tax assessment.

If your home has lost value in recent years, there's a chance you should also be paying a smaller property tax bill -- slashed by as much as $1,000 or more.

Santa Clara County Assessor's office has already reduced the assessed value of some 90,000 properties, among 200,000 properties the office reviewed for the current 2009-2010 tax year.

Among those properties with already reduced assessed values, the reduction averaged $181,000 -- that's nearly a $2,000 annual savings.

With another 10,000 other homeowners are already in line ahead of you for a similar reduction, if you think your assessment is too high, you'd better file for a review quickly.

Naked Cowboy for NYC mayor

Under Proposition 13, your property tax is about 1 percent of your homes' assessed value, plus other fees for government bonds. Property taxes pay for certain local government costs including schools and government agencies.

There are some 400,000 assessed homes in the county, however, those purchased during the height of the market are those most likely to experience reduced values, due to falling market prices.

Under Proposition 13, a property's assessed value begins with the original "base year value" or the market value of the home when purchased -- typically, the sales price. A new base value is set with each purchase or new construction. Subsequently, the assessed value can increase by no more than 2 percent each year, as the "factored base year value."

In June, the assessor mailed every homeowner a "Notification of Assessed Value" on a beige two-sided postcard which indicates your property's assessed value. The card also indicates if the assessor has already lowered your assessed value.

Lowered or not, under another tax law, Proposition 8, if you believe your assessed value is too high, you have until Aug. 15 to seek a no-cost review of the value.

"Ideally go to the web site, or you can call, write, fax, email or come into the office and do the same thing and we will conduct an informal review," said Assessor Larry Stone.

If you pay your property taxes in equal monthly installments through escrow with your mortgage lender, you still must file for the review yourself. You should, however, contact your lender to determine how it will handle any change to your assessed value.

The online review request is the speediest way to accomplish the task.

Most of the information you need to complete "Prop 8 (Decline-in-Value) Request Form" online is on your "Notification of Assessed Value" card -- parcel number, address, owner name, etc. Other information is on the Web site.

In addition, you are asked to provide at least three comparable sales as evidence of your property's value. The sales should have been completed before, but as close to Jan. 1, 2009 as possible. That's because the law requires the assessor to value properties on Jan. 1 and you want comparables dated as near that date as possible.

The comparables should be homes as identical to your own as possible in terms of number of rooms, square footage, age, features, etc.

The real estate agent you hired when you purchased your home, the seller's real estate agent, or a real estate agent who works the neighborhood can also find the most recent comparable sales for you.

Likewise online real estate services like Zillow.com, PropertySharks.com and Cyberhomes.com offer comparables.

The assessor office's own online Property Assessment Information System, also provides records of properties' assessed values, which can serve as comparables, provided they are timely.

Inside the "Property Assessment Information System," you can search your street and nearby streets in your neighborhood for comparable sales information from the rolls of assessed properties. You can also look at the assessed value of comparable properties over time to see if they are moving up or down to further your case.

In any event it's important to file for a review quickly. The deadline is weeks away and currently there are more than 10,000 requests for a review, as a result of this year's assessment notice mailing.

If by Aug. 15, the assessor determines the market value of your property as of January 1st is lower than the assessed value, you will be notified that your assessed value will be lowered to the market value. Then, the adjusted value will appear on your annual property tax bill mailed in September.

Also by Aug. 15, the assessor will let you know if your review request has been denied or, because of the volume, the office didn't get to your review. You will still have until Sept. 15 to file for a formal $30 assessment appeal hearing with the Clerk of the Appeals Board.

Keep in mind, a Proposition 8 reduction in your assessed value is temporary and does not change your Proposition 13 factored base year value.

Once you have a reduction, the assessor must review your property's value each year. Whenever the office determines your value has returned to the factored base year value -- the base year value plus 2 percent each year -- the factored base year value will be immediately reinstated.

That could mean, from one year to the next, you could experience more than an annual 2 percent, per year increase in your property taxes. In past down and up housing market cycles, Proposition 8 increases and decreases have been in the double digits.

"You could see a 10 percent increase in one year," says Stone.

More property tax news that really hits home.

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© 2008 DeadlineNews.Com

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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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Appraisers advise sellers how to get top dollar

A professional appraiser's job is to determine the true market value of homes. They know what makes one property more valuable than another. They also know higher valued homes sell faster and for greater amounts. It follows then, that they can tell you how to best ready your home for market -- now or later.

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Want to get top dollar when you sell your home?

Listen to what professional appraisers say.

Their job is to determine the true market value of homes so they know what makes a property sell for the greatest amount and can tell you how to best ready your home for market now and later.

"A few years ago, houses were selling quickly with little effort. Now many homeowners actually have to make improvements before they can sell their home," said appraiser Mike Evans, a Fellow of the American Society of Appraisers (ASA).

In the term, cosmetic touch ups can help a home sell a faster. They include:

• Updating the paint and carpeting. A fresh coat of paint (preferably white) inside and out and new floor covering give the home the look and smell of "new." With the facelift treatment, gone are the wrinkles of cracking paint, the sags of aging wallpaper and the dark age spots of stains and spills. When in doubt, nothing works better than a fresh coat of white paint.

• Heighten the curb appeal. How you home looks upon approach is its first impression. The idea is to make that first impression one that invites visitors inside for a longer look. At least work on the front yard, the backyard can wait, if necessary. Improve the landscaping, fix cracks and stains in the driveway and remove extraneous clutter.

• Clean house. Cleaning house means mop, pail and elbow grease action, but also clearing clutter. Put stuff in storage if that's what it takes to rid your home and garage of that unorganized look. Less is more when it comes to the appearance of larger looking rooms.

If you won't sell your home for some time, but know that possibility looms, do the right improvement things, including:

• Adding square footage. Appraisers say an addition provides more returned value to your home than most other improvements. While that doesn't necessarily mean the buyer will pay the cost of the work in terms of a higher price, you likely will attract more buyers.

• Build out your garage. All that clutter you cleared? The new buyer will want to put his or her junk right back in there. Buyers also want a comfy room for their cars. Add, expand or improve your garage and you'll also increase the value of your home.

• Think before you sink money into a pool. You may love the idea of having a pool, but a young family with small kids may see it as a potentially fatal accident waiting to happen. Other buyers don't want the upkeep and costs that come with a pool. A pool will limit your buyers pool to only those who want a pool.

• When you buy, think location. The best locations sell faster. Proximity to good schools, jobs, shopping and attractions and away from crime, heavy traffic, business, commercial or industrial locations helps homes sell faster and for more. Buy a home in a good location. Then you'll have a home to sell in a good location. Location rules.

"It looks like home prices in many markets may be on a downtrend for a while," said Evans.

"It pays to plan to make home improvement decisions strategically if you may be selling a home in the next few years. Think in terms of increasing the value of your home and not just about design and décor," he added.

See related stories on home improvements.

See related stories on staging.

See related stories on home selling.

See related stories on home value.

© 2008 DeadlineNews.Com

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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. 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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California still on the ropes, with glimmers of recovery hope

1-in-3 mortgages underwater

The Golden State suffers a 10.5 percent unemployment rate, home values are down as much as 50 percent and 30 percent (nearly one in three) of Californians are living with upside down mortgages -- mortgage balances higher than the value of their home. Nationally the rate is only 20 percent -- about one in five.

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Home sales in some California regions are rising and inventories are falling, but as most Californians know, the Golden State's housing market is still on the ropes.

A one-two punch from rising sales and falling inventories is hardly the combination necessary to put the recession down for the count.

The state suffers a 10.5 percent unemployment rate, home values are down as much as 50 percent and 30 percent (nearly one in three) of Californians are living with upside down mortgages -- mortgage balances higher than the value of their home. Nationally the rate is only 20 percent -- about one in five.

That's the assessment of California's real estate market from Richard Green, director of University of Southern California's Lusk Center For Real estate.

"Things are pretty bad out there," Green told Suzanne Pratt a senior news producer, during a recent edition of Public Broadcasting Service's ongoing series covering the recession "Reviving the Economy."

But there are also signs the bottom may be near.

"Depending on where you are in the state, house price have declined between 10 and 50 percent. Thirty percent of people in California who have a mortgage have a mortgage whose balance spread is more than the value of their house," Green said during the interview.

The problem is jobs. While there have been increased home sales in the Inland Empire areas of San Bernardino and Riverside counties, California's unemployment rate is a staggering 10.5 percent, compared to the 8.5 percent national average.

"And again you get away from the coast, the unemployment rates are even higher than that," said Green.

It's tough to buy or keep a home with both values and incomes falling.

Hope for renewed California Dreamin'

Green said he's hopeful federal stimulus money that raised conforming loan limits on Fannie Mae and Freddie Mac loans will help more homeowners refinance for lower interest rates.

Other federal economic stimulus money should also put money into rebuilding California's infrastructure and that will put more people back to work.

"Once jobs come back, I think you'll start to see the housing market come back here pretty quickly," he said.

Real estate is an economic growth generator, some would say an economic cornerstone, and as goes California, so goes the nation.

As in the past, California real estate market can move the state out of recession and California can lead the nation out of recession.

From a real estate perspective that's because the state avoided much of the overbuilding -- at least in the coastal population areas -- that occurred in Nevada, Arizona and Florida.

Said Green, "In part, the regulatory environment here makes it very hard to build so if you look at the vacancy rate in Los Angeles, that's vacancy in detached homes and apartments, it's among the lowest in the country, which means as soon as there's demand, we should see a return to some health in the housing market here."

California consumers looking to buy should keep close tabs on market conditions. California's volatile housing market could produce a bottom that comes and goes in the night.

"The inventories have been dropping pretty rapidly here so that's very good news. The other thing is: Does owning look good relative to renting as a bargain? Right now, with the lower prices and low interest rates, I think it does," Green said.

"But the employment picture really clouds everything else at the moment and until we see those jobs come back, it's going to be hard to be really bullish about the housing market here."

© 2008 DeadlineNews.Com

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.

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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. 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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San Francisco Bay Area $300,000 median home price far off $665,000 peak

A falling median price doesn't mean all homes are losing value at the same pace. Much of the median price decline is due to a larger share of foreclosed and distressed properties snatched up at bargain prices.

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - San Francisco Bay Area home sales rose for the fifth consecutive month in January, with sales buoyed by lower priced foreclosures that are also dragging down the median price.

San Diego-based MDA DataQuick reported a total of 5,050 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was down 26.7 percent from 6,889 in December, but up 40.8 percent from 3,586 in January 2008.

January sales, however, remained a shadow of peak sales.

Last month’s sales were the third-lowest for a January since 1988, when DataQuick’s statistics begin, and 20 percent below the average for the month. January sales have ranged from a low of 3,586 in 2008 to a high of 8,298 in 2005.

The median price paid for all new and resale houses and condos combined in the nine-county Bay Area fell to $300,000 last month. That was down 9.1 percent from $330,000 in December and down a record 45.5 percent from $550,000 in January 2008. The current median is 54.9 percent below the peak median of $665,000 reached in June and July of 2007.

Contra Costa County saw the median plummet from $845,00 last January to $525,000 last month, a 52.5 percent dive and the largest median price drop in the region.

The smallest median price decline was 24.5 percent in San Francisco. Silicon Valley (Santa Clara County) suffered a 37.4 percent dip.

A smaller median price doesn't mean all homes are losing value at the same pace.

Much of the median price decline is due to a larger share of foreclosed and distressed properties snatched up at bargain prices.

Foreclosures represented 54 percent of the Bay Area homes that resold last month, according to DataQuick, a real estate information service.

The regional market remains mixed.

Foreclosure activity has waned recently, but remains near record levels, while financing with adjustable-rate mortgages is near the all-time low, as is financing with multiple mortgages.

Down payment sizes and flipping rates are stable.

Non-owner occupied buying activity has edged higher recently to above-average levels in some areas as investors test the waters, MDA DataQuick reported.


© 2008 DeadlineNews.Com

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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 -- 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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Deadline Newsroom FAQ 81808

When you have questions needing answers that really hit home, contact the Deadline Newsroom. This installment: home equity use; home improvement cost-vs-value; mortgage insurance tax deduction.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Q: My home equity has grown substantially in the past decade. Now home prices are falling. So is my equity. Should I use it before it evaporates?

A: Financial experts are divided on how you should or shouldn't use your home equity -- the difference between your mortgage balance and the value of your home. But dwindling equity alone isn't a sound reason to tap the till. For one thing, your equity is likely to rise from the ashes. Since the Great Depression, home value declines have never been as great as the home value appreciation that immediately preceded the declines.

Conservative financial planners say never, ever use your home's equity. They say pay off your mortgage so you can retire on a fixed income without a mortgage payment.

If you must use it, the experts agree, use it as a sound reinvestment -- home improvements, college education, business start-ups, a second home and other financial moves that provide an equal or better return on your money than the cost of the loan. Avoid cars, vacations, techno gizmos and other stuff that doesn't give you a return on your money. Emergencies are another consideration and home equity is a better alternative than plastic. Again, the financial conservatives would prefer that you to sock away an emergency savings fund as part of a sound financial plan to protects your home equity.

However, even if you avoid equity use, taking out a home equity line of credit (HELOC) as an emergency backup, could make sense -- at least until you've got that emergency savings pot. HELOCs, like credit cards, come with a revolving line of credit, but nothing is due if you don't use it. Using home equity to consolidate higher interest rate plastic from banks and retailers also can be a good use of your home equity, with a caveat. You must pay off the debt, close the credit card accounts and not backslide.

Q: I understand certain home improvements can help me shore up, even increase the value of my home. How is that possible in a market with falling prices?

A: Homeowners who perform improvements that bring their home up to par with other homes in the neighborhood -- or make them slightly above par -- can protect home value even in a down market because the right improvements increase your home's value. How much the improvement affects home value depends upon a host of factors -- the condition of the rest of the house, the value and condition of nearby similar homes, the local economy's impact on property values, and more.

Hanley Wood's annual Cost Vs. Value report generally says jobs that generate the most value are kitchen and bath remodels, however, the long-time report has yet to include improvements like solar panel arrays which can ultimately pay for themselves, with or without a cost-vs-value return. However, give they pay for themselves, the value derived from the work is invaluable. A home with a solar panel array, compared to an identical home, sans the array, will likely bring in a higher cost.

Q: I'm told I can continue to deduct my mortgage insurance from my income for tax purposes.

A: You can if you qualify. Effective January 1, 2008, the "Mortgage Forgiveness Debt Relief Act of 2007," act extended federal tax relief for homeowners who pay mortgage insurance, from one year, 2007, to four years, until 2010. The extension allows eligible home owners a tax deduction (which reduces your taxable income) on the cost of their government or private mortgage insurance premiums paid in any year from 2007 to 2010. Qualified borrowers are families with an adjusted gross income of $100,000 or less. Families with incomes up to $109,000 are eligible for a partial deduction. See your tax professional for more details.

Got questions? Send them to news@deadlinenews.com. We'll do our best to get you the most relevant answer.
© 2008 DeadlineNews.Com

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Affordability Moving Into Silicon Valley

Growing affordability already appears to be clearing the logjam of unsold homes and tightfisted sellers are taking note. New data contains evidence of greater affordability likely in the near future, but the market is moving closer to equilibrium -- that market bottom where prices stop falling.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - There may not be a whole lot more wait-and-see room left for fence-sitters in Silicon Valley's housing market.

Growing affordability already appears to be clearing the logjam of unsold homes and tightfisted sellers are taking note. New data contains evidence of greater affordability likely in the near future, but the market is moving closer to equilibrium -- that market bottom where prices stop falling.

That bottom could arrive sooner than expected.

"Affordability, relatively speaking, is way up and that's driving the lower end of the market. The REO market is robust and the low end is robust. There's some languishing in the higher end where the credit crunch is still a problem," said David Walsh, president of the Santa Clara County Association of Realtors.

Right now, Silicon Valley home buyers can find homes with a 20 to 40 percent markdown, compared to last year's prices. But they can just as easily find homes with a 20 to 40 percent or even greater markup.

"My clients are buying properties well below their peaks. Just closed today -- a condo downtown San Jose purchased two years ago for $460,000. My borrower bought it for $340,000," said Stephanie Noryko, broker owner of Granite Financial Real Estate Loans in Cupertino.

Break out market

Those large discounts and markups, however, are found in fewer, select neighborhoods at either end of the price spectrum. There's a greater, more significant market segment in the middle price ground.

Comprising about 60 percent of the current market, geographically, the middle ground includes larger community swaths of homes with prices that are down by no more than 20 percent nor up more than 20 percent, according to the July 26 LaJolla-based DataQuick's weekly ZIP Code-based home price map for Silicon Valley.

"The homes that were selling slow (in the lower price range), that segment is improving slowly. The (higher-end) market that was doing well is still doing well, but less well than it was," said Richard Calhoun, broker owner of Creekside Realty in San Jose.

High end home sales had managed to keep the median price aloft for much of last year, but with some backing off in the high end neighborhoods and continued troubles in the low end, a reversed trend is showing up in the median price.

Calhoun, a number-crunching statistician of a real estate broker, said the median single-family home price (in closed sales) in June 2007 was $865,000. By this June, the median had fallen a whopping $115,000 to $750,000.

That 13 percent June-to-June decline has been largely due to overwhelming problems in middle- and low-priced homes, segments hit hardest by foreclosures and the tight credit market. Foreclosures, short sales and the like bring down prices because affected properties show up on the market as distressed properties, auction material and REOs (for "real estate owned" -- repossessed homes), all priced to move.

Foreclosures were up 194 percent from 1,275 during the second quarter last year to 3,751 during the same period this year in Santa Clara County. Only five counties had a greater rate of increase in foreclosures -- Merced, Monterey, Santa Cruz, Sonoma and Sutter, according to DataQuick Information Services in La Jolla.

Affordability growth

Unfortunately, the law of the housing jungle today means one person's anguish is another's affordability.
"There are markets, and there are markets. Some markets are good for buying, others are good for selling," said Eric Nelson, mortgage broker and owner of the Honte Group in Campbell.

The California Association of Realtors said in Silicon Valley, 31 percent of households could afford the entry level price of $663,000 in the first quarter, up from 27 percent a year earlier.

Likewise, the Emeryville-based PMI Group's Affordability Index for the San Jose Metropolitan Statistical Area (MSA) was about 68 during the first quarter of 2007, just before prices peaked. In the first quarter this year, the index rose to 80, thanks to lower prices. An index score that exceeds 100 indicates that homes have become more affordable; a score below 100 means they are less affordable.

With the lower price-spawned affordability comes less risk of further large price reductions.
The PMI Risk Index for Silicon Valley came in at 56 two years ago this summer, a year before prices peaked. Now, a year after the peak, the index is down to about 51 percent. The index score translates to a percentage that predicts the probability that house prices will be lower in two years. The latest number means there's a 51 percent chance of lower prices in the next two years. That's almost even odds.

"The market is really alive and well, depending upon what segment you are looking at," added Walsh, who is also a vice president at Alain Pinel.

But here's the rub.

Affordability generates demand that could leave fence sitters, well, perched.

More, faster sales

Walsh, in his "Santa Clara County End of July" report to association members, said the number of pending sales in Silicon Valley, at 2,290 had grown 70 percent above the 1,351 pending sales from a year ago. More buyers are buying.

"The active demand to purchase properties is still showing a climbing trend, especially with respect to lower priced and REO properties," Walsh said.

Some sales are seasonal by nature, but Calhoun also reveals closed sales of single family homes were likewise up steadily every month this year from 338 in January to 927 in June. Last June the number was 977.

"This current time is perhaps the best time to buy in nearly 20 years. There is twice the normal inventory of homes for sale, and there is an overwhelming amount of foreclosures on the market," said Nelson.

Homes are selling faster too. The average numbers of days on the market for single-family homes in closed sales was 74 in June this year, down from 88 in January, but still well off the June 2007 figure of 45 days.

Days of unsold inventories (DUI) came in at 125 days, compared to about 250 in January and about 117 a year ago. DUI is the theoretical number of days it would take to sell off the current inventory, at the present sales rate, if no other homes came on the market.

Seller squeeze

Another word of caution for hesitant buyers, sellers may already be putting the breaks on price breaks. The gap between the median asking price (what sellers want) and the actual closed price (what sellers actually get) narrowed in June this year.

Last June, during peak market times, sellers were getting, on average, 100 percent of their asking prices from buyers. This June, buyers gave sellers $9,000 less than the asking price, but that was the smallest differential for all of 2008, except for March when the difference was $5,000.

Compare that with January this year, when buyers shorted sellers by an average $25,500 and with April, when buyers paid an average $30,000 less than asking, according to Calhoun.

"It still seems to ring true that pricing your home right is hugely important. An overpriced home just sits and sits. I don't understand why people don't start with a lower price. When the owner finally decides to lower the price, it gets labeled as a problem property," said Noryko.
© 2008 DeadlineNews.Com

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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 where all the news really hits home.

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Paint Primer

Choosing and using exterior paint is not as simple as choosing the best rated paint, but also considering regional differences, cost savings, preparations and more.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Painting the exterior of your home the right way can boost the value of your home, add a positive new color scheme or slather on a protective coat of loving care.

Paint wrong and, well, the opposite is true -- your home value could suffer, neighbors could scream at the sight and you may have to repaint sooner than planned (Then, of course, neighbors would rejoice).

But how do you choose and use paint when you want to refinish your home's exterior?

Consumer Reports' recent "torture test" of dozens of paints provides some guidance. The trusted, independent, non-profit rating service recently tested dozens of exterior paints for dirt and mildew build up over time, the color-changing effects of sunlight and cracking to determine the best paints.

The smaller California brand's 2010 line and Kelly-Moore came out on top, but the recommended findings aren't all you'll have to consider for the best job.

You'll also have to choose the right paint for the job.

• Consider regional differences. If you live in a cool, damp or shady climate you want paint with mildew resistance. In urban and industrial areas you want paint that resists dirt. For sunny locales, colorfast paint is best.

• Know what your house painter is using. The painter's choice may not jibe with what Consumer Reports found to be tops. Your contract should designate the brand, line and cost of the paint used, how many coats will be applied. One coat of primer and two coats of paint are recommended.

• Look for cost savings. For example, two five-gallon containers of paint instead of 10 one gallon cans and save you 50 percent or more, Consumer Reports says. Ask the paint retailer for volume discounts if you, rather than the painter, will make the buy.

Once you have the best paint at the best cost, here's how to make sure the job gets done right.

• Finesse spot repairs. Along with priming, complete spot repairs so surface difference don't show through the coating. Two coats help accomplish this.

• Never paint over mildew and dirt. Treat and remove mildew with a bleach (one part) and water (three parts) solution. Leave the solution on for 20 minutes, then rinse. Use detergent for remaining mildew and bleach and expect to wait a week for drying.

• Replace cracked siding boards. Cracked or split boards should be replaced rather than repaired. Otherwise water intrusion can ensue, expanding, contracting or blistering the board and cracking the paint.

• Paint a test patch. If you paint a sample board or area with each color you can see how each looks before you complete the job and perhaps regret your color choice.

• Check the forecast. Paint on windless days when temperatures range from 60 to 85 degrees. Don't paint in direct sunlight or when it's raining.

• Store and dispose paint properly. Transfer extra paint into a labeled glass jar with a tight seal. Keep low-VOCs (Volatile Organic Compounds) out of the cold. Check with your local sanitation/recycle department for proper disposal. In areas where you can dispose of dried latex paint with your trash, add unused cat litter to help dry the paint.

• Also see "Painting Your House", information from the Rohm and Haas Paint Quality Institute and Jackie Craven, About.com's resident architect.

© 2008 DeadlineNews.Com

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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 where all the news really hits home.

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Towns To Get Up And Go For

Outside magazine's spin on the best towns is a rundown of places for great alfresco living. DeadlineNews.Com put the list to the home value test and found healthy real estate markets in many of the towns.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - When Outside magazine asks its readers to come up with a list of the best towns in America, chances are they won't be skyscraper canyons or commuter suburbs.

The magazine is pretty much about what its title implies -- living the active life -- without a roof overhead.

Every issue lays it on pretty thick for the thin with stories about buff people working up a sweat with their hot gear.

However, when DeadlineNews.Com took a closer look at this spin on best places, it discovered the towns featured in the magazine's August issue were a lot more than living large al fresco style

Towns where the fit want to get up and go to also often include housing markets in pretty good shape.

While some towns listed for their outdoorsy appeal are pricey resorts, others are affordable places that didn't see skyrocketing home prices during the boom. Most of them were still enjoying home price appreciation this year.

Along with the possibility of developing a hard body, there's also the potential for buying into a healthy real estate investment.

Here's a quick look at some of the top towns, a bit about how they made the list, Outside magazine's own "median home value" for each and, where available, home value growth (or not) for the past year ending in the first quarter 2008, according to the Office of Federal Housing Enterprise Oversight.

• Washington D.C. tops the list. The new major is ultra-buff, the new National's MLB stadium is the first LEED-certified one in the nation, young entrepreneurs are flocking to the northwest and Chinatown and there's lots of inner-city revival. Rock Creek Park hosts 40 miles of trails, there's another stretch along a scenic canal towpath, and there's even Class V rapids at Great Falls, baby. Median value, $437,700, down only 1.5 percent.

• Chattanooga, TN is a former manufacturing town turned waterfront gem. LEED-certified urban renewal along the Tennessee River flows through town with a ten-mile river walk, an aquarium, pedestrian pier, public boat slips and the aptly dubbed Renaissance Park. Locals are planting trees, hanging out at the Riverbend music festival and spending more time in the verdant Appalachians. Median value, $119,900, up 2.75 percent.

• Ogden, UT, once a railroad junction in the foothills of the Wasatch, has become a Main Street America town with a self-proclaimed moniker "Adventure Sports Capital of America." Skiing, kayaking parks, mountain biking and a rec center with climbing walls, a vertical wind tunnel and standing surf wave make it so. Twenty outdoor gear manufacturers headquarter in the town where two rivers flow. Median value, $14,700, up 6.64 percent.

• Portsmouth, NH, no longer a ship building center from the 18th century, has turned a run down waterfront into a preservationist's dream home. Cobblestone paving remains endearing and emerging musicians and artists are populating independent theaters, a restored Music Hall, galleries, a film fest and live music venues. The beachfront town boasts the first stretch of the 3,000 mile East Coast Greenway planned to run from Maine to Florida. Median value, $318,000, down 1 percent.

• Tacoma, WA, long overshadowed by Puget Sound neighbor Seattle, is now a vibrant art center with a University of Washington campus, reborn Union Station, and plenty of waterways for water sport junkies. Don't forget Mount Rainier's snow cone. Median value $228,300, up 1.64 percent.

• Ithaca, NY offers ivy league education from Cornell University and Ithaca College, for those who want to their brains a work out. Cardio pumping happens at the walkable mall, around the Finger Lakes and in Treman State Park. Sustenance is legendary at famous Moosewood eatery and sustainability is found in EcoVillage with two organic farms. Median value, 183,500, up 10.63. That's not a typo.

Rounding out the Top 10 were:

• Bourbon, bluegrass and Kentucky Derby's Louisville; $141,600, up 2.73 percent.

• Home to half the globe's old-growth redwoods (and, in the county, one other infamous cash crop), Eureka, CA; $262,250, down 5.8 percent (the figure is according to the Humboldt County Association of Realtors).

• Considered Colorado's last great ski town, Crested Butte; $301,100, up 4.91 percent (according to OFHEO's statewide figure).

• Embraced by the foothills of the Ozarks, Columbia, MO; $164,700, up 3.28 percent.

© 2008 DeadlineNews.Com

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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 where all the news really hits home.

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Home Equity Stakes Stumped

Americans' home equity stake, a victim of over-use, low and no-down payment financing and declining home prices, is at the lowest level since World War II.

by Broderick Perkins
© 2008 DeadlineNews.Com



Deadline Newsroom - The equity stake in Americans' most important asset has dropped to its lowest level since the end of the second World War.

Home owners' home equity slipped to 46.2 percent in the first quarter this year, the fifth consecutive quarter the rate was below the 50 percent market, according to the Federal Reserve's first quarter Flow of Funds report.

Home equity is the market value of a property, minus the mortgage debt. For example, if a property is worth $300,000 and the mortgage debt is $150,000, the equity stake is $150,000 or 50 percent.

Home equity levels declined steadily even during the housing boom when consumers cashed in on cash-out refinancing, home equity borrowing and 100 percent financing.

Now, home values are falling, taking a bigger slice out of the home equity pie.

The decline in values has left many home owners with negative equity or what's called an "upside down" mortgage where the mortgage is larger than the home's value.

At the end of March, some 8.5 million home owners, 16 percent of those with a mortgage, had negative or no equity in their homes, according to Moody's Economy.com.

In some hard hit areas like California, Florida, Michigan and Nevada, more than half the home owners who purchased homes in 2006 live with upside down mortgages, according to Zillow.com.

Other than quickly paying down the mortgage or otherwise shelling out cash for equity-saving home improvements, there's little many home owners can do to hold onto or increase their equity.

Experts expect equity nationwide to decline further as falling home prices erode home prices, plunging more home owners into upside down mortgages.

Economy.com is forecasting home prices to decline by as much as 24 percent from the peak of the market. By June 2009 Economy.com estimates the number of home owners with zero or negative equity will increase to 12.2 million, or about 25 percent of all home owners with a mortgage.

Home owners with zero or negative equity are those most likely to default on mortgage payments and walk away from their mortgages. The trend will exacerbate the housing down turn by leaving the market with more foreclosures.

The good news is that one out of every three home owners have no mortgage at all and own their home free and clear with a 100 percent equity stake.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Consumer Alert: Property Tax Reduction Offers

Beware of fee-based offers to reduce your property tax, especially those that arrive with an official-looking letterhead. Get the facts from your local tax office or assessor.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Larry Stone, Silicon Valley's tax assessor , is warning homeowners to beware of companies seeking cash to help homeowners lower their property tax.

He says a local company, asking for $99 to perform a property tax reduction services, is "disgraceful" because the assessor's office performs the service for free.

The sales pitch also arrives with official-looking letterhead.

"There's simply no reason at all for a property owner to pay a fee to a private company for a service taxpayers receive from the Assessor's Office without charge," Stone said.

This consumer alert comes from Silicon Valley's Santa Clara County, but it's good advice for any homeowner anywhere facing lower property values.

Here's why.

When your home value falls, a small consolation can come in the form of a temporary property tax cut. That's provided your property tax jurisdiction, like Silicon Valley, bases your home's assessed value on market values and or sales prices.

If you live in Silicon Valley, depending on the location, your home value may have fallen by 20 percent or more since the market peaked.

This month 41,231 Silicon Valley homeowners had their assessed values reduced, netting an average $900 per-home reduction in annual property taxes, for the 2008-2009 assessment roll.

That's a healthy chunk of change in hard economic times, especially when the reduction in assessed values and property taxes did not cost them a dime.

That's because Silicon Valley's assessor uses a relatively unique -- even in California -- proactive property tax assessment process that includes annual examinations of property values when the market is in decline.

Computer models using recent sales flag properties that warrant a reduction in assessed values, the assessor automatically makes the reduction and if you don't agree with the reduction or any assessment, you can always appeal it -- at no charge. Silicon Valley offers informal appeals directly with the assessor and another level of appeal with an independent appeals board.

Jurisdictions vary on how they handle property taxes. But, before you spend a penny, check with your assessor or tax office to determine if, when and how to get your property taxes reduced. Most assessors have Web sites that make this information available.

"(There) are questionable operators, bottom dwellers who are feeding upon the increased fears of homeowners stressed out by a declining real estate market and the loss of equity," said Stone.

Stone said the pitch for the $99 service comes just weeks before the assessor's office sends out property tax levy notifications. That could encourage homeowners to apply for and pay for a property tax reduction the assessors office has already granted.

In some jurisdictions you may have to pay for professional services if your appeal process asks you to document your home's value and you don't want the headache of making the effort. Typically you can choose to use an appraisal or comparable market analysis to prove your case.

An appraisal is typically conducted by a licensed appraiser who physically examines your house, factors in market conditions, building costs and other homes like yours, among other factors, and then sets a value based on professional opinion derived from their work.

A comparable market analysis, to determine a value, considers homes like yours that were recently sold. The homes should be as much like yours as possible in terms of square footage, lot size, age, floor plan, rooms, building materials, style and other factors. An appraiser typically includes comparables in his analysis.

You can obtain comparable market analysis information from public records where deeds are recorded, but in a moving market, faster access to recent sales may give you a more accurate value.

The most recent sales are available through the members-only multiple listing service. Real estate agents and other eligible real estate professionals have access, but they could charge you a fee for pulling the comparables. It you choose this alternative, some fee could be worth it to get comparables that have actually closed. In today's market, "sold" doesn't always mean "closed escrow."

Hiring a real estate attorney could be another option if your jurisdiction allows legal representation to prove the value of your home for property tax purposes.

A final note, in Silicon Valley and other California jurisdictions, a property tax reduction lasts only as long as the market warrants it. Once values begin to rise so does the property tax amount -- and fast -- to the cap set by law.

Golden State law generally mandates that property taxes rise no more than two percent a year.

However, once property values have been reduced, and later begin to rise, the assessed property value rises too -- in a hurry.

Once a property's value returns to the pre-reduction level, the assessed value gets put on the fast track and quickly jumps back to its pre-reduction level -- where it would have been if there was no reduction -- plus the allowed 2 percent a year.

That could be a sudden increase in property taxes at a rate much steeper than the otherwise normal 2 percent annual increase.

Again, contact your local jurisdiction's property tax agency and get the straight scoop before you listen to someone offering you property tax reduction services for a fee.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Time For A Major Homeowner Bailout?

With some 9 million homeowners holding an incentive to dump their homes, a real homeowner bailout is beginning to look a lot better than what's in store otherwise.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - It may not be such a bad idea to bailout millions homeowners who are in over their heads with mortgage debt.

Sure, many homeowners are to blame for their housing lust -- developed with a little boost from their friendly neighborhood real estate dealers -- but there's a bigger picture.

The economy is at stake.

Housing has long been considered an economic cornerstone. People buy homes. Homes gain value. People cash in on that value and buy stuff. As we all know, consumer spending is what really fuels the economy. Housing, after the dot com bust, carried the economy on its rooftop for years.

Unfortunately, the cycle is done. The trend is down. Home values are falling, faster and faster. Falling home prices are leaving consumers short of that extra home-based, economy-boosting, discretionary cash.

Mortgage lenders, who once poured mortgage money into the streets, now cover their assets and are reluctant to finance homes with falling values or to help the vast majority of homeowners facing falling fortunes.

Toss more foreclosures, short sales, auction sales and other homes with weakened values into an already over-supplied housing market and you get prices squeezed even more.

It's a vicious circle.

Take California.

The year got off to a rousing start in January when for the first time in documented history, there were more homes sold at foreclosure auctions than condos and single-family homes on the open resale market, according to data mash from ForeclosureRadar.com and DataQuick.

Meanwhile, January home sales in the Golden State were in the tank and prices were whipped, down a whopping 22 percent from a year ago, according to the California Association of Realtors (CAR).

California will always have Paris and celebrity stars gone wild, the Steve Jobses and the industries of nerds, so-real vacation playlands that serve as backdrops for Hollywood movies, and its own produce to eat, but most markets won't be so lucky.

They may follow California into a market of doom. Coming out is going to be tough.

Right now, without some sort of bailout (and most Americans want one), millions of homeowners have nothing but an incentive to dump their homes on the market. Their mortgages are larger than the value of their homes.

Moody's Economy.com recently reported that one in 10 homeowners, nearly 9 million of them, have homes that aren't worth the balance on their mortgage.

The threat of more depressed value homes on the market recently prompted Mark Zandi, Economy.com's chief economist to forecast a home price drop of 20 percent from peak price levels in 2006.

He says each foreclosure on a neighborhood block reduces the value of all homes on that block by almost 1.5 percent.

U.S. home prices were already down nearly 9 percent by the final quarter of 2007, compared to the same period in 2006, according to the Standard & Poor's/Case-Shiller Home Price Index.

That's the steepest decline in the index's 20-year history.

An unscientific poll running for months now on the news-that-really-hits-home Deadline Newsroom blog is leaning toward a "later than 2010" recovery for the housing market.

Experts at the Center for American Progress say, even if the credit market improved, a freefall in home prices due to excess inventories is likely to push the housing market bottom way out beyond the horizon of 2009.

And that's just the bottom. A real recovery will take much longer.

Market conditions today are a lot like the homeowner who waits until the last minute to try to escape foreclosure.

If there isn't a bail out now, options leave the table and prolonged distress could force a really costly bailout years down the road.

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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House Lust, The New American Tradition

More than just incessant cocktail party banter, or water cooler chatter, America's love for all things housing gets some of the blame for the current boom-to-bust cycle

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Here's a quick quiz that should really hit home.

While on vacation, do you stare in storefront windows at real estate listings?

Are the Web sites Zillow.com, Trulia.com and Propertyshark.com, at the top of your Web browser bookmark list?

Can you name the hosts of TV shows "This Old House" or "Extreme Makeover: Home Edition"?

If you are nodding your head "yes" to those questions and others there's a good chance you suffer something called "house lust," a fetish-like preoccupation with everything real estate.

House lust has become as American as apple pie, says Daniel McGinn, a Boston-based national correspondent for Newsweek. He ought to know. He wrote the book on the subject: "House Lust: America's Obsession With Our Homes" (Random House, $24.95).

McGinn's research indicates house lust gets some of the blame for the last housing boom-to-bust cycle because the distinctly-American addiction caused many buyers to overdose on more house than they could afford. Easy mortgage money made it affordable to carry a monkey on your back.

McGinn says instead of taking the pragmatic roof-over-your-head approach to housing, Americans have become emotional infants about shelter. They envy, scheme over, bellyache about and ogle homes they can't have and probably don't need.

Called a "mania for homes" house lust reached fever pitch during the last boom when supersized trophy homes, second, third and fourth homes, household-disrupting renovations, over bidding, and the fascination with real estate Web sites and TV programming reached "obscene" levels, says McGinn.

Even professionals left tenured careers to rush off and join the army of real estate agents.

McGinn, who explores the seven deadly sins of house lust in his book, conducted research during sleep-overs in models homes, at real estate investment seminars and by obtaining his real estate license in a single weekend.

Is the housing bust creating withdrawal symptoms?

No, says McGinn. The possibility of more house lust euphoria trumps any temporary pain caused by the housing crunch.

Here's what McGinn's research uncovered.

• Bigger is better. McGinn spent time with a couple who traded up in a series of houses that started at 2,000 square feet and ended with a $3 million 9,000 square foot McMansion that includes a men's hangout room and twin dishwashers. The couple says their backyard is still too small.

• Virgin homes. McGinn uncovered the "ick factor" a cultural penchant for shiny, new things. People prefer an unsullied new home's smell rather than living in someone else's grit. The penchant helps fuel new home construction.

• Voyeurism. American's have become both virtual and real life looky-loos gathering intel on line from a growing number of data-based real estate web sites and visiting open house events with no intention to buy.

• Money lust. Too many, real estate is money rather than shelter. It's the dot com stock of the New Millennium. In fact, many refugees from the dot com disaster sought financial shelter in real estate. And many of those speculators now feel like they've had a bad weekend at the crap tables in Sin City.

Disclaimer: The writer of this article also has house lust. His dream home is a real, newly built, masonry, commercial loft, with a California ocean view. Yes an unstable structure built on unstable sand in unstable Earthquake Country. It would have to be an engineering marvel. But he has to have it.

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Use Home Equity Protection

Safe home equity use can stimulate your financial outlook. Excessive spending against the unencumbered value of your home could leave you in, well, financially transmitted distress.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - You don't have to abstain from spending against the unencumbered value of your home, but you do have to guard against home equity excess.

Home equity is the difference between your mortgage balance and the value of your home.

When you buy a home with a down payment of, say 20 percent, you have a 20 percent equity stake in your home. Over time, mortgage payments and appreciation can give you a larger equity stake. Likewise, depreciation can reduce your stake.

Lenders allow you to borrow money against some, but not always all of your home equity, provided you qualify with good credit and adequate income.

Home equity can be an emergency fund, investment pot, nest egg for retirement or a way to get out of more expensive debt.

Just keep in mind, when you use it, you lose it.

A home equity loan, by it's very nature, is an equity-depleting loan. You don't have an unlimited amount of equity to bank on.

The most conservative financial planners advise not fooling around with your home's equity. Eventually pay off your mortgage so that when you retire on a fixed income you'll be home free with no mortgage payment.

However, emergencies do arise and it's nice to know you've got something to fall back on, other than credit cards. That's particularly true as you age and your health wanes and during hard economic times that threaten your employment.

Again, the conservative advice suggests, instead of using your equity, even during an emergency, you should have socked away an emergency savings fund of from three to six months worth of your income as part of a sound financial plan.

However, even if you don't use your equity, it's not a bad idea to take out a home equity loan as a financial backup while you are fully employed. Once you are already unemployed or fully aware you will be laid off, it's probably too late.

If employment and income are necessary to qualify for the loan and you lie about your employment status, you are omitting a material fact and defrauding a lender. Lying on an loan application is a federal offense.

The best back up home equity loan is a home equity line of credit (HELOC). Like a credit card, if you don't use it, there are no payments, but it's there if you need it. HELOC's are almost always cheaper than a credit card, but it is a form of revolving credit, often with an adjustable interest rate.

A home equity loan for a fixed amount with a slightly higher fixed rate may be a good deal for set costs, financial endeavors, investments and the like. Because it is an installment loan with fixed payments, however, the loan forces you to begin making payments right away, even if you don't use the money right away.

Either loan could be a good choice for bill consolidation, but only if you have the will power to pay off bills and other credit that comes with higher interest rates and not use them again. The rates are lower than average credit card and retail store card rates.

Conservative and more liberal financial experts alike, say if you must use your home equity, the best use is to reinvest 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.

Avoid buying big gas guzzling cars, boats, RVs, vacations, home theaters and other items that don't give you a return on your money.

Finally, don't overlook how economic conditions of the day can affect your home equity. This is especially noteworthy if you combine an adjustable rate mortgage (ARM) first with an adjustable rate home equity loan in a so-called "piggy-back" deal to finance most or all of the cost of a home.

With two mortgages, should interest rates rise and push up both monthly payments, you could quickly reach an affordability point of no return.

For example, in a soft housing market, with flat and falling home prices, there will be little if any home equity growth to bail you out, say with a refinance because your home could be worth less than the mortgages you seek to refinance.

Related news from DeadlineNews.Com
• Equity-Saving Home Improvements
• Home Equity Meltdown
• DeadllineNews.Com's Home Equity Section

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Home Equity Loan Meltdown

Toss home equity loans into the mortgage meltdown vat. Homeowners who squandered home equity or used it to buy homes they couldn't otherwise afford are the latest mortgage market victims.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - A growing number of homeowners who used their homes like ATMs are beginning to suffer withdrawal symptoms.

They can't afford to pay their home equity loans.

The same interest rate resets that have ripped through the subprime market are also becoming a pain in pockets of homeowners with home equity loans.

Three of the nation's largest banks -- Citigroup, Wells Fargo and JP Morgan Chase -- all reported reduced fourth quarter earnings tied to trouble in the 850 billion dollar home equity market.

In the third quarter of 2007, the 15 billion dollars in delinquent home equity loans was the highest level in a decade, according to Moody's U.S. Home Equity Index.

For too many homeowners home equity use has gotten out of hand.

Home equity is the difference between your mortgage balance and the value of your home. Lenders allow you to borrow money against some of that equity.

During the housing boom, home values skyrocketed, creating a sudden "wealth effect" and homeowners cashed in their home equity bonus.

Some of them went too far.

Smart homeowners used home equity money to fund what financial experts consider safe bets -- business start-ups, home improvements and college education.

Other homeowners splurged on vacations, big cars and home theaters -- items that don't give you a return on your money.

Homeowners having the toughest time are those who combined an adjustable rate first mortgage with an adjustable rate home equity loan in a so-called "piggy-back" mortgage deal. Piggy-back mortgages are used to finance the full value of a home.

Piggyback mortgage homeowners now have two mortgages, interest rates have risen on both loans and monthly mortgage payments have become unaffordable.

In today's soft housing market, with flat and falling home prices, there's little if any home equity growth to bail them out.

Also see DeadlineNews.Com's Home Equity Guide

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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