Posts Tagged ‘NATIONAL ASSOCIATION OF REALTORS’

The Cost Of Owning A Home
According to a recent survey published in the Wall Street Journal, the monthly cost of owning a home is more affordable now than it has been in the past 15 years.

Low prices and some of the lowest mortgage rates we’ve ever seen have created a particularly appealing buyer’s market, but that’s not the only benefit. Dan Green, a loan officer with Waterstone Mortgage in Cincinnati, told The Wall Street Journal that buyers today have a 77 percent increase in their borrowing power compared to 1991. To illustrate, he gave the example that in 1991 a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage, whereas today the home owner taking advantage of current low rates can get a $350,000 loan for that mortgage payment amount.

Nationwide, apartment rents are expected to rise by about 4 percent this year, which may make owning versus renting an even more attractive option.

In fact, in the 28 cities that The Wall Street Journal tracked, it found monthly mortgage payments on the median-priced home, including taxes and insurance, to be lower than the average rent levels in nearly half of the metro areas surveyed.

The NAR thinks that the commercial real estate market is expected to follow the mood of the general economy. Mr. Yun expects vacancy rates to trend lower and rents should rise modestly next year.

The big winner here could be the multifamily market, which already has the tightest vacancy rates in any commercial sector. Apartment rents will be rising at faster rates in most of the country next year and the NAR’s chief economist thinks that if new multifamily construction doesn’t ramp up, rent growth could potentially approach 7 percent over the next two years.

Now let’s take a moment to break the details down into the four major commercial sectors.
In the office space market, vacancy rates are expected to fall to 16.1 percent in the fourth quarter of 2012 from the fourth quarter of this year. Whereas rents are expected continue to rise through the fourth quarter of this year and nearly TWO percent further by the end of next year.

In the industrial market, vacancy rates are projected to decline to 11.7 percent in the fourth quarter of 2012. Industrial rents should see a bit of a drop off at the end of this year, by about one half of one percent, but then they’re expected to rise nearly 2 percent in 2012.

When it comes to the retail markets, vacancy rates are expected to decline to 11.8 percent in the coming 12 months. Similar to the industrial markets, we may see a slight drop off in rents by the end of the year, but then we should see them heading up again by about SEVEN-TENTHS-OF-ONE percent in the year to come.

Finally the multifamily market, or apartment rental market, is expected to see vacancies drop even further, from FIVE percent in the fourth quarter of this year, down to 4.3 percent in the fourth quarter of 2012. Multifamily vacancy rates below FIVE percent generally are considered a landlord’s market with demand justifying higher rents, and higher rents are what we will be seeing as the average apartment rent is projected to rise 2.5 percent this year and another 3.5 percent in 2012.

So the big news in commercial real estate is that we should be seeing vacancies decrease and rents rising across the board through 2012. The market to really keep an eye on appears to be the multifamily, or apartment, market as rents are projected to go up dramatically as we enter a stronger landlord’s market. How will that affect the existing home sales market? Well, we’ll have all the details you need right here on Real Estate Today.

Nowadays, for those who can qualify, you can lock in record low rate of 4 percent or possibly even in the upper 3 percent range for a 30-year mortgage. Did you catch the caveat in there, though–because you knew there’d have to be at least one. Yes, rates are ultra-low — but only for those who can qualify. Not everyone can qualify.

Banks have stricter underwriting standards than they did a few years ago. And to get those great rates, you’ll need good credit, good savings, and a stable employment history. If you’re missing one or more of those? You’ll be facing a tough time.

But for those who can qualify, low mortgage rates combined with increased housing affordability–record-breaking, in fact–means your money will go a lot further when purchasing a home than it did a few years ago.

Now low rates aren’t just a benefit to those looking to purchase a home. They’re also a benefit to home owners who are looking to refinance. Low rates should matter to you too.

So here’s the big question: What’s the mortgage rate on your loan?

I’m willing to bet that if you purchased your home a few years ago, your mortgage rate is much higher than what you could get today. That means you’re paying more on your monthly payment than you probably need to be. By refinancing at today’s lower rate, you may be able to shave $200 a month off your monthly payment–that’s $2,400 a year. Who couldn’t use that extra money in their wallet?

I know, I know. There are upfront costs to refinancing, but look at it in the long run. If you save $2400 a year on your mortgage, over the next, say 20 years? You’ve saved $48,000. That kind of savings might be worth the up-front fees…but of course, that’s a decision only you can make.

If you’re having a tough time with your mortgage, and you think refinancing can help, you’ll want to know that the government has made some changes to a program called the Home Affordable Refinance Program or HARP. You’ve probably been hearing something about it in the news lately. The program can help home owners refinance their mortgages at today’s low interest rates without incurring as many loan fees for refinancing. Plus, you won’t run into the appraisal hurdles typical with refinancing–this is important if you’ve seen your property’s value drop and you actually owe more on your home than it is currently worth. HARP was originally launched in 2009 but it’s been updated recently, and you’re starting to see those changes roll out in many areas.

It may be worth a call or a visit to check with your lender to see if you qualify for HARP or any other refinancing program. Take advantage if you can: Mortgage rates are like a Black Friday special, you want to grab them low while they’re hot.

Sure, we do have some assurance that low rates will stick around for a while and into the new year. The Federal Reserve took a very rare step in August to vow to keep rates low until 2014. But whether rates will stay as low as we’re currently seeing and for how long, no one knows. Some have forecast rates to inch up to 4.5 percent by the middle of 2012.

So talk with your lender to see what rate you can get. Remember, it’s not just the cost of a house that matters; it’s the cost of the money. And the money to buy that dream house or refinance it, has never been more affordable.

The recent headlines have actually been pretty good:
• New-home construction is on the rise.
• Pending home sales–a gauge of future home buying–rose sharply in October and remains well above year-ago levels;
• Interest rates are at all-time lows;
• Housing affordability is at record highs;
• And, inventories of for-sales homes on the market are dropping nationwide.

But what does all of this mean to you–as a home owner, seller or buyer? Let’s break it down.

First, for home buyers, 2012 will likely continue to be a buyer’s market. You can expect to get a lot for your money. Earlier in the show we talked about how interest rates are at historical lows–in the 4 percent range for the 30-year fixed-rate mortgage, the most popular financing choice among home buyers. Home buyers who can lock in a low rate while taking advantage of low home prices may see their dream home well within reach.

In many markets, it’s making more sense to buy too: It has become cheaper than renting in a lot of places. Housing affordability–measured by median home prices, mortgage interest rates, and median family incomes–has been at record highs this year and are expected to continue to be strong into 2012.

So you can get a lot of bang for your buck — but you’ll need to qualify for financing, and that’s possibly the biggest hurdle home buyers face. The tightening of underwriting standards by banks has made it more difficult to get approved for a loan and to lock in these super low rates that everyone wants, but not everyone can get.

For sellers, looking into that crystal ball, 2012 will likely be better for you. Housing inventories are at four-year lows. The number of homes listed for-sale nationwide in October reached its lowest level in more than four years, and the inventory totals nationwide were down 21 percent when looking at year-over-year levels. This should mean a lot to those looking to sell their home because this means you have less competition. Lower inventories means you’re not one in a crowd, and it will likely force buyers to give you a little more extra attention.

Also, when inventories drop, it can spark higher demand. And higher demand can edge up home prices–wouldn’t that be nice? The National Association of Realtors is projecting a moderate appreciation next year, as well as existing-home sales to increase by 4 to 5 percent. So maybe it’s soon time to say good-bye to all of those lowball offers.

However, one of the biggest threats to sellers will still be lurking in 2012, and that’s nearby foreclosures, which threaten to bring your home’s value down. Foreclosures are taking longer and the pace is slowing as banks are being sure to dot all their “i’s” and cross their “t’s” before issuing an eviction. Banks also are looking at more ways to keep home owners in their home. We’re hardly out of the woods yet with the foreclosure crisis, but sellers should watch the pace of foreclosures in their area to see if it’s improving–it could possibly serve as an indicator of where prices may be heading in your hometown.

And finally, what’s the new year look like for home owners? If you’re a home owner who can comfortably afford your mortgage, then 2012 may be a good year for you to enjoy being a home owner and having your piece of the American Dream.

That doesn’t mean you can’t look into some savings though: If you’re able to and haven’t already, see if you can take advantage of those ultra-low mortgage rates through refinancing. Refinancing your mortgage at today’s rates could possibly save you $200 each month on your mortgage payments.

Home owners will likely head into the new year breathing a huge sigh of relief that one of the biggest threats to home ownership is off the table, at least for now. That was the threat emerging this year from some in Congress who set out to curtail the mortgage interest deduction–you know, that big fat tax deduction you get every year for being a responsible home owner. Well, when reviewing budget cuts, some in Congress eyed the mortgage interest deduction. As home owners, we should closely watch any threats to the mortgage interest deduction and make sure this vital benefit to home ownership stays safe in 2012 and beyond.

So, whoever you are – home buyer, seller, or home owner–rest assured, things are perking up after all. While no doubt it’s been a rough few years in real estate, it looks like there is a light emerging from this long, dark tunnel.

That’s the wonderful thing about a new year. You get to say goodbye to the old – and hello to the new. It’s a fresh start, and a welcome one, at that.

So from all of us here at Real Estate Today, we hope the year ahead is filled with successes for you and your family. And whether you’re buying, selling or staying put – we’ll be here every week, with the information, the techniques and the strategies you need, to make 2012 a great year – for your pursuit of the American Dream.