What’s Driving Buyers To Buy Homes?

26 01 2011
by Phoebe Chongchua

The Wall Street Journal is reporting that “affordability” is the top reason for home buying in 2010.

That makes sense, especially in unstable market conditions. Buyers, as always, are looking for a bargain but, more than ever, they’ve been enticed by low home prices and low interest rates, according to a survey by Weicher Realtors, Inc.

The survey gathered information from 1,261 of the company’s customers who bought homes between July 1 through December 31, 2010.

What about pride in homeownership? it appears that buying a home because they didn’t want to rent, was not the driving force. Instead, it came down to price. This differs from survey results five years ago when respondents (26%) said, “the desire to own their home and stop paying rent” motivated them to buy, according to the Wall Street Journal.

Another influencer was the desire for more living space. According to the Wall Street Journal the survey reported that 28% of the respondents said, “they bought a house because they wanted more living space or a larger property”. However, 11% of those surveyed said that “potential financial growth” motivated them to purchase a home. This response is similar to the answers received in the survey’s first year (2005) when respondents answered the question, “What motivated you to purchase your home at this time?”

A sharp drop (12%) was reported by respondents who said they bought a house in 2010 due to relocation. The figure was the same as 2009. However, it’s a decrease from 20% in 2008.

Real estate experts believe that buyers are still motivated by the potential financial growth, but indeed a good value in the form of low interest rate and discounted home prices is the driving force these days. So, if you are listing your home for sale, focus on value. Detailed marketing materials that showcase your home’s amenities, walking-distance retail outlets, and neighborhood parks and schools will also help create value.

Don’t underestimate the importance of valuable upgrades such as new appliances, water heater, solar panels, green technology, smart wiring for commonly used technology, and, of course, any energy-saving lighting and/or heating/air conditioning systems that you might have installed.

Light up your house as much as possible when showing or holding an open house. Even if you typically keep the shades drawn, open them up, turn on light fixtures and, if you have skylights, make sure they’re clean.

Value increases for buyers the more they can see themselves living in your home. So, make it cozy, comfortable, and attractive. In the bathrooms, hang color-coordinated towels; some fresh flowers in a vase. And if the walls are scuffed, try using a Magic Eraser. If that doesn’t work, touch up the paint or paint the entire bathroom.

In the dining room or the kitchen, set the table. But don’t overdress the table. Too much stuff on a table makes it look crowded, small, and can be a turn-off.

Remember, selling your home is about creating value for buyers. That means how you live in your home may not be the way you show your home. You may have to put away a lot of the clutter such as trinkets, family photos, pet toys, electrical cords, kids’ toys, and anything else that is personal to you. By doing this you’ll create a greater chance of buyers viewing your home as theirs. And that’s value.

Published: January 21, 2011





Realty Times – Successfully Navigating The Changing World of Mortgages

25 01 2011

Realty Times – Successfully Navigating The Changing World of Mortgages.

The world of mortgages is changing. To paraphrase the old Joni Mitchell song, most consumers will not know what they’ve got until it’s gone.

     

  • They won’t realize that by the time a mortgage is paid off, borrowers have paid two or three times the original amount borrowed—the mortgage principal—to buy real estate they originally bargained hard for to cut costs. 
  • They won’t understand what they could have done to increase their real estate holdings and improve their profits until the legal and tax advantages that support investment and individual creativity disappear.

The real estate and banking sectors are set up to facilitate their deal making and profit taking with a measure of consumer protection added to keep things from becoming noticeably one sided. Too many buyers and sellers further stack the deck against themselves by not digging deeper than fads, marketing, and salesmanship. Most real estate buyers and sellers invest more time learning about their latest mobile device and its apps than exploring ownership and financial strategies for buying residential and recreational property.

Therefore, they may not miss what they did not understand, and would have appreciated, in the first place. Have you heard about a great government program or a tax advantage only when the media lament its end? How do you make sure you are taking advantage of all the options open to you to reduce the cost of the money you borrow to purchase real estate—your mortgage?

Real estate buyers and owners who want to achieve more for less should start this new year by learning what the latest round of mortgage resets mean to their specific real estate goals and opportunities. We always advocate going to the source, so dive into the detail announced by the Federal Ministry of Finance January 17, 2011: http://www.fin.gc.ca/n11/11-003-eng.asp

Here are a few perspectives to start you off.

Just remember, that what is relevant to you and your specific situation may not be on this list, hence the value of going to source:

Motives and motivation: The title, “The Harper Government Takes Prudent Action to Support the Long-Term Stability of Canada’s Housing Market,” has an election ring to it. Either the federal government is positive there won’t be more negatives ahead for housing, so it wants to appear to have created the soft landing, or it is bailing out before problems hit, so it can point fingers at others while patting itself on the back. What’s your opinion?

Reduce amortization: Cutting the maximum amortization period down 5 years to 30 years is not the across-the-board measure it has been presented as. This restriction applies only to new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent. The 35-year amortization may be available for mortgages outside these restrictions for borrowers that lenders feel suit this repayment method. The amortization period is the number of years, at a specific payment amount, that it will take to pay the mortgage principal and interest to zero.

     

  • Buyers’ advantage: The longer the amortization period the smaller the monthly payment of principal and interest, and the greater the mortgage principal a buyer will qualify to borrow. Buyers could opt for the longest amortization possible—which used to be 40 years, then 35 and now 30—and then, down the road, decrease the amortization period on renewal to cut total interest costs. 
  • Owners’ advantage: The shorter the amortization period, the lower the total amount of interest paid on a mortgage. The common 25-year period provides a hefty profit for lenders. Pop your original mortgage principal into a mortgage calculator, and see how much you have paid for this borrowed money in the first 10 years. Compare this with how much is left to pay on the mortgage. Shorten the amortization period as much as possible when you renew. Even one year can make a difference in the total interest paid. 
  • Equity building: The government reports the latest restrictions will “allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire”. Home equity management is an ongoing topic in this column, but if these changes represent the government’s best shot at facilitating equity building, they need input from consumers on what would really aid in accumulating value and repaying mortgage debt.

Taking taxpayers off the hook for lenders: The government backs mortgages arranged to buy real estate, so if the borrower defaults and can’t make payments, the government (that’s taxpayers) cover losses for lenders (that’s largely the big banks). Those same lenders promote refinancing for a range of home improvement and lifestyle uses, the government is letting it be known that this lender-promoted debt should not be as risk-free for lenders as arranging the original mortgage. Lender reactions to the government taking taxpayers off the hook for mortgage default or lack of repayment may not be pleasant for homeowners.

     

  • Restricting access to equity: By lowering the maximum amount Canadians can borrow when refinancing their mortgages the government says it’s promoting savings. The drop from 90 per cent to 85 may not seem significant until you want that 5 per cent in your pocket. This change means the only way to access that 15 per cent is to sell. When so many want to stay in their own homes as they age, does this move seem in synch with consumers goals? 
  • Withdrawing government insurance on lines of credit: Lenders who issue lines of credit secured by real estate, including home equity lines of credit, will no longer have government insurance to cover them against losses. The government believes its move will ensure that risks associated with consumer-debt products used to borrow funds unrelated to real estate purchases are managed by the financial institutions and not borne by taxpayers. Will lenders demand a premium for their additional risk?Note: The adjustments to the mortgage insurance guarantee framework will come into force on March 18, 2011. The withdrawal of government insurance backing on lines of credit secured by homes will come into force on April 18, 2011.

Government intervention: The government’s paternalistic approach with this “for their own good” set of financial rewrites opens the door to many considerations. Do you want the government deciding what’s best for you and your real estate, or would you prefer to deal with lenders who set standards and criteria for lending on a case-by-case basis? What may not be prudent for one borrower may be calculated risk for another.

The Honourable Jim Flaherty, Minister of Finance, was said to make “prudent adjustments to the rules” to “support hard-working Canadian families saving through home ownership”. Does their definition of “saving” properly describe your intentions in owning real estate?

If you need help understanding finance and planning for your future, is the government your preferred source and resource? Maybe the wrong level of government and the wrong ministry are involved. Wouldn’t it be more practical to teach money management and real estate investment in public school, so we all become our own experts?

Published: January 25, 2011





South Bend on the Mend

25 01 2011
by Broderick Perkins

South Bend, IN is shrugging off lackluster years of falling home sales and drooping prices by making a name for itself in the awards and recognition categories.

With most homes selling at or below the $200,000 mark in 2010, the affordable housing town and county seat for Indiana’s St. Joseph County is receiving accolades for boosting the quality of life and growing “green”.

• Gold Award for Municipal Excellence – The National League of Cities (NLC) late last year awarded the town gold for its participation in the formation of the Northeast Neighborhood Revitalization Organization, a partnership for redevelopment efforts that:

– Created a plan that led to the development of the $215-million Eddy Street Commons by Kite Realty Group, supported by $35 million in city infrastructure development.

– Supported infill housing efforts by the Northeast Neighborhood Council and the University of Notre Dame, just north of the city.

– Acquired and re-platted land to build 50 new low-to-moderate income and market-rate homes between Eddy Street Commons and State Highway 23.

“South Bend’s program has improved the quality of life for all citizens by developing a creative solution to a pressing local problem,” said Donald J. Borut, NLC executive director.

Also included in the award recognition was the city’s involvement in the:

– Creation of Innovation Park at Notre Dame (along with the University and Project Future) as part of South Bend’s dual-site, state-certified technology park. In the year since its founding, Innovation Park has been home to more than 30 clients.

– Location and expansion of the Indiana University School of Medicine at South Bend (with Notre Dame).

– Development of a master plan for reuse of the former Saint Joseph Regional Medical Center site, now likely to be the home to a new St. Joseph’s High School.

That’s just for starters.

• In the fall last year, South Bend became the first community in northern Indiana to be designated a Bicycle Friendly Community by the League of American Bicyclists. The award was presented because of the town’s “remarkable commitment” to providing safe accommodation for cycling and encouraging residents to bike for transportation and recreation.

In a previous “green” honor, the Indiana Association of Cities and Towns named South Bend the 2009 Green Community of the Year for 50,000-plus population regions. South Bend has a population of about 104,000 residents.

There’s more.

American City & County Magazine donned Public Works director Gary Gilot with a “Public Works Leader of the Year” designation in August 2010. The award came for Gilot’s model work in reshaping the public works landscape in South Bend. The work included a high-tech solution for sewage overflows and the unique use of University of Notre Dame’s computer servers to heat a greenhouse at Potawatomi Park.

Finally, in early 2010, the NBC’s “Today” show ranked South Bend highest in the nation for it’s collection of real estate properties and for best real estate values (great homes for under $100,000), based on home size and value; area job growth and rising real estate prices.

Real estate agents: Visit Realty Times Market Conditions to file your own report on the South Bend, IN real estate market.

Published: January 20, 2011





Realty Times – Reduce, Reuse, and Recycle Your Closet

23 01 2011

Realty Times – Reduce, Reuse, and Recycle Your Closet.





17 01 2011

YouTube – ROBOPLOW http://ping.fm/QsMAl





16 01 2011

Real Estate Agent Tips, Trends, Data & More: REALTOR® Magazine http://ping.fm/sMVzR





14 01 2011

NHL.com – The National Hockey League http://www.nhl.com/





11 01 2011

Million-dollar gold Monopoly game – Video – Luxury http://ping.fm/3JXMh





7 01 2011

Unemployment rate falls to 9.4% as employers add 103,000 jobs – USATODAY.com http://www.usatoday.com/money/economy/2011-01-07-jobs-december_N.htm





6 01 2011

GOP moves to repeal IRS, bank bailouts – On Politics: Covering the US Congress, Governors, and the 2010 Election – USATODAY.com http://ping.fm/Sk3ii