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Posts Tagged ‘home’
Monday, November 2nd, 2009
 Last week a bi-partisan deal was announced in the Senate that will likely pave the way for the new homebuyer’s tax credit to be extended through April 2010. The deal also includes plans for a significant expansion of the tax credit, raising the income requirements to $125,000 per individual and $225,000 per couple from $75,000 per individual and $150,000 per couple. This expansion means that many more individuals will be eligible for the tax credit than were previously. Finally, the deal added a $6,500 tax credit will be available to homeowners wishing to move out of their current home into a more expensive one.
I have been thinking about the deal all weekend, and I worry about its effects. While the goal of the credit is to strengthen the market and help bring home prices back up, increasing income requirements and adding a tax credit to incentivize trading up seems like it risks exacerbating the current problems in the housing market. Many of the current problems in the housing market have been created by homeowners (many first-time homeowners) taking out mortgages that were more than they could afford to pay in order to buy homes. Even when they could afford the mortgage, the recent economic problems have led many to be out of work or find their401(k)s and pensions to be less than they had expected. Consequently, the number of foreclosures and mortgage delinquencies reached all time highs in recent months.
In light of these developments, some proposed that maybe homeownership should no longer be an essential part of the American Dream. It was argued that it is a disservice to put people into homes they cannot afford. While the tax credit is not a very large sum of money, it is enough money to push individuals to act in uncertain times. A realtor in Portland, ME commented that nearly 70% of their clients were motivated by the tax credit. Yes, the housing market could use a boost, but when individuals are making a significant long-term financial decision for a short-term financial incentive, it seems like many poor choices can occur.
Reverse mortgages and refinances are available to help homeowners who find themselves over-extended, but reverse mortgages are only available to those over 62, and refinances and short pays have been extremely hard to get. To avoid another housing crisis, the government does need to stimulate the market, but putting more borrowers into homes they cannot afford does not seem to be a safe way to do so.
Tags: home, home prices, homeowner, homeowners, housing crisis, housing market, money, refinance, reverse mortgage, reverse mortgages, Senate, tax credit
Posted in Consumer News, Industry News | No Comments »
Thursday, September 3rd, 2009
 An article in the Wall Street Journal today focused on a noteworthy new phenomenon: more homeowners are taking in renters. In some cases, homeowners are taking in renters in homes they still live in as a way to help make ends meet. In others, homeowners are becoming landlords, renting out homes they are unable to sell. This seems to be a popular option when the homeowners are forced to make a quick move- especially in the distressed real estate market. While to qualify for a reverse mortgage, a single family residence cannot be a rental property, nor can any portion of it be a rental property, renting out a home may be a good option for those who do not qualify for a reverse mortgage, but need the income from their home. In addition, multi-family homes with separate apartments may be rented and still qualify for a reverse mortgage as long as the homeowner continues to occupy the home.
There are some additional costs that come with being a landlord. Landlord insurance is about 25% higher than homeowners insurance, and landlords who use property manages may wind up paying them 3-12% of the rent. However, a tenant can be a good source of income, helping homeowners be able to continue to afford mortgage payments or break even on a property. When homeowners need to relocate in a short time frame, taking on a tenant helps alleviate the financial burden of paying for two mortgages at once (or a mortgage and rent).
Tags: home, homeowner, homeowners, landlord, landlord insurance, landlords, Mortgage, real estate, rent, renter, renters, reverse mortgage, reverse mortgages, Wall Street Journal
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Monday, August 17th, 2009
 A wonderful article in the Wall Street Journal this week focused on changes in buying vs. renting as outgrowths of the American Dream and supported the position that the Obama Administration should turn to helping renters, rather than putting all of its money into revitalizing the housing market. The idea is an interesting one. Before the Great Depression, homeowners were either very wealthy or people who built the house themselves. The vast majority of Americans rented.
Now, home ownership has become synonymous with the American dream. A noteworthy quote mentioned in the article is, “‘A man is not a whole and complete man unless he owns a house and the ground it stands on.” – Walt Whitman. But this change was only completed as the federal government stepped in to dramatically assist and subsidize lenders with the creation of government programs such as the Home Owners Loan Corporation and the Federal Housing Administration. I would also argue that the change occurred partly due to class issues, as wartime and the Great Depression led to the ascendancy of the self-made man and decreased the emphasis on Old Money. Regardless, the change to a society that glorified home ownership was not made until the 1930s, and has still not occured in many European countries, where most rent.
It is true that the Obama Administration has spent a lot of money to try to help stimulate the housing market and keep homeowners that are behind on their mortgages in their homes. The aptly named “Save the Dream” fair in Atlanta this past weekend seems to aptly illustrate this idea that the dream of owning a home is a fleeting one. A report by the National Foundation for Credit Counseling in June found that 1/3 of Americans believe they will never be able to own a home, and 42% of those who owned a home in the past but do not own one currently believe they will never be able to own one again. This is hardly optimistic data for those seeking to restart the home ownership market.
In New York City (and I imagine in other urban areas as well), there are programs in which the government assists low-income families with finding apartments. I believe there are even cases when rents are subsidized, depending on the circumstance. Assisting landlords and tenants may be the best way to help combat the housing crisis. Landlords in default or distress can cause problems for tenants, who may find themselves evicted. In cities where property values are high, many renters can be stuck with rents that amount to more than half their salaries.
Helping renters will help individuals save money, perhaps leading them on the path to home ownership, while, in the meantime, improving their present situation. Although programs such as the reverse mortgage program and the HECM for Purchase program are wonderful ways to help homeowners, the point that renters should be attended to as well (and perhaps instead) of simply focusing on homeowners is a valid one that has been long overdue.
Tags: American dream, Americans, buying, Great Depression, HECM for purchase, home, home ownership, homeowners, National Foundation for Credit Counseling, New York City, Obama administration, rent, renting, reverse mortgage, reverse mortgages, Wall Street Journal
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Tuesday, July 21st, 2009
 Another component to aging in place safely is safe driving. Many suburbs and rural areas are not easily navigatable without the ability to drive. This means that when seniors lose their mobility and/or ability to drive safely, many of them are forced to move out of their homes. Other times, seniors who choose to stay become a part of a “homebound elderly” population, which does not make aging easy.
In the last week or so, AAA has announced a number of resources to help senior drivers stay safe on the roads. Programs like Carfit help ensure that senior’s cars are safe so that they are less likely to be killed in a crash. Drivesharp, one of the newest AAA offerings, is a computer software program that strengthens the brain’s ability to process what drivers see, so that they can focus better, keep track of more on the road, and react faster when driving. Many of these problems are more likely to plague seniors, and improvements in visual processing decrease crash risk. Roadside Review and I Drive Safely’s Mature Drivers Course are two other examples of programs targetted towards helping senior drivers improve their skills and abilities so that they can stay on the road longer, prolonging their ability to remain in their home.
For more information, visit www.aaa.com or www.aaaseniors.com.
Tags: AAA, accessibility, aging in place, Carfit, course, crash, driver, drivers, Drivesharp, driving, home, I Drive Safely, reverse mortgage, reverse mortgages, Roadside Review, safe driving, senior, seniors
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Friday, July 17th, 2009
 More people are starting to build new homes again, or at least, that’s what the numbers from the unexpected rise in housing starts in June appear to show. The number of housing starts rose 3.6% (or about 20,000 seasonally adjusted starts) to 582,000 units. Even larger leaps were seen in the number of housing starts of single family homes (14.4%) and the number of permits to break ground (8.7%). Analysts had expected these values to remain unchanged from previous months.
While the number of housing starts and permits to break ground are still down around 50% from a year ago, the increase is still a sign of progress. It seems that few aspects of the real estate industry have defied analyst’s expectations recently, and the large unexpected jumps are a definite exception. Although one wonders slightly whether developers will be able to fill all their new properties, it is good to see people building homes again. Perhaps once the new properties are completed, the worst of the recession will be over.
Tags: break ground, home, homes, housing, housing starts, June, permits, real estate, real estate industry, recession, single family homes
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Thursday, June 4th, 2009
 Every day I talk to clients across the country confused on how appraisals work, and the ultimate value of their home. I am not an appraiser, just someone with experience reading hundreds of appraisals and understanding in broad terms how appraisers come to report the value of a home.
Today I spent twenty minutes on the phone with a pleasant woman, who is convinced that her home is worth at least $210,000. We spent much of the call going through every detail of her home, which sounds well-maintained and in great condition. I know the color of the carpets and walls in every room, the materials used in the updated kitchen, and the time that went into the landscaping.
This twenty minute tour of her home didn’t change the fact that two homes of similar square footage have sold on her street recently for under $150,000. The hard truth of the current market, full of foreclosures, and short-sales came crashing down on her Reverse Mortgage dreams. With so few retail sales recently, distress sales make up the bulk of the comparable sales and are exerting unprecedented influence on appraised values.
I am not writing this to tell horror stories about appraisals (although I have some that come to mind), only in the hope that we can all be a little more realistic about today’s real estate market. Appraisals can not take into consideration the beautifully decorated kitchen, except to perhaps slightly increase the value due to the homes great condition. Appraisers look at square footage, lot size, and overall condition of the property, number of bedrooms, number of bathrooms, and features, among many other factors. They look at comparable sales within the area within a certain time period. Unfortunately, that means that if a home down the street is the same model on the same lot as yours in similar condition it will reflect heavily on your value, even if they did not put the same amount of work into the landscaping or the interior of the home.
The appraiser’s job is not to assess the value of the upgrades made to the home, but only to compare your property’s overall condition to the overall condition of other sales in the area. Homes currently on the market have no bearing on the value until they have sold, providing a current comparable sale. Until then, the home on the market only increases property inventory which can actually reduce the value of your home.
Even experienced professionals in the real estate industry are often surprised lately by low appraisals. Please, heed my advice and research other sales in your area as well as similar properties that are pending sales to be sure you have an informed opinion of the value of your home to save much heartache and frustration, and in some cases money if the appraisal comes back lower than what is acceptable.
Bill Tennant is the Vice President of Access Reverse Mortgage in St. Petersburg, FL. He is a guest contributor to the site.
Tags: Access Reverse Mortgage, appraisal, appraisals, appraiser, appraisers, guest, home, home value, home values, homes, reverse mortgage, reverse mortgages
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Thursday, May 14th, 2009
 A house near Grandma's house
My grandmother enjoys telling the story of how I helped them find their new home. I was about 10 at the time, and they were looking at a house in an area of Riverdale called Fieldston, near what would become my high school. I don’t remember all the details, but when I saw the house, I told them that they should buy it and then the whole family could move in. I found rooms for my cousins, my aunts and uncles, my parents, and my brother and I. The house is not that large, but again, I was 10. And it was cozy and gorgeous.
As the years passed, I have a lot of great memories of my time spent there. I remember watching the Clinton impeachment trial from the study and my first experience with the Romance channel. There were family gatherings, tea, chamber music and split pea soup. And I remember, more than 12 years later, going back for the reception after my grandfather’s funeral.
It’s amazing how a place can have so many memmories, and a memoir, essay, or post could probably be written about each of them. And when I first heard about reverse mortgages, it was my grandmother’s house that I thought of first. Because so many of the stories in our family are tied to places, like The House in Stockbridge and The House on River Road, and, as I grow up, those are the stories I want to tell my children. Those are the homes I want to show them, so I can say “Look, this is where I grew up.”
I am young. I have very little idea of anyone’s financial situations and could never dream of making a reverse mortgage calculation. And, due to my love of the house and its high property value, I don’t know what I’d choose to do were I the one mulling over the reverse mortgage option. But any time I see a photo of a “grandma’s house,” I’m glad a program like this exists that can help keep grandparents in their homes should they choose to stay there.
Tags: Fieldston, grandma, grandma's house, grandmother, grandpa, grandparents, home, house, reverse mortgage, reverse mortgages, Riverdale
Posted in Consumer News, Industry News | No Comments »
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Last week a bi-partisan deal was announced in the Senate that will likely pave the way for the new homebuyer’s tax credit to be extended through April 2010. The deal also includes plans for a significant expansion of the tax credit, raising the income requirements to $125,000 per individual and $225,000 per couple from $75,000 per individual and $150,000 per couple. This expansion means that many more individuals will be eligible for the tax credit than were previously. Finally, the deal added a $6,500 tax credit will be available to homeowners wishing to move out of their current home into a more expensive one.
