How the foreclosure process works in N.C.
By Christine Rexrode
crexrode@charlotteobserver.com
Posted: Sunday, Oct. 31, 2010
If you're afraid that you're about to fall behind on your mortgage, you should contact your bank as soon as possible to try to work out a new payment plan. You should also talk to a HUD-approved counselor, even if the bank has already started foreclosure proceedings against you. You should be able to negotiate with your bank up until the final sale date. See www.ncforeclosurehelp.org for more information.
A house doesn't go into foreclosure as soon as a borrower misses a payment. It can take months or even years from the time that the borrower first defaults until the house is actually repossessed and the borrower is required to leave.
North Carolina's Administrative Office of the Courts calculates there were nearly 53,000 foreclosures started in the state through the end of September, but not all of those will end in actual foreclosure sales or repossessions. The N.C. Commissioner of Banks' office estimates that about half of the foreclosure starts in North Carolina actually become foreclosure sales.
Here's how the foreclosure process works in North Carolina.
STEP 1
The borrower defaults on his mortgage payment, and the bank starts sending letters threatening foreclosure action. Typically, the bank waits about 90 days before referring the case to the trustee. The trustee is a person, usually a lawyer, who is supposed to be an impartial party who makes sure that everyone in the foreclosure process is notified correctly.
STEP 2
The trustee notifies the borrower that he is going to file foreclosure papers, then files at the county courthouse and gives the homeowner notice that there will be a hearing at the Clerk of Court's office.
STEP 3
At the hearing, the trustee must prove that there is a debt, that the borrower is in default, that the mortgage agreement gives the bank the right to foreclose, and that the homeowner has been properly notified. The borrower can appeal if he can show that the trustee can't prove one of these facts.
(If the homeowner has some other line of defense - for example, he might say that the bank hired debt collectors who harassed him - then he has to file a separate lawsuit and get an injunction to stop the foreclosure filing from moving forward in the Clerk of Court's office.)
North Carolina law also requires the bank to show that it has tried to resolve the delinquent loan without resorting to foreclosure; usually, this means it has to show that it tried to work out a mortgage modification with the borrower. The clerk can grant an extension of up to 60 days if she believes that a mortgage modification could probably be worked out.
STEP 4
If the clerk allows the foreclosure to move forward, then the trustee posts a notice of sale at the courthouse and publishes another notice in the newspaper, usually the Mecklenburg Times. The trustee must also notify the homeowner.
STEP 5
The foreclosure sale is conducted by the trustee at the courthouse. In Mecklenburg, the sales happen in a designated area on the first floor. Anybody can bid at the sale. The bank usually bids the amount it is owed, although sometimes it will bid less to try to stir up interest in the property.
STEP 6
The trustee files a report of sale at the courthouse. There is a 10-day "upset bid period" where anyone can place a higher bid, as long as it is at least 5 percent more than the previous bid. The borrower can also file at any time for Chapter 13 bankruptcy protection, which will temporarily stop foreclosure proceedings.
STEP 7
If no upset bids are placed, the trustee files the final sale report and the delinquent borrower must leave the house. If the bank is the new owner, the property is called bank-owned or real-estate-owned. Most people who buy foreclosure properties buy them from the bank, rather than at the courthouse sale.
Sources: Mecklenburg County Clerk of Court’s office, N.C. Commissioner of the Banks’ office, Charlotte attorney G. Martin Hunter, Charlotte attorney Peter J. Underhill
Subscribe to The Charlotte Observer.
Read more: http://www.charlotteobserver.com/2010/10/31/1799908/how-foreclosure-process-works.html#ixzz13wEIGjq1
Minggu, 31 Oktober 2010
Sabtu, 23 Oktober 2010
Home sales in selected areas of New Bern
Neuse Harbour
Active homes for sale by price range
Current number of homes on the market=12
Pending sales=0
Active homes for sale by price range
$240,000-$300,000=6
$,300,000-$400,000=3
$400,000-$439,000=2
$1,250,000=1
There were 6 homes that sold and closed in Neuse Harbour in the last 6 months. The most expensive was $250,000
Stately Pines
Current homes on the market=6
Pending sales=1
Active homes for sale by price range
$181,900-$200,000=4
$200,000-$288,000=1
$799,000=1
There were 7 homes that sold and closed in Stately Pines in the last 6 months. The most expensive house sold was $262,500.
Carolina Pines
Current homes on the market=22
Pending sales=1
Active homes for sale by price range
$107,000-$150,000=5
$151,000-$200,000=8
$201,000-$256,000=9
There were 17 homes that sold and closed in Carolina Pines in the last 6 months. The highest priced home sold was $249,000.
Tucker Creek
Current homes on the market=6
Pending sales=2
Active homes for sale by price range
$119,900-180,000=4
$269,000-$299,000=2
There were 9 homes that sold and closed in Tucker Creek in the last 6 months. The highest priced home sold was $270,000.
Feel free to call or email me if you would like to have a customized absorption rate or a Comparable Market Analysis for your property.
Currently mortgage interest rates are low which is great news for buyers. 30 year mortgages are being quoted at 4.21% and 15 year mortgages are 3.64%.
1002 homes were sold in our entire MLS system from Jan.1 2010 thru Oct.23, 2010. Of these 226 were new construction.
982 homes were sold in our entire MLS system from Jan.1 2009 thru Sept.15, 2009. Of these 268 were new construction.
Craven County News
As an elected official I serve at the pleasure of the public. If I can be of service to you on any local government issue please don’t hesitate to email me. And if you have an issue that pertains to the state government and are having trouble get a response from the state I am always willing to try to help.
Any suggestions to make this article better would be welcomed. I can be reached at SteveTyson@NCmove.com And remember you can always visit me online at www.NewBern-NC.Info
Realtor Steve Tyson
The Tyson Group Realtors
Active homes for sale by price range
Current number of homes on the market=12
Pending sales=0
Active homes for sale by price range
$240,000-$300,000=6
$,300,000-$400,000=3
$400,000-$439,000=2
$1,250,000=1
There were 6 homes that sold and closed in Neuse Harbour in the last 6 months. The most expensive was $250,000
Stately Pines
Current homes on the market=6
Pending sales=1
Active homes for sale by price range
$181,900-$200,000=4
$200,000-$288,000=1
$799,000=1
There were 7 homes that sold and closed in Stately Pines in the last 6 months. The most expensive house sold was $262,500.
Carolina Pines
Current homes on the market=22
Pending sales=1
Active homes for sale by price range
$107,000-$150,000=5
$151,000-$200,000=8
$201,000-$256,000=9
There were 17 homes that sold and closed in Carolina Pines in the last 6 months. The highest priced home sold was $249,000.
Tucker Creek
Current homes on the market=6
Pending sales=2
Active homes for sale by price range
$119,900-180,000=4
$269,000-$299,000=2
There were 9 homes that sold and closed in Tucker Creek in the last 6 months. The highest priced home sold was $270,000.
Feel free to call or email me if you would like to have a customized absorption rate or a Comparable Market Analysis for your property.
Currently mortgage interest rates are low which is great news for buyers. 30 year mortgages are being quoted at 4.21% and 15 year mortgages are 3.64%.
1002 homes were sold in our entire MLS system from Jan.1 2010 thru Oct.23, 2010. Of these 226 were new construction.
982 homes were sold in our entire MLS system from Jan.1 2009 thru Sept.15, 2009. Of these 268 were new construction.
Craven County News
As an elected official I serve at the pleasure of the public. If I can be of service to you on any local government issue please don’t hesitate to email me. And if you have an issue that pertains to the state government and are having trouble get a response from the state I am always willing to try to help.
Any suggestions to make this article better would be welcomed. I can be reached at SteveTyson@NCmove.com And remember you can always visit me online at www.NewBern-NC.Info
Realtor Steve Tyson
The Tyson Group Realtors
Senin, 18 Oktober 2010
Update
Hi folks.
Been very, very busy the last couple of weeks. But I am still posting. In a more limited fashion but posting nonetheless.
Been very, very busy the last couple of weeks. But I am still posting. In a more limited fashion but posting nonetheless.
Selasa, 05 Oktober 2010
Wrong again
Nation's Building News
The Official Online Newspaper of NAHB
FONT SIZE: A A AHousing Forum
Once Again, the Housing Naysayers Have Got It Wrong
By Jason Forrest
The naysayers and pessimists are out in full force with their doomsday proclamations that homes are no longer a solid investment.
The New York Times printed this headline in August: "Housing Fades as a Means to Build Wealth, Analysts Say." And the September issue of Time magazine has the cover story, “Rethinking Homeownership: Why Owning a Home May No Longer Make Economic Sense.”
People have been reading these articles and thinking that they shouldn’t buy a home, but historically, booms always follow busts and demand eventually catches up with supply. Add the basic human need for shelter and the United States is in position for the inevitable — another housing boom.
It’s not the first time we’ve seen dismal predictions from credible sources such as The New York Times and Time magazine. Here are a few others:
■“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.” — Time
■“If you are looking to buy, be careful. Rising home values are not a sure thing anymore.” — The Miami Herald
■“Most economists agree a home will become little more than a roof and a tax deduction, certainly not the lucrative investment it was.” — Money
■“We’re starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot.” — Los Angeles Times
■“Financial planners agree that houses will continue to be a poor investment.” — Kiplinger’s Personal Finance Magazine
But wait, I forgot to mention the dates. Each of the above quotes was printed between 1947 and 1993. And following each, the markets recovered and eventually boomed. That means they were all wrong. Demand caught up with supply and the economy improved.
Those last two quotes came from 1993, a low point for real estate values in Los Angeles. Median prices in L.A. reached $222,200 at their peak in 1990, and dropped to $178,300 in 1998. Selling during the bust would have cost home owners more than 20%. I’d be willing to bet that more than a few people heeded the advice not to buy a home in the L.A. area and then missed out on one of the biggest housing booms in history. As usual though, prices rose in the long term, with median values reaching $533,200 in 2005. In 2010, median prices in L.A. are at $345,000, according to John Burns Real Estate Consulting's August 2010 report, which still represents a gain of more than 55% from 1990.
Los Angeles is not alone. The median home price in Austin, Texas, reached $109,000 in 1988. Two years later, median prices had fallen 28.5%, to $81,200. Median home prices in Austin today have reached $202,800, according to Burns, more than an 86% increase since 1988. Similar trends have occurred in San Francisco, Phoenix, Denver, Honolulu and other markets.
(In his article, “Housing Is Good as Gold,” Paul Cardis, founder and CEO of AVID Ratings, includes a graph highlighting national boom and bust cycles in the last 49 years.)
Warren Buffett says, “Be greedy when others are fearful and fearful when others are greedy.” That means that the time to buy is when the masses are freaked out and prices are low.
History repeats itself. Land has been king for thousands of years — starting with Solomon and going all the way through Warren Buffett, who has recently taken on top economists himself by ruling out a double-dip recession.
My dad taught me that if you want to be the best at something, you should copy what the best do. So if you want to be wealthy and successful, you copy the top 10%. As one of the world’s richest people, Warren Buffett’s strategy seems to be working out all right for him.
Investors are buying land while it’s cheap to eventually make a profit on the re-sale, and they now make up 60% of the buyers, said Jeff Frieden, CEO of REDC, in July’s Investor’s Business Daily.
In the recent New York Times article cited above, Stan Humphries, chief economist for the real estate site Zillow, said “housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.” He’s wrong — demand will catch up with the surplus housing inventory and then outweigh the supply.
We have yet to figure out a way to produce more land, but people still need places to live. Plus, the population is growing. More than 4.3 million babies were born in the U.S. in 2007, and they will be looking for homes sometime in the late 2020s. The Census also estimates an average 888,000 immigrants entering the country annually and projects a U.S. population of 392 million by 2050, more than a 50% increase in size from 1990.
Housing opportunities will also continue to arise from people entering new stages of their lives. The Census counted more than 54.5 million Americans between the ages of 50 and 64 in 2008. Approaching retirement, many of these folks will downsize or move to active adult communities like The Villages in Florida, the largest, most successful retirement community in the nation.
Growing families will want more space; newlyweds (there were almost 2.2 million of them in 2008) will need homes and workers will be moving in response to new jobs, job relocations or raises. Add those entering the workforce from high school and college, and demand is bottling up, positioning the U.S. for another housing boom.
Beyond the historical elements and the logic of supply versus demand, people are driven to buy homes for emotional reasons. Psychologists say that buying a home is the third most emotional thing people go through, following birth and marriage. Shelter is a basic human need; in Maslow’s hierarchy of needs it is right up there with food, air and sleep. But buying a home is also an important step in improving your life. It can mean a better school district or a less stressful marriage and it’s at the core of the American dream. Homes are a sound financial investment, but if that alone doesn’t motivate people to buy, their emotions will.
People are bound to panic during busts, giving in to their fears and market anxiety. Even so, as always, housing remains a solid investment. Demand will catch up with the supply; historically, booms always follow busts; and people are emotional beings who will do whatever it takes to provide for their families.
Jason Forrest is a new home sales trainer and author of “Creating Urgency in a Non-Urgent Housing Market” and “40 Day Sales Dare.” Contact information is on his website: www.jasonforrestspeaker.com.
The Official Online Newspaper of NAHB
FONT SIZE: A A AHousing Forum
Once Again, the Housing Naysayers Have Got It Wrong
By Jason Forrest
The naysayers and pessimists are out in full force with their doomsday proclamations that homes are no longer a solid investment.
The New York Times printed this headline in August: "Housing Fades as a Means to Build Wealth, Analysts Say." And the September issue of Time magazine has the cover story, “Rethinking Homeownership: Why Owning a Home May No Longer Make Economic Sense.”
People have been reading these articles and thinking that they shouldn’t buy a home, but historically, booms always follow busts and demand eventually catches up with supply. Add the basic human need for shelter and the United States is in position for the inevitable — another housing boom.
It’s not the first time we’ve seen dismal predictions from credible sources such as The New York Times and Time magazine. Here are a few others:
■“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.” — Time
■“If you are looking to buy, be careful. Rising home values are not a sure thing anymore.” — The Miami Herald
■“Most economists agree a home will become little more than a roof and a tax deduction, certainly not the lucrative investment it was.” — Money
■“We’re starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot.” — Los Angeles Times
■“Financial planners agree that houses will continue to be a poor investment.” — Kiplinger’s Personal Finance Magazine
But wait, I forgot to mention the dates. Each of the above quotes was printed between 1947 and 1993. And following each, the markets recovered and eventually boomed. That means they were all wrong. Demand caught up with supply and the economy improved.
Those last two quotes came from 1993, a low point for real estate values in Los Angeles. Median prices in L.A. reached $222,200 at their peak in 1990, and dropped to $178,300 in 1998. Selling during the bust would have cost home owners more than 20%. I’d be willing to bet that more than a few people heeded the advice not to buy a home in the L.A. area and then missed out on one of the biggest housing booms in history. As usual though, prices rose in the long term, with median values reaching $533,200 in 2005. In 2010, median prices in L.A. are at $345,000, according to John Burns Real Estate Consulting's August 2010 report, which still represents a gain of more than 55% from 1990.
Los Angeles is not alone. The median home price in Austin, Texas, reached $109,000 in 1988. Two years later, median prices had fallen 28.5%, to $81,200. Median home prices in Austin today have reached $202,800, according to Burns, more than an 86% increase since 1988. Similar trends have occurred in San Francisco, Phoenix, Denver, Honolulu and other markets.
(In his article, “Housing Is Good as Gold,” Paul Cardis, founder and CEO of AVID Ratings, includes a graph highlighting national boom and bust cycles in the last 49 years.)
Warren Buffett says, “Be greedy when others are fearful and fearful when others are greedy.” That means that the time to buy is when the masses are freaked out and prices are low.
History repeats itself. Land has been king for thousands of years — starting with Solomon and going all the way through Warren Buffett, who has recently taken on top economists himself by ruling out a double-dip recession.
My dad taught me that if you want to be the best at something, you should copy what the best do. So if you want to be wealthy and successful, you copy the top 10%. As one of the world’s richest people, Warren Buffett’s strategy seems to be working out all right for him.
Investors are buying land while it’s cheap to eventually make a profit on the re-sale, and they now make up 60% of the buyers, said Jeff Frieden, CEO of REDC, in July’s Investor’s Business Daily.
In the recent New York Times article cited above, Stan Humphries, chief economist for the real estate site Zillow, said “housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.” He’s wrong — demand will catch up with the surplus housing inventory and then outweigh the supply.
We have yet to figure out a way to produce more land, but people still need places to live. Plus, the population is growing. More than 4.3 million babies were born in the U.S. in 2007, and they will be looking for homes sometime in the late 2020s. The Census also estimates an average 888,000 immigrants entering the country annually and projects a U.S. population of 392 million by 2050, more than a 50% increase in size from 1990.
Housing opportunities will also continue to arise from people entering new stages of their lives. The Census counted more than 54.5 million Americans between the ages of 50 and 64 in 2008. Approaching retirement, many of these folks will downsize or move to active adult communities like The Villages in Florida, the largest, most successful retirement community in the nation.
Growing families will want more space; newlyweds (there were almost 2.2 million of them in 2008) will need homes and workers will be moving in response to new jobs, job relocations or raises. Add those entering the workforce from high school and college, and demand is bottling up, positioning the U.S. for another housing boom.
Beyond the historical elements and the logic of supply versus demand, people are driven to buy homes for emotional reasons. Psychologists say that buying a home is the third most emotional thing people go through, following birth and marriage. Shelter is a basic human need; in Maslow’s hierarchy of needs it is right up there with food, air and sleep. But buying a home is also an important step in improving your life. It can mean a better school district or a less stressful marriage and it’s at the core of the American dream. Homes are a sound financial investment, but if that alone doesn’t motivate people to buy, their emotions will.
People are bound to panic during busts, giving in to their fears and market anxiety. Even so, as always, housing remains a solid investment. Demand will catch up with the supply; historically, booms always follow busts; and people are emotional beings who will do whatever it takes to provide for their families.
Jason Forrest is a new home sales trainer and author of “Creating Urgency in a Non-Urgent Housing Market” and “40 Day Sales Dare.” Contact information is on his website: www.jasonforrestspeaker.com.
Selasa, 28 September 2010
This is what Scarsdale should have done in the first place
As many of you know, I am one the growing masses that is not exactly crazy about the new Scarsdale AT curriculum.
Unfortunately, in this competitive age of education, school systems need to determine the best course for their students and it appears that one school has been able to reinvent themselves despite being a large school with a bad academic reputation and a strong teacher's union.
4,100 Students Prove ‘Small Is Better’ Rule Wrong
There was one point that I found quite interesting.
These people had the balls to ask for outside help. They were not caught up in their own hubris that they could do a better job on their own, unlike Scarsdale which decided to look into their own pool of resources which maybe deep but not finite.
Only time will tell. Let's see what happens in the next 10 years.
Unfortunately, in this competitive age of education, school systems need to determine the best course for their students and it appears that one school has been able to reinvent themselves despite being a large school with a bad academic reputation and a strong teacher's union.
4,100 Students Prove ‘Small Is Better’ Rule Wrong
There was one point that I found quite interesting.
Brockton’s performance is not as stellar in math as in English language arts, and the committee has hired an outside consultant to help develop strategies for improving math instruction, Mr. Perkins said.
These people had the balls to ask for outside help. They were not caught up in their own hubris that they could do a better job on their own, unlike Scarsdale which decided to look into their own pool of resources which maybe deep but not finite.
Only time will tell. Let's see what happens in the next 10 years.
Senin, 27 September 2010
No one is in control
You can't control a sinking ship.
Recently the New York Times announced that the worm has turned for landlords.
Landlords Are Back in Control
TO the chagrin of many renters in New York City, the balance of power in the rental market has tipped back toward landlords — if not far enough for landlords to start celebrating quite yet.
At the beginning of the year, renters could demand and receive a month of free rent and maybe even get the landlord to pay their broker’s fees. Those concessions, now the exception rather than the rule, are mainly found in brand-new apartment towers whose owners are hoping to fill them quickly. Overall vacancy rates are again hovering around 1 percent, where they were during the boom. Some landlords have started to push for rent increases.
But it is not because of improvements in the rental market.
The true reason is that landlords are very aware of the current economic situation.
The New York City Independent Budget Office has projected slow employment growth in the city through 2011 and does not anticipate a return to pre-downturn levels until mid-2013.
The budget office’s data on the size of the city’s labor force, which includes everyone who is employed or looking for work, also mirror the strengthening rental market earlier in 2010 and the recent weakening. The size of the labor force had dropped through most of 2009 and had finally started to grow again in February 2010, approaching 4 million people. But the number fell by 14,000 in July, and in August grew by only about 2,000. (In August 2008, the last month before the economic meltdown, the city’s labor force grew by 7,500.)
Landlords who were emboldened to stop offering rental concessions earlier in the year “maybe were sensing the jobs picture improving and may have been reacting to that,” said Doug Turetsky, a spokesman for the budget office. The growing vacancy rate in August may also be a reaction to the falloff in the labor force in July, he said.
The reason why landlords were rolling out the red carpet and champagne for renters was that they needed to boost up their tenant base. The objective was to lock in as many people as possible and then pull the red carpet and end the party. And when renters realized that they can't go elsewhere because there are no deals out there and they were better off staying put.
What landlords are doing is textbook accounting. They are increasing their revenue, which is their rent and cutting back on their expenses which are all the concessions they presented in the past.
If you think they are being greedy or taking advantage of renters, they are not. They are actually scared out of their minds.
Job Loss Looms as Part of Stimulus Act Expires
Tens of thousands of people will lose their jobs within weeks unless Congress extends one of the more effective job-creating programs in the $787 billion stimulus act: a $1 billion New Deal-style program that directly paid the salaries of unemployed people so they could get jobs in government, at nonprofit organizations and at many small businesses.
Analyst: Wall St. layoff wave coming in '11
Pink slips will be coming back into fashion next year on Wall Street, one banking analyst is forecasting.
Meredith Whitney, whose reports trumpeting hard times for US banks were stunningly on target as early as 2007, said financial services firms could see as many as 80,000 job losses, or about 10 percent of current payrolls in the sector, between now and early 2012.
"Over the next 18 months, Wall Street will go through yet another iteration of resizing not seen since the post-dotcom era," Whitney recently told clients of her eponymous research firm, Meredith Whitney Advisory Group.
It is a simple equation. If you do not have a job, you are not going to be able to pay the rent let alone look for an apartment.
How New York City landlords are acting is a bell weather of the future of our economy and it should not be taken lightly.
All these developments probably explain my inbox getting carpet bombed with ads from Property Campaign.
Pendulum or noose?
Selasa, 21 September 2010
Reason to buy a home in New Bern today
Enough with the doom and gloom about homeownership.
Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.
The Sept. 6 cover of Time magazine: This is what capitulation looks like.
.After all, at the peak of the bubble five years ago, Time had a different take. "Home Sweet Home," declared its cover then, as it celebrated the boom and asked: "Will your house make you rich?"
But it's not enough just to be contrarian. So here are 10 reasons why it's good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
Brett Arends discusses why he thinks now is a particularly good time to buy a home.
.2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
The June 13, 2005 cover of Time.
.4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said something big.
More on the Developments Blog
Buying a Home, Good Idea?
With Little to Do, Home Builders Focus on Quality
In Monaco, the 'Most Expensive' Home
House of the Day: Private Maine Island
.5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.
6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.
View Full Image
Associated Press
A house for sale in Shelby, Ohio.
.7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.
9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.
10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town.
Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.
The Sept. 6 cover of Time magazine: This is what capitulation looks like.
.After all, at the peak of the bubble five years ago, Time had a different take. "Home Sweet Home," declared its cover then, as it celebrated the boom and asked: "Will your house make you rich?"
But it's not enough just to be contrarian. So here are 10 reasons why it's good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
Brett Arends discusses why he thinks now is a particularly good time to buy a home.
.2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
The June 13, 2005 cover of Time.
.4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said something big.
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House of the Day: Private Maine Island
.5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.
6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.
View Full Image
Associated Press
A house for sale in Shelby, Ohio.
.7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.
9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.
10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town.
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