A Good Time to Buy

Experienced home buyers know that one of the first steps in beginning a successful search for a new house is taking a hard, objective look at finances.

Determining how much money you can dedicate to the purchase of your new house affects almost every aspect of buying a new home - including how professionals write the offer, which mortgage programs you will qualify for, shopping for the best mortgage loan and which homes are truly in your price range.
 If you would like to start the qualifying process today, give me a call and I’ll put my professional network of lenders to work for you so that you can start looking for your home.

Attaining the American Dream: 5 Financial Reasons to Buy

Heading into 2015 many people have their sights set on buying a home. The personal reasons differ for each buyer, with many basic similarities. Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top 5 financial benefits of homeownership his paper - The Dream Lives On: the Future of Homeownership in America.

Here are the five reasons, each followed by an excerpt from the study:

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You're paying for housing whether you own or rent. 

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. from KCM

Newest 3D Printer Makes Low Cost Housing Out of Mud

Based out of Italy and recently debuting their latest development -- a 3D printer that squirts out mud -- at Rome's Maker Faire, WASP (World’s Advanced Saving Project) may be the future of housing in many parts of the world where earth is the most abundant, and affordable, local building material around. The aim is to ease the labour-intensive process that building with earth requires, with an automated, digital fabrication process, using one of humanity's oldest building materials.
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A Stunning $441 Billion Paid in Rent ion 2014

A recently released study revealed that a whopping $441 Billion was spent on rents in the U.S. in 2014. This represents an increase of over $20 Billion from the year before. As shown on the chart below, rents have increased consistently over the last 20+ years.

Why such a jump? 

Many Millennials have postponed the purchase of their first home while waiting for the economy to recover. This has increased demand and dramatically lowered vacancy rates. In a recent article on the MarketWatch, economics reporter Ruth Mantell explains:

“Landlords have ramped up rents by the fastest pace in six years, with national vacancy rates the lowest in two decades.”

Zillow Chief Economist Stan Humphries let us know that increases will continue:

“Another increase in total rent paid similar to that seen this year isn't out of the question. In fact, it's probable."

Perfect economic mix set to boost housing in 2015

2015 is shaping up to be one of those rare times when strong economic growth is accompanied by low interest rates, the perfect mix for these names, according to a historical study of stock prices using Kensho, a quantitative tool used by hedge funds.

CNBC looked at the periods since 1980 when GDP was above 2 percent, yet the 10-year Treasury yield remained under 2.5 percent. In total, there has been about one year or four quarters of time when both these conditions were met and homebuilder stocks were far and away the standouts among stocks in the S&P 500.

Where Are Rents Headed in 2015?

CNBC’s Diana Olick recently reported that rents in the residential housing sector continued to rise in 2014. She interviewed Jed Kolko, Chief Economist at Trulia, who revealed:

"Rents are rising because of strong demand that supply hasn't kept up with. Nearly all the new households are renters, and young people moving out of their parents' homes will keep fueling rental demand."

Where are rents headed in 2015?

The question now is where rents will be heading over the next twelve months. In a press release last week, Zillow chief economist Dr. Stan Humphries predicted residential rental prices will continue to climb in 2015:

"Home value appreciation will continue to cool down, from roughly 6 percent now to around 2.5 percent by the end of 2015. But rents will see no such slowdown, and will continue to grow around 3.5 percent annually throughout 2015. As renters' costs keep going up, I expect the allure of fixed mortgage payments and a more stable housing market will entice many more otherwise content renters into the housing market."

However, those potential buyers must make a decision quickly because, as Kolko explains:

“Paying more on rent makes it harder for would-be homebuyers to save for a down payment."

Bottom Line

Ryan Severino, a senior economist at Reis, in Olick’s article stated the obvious:

"Landlords should still be able to push asking rent increases on to their tenants."

If you are thinking about buying a home in 2015 instead of continuing to rent, it probably makes sense.