Archives for May 2011

Does buying really make better sense than renting?

You may be wondering if buying a home is the right thing to do. Relax. Having reservations is normal. The more you know about why you should buy a home, the less scary the entire process will appear to you. Here are six good reasons why you should buy a home: (1) it is still the American Dream; (2) pride of ownership; (3) possible appreciation; (4) mortgage interest deduction; (5) property tax deduction; and, (6) mortgage reduction builds equity.

Forget the finances for a minute. Why did you even begin to consider purchasing a home? The Fannie Mae National Housing Survey shows that four of the biggest reasons people buy a home have nothing at all to do with money: They want a place to raise and educate their children, a place where their family will feel safe, to have plenty of living space, and to have control over the space. What nonfinancial benefits will your family gain from owning a home? Your answers to that question should be the reason you decide to purchase or not. The bottom line is that the cost of a home will probably remain relatively unchanged even if prices continue to depreciate. Don’t allow money to be the only factor in making the decision that’s right for you.

When will I begin to see appreciation if I buy now?

What is appreciation? Why do property values go up?  There are many factors that may cause the property to increase in value over time.  Of course, property appreciation cannot be guaranteed but understanding why you should buy a home or investment property is fundamental to making a sound decision to purchase.  One such bench mark is inflation.  Inflation is caused by an increase of the amount of money in circulation.  The value of money declines and the end result is increased retail prices.  Real estate will usually appreciate in value over time due to rising inflation because of the cost to replace the property has increased.  Is the economy ripe for increased inflation?

 Appreciation can be viewed as short or long term.  Real estate should be an integral part of your investment portfolio.  Just like stocks and bonds, real estate should be held for the long term to capitalize on future appreciation and tax incentives. Appreciation varies by market, so it’s important to look closely at local pricing trends. Nationally, there are indications that values will begin to rise this year. NAR projects home prices to grow slightly (0.5 percent) in 2011. Macro Markets LLC, a financial technology company, recently asked more than 100 housing industry experts to project housing prices through 2015. The results—released in the company’s 2010 Home Price Expectation Survey—show that experts think prices will start increasing in the second half of 2011, reaching a cumulative appreciation of more than 10 percent between now and 2015.

1.”If it’s possible that prices will continue to fall, why should I buy now?”

Here’s an answer from Broker Pam Ermen…The truth is, IT IS DIFFICULT to outrun the interest rate if you choose to define your entire home buying decision by whether home prices will continue to fall  Here’s a great rule of thumb…a 1% increase in the interest rate is equal to a 10% loss in buying power!  As stated by REALTOR.org, price is normally the major concern when selling a home, while cost is often the main concern when purchasing one. So, if you’re deciding whether to buy now, you should take into account what your monthly payment will be, considering not only the price of the home but also the interest rate of your mortgage. Waiting for prices to bottom out while rates are increasing can wind up costing more over the life of the mortgage. Fannie Mae, Freddie Mac, the NATIONAL ASSOCIATION OF REALTORS®, PMI, and the National Mortgage Bankers Association are all that projecting interest rates will increase over the next several quarters. Consider talking to a Regional Home Mortgage Loan Officer  to help you determine what an interest rate increase might cost you if you continue to sit on the fence!

iPhone, iPad?! iDon’t Know!

I have heard it many times: “I am confused with all of the new gadgets available and don’t want to spend my money frivolously.  Should I buy another tool for my business now or wait for the next hot item?”

I can’t say that I am shy in purchasing new technology;   I have bought my share.  I have purchased the in-car turn table for vinyl records; the Atari game system; pagers; cell phones I couldn’t put in the glove compartment; desktop computers, laptops, dumb phones and (not-so) smart ones.  All the before mentioned, except for the car turn table and Atari, I purchased with the belief that: (1) I would become more efficient in my real estate career; (2) I would increase my business; (3) I could keep in touch with my clients with little effort;  and (4) I could free up more personal time.

My journey through the world of technological gadgetry should not necessarily be the path that you travel.  Before you buy, I recommend you develop a list of your anticipated uses for your real estate practice.  Once your list is complete evaluate the tech equipment you currently have.  Concentrate on the utilization of each item: are they mobile; is their use redundant; are they old and in need of upgrading; can I do with less; and, do they complement each other, or just duplicate functions. Second, I recommend speaking with a current owner of the device or the support at your local store to see that they say about how you can use it for your business. And third, I recommend determining how much time you will save with the newer device and how much that is worth to you.

So should you buy the iPad?  It depends.  The iPad is a capable addition to the laptop.  It is much lighter and starts up in a few seconds.   I use my iPad when I am on the go and want the computing power of my laptop and a larger screen than my iPhone.  Take a test drive and look for my future postings on using the iPad for real estate success.

Tip:  Don’t buy the iPad to use it as an e-reader.  For people who read books for 2+ hours at a time and enjoy reading outside in full sunlight you should purchase a product similar to the Kindle instead.