Buying A Home Is Now 38% Cheaper Than Renting

Is renting or buying a better financial bet? Every six months, Trulia’s chief economist Jed Kolko runs the numbers to answer that question and help you stay on top of the trends.  So what does Trulia’s Winter 2014 Rent vs. Buy Report tell us? Although the gap between renting and buying is narrowing across the U.S., homeownership is still 38% cheaper than renting.

Homeownership remains cheaper than renting nationally and in all of the 100 largest metro areas according to Trulia TRLA +1.32%’s latest Winter Rent vs. Buy report. Rising mortgage rates and home prices have narrowed the gap over the past year, though rates have recently dropped and price gains are slowing. Now, at a 30-year fixed rate of 4.5%, buying is 38% cheaper than renting nationally, versus being 44% cheaper one year ago.

rentvsbuy3

The rent versus buy math is different in each local market. Buying ranges from being just 5% cheaper than renting in Honolulu to being 66% cheaper than renting in Detroit. But even for a specific market, the cost of buying versus renting depends on how much home prices rise (or fall) after you buy. Our model assumes conservative home price appreciation, but – as we all know after the last decade – home prices can unexpectedly rocket or plummet.

rentvsbuy1rentvsbuy2Buying Beats Renting Until Mortgage Rates Hit 10.6%

Even though prices increased sharply in many markets over the past year, low mortgage rates have kept homeownership from becoming more expensive than renting. Also, in some markets, like San Francisco and Seattle, rents have risen sharply; rising rents hurt affordability relative to incomes, but rising rents make buying look cheaper in comparison.

Will renting become cheaper than buying soon? Some markets might tip in favor of renting this year as prices continue to rise faster than rents and if – as most economists expect – mortgage rates rise, due both to the strengthening economy and Fed tapering. For each metro, we identified the mortgage rate “tipping point” at which renting becomes cheaper than buying, given current prices and rents. If rates rise, Honolulu would become the first metro to tip, at a mortgage rate of 5.0%. San Jose and San Francisco would also tip before rates reach 6%. But those are the extreme markets. Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.

 

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Helpful Hints to Freshen Up Your Carpets

Freshen Up a Smelly Carpet

Carpets add warmth to a room, but they can pick up a collection of smells and dirty spots. Experts agree that carpeting and rugs should be vacuumed at least once a week to keep dirt from getting embedded in the fibers, where it wears them down. Here’s a way to freshen up a bedraggled carpet…

In an empty spray bottle, mix one part liquid fabric softener (any scent you prefer) with six parts water. Spray the carpet with this solution, and then vacuum. The carpet will be more dust-resistant, generate less static electricity and smell fresher, too.

More help with your carpets…

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Spring Selling Starts Now!

Want to Sell Your Home? The Spring Selling Season May Be Coming Early This Year

Source: Images of Money

If you’re considering selling your home in 2014, now is the time to get ready. Not next month, not next week, not tomorrow. Right now.

Why? Because buyers are already on the hunt.

The Internet is the new curb appeal
Last month will likely be remembered for polar vortexes, widespread snow, and historic traffic jams. Lost in the shuffle is that while American’s were sitting inside trying to stay warm, they were looking at houses for sale on the Internet. 

Experian Marketing Services released its monthly most visited real estate website rankings earlier this week for web traffic in January. The results are eye popping.

Web traffic to real estate websites was up 25% from December to 364 million visits. Zillow (NASDAQ: Z  ) led the way with over 57 million visits and Trulia (NYSE: TRLA  ) limped into second at over 30 million visits.

If you’re considering selling and your home is not yet online, then every day you’re missing out on thousands (or even millions) of potential buyers viewing your home. 

Even more incentive for buyers
Spring is coming, and that is certainly driving a lot of the interest in homes currently listed for sale. But there are other factors at play.

Mortgage rates have declined over the past month and are currently trending back toward 4% for traditionally structured, well qualified loans. This is a significant development for buyers, as interest rates are a huge driver of home affordability.

For example, a traditional 30 year, $150,000 mortgage at 4.5% would have a monthly payment of $760. If rates declined to 4.25%, the payment would change to $738.

For borrowers on the edge of qualifying for a mortgage, that $22 per month savings could make the difference between getting a loan approval or not. Over the life of the loan, that 0.25% difference saves the borrower $7,963!

For buyers, the time is now!
Buy low and sell high, right? For buyers, the time to buy low is quickly ending, creating a sense of urgency to buy now before prices rise too high or interest rates return to more historically normal levels.

According to CoreLogic and reported by Realtor.org, home prices in 2013 saw the largest percentage increase across the board since 2005, north of 11% as of December. The appreciation was most pronounced in the states that were hit hardest in the real estate collapse: Nevada rose 23.9%, California 19.7%, and Michigan 14% rounding out the top three.

Buyers are ready. Are you?
The spring selling season will be in full swing sooner than you think. Rates are low, there is urgency to buy now, and buyers are already coming out of their winter slumber. If you’re planning to sell you home in 2014, you need to be ready now. Don’t miss out on the perfect, well qualified buyer because you waited a moment too long.

There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool’s chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report “The Motley Fool’s Top Stock for 2014.” Just click here to access the report and find out the name of this under-the-radar company.

 

By Jay Jenkins

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If you’re a Buyer waiting on the sidelines, now is the time as mortage rates remain in a downward trend

Mortgage Rates Continue Downward Trend

weekly mortgage rates freddie mac

Daniel Acker/Bloomberg via Getty Images

WASHINGTON — Average U.S. rates for fixed mortgages fell this week as the latest data continued to indicate a pause in the housing market’s recovery.

Mortgage buyer Freddie Mac said Thursday the average rate for the 30-year loan declined to 4.23 percent from 4.32 percent last week. The average for the 15-year loan slipped to 3.33 percent from 3.40 percent.

Mortgage rates have risen about a full percentage point since hitting record lows roughly a year ago. The increase was driven by speculation that the Federal Reserve would reduce its $85 billion a month in bond purchases. Saying the economy was gaining strength, the Fed pushed ahead last week with a plan to reduce the bond purchases, which have kept long-term interest rates low.

Data released Tuesday by real estate specialist CoreLogic (CLGX) showed that U.S. home prices slipped from November to December, and the year-over-year increase slowed, likely a result of weaker sales at the end of last year.

The December decline was the third straight month-to-month drop.

Home prices had risen for eight straight months through September. For all of 2013, prices rose a healthy 11 percent.

The Commerce Department reported Monday that U.S. construction spending rose modestly in December, slowing from healthy gains a month earlier.

Most economists expect home sales and prices to keep rising this year, but at a slower pace. They forecast that both will likely rise around 5 percent, down from double-digit gains in 2013.

Steady job gains are putting more people to work and enabling them to buy a home. And rising prices should encourage more owners to sell their homes. A larger supply of available homes would likely boost sales.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

  • The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan rose to 0.7 point from 0.6 point.
  • The average rate on a one-year adjustable-rate mortgage fell to 2.51 percent from 2.55 percent. The fee increased to 0.5 point from 0.4 point.
  • The average rate on a five-year adjustable mortgage slipped to 3.08 percent from 3.12 percent. The fee held at 0.5 point.

Here’s a look at rates for fixed and adjustable mortgages this week and over the past year. (All values in percentage points):

Loan type Current avg. Last week 52-week high 52-week low
30-year fixed 4.23 4.32 4.58 3.35
15-year fixed 3.33 3.40 3.60 2.56
5-year adjustable 3.08 3.12 3.28 2.56
1-year adjustable 2.51 2.55 2.71 2.51
Source: Freddie Mac Primary Mortgage Market Survey
by The Associated Press Feb 6th 2014 10:20AM
Updated Feb 6th 2014 2:54PM
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The Return of New Construction prevails in the Atlanta Market

Homebuilders Forecasting a Steady Rise in 2014

Construction_of_Home_Pic

Led by a resurgence in single-family production, housing will continue its climb toward higher ground in 2014, but builders are still confronting several challenges that could hinder the pace of the ongoing recovery, according to economists speaking at the National Association of Home Builders (NAHB) International Builders’ Show (IBS) in Las Vegas.

“My single-family forecast for 2014 is pretty aggressiv—822,000 starts which is likely 200,000 more than 2013,” said NAHB Chief Economist David Crowe. “There are five key points to the turnaround. Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing and builders see it.”

Consumer confidence has returned to pre-recession levels and household balance sheets are on the mend. Year-over-year household formations are on the rise and are now averaging 620,000 compared to just 500,000 during the housing downturn. At the height of the housing boom, the U.S. was producing 1.4 million additional households each year.

Meanwhile, new-home sales are averaging just 8.7 percent of total home sales, barely half the historical average of 16.1 percent. In the midst of the Great Recession, the cumulative lost number of existing home sales between 2007 and 2011 totaled more than four million, Crowe said. Moreover, the percentage of mortgages seriously delinquent has fallen and the decline has been larger in markets that had the highest rates.

In a sign that builders are well aware of the trend now under way, the NAHB/Wells Fargo Housing Market Index (HMI), which measures builder sentiment in the single-family housing market, has been above the 50 mark for the past eight months. Any reading above 50 means that more builders view sales conditions as good than poor.

However, Crowe cautioned that builders still face several headwinds, including rising building material prices, persistently tight mortgage credit conditions, difficulties in obtaining accurate appraisals and limited availability in labor and developed lots. Moreover, gridlock and uncertainty in Washington threaten to harm consumer confidence and future housing demand.

A Healthy Outlook
NAHB is forecasting 1.15 million total housing starts in 2014, up 24.5 percent from last year’s total of 928,000 units.

Single-family production is projected to rise 32 percent in 2014 to 822,000 units and surge an additional 41 percent to 1.16 million units next year.

NAHB is anticipating 333,000 multifamily starts in 2014, up 9 percent from 306,000 last year.
Single-family home sales are projected to hit 584,000 this year, a 35.9 percent increase above last year’s 430,000 sales.

Meanwhile, residential remodeling activity is expected to register a modest gain this year over 2013.

The slow and steady housing recovery will bring nationwide housing starts to 71 percent of normal by the fourth quarter of this year and 93 percent of normal by the end of 2015, Crowe said. Viewing the recovery on a state level, by the end of 2015, the top 20 percent of states will be back to normal production levels, compared to the bottom 20 percent, which will still be below 84 percent.

Mortgage Rates Up, but Housing Still Affordable
As the economy strengthens and the Federal Reserve tapers its buy-back of mortgage-backed securities, this should put upward pressure on mortgage rates, but not enough to harm housing affordability, according to Frank Nothaft, vice president and chief economist at Freddie Mac.

“Regarding mortgage rates, we’ve gone from dirt cheap to cheap, and I think we will see a gradual rise of about a half a percentage point to five percent in 2014,” said Nothaft. But even then, he said, “most markets will remain quite affordable.”

Nationally, Nothaft expects that home sales and prices will each rise about 5 percent in 2014 and that housing starts will post a 20 percent gain.

This year, he expects a big transition, as home purchase originations overtake the refinancing market.

“As we move into the 2014 home buying season, it will be a market dominated by home buying originations rather than refinance originations,” said Nothaft. “This will be the first time since 2000 that purchase originations will dominate the market.”

He said the reason for the change is because so many households looking to refinance have already done so, and as mortgage rates gradually rise, fewer home owners will look to refinance. Further, purchase originations are expected to increase as the overall housing market strengthens.

Pent-Up Demand Will Fuel Growth
In the aftermath of the Great Recession, there is a significant pent-up demand to form households and even to build homes, noted David Berson, senior vice president and chief economist at Nationwide Insurance.

“At least 3 million fewer households formed over the past five years than would normally have been expected,” he said, noting that during this period many college graduates were forced to double-up or move in with their parents.

Stronger job growth and a strengthening economy in 2014 should lead to a rise in household formations, which will be important to supplement housing demand, he added.

“I think this will be a pretty good year for home construction,” said Berson. “There will be a big increase in single-family construction, but not as much for multifamily.”

Homebuilders Forecasting a Steady Rise in 2014

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2013 existing home sales strongest in 7 years

2013 existing home sales strongest in 7 years

Image

U.S. home resales rose slightly in December after three monthly falls in a row, as record low mortgage interest rates and pent-up demand continue to sustain a recovery in the market.

The National Association of Realtors (NAR) said on Thursday that sales of previously owned homes rose 1.0 last month, to an annual rate of 4.87 million units. Total sales for 2013 were the strongest in seven years.

Economists polled by Reuters had expected home resales to rise to a 4.94 million-unit pace in December.

(Click here to track U.S. stock indices following the report.)

“For the year as a whole, it’s a good recovery,” NAR economist Lawrence Yun told reporters. “We lost some momentum toward the end of 2013.”

Home resales have been hurt by a sharp rise in mortgage interest rates since the spring and ongoing price increases that have shut some home buyers out of the market.

But other recent indications of the sector’s health have brightened as a steady rise in household formation from multi-decade lows props up demand and encourages builders to undertake new development projects.

Yun said two opposing forces are impacting the market: a mismatch of fast-rising prices coupled with weak income growth, which have combined to make home buying less affordable for many Americans.

The median existing home price rose 9.9 percent in December to $198,000 from the same month in 2012.

Prices have risen mainly due to a shortage of properties on the market. The number of homes for sale remains relatively tight, and the inventory of unsold properties on the market dropped 9.3 from the prior month to 1.86 million.

© 2014 CNBC.com

URL: http://www.cnbc.com/101358564

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5 Dirtiest Spots in Your House and How to Clean Them

5 Dirtiest Spots in Your House and How to Clean Them

Surprise! Dirt, bacteria and germs can live in places in your home you might consider clean. Before you set your family loose to touch, use, and handle these items, make sure they are as clean as can be.

Kitchen Sink

With so much daily use, it’s not completely shocking that your kitchen sink might actually be dirtier and more bacteria-laden than your toilet. While most of us take the time to disinfect our toilets, we forget about the bacteria festering in the sink from food stuck to soaking plates (which can be a breeding ground for salmonella and E.Coli). Don’t just rinse the sink with water: Wash with bleach or a bleach-based cleanser once a day, and rinse. Don’t forget to replace kitchen sponges, brushes and rags regularly.

The TV Remote

Everyone touches the remote. It falls on the floor. The dog sniffs it. It’s not surprising that half the remote controls tested by a study had cold germs on them. Wipe your remote regularly – daily if you can — with an alcohol- or bleach-based wipe or a paper towel with bleach and water.

Your Computer Keyboard

Just like your remote, the computer keyboard picks up germs easily. If you’re sneezing on the keyboard, eating at your desk, or sitting down to work without washing your hands, you’re potentially spreading germs and bacteria. Be sure to wash your hands – and try to get everyone else to do the same – before using your computer, and don’t eat over the keyboard. Shake out crumbs often, and gently wipe down the keyboard and mouse with an alcohol-based wipe on a regular basis.

The Bathtub

Your tub can be a secret home for germs, with warm water making a breeding ground for mold and bacteria. To sanitize the place where you go to get yourself clean, spray down the tub with a daily cleanser after bathing. Regularly use a bleach-based cleanser to truly disinfect, and then rinse and wipe down any damp spots.

Toothbrushes

While we use toothbrushes to clean our mouths, they are accumulating germs and bacteria, not only from us, but also from the bathroom. Replace toothbrushes regularly and keep them in a place they can fully dry out between uses – as far away from the toilet as possible. And always flush with the lid closed, since each flush can spray bacteria.

Article from TLC How Stuff Works

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