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Monday, March 22, 2010

Benefits of Home Ownership

Homeownership in Hoboken, NJ can bring with it many blessings. Yet, the idea of caring for and maintaining a home, as well as affording a mortgage can seem daunting, but let's review some of the many reasons that homeownership can be beneficial.

The most obvious benefit is building wealth. The U.S. Department of Housing and Urban Development (HUD) notes that home equity is the largest single source of household wealth for most Americans.

What is home equity? Home equity is the difference between the home's fair market value and the outstanding balance of all liens on the property. Let's say you have a balance of $100,000 left on your home's mortgage, but the property appraises for $150,000. You now have $50,000 worth of home equity.

And let's not forget about appreciation. While there is no set year-to-year rate that is considered normal, reports indicate that you can expect around a 6.5 percent average value increase in your home each year.

The National Homeownership Strategy cites that through homeownership, a family invests in an asset that can grow in value and generate financial security. This is what sets homeowners apart from renters.

Monday, March 15, 2010

Real-Estate Recovery Signaled

The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth. The underlying trend is turning positive.

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

Real-Estate Recovery Signaled

The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth.
The underlying trend is turning positive.

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

Monday, March 08, 2010

Federal Reserve Biege Book/Consumer Confidence Creeping Back

If you're trying to figure out where real estate is headed in the coming months, should you listen to the Federal Reserve or do you focus on the latest pending home sales numbers?

Probably both, but here's a key fact: The Fed's latest "Beige Book" report based on economic data from each of its 12 regional member banks found positive signs in nine of the 12 regions it covered. Despite blizzards and bad weather in January and early February in large portions of the country, the Fed's regional banks found consumer spending and manufacturing output increasing.

What does that signify? Consumers are slowly coming out of their shells, regaining confidence, and beginning to feel good again about buying more goods and services.

On the housing front, the National Association of Realtors reported last week that the severe weather that paralyzed entire sections of the country also put a damper on home shopping last month, knocking down pending home sales by 7.6 percent in the process.

Friday, March 05, 2010

Home Purchases Expected to Rise

Despite the Mortgage Bankers Associations report two weeks ago that purchase applications fell to a 13-year low, mortgage analysts now anticipate home sales to restart yet again as the deadline for the $8,000 first-time homebuyer tax credit and the $6,500 move-up homebuyer tax credit. Lawrence Yun, Chief Economist for the National Association of Realtors, says the recent decline in purchase transactions is due in large part to the delay among homebuyers that have been searching for a home, then ultimately closing on it.

People who got into the market after the homebuyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales. Overall the doom and gloom of the market seems to be a figment of imagination. Jobs also seem to be stabilizing in the 9.5 to 10% range thus we can probably see a decline in the unemployment number very soon.

Monday, March 01, 2010

Enough is Enough

Thanks to the media pundits and agendicized politicians, fear seems to be the theme. Weather or not you believe we will experience a double dip, the numbers tell a different story. On a seasonally-adjusted basis, Case-Shiller's 20-city index was up three tenths of a percent -- the seventh consecutive monthly improvement in pricing. US Housing Starts have reached record lows, why is this bullish?

With less new development on the horizon the market will start to absorb what we call the resale. Inventory has creeped up recently, with housing start numbers lagging it will take a few months to factor in this level of improvement. All in all weather your in Hoboken, Jersey City or the tri state area, the numbers show a different story and as educated consumers we should recognize we are NOT heading into a great depression.

Tuesday, February 09, 2010

The Starter Home Boom

As we start this new decade with rising debt, a smokey business environment and no direction from washington, its safe to assume it will be another year or two before we get out of this great recession.

That being said there is tremendous demand for starter homes, more and more young couples and families are buying into their American dream. If they still have a job, have saved enough for a hefty down payment they are making offers.

Demographics have dictacted every countries rise and falls in business cycles, this one is no different. For real estate developers in urban areas like hoboken and jersey city we are seeing a rise in housing permits and parcels of land being swept up. "We will build this year and sell into 2011 and 2012" -Ardan House Developer said of 3121 central ave., Union City, NJ.

Interest rates are still low and will remain at these levels for the next few months. Prices have been dropped as far as they will go in most places and the lookout for new and fresh inventory has started. So will demographics from age 25-32 save our country and help us out of recession? No one has a cyrstal ball but its safe to assume with real demand picking up, we will start to see signs of improvement in the next 2-3 years.

Tuesday, January 19, 2010

Real Estate Outlook: Strong Sales Predicted

Will housing outperform the overall economy in 2010 as we pull out of the Great Recession?

Nothing is absolute in the predictions business, but there are solid indications that, yes, housing is likely to rebound more energetically than the overall economy.

Here's why: Even the most bearish Wall Street analysts now concede that home sales are up in many areas from year-earlier levels -- sometimes by extraordinary percentages.

For example, MDA DataQuick reports that sales in the greater Phoenix market in November were 62 percent higher than the year before.

Prices either have bottomed out in dozens of these markets or are close to it. That's because the distressed sales component of local volume - short sales, REOs and foreclosures - has been declining slowly but steadily.

In his latest forecast, Jay Brinkmann, chief economist for the Mortgage Bankers Association, says both existing and new home sales will be higher in 2010 than in 2009 - and 2009 was better than 2008.

No question that a key part of the energy in housing will be the direct result of stimulus efforts by the federal government - especially the two tax credit programs -- that will push sales and even pricing through mid year.

The overall economy, on the other hand, according to Brinkmann, is likely only to grow slowly in the first half of 2010, and not really warm up until the second half.

The heavy anchor dragging on national economic growth -- and on housing demand -- will continue to be unemployment. Brinkmann says that "the time of job destruction is over" in this cycle - that is, the number of new layoffs and new unemployment insurance claims filings are trending down.

But we haven't yet moved into the next phase nationwide - that of "job creation," which may not begin until later in the year, he says, and may be a long, slow process.

The National Association of Realtors' chief economist, Lawrence Yun, sees a strong sales year ahead - up 20 percent over 2009. In some markets, he also expects to see a return to modest and sustained price increases - anywhere from two to five percent on average.

Will higher interest rates put a big dent in these projections? Many economists are forecasting 30 year rates in the upper 5 percent range later in the year.