Renters vs. Owners, Who Is Happier?
Jun 23, 2010 News
Does where you live affect the safety of your kids?
I referenced Steve Harney’s great blog in my article What Is Your Louisville Home Worth? earlier this month and now I’m back at it again. He’s just making too much sense.
This time, Mr. Harney has a bone to pick with a Wall St. Journal article by Richard Florida (great real estate name, huh?) that promoted the idea that people who rent their homes are happier than people who own their homes. The article seems to the single attribute of home ownership and tries to correlate that to happiness for certain U.S. cities.
Let me try to understand. The people in Detroit, St. Louis and Pittsburgh are less happy than the people in New York, Los Angeles, San Francisco and Boulder. And, the reason is because of home ownership rates?
He sounds incredulous! Then moves on to the generally held best practice for learning someone’s opinion… you ask them.
Let’s try a different way of determining whether renters are happier than homeowners. Why don’t we ask them? Fannie Mae’s National Housing Survey 2010 reported:
58% of current renters believe now is a good time to buy a house
75% of current renters believe owning a home makes more sense and
67% plan to buy a home at some point in the futureWhen they asked current renters for the major reason to buy a house, these were their answers (they could pick multiple answers):
78% said it was a good place to raise children
75% said because they would feel safe
70% said because you have control of your own space
66% said owning a home would be a good way to build wealth
54% said paying rent is not a good investment
There are times when renting makes more sense than buying a new home, such as estimated length of stay but the WSJ article seems to jaunt off in a bizarre direction.
This article is Dumb Reason #2 with more to follow next week. I recommend bookmarking Mr. Harney’s blog if you enjoy common sense commentary on the world of real estate.
Tax Credit Opportunity Close to End
Mar 26, 2010 News
The news of the month in Louisville real estate is the upcoming date of April 30th. With the tax credit opportunity coming to an end, those looking to cash in the $8,000 (first-time homebuyers) or the $6,500 (existing homeowners) need to move quickly.
My loan specialist friend, Rodny Davidson, sent me this piece from the Wall St. Journal does a good job explaining the requirements that a borrower should expect when talking with a loan company about qualifying.
To qualify for a mortgage, you will need a job and at least two recent pay stubs. You also will be asked for two years of W-2 forms, proof of other assets and either your tax return or a form allowing the lender to get your return from the Internal Revenue Service. That means that items that reduce your adjusted gross income, like business expenses or IRA contributions, can reduce the loan for which you qualify.
Then there is the appraisal challenge. With home prices still falling in many markets, an appraisal below the purchase price puts the deal in jeopardy. That is because a low appraisal means the buyer must come up with more cash or the seller must lower the price to keep the deal alive.
Tags: Rodny Davidson, tax credit, Wall St. Journal
Are Distressed Properties Worth the Hassle?
Oct 4, 2009 News
Quick post just to draw your attention to this well-written piece by the Wall St. Journal calling out the trials involved with purchasing a distressed property—either a foreclosure or short-sale. As is usually the case, the more tricky the transaction, the more valuable it is having expertise on your side.
Tags: Wall St. Journal
Louisville Housing Market Improving
Jul 23, 2009 News, Residential
This piece in the NYT is aptly titled Home Sales, All Over the Map and that’s exactly the point! Depending on where you live, housing markets are extremely different from one another.
Areas like D.C. and San Francisco which had seen home values dropping drastically are leveling out, whereas, Las Vegas and most of Florida are still seeing these numbers fall. Like I just posted yesterday, Louisville isn’t seeing those dramatic drops because we never saw dramatic increases years before.
So is this a good time for you to buy? As always, that depends on your situation.
For Amy Musial, who manages a Starbucks in Sacramento buying a house became “a no-brainer” this spring once she and her husband realized that their monthly payments would be slightly lower than the rent they had been paying on a two-bedroom apartment. They paid about $229,000 for a three-bedroom house that had been through a foreclosure. Several years ago, the same house could have sold for more than $350,000, estimates Shelley Hescock, the real-estate agent who represented the Musials.
The best advice I can give is for you to find a trustworthy Realtor and ask as many questions as you need. Interest rates are still historically low and there’s a great deal of inventory still in the Louisville MLS, though we just dropped under 8,000 Single Family Homes today.
Update 7/24: The CJ decides to post the positive news, for once.
Positive News For Home Sales
Jun 4, 2009 News, Trends/Statistics
The Wall St. Journal is now talking about positive news regarding the housing market. There’s a change! But even this news, while positive, isn’t especially noteworthy.
In another sign that the housing market may have begun to recover, the number of people who signed contracts to purchase homes increased for the third month in a row.
The reason that this isn’t a big deal is that this data is seasonal—home sales increase from January to February; from February to March; and from March to April most every year, good market or bad.
But here’s the good part.
Year over year, the index was up 3.2%. The 6.7% monthly increase was much larger than the 0.5% gain analysts had projected.
The national year-over-year increase was far greater than analysts had projected. This is great news for home sellers in Louisville. But for buyers sitting on the fence, they should be seriously thinking about making their move now before home prices readjust upward, interest rates climb or they miss out on the government incentives.
Tags: Kentucky, Louisville, Wall St. Journal
Foreclosures: Builders Lose, Consumers Win
Mar 12, 2009 Home Improvement, Residential
Just a quick post to bring this issue to your attention. I feel like half of my job is battling the largely negative news coming from almost every media outlet on a daily basis. Sure, you can speak to how foreclosures are hurting builders, like the Wall St. Journal does in this piece called Foreclosed Houses Haunt Home Builders. That’s certainly true.
Or, you could talk about how this phenomenon positively affects consumers, who now have a much greater selection, lower home prices and historically low rates.
It’s almost like the media wants our economy to continue to slide with how much they focus on the bad. If more consumers would wake up to the possibilities that exist in today’s housing market, these new transactions would only help to revive our country’s economic activity.
Ok, I’ll stop for today.
Tags: foreclosures, Wall St. Journal
Home Sales in December Up 6.5% Nationally
Jan 27, 2009 Trends/Statistics
It’s always interesting to me to see how headlines are formed. Sometimes they convey the true meaning of the article but many times they don’t.
Take this heading from The Wall St. Journal:
Home sales rising should be great news right? Well, they seem to feel the need to couch it alongside some negative news—the price cuts. Are we sure that it was the price cuts the forced the increase? I’m sure they played a role but many factors, including things like the weather, affect home sale numbers. Then the WSJ does it again with the tagline:
Largest Monthly Gain Since 2002, but Economists Warn of Sluggish Season Ahead
Awesome! But don’t stay happy. Sounds like our popular media is a bit conflicted. Not all experts are predicting “sluggish” results. Alexis McGee is predicting a “major improvement.”
How did we do here in Louisville? In November 2008, there were 459 homes sold in Jefferson County and 497 sold in December 2008 for an 8.3%.
Keep in mind it’s usually better to compare a particular month from one year to the same month of a previous year. When we do that, there was a significant drop from the 668 homes sold in December, 2007.
If you’d like to see what your home might sell for in today’s market, feel free to contact me for a complimentary CMA.
Tags: home sales, Wall St. Journal
Louisville Weathers the Housing Crunch; Beats Cincinnati, Indianapolis
Dec 9, 2008 Residential, Trends/Statistics
My thanks to a reader who thoughtfully sent this in. The Wall St. Journal does certain things very well. One of them is their “handy-dandy” charts. The other is their in-depth analysis. This time with Shrinking Prices, Rising Delinquencies, they only batted .500. This was due in large part to the chart not working properly.
That’s OK, we’ll forgive them because this piece wasn’t hidden behind a subscriber log-in.
So how did we do? Since the housing market peak in the 4th quarter of 2005, the median home price in Louisville, Kentucky is up 3.2%! Now, this isn’t the 4-5% annual appreciation we’re used to seeing in our city but in a housing recession that many are calling the worst of 50 years, I’ll take it!
It’s always helpful to compare data from Louisville with other cities of similar size in our geographic region.
Relative to price at U.S. housing market peak (%)
Nashville, Tennessee 106.6
Knoxville, Tennessee 105.1
Louisville, Kentucky 103.2
Cincinnati, Ohio 99.9
Evansville, Indiana 98.2
Columbus, Ohio 97.8
Indianapolis, Indiana 97.1
Memphis, Tennessee 95.4
Turns out Louisville performs better than some, worse than others.
Louisville’s delinquency rate of 3.30 is less than the national average of 3.86 and the rate of that change also trails the national average, which is a good thing.
Should I Buy?
I’m not going to say that everyone should be buying real estate this year. It’s a complicated decision with many variables. But what I do know is that depending on your personal situation, now is a great time for families looking to move up in overall home value. In this housing market, those families will realize a substantial financial benefit. Here’s why:
“The amount you will likely lose in the sale of your current home will be more than surpassed by the amount you save on the purchase of a more expensive home.”
When you couple that fact with interest rates, assuming you can qualify, which are towards the bottom end of historical lows, making this kind of move in our market is a wise decision.
However, if your personal situation says you need to downsize or make a lateral move, then from a financial perspective, this is not the best time for you to make a move.
Tags: Kentucky, Louisville, median home value, real estate, Wall St. Journal
