Certain home owner habits could actually be harming the home, and can lead to major home improvement projects later on. This Old House recently featured a list of several bad home owner habits to avoid, including:
1 | Walking on the Roof
It's true that keeping gutters clear and spotting roof damage early precludes pricey repairs, but stepping onto the shingles is risky for any DIYer. It can not only damage roofing but will also void the manufacturer's warranty.
Are Facebook’s 150 million American users revealing too much — and are you one of them? According to a recent study by Consumer Reports of more than 1,300 households who use Facebook, many Facebook users do not use privacy settings and reveal too much about their day-to-day plans that could be putting themselves and their information at risk. According to the study, researchers project that 4.8 million people have used Facebook to reveal their plans on a certain day, which could serve as a tip-off to burglars.
As real estate market analysts debate whether U.S. home prices have finally found a bottom, which would signal a recovery is taking hold, some experts are arguing the difference between a home’s price and its value to a buyer. Economists note that homes have historically been poor investment vehicles when considering the alternatives, and that buyers should focus on a home’s value as measured by the quality of life and utility that it delivers to buyers. Deciding this often comes down to a comparison with the costs of renting, and websites like Trulia.com offer rent-to-buy indexes to help buyers weigh the costs and the benefits. For more on this continue reading the following article from TheStreet.
Economists are furiously debating whether home prices are "bouncing along the bottom," ready to rebound, or poised for another dip. Millions of prospective homeowners are eagerly awaiting the conclusion. After all, no one wants to invest in a money loser.
But maybe those buyers are focused on the wrong question. Price is not as important as value, two measures that sound the same but aren't.
That's among the conclusions in a SmartMoney piece by Jack Hough, who uses home price data back to the 19th Century to show that, once inflation is figured in, home prices don't go up at all over the long term. There are spikes, like the one in the last decade, often followed by price collapses. But on average, home prices rise at the inflation rate. In contrast, some other investments, including stocks, rise considerably faster than inflation to produce real profits.
Experts have known for a long time that homes are not especially profitable investments, though it's hard to convince homeowners.
This does not mean, however, that a home is a bad buy. Instead, the home should be viewed as a purchase for consumption, just like shoes, cars and food -- necessities that produce no investment return. The home's value, as opposed to its price, is determined by how well it serves the owner's need for shelter.
And that largely depends on the cost of the alternative: rent.
Right now, home prices in many parts of the country are low relative to rent, making buying the better option. This is seen in the "rent yield," figured by dividing annual rent by the sales prices of comparable properties. If you paid $12,000 a year to rent a home worth $120,000, the rent yield would be 10%. Hough points out that even if you adjust for things like taxes and maintenance on the home, the yield in many markets exceeds 5%, not bad then considering bank savings are paying next to nothing.
Trulia.com has a rent-vs-buy index that shows markets where buying makes the most sense. This price-to-rent ratio divides home prices by rents, the inverse of the rent yield index, so the lower the number the better. (Convert it to rent yield by dividing 1 by the price-to-rent ratio.)
Trulia's most recent survey found it is cheaper to buy than to rent in 98 of the 100 largest markets.
Why has the balance shifted toward renting in so many places? It's a combination of the drop in home prices and the rise in rents due to greater demand from people who cannot buy or don't want to buy.
Buying does not make sense unless you plan to stay in the home for at least five years -- the longer the better. That will provide time for appreciation to cover buying and selling costs like the real estate agent's commission.
Finally, if the home is a consumption item and not an investment, it makes sense to buy the cheapest home that serves your needs. Buying a McMansion packed with rooms you rarely use is like buying a dozen eggs and letting half of them spoil.
This article was republished from TheStreet.
Written by: Jeff Brown, MainStreet
April 2012 Market Update Now three months into 2012, both the housing market and the overall economy are improving at modest rates. These improvements have inspired confidence in consumers, demonstrated by a 9.2% increase in pending home sales in February from the year prior. Both home prices and sales are expected to increase in 2012. Lawrence Yun, chief economist for NAR, stated, “Falling visible and shadow inventory [bank-held properties], combined with a dearth of new-home and apartment construction during the past three years, assure that rents will continue to rise, with likely home price increases in 2012.” As rents continue to rise, buying becomes a more and more attractive option as home affordability, or the percent of income it takes to pay the mortgage, continues to be among the most favorable in history. Trulia’s Winter 2012 Buy vs. Rent Index, which measures the relative cost of renting compared to asking prices of homes found that in 98% major metropolitan areas sampled, it was more affordable to buy than to rent.
Home buying is the smarter choice than renting, according to Trulia’s Winter 2012 Rent vs. Buy Index. Buying a home is more affordable than renting in 98 of the nation’s 100 largest metro areas, according to the index, which tracks asking prices for rental units compared to for-sale homes in major metro areas.
Reality check: your real estate transaction is not a children’s story. Grown-up life is complicated, as are money matters and relationships. Since real estate involves all three (being a grown up, money and relationships), smart buyers and sellers should cast a suspicious eye at super simple real estate rules of thumb. Let’s take a handful of the most persistent ones head on, and decipher which of them are fact, and which are fiction.
The answer has never been clearer: Buy.
March has arrived. This video has some interesting news and facts about our current real estate market and gives some advice on how to sell your home quicker than others around you.
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