The upside of this trend is consumers have the ample opportunity to find out about national trends in the market. The downside is that “scanning” doesn’t make you an expert and can create some seriously twisted misconceptions about what’s happening both nationally and locally.

Here are four of the 2014 myths that may have your buyer and seller clients in the wrong (or slightly skewed) mindset about today’s market.

Myth 1: You Have to Sell to Move On

Talks of inventory shortages, price increases, and a more normal housing market are conjuring thoughts of selling among many property owners. Why? They want to profit off of their investmentand move up to something bigger or better.

Unfortunately, the most common debate—to sell or not to sell—leaves out a great option in today’s market; becoming a landlord. Your seller prospects who show up wanting to list to get in to their next property may need a reality check.

Use resources like the rent vs. buy calculator and Trulia rental search results to show what they could be making in rental income. This may open up a new opportunity to profit and land you an instant buyer client who is primed and ready to move.

Myth 2: Buying Today Has Less Short-Term Risk

Prices are up, interest rates are down, buying must be “safe” again, right? Wrong.

During market upturns many buyers think that the “worst” in terms of market change is behind them.

Karl “Chip” Case, economist and co-creator of Case-Shiller Index was recently quoted saying, “If you’re not buying it for the long haul, don’t buy because there’s a good chance you’ll have to sit through some down cycles.”

Buying will always have its risks. That’s why choosing the right home for the right reasons is critical.

Download and pass along this helpful handout “4 Big Signs You Should Buy” to help your prospects and clients understand how to make the purchase that will benefit them in the long run.

Myth 3: The Starter-Buyer Pool Is Slim

If you’re selling a starter home or looking to jump in to home ownership for the first time, some of the headlines have been down-right depressing. Most read that Millennials and the market’s potential first timers are held up with 18 roommates or in their parents’ basements.

The real fact is that the true home ownership rate among Millennials has been steadily climbing since late 2011.

According to Chief Economist Jed Kolko, “The official homeownership rate published by the Census gives a misleading picture of homeownership trends. In fact, homeownership among young adults is both on the rise and not too far off from where demographics say it should be.”

Myth 4: It Takes Top-Dollar to Win a Bidding War

While price is one of the biggest factors in any housing deal, it doesn’t stand alone. Many buyers in this market are anxious because of the constant talks of price increases. They may think they can’t afford to compete for the home they really want.

This is where a little agent education can go a long way. In super-competitive markets and multiple offer situations, there are other motivators buyers can use to win the deal including:

• Committing a quick closing dates
• Limited or no concessions
• Accepting responsibilities for some needed repairs
• Heart-felt letters that share why buying this particular home is important

At the end of the day, there are humans on both sides of the tables with multiple priorities. Appealing to the other, less black-and-white needs of the seller can give your buyer clients the ammunition to close in this market.

Written By:  Jovan Hackly

Of course, relocation services can take some of the worry off your shoulders. But they can cost thousands of dollars. The good news is you can manage a move by yourself, save tons of money, and still have some sanity left on the other end.

In this three-part series, I’ll talk about:

• How to identify the best neighborhood for your family
• Unconventional ways of finding a great house (with a focus on rental properties)
• Finding a trustworthy mover and organizing the details of your relocation

My family and I are in the midst of our fourth long-distance move (including one overseas), and as a single I packed up house six times. While I’m not a relocation expert (yet), I hope that the skills I’ve gained from our itinerant lifestyle can help others make the experience a little less daunting.

HOW TO FIND A GOOD NEIGHBORHOOD

Finding the right neighborhood is a huge factor in determining the success of your move. Because we all have different needs, tastes and lifestyles, there is no “best neighborhood.” One person’s paradise might be another’s dungeon.

Here are some methods for finding the right place for you. I suggest trying as many of them as you can. Finding a neighborhood is like assembling a mosaic: each small tile you place will help you see the big picture more clearly.

Fun Online Tools

Of course visiting neighborhoods in person should be at the top of your list. But with kids in tow and travel expensive, sometimes much of the legwork has to be done long-distance.

NeighborhoodScout.com

Recommended by Money magazine, NeighborhoodScout can help you search for the best neighborhoods for you, with categories such as urban sophisticates, first-time homebuyers, or great deals on great towns. In the advanced search you can even select median home value and an urban, suburban or rural setting.

If you’d like to find out more about a certain place, type its name in the Learn tab and get all sorts of details about a neighborhood and its residents, such as age and lifestyle, education level and income. The description tab is an especially welcome feature, which distills the statistics and gives you a written overview of the neighborhood.

NeighborhoodScout also has a neat Match tool where you can search for neighborhoods that are similar to ones that you already know and love.

You Are Where You Live

Another site that can give you a feel for the type of people that live in a certain zip code is You Are Where You Live. Based on a “lifestyle segmentation” system called PRIZM from the Nielsen Company, it classifies consumers into 66 categories — like Shotguns & Pickups, Bohemian Mix and Newlyweds — based on census data, consumer surveys, and other sources of demographic and consumer information.

Because PRIZM operates on the principle that “birds of a feather flock together,” it can be a curious exercise to type in your own neighborhood and see if they’ve got your number.

WalkScore.com

If you’re like me and you enjoy being able to walk to shops, restaurants, banks, and schools, WalkScore is an excellent site to know about. WalkScore ranks the most walkable nabes in the 40 largest cities, or if you want to know about a particular neighborhood or house, you can type in an address or a zip code and get a walkability score from 1 to 100 and a classification like “car-dependent”, “somewhat walkable,” or “walker’s paradise.”

GreatSchools.org

While I believe GreatSchools is the best of the school ranking sites out there, I recommend using it as just one of the many ways you judge a school. Test scores — upon which most of their ratings are based –are only one aspect of a school’s overall success.

It’s tempting to whittle down your list based on this concrete, easily-obtained information. But if you are very interested in a neighborhood for other reasons, I would not write the area off simply because its elementary school gets a 2 out of 10.

I have personally known schools to have low ratings on GreatSchools, but to be well-loved places where kids are engaged, challenged and thriving. Oftentimes scores are outdated, don’t reflect the dynamism of the teaching, a new principal, or how your child would do in that school.

Finally, standardized test scores and demographic information cannot replace a personal visit to a school, where you will immediately get a feeling about a place (see below). Don’t underestimate the mother’s gut!

Also talking to parents who have children currently at the school is another great way to get a reading on whether you would be happy there or not. (GreatSchools may have a few parent reviews about your school, but I would not count on them as an indicator of how most parents feel about a school. And really, the most important thing is how you feel about a school.)

Tip: If you are not only looking for a neighborhood, but a city to live in, you might want to check out GreatSchool’s Best Cities to Live and Learn. The series includes sub-articles on small, midsize and large cities with outperforming public schools, as well as articles which rate towns with great public schools based on median home prices that range from under $100,000 to $800,000 or more.

Researching on the Web

Mamapedia.com

Sarah from Buttoned Up recommends asking the moms at Mamapedia for advice about your new destination. While this national networking resource probably won’t replace locally based groups (see below), it’s a good place to start asking questions about your city.

Use parent networks like this to find out more than just places to live. In a search for Syracuse, I found moms exchanging advice about OBs, pediatricians and babysitters. If you don’t find what you are looking for searching with key words, sign up and post a query yourself.

Tip: If you introduce yourself first — telling a little bit about you and your family and what brings you to the area — you might just sow the seeds of some future friendships.

Neighborhood Reviews in City Newspapers and Magazines
Many cities have a column dedicated to reviewing area neighborhoods each week. In the Washington Post, for example, the column is called “Where We Live.” The New York Times has “Living In,” and New York magazine as well as Time Out Kids both run regular neighborhood write-ups and ratings.

See if you can get an online or paper copy of the local newspaper and magazine and check out the real estate or living section.

I love these articles because they mean an intelligent person has already done a lot of the legwork: touring the hood, investigating its history, talking to residents, evaluating housing prices and commute times, and identifying some of the pros and cons of living in the area.

Good ol’ Google

Type in your city or county name with some characteristics you desire, such as “walkable,” “historic district” or “charming downtown.” I found a few fantastic New York suburbs this way, and while we didn’t end up moving there, it gave me hope that there are places that are really right for us if we are just willing to unearth them.

Person-to-Person

Mine Your Personal Networks for Local Contacts

When we told people we were moving to Syracuse, we were surprised at the amount of friends, acquaintances and colleagues who actually knew people who lived there.

To speed the process, try writing an email to everyone you know asking if they know someone with experience in your city. Once you make the connection, ask each person what neighborhoods they like best and which ones would they recommend for you.

While I had these personal contacts on the phone, I also asked their tips for finding rental houses, parent groups, and schools.

Join Local Parent Groups and Ask Questions

These online networks are invaluable sources of information. Most membership mom groups will have an email loop that you can join before you move there and some are strictly online networks. You can search the archives or just fire away. I’m sure you’ll get lots of input from local moms who have been in the same situation you’re in.

How to find one in your area? Ask your new-found contacts (or Mamapedia moms). Search the online version of the local newspaper for articles about parenting or mom groups. Another way to find people with similar interests is to search Yahoo Groups, Google Groups, and MeetUp.

Once you’ve found some, join the ones that you can for free and from a distance. Introduce yourself in an email and ask members to recommend neighborhoods with the characteristics you seek.

Use Your Alumni Network

Most colleges have an alumni organization. I can search mine for fellow graduates by city and other things like field of work and date of graduation.

When internet searching was leaving me thirsty for more information about our future city, I found a few people who lived there and who graduated around the same time I did.

Even though I didn’t know them from Adam, I just called and said we’d gone to school together and that I was moving to the area. Did they have a minute to give me a lay of the land?

Nothing Beats Your Own Eyes, Ears and Sixth Sense

As mentioned before, neighborhoods will appeal to different people in different ways. A place one person raves about may throw another over the edge. Just remember that you are on a fact-finding mission and you might end up with a conclusion that will surprise you.

No one source is going to provide you with your answer. It will be a process of gathering and selecting, like sifting sand at the beach. Eventually you’ll end up with a few pretty shells to examine further.

That’s when it’s time to pack your bags and go see for yourselves.

Reconnaissance Trip

With no car, three kids and a tight budget, we didn’t visit our new city until we actually had some houses lined up to look at. But if we had, we would have saved ourselves a lot of time and effort.

Neighborhoods will usually affect you in a visceral way. You’ll know pretty quickly if it’s a place you’d feel comfortable or not. This will help you eliminate houses that look great on their own, but whose surroundings would not fit your bill.

Check out the Neighborhood from All Angles

In How to Find a Good Neighborhood, the Life Hacker blog recommends visiting a neighborhood at different times of day and night.

Check out the area at rush hour and on the weekends. You might find the place comes to life on the weekends (or the opposite), that traffic on the single thoroughfare is unbearable, or that university students hog all the street parking on weekdays.

Lifehacker also advises, “If you depend on public transportation, find out how accessible it is in this area. Drive to and from the house from several different directions, so you see both the scenic and not-so-scenic routes.”

Visit Schools, Libraries and Playgrounds

Make appointments with schools in neighborhoods you think you’ll like. Ask to tour the school and meet the principal. Peek in classrooms. Do the children seem engaged and happy? Do the staff seem cheerful and friendly?

If you and your children like to frequent the public library, it’s easy to walk in and check out what the local branch has to offer, who uses it, and what is posted on their bulletin board. Same goes for the town playground.

Go to Open Houses

Even if you’re not serious about buying or renting a house in the area, it doesn’t waste anyone’s time to show up at a scheduled open house. Touring a local house will give you a more intimate view of a neighborhood, almost from the inside out. Plus you might get a chance to talk to the real estate agent or other house-seekers about the area.

Eat at Local Hang-Outs

Ask your new mom networks their favorite cafe’s, or go to the town center and arrive at a restaurant at prime time: say 6 pm on a Saturday night. You’ll get a sense of the kind of residents the place has and how friendly people are.

You might also visit the YMCA, community center, hardware store or even post office. Check out the bulletin boards and observe people interacting in everyday ways.

Every place you visit will help you flesh out your picture of a place. And once you’ve figured out some neighborhoods that will make you happy, it’s time to find that perfect house.

Stay tuned to Frugal Mama for the next three installments: How to Find a Quality House to Rent, Finding a Low-Cost Mover Without Getting Scammed, and Frugal Mama’s Moving Checklist.

1. What tax benefits did homeowners get in the recent ‘fiscal cliff’ budget agreement? Two tax provisions that ended in 2011 were reinstated for 2012 and 2013: 1. Mortgage insurance premiums are again tax deductible for people with adjusted gross income below $110,000; 2. Homeowners will continue to get tax credits for certain energy-efficient home improvements. For details, visit www.irs.gov or ask a tax professional.

2. What are the home related tax deductions people most often claim? One of them is the mortgage interest deduction (which can mean about $3,000 in tax savings for the average itemizing homeowner) and another one is the deduction for property taxes.

3. What is the #1 mistake homeowners make with their taxes? If your real estate taxes are not part of your monthly mortgage payment, you are billed by your town or county. Those tax bills often include other items like trash collection and snow removal fees. Be careful to deduct only the part of your bill that is property tax.

4. What tax deduction should I be sure to take? Make sure to deduct any points you paid on the mortgage you took out to purchase your home in the tax year you paid them. But if you refinanced, you need to amortize and deduct any points you paid over the life of the mortgage. People can easily forget the deduction after a few years.

5. What’s the most important thing I should do as a first-time homeowner? Look at the HUD-1 form you received when you closed on your home. There may be fees like prepaid taxes or interest you can now deduct.

6. What should I look out for if I’ve owned my home for a number of years? If you’ve refinanced and taken out home equity loans or lines of credit, remember that the maximum outstanding home equity debt that’s deductible is $100,000 and the maximum amount of deductible mortgage interest is $1 million.

7. Which home improvement records should I keep? Keep all receipts for the capital improvements you’ve made to the property. Tax rules let you add these expenses to your home’s cost to reduce any profit you might have to pay taxes on when you sell. But most people are exempt from taxes on the first $500,000 of profit for joint filers ($250,000 for single filers).

8. What’s the difference between a capital improvement and a repair? Fixing a furnace so it keeps working is a repair; replacing it is a capital improvement.

9. Will taking a home office tax deduction increase my chances of being audited? Taking the deduction shouldn’t generate an audit by itself. But if your expenses are unusually large, or if it looks like you’re using office costs to create artificial losses, the IRS will probably look into it.

NOTE: Always consult a tax professional for the definitive answer to any tax question.

AN OUNCE OF PREVENTION

Doing routine home maintenance is the best way to avoid those really expensive repairs that can come when things aren’t looked after. Plus, when it comes time to sell, buyers will pay more for a well-maintained home. Here’s how to stay on top of the upkeep.

1. Make a schedule and stick to it. Most maintenance can be done annually: roof, gutter, and downspout repairs; sealing exterior cracks; weatherproofing windows and doors; furnace and air conditioning checkups; inspecting and cleaning the drainage system. Put these on your calendar, then do them!

2. Take care of problems as soon as they appear. If a pipe leaks, repair it immediately. If a roof looks worn, repair it before it leaks. When gutters back up, even on a new house, water can come down inside walls and even damage the framing. You want to avoid the extra damage that can occur after something fails.

3. Assemble a team of contractors and repair people. Ask friends in your area, neighbors, and your real estate agent to recommend trades people. When buying a home, ask the seller for a list of the people who have worked on the property.

4. Be careful when choosing the least expensive contractor or building materials. Don’t make cost the most important factor. Shoddy work and inferior materials will cost you more when you have to redo the job.

5. Ask your home inspector to re-inspect your property. Periodically bring in a professional inspector to show you what needs to be done to keep your home in good shape. Inspectors can point out simple, inexpensive things, like sealing cracks and touching up paint, which can make a big difference in the long run.

It’s also a good idea to keep up with the latest home financing information. If you’re thinking of buying a new home, refinancing your existing one, or funding home improvements, please call or email us – we’re always here to help…. Have a great day!

WASHINGTON (January 28, 2013) – Pending home sales declined in December but have stayed above year-ago levels for 20 consecutive months, according to the National Association of Realtors^®.

The Pending Home Sales Index,^* a forward-looking indicator based on contract signings, fell 4.3 percent to 101.7 in December from 106.3 in November but is 6.9 percent higher than December 2011 when it was 95.1. The data reflect contracts but not closings.

Lawrence Yun , NAR chief economist, said there is an uneven uptrend. “The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year-over-year basis,” he said. “Buyer interest remains solid, as evidenced by a separate Realtor^® survey which shows that buyer foot traffic is easily outpacing seller traffic.”

Yun said shortages of available inventory are limiting sales in some areas. “Supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first-time buyers have fewer options,” he said. “We expect a seasonal rise of inventory in the spring to help, but a seller’s market may be developing. Much of the West is already a seller’s market for homes priced under a million dollars, but conditions are much more balanced in the Northeast.”

Even with tighter inventory, a pent-up demand and favorable affordability conditions bode well for the market. Yun expects existing-home sales to increase another 9 percent in 2013, following a 9 percent rise in 2012.

The PHSI in the Northeast fell 5.4 percent to 78.8 in December but is 8.4 percent higher than December 2011. In the Midwest the index rose 0.9 percent to 104.8 in December and is 14.4 percent above a year ago. Pending home sales in the South declined 4.5 percent to an index of 111.5 in December but are 10.1 percent higher December 2011. In the West the index fell 8.2 percent in December to 101.0 and is 5.3 percent below a year ago.

The National Association of Realtors^®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

NOTE: Fourth quarter metro area home prices will be published February 11, existing-home sales for January will be reported February 21 and the next Pending Home Sales Index will be on February 27; release times are 10:00 a.m. EST.

The following is a very basic overview of the five most important factors in determining your credit or loan score (aka FICO score). It is worth noting that the three major credit bureau all calculate their scoring models slightly differently, so what I have presented is a slightly blended overview, but it will give you the most important factors and an a rough relative weight in the credit scoring process.

HOW PAYMENT HISTORY AFFECTS YOUR CREDIT SCORE – 35%

Payment history accounts for about 35 percent of your credit score (this will vary depending on the scoring agency). It makes sense that this would be a top factor, since someone with a long history is of never missing a payment is likely to continue to be a safe person to lend money to.

If you do have negative marks on your credit score, three factors will determine the size of the deduction to your credit score:

• Time Since The Event – how long ago did you miss a payment? If it was a long time ago, and you have a good payment history since that time, it will not affect your score very much. Whereas a recent missed payment will cost more against your credit scoring.

• Number of Missed Payments – obviously matters. One missed payment in ten years of good history won’t matter very much, but the more missed payments in your history, the more risky you are seen to be and this will be reflected in a lower debt score.

• How Bad Was The Blunder? – being late or missing one credit card payment is a small deduction. All the way up to having a bill go to a collection agency to the biggest black mark of all: bankruptcy.

HOW MUCH YOU CURRENTLY OWE – 30%

If you think of your credit score as a kind of “worry index” for lenders, you’ll understand why how much of your possible credit you are using would be a concern for lenders.

Think of this aspect of credit score as a percentage. The amount you owe on all possible credit sources (credit cards, auto loans, home loans, your current mortgage and so on) divided by the total of all credit available to you.

To put it into perspective, statistically most Americans use less than 30% of their available credit and only about 12% use more than 80%.

How much you currently owe compared to your total available credit accounts for about 30% of your loan score. Knowing this straightforward measurement, to improve your score, simply pay down any loans and avoid the temptation to get cute and improve your ratio by getting a larger amount of “available credit”. As we’ll see in the next sections, this can actually hurt your credit score more than improve it.

In general people who have a debt scenario near to or at the limit of their credit are much more likely to default and therefore are given a lower credit score. If you are in this situation credit counseling, to develop a debt management plan, may be something worth considering to reverse the trend and lower your debt ratio.

HOW LONG YOU HAVE HAD CREDIT – 15%

This metric accounts for about 15% of your credit score, with favorable weight going to those who have had credit for the longest time. The reasoning behind using time as a credit score factor is because in time it is easier to establish patterns of behavior.

Even if someone has never had a credit incident (a late payment for example) but they have only had a credit card or loan for a short period of time, they may not have encountered any of the critical life events that can cause major stress.

Credit statistics show that people with the highest ratings for example, have not missed a payment even when they have lost their job or been ill for extended periods.

YOUR LAST APPLICATION FOR CREDIT – 10%

The typical American consumer last applied for some sort of new credit 20 months ago. Recent credit applications can indicate a “need” for money and needing money is a negative factor on your credit score.

Your last credit application date accounts for about 10% of your total score. In fact, even having many lenders check your credit score can have a negative impact on your credit score, so make sure you don’t authorize lenders or banks to “pull” your credit score unless you are in fact, seriously shopping for a loan or other credit instrument.

Ordering your own credit score report from one of three bureaus should not count as a negative on your actual credit score.

THE TYPES OF CREDIT YOU ARE USING – 10%

In short there are two major types of credit: revolving and installment.

Installment loans are items like car loans and mortgages. Revolving are credit cards and the like where even if you pay them in full, you still retain the credit to use it again. Generally credit cards are seen as higher quality revolving credit, than department store cards. And mortgages are seen has higher quality than revolving credit, simply because they are more difficult to obtain ( the recent sub-prime loans excluded ).

The type of credit you are using represents about 10% of your score, and a higher score is give to people with a blend of credit from various sources. This is seen as a reflection of trust, due to each credit card or loan being seen as an endorsement from a different company.

CREDIT SCORE CONCLUSIONS

It is clear when you read through the 5 credit score factors that they are derived from a statistical analysis of many years of loans versus default rate data. This is both good and bad. For the lenders it can be a fairly accurate predictor of the “typical” borrower’s behavior and for the consumer it does provide a clear roadmap for improving their credit score.

The downside to this statistical analysis is, of course, that it doesn’t account for the human factor or treat people as individuals. In the old days, before FICO Scores, the bank manager or loan officer knew their clients and included the client’s “character” as a major factor in making a decision whether to lend or not. Now that the decision is largely automated, it is possible to be unfairly represented, and be forced to pay higher lender fees, by a credit scoring models based on other people’s behaviors.

What is equity?

The equity in your home is the difference between its market value and the balance on your mortgage. In other words, equity is the wealth built up in your home over time. If you could sell your home for $400,000 and the amount you owe on your mortgage is only $100,000, then your equity is $300,000.

Equity is built in three ways: down payment, mortgage payments, and market gains. Making a down payment is a reduction in your mortgage amount, giving you instant equity in your home. Making house payments increases your equity as well, since every payment includes a portion for interest and a portion that reduces the amount of your loan amount (called the principal). Over time the amount of your payment that goes toward the principal increases and helps to build your equity even faster.

Market Value Appreciation

You also build equity as your home gains in value over time; this appreciation in market value can mean that you build equity simply by owning your home. Of course there are no guarantees that real estate values will continue to rise, but historically this has been the case. If your home is worth $250,000 and the market appreciates by 5% each year then after just two years you could add $25,000 in equity simply by living there.

Equity doesn’t have to be an abstract concept; you can turn it into cash by applying for a home equity loan which uses the equity in your home as security and in many cases allows you to deduct the interest from your taxes, just as you do with your first mortgage. Home equity loans are usually a cheaper source of funds than other types of credit (credit cards, for example) and can be an excellent way to pay for home renovation or to consolidate debt.

1. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

1. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

1. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

1. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

1. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

• Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Mortgage rates continue to fall, with fixed-rate mortgage rates reaching new record lows last week for the second consecutive week, Freddie Mac reports in its weekly mortgage market survey.

“Fixed mortgage rates continued to ease somewhat this week to record lows and should help the ongoing housing recovery,” said Frank Nothaft, Freddie Mac’s chief economist.

Here’s a closer look at mortgage averages for the week ending early due to the holiday on Nov. 21:

• 30-year fixed-rate mortgages averaged a new low of 3.31 percent, with an average 0.7 point, dropping from last week’s 3.34 percent average. A year ago, 30-year rates averaged 3.98 percent.
• 15-year fixed-rate mortgages averaged a new record low of 2.63 percent, with an average 0.7 point, dropping from last week’s 2.65 percent average. Last year at this time, 15-year rates averaged 3.30 percent.
• 5-year adjustable-rate mortgages averaged 2.74 percent, with an average 0.6 point, holding the same as last week’s average. Last year at this time, 5-year ARMs averaged 2.91 percent.
• 1-year ARMs averaged 2.56 percent, with an average 0.5 point, rising slightly from last week’s 2.55 percent average. A year ago, 1-year ARMs averaged 2.79 percent.

Source: Freddie Mac

By Walter Molony

ORLANDO (November 9, 2012) – The housing market recovery should continue through the coming years, assuming there are no further limitations on the availability of mortgage credit or a “fiscal cliff,” according to forecast presentations at a residential forum here at the 2012 Realtors^®Conference and Expo.

Lawrence Yun , chief economist of the National Association of Realtors^®, said the housing market clearly turned around in 2012. “Existing-home sales, new-home sales and housing starts are all recording notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases,” he said.

“Disruption from Sandy likely will be temporary, notably in New Jersey and New York, but the market is likely to pick up speed within a few months with the need to build new homes in damaged areas,” Yun added.

Yun sees no threatening signs for inflation in 2013, but projects it to be in the range of 4 to 6 percent by 2015. “The huge federal budget deficit is likely to push up borrowing costs and raise inflation well above 2 percent,” he said.

Rising rents, quantitative easing (the printing of money), federal spending outpacing revenue, and a national debt equal to roughly 10 percent of Gross Domestic Product are all raising inflationary pressures.

Mortgage interest rates are forecast to gradually rise and to average 4.0 percent next year, and 4.6 percent in 2014 from the inflationary pressure.

With rising demand and an ongoing decline in housing inventory, Yun expects meaningfully higher home prices. The national median existing-home price should rise 6.0 percent to $176,100 for all of 2012, and increase another 5.1 percent next year to $185,200; comparable gains are seen in 2014.

“Real estate will be a hedge against inflation, with values rising 15 percent cumulatively over the next three years, also meaning there will be fewer upside-down home owners,” Yun said. “Today is a perfect opportunity for moderate-income renters to become successful home owners, but stringent mortgage credit conditions are holding them back.”

Existing-home sales this year are forecast to rise 9.0 percent to 4.64 million, followed by an 8.7 percent increase to 5.05 million in 2013; a total of about 5.3 million are seen in 2014.

New-home sales are expected to increase to 368,000 this year from a record low 301,000 in 2011, and grow strongly to 575,000 in 2013. Housing starts are forecast to rise to 776,000 in 2012 from 612,000 last year, and reach 1.13 million next year.

“The growth in new construction sounds very impressive, and it does mark a genuine recovery, but it must be kept in mind that the anticipated volume remains below long-term underlying demand,” Yun said. “Unless building activity returns to normal levels in the next couple years, housing shortages could cause home prices to accelerate, and the movement of home prices will be closely tied to the level of housing starts.”

“Home sales and construction activity depend on steady job growth, which we are seeing, but thus far we’ve only regained half of the jobs lost during the recession,” Yun said.

Yun projects growth in Gross Domestic Product to be 2.1 percent this year and 2.5 percent in 2013. The unemployment rate is showing slow, steady progress and is expected to decline to about 7.6 percent around the end of 2013. “Of course these projections assume Congress will largely avoid the ‘fiscal cliff’ scenario,” Yun said. “While we’re hopeful that something can be accomplished, the alternative would be a likely recession, so automatic spending cuts and tax increases need to be addressed quickly.”

Regardless, Yun said that four years from now there will be an even greater disparity in wealth distribution. “People who purchased homes at low prices in the past couple years, including many investors, can expect healthy growth in home equity over the next four years, while renters who were unable to get into the market will be in a weaker position because they are unable to accumulate wealth,” he said. “Not only will renters miss out on the price gains, but they’ll also face rents rising at faster rates.”

Also speaking was Mark Vitner, managing director and senior economist at Wells Fargo, who said the fiscal cliff is the biggest situation that needs to be addressed. “Beyond concerns about the fiscal cliff, the economic improvement seems to be broadening,” he said.

“Housing will strengthen in 2013 even if the economy weakens because there is a demand for more construction, and the demand for apartments is rising at a faster rate than the need for more single-family homes,” Vitner said. “Unfortunately, apartment construction is focused on about 15 submarkets, so additions to supply will be uneven.

Even with declining market shares of foreclosures and short sales, Vitner said they will continue. “Distressed homes right now are like an after-Christmas sale – most of the best stuff has been picked over, but make no mistake they’ll be with us for a while.”

Yun projects the market share of distressed sales will decline from about 25 percent in 2012 to 8 percent in 2014.

Original Article –>

The National Association of Realtors^®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.