We all seem to forget that in a slow - or "off" real estate market - that home owners are just taking a "paper loss" on the valuation of their Highlands Ranch, Littleton or other Denver real estate...very similar to if your 401k or stock/mutual fund portfolio decreased because the stock market was going through a down period. Should you worry?
In the stock market or with your 401k, you can sell - or shift your allocations to other more profitable; or safe fixed options instead. If you don't sell, then you can just "ride out" the bad times and let your stocks go back up; thus the term "on paper loss", as in it looks bad on paper now, but it should recover in a short while.
In real estate, you do the exact same thing. Unless you really MUST sell your home for a job, other relocation, or buy a bigger or smaller house - then right now many of you are taking a paper loss on your home. It costs you NOTHING to incur a paper loss. Your exact same model of home down the street may have sold for $25,000 below the value you "thought" yours used to be worth...but does that really matter? Sure it stinks to take a paper loss, but what does it REALLY cost you - unless you ABSOLUTELY need to sell now? What?
In this professional Realtors opinion, you have 2 clear choices to consider...
1. OPPORTUNITY COST/OPPORTUNITY
Many 'half-empty' glass people forget that you are not being forced at gun point to keep living in your current house. You have an excellent - yes excellent - opportunity to "bail" on your current house and buy another one that's: bigger, smaller, closer to work, closer to an area you like much better, closer to recreational interests, in a nicer neighborhood, in the mountains, closer to your parents or in-laws - or in a better school system for your kids.
If you "bail" on your house now, you will INCUR the paper loss as a reality cost - as you will clearly make LESS money on your house by selling now - right? BUT DON'T FORGET THIS - you will also GAIN the peace of mind that you got a better house in the different area or price range you really wanted AND you will be buying that house for BELOW MARKET PRICING too!!! This is what economists call an "opportunity cost" - where you lose $25,000 on your current house but you get a $25,000 (or MORE!) favorable exchange when you buy another house below market value.
Savvy and smart buyers see the HUGE opportunity to move-up to a much more expensive house right now, as you many be able to purchase that home for $25,000 to $75,000 BELOW the regular market price; thus the excellent "opportunity" to make a financial GAIN in a slow real estate market. It's a rather genius way to really make a profit now, by the old adage of "buy low and sell high".
2. CUT YOUR LOSSES
If your present home is too expensive, too small, too big, bad neighborhood or neighbors, schools aren't good, you're commuting too far to work - or what ever you "dislike or hate" - then perhaps you need to CUT YOUR LOSSES now and make a move somewhere you like better. If you are downsizing to a less expensive or smaller house, you will probably LOSE MONEY by selling your current house and getting a smaller house, as you might not be able to 'recoup' the trade-down value; i.e. - you'll buy a less expensive home for only $12,000 below market, but you're selling your house at $25,000 below market. Make sense?
But, if your arm is bleeding, how much longer are you going to wait to go to the emergency room? Sometimes the BEST opportunity is to "cut your losses" and move on to a better opportunity that makes you happier in the long run! Moving closer to your job, saving driving and commuting time, getting a better - moving to a nicer area makes most people MUCH HAPPIER - and there is no amount of money you can put aside for getting "happier" or "more sanity" in your life...right?
I know of people who have moved just to get their kids into a better scholastically rated - or better sports program high school - while the kids were still in elementary or middle school.; so the transition would be easier for the kids to adjust and make new friends. I know several people who have sold homes to "move-up" to nicer neighborhoods and much closer to work/jobs.
From an economic standpoint, does this help to explain why "now" many be the best opportunity for you to list your house for sale - and purchase another one? Let me know if I can help you sell or purchase your next home? We are now offering the new hybrid Home Ownership Accelerator Loan that helps you pay off your home in only 5-12 years, for homeowners wanting to get their homes paid off faster as you approach retirement age.
Don't miss my next topic - remodeling and updating mistakes that cost you dearly!
Showing posts with label real estate market news. Show all posts
Showing posts with label real estate market news. Show all posts
Saturday, May 31, 2008
Saturday, May 3, 2008
Will "Fence-Sitting" Dominate the 2008 US Housing Market?
Is it smart to be a "fence-sitter" in 2008 if you are confused about whether you should buy a home - or to rent a house instead? This Realtor thinks that it's actually a pretty simple choice...
The issue facing so many American now, is if they'll get 'burned' financially buying now - as opposed to renting instead. But, in order to break down that decision to see if it's a sound decision - we must examine 2 key components. The first one is how much does rent cost you per month for the same equivalent lifestyle and home size? In certain parts of the country, renting is a very expensive way to live - and monthly rent costs a lot.
The biggest factor on this decision too, is that paying rent gives you NO tax write-off, where as 86-88% of a house payment & property taxes are tax deductable (86%-88% represents the interest portion of a 30 year fixed loan plus the property tax deduction during the first few years of amortizing). So your monthly interest deduction would be $1243 + 100% of your monthly tax bill; lets use $225 a month, which equals $1468. The rough way to figure this is to multiply $1468 by your .28 or .33 tax bracket (normally done on a Schedule A) which is $411 at 28% and $484 at a 33% tax bracket. These are the 'real' cost comparisons the US Government allows you every month to buy a house - and multiply them by 12 months to get $4,938 and $5,808 respectfully.
Another way to think of this - is like this: buying a house for the same or similar rent payment means that your house could "depreciate" $4,938 to $5,808 a year and you'd still break even!
The second comparison to fence-sitting and renting; to home buying, is that factor on "how long" you think you'll be living in the house or area, until you'll need a bigger or smaller house - or a job change might require you to sell?
This is actually the 'hardest' factor to consider...as no one can predict the future! If you are going to live in a house or rent for just a few years, I can tell you that the real estate commissions to sell a $250,000 house will be about $12,500 at 5% and $15,000 at 6%. If you home will NOT appreciate at these amounts, then you must factor in this expense into your rent vs home buying decision. Plus, the home might take 3-8 months (or longer!) to sell. But conversely, you'd be locked into a rental lease, and depending on when you needed to move, you might still owe 3, 6 or 9 months MORE on the lease you'd need to break!
This is the "X factor" that makes this renting vs home buying decision so hard! And - it's why fence sitting is so popular, as most people relate to making "no decision" as their typical process 9 out of 10 times, typically.
Then, look at buying a home which gives you the extra freedom & "peace of mind" knowing you control your destiny and have the joy of home ownership. You can paint, decorate and design the home anyway you want it! You lose all that freedom by renting. You can also pick the neighborhoods that you feel that 'matches' your socio-economic status - or feeds into a certain school(s) for your kids, or is closer to work or recreation opportunities. Finding a rental apartment or house in the same area might be tough or impossible...and most people 'clearly' state that they feel much worse about themselves when they are renting. The personal pride factor goes down significantly when you rent. Homeownership is a very 'powerful feeling' once you've been a homeowner before!
In conclusion, it appears that the real decision to fence-sit or to buy a home will still be dominated by "indecision" in 2008 - as most buyers will NOT commit to a decision - because no one can clearly see the real estate market booming and growing again, anytime soon. My guess is that the home rental business will be very strong for at least another year - or longer...
The issue facing so many American now, is if they'll get 'burned' financially buying now - as opposed to renting instead. But, in order to break down that decision to see if it's a sound decision - we must examine 2 key components. The first one is how much does rent cost you per month for the same equivalent lifestyle and home size? In certain parts of the country, renting is a very expensive way to live - and monthly rent costs a lot.
The biggest factor on this decision too, is that paying rent gives you NO tax write-off, where as 86-88% of a house payment & property taxes are tax deductable (86%-88% represents the interest portion of a 30 year fixed loan plus the property tax deduction during the first few years of amortizing). So your monthly interest deduction would be $1243 + 100% of your monthly tax bill; lets use $225 a month, which equals $1468. The rough way to figure this is to multiply $1468 by your .28 or .33 tax bracket (normally done on a Schedule A) which is $411 at 28% and $484 at a 33% tax bracket. These are the 'real' cost comparisons the US Government allows you every month to buy a house - and multiply them by 12 months to get $4,938 and $5,808 respectfully.
Another way to think of this - is like this: buying a house for the same or similar rent payment means that your house could "depreciate" $4,938 to $5,808 a year and you'd still break even!
The second comparison to fence-sitting and renting; to home buying, is that factor on "how long" you think you'll be living in the house or area, until you'll need a bigger or smaller house - or a job change might require you to sell?
This is actually the 'hardest' factor to consider...as no one can predict the future! If you are going to live in a house or rent for just a few years, I can tell you that the real estate commissions to sell a $250,000 house will be about $12,500 at 5% and $15,000 at 6%. If you home will NOT appreciate at these amounts, then you must factor in this expense into your rent vs home buying decision. Plus, the home might take 3-8 months (or longer!) to sell. But conversely, you'd be locked into a rental lease, and depending on when you needed to move, you might still owe 3, 6 or 9 months MORE on the lease you'd need to break!
This is the "X factor" that makes this renting vs home buying decision so hard! And - it's why fence sitting is so popular, as most people relate to making "no decision" as their typical process 9 out of 10 times, typically.
Then, look at buying a home which gives you the extra freedom & "peace of mind" knowing you control your destiny and have the joy of home ownership. You can paint, decorate and design the home anyway you want it! You lose all that freedom by renting. You can also pick the neighborhoods that you feel that 'matches' your socio-economic status - or feeds into a certain school(s) for your kids, or is closer to work or recreation opportunities. Finding a rental apartment or house in the same area might be tough or impossible...and most people 'clearly' state that they feel much worse about themselves when they are renting. The personal pride factor goes down significantly when you rent. Homeownership is a very 'powerful feeling' once you've been a homeowner before!
In conclusion, it appears that the real decision to fence-sit or to buy a home will still be dominated by "indecision" in 2008 - as most buyers will NOT commit to a decision - because no one can clearly see the real estate market booming and growing again, anytime soon. My guess is that the home rental business will be very strong for at least another year - or longer...
Friday, May 2, 2008
What is the HOME OWNERSHIP ACCELERATOR Loan?
Is the HOME OWNERSHIP ACCELERATOR Loan the best loan in the United States today - and should you consider using it - to buy or refinance your home?
There is a new mortgage loan available in Denver Colorado (and 41 other states) that combines the effectiveness of a 15 year mortgage loan - combines it with a home equity line of credit on your home - and then combines it with your checking account...so that you can PAY OFF YOUR HOME IN 6-12 YEARS on average!!!
The HOME OWNERSHIP ACCELERATOR Loan compounds interest DAILY, and can permit you to buy or refi a home - yet pay the home off in 5-12 years, without you having to pay extra monthly payments, or have HIGHER monthly payments, or having to do Bi-Weekly or other strict payment rules!!! You can use the existing equity in your home (at any time) to pay bills and borrow money against - anytime YOU want to...with NO strict rules and NO pre-pay penalties!
The loan is perfect for financially savvy home buyers, Jumbo buyers AND older borrowers who want to pay off their home much faster - yet without all the extra payments and double or triple monthly payments.
The loan requires a 15% down payment on purchase loans in Colorado, a 680+ mid-fico score, and 'decent' reserve accounts like your 401k, investments/stocks and IRA's. The loan is actually a Home Equity Line of Credit at 85% LTV, allowing you the freedom to use your equity at any time, but combining it with your checking/saving accounts - so that all your paychecks can be used to REDUCE your average daily mortgage principle & other debts. You deposit your entire paychecks into this innovative loan, and dramatically reduce your mortgage principle balance. If you are a buyer or borrower with a very good monthly cash flow (you 'bank' a large portion of your paychecks without spending most of the money) you'll be able to rapidly reduce your mortgage loan balance...and I can show you how to pay off your home loan in 6-12 years on average - WITHOUT you changing your current spending habits.
Sound too good to be true? It's not...
The loan is very popular overseas in England, Australia and South Africa - as it makes your checking account work for you - instead of the banks keeping all your checking/savings account interest!
Watch the HOME OWNERSHIP ACCELERATOR Loan video - or call me for a better explanation on how you can pay off your Denver or other home in 5-8 years! This loan is amazing, because it compounds interest daily - NOT monthly like traditional loans. It also let's you use your checking account and savings account balances to pay down your mortgage loan - without you actually prepaying on your loan! For example, if you paid your $600,000 home down to $300,000 after a few years - you have the freedom to take out the $210,000 equity (up to 85%) to invest in a stock or mutual fund, buy a car for cash, pay for your kids college expenses - or start a new business. It's YOUR MONEY that you can access whenever you want to...you just write yourself a check!
It's more cost effective than a Reverse Mortgage for seniors (you never have to give the bank 60-90% of your house!) and it's also perfect for Baby Boomers with good incomes trying to pay off their homes faster...but who don't like being "locked into" 15 year notes and no capability to get the equity out fast - if you have an emergency and can't wait to refinance. This loan IS ALREADY a home equity loan...so you can get any of your money out at anytime by writing a check or by using your VISA debit card.
Decide for yourself - would you like to buy a home next month and have it paid off in 5-10 years WITHOUT having to double or triple your monthly house payments?
This is the MOST AMAZING loan this mortgage lender and Realtor has ever seen - email me what you think of it!!!
There is a new mortgage loan available in Denver Colorado (and 41 other states) that combines the effectiveness of a 15 year mortgage loan - combines it with a home equity line of credit on your home - and then combines it with your checking account...so that you can PAY OFF YOUR HOME IN 6-12 YEARS on average!!!
The HOME OWNERSHIP ACCELERATOR Loan compounds interest DAILY, and can permit you to buy or refi a home - yet pay the home off in 5-12 years, without you having to pay extra monthly payments, or have HIGHER monthly payments, or having to do Bi-Weekly or other strict payment rules!!! You can use the existing equity in your home (at any time) to pay bills and borrow money against - anytime YOU want to...with NO strict rules and NO pre-pay penalties!
The loan is perfect for financially savvy home buyers, Jumbo buyers AND older borrowers who want to pay off their home much faster - yet without all the extra payments and double or triple monthly payments.
The loan requires a 15% down payment on purchase loans in Colorado, a 680+ mid-fico score, and 'decent' reserve accounts like your 401k, investments/stocks and IRA's. The loan is actually a Home Equity Line of Credit at 85% LTV, allowing you the freedom to use your equity at any time, but combining it with your checking/saving accounts - so that all your paychecks can be used to REDUCE your average daily mortgage principle & other debts. You deposit your entire paychecks into this innovative loan, and dramatically reduce your mortgage principle balance. If you are a buyer or borrower with a very good monthly cash flow (you 'bank' a large portion of your paychecks without spending most of the money) you'll be able to rapidly reduce your mortgage loan balance...and I can show you how to pay off your home loan in 6-12 years on average - WITHOUT you changing your current spending habits.
Sound too good to be true? It's not...
The loan is very popular overseas in England, Australia and South Africa - as it makes your checking account work for you - instead of the banks keeping all your checking/savings account interest!
Watch the HOME OWNERSHIP ACCELERATOR Loan video - or call me for a better explanation on how you can pay off your Denver or other home in 5-8 years! This loan is amazing, because it compounds interest daily - NOT monthly like traditional loans. It also let's you use your checking account and savings account balances to pay down your mortgage loan - without you actually prepaying on your loan! For example, if you paid your $600,000 home down to $300,000 after a few years - you have the freedom to take out the $210,000 equity (up to 85%) to invest in a stock or mutual fund, buy a car for cash, pay for your kids college expenses - or start a new business. It's YOUR MONEY that you can access whenever you want to...you just write yourself a check!
It's more cost effective than a Reverse Mortgage for seniors (you never have to give the bank 60-90% of your house!) and it's also perfect for Baby Boomers with good incomes trying to pay off their homes faster...but who don't like being "locked into" 15 year notes and no capability to get the equity out fast - if you have an emergency and can't wait to refinance. This loan IS ALREADY a home equity loan...so you can get any of your money out at anytime by writing a check or by using your VISA debit card.
Decide for yourself - would you like to buy a home next month and have it paid off in 5-10 years WITHOUT having to double or triple your monthly house payments?
This is the MOST AMAZING loan this mortgage lender and Realtor has ever seen - email me what you think of it!!!
Monday, April 28, 2008
Is The SKY FALLING On Denver Real Estate?
Is Denver real estate doomed? Is this sky really "falling" on Denver real estate?
In this Realtor's opinion the answer is NO...but we sure have slowed down a lot - as most of Denver real estate sales are "off" target from last years sales by about <28%>.
Only Highlands Ranch, Thornton and Erie remain the same -or showing sales increases. Is there an explanation for this? Well let's think about that...
There still remains two big problems for the Denver real estate market. First, there are less people able to qualify now with the tightening of the underwriting rules & qualifications for mortgage lending. With no more zero down loans and harder to qualify FHA and conventional loans - more people CAN'T buy - even if they wanted too! Second, everybody seems scared to death with the economy, the price of gas and other expenses going higher! Consumer confidence is definitely hurting the Denver real estate market.
But, is this very logical - and does this make sense in reality?
The answer is no! The reality is that you're going to neither have to rent or you're going to have to buy. You get a tax deduction when you own a home you get zero when you rent. In many neighborhoods it's pretty cheap to rent, but the stuff you're renting is pretty crappy. Nobody seems to care of their cars depreciating at record rates... but so many people are convinced they should still wait before they buy. Why the insanity difference here?
Savvy buyers are snatching up houses left and right at very low prices - and at very low interest rates! Why aren't you? Many homes for sale in the Littleton real estate market, Highlands Ranch, Parker, and southeast Denver and Southeast Aurora are selling in less than 30 days on the market - if they're priced correctly! Ugly homes and unremodeled homes are taking forever to sell - go figure...!!! But there are still many bargain homes out there if you still hurry! There certainly isn't anything wrong with a 5.875% 30-year fixed-rate loan - and I just did a 10% down investor loan at 6.625% for another client who just bought a foreclosure deal!!!
The only question for you is - how long are you going to keep sitting on the fence?
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