Home Ownership "V" Stock Market

Here are five reasons why you get more for your money with a house than the stock market:

1. Leverage. With stocks, you put in all your money for a little piece of a company. With a house, you put in a little money to get the entire house.

2. Tax benefits. Uncle Sam knows that owning a home is a pain in the neck; that's why you get tax incentives. These are basically government bribes to get you to buy. Think about it, with what other investment can you put in 5 percent of the cost of the asset, reap all the appreciation, and pay no capital gains? That's right: live in your home for at least two years, and you don’t have to pay capital gains tax on up to $250,000 in appreciation if you’re single and a combined $500,000 if you’re a married couple.And that's not all — consider the benefits of fixed-rate mortgages, property tax write-offs, interest rate deductions, and depreciation. Is this a great country or what?

3. Control. When you buy stocks, you're paying some CEO 500 times the average worker's salary for company performance that most other workers would lose their job over. With a home, you have control — what you buy, how much you pay, and where you live. You can improve the value with repairs and updates. Try comparing that to getting heard at the next shareholders' meeting!

4. Lifestyle. Do you want to look at a concrete jungle or your children playing in your own back yard? With a home, you're purchasing a vantage point for yourself and your family. The neighborhood you want to be in, and the size and style of a home that fits your needs.

5. Value. Unlike some stocks, your house will seldom become worthless. Barring a catastrophe, your home will retain a major portion of its value, even in the worst of times. So don't freak out about slight fluctuations in the value of your home in any given year. You'll make it up. Housing has lost value only one year out of the last 35. It's more normal to beat inflation by 1 percent to 2 percent.

David Labrecque
Exclusive Buyer Agent
http://www.fletcher-realty.com/

Law Makes Housing Affordable for Veterans

Veterans across America now have expanded homeownership opportunities due to the Veterans’ Benefits Improvement Act of 2008, which President George W. Bush signed into law last Friday. Three provisions in the legislation are critical to help veterans during the current housing turmoil.

• The law will make it easier for veterans who have fallen victim to risky sub prime loans to refinance their loans into safer, more affordable loans backed by the U.S Department of Veterans Affairs.
• The legislation also makes the VA loan limit increases permanent, which will help veterans living in high-cost areas.
• The VA also can now offer adjustable-rate mortgages to veterans. That would make homeownership more attainable for military families and personnel who often have to move more frequently than their civilian counterparts.
  
  David Labrecque
  Exclusive Buyer Agent
  http://www.fletcher-realty.com/

10 Must-Know Real Estate Trends

RISMEDIA, Oct. 1, 2008-Like Wall Street, the real estate industry is feeling the painful effects of loose lending practices and bad mortgage loans. Now, more than ever, prospective home buyers and sellers should be aware of what’s happening with the housing market-and where it’s headed-in order to make smart decisions. In addition to understanding what fueled the collapse of investment bank Lehman Brothers and the government’s bailout of mortgage giants Fannie Mae and Freddie Mac, get familiar with these top 10 trends in real estate, according to HGTV’s new award-winning real estate site, FrontDoor.com.

1. Homes in foreclosure reach record highs. While some markets have started to show improvement, the number of homes in foreclosure continues to rise to unprecedented levels. According to a report from the Mortgage Bankers Association, a record 1.2 million homes were in foreclosure in the second quarter of 2008. This number is expected to reach 2 million by the end of the year, analysts say.
   
2. Home prices continue to fall. But because real estate is local, the rate of decline varies on your market. And in some high-demand markets, prices are still climbing, though at a slower rate. According to the Case-Shiller Index — a survey of home prices in 20 major metropolitan areas — prices nationwide fell 15% in the second quarter of 2008 compared with last year. Despite the national numbers, some regions are starting to make a comeback. Some say the trend in falling home prices will mean lower divorce rates because a couple is less willing to sacrifice their equity.
3. Borrowers will have a harder time getting a mortgage. During the housing boom, mortgages were easy to come by — too easy to come by. Risky lending practices have come back to bite companies who profited from millions of bad loans, and many mortgage companies (including industry giants Countrywide, Fannie Mae and Freddie Mac) and investment bank Lehman Brothers have fallen apart. As a result, U.S. banks have tightened their lending standards, limiting non-traditional loans such as interest-only mortgages and getting rid of subprime mortgages.
4. Bad real estate agents will get weeded out. In the past, homes practically sold themselves, and enterprising people became part-time real estate agents. Nowadays, home sellers are looking for premium service and expertise from Realtors in exchange for the 6% commission. And savvy buyers want an agent who offers insight and knowledge not available on the Internet. So be selective — only the best Realtors will succeed in this market.
5. Mortgage rates are still at historic lows. After the government bailout of Fannie Mae and Freddie Mac, rates of 30-year fixed rate mortgages plunged from 6.35% to 5.93% in a week, the biggest weekly drop in more than 28 years. However, some analysts believe mortgage rates will rise if the government has to borrow money to finance Fannie Mae and Freddie Mac. But remember before the 1990s, interest rates were in the double digits.
6. Urban areas are making a comeback. The U.S. experienced a mass exodus to the ‘burbs after World War II, but homebuyers are now regaining interest in downtown areas. Urban core homes are often more expensive per square foot than their suburban counterparts, but many buyers are willing to pay a premium to avoid long commutes and urban sprawl.
7. Bigger is not always better. While the size of the average American family shrunk from 3.1 people in 1974 to 2.6 people in 2004, the size of the average American home increased from 1,695 square feet to 2,349 square feet. However, many home buyers looking to save money on utilities, taxes and maintenance are now foregoing McMansions and instead opting for smaller homes.
8. Buyers are going green. Eco-friendly attributes such as radiant floor heating systems, Energy Star rated appliances and on-demand water heating units are all the rage with homebuyers right now. For sellers, promoting your home’s green features will give you an edge in the competitive market.
9. Technology and social networking are changing how we buy and sell homes. Listings, home valuations and other information previously only available through real estate agents are now available on the Web. Because of this, agents have had to rethink their roles in the real estate world and adapt to the times. For buyers and sellers, more technology means alternatives to the traditional route of selling through an agent, such as home swapping and online auctions.
10. Flipping is out, buying and holding is in. Falling prices and a large inventory of unsold homes mean there are more potential bargains out there. Real estate investors are taking advantage of current conditions, knowing that a down market is the best time to get a good deal.

David Labrecque
Exclusive Buyer Agent
http://www.fletcher-realty.com/

Court Mandates Credit File Cleanup

A recent court decision requires the three major credit-reporting bureaus — Experian Group Ltd., Equifax Inc., and TransUnion LLC — to clean up the credit files of consumers who have filed for Chapter 7 bankruptcy.

These bureaus are still reporting old debts as active on consumers’ credit reports even though they were wiped clean in a bankruptcy filing.

The U.S. District Court for the Central District of California gave the bureaus until Oct. 1 to revamp their systems.

Consumers who have gone through Chapter 7 bankruptcy should request copies of their credit reports at a website like AnnualCreditReport.com and make sure that the old debuts have been removed.

The court-mandated changes come at a time when more consumers are filing for bankruptcy amid rising loan defaults and tighter credit standards. U.S. consumer bankruptcy filings jumped 29.2 percent to 96,413 in August, according to the American Bankruptcy Institute.

Source: The Wall Street Journal, Jane J. Kim (09/30/2008)

David Labrecque
Exclusive Buyer Agent
http://www.fletcher-realty.com/