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In 2009
Economist Ken Fears wrote for Our Trend Multiple Listing Service:
Will Spring Thaw our Frozen Market?
On the bright side, employed home buyers with good credit will find 2010 is an excellent time to buy.
Why Houses Look Better and Better
By DAVE KANSAS
Some people think it's a good time to buy a house. Is it?
In the past few weeks, home-sales data have perked up from very low levels. At the same time, home prices continue to fall in most parts of the country and mortgage rates, while ticking up, are at remarkably low levels.
All these data raise an intriguing question: Is now a good time to purchase a home?
It's important to address the salient caveats. First, we are extremely unlikely to return to the boom-boom era of home investing reached earlier in this decade when prices soared 20% and more per year. Long-run historical data indicate that homes generally match the inflationary trend, rising about 3% a year.
Buy Carefully
Second, this is not the time to take aggressive action. Borrowing too much or utilizing gimmicky mortgages are what got too many people into trouble in recent years. Investing in a home, like investing in the stock market, should be approached prudently. You should be prepared to put at least 20% down and your budget should account for monthly mortgage and principle payments.
The importance of the down payment is that it gives you an equity "buffer" in case home prices should continue to decline after your purchase, which may be the case in many communities this year.
One reason to think seriously about a home purchase is the mild revival in real-estate data. According to the National Association of Realtors, new-home sales rose 5.1% in February. The Commerce Department reported that new-home sales gained 4.7% in the same period.
The pop in sales activity, which is coming from very low levels and remains fairly weak, is being driven in large part by falling prices. The Case-Shiller Home Price Index for January fell 19% year-over-year. The Commerce Department reported similar drops for new-home sale prices.
The fall in prices and the rise in sales activity is a good thing. It shows that buyers and sellers are starting to agree more and more often on a price. When prices start declining, sellers will hesitate, hoping that the market will rebound. This hesitation has evaporated as prices have continued to fall. The uptick in sales amid falling prices shows that the market is beginning to work once again, which is usually an early indication that a bottom in prices is starting to form.
Don't Hunt for the Bottom
Some prospective homebuyers naturally want to know when prices will actually hit bottom. Pinpointing a bottom in home prices, however, is very difficult, akin to picking the bottom in the stock market. But data and research indicate we're getting close.
A recent report from Banc of America Securities-Merrill Lynch argues that the housing market could start to demonstrate modest growth and improvement later this year.
This forecast relies on long-term mortgage rates continuing to decline. It also notes that a weak job market will hamper growth in housing.
Mortgage rates are a key element to buying a home since lower rates make it cheaper to finance your home purchase. Last week, Freddie Mac 30-year mortgage rates ticked up to 4.87%. Merrill Lynch predicts that the Federal Reserve, through the purchase of long-term Treasurys and other tactics, will drive 30-year mortgage rates to 4.2% by year end.
If you believe now is a good time to buy a home and your lifestyle and budget support such a choice, there are a few strategies to consider in order to get the best price.
Know what you want. This requires doing the requisite amount of research so you know exactly what you want and what you can afford. Once that's done, being ready to buy quickly can help you drive a good hard bargain.
Be ready to pounce. Cash, of course, is king. If you can write a check for a home, you can drive a very tough bargain in a world of eager sellers. Not everyone has that kind of kitty, so the next best thing is having a pre-approved mortgage. Many sellers are looking to close a deal smoothly and quickly, so having everything lined up ahead of time can strengthen your negotiating position.
Negotiate closing costs. Having the seller handle all closing costs can knock a bit off the sale price. It's a buyer's market; fight for this.
Get an inspection. And make the sale contingent on what you learn. Then renegotiate to lower the price. At the least, make sure that the seller is responsible for all inspection-related improvements.
If acquiring a home is starting to look more interesting, be careful not to confuse buying a house with investing in the real-estate market, whether as a landlord, a property speculator or a stock investor buying homebuilder stocks or real-estate investment trusts.
Real-estate investing can still be pretty dicey in the current market. There may -- or may not -- be money to be made. But buying a home is all about providing a place for you and your family to live. And as home prices settle at lower levels, you just might become a homeowner much more economically than anyone has in a long time.
Browse through the Real Estate section of the Wall Street Journal. Lots of great information on this site.
www.realestatejournal.com
Ten Things To Buy Before The Economy Improves
By Daniel Indiviglio, Reprint from Forbes Magazine
Sadly, someday this recession is going to end.
After 17 months of steep decline, both the president's Council of Economic Advisors and the Federal Reserve now believe the economy will begin to recover sometime in 2009. (Here it is 2010....have you noticed a change?)
Great news, to be sure. But it's also a warning to consumers: The deals you're seeing on everything from houses and cars to televisions and furniture won't last forever.
Luckily, for a host of goods and services, the sale of the century (literally) is still on.
Insert House Photo
The reason is simple: no buyers. Personal savings in 2008 were nearly six times greater than in 2005, amounting to $191 billion or 1.8% of the nation's disposable income. In 2009, annualized savings for January and February exceeded $450 billion, or more than 4% of disposable income.
For those feeling bold enough to bargain shop, opportunities abound. Some deals, like housing and automobiles, might be obvious, but others, like diamonds, might not be.
Big Ticket Items -At the top of the list: housing.
This may be the best time in a generation to buy a home. According to the S&P/Case-Shiller U.S. National Home Price Index, fourth-quarter 2008 prices were down 25% from the four quarter of 2006. The stimulus bill Congress passed in February includes an $8,500 credit for first-time home buyers. According to bankrate.com, average interest rates are beginning to dip below 5% for a 30-year, fixed-rate mortgage.
More good news for consumers: Automakers had a miserable 2009. Auto demand is down by approximately 33% since October and dealers have excess inventory backing up and bills coming due. It's a good time to buy.
Incentives from manufacturers have "probably never been as strong as they are today," says John McEleney, a multi-franchise auto dealer and chairman of the National Auto
Dealers Association. If you've got good credit, you can expect 0% financing and cash rebates as high as $6,000.
Another deal? Diamonds. Anyone in the market for a something sparkly will find prices down 14%, on average, since their highs in mid-2008, according to Ken Gassman of the Jewelry Research Institute. Gassman says more expensive diamonds have seen even greater drops. A pristine 4-carat diamond that went for $70,000 per carat is now selling for $51,700 per carat--a 26% discount.
Consumer Goods
Each year it seems like TVs get cheaper and cheaper, but this year those decreases are starting to make larger flat-panel TVs far more affordable. The radio/television category in February's Consumer Price Index was down 9% from a year ago as more manufacturers get into the flat-panel business, driving prices down.
Same thing for furniture. The Consumer Price Index shows prices fell 2.4% since August, but even bigger bargains are out there. With fewer people buying houses, fewer shoppers are filling them. Jim Sluzewski, a spokesman for Macy's, says demand has noticeably decreased over the past year. Retailers have excess inventory, leading to lower prices and better deals for consumers.
Women's fashion is also an interesting story. Right now there is no dominant fashion trend in women's apparel, according to Jeffrey Klinefelter, senior research analyst on the Piper Jaffray consumer team.
Women have been taking greater advantage of lower-cost clothing retailers like Forever 21 and Target, not feeling the need to spend more on expensive outfits. This allows the lower-cost chains to reduce their prices through production cost savings and requires the higher-cost chains and designers to cut prices on their excess inventory in response to lower demand.
So if you're ready to spend a little, now's the time. Bargains are out there--for as long as the downturn holds.
Financial Information
How much of a mortgage can you afford?
Do you know the difference between getting a prequalification letter and a pre approval letter from a mortgage counselor?
Do you know what all the fees are for when you apply for a loan?
Here are some links to Mortgage Brokers and Bankers to help you with obtaining all the financing information you may need.
www.thetridentgroup.com
Help in deciding whether move will pay
Several Web sites provide useful information and cost-of-living calulators that can help you figure out salary needs.
America's Career InfoNet at www.acinet.org/acinet/occ lets you search by occupation and location to come up with comparative wage information.
Homefair.com lets you compare salaries and the cost of living in hundreds of cities
Job Options provides a salary calculator for comparing the costs of living in different cities around the world. The site also provides tips on negotiating salaries and other general salary information.
VirtualRelocation.com offers relocation tools and salary information.
WageWeb offers salary data for dozens of positions in nine main career fields.
Negotiating Like a Billionaire
Donald's Dos and Don'ts-Courtesy of Donald Trump
In Donald Trump's 2004 book, Trump: How to Get Rich*, he dedicates an entire section to the secrets of negotiation. I think you'll be amazed to know how much the dealings of a multi-billionaire relate to business at any level.
Here are some of the tips he shares for successful negotiation:
Consider What the Other Side Wants.
If you remain too focused on what you want, you'll miss which concessions you can make that might satisfy the other side.
Be Reasonable and Flexible.
Unless you are never going to be negotiating again, it will hurt you in the long run if you show an unwillingness to bend. The word will eventually get out, and no one will want to work with you.
Trust Your Instincts.
If it sounds too good to be to true, it probably is. Don't let the same brain that struggles with long division be the only decision-maker. Trust your gut!
Know Exactly What You Want and Keep It to Yourself.
Chess masters know they've lost the game when their opponent can see their true attack coming. In other words, as soon as the other side knows what you want, they have you by the throat.
Let Your Guard Down, but Only on Purpose.
Let out some facts or opinions to "test the waters." See if people are agreeable or disagreeable, in order to gauge what they're thinking and feeling.
Be Patient.
Stubbornness is not the same as patience. Don't let your impatience overrun the deal itself. Be willing to wait for the right conditions to be met.
Be True to Your Friends.
Be loyal, be kind, and believe that both sides can come out winners.
Stay tuned for more Business Boosters coming your way!
*Trump: How To Get Rich, by Donald Trump and Meredith McIver, © 2004, Random House, Inc.
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