10 reasons you should buy a home now

By Brett Arends, The Wall Street Journal

You can get a good deal

You can get a house at a bargain price now -- especially if you play hardball. This is a buyer's market. Most of the other buyers have vanished since the tax credits on purchases expired.

We're four to five years into the biggest housing bust in modern U.S. history. And prices have come down a long way -- about 30% from their peak, according to the S&P/Case-Shiller Indices, which track home prices in cities across the country. Yes, it's mixed. New York's prices are down only 20%. Arizona's have been halved.

Will prices fall further? Sure, they could. You probably won't catch the bottom, but it doesn't really matter so much in the long haul.

Mortgages are cheap

You can get a 30-year home loan for about 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago, they were about 6.3%. That drop slashes your monthly repayment by a fifth.

If inflation picks up, you won't see these mortgage rates again. And if we get deflation and rates fall further, you can refinance.

You'll save on taxes

You can deduct mortgage interest from your income taxes. You can deduct your real-estate taxes. And you'll get a tax break on capital gains -- if any -- when you sell.

Sure, you'll need to do your math. You'll get the income tax break only if you itemize your deductions, and you may be better off taking the standard deduction instead. The tax breaks are more valuable the more you earn and the bigger your mortgage. But many people will find that these breaks mean owning costs them less, often a lot less, than renting.

It'll be yours

When you own, you can have the kitchen and bathrooms you want. You can move the walls, build an extension -- zoning permitted -- or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible.

Also, you'll feel better about your home if you own it. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Prime Minister Margaret Thatcher had just begun selling off public housing to the tenants.

"You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy."

It was a small sign that said something big.

You'll get a better home

In many parts of the country, it can be hard to find a good rental. All the best places are sold as condos. Money talks.

But this is a case-by-case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. Generally speaking, however, if you want a good home in the best neighborhood, you're better off buying.

It offers some inflation protection

Although housing can't entirely protect you from inflation, studies by professor Karl "Chip" Case, of Case-Shiller, and others suggest that over the long term, housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young, raising a family and thinking about the next 30 or 40 years.

In the recent past, inflation-protected government bonds or Treasury inflation-protected securities offered easier forms of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.

It's risk capital

Your home isn't the stock market, and you shouldn't view it as a way to get rich. But if the economy does surprise us all and start booming, sooner or later real-estate prices will head up again, too.

One lesson from the past few years is that stocks are incredibly hard for most normal people to own in large quantities -- for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy -- if it happens -- and still managing to sleep at night.

It's forced savings

If you can rent an apartment for $2,000 a month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? Most people won't.

Once again, you have to do the math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.

There's a lot to choose from

There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak but well above typical levels and enough for about a year's worth of sales.

More homes keep coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice as well as great prices.

Sooner or later, the market will clear

Demand and supply will meet. The U.S. population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes.

Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed -- deliberately or by inaction. This is already happening. Even two years ago, when I toured western Florida, I saw bankrupt condo developments that were fast becoming derelict.

And, finally, a lot of the glut simply won't matter to you. It's concentrated in a few areas, such as Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town.

Americans Still Believe Buying a Home Is a Good Financial Decision

by http://www.realtor.org/

NAR's (National Association of Realtors) eighth annual Housing Opportunity Pulse Survey reveals that nearly eight out of 10 respondents believe buying a home is a good financial decision, despite ongoing challenges with the economy and housing market. The telephone survey of 1,209 urban and suburban adults in the top 25 metropolitan statistical areas was conducted for NAR by American Strategies and Myers Research & Strategic Services for NAR's Housing Opportunity Program.

Some key results:

Americans continue to believe that buying a home is a good financial decision (68 percent belive this strongly). More than two-thirds of respondents say that now is a good time to buy a home.

Job insecurity and the lack of jobs continue to be the primary obstacle to home ownership and market recovery.Respondents see the recession and job losses as the main reasons for the foreclosure problem, a shift from last year when they more likely to blame homeowners who bought homes they could not afford.

A majority of renters say that owning a home at some point in the future is either one of their highest priorities (39 percent) or a moderate priority (24 percent). Just 21 percent of renters say that owning a home is not a priority at all.

Frustration with banks is up: now a majority worry that banks have made it too hard to qualify for a home mortgage loan.

51 percent of respondents say foreclosures remain a big or moderate problem in their area. While there has been a significant drop in the percentage of those surveyed who say foreclosures have increased, 51 percent say that the rate of foreclosures is about the same as it was last year.

Most of those surveyed say that it is harder to sell a home in their neighborhood than it was a year ago.Looking forward, 70 percent expect real estate sales in their neighborhood to remain about the same over the next few months.

A nearly identical number (69 percent), also expect home values to remain the same.Nearly one-quarter (23 percent) are now very concerned about the number of homes and condos for sale in their area—a number that is up just 7 points from last year.

Most respondents are more concerned about the drop in home values than they are about home costs being too high. Still, cost remains the significant barrier to many who would otherwise like to buy a home.

See more information about homebuying at http://www.jimblalockandassociates.com/

CAMPAIGN TO HELP MILITARY FAMILIES FACING FORECLOSURE

HouseLogic will donate $1 to USA Cares every time someone “likes” the Operation Home Relief Cause page, (http://apps.facebook.com/causes/532222), on Facebook and will match individual donations made to the cause, up to $20,000.
The National Association of Realtors®’ HouseLogic, a free, comprehensive consumer website about all aspects of homeownership, launched Operation Home Relief, a new Facebook Causes campaign. The campaign aims to increase awareness, rally support and raise funding for USA Cares, a nonprofit organization that provides counseling and financial foreclosure assistance to post-9/11 active duty U.S. military service personnel, veterans and their families. Visit www.houselogic.com & www.usacares.org for more information.

6 Things You Think Add Value to Your Home -- But Really Don't

by Jean Folger

Every homeowner must pay for routine home maintenance, such as replacing worn-out plumbing components or staining the deck, but some choose to make improvements with the intention of increasing the home's value. Certain projects, such as adding a well thought-out family room -- or other functional space -- can be a wise investment, as they do add to the value of the home. Other projects, however, allow little opportunity to recover the costs when it's time to sell.

Even though the current homeowner may greatly appreciate the improvement, a buyer could be unimpressed and unwilling to factor the upgrade into the purchase price. Homeowners, therefore, need to be careful with how they choose to spend their money if they are expecting the investment to pay off. Here are six things you think add value to your home, but really don't:

1. Swimming Pools

Swimming pools are one of those things that may be nice to enjoy at your friend's or neighbor's house, but that can be a hassle to have at your own home. Many potential homebuyers view swimming pools as dangerous, expensive to maintain and a lawsuit waiting to happen. Families with young children in particular may turn down an otherwise perfect house because of the pool (and the fear of a child going in the pool unsupervised). In fact, a would-be buyer's offer may be contingent on the home seller dismantling an above-ground pool or filling in an in-ground pool.

An in-ground pool costs anywhere from $10,000 to more than $100,000, and additional yearly maintenance expenses need to be considered. That's a significant amount of money that might never be recouped if and when the house is sold.

2. Overbuilding for the Neighborhood

Homeowners may, in an attempt to increase the value of a home, make improvements to the property that unintentionally make the home fall outside of the norm for the neighborhood. While a large, expensive remodel, such as adding a second story with two bedrooms and a full bath, might make the home more appealing, it will not add significantly to the resale value if the house is in the midst of a neighborhood of small, one-story homes. (Overbuilding might be anticipating your neighborhood's next move.)

In general, homebuyers do not want to pay $250,000 for a house that sits in a neighborhood with an average sales price of $150,000; the house will seem overpriced even if it is more desirable than the surrounding properties. The buyer will instead look to spend the $250,000 in a $250,000 neighborhood. The house might be beautiful, but any money spent on overbuilding might be difficult to recover unless the other homes in the neighborhood follow suit.

3. Extensive Landscaping

Homebuyers may appreciate well-maintained or mature landscaping, but don't expect the home's value to increase because of it. A beautiful yard may encourage potential buyers to take a closer look at the property, but will probably not add to the selling price. If a buyer is unable or unwilling to put in the effort to maintain a garden, it will quickly become an eyesore, or the new homeowner might need to pay a qualified gardener to take charge. Either way, many buyers view elaborate landscaping as a burden (even though it might be attractive) and, as a result, are not likely to consider it when placing value on the home.

4. High-End Upgrades

Putting stainless steel appliances in your kitchen or imported tiles in your entryway may do little to increase the value of your home if the bathrooms are still vinyl-floored and the shag carpeting in the bedrooms is leftover from the '60s. Upgrades should be consistent to maintain a similar style and quality throughout the home. A home that has a beautifully remodeled and modern kitchen can be viewed as a work in project if the bathrooms remain functionally obsolete. The remodel, therefore, might not fetch as high a return as if the rest of the home were brought up to the same level. High-quality upgrades generally increase the value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the home.

In addition, specific high-end features such as media rooms with specialized audio, visual or gaming equipment may be appealing to a few prospective buyers, but many potential homebuyers would not consider paying more for the home simply because of this additional feature. Chances are that the room would be re-tasked to a more generic living space.

5. Wall-to-Wall Carpeting

While real estate listings may still boast "new carpeting throughout" as a selling point, potential homebuyers today may cringe at the idea of having wall-to-wall carpeting. Carpeting is expensive to purchase and install. In addition, there is growing concern over the healthfulness of carpeting due to the amount of chemicals used in its processing and the potential for allergens (a serious concern for families with children). Add to that the probability that the carpet style and color that you thought was absolutely perfect might not be what someone else had in mind.

Because of these hurdles, wall-to-wall carpet is something on which it's difficult to recoup the costs. Removing carpeting and restoring wood floors is usually a more profitable investment.

6. Invisible Improvements

Invisible improvements are those costly projects that you know make your house a better place to live in, but that nobody else would notice -- or likely care about. A new plumbing system or HVAC unit (heating, venting and air conditioning) might be necessary, but don't expect it to recover these costs when it comes time to sell. Many homebuyers simply expect these systems to be in good working order and will not pay extra just because you recently installed a new heater. It may be better to think of these improvements in terms of regular maintenance, and not an investment in your home's value.

The Bottom Line

It is difficult to imagine spending thousands of dollars on a home-improvement project that will not be reflected in the home's value when it comes time to sell. There is no simple equation for determining which projects will garner the highest return, or the most bang for your buck. Some of this depends on the local market and even the age and style of the house. Homeowners frequently must choose between an improvement that they would really love to have (the in-ground swimming pool) and one that would prove to be a better investment. A bit of research, or the advice of a qualified real estate professional, can help homeowners avoid costly projects that don't really add value to a home.

Read more Real Estate Tips:
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Step #10 to Buying a Home…Moving In!

You've done it. You've looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process?

Whether you're a first-time buyer or a repeat buyer, there are several more steps you'll want to take.

Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future, such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.

Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. REALTORS® can provide contact numbers and related information.

About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property.

Moving in:
It is generally understood that sellers will leave homes "broom clean" when moving out. This expression does not mean "vacuumed" or "spotless." Broom clean makes sense because it means the house is ready to be painted and cleaned.

Your home, your money
For most owners a home is the largest single asset they hold, so it makes sense to protect that asset.

Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it.

You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details.

Lastly, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what's most important is that home ownership should be a wonderful experience. Enjoy!

Read All 10 Steps for First Time Homebuyers:
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