Fast Facts
Calif. median home price - January 08: $430,370 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region January 08: Santa Barbara So. Coast $1,135,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region January 08: High Desert $234,310 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Third Quarter 07: 33 percent (Source: C.A.R.)
Mortgage rates - week ending 02/21: 30-yr. fixed: 6.04%; Fees/points: 0.6% 15-yr. fixed: 5.64%; Fees/points: 0.5% 1-yr. adjustable: 4.98%; Fees/points: 0.6% (Source: Freddie Mac)
Thursday, February 28, 2008
Tuesday, February 26, 2008
3 Ways Parents Can Help Their Children Buy A Home
RISMEDIA, Feb. 26, 2008-(MCT)-With today’s turmoil in the housing market, hitting up mom and dad for a down payment may be a young buyer’s best route to homeownership. It’s hard for the younger generation to become first-time home buyers today as they try to juggle numerous financial responsibilities, experts say.”Stakes are higher,” says Carrie Schwab Pomerantz, chief strategist of consumer education with Charles Schwab & Co. “Today, young people are solely responsible for their retirement. A lot of young people are coming out of college with high levels of debt.”
Here are three ways parents can help their children buy homes:
1. Cash is Clean and Easy: Experts say simply giving adult children cash for a down payment is one of the smoothest ways to help them buy a home. For parents with the means, gifting can avoid intergenerational squabbles and misunderstandings.
“Helping with cash is pretty clean, pretty easy,” says Jack Guttentag, an emeritus finance professor at the Wharton School of the University of Pennsylvania.
Guttentag helped his adult son buy a house in Venice Beach, Calif., about 15 years ago. Prices were high, so Guttentag ponied up for the down payment, while his son had enough income to carry the mortgage.
“It turned out well,” Guttentag says.
To avoid triggering a taxable event, Guttentag spaced out his gift over two years. An individual can give $12,000 a year to a recipient without having to pay a tax on the gift. Therefore, a couple could give an adult child and the child’s spouse a total of $48,000 in one year.
Yet gifting can become complicated when lender institutions have rules that limit the size of a gift. From a lender’s point of view, a debt obligation-even a gift from parent to child-could weaken the security of the mortgage, Guttentag says.
“When lenders assess someone’s qualification for carrying a mortgage, they take into account their other debt payments,” he says.
Some lenders can be concerned that reported gifts aren’t really gifts at all, and may require borrowers and parents to sign an affidavit that no repayment is expected, Guttentag says. To avoid too much scrutiny by a lender, Guttentag suggests giving your adult child a down payment well in advance of applying for a mortgage.
2. Cosign a Loan or Invest in a House: Some parents may have limited resources as home equity has come under pressure. Others may need their investments for retirement.
Yet they can still help their adult children by cosigning a loan. Cosigning can help make a lender feel more comfortable with extending a mortgage to an adult child, says Adele Brady Bolson, a certified public accountant in Washington state.
However, if payments aren’t made, the mortgage company will go back to the parents, she says. And the parents’ credit can be affected.
Investing in a home can also work for parents that want to be paid back.
Families must be careful planners and good record keepers over time to avoid confusion and intergenerational quarrels. All parties should understand how their respective shares in the equity of the house would be divided and change over time. As children make the mortgage payments, their share of the equity in the house will increase.
“The investment has the potential for conflict because of changes that occur over time,” Guttentag says. “If both parties agree on what the rules are and keep accurate records, there isn’t going to be any conflict.”
And parents may face hard choices if they invest in a child’s home through a loan or by co-signing a mortgage.
“I’ve seen all sorts of really unfortunate things happen,” Bolson says. “Don’t make promises that you cannot keep. Whatever promises you’ve made should be put down in writing.”
3. The Gift of Knowledge: Schwab Pomerantz says the “gift of knowledge” is a good option for parents without the means to contribute cash or invest in a child’s home.
“Very few families have frequent conversations about money and investing,” she says. “So you’re already starting at a deficit in terms of families who talk about finances.”
The lack of conversation is not a socioeconomic issue-families across the wealth spectrum are missing out on these important talks, Schwab Pomerantz says. She suggests “helping kids weed through the various mortgage alternatives to avoid these scandalous offerings that are inappropriate for them.”
Adult children should understand the importance of borrowing within the limit of what they can actually afford, rather than becoming overly indebted to a home.
“It’s never worth it to be house poor. … It limits you from doing so many other things,” Schwab Pomerantz says.
Current turmoil in the mortgage market magnifies the importance of ensuring that all parties understand the terms of a mortgage before buying a home, says Bolson.
“If I’m going to be giving money to my child I need to make sure that my husband is OK with it,” she says. “All parties need to agree.”
Bolson also recommends that a first home for adult children should cost no more that the average for the community, especially when parents are helping financially.
“You want to be cautious about whether this is just the beginning of kids wanting parents to buy what they themselves can’t afford,” she says. She added that in most circumstances parents “should only help with the first home. When (adult children) are ready for the dream home they can trade up to it.”
© 2008, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Here are three ways parents can help their children buy homes:
1. Cash is Clean and Easy: Experts say simply giving adult children cash for a down payment is one of the smoothest ways to help them buy a home. For parents with the means, gifting can avoid intergenerational squabbles and misunderstandings.
“Helping with cash is pretty clean, pretty easy,” says Jack Guttentag, an emeritus finance professor at the Wharton School of the University of Pennsylvania.
Guttentag helped his adult son buy a house in Venice Beach, Calif., about 15 years ago. Prices were high, so Guttentag ponied up for the down payment, while his son had enough income to carry the mortgage.
“It turned out well,” Guttentag says.
To avoid triggering a taxable event, Guttentag spaced out his gift over two years. An individual can give $12,000 a year to a recipient without having to pay a tax on the gift. Therefore, a couple could give an adult child and the child’s spouse a total of $48,000 in one year.
Yet gifting can become complicated when lender institutions have rules that limit the size of a gift. From a lender’s point of view, a debt obligation-even a gift from parent to child-could weaken the security of the mortgage, Guttentag says.
“When lenders assess someone’s qualification for carrying a mortgage, they take into account their other debt payments,” he says.
Some lenders can be concerned that reported gifts aren’t really gifts at all, and may require borrowers and parents to sign an affidavit that no repayment is expected, Guttentag says. To avoid too much scrutiny by a lender, Guttentag suggests giving your adult child a down payment well in advance of applying for a mortgage.
2. Cosign a Loan or Invest in a House: Some parents may have limited resources as home equity has come under pressure. Others may need their investments for retirement.
Yet they can still help their adult children by cosigning a loan. Cosigning can help make a lender feel more comfortable with extending a mortgage to an adult child, says Adele Brady Bolson, a certified public accountant in Washington state.
However, if payments aren’t made, the mortgage company will go back to the parents, she says. And the parents’ credit can be affected.
Investing in a home can also work for parents that want to be paid back.
Families must be careful planners and good record keepers over time to avoid confusion and intergenerational quarrels. All parties should understand how their respective shares in the equity of the house would be divided and change over time. As children make the mortgage payments, their share of the equity in the house will increase.
“The investment has the potential for conflict because of changes that occur over time,” Guttentag says. “If both parties agree on what the rules are and keep accurate records, there isn’t going to be any conflict.”
And parents may face hard choices if they invest in a child’s home through a loan or by co-signing a mortgage.
“I’ve seen all sorts of really unfortunate things happen,” Bolson says. “Don’t make promises that you cannot keep. Whatever promises you’ve made should be put down in writing.”
3. The Gift of Knowledge: Schwab Pomerantz says the “gift of knowledge” is a good option for parents without the means to contribute cash or invest in a child’s home.
“Very few families have frequent conversations about money and investing,” she says. “So you’re already starting at a deficit in terms of families who talk about finances.”
The lack of conversation is not a socioeconomic issue-families across the wealth spectrum are missing out on these important talks, Schwab Pomerantz says. She suggests “helping kids weed through the various mortgage alternatives to avoid these scandalous offerings that are inappropriate for them.”
Adult children should understand the importance of borrowing within the limit of what they can actually afford, rather than becoming overly indebted to a home.
“It’s never worth it to be house poor. … It limits you from doing so many other things,” Schwab Pomerantz says.
Current turmoil in the mortgage market magnifies the importance of ensuring that all parties understand the terms of a mortgage before buying a home, says Bolson.
“If I’m going to be giving money to my child I need to make sure that my husband is OK with it,” she says. “All parties need to agree.”
Bolson also recommends that a first home for adult children should cost no more that the average for the community, especially when parents are helping financially.
“You want to be cautious about whether this is just the beginning of kids wanting parents to buy what they themselves can’t afford,” she says. She added that in most circumstances parents “should only help with the first home. When (adult children) are ready for the dream home they can trade up to it.”
© 2008, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Thursday, February 21, 2008
Percentage of Households That Could Afford To Buy
RISMEDIA, Feb. 21, 2008-The percentage of households that could afford to buy an entry-level home in California stood at 33% in the fourth quarter of 2007, compared with 25% for the same period a year ago, according to a report released by the California Association of Realtors® (C.A.R.).
C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.
The minimum household income needed to purchase an entry-level home at $411,170 in California in the fourth quarter of 2007 was $82,200, based on an adjustable interest rate of 6.21% and assuming a 10% down payment. First-time buyers typically purchase a home equal to 85% of the prevailing median price. The monthly payment including taxes and insurance was $2,740 for the fourth quarter of 2007.
At 54%, the High Desert region was the most affordable in the state, followed by the Sacramento region at 53%. Monterey was the least affordable region in the state at 20%, followed by the Santa Barbara region at 21%.
For more information, visit www.car.org.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.
The minimum household income needed to purchase an entry-level home at $411,170 in California in the fourth quarter of 2007 was $82,200, based on an adjustable interest rate of 6.21% and assuming a 10% down payment. First-time buyers typically purchase a home equal to 85% of the prevailing median price. The monthly payment including taxes and insurance was $2,740 for the fourth quarter of 2007.
At 54%, the High Desert region was the most affordable in the state, followed by the Sacramento region at 53%. Monterey was the least affordable region in the state at 20%, followed by the Santa Barbara region at 21%.
For more information, visit www.car.org.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Thursday, February 14, 2008
Hollywood Hill for Sale for $22 Million
Daily Real Estate News | February 14, 2008
The mountaintop property that shares space with the famous Hollywood sign high above Los Angeles is for sale for $22 million.
Howard Hughes once planned to build a love nest on the spot for his paramour Ginger Rogers.
The property offers a 360-degree panoramic view of the Los Angeles Basin and the San Fernando Valley, says Fox River Financial Resources, which acquired the land in 2002 for less than $1.7 million.
The Los Angeles City Council members say they want the city to buy the property and are opposed to homes being built on the peak.
Source: The Associated Press (02/13/2008)
The mountaintop property that shares space with the famous Hollywood sign high above Los Angeles is for sale for $22 million.
Howard Hughes once planned to build a love nest on the spot for his paramour Ginger Rogers.
The property offers a 360-degree panoramic view of the Los Angeles Basin and the San Fernando Valley, says Fox River Financial Resources, which acquired the land in 2002 for less than $1.7 million.
The Los Angeles City Council members say they want the city to buy the property and are opposed to homes being built on the peak.
Source: The Associated Press (02/13/2008)
This is an ideal time to buy.
RISMEDIA, Feb. 14, 2008-Despite all of the negative commentary about the housing and credit markets, 64% of Americans believe that for those with good credit and a down payment “this is an ideal time to buy a home,” according to a study commissioned by Beazer Homes, one of the country’s top-10 homebuilders. Perhaps with an eye toward the future, 24% of survey respondents-from Gen Y to Baby Boomers-say they plan to buy a new home in the next two years either as a primary residence or second/vacation home.
“We know the American consumer believes with great conviction that home ownership is a smart investment over the long term,” said Ian McCarthy, president and CEO of Beazer Homes. “Savvy consumers realize that housing is a cyclical industry and some appear to be waking up to the opportunities that do exist in today’s marketplace. Whether they act on this conviction remains to be seen, but the underlying sentiment bodes well for the industry.”
Indeed, 65% of survey respondents agree that given the current supply of homes for sale and special incentives this is “truly a buyer’s market.” And, 39% believe that tentative buyers who are waiting for home prices to go lower risk “missing out on one of the greatest home-buying markets in recent history.”
As in most areas, experience brings additional confidence. The survey found 70% of experienced home buyers-those who have purchased at least one home-urging renters to purchase a home as soon as he or she is financially able to do so.
The company says that this sentiment seems to resonate with prospective first-time buyers, with 30% citing they are “looking to make an investment” as their primary motivation for purchasing a new home. This is followed by the desire for a better location (22%) and the need for a bigger home (21%). Experienced buyers, on the other hand, ranked a ‘desire for less maintenance and up-keep’ (35%), better location (27%) and investment (14%) as the primary motivations for their next home purchase.
Across the board, consumers appear optimistic about the availability of home mortgage options. For experienced buyers, 75% believe there are plenty of mortgage options available for those with good credit compared with 53% of first-time buyers. When it comes to securing a home mortgage, 24% of total respondents report they are currently saving for a down payment.
“While this is clearly a challenging time for the homebuilding industry, for those who are financially grounded, we believe it is an ideal time to buy a home. It’s an even better time to buy a brand new home.” said McCarthy. “Now more than ever, a newly constructed home is likely to be a much better value for home buyers when compared with the purchase of a re-sale home.”
Benefits to purchasing a newly constructed home include more livable floor plans, better warranties, energy-efficient systems and options and, in many instances, the ability to personalize certain features such as flooring, cabinetry and paint colors. Additionally, a new home does not require the costly updates or remodeling that can accompany the purchase of a re-sale home.
Beazer Homes surveyed 548 adults nationwide, Jan. 4-7, 2008, between the ages of 25 to 72 with a minimum annual household income of $40,000.
“We know the American consumer believes with great conviction that home ownership is a smart investment over the long term,” said Ian McCarthy, president and CEO of Beazer Homes. “Savvy consumers realize that housing is a cyclical industry and some appear to be waking up to the opportunities that do exist in today’s marketplace. Whether they act on this conviction remains to be seen, but the underlying sentiment bodes well for the industry.”
Indeed, 65% of survey respondents agree that given the current supply of homes for sale and special incentives this is “truly a buyer’s market.” And, 39% believe that tentative buyers who are waiting for home prices to go lower risk “missing out on one of the greatest home-buying markets in recent history.”
As in most areas, experience brings additional confidence. The survey found 70% of experienced home buyers-those who have purchased at least one home-urging renters to purchase a home as soon as he or she is financially able to do so.
The company says that this sentiment seems to resonate with prospective first-time buyers, with 30% citing they are “looking to make an investment” as their primary motivation for purchasing a new home. This is followed by the desire for a better location (22%) and the need for a bigger home (21%). Experienced buyers, on the other hand, ranked a ‘desire for less maintenance and up-keep’ (35%), better location (27%) and investment (14%) as the primary motivations for their next home purchase.
Across the board, consumers appear optimistic about the availability of home mortgage options. For experienced buyers, 75% believe there are plenty of mortgage options available for those with good credit compared with 53% of first-time buyers. When it comes to securing a home mortgage, 24% of total respondents report they are currently saving for a down payment.
“While this is clearly a challenging time for the homebuilding industry, for those who are financially grounded, we believe it is an ideal time to buy a home. It’s an even better time to buy a brand new home.” said McCarthy. “Now more than ever, a newly constructed home is likely to be a much better value for home buyers when compared with the purchase of a re-sale home.”
Benefits to purchasing a newly constructed home include more livable floor plans, better warranties, energy-efficient systems and options and, in many instances, the ability to personalize certain features such as flooring, cabinetry and paint colors. Additionally, a new home does not require the costly updates or remodeling that can accompany the purchase of a re-sale home.
Beazer Homes surveyed 548 adults nationwide, Jan. 4-7, 2008, between the ages of 25 to 72 with a minimum annual household income of $40,000.
Wednesday, February 13, 2008
BY BLANCHE EVANS
It's high time we told buyers (and sellers, for that matter) the truth about whether a home is a good investment.Despite what Wall Street wants you to believe, owning a home isn't the same kind of investment as stocks or bonds.
What you get is a USE asset that depreciates over time while it grows in market value. All you have to do is keep the home in good repair to maximize your investment.
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.Take Stock in ThisSo let's add a little perspective here. You lost a greater percentage on the stock market this past year than if you owned a house. You lost more on your SUV. And you sure lost more on your iPhone.
And keep this in mind: When it rains, which would you rather have over your head — a roof or a stock certificate
It's high time we told buyers (and sellers, for that matter) the truth about whether a home is a good investment.Despite what Wall Street wants you to believe, owning a home isn't the same kind of investment as stocks or bonds.
What you get is a USE asset that depreciates over time while it grows in market value. All you have to do is keep the home in good repair to maximize your investment.
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.Take Stock in ThisSo let's add a little perspective here. You lost a greater percentage on the stock market this past year than if you owned a house. You lost more on your SUV. And you sure lost more on your iPhone.
And keep this in mind: When it rains, which would you rather have over your head — a roof or a stock certificate
Thursday, February 7, 2008
California Fast Facts
Calif. median home price - December 07: $475,460(Source: C.A.R.)
Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Mortgage rates - week ending 01/31: 30-yr. fixed: 5.68%; Fees/points: 0.4% 15-yr. fixed: 5.17%; Fees/points: 0.4% 1-yr. adjustable: 5.05%; Fees/points: 0.6% (Source: Freddie Mac)
Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)
Mortgage rates - week ending 01/31: 30-yr. fixed: 5.68%; Fees/points: 0.4% 15-yr. fixed: 5.17%; Fees/points: 0.4% 1-yr. adjustable: 5.05%; Fees/points: 0.6% (Source: Freddie Mac)
Friday, February 1, 2008
Mortgage Rates Inch Up
Mortgage Rates Inch Up
Following four consecutive weekly declines, Freddie Mac reports a jump in the 30-year fixed mortgage rate to 5.68 percent during the week ended Jan. 31 from 5.48 percent the prior week. The 15-year fixed mortgage rate rose to 5.17 percent from 4.95 percent over the same time span.Meanwhile, the five-year adjustable mortgage rate edged up to 5.32 percent from 5.13 percent; and the one-year ARM climbed to 5.05 percent from 4.99 percent. Freddie Mac chief economist Frank Nothaft attributes the recent gains to an uptick in 10-year Treasury bonds.
Source: San Jose Mercury News (Calif.), Martin Crutsinger (02/01/08)
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