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BAP powered Site BAP site syndication http://www.livinginwestfieldnj.com Wed, 08 Sep 2010 16:30:53 +0100 FeedCreator 1.7.2 http://www.livinginwestfieldnj.com/images/M_images/ Powered by BAP http://www.livinginwestfieldnj.com BAP site syndication The Bumpy Road Back To Recovery http://www.livinginwestfieldnj.com/local-market-info/the-bumpy-road-back-to-recovery.html By Sean Sposito/The Star-Ledger (http://connect.nj.com/user/ssposito/index.html) April 13, 2010, 9:03PM Coming off one of the worst years for real estate since the Great Depression, most developers say the housing landscape still looks rocky. An inevitable rise in historically low mortgage rates, high unemployment, foreclosures, a state budget in financial crisis and a lack of credit will continue to plague New Jersey home builders as the decade unfolds, according to a panel of industry experts at the Atlantic Builder’s Convention in Atlantic City yesterday. "It’s not going to be one of those things where we’ll have an ‘aha’ moment and say: ‘That’s when it’s going to happen,’ " said David Crowe, chief economist for the National Association of Home Builders, referring to a turnaround. Now that the Federal Reserve has stopped buying bad loans, the six-month streak of falling interest rates seems to be at an end. Last week, the average rate for a 30-year fixed-rate mortgage rose to an eight-month high of 5.31 percent. And some estimates push that number to more than 6 percent by 2011, chipping away at affordability. "That will assure that our housing market will be constrained for a very long time," said Jeffrey Otteau of the Otteau Valuation Group, an East Brunswick real estate appraisal firm. Things don’t look too good for job growth, either. Crowe said he expects the unemployment rate to hover around 8 percent for the next several years. And in New Jersey, where about one in five adults are employed by the government, Gov. Chris Christie’s budget eventually will affect housing. In the previous decade, the private sector lost about 223,000 jobs, while government jobs grew by 57,000 positions, according to the Otteau Valuation Group. "But the state doesn’t have a choice at this point," said Joel Naroff of Naroff Economic Advisors. Naroff said in the long term, health care reform legislation will help create state jobs in one of New Jersey’s most crucial sectors: pharmaceuticals. The outlook, however, for the state’s real estate isn’t too sunny for at least the next several years. Housing prices are now at 2004 levels. And there is a 16-year supply of age-restricted, or senior, housing in the state. Otteau said luxury housing will perhaps never fully recover. He predicted housing prices won’t reach 2005 levels until at least 2020. The children of Baby Boomers won’t have the wherewithal to handle the mortgages accompanying their parent’s three-car garages, outdoor kitchens and McMansions, he said. "What we’re going to see is a more European market model efficiency," he said of future housing, adding that home prices will first come back in North and Central Jersey because of their proximity to business centers. "Homebuyers will seek to live close to jobs and transportation." The consensus among the panel’s three members was that at least the real estate market won’t get any worse. "We are in for some good news," Crowe said. "But this is a steady steep climb out of a deep hole." Blog - Local Market Info Thu, 15 Apr 2010 22:02:03 +0100 http://www.livinginwestfieldnj.com/local-market-info/the-bumpy-road-back-to-recovery.html The Home Buying Process http://www.livinginwestfieldnj.com/buyer-info/the-home-buying-process.html  The most important investment you will ever make is probably the purchase of a home. Finding the right home for you can be a long and arduous process, but there is no getting around that. Know Your Wants And Needs Before embarking on your journey of house hunting, you must know what you really want to find. Sit down with pen and paper and list all the features you care most about, such as: - Location (in a particular city, school district or neighborhood) - Size -- how many bedrooms and bathrooms - Parking -- a 1-car garage or 2? - Style -- 2-story house or ranch style home? - Heating -- central heating and/or air conditioning? Equally important, on a new sheet of paper list all the features you absolutely do not want in a house. For example: - high-traffic area. - high noise area (airport, train station or highway in close proximity) - maintenance -- major repairs needed As you look at homes for sale keep both lists in mind. Your lists may change over time as you do more looking. You'll want to add or remove features, or perhaps you'll become willing to make compromises. Realize that you most likely will not find the "perfect" home. Experienced homebuyers will tell you, perfect homes are not found, they are made perfect through hard work. Get Your Credit Report In Order Prior to looking at properties, you must get your finances in order. This is the time to review your credit report and clean it up, if need be, to maximize your credit score. Many people do not realize how important it is to check your credit report periodically to make sure it is accurate. You should pay off any past due amounts, or negotiate a settlement price to close the debt. Get such agreements in writing, before paying any settlement. Keep all receipts for any settled items from your credit report since it may take months to get the debt actually removed. Research Your Home-Buying Options Decide what kind of property you are interested in. Do you want a HUD property, a foreclosure, real estate, or property for sale by owner? A number of web sites list homes according to city, state, or price range. Visit these sites to see pictures of homes, many with virtual tours, and review the listing features. Get Pre-Approved For A Loan You're ready now to find a lender and get yourself pre-approved for the loan. Being pre-approved offers a number of advantages. It will clarify the price range you can afford. Also, once you find the home you want, you can place an immediate offer. If you have to wait for pre-approval, someone could buy the house right out from under you. Several special programs are often available from lenders, such as the FHA or Ameri-Dream, that can save you money in the closing. Ask the lender about any special programs before you decide on a loan. These are just the basics of home buying. You will find many details you need to master as you move through the buying process, but having these basics under your belt will give you a head start. Blog - Buyer Info Wed, 07 Apr 2010 22:59:08 +0100 http://www.livinginwestfieldnj.com/buyer-info/the-home-buying-process.html Buying vs Renting: What's Wiser?: http://www.livinginwestfieldnj.com/buyer-info/buying-vs-renting-whats-wiser.html  Should you buy or rent? In reality, it all depends on your circumstances, and the real estate market where you are going to live. Years ago, I sold a Westfield home for a young couple who owed almost as much as the sales price on their house. They needed to take money from savings to pay the closing costs and sales commission. You can bet that they wished they had rented for the couple years they lived there. This brings up the first thing to consider when comparing buying versus renting: the amount of time you'll be there. Buying and later selling a home will usually cost about 10% or more of the value of the home. These costs mean that if the home only went up in value 10% or so in the year or two you lived there, you won't be gaining anything (equity gain from principal pay-down is very little in the first years). You'll often be better off renting if you'll be in a town for less than a few years. What about areas which have historically shown a much faster rate of appreciation? Have you done some serious homework? If not, to assume appreciation will be more than the rate of inflation is just gambling. The sellers in the example above sold for the same price they bought the house for two years earlier - and this was in a decent and growing area. You can't count on fast appreciation just because it has been that way recently. To Buy Or Rent - Cost Comparison Looking at buying versus renting, you have to take into account that in many places it costs much more to buy. In Tucson, Arizona, for example, a small home can cost $200,000. The mortgage payment, taxes, insurance and maintenance will add up to about $1,600 per month, but you can rent the same size home for about $800. What does that mean? Many real estate fanatics will say you're at least buying something for your money, and renting is throwing your money away. Of course in this example more than $1,000 of your payment will be going towards interest alone, and that's not buying you anything. Suppose you can afford the $1600 per month, but instead you rent for $800 and put the other $800 into a decent safe investment that makes you 5%? In three years you'll have over $30,000 in this account. If the home appreciated at 6% per year (it has been more like 25% per year recently, but that can't continue, and assuming so is not planning, but gambling), it would be worth $231,000. The costs of initially buying it and then selling it would be around $13,800 (2% buying and 6% selling), leaving you with a gain of about 19,000 once we include your principal pay-down. In other words, you would be at least $11,000 better off if you rented and banked the difference. Every market is different, of course, so you have to do the math. Compare the total costs of owning versus renting, and then make safe assumptions about the rate of appreciation for Westfield New Jersey homes. If you'll definitely be in one place for a long time to come, it will almost always be better to buy than to rent. In the last example, buying becomes a better bet after about four or five years. Also consider that if you get a fixed rate mortgage, your payment will never change, a benefit landlords won't offer you that on your rent payment. To sum up, look at the time you'll be there, the comparison of total monthly costs, whether rents are going up fast, and whether you have good reason to believe home prices will be going up fast. Then look also at all the personal factors. Do you want to be responsible for the maintenance, yard work and unpredictability of ownership problems? To buy or to rent? In the end, you have to work this one out by yourself. Blog - Buyer Info Tue, 09 Mar 2010 20:11:54 +0100 http://www.livinginwestfieldnj.com/buyer-info/buying-vs-renting-whats-wiser.html North Jersey Home Prices Down 5.5% in Fourth Quarter 2009, to Median $434,000 http://www.livinginwestfieldnj.com/north-jersey-home-prices-down-5.5-in-fourth-quarter-2009-to-median-43-6.html February 11, 2010 Kathleen Lynn The Record #printDesc The housing market’s steep price slide appears to be slowing, according to data released Thursday by the National Association of Realtors. The median price of an existing single-family home in North Jersey and the New York metropolitan area was $434,000 in the fourth quarter of 2009, down 5.5 percent from a year earlier, the NAR said. Nationally, prices declined 4.1 percent in that period, to a median $172,900. Prices in North Jersey and the metro area are more than $100,000 below the peaks of around $540,000 reached in 2006 and 2007. Patrick O’Keefe, an economist with the accounting firm J.H. Cohn in Roseland, thinks the big price declines are over for now. "I think prices in New Jersey will stabilize and trend upward slightly over the rest of the year, primarily because the economic environment looks to be improving," O’Keefe said. "We should start adding jobs in the second quarter of the year." A brighter jobs picture would make buyers more confident about taking on mortgages. The volume of sales jumped in the fourth quarter, apparently boosted by the $8,000 federal tax credit for first-time buyers, which was originally scheduled to expire Nov. 30. That credit was extended to sales that are under contract by April 30 and close by June 30. In addition, a $6,500 credit was added for repeat buyers. Sales of condos, co-ops and single-family homes in New Jersey rose 34 percent in the quarter from a year earlier, to 135,600 units. That’s still below the levels of the housing boom, when yearly sales topped 180,000 in 2004 and 2005. Real estate broker Vikki CQ Healey CQ of Vikki Healey Properties in Maywood said she thought prices in the area were down a little more than the NAR data suggests — maybe 7 or 8 percent. "We have such a preponderance of short sales and foreclosures in the market; those prices are really bring down the averages quite a bit," she said. But she agreed that the volume of sales was way up over late 2008, in part because of the depressed market activity after the collapse of Lehman Brothers in September 2008. "Nothing was selling; it didn’t matter what the price was, what the interest rate was," she said. "That was when the financial crisis hit, and we were paralyzed." Now, however, homes priced at the lower end of the market are selling, and the most attractive properties — in good locations, well-maintained and reasonably priced — are drawing multiple offers, Healey said. "Based on the rising number of resales, it appears that the market has found its footing," Jarrod C. Grasso, chief executive of the N.J. Association of Realtors, said in a statement. "As the general economy begins to recover and jobs are added, the pace of housing sales should accelerate." E-mail: lynn@northjersey.com The housing market’s steep price slide appears to be slowing, according to data released Thursday by the National Association of Realtors. The median price of an existing single-family home in North Jersey and the New York metropolitan area was $434,000 in the fourth quarter of 2009, down 5.5 percent from a year earlier, the NAR said. Nationally, prices declined 4.1 percent in that period, to a median $172,900. Around the nation Despite recent price drops, the N.Y. metro area, including North Jersey, remains one of the priciest in the nation: Area Median price* N.Y. $434,000 Honolulu $612,300 San Francisco $551,300 Boston $332,800 Los Angeles $352,700 U.S. $172,900 *Existing single-family home Source: National Association of Realtors Prices in North Jersey and the metro area are more than $100,000 below the peaks of around $540,000 reached in 2006 and 2007. Patrick O’Keefe, an economist with the accounting firm J.H. Cohn in Roseland, thinks the big price declines are over for now. "I think prices in New Jersey will stabilize and trend upward slightly over the rest of the year, primarily because the economic environment looks to be improving," O’Keefe said. "We should start adding jobs in the second quarter of the year." A brighter jobs picture would make buyers more confident about taking on mortgages. The volume of sales jumped in the fourth quarter, apparently boosted by the $8,000 federal tax credit for first-time buyers, which was originally scheduled to expire Nov. 30. That credit was extended to sales that are under contract by April 30 and close by June 30. In addition, a $6,500 credit was added for repeat buyers. Sales of condos, co-ops and single-family homes in New Jersey rose 34 percent in the quarter from a year earlier, to 135,600 units. That’s still below the levels of the housing boom, when yearly sales topped 180,000 in 2004 and 2005. Real estate broker Vikki CQ Healey CQ of Vikki Healey Properties in Maywood said she thought prices in the area were down a little more than the NAR data suggests — maybe 7 or 8 percent. "We have such a preponderance of short sales and foreclosures in the market; those prices are really bring down the averages quite a bit," she said. But she agreed that the volume of sales was way up over late 2008, in part because of the depressed market activity after the collapse of Lehman Brothers in September 2008. "Nothing was selling; it didn’t matter what the price was, what the interest rate was," she said. "That was when the financial crisis hit, and we were paralyzed." Now, however, homes priced at the lower end of the market are selling, and the most attractive properties — in good locations, well-maintained and reasonably priced — are drawing multiple offers, Healey said. "Based on the rising number of resales, it appears that the market has found its footing," Jarrod C. Grasso, chief executive of the N.J. Association of Realtors, said in a statement. "As the general economy begins to recover and jobs are added, the pace of housing sales should accelerate." Blog - Local Market Info Tue, 23 Feb 2010 12:26:58 +0100 http://www.livinginwestfieldnj.com/north-jersey-home-prices-down-5.5-in-fourth-quarter-2009-to-median-43-6.html Doing The Math: How Much of A Home Can You Really Afford? http://www.livinginwestfieldnj.com/doing-the-math-how-much-of-a-home-can-you-really-afford.html When reviewing a home loan, lenders apply a special formula to help them determine how much of a loan a home buyer is qualified for. Known as a debt-to-income ratio, this formula allows them to determine how much money they can safely loan you toward a home purchase or mortgage refinancing. Everyone knows their credit score is an important factor in qualifying for a loan. But in reality, the DTI is every bit as important as the credit score. Lenders typically apply a standard "28/36 rule" to your debt-to-income ratio to determine whether you’re loan-worthy. The first number, 28, is the maximum percentage of your gross monthly income that the lender will allow for housing expenses. The total includes payments on the mortgage loan, mortgage insurance, fire insurance, property taxes, and homeowner’s association dues. This is usually called PITI, which stands for principal, interest, taxes, and insurance. The second number, 36, refers to the maximum percentage of your gross monthly income the lender will allow for housing expenses PLUS recurring debt. When they calculate your recurring debt, they will include credit card payments, child support, car loans, and other obligations that are not short-term. Let’s say your gross earnings are $4,000 per month. $4,000 times 28% equals $1,120. So that is the maximum PITI, or housing expense, that a typical lender will allow for a conventional mortgage loan. In other words, the 28 figure determines how much house you can afford. Now, $4,000 times 36% is $1,440. This figure represents the TOTAL debt load that the lender will permit. $1,440 minus $1,120 is $320. So if your monthly obligations on recurring debt exceed $320, the size of the mortgage you’ll qualify for will decrease proportionally. If you are paying $600 per month on recurring debt, for example, instead of $320, your PITI must be reduced to $840 or less. That translates to a much smaller loan and a lot less house. Bear in mind that your car payment has to come out of that difference between 28% and 36%, so in our example, the car payment must be included in the $320. It doesn’t take much these days to reach a $300/month car payment, even for a modest vehicle, so that doesn't leave a whole lot of room for other types of debt. The moral of the story here is that too much debt can ruin your chances of qualifying for a home mortgage. Remember, the debt-to-income ratio is something that lenders look at separately from your credit history. That's because your credit score only reflects your payment history. It's a measurement of how responsibly you've managed your use of credit. But your credit score does not take into account your level of income. That's why the DTI is treated separately as a critical filter on loan applications. So even if you have a PERFECT payment history, but the mortgage you've applied for would cause you to exceed the 36% limit, you'll still be turned down for the loan by reputable Westfield lenders. The 28/36 rule for debt-to-income ratio is a benchmark that has worked well in the mortgage industry for years. Unfortunately, with the recent boom in real estate prices, lenders have been forced to get more "creative" in their lending practices. Whenever you hear the term "creative" in connection with loans or financing, just substitute "riskier" and you'll have the true picture. Naturally, the extra risk is shifted to the consumer, not the lender. Mortgages used to be pretty simple to understand: You paid a fixed rate of interest for 30 years, or maybe 15 years. Today, mortgages come in a variety of flavors, such as adjustable-rate, 40-year, interest-only, option-adjustable, or piggyback mortgages, each of which may be structured in a number of ways. The whole idea behind all these newer types of mortgages is to shoehorn people into qualifying for loans based on their debt-to-income ratio. "It's all about the payment," seems to be the prevailing view in the mortgage industry. That's fine if your payment is fixed for 30 years. But what happens to your adjustable rate mortgage if interest rates rise? Your monthly payment will go up, and you might quickly exceed the safety limit of the old 28/36 rule. Many of these mortgage products are fine as long as interest rates don't climb too far or too fast, and also as long as real estate prices continue to appreciate at a healthy pace. But make sure you understand the worst-case scenario before taking on one of these complicated loans. The 28/36 rule for debt-to-income has been around so long simply because it works to keep people out of risky loans. Most recently, rising unemployment, problems on Wall Street -- and a worldwide recession -- have made low-risk loans such as those available through the FHA especially appealing. Quite frankly, FHA mortgages are possibly the best financial alternative today for just about anyone considering the purchase or refinancing of real estate. First, you can get a fixed-rate loan at a decent rate. This is very important because unprecedented government spending and balance-of-payments deficits could cause inflation and the devaluation of the dollar — bad news for those with adjustable-rate loans. If inflation becomes an issue loan rates and monthly payments will soar for ARM borrowers. Second, there is no prepayment penalty or other funny business. Third, HUD, to its credit, tries to help FHA borrowers who run into hard times. Fourth, the application process is very clear: You have to provide paperwork and verifications, the way loans should always be underwritten. Fifth, you can buy with 3.5 percent down. Whatever loan program you decide on, make sure you understand exactly how far or how fast your loan payment can increase before accepting anything other than a fixed-rate mortgage. If your DTI disqualifies you for a conventional 30-year fixed rate mortgage, then you should think twice before squeezing yourself into an adjustable rate mortgage just to keep the payment manageable. Instead, think in terms of increasing your initial down payment on the property in order to lower the amount you'll need to finance. It may take you longer to get into your dream home by using this more conservative approach, but that's certainly better than losing that dream home to foreclosure because increasing monthly payments have driven your debt-to-income ratio sky-high. Blog - Buyer Info Thu, 18 Feb 2010 08:49:14 +0100 http://www.livinginwestfieldnj.com/doing-the-math-how-much-of-a-home-can-you-really-afford.html