New Bern and area home sales

Currently, there are 1387 homes listed for sale in our MLS System. Of these 90 are listed as Bank Owned, and 48 are listed as Short Sales.

During the past year there were 1214 homes sold in our MLS.  This equates to a little over a year absorption rate, not good news if you are a seller. However each price range varies in days on the market before a sale takes place and list price to sells price ratios. If you happen to be in a good price range you could expect to sell in under 120 days. When a house is priced to sell, buyers and buyers agents realize this, and will often make an offer closer to the asking price.

Although the number of bank owned properties is about as high as I have seen it, it is relatively low compared to the market as a whole, about 6%. Interestingly enough, bank owned properties accounted for about 16% of sales in the last year. This probably indicates that banks will get aggressive on their sales price especially when they are not sold in a reasonable time frame.

Year to date home sales are about the same as last year volume wise. Total dollar volume is however down 3%. I am not sure, but believe, this is due to home prices still sliding south.

New Home Sales


There are 154 new homes listed for sale in our MLS. In the last 365 days  237 new homes sold. Of these new home sales, 107 were priced from $150,000-$200,000 This compares to 282 new home sales in the year prior and 330 the year before that. Why are sales down 50% from 2 years ago? I believe this is largely due to banks being very cautious about construction loan lending, more folks looking at renting instead of buying, and attractive existing home prices.

I have read some words of encouragement regarding some housing markets, especially those that were hit the hardest. However, I believe the market will improve when the economy starts to create jobs, and I am not real confident the current President knows how to do this.

New Bern Home Inventory down

The inventory of homes for sale in the New Bern area MLS is down substantially. Currently there are 1291 homes for sale. Throughout most of the year that number has been over 1500 homes. Percentage wise this is a decrease of 13%.

Although inventory typically decreases in December, this is more than we normally see. My take is folks are staying put with hopes of selling when the market improves. Whatever the reason, I hope that with less inventory, home prices will start to level off. If this happens we will all be better of in the long run.

Real Estate Update.

Steve Tyson’s Real Estate Update


For selected subdivisions

Neuse Harbour

Active homes for sale by price range

Current number of homes on the market=13

Pending sales=1

Active homes for sale by price range

$182,000-$200,000=1

$209,000-$250,000=6

$254,900-$300,000=2

$$300,000-$1,225,000=4

There was 1 home that sold and closed in Neuse Harbour in the last 12 months. The sales price was $232,800



Stately Pines

Current homes on the market=6

Pending sales=1

Active homes for sale by price range

$164,000-$200,000=3

$202,000=1

$669,500=1

$769,000=1

There were 10 homes that sold and closed in Stately Pines in the last 12 months. The most expensive house sold was $214,250.

Carolina Pines

Current homes on the market=22

Pending sales=2

Active homes for sale by price range

$107,500-$150,000=5

$157,900-$200,000=2

$229,000=1



There were 18 homes that sold and closed in Carolina Pines in the last 12 months. The highest priced home sold was $265,000.

Tucker Creek

Current homes on the market=4

Pending sales=3

Active homes for sale by price range

$110,000-$150,000=1

$165,000-$200,000=3

$245,000-$289,000=2

There were 15 homes that sold and closed in Tucker Creek in the last 12 months. The highest priced home sold was $275,000.

Total homes sold January 1-Nov. 29 2009=1118

Total homes sold January 1-Nov. 29 2010=1108

During the same time frame in 2011=1107 homes have been sold.

There are currently 1312 homes listed for sale in our multiple listing service. This number is down from about 1550 In prior months. We are selling homes at a rate of about 100 a month so there is still a large inventory on hand. A buyers market is defined as more than 6 months of home inventory. It is definitely a buyer’s market as we currently have 13 months worth of inventory.

On the plus side, interest rates are still incredibly low, prices have become more reasonable, and we have a nice selection of homes to choose from.

Feel free to call or email me if you would like to have a customized absorption rate or a Comparable Market Analysis for your property. Home sales in each neighborhood can vary greatly.




Realtor Steve Tyson

The Tyson Group Realtors

Steve Tyson’s Real Estate Update





Neuse Harbour

Active homes for sale by price range

Current number of homes on the market=5

Pending sales=1

Active homes for sale by price range

$279,000=1

$,334,000-$385,000=2

$ 775,000=1

$1,225,000=1

There was 1 home that sold and closed in Neuse Harbour in the last 12 months. The sales price was $232,000



Stately Pines

Current homes on the market=6

Pending sales=0

Active homes for sale by price range

$160,000-$200,000=2

$205,000-$210,900=2

$669,500=1

$769,000=1

There were 11 homes that sold and closed in Stately Pines in the last 12 months. The most expensive house sold was $214,25s0.

Carolina Pines

Current homes on the market=18

Pending sales=1

Active homes for sale by price range

$137,500-$$150,000=5

$157,000-$200,000=6

$215,000-250,000=6

$259,000=1

There were 18 homes that sold and closed in Carolina Pines in the last 12 months. The highest priced home sold was $265,000.

Tucker Creek

Current homes on the market=7

Pending sales=3

Active homes for sale by price range

$110,000-$150,000=2

$165,000-$200,000=3

$245,000-$289,000=2

There were 14 homes that sold and closed in Tucker Creek in the last 12 months. The highest priced home sold was $275,000.

Total homes sold January 1-Oct. 24 2009=982

Total homes sold January 1-Oct. 23 2010=1021

During the same time frame in 2011=981 homes have been sold.

There are currently 1387 homes listed for sale in our multiple listing service. This number is down from about 1550 In prior months. We are selling homes at a rate of about 104 a month so there is still a large inventory on hand. A buyers market is defined as more than 6 months of home inventory. It is definitely a buyer’s market as we currently have 13 months worth of inventory.

On the plus side, interest rates are still incredibly low. I have a customer that got a 3.75% rate in mid October. In the early 1980’s I remember rates went as high as 18% so it is a great time to buy and lock in a great rate.

Feel free to call or email me if you would like to have a customized absorption rate or a Comparable Market Analysis for your property. Home sales in each neighborhood can vary greatly.

 I can be reached at SteveTyson@NCmove.com And remember you can always visit me online at www.NewBern-NC.Info



Realtor Steve Tyson

The Tyson Group Realtors

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.




The good news? Two key measures now suggest it's an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation's ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.



Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter "throws money down the drain." Whether buying is a better deal than renting isn't a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.



.But the math is turning in buyers' favor. Stock-oriented folks can think of a house's price/rent ratio as akin to a stock's price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.



Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody's Analytics. The average from 1989 to 2003 was about 10, so valuations aren't quite back to normal.



But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren't hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or "points.") The latest rate is still less than half the average since 1971.



Real Estate Tools at SmartMoney

Mortgage Calculator

Should You Refinance?

How Much Can You Afford

.As a result, house payments are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index's historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today's buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.



For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer's monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.



Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. "If you have good credit, a job and a down payment, you can get a mortgage," Mr. Humphries says. "There's more paperwork and scrutiny than five years ago, but things are pretty much like they were in the '80s and '90s."



Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.



For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent "yield." The median market's rent yield is 9.3% and Detroit's is 17.9%.



Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor's 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.



A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody's Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. "If the economy slips back into recession, however, we could easily see a 10% drop," Ms. Chen says.

Tips to help your home appraisal

. October 11, 2011, 6:06 PM ET.Ten Tips for High Value Home Appraisals.Article Comments (12) Developments HOME PAGE ».EmailPrintTwitter

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close StumbleUponMySpacedel.icio.usRedditLinkedInFarkViadeoOrkut Text By S. Mitra Kalita



Reuters

Appraisal forms might not always capture a home’s true value, but there are ways to avoid disappointment.The appraiser was due in an hour. The beds were unmade, breakfast dishes in the sink and toys scattered about the playroom. Would she care?



I got moving—and cleaning. At 34 weeks pregnant, that’s not so easy.



After all, I know lowball appraisals can kill deals, something I’ve written about for The Journal.



They can also kill a refinancing application, which we are in the midst of for our 1920s Georgian-style house in Queens. If it comes in too low, it’s not worth refinancing or you might need to put in a whole lot more equity.



We don’t know how ours turned out yet but after talking to a handful of appraisers, I felt great regret at not doing more to plan and prep. Here are some tips based on those conversations.



Caution: Some of the advice—like home valuations themselves these days—might feel contradictory. But what they all agree on is to keep the look, feel and condition of the property as updated and cared for as possible.



1.Spruce the house up. But appraisers caution that you don’t need to deep clean under couches and that a few dirty dishes won’t hurt your value. Rats, cockroaches and that car you’ve been tinkering on might… “Things like overgrown landscaping, soiled carpeting, marks on walls — those do affect value and are part of the property’s overall condition rating,” said Dean Zibas, the president and chief appraiser for Zibas Appraisal in San Clemente, Calif. In other words, think broom clean, not set design for a home-decorating magazine.

2.Curb appeal also matters so mow the lawn, hack those weeds and trim those hedges. This can also help offset your house from unfair comparisons with foreclosures nearby. “In today’s climate I can’t stress enough condition, condition, condition,” said Doreen Zimmerman, an appraiser in Paradise, Calif. “An hour or two, for the most part, will set your home apart in the actual picture that the lender gets from the appraiser vs. the actual picture that the appraiser will provide of the (foreclosure) down the street.

3.Keep a list of all the updates you’ve made and be ready to hand it over; a sketch plan of the house indicating square footage also helps. “Have a list of updating done within the past 15 years. Itemize each update with the approximate date and approximate cost. Also highlight the notable features of the property,” says Matthew George, the chief appraiser of Eagle Appraisals Inc. in Denver, Colo. Remember the items that an appraiser might not notice, like a new roof or insulation. Don’t forget the minor items. For example, I mistakenly told the appraiser we hadn’t updated one bathroom but actually we had installed a new sink and had the tub sealed. That counts, according to the experts.

4.Have comps on hand. Yes, you say this is the appraiser’s job but every little bit helps, “especially if they are aware of a property that sold without the aid of a Realtor (i.e. for-sale-by-owner),” says Mark T. Smith, the owner and president of Smith Appraisal Services in St. Augustine, Fla. That can mean it wasn’t posted on the Multiple Listing Service, and result in other delays by the time it gets posted through other government data sources.

5.Be mindful of peeling paint. Government-insured loans such as FHA and veterans’ loans will require peeling paint to be removed in houses built before 1978. But don’t worry too much about a child’s scrawling on his bedroom wall, unless it’s going to require a whole new paint job.

6.Focus. “Don’t spend money that won’t yield a return on the investment. The best expenditures for most markets are paint, carpet, light and plumbing fixtures,” says Denver’s Mr. George. Prioritize what you do; if you’re the type of homeowner who has upgraded and fixed items as they broke, you should be fine.

7.Location still matters. If there have been changes to the neighborhood, mention them, from a new playground to a new Whole Foods. If the area’s just been declared a historic or landmark district, let the appraiser know.

8.Keep the $500 rule in mind. Appraisers often value houses in $500 increments so if there’s a repair over $500 that can or should be made, it will count against the property. Fix leaky faucets, cracked windows, missing hand rails and structural damage.

9.Also remember the concept of “effective age,” the age the appraiser can assign to a home after taking into consideration updating and condition. “Say you have a cracked window, thread-bare carpet, some tiles falling off the shower surround, vinyl torn in the laundry room, and the dog ate the corner of the fireplace hearth, these items could still add up to an overall average condition rating as the home is still habitable, however your effective age will be higher resulting in comparables being utilized which will have the same effective age and resulting lower value,” says Ms. Zimmerman, who wrote the book “Challenge Your Home Appraisal” and runs a web site by the same name.

10.Lock up Fido and Fifi. Appraisers say they get annoyed enough by homeowners following them around but a snarling, growling dog is even worse. Along the same lines, try to make the appraiser comfortable — if it’s cold out, put the heat on; hot out, the air conditioning. “If it’s 100 degrees out and you never put the air conditioning on, put it on for the appraiser so they don’t question that your unit is broken,” says Ms. Zimmerman.

With those things in mind, let the appraiser do his or her job. “Questions and banter may make the inspection go slow or make the appraise miss something,” said James R. Gerot, a residential appraiser in Ottumwa, Iowa. “My inspections have a rhythm to them so once I get started interruptions are just that. Save questions until after.”



Appraisal, Doreen Zimmerman, Eagle Appraisals Inc., James R. Gerot, Smith Appraisal Services

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9:37 am October 16, 2011

Dave wrote:

.I feel sorry for Zach, and believe he could benefit from a matchbook course in real estate appraising, as a start. Competent Appraisers are trained to be eyes and ears of the real estate market, listening, seeing, reading, viewing, accepting data from everyone, compiling information about the subject market that relates to the subject, and rejecting all that is not relevant.



Doing proper homework on comps, verifying their “arm’s length” transaction, is not a difficult task, just time consuming. The independence of appraisers arises out of how they treat all the data they receive, investigate, uncover, and analyze. Zach’s tub and sink issue is a micro analysis of a lengthy article with very apparent bias.



I began appraising in New England in 1984. I would have a wonderful time in court testifying in opposition to the comments by Zach. That HVCC is in force or terminated is not the issue. It is the aptitude and unbiased position of each appraiser. The industry is rampant with those that have neither, and lending institutions that use the cost of an appraisal and their own bias to choose appraisers. We cannot legislate morality or ethics.

.

8:27 pm October 15, 2011

Jon Putnam wrote:

.Zach: I agree with your thoughts on this article, and on HVCC in general. One small thing. It is perfectly acceptable to present comps to an appraiser. The appraiser must decide if the comps (or any other information) is relevant to the assignment.

.

5:55 pm October 15, 2011

DeeDee Riley, Realtor, El Dorado Hills CA wrote:

.Great input!

.

1:25 am October 15, 2011

Zach wrote:

.Felipe – Las Vegas poses a big problem to Las Vegas now days The appraisers just report market conditions. This is like saying the weather man makes it 80 degrees and sunny.

.

1:23 am October 15, 2011

Zach wrote:

.HVCC is not a problem. All of the brokers and lenders that coerced appraisers into inflating values was a problem.



The HVCC does have undeniable unintended consequences and the system could be better. The slant from the broker/lender community is so transparent it’s not even funny…they’re only upset because they can’t push appraisers to grease the wheels on their transactions. Any major lender that tracks their appraisal data will tell you that there is a lot more objectivity in appraisal values than there is in borrower’s estimates. How many borrower’s “estimate of value” is loan balance divided by 0.8? They estimate their home to be worth what they need to get a deal done…any lender has the data to show this.



I don’t know why this author feels so compelled to write about something he is completely unqualified to speak about. This article is absolutely ridiculous.



Added a new sink and sealed the tub? Are you kidding? Sealed the tub??? Ask 10000 appraisers and every single one of them will tell you sealing a bathtub will never make its way on to an appraisal report. Why? Because the appraiser has the luxury of inspecting every nook and cranny in the subject property, but has basic info (age, beds, baths, square footage, amenities, lot size, etc) for the comparables. How is an appraiser to gauge the typical buyer’s reaction to having a bathtub resealed or address the value of a new sink? We’re talking about a couple hundred dollars in general maintenance on a home that could be worth 1000 times that. I’ve heard about every argument, but this one takes the cake as the most ridiculous of all time.



Can you imagine the outrage if an appraiser made a negative adjustment to one of the comparables because they just put in a new sink and sealed their tub? This is where the double-standard of salespeople and borrowers becomes transparent. They want the appraiser to make positive adjustments for these kind of things on their property, but would crucify an appraiser for docking their value because a comparable had these things.



All features of a property are adjusted for relative to the comps. If you just dumped $50k building a 3-car garage on your property but all of your comps also have a 3-car garage, do you know how much that $50k adjustment will equate to in adjustments on your appraisal? Exactly zero.



The author also makes the profound statement that “Location still matters”. Really? Was that ever in doubt? Mention the new playground in the neighborhood? Why? If the comps are from the same neighborhood wouldn’t they benefit the same amount from the new playground?



Have comps on hand? I suggest Mr. Kalita get familiar with the Appraisal Independence Requirements. Suggesting comps to an appraiser is either (a) going to get ignore or (b) cause them to decline the assignment. How is pushing “comps” on them not attempting to influence value? I suppose we’re all to believe that the borrower will have access to local MLS, verify terms of these transactions, and verify with independent third parties? And, of course, the borrower is performing said search of MLS based on an objective analysis of market data and an unbiased view of their home’s physical characteristics? They would never search $300k-$350k and see what pops up and looks “similar”? If banks and investors want borrower-supplied comps, why not just let the borrower send to the underwriter?



The author continues to expose himself as the amateur that he is. Perpetuating these fallacies does more damage to the marketplace than the HVCC ever will. As a leading financial publication, I am shocked and disappointed that the WSJ continues to print these stories. And I say “stories” intentionally.

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New Homes sales-Bad News

Although existing real estate sales in our MLS have been down this year new home construction has been hammered. I think it is a result of banks not lending for speculative building and buyers finding homes that are almost new for much less than builders can build new homes for. Unfortunately this trend might last for some time. Consider the data below. The data below represents homes sales in each year, Jan.1-Oct.9

2006-586
2007-477
2008-303
2009-256
2010-254-
2011-190

In my next post I talk about what builders can do to get a competitive edge.

Mortgage News

DOW JONES NEWSWIRES


The number of mortgage applications filed in the U.S. last week rose 9.3% from the prior week, the Mortgage Bankers Association said Wednesday, as interest rates continued to slide following the Federal Reserve's latest stimulus measure.



Refinance activity climbed 11%, according to the MBA's weekly survey, which covers more than three-quarters of all U.S. retail residential mortgage applications. Purchasing grew by a seasonally adjusted 2.6% during the week ended Friday.



Borrowers have reacted cautiously to extremely low interest rates over the past few months, while tighter lending requirements continue to pressure new applications. But mortgage activity picked up last week after the Fed's latest move, dubbed Operation Twist, helped push rates even lower. The move was designed to help lower long-term interest rates by buying up more mortgage-backed securities.



The share of applications filed to refinance an existing mortgage rose to 79.7% of total applications from 78.3% the previous week. It was the highest share since the survey changed its benchmark in January.



The four-week moving average for all mortgage applications is up 1.96%.



Adjustable-rate mortgages made up 6.1% of activity last week, down from 6.7% a week earlier.



The average rate on 30-year fixed-rate mortgages with conforming loan balances edged down to 4.25% from 4.29%, while rates on similar mortgages with jumbo loan balances decreased to 4.51% from 4.55%. The average rate on FHA-backed 30-year fixed-rate mortgages slipped to 4.05% from 4.07%.



Meanwhile, the average for 15-year fixed-rate mortgages ticked up to 3.47% from 3.46%. The 5/1 ARM average decreased to 2.95% from 2.96%.



-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com

Bright Spots in Real Estate.

LOWESREALTORBENEFITS.COM LOWES MOVING LOWES.COM INMAN.COM


DAILY REAL ESTATE NEWS



September 14, 2011





5 bright spots in real estate recession

Mood of the Market

By Tara-Nicholle Nelson

Inman News™



Share ThisThe real estate market meltdown was much more severe and has lasted much longer than even the most bearish housing market observer would ever have predicted. Rather than values taking a dip, they've taken a double dip in many places; and the housing sector drama has infected the job market and the entire world's economy.



Yet, there are some very shiny silver linings to this whole mess -- a handful of ways in which our mindsets, habits, behaviors and approaches to money, mortgage and even life decision-making -- have been changed by this real estate market debacle. As I see it, here are the five best things about this otherwise terrible housing recession:





People now buy for the long term. Even Jeff Lewis, that reality TV house flipper extraordinaire, has declared that he's tapped out of the flipping business for the foreseeable future, trading in his real estate wheeling and dealing for the design business.



Recently, he mentioned having lost six homes in the real estate market crash. While Lewis flipped homes as his business, just five years ago, many Americans -- homeowners and investors alike -- took a short-term view on their homes, buying them with the idea that they could count on refinancing, pulling cash out or even reselling them anytime they wanted, at a profit.



Reality check -- those days are gone. Now, buyers know they'd better be prepared to stay put for somewhere between seven and 10 years (shorter in strong local markets, longer in foreclosure hot spots) before they buy if they want to break even. And this is causing them to take mortgages they can afford over time, and make smarter, longer-term choices about the homes they buy.









Dysfunctional properties are being weeded out and creatively reused. Municipalities like Detroit and Cleveland are demolishing blighted and decrepit properties in dead neighborhoods en masse, intentionally shrinking their cities to match their shrinking populations. These efforts are also eliminating breeding grounds for crime, and focusing resources on the neighborhoods that have a better chance of surviving and thriving in the long term.



In the so-called "slumburbias" of central California, Nevada and Arizona, McMansions are being repurposed into affordable housing for groups of seniors, artist communities and group homes.









American housing stock is getting an energy-efficient upgrade. The news would have you believe that every American has lost his or her home, walked away from it, or is now renting by choice. In fact, the vast majority of homeowners have simply decided to stay put.



Instead of selling and moving on up, homeowners are improving the homes they now plan to stay in for a long(er) haul. And this generation of remodeling is focused less on granite and stainless steel, and more on lowering the costs of "operating" the home and taking advantage of tax credits for installing energy-efficient doors, windows, water heaters and more. And while the first-time homebuyer tax credit is a thing of the past, the homeowner tax credits for energy-optimizing upgrades are in effect until the end of this year.









People are making more responsible mortgage decisions, and building financial good habits in the process. Buyers are buying far below the maximum purchase prices for which they are approved. They are reading their loan disclosures and documents before they sign them. And, thanks to the stingy mortgage market, they are spending months, even years, in the planning and preparation phases before they buy: paying down their debt; saving up for a down payment (and a cash cushion, so that a job loss wouldn't be disastrous); being responsible and sparing in their use of credit to optimize their FICO scores; and creating strong financial habits in one fell swoop.









Our feelings about debt and equity have been reformed. Americans no longer use their homes like ATM machines, to pull out cash, pay off their credit cards and then start the whole overspending cycle over again. Many can't, because their homes are upside down and cannot be refinanced in any event -- much less to pull cash out.



Others have been reality-checked by the recession, and are dealing with their non-mortgage debt the old fashioned way: by ceasing the pattern of spending more than they make, and applying the self-discipline it takes to pay their bills off.



Home equity, in general, is no longer viewed as an inexhaustible source of cash. Rather, we see it as a fluctuating asset to be protected and increased -- not so much through the vagaries of the market, but through the hard work of paying the principal balance down. Many of those refinancing into today's lower rates aren't doing it to pull cash out, as was the norm at the top of the market; instead, they are refinancing into 15-year loans to pay their homes off sooner than planned, or reducing their required payment so their extra savings can be applied to principal.



Of course, it remains to be seen how lasting these changes will be if and when home prices go up and mortgage guidelines loosen up. But since neither of these things look likely to happen in the short term, hopefully there's a chance that these behavior shifts will become part of a permanent mindset reset for American housing consumers.



Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.



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Copyright 2011 Tara-Nicholle Nelson



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Time to buy a home?

I started my career in home construction and real estate in 1978. Home sales were brisk until the early 1980's when mortgage interest went up to as high as 18%. Talk about a challenge, try convincing someone that 18% was a good rate to pay for a home loan. Hign interest rates, high unemployment, and high inflation eventually bought the real estate market to a grinding halt.




Consider mortgage rates today, 9-13-11. You can get a 15 year mortgage for 3.33% if you have good credit. In North Carolina you can get a new 2000 square foot home for 200,000. If you borrowed $180,000 for 15 years at 3.33%, your payments, principle and interest, would be around $1271.81. You could rent a home for a comparable amount so which way should you go?



In my opinion, if you are going to be in a home only 2 or 3 years you might want to rent. Any longer buying might be the better option as we all know long term real estate will go up. It might be a few more years before the sub prime meltdown plays out but it will eventually work out and home prices will start to rise again.