http://speakingofrealestate.blogs.realtor.org/2010/11/24/the-3-8-tax-is-not-a-real-estate-transfer-tax/

As rents continue to become very expensive and hard to find people should consider buying instead.

Right now rental properties are HOT! Many landlords are experiencing multiple offers on their rentals. Of course low supply and high demand equals higher rental prices.  With short sales, foreclosures and stricter requirements for mortgages more and more people are finding themselves with the need to rent.

Even with historically low mortgage rates and house prices some people are still sitting on the fence waiting to see what directions things are going to start moving in. For the longest time the reasons for not buying were because people were waiting for real estate to “bottom out”. Now more concern regarding unemployment and the economy are still holding people back from taking the leap.

But if you do meet the mortgage requirements, have money for a down payment and are planning on staying in a home for a minimum of 6 years now is still a fantastic time to buy. Take a moment to sit down and do the math. As a renter you are facing the reality of your rent being increased yearly. As they get higher the scales will tip beyond the point they are now. You will be saving each month because it will cost less to own than to rent. And there is always the tax write off to keep in mind. And if you can pay your own mortgage why make your landlord rich?

Commentary: Industry trade groups should sound warning bell

By Jack Guttentag
Inman News™

“How would a debt default by the federal government impact the home mortgage market?”

We can only guess about the extent of the impact, but it would range somewhere between ugly and catastrophic. Ugly might be a doubling of interest rates and a drop of 50 percent in loan volume. Catastrophic would mean an almost complete shutdown.

About 95 of every 100 home loans being written today are placed into mortgage-backed securities that are sold in the market with guarantees by Fannie Mae, Freddie Mac or Ginnie Mae. These are federal government guarantees, the value of which would drop like a rock with a default.

At best, the securities market would immediately demand a sizable rate premium on new guaranteed mortgage-backed securities to compensate for the added risk. This would immediately translate into sharply higher interest rates charged to new borrowers.

At worst, the markets for these securities would stop functioning altogether as investors retreated to the sidelines to await further information on which government obligations would be honored and which would not. That could be a long wait, as the systems the government uses to make payments have no provisions for allocating funds when there isn’t enough money to pay all claims, and there are no contingency plans for this contingency.

“If a default had the horrendous consequences you describe, and these induce Congress and the Obama administration to agree finally on an increase in the debt ceiling, how long would it take financial markets to return to normal?”

Markets would never return to a state where U.S. government obligations are viewed as riskless. We will pay for this loss of grace forever.

Investors in fixed-income securities are worst-case-oriented, and make a major distinction between the impossible and the unlikely. The current rates that the Treasury must pay investors are based on the assumption that default is impossible. Once a default occurs, it will NEVER again be viewed as impossible. The additional cost of carrying debt on which default is possible will be paid forever.

“How much extra would it cost?”

That is not knowable in advance, but I’ll hazard a guess. My guess is that the cost of carrying the federal debt will increase by about 3 percentage points where it would more or less match the return on investment-grade corporate bonds. On a debt of $14 trillion, an increase of 3 percent in carrying cost would add about $420 billion to our annual deficit.

An optimistic estimate would be that the cost would rise by only 0.25 percent, which would increase the annual deficit by “only” $35 billion.

“Do you really think there will be a default?”

Given the current political impasse, I think the probability is frighteningly high. The message I drew from last night’s address by President Obama, and the follow-up comments of House Speaker John Boehner, is that both were more heavily invested in their positions on spending and taxes than on the need to avert default.

Many important events, especially in the political world, are the result of inadvertence. Nobody planned them and often nobody wants them, but events set in motion years earlier acquire a momentum of their own, and nobody has the motivation and/or power to stop it. Because nobody wants it, everybody expects someone else to swing the axe.

In that connection, the threat posed to mortgage lenders, REALTORS® and homebuilders by a debt default is enormous. But where are the trade groups? When a bill is introduced to, say, eliminate the mortgage interest deduction, the trade groups are all over the Congress and administration to beat it. But on an issue that threatens their very existence, they are nowhere to be seen. Their assumption seems to be that at the 11th hour, the politicians will prefer doing the right thing to laying the blame for disaster on their adversaries.

In the current political climate, that is a terribly risky assumption.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

A lot of first time buyers shop for their homes thinking that this is going to be where they are going to live forever. And some do just that. But the statistics show that they are not the majority. I think parents of people my age were the last generation who were able to land a job out of school and pretty much plan on retiring from the same job 30 years later. My parents lived in the same house until the day they died. But today’s reality is that most people move every 5 to 7 years.

Weather it’s because of employment or your home doesn’t fit your needs any longer you will reach a point some day where you have to think about making the house that you have work for you again or is it time to move on? You can always figure out what the current trends are by watching TV. The new shows are a good indication of what is happening right now. The Oprah’s new OWN channel has a new program called “Love It Or List It”. The players are an interior designer and a real estate agent who compete with each other, one by redesigning the homeowner’s current house to make it more “lovable” and livable again and the other is the real estate agent who shows the homeowners new house that have all the perks they are looking for. Much to my surprise it seems to run 50/50,  50% stay and 50% move. The one thing that it does show is that real estate is emotional. And with it being so emotional for most it can be difficult to separate and  look at it as a business transaction. That is when having a real estate agent can be really helpful.

So whether it’s helping sort out what type of real estate fits your lifestyle or if you should stay or leave your current home, a real estate consultant is the person you should turn to to help you decide.

Most do it yourselfers who buy a foreclosure or short sale at some point start to feel like they are attached to a ball and chain. As one project gets completed the next one is just begging for attention. I recently checked in with a buyer I helped purchase a foreclosure and he told me that he can’t look at it as a whole because he starts to shake. He has to focus on one project at a time. I think now he is starting to see that I may have been right when I told him that by the time he is done his house will be valued at or possibly a little less than market. But so far just a quarter into the rehab of his foreclosure dream house he has experienced the following. He had to apply for a variance and get a survey of the property done and this is why. The previous owner was of course above all laws. The original plans submitted to the city were for a two car garage and a 3 foot extension to the side of the house. The addition to the side added 6 feet instead of 3 extending it into the setbacks and then he built an entire second floor above the existing structure and the new garage! Maybe he thought the city wouldn’t notice? I don’t know what he was thinking but it might give us some insight as to why his house went into foreclosure.

I just ran into my buyer a couple of weeks ago in the grocery store. I asked him how things were going. He said that the City granted that variance, he filled dumpsters with old sheet rock that had to be removed because it was so badly damaged and that the contractor who was with him every step of the way encouraging him to buy this foreclosure had stopped taking his calls. Unfortunately, regardless of the condition he was going to be in the house by August because he just can’t keep paying rent on top of a mortgage. But I know this man and he will have the house of his dreams when he is done. But for me I ask … at what price?

I work for Coldwell Banker and our office is located on the green. I’m blessed to have a huge window by my desk that looks out over it. Sometimes it feels like my work space is right out of a storybook. It’s so beautiful it can almost be distracting. Just perfect to do a little day dreaming while I’m thinking about the next catchy home description I’m going to write.

Another area that is so beautiful in Milford is the Duck Pond. A little past mid day the ducks and the geese have their own little parade as they march across the street from the pond to the church lawn.  If you live in Milford long enough I’m sure you will have the pleasure someday of watching them. (don’t be in a hurry and horns make them move slower!)

The reason I’m doing this blog is because I think it’s important for people to know what is happening in their area regarding real estate. We hear so much on the news but most of the time it doesn’t seem to fit what is happening in our own market.  I’m going to do my best to post information that will be helpful to people who are buying or selling in the Milford/New Haven County area.

Besides giving you statistics I also what to share with you thoughts and observations from other area realtors. I hope you will always find it interesting and helpful. At anytime ask questions or challenge me if you think I have posted something incorrectly. It’s the best way for all of us to learn.

Enough said for now. I’ll be thinking of what my first topic will be. It might even be about how important social media is to the real estate industry and how challenging it is to get started. 

Type at ya later.

Cindy Lee