-Good Times are within Our Grasp-
I believe 2008 will be a transition year just as I described 2006. However, I trust that 2008 will evolve into a brighter time for those involved in the real estate game as opposed to 2006, which transitioned into the somewhat sluggish 2007 market. Some experts believe that 2008 will be our tunnel into the bright light of 2009. I agree.
As I have said in the past, there is no doubt that the real estate market has changed, but in our area, it was never as dire as the media would have us believe. What we saw this past year was fear. I believe with the ever-increasing consumer confidence due to lower interest rates, available financing, and buyer/seller awareness we will see that fear lift and the downtrend end.
The National Association of REALTORS® is predicting existing home sales and prices to stabilize and then rise throughout 2008. This is great news because we are in a better place now. Buyers, and especially sellers, understand what is going on.
The following is my short list of vital steps that must be taken by buyers and sellers to feel successful in the 2008 housing market.
SELLERS
-Be proactive in setting an effective price
-Remember this will not be a fast market therefore buyers do not be afraid of losing the property
-Listen to your agent when it comes to preparing the condition of the home for sale
-Be realistic and prepared for how many days the house will be on market to procure and close a buyer
BUYERS
-Put on your buying shoes and get out there
-Take advantage of the market and of the low interest rates
-Know that there is a lot of inventory available but finding “the one” means seeing a lot of homes
-There are foreclosures readily available, so if this fits your needs have your agent do a search for foreclosed homes for sale in your area.
Real estate is not always a win-win situation. Therefore, if you are a buyer and a seller the give-and-take game is probably in your future, so be ready. You may have to take a hit on the sale of your existing home but in turn, be able to purchase a larger home because of the great interest rates.
Monday, January 28, 2008
Thursday, July 12, 2007
How are interest rates determined?
Interest rates are affected by a number of factors. The Federal Reserve, which is charged with maintaining the stability of the nation's financial system, raises or lowers short-term interest rates in an effort to maintain that stability. The Fed regularly takes these actions in response to economic ups and downs that the country goes through on a fairly routine basis.
Short-term rates are raised in what are called expansions -- good times -- to keep the economy from building too fast and risking inflation. The Fed will lower short-term rates when the economy is contracting -- slowing down.
So what have rates been doing? The Federal Reserve raised short-term rates 17 times between June, 2004 and June 2, 2006, and they have remained at that point since then.
Long-term rates, like Mortgage Rates, aren't affected as quickly by economic conditions as are short-term rates, but there is a trickle down factor and they reflect the impact eventually.
Unlike short-term rates, Mortgage Rates typically change daily and as a rule of thumb, bad news in the economy brings on lower rates, and good news makes rates climb.
Short-term rates are raised in what are called expansions -- good times -- to keep the economy from building too fast and risking inflation. The Fed will lower short-term rates when the economy is contracting -- slowing down.
So what have rates been doing? The Federal Reserve raised short-term rates 17 times between June, 2004 and June 2, 2006, and they have remained at that point since then.
Long-term rates, like Mortgage Rates, aren't affected as quickly by economic conditions as are short-term rates, but there is a trickle down factor and they reflect the impact eventually.
Unlike short-term rates, Mortgage Rates typically change daily and as a rule of thumb, bad news in the economy brings on lower rates, and good news makes rates climb.
What is the cutting edge house color? GREEN
What is the cutting edge house color? GREEN
Did you know that the average U.S. home causes twice as much greenhouse emissions as a single car? It’s true. So it shouldn’t surprise anyone that “green” home building is poised to be the next big push in the environmental awakening. “Green” homes or environmentally sensitive housing are already afoot in other areas of the nation and are about to be the next trend here in the St. Charles area.
While some may see this as another politically correct fad, “green” homes offer owners greater durability, less maintenance costs, and lower energy bills than typically constructed houses. “Green” homes may include energy-efficient appliances, water efficient faucets, better ductworks and air filtration systems, and low-emissivity windows (which keep heat from filtering in or out of the windows). Some of the tricks of the trade for “green” home design include using recycled rainwater, solar chimneys, rooftop gardens, geothermal cooling systems, and solar panels.
Commercial construction is ahead of the residential market as far as building “green.” But environmentally-friendly developments are on the rise. Highland Park in St. Charles is touted as Missouri’s first “green” residential community. Its 245 condominiums and town homes are designed with recycled and sustainable materials and energy-efficient systems.
Now, the big question is “What constitutes a ‘green’ home?” Well, it depends on who you listen to. MSNBC reports that there are 80 different local and state “green” building organizations and at least two different national groups promoting their guidelines for constructing “green.” I believe there will soon be a national standard adopted for what qualifies as a “green” home and all these organizations are simply jockeying for their interests to be embraced.
The best-known group in “green” building is the U.S. Green Building Council (USGBC). This non-profit group developed its own point rating system for “green” commercial projects in 2000. Their new construction rating system is based on five categories: sustainable sites, energy and atmosphere, water efficiency, indoor environmental quality, materials and resources. To find out more about building an environmentally-conscious home visit www.usgbc.org.Be sure to consult your realtor for locally established ways to go “green” when you are building your new home.
Did you know that the average U.S. home causes twice as much greenhouse emissions as a single car? It’s true. So it shouldn’t surprise anyone that “green” home building is poised to be the next big push in the environmental awakening. “Green” homes or environmentally sensitive housing are already afoot in other areas of the nation and are about to be the next trend here in the St. Charles area.
While some may see this as another politically correct fad, “green” homes offer owners greater durability, less maintenance costs, and lower energy bills than typically constructed houses. “Green” homes may include energy-efficient appliances, water efficient faucets, better ductworks and air filtration systems, and low-emissivity windows (which keep heat from filtering in or out of the windows). Some of the tricks of the trade for “green” home design include using recycled rainwater, solar chimneys, rooftop gardens, geothermal cooling systems, and solar panels.
Commercial construction is ahead of the residential market as far as building “green.” But environmentally-friendly developments are on the rise. Highland Park in St. Charles is touted as Missouri’s first “green” residential community. Its 245 condominiums and town homes are designed with recycled and sustainable materials and energy-efficient systems.
Now, the big question is “What constitutes a ‘green’ home?” Well, it depends on who you listen to. MSNBC reports that there are 80 different local and state “green” building organizations and at least two different national groups promoting their guidelines for constructing “green.” I believe there will soon be a national standard adopted for what qualifies as a “green” home and all these organizations are simply jockeying for their interests to be embraced.
The best-known group in “green” building is the U.S. Green Building Council (USGBC). This non-profit group developed its own point rating system for “green” commercial projects in 2000. Their new construction rating system is based on five categories: sustainable sites, energy and atmosphere, water efficiency, indoor environmental quality, materials and resources. To find out more about building an environmentally-conscious home visit www.usgbc.org.Be sure to consult your realtor for locally established ways to go “green” when you are building your new home.
Thursday, May 24, 2007
Do you know your debt-to-income ratio?
Commonly referred to as DTI, your debt-to-income ratio tells lenders what % of your income you have available for a house payment after fulfilling your other recurring obligations each month.
Recurring debt includes credit card payments, child support payments, car payments and other obligations that will not be paid off within 10 months (for conventional loans).
Lenders prefer that this number is not more than 36%, but depending on the strength of your loan application your number might be higher or lower.
To calculate the DTI ratio, take your total gross annual income and divide it by 12 to get your gross monthly income. Then add up all of your recurring debts including your house payment. Then divide your gross monthly income by this number and you will have your DTI ratio.
If your ratio is higher than 36%, then it may mean you are stretching your income too far. In addition, too much revolving debt can drive down your credit scores.
Recurring debt includes credit card payments, child support payments, car payments and other obligations that will not be paid off within 10 months (for conventional loans).
Lenders prefer that this number is not more than 36%, but depending on the strength of your loan application your number might be higher or lower.
To calculate the DTI ratio, take your total gross annual income and divide it by 12 to get your gross monthly income. Then add up all of your recurring debts including your house payment. Then divide your gross monthly income by this number and you will have your DTI ratio.
If your ratio is higher than 36%, then it may mean you are stretching your income too far. In addition, too much revolving debt can drive down your credit scores.
Improving your home’s curb appeal
What is the charm factor of my house? When it comes time to sell, most homeowners’ concerns turn to “curb appeal.” A new welcome mat just isn’t enough anymore. Competition among sellers is fierce so the goal is to make your home so attractive from the roadway that all who pass will want to see the inside.
I suggest that my clients perform this curb appeal test. On your way home, stop the car in the roadway and try to see your home with an objective eye. Ask yourself these questions:
1. What is the first impression of my house and the property? Does it look cluttered or too bare?
2. What is the best exterior attribute of the house or the lot? How can I enhance that?
3. What is the most unflattering feature of the home or lot? What can be done to fix it, remove it, remodel it, add to it or hide it?
Then park the car where a potential buyer would and walk towards the house noticing if the approach is clean and tidy or what improvements are needed.
Don’t forget about evening curb appeal too. One quick way to improve nighttime curb appeal is with lighting. Pathway lighting along sidewalks or the driveway can make a dramatic difference, as well as replacing front porch and garage lights with updated fixtures.
To grow your home’s curb appeal I suggest giving your front door a little attention. The door can be repainted (along with matching shutters), replaced with a new and more attractive door or perhaps the addition of a quality storm door is the perfect finishing touch. Then top off the transformation with a welcoming seasonal wreath.
Be sure to get rid of all mold or mildew on the house and roof, find a hidden place for all gardening items and tools, rake and dispose of fallen leaves, clean windows and gutters, and trim tree limbs that hang near or touch the roof.
Many sellers turn to landscaping when an outdoor spruce-up is needed. Be careful not to overwhelm the property and the potential buyers with obscure, high-maintenance plants. Predicting the weather, especially in St. Charles, is an inexact science so be careful not to lose money and plants to an unexpected cold snap. Colorful hanging flower pots spaced evenly along the front porch can add life to a white house. If you have always considered adding a water feature or an architectural element to the garden go ahead and do it. These projects can be inexpensive and enjoyable for the do-it-yourselfer and will at the very least make the house stand out among other homes. “I’d like to go back and see the house with the waterfall.”
Other easy projects that are sure to raise your home’s charm factor are to replace the beat-up mailbox with a brightly colored or ornamental iron mailbox, install awnings, paint and stencil a wooden porch floor, add ceiling fans to a roomy front porch, or simply add a flag stand to display “Old Glory.”
I suggest that my clients perform this curb appeal test. On your way home, stop the car in the roadway and try to see your home with an objective eye. Ask yourself these questions:
1. What is the first impression of my house and the property? Does it look cluttered or too bare?
2. What is the best exterior attribute of the house or the lot? How can I enhance that?
3. What is the most unflattering feature of the home or lot? What can be done to fix it, remove it, remodel it, add to it or hide it?
Then park the car where a potential buyer would and walk towards the house noticing if the approach is clean and tidy or what improvements are needed.
Don’t forget about evening curb appeal too. One quick way to improve nighttime curb appeal is with lighting. Pathway lighting along sidewalks or the driveway can make a dramatic difference, as well as replacing front porch and garage lights with updated fixtures.
To grow your home’s curb appeal I suggest giving your front door a little attention. The door can be repainted (along with matching shutters), replaced with a new and more attractive door or perhaps the addition of a quality storm door is the perfect finishing touch. Then top off the transformation with a welcoming seasonal wreath.
Be sure to get rid of all mold or mildew on the house and roof, find a hidden place for all gardening items and tools, rake and dispose of fallen leaves, clean windows and gutters, and trim tree limbs that hang near or touch the roof.
Many sellers turn to landscaping when an outdoor spruce-up is needed. Be careful not to overwhelm the property and the potential buyers with obscure, high-maintenance plants. Predicting the weather, especially in St. Charles, is an inexact science so be careful not to lose money and plants to an unexpected cold snap. Colorful hanging flower pots spaced evenly along the front porch can add life to a white house. If you have always considered adding a water feature or an architectural element to the garden go ahead and do it. These projects can be inexpensive and enjoyable for the do-it-yourselfer and will at the very least make the house stand out among other homes. “I’d like to go back and see the house with the waterfall.”
Other easy projects that are sure to raise your home’s charm factor are to replace the beat-up mailbox with a brightly colored or ornamental iron mailbox, install awnings, paint and stencil a wooden porch floor, add ceiling fans to a roomy front porch, or simply add a flag stand to display “Old Glory.”
Tuesday, May 1, 2007
Do you know your housing ratio?
This is very beneficial information to have when deciding how much to spend on a new house or determining whether to refinance. This is also one of the many factors that lenders review when deciding whether or not to lend you money.
Your housing ratio simply measures the amount of your income that you spend on a house payment(s). To calculate the housing ratio, take your total gross annual income and divide it by 12 to get your gross monthly income. Then divide that number by your total house payment. Make sure you include taxes, insurance and any 2nd mortgage payments.
Fannie Mae recommends that you don’t spend more than 28% of your gross monthly income on a house payment. Again, this is a rule of thumb and there are many other factors that a lender takes into consideration including how much you spend on other debt per month and your credit scores before determining whether you are qualified for a loan.
But in general it is a good ideal to not go much higher than 28%. Studies have shown the higher the housing ratio is; the harder it can be for people to make their payments on time.
Your housing ratio simply measures the amount of your income that you spend on a house payment(s). To calculate the housing ratio, take your total gross annual income and divide it by 12 to get your gross monthly income. Then divide that number by your total house payment. Make sure you include taxes, insurance and any 2nd mortgage payments.
Fannie Mae recommends that you don’t spend more than 28% of your gross monthly income on a house payment. Again, this is a rule of thumb and there are many other factors that a lender takes into consideration including how much you spend on other debt per month and your credit scores before determining whether you are qualified for a loan.
But in general it is a good ideal to not go much higher than 28%. Studies have shown the higher the housing ratio is; the harder it can be for people to make their payments on time.
Sellers – Choose the right upgrades and get better bang for your buck
Your home is your sanctuary and when it comes time to sell, you want someone else to think of it as their sanctuary too. So how do you make your home stand out among all the new construction homes available? It is all in the upgrades.
To prepare your home for sale, the tricky part is deciding where to begin. This is where your real estate agent comes in.
Too many times I have witnessed well-meaning sellers make improvements to their home which are not appealing to the masses. My clients use my complimentary home inspection for an early glimpse as to what buyers may want repaired or improved.
Heating and cooling efficiency items are becoming more common upgrades in the St. Charles area. Homeowners are spending the extra $150 for this perk. I am also starting to hear more about solar alternatives as an amenity.
Many people believe the bathroom is the place to start upgrading. Sellers can turn a dated bath into a luxurious haven by installing a jet tub, a double bowl vanity or pedestal sinks.
An inexpensive way to upgrade any room is with improved lighting. But a great impact can be made in a bathroom with the addition of new vanity lights, a shower recessed light, or a skylight. A major bathroom remodel provides a great return on investment when the house is sold.
The kitchen is the heart of the home for most buyers. Granite countertops and stainless steel appliances are “in” and that may be all it takes to bring a kitchen into the 21st century. However, a blast-from-the-past kitchen in need of a significant overhaul will be worth the investment when the house sells.
Sellers should not forget to consider the outside of their home when contemplating improvements. The addition of a deck is the most economical way to add square footage to a home and usually brings a significant return on your investment.
The top 10 remodeling projects with the highest return on investment (ROI) according to REALTOR magazine are:
10. Sunroom Addition
9. Roof Replacement
8. Family Room Addition
7. Deck Addition
6. Basement Remodel
5. Attic Bedroom Remodel (adding an extra bedroom)
4. Moderate Kitchen Remodel
3. Bathroom Remodel
2. Siding Replacement
And the number one remodeling project with the highest return for sellers is window replacements.
Minor touchups can also be invaluable for sellers. Nothing says (or smells) of an upgrade like freshly painted walls. Other worthwhile minor fixes include: installing new ceiling fans, pressure washing the house and sidewalks, installing closet organizers, repairing all cracks in walls and ceilings, among others.Make sure your chosen contractor follows all the current county building codes and applies for the necessary permits. Saving the $50 and skipping the permit process will only come back to haunt you when your house goes on the market.
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