John answer the Question is purchasing a home makes sense now?

With the roller-coaster ride on Wall Street continuing, many have asked me whether this is the right time to buy a house. Maybe it’s a better idea to stay put and wait until the economy recovers, and then a logical course of action may seem clearer.
I beg to differ.
We have seen economic ups and downs before. Postponing the decision to own real estate was the wrong path then, and I believe it to be the wrong path now.
For starters, there are at least five compelling reasons to buy and own real estate today. Let’s take a look:
1. You have to have a place to live. Let’s face it. When you write that rent check every month, you are throwing your money down the drain. The only return you get is the receipt your landlord politely hands you.
Most real estate markets are truly beat up right now, meaning that any serious seller understands what it will take to make a sale. The house has to be in good condition, priced right and made attractive in every way. Smart buyers can get a bargain in this market.
In addition, because interest rates are at or near historical lows, you can buy a house today for only slightly more than it costs to rent. The interest expense of owning a home is far and away the largest cost associated with ownership. And you’ve got to live somewhere.
2. Your government wants you to own a house, and it will give you tax breaks for doing so. And those tax breaks are substantial. The interest you pay on your home loan is probably totally tax deductible, and so are the property taxes you pay. These two expenditures make up the bulk of your monthly payment in the early years of your mortgage.
And the benefits get better from there. When you get ready to sell, you can likely pocket 100 percent of the profit and pay no tax whatsoever, amplifying the dollar value of any appreciation you might experience.
And both these benefits can be used again and again, within certain limits.
3. Your investment in real estate is likely to be worth more in the future. I know, I know. You’ve heard that
real estate has lost most of its value and that it’s a bad investment because it has gone down so far in value. And you heard just last week on cable TV that the housing market might never recover.
Well, take a deep breath and listen to this: The last time I checked, there were 305 million of us living in this great nation, and most of us prefer to live indoors. The reality is that certain regional markets, particularly California and Florida, have experienced extreme price volatility, allowing some pundits to focus on the downside of the run-up in prices. In contrast, homes in Georgia have, with some exceptions, maintained their value.
Appreciation has, in the past, rewarded homeowners who owned for any substantial length of time. While there is no guarantee that your home’s value will increase in the future, history tells us that is the most likely outcome.
4. You will be paying back your loan, little by little, month by month. On a typical home loan, the portion of your monthly payment allocated to debt reduction is small. But with each passing month, your loan’s principal balance gets lower and lower.
This buildup in equity occurs regardless of any appreciation, and it will eventually result in a home that you own free and clear of any debt. Whether you select a traditional 30-year loan or a lower-interest-rate 15-year program, the eventual goal is the same. And it happens automatically.
5. You can use a very small cash down payment to buy a large investment. While the days of the 103 percent loan are mostly behind us, you can still find 90 percent and even 95 percent financing available for well-qualified buyers.
And depending on the lender’s guidelines, you may be able to use a gift from a family member as some or all of your required cash at closing.
This ability to leverage your purchase and to obtain long-term fixed-rate financing has made homeownership affordable to more of us than ever before.
I understand that homeownership isn’t right for everyone. If you plan to relocate in the next three years, or if you aren’t ready for the financial responsibilities of ownership, then it likely makes sense to wait. Furthermore, there are some people who highly value their freedom to make a move on a moment’s notice. For these and some others, owning might be a burden and a mistake.
But if you are planning on settling down for at least a few years and you understand what you are getting into, owning a home might very well be the best financial decision you make this year.
John Adams is a broker and investor. For more real estate information or to make a comment, visit Money 99. Find previous articles by John Adams and more home buying advice on the

Homes & Land to Offer Featured Listings on Yahoo! Real Estate

TALLAHASSEE, Fla., Oct 28, 2008 (BUSINESS WIRE) -- Homes & Land, the affluent home buyer's marketplace, announced today that it will begin to offer its Realtor(R) advertisers featured listings on Yahoo! Real Estate, the number one real estate site on the web. With this new ad package, Homes & Land Realtors are able to promote specific homes as featured listings on Yahoo! Real Estate at the top of its local search results pages, increasing exposure for home listings and generating significantly higher click-through rates and views than non-featured listings.
According to comScore Media Metrix, the number of unique visitors to real estate sites was up to 41.2 million in the past year, and Yahoo! Real Estate has seen its unique visitors increase 22 percent in year over year analysis. Additionally, Yahoo! Real Estate visitors are twice as likely as Internet users to purchase a new residence in the next six months and almost twice as likely to have sold or changed their primary residence in the last six months. (comScore Media Metrix July 2008 report)
"Home sellers engage Realtors(R) who are savvy marketers and expect their homes to be advertised in well-branded areas," says Rob Wicker, Homes & Land's Chief Marketing Officer. "Featured listings are a vital tool in attracting active buyers as well as an important way for our advertisers to demonstrate to their sellers that their home sale is a top priority."
The agreement allows Homes & Land Realtor(R) advertisers to purchase featured listings on Yahoo! Real Estate, one of the largest and fastest-growing real estate Web sites, according to comScore Media Metrix. Realtor(R) advertisers of Homes & Land publications can purchase featured listings at a special introductory price.
Yahoo! Real Estate's Web site http://realestate.yahoo.com showcases featured listings based on qualifiers such as zip codes, cities, beds, baths and price ranges. Yahoo! Real Estate averages over five million unique visitors monthly, according to comScore Media Metrix.
"We're pleased to extend our partnership with Homes & Land," said Steve Schultz, senior director of Yahoo! Real Estate. "This relationship brings together Yahoo! Real Estate's substantial audience of home buyers with Homes & Land's long history of serving the advertising needs of local real estate agents."
Homes & Land advertisers may upgrade any of their online listings easily by choosing the Featured Listing option associated with their property on their account at HomesAndLand.com.
"There continues to be growth in online real estate searches and listings," adds Wicker. "Offering our advertisers more ways to reach online active buyers in the marketplace is essential in assisting with their business goals."
Homes & Land is a category leader in real estate media. For more than 35 years, Realtors(R) have counted on the brand to provide the most targeted distribution channel to reach active home buyers. In addition to its flagship publication, the company also publishes Home Guide magazine, Estates & Homes magazine and Rental Guide magazine. Homes & Land is a leading resource of real estate information through its online portal HomesAndLand.com http://www.homesandland.com. Log on 24-hours a day to gain insight and perspective into the home sales market.
SOURCE: Homes & Land

As A New Home Buyer

Is it Best to Buy a New Home, or a Older Home In California? “The indispensable first step to getting the things you want out of life is this: Decide what you want” Ben Stein

Is it True Housing healthier near thriving metros

As housing prices near a bottom -- perhaps by late 2009 -- homes closer to cities with thriving economies and mass transit will outperform outer-ring suburbs and "exurban areas," where high gas prices are making long car commutes prohibitively expensive and rising energy costs mean higher utility bills.
That's the conclusion of a report released today by the Urban Land Institute and PricewaterhouseCoopers LLP that's based on interviews with more than 600 real estate experts, including investors, developers, lenders and real estate brokers. The Urban Land Institute is a nonprofit that bills itself as dedicated to promoting the "responsible use of land and in creating and sustaining thriving communities worldwide."
The report, Emerging Trends in Real Estate 2009, projects that the worst of the national housing downturn may be over, with a price bottom probably forming by late 2009. But there's still more pain to come, the report predicted, in part because mortgage lenders aren't backing off stricter standards and interest rates are probably headed up.
The report is focused on commercial real estate such as commercial, office, industrial and apartment properties. But it includes an overview of housing markets and how they may be affected by macroeconomic trends and changing regional conditions.
Home builders may have to continue selling tracts of land for cents on the dollar or face foreclosure on their holdings, the report predicts, adding to the already high rate of mortgage defaults and foreclosures.
As home prices continue to fall, "McMansion subdivisions in the sticks (will) take a double whammy," the report predicts. Rising heating and cooling bills could work against sellers already facing resistance to long commutes. "People realize they don't need 3,000 square feet and four cars anymore," one source interviewed for the report said.
Changing preferences could increase demand for condos in urban areas, many of which now have a glut of such properties. One respondent said their company had 30,000 unsold units in south Florida -- just as they did in 1975 and 1988.
At some point, those high-end Miami condos overlooking the Atlantic will be good buys," the report predicts, noting that ocean views "always find a market."
So-called "24 hour cities" like New York, Boston, Chicago, San Francisco, and Washington, D.C., should also benefit from mass transit systems that can free residents from car dependence, the report said.
"Fast-growing Sunbelt cities had pooh-poohed mass transit in their rapid expansions, enabled by interstate highway building during the 1960s and 1970s," the report said. "Virtually no one contemplated the consequences of car dependence until populations began to overwhelm road capacities."
The Sunbelt is also plagued by water issues, as spotlighted by droughts that tested Atlanta's reservoir system, which the report called "insufficient."
Water issues pose a challenge to further growth in areas dependant on the Colorado River and throughout the Southwest, the report said. Continued growth in areas like Las Vegas, Phoenix and Southern California will require increased conservation and new sources of water.
The suburbs will continue to retain an edge among many families looking for better school districts and child-friendly environments, the report said. But the mortgage crisis, high car-related costs and increasing property taxes mean moving to the suburbs requires greater sacrifices, the report noted. Federal grants that enabled suburban expansion by subsidizing the extension of roads and sewers are also in shorter supply.
Gains in the attractiveness of 24-hour cities could be "squandered" if cutbacks in police, fire and sanitation result in less safe and appealing environments, the report said. Falling property values and the economic slowdown are expected to cut into tax revenues, forcing cities to reduce services.
"Nothing would undermine 24-hour dynamics more quickly than rising crime rates," the report warned.
Commercial outlook
Seattle, San Francisco, Washington, D.C., New York and Los Angeles are expected to be the top five markets for investment in commercial property in 2009, the report said.
Wall Street layoffs and office vacancies will help Seattle and San Francisco to reclaim top rankings for commercial investment from New York, the report predicted, and California's large suburban satellite markets, Riverside and Orange County, are expected to "tank in mortgage and housing misery."
Seattle is braced for downtown office vacancies to rise above the current 10 percent, and demand for housing and housing prices are expected to slip but stay above national averages.
San Francisco offers "a high quality of life with a well-diversified economy," the report said, and the city ranks first for development and home building. Even though housing prices are expected to decline, foreclosures should remain in check, the report notes.
The thriving energy industry is expected to boost commercial investment prospects for "long-forlorn" Texas markets, but Midwest factory towns are expected to lose even more ground, the report said.
Houston makes the report's list of top 10 commercial markets since 1995, as office vacancies are expected to drop to 10 percent.
"Cheap land results in cheap housing, and prices have not gone up dramatically," the report noted of Houston's housing markets.

WOW September home sales up 65% from last year in Southern California

Sinking home values continued to drive home sales in September as bargain hunters snared properties at 2003 prices.

The median Southern California home sales price was $308,500 in September, the lowest since May 2003 and down 33% from the September 2007 price of $462,000, according to real estate research firm MDA DataQuick.

The number of homes sold in Los Angeles, Orange, San Bernardino, Riverside, Ventura and San Diego counties shot up 65% compared with September 2007. Fifty percent of homes sold last month had been foreclosed.

Real estate experts said despite the increase in September sales, the real estate market is likely to suffer along with the rest of the economy.

September's figures reflect home purchase decisions that were made in mid- to late-summer, before the dramatic worsening of the nation's economic crisis in recent weeks, said MDA DataQuick president John Walsh.
"Over the next few weeks our sales data will begin to show how the meltdown in financial markets this fall has impacted housing demand," Walsh said in a statement.

Since September, the stock market has declined sharply and unemployment in California has remained close to 8%. Mortgage interest rates have also been rising, elevating the cost of home purchases.

A total of 20,497 homes closed escrow in the Southern California in September, up 5.8% from 19,366 in August. Sales were up most in Riverside County, which posted a 106% gain from the same month a year ago. Riverside and San Bernardino counties also recorded the steepest year-to-year price declines in the region, with the median sales price down 37% compared with a year ago.

In Riverside County, 69% of homes sold in September had been foreclosed, while foreclosed properties comprised 63% of San Bernardino County homes sold last month. Foreclosed homes made up 39% of Los Angeles County homes sold in September and 37% of Orange County homes sold last month.

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Foreclosures drop in Santa Clara County, state

Foreclosures decreased statewide by 12.4 percent and notices of default decreased 61.8 percent in September, which some attribute to the state law that went into effect last month
requiring lenders to work with borrowers who are struggling with mortgage payments.

Affordability, is that true for Los Altos California, Is the Key

One of the interesting things about what is currently happening in the real estate and financial markets to me is all the pet theories people have about what drives prices. Folks will create spreadsheets and graphs that somehow prove, or at least don't disprove their ideas, and then other folks will agree or disagree based on their personal prejudices.
One theory floating around out there is the "Time Delay" theory. The Time Delay theory says that Los Altos and the surrounding area real estate pricing trends tend to lag trends in other parts of the country by 18 months to 2 years. It seems as though what the theory attempts to do is simply that some rule exists whereby you can predict what will happen in the Los Altos and the surrounding area market by looking at other real estate markets around the state or country. What this theory doesn't do, is indicate any understanding as to why markets may or may not behave differently. The proponents of this theory are quick to discount any strengths that the Los Altos and the surrounding area has that would mitigate the effects of a slowdown in the economy or real estate market.
In a nutshell, I would refer to the Time Delay theory as the idea that whatever happens elsewhere must inevitably happen to Los Altos and the surrounding area, and we are just late to the party. Obviously, the flaw is that you are looking at an effect and trying to imply causality.
I am not saying the theory is completely without any basis, however. It does seem to be true that our local economy may at times be up when other parts of the country are down, or vice versa. However, there are reasons why this happens, one of which is international trade. We are somewhat unique in that we have one of the strongest balances of international trade in the country. So, if the dollar is weak, and the economy overall is somewhat weak, our local economy can sometimes be buoyed by selling more of our goods overseas.
Not to say we are immune from economic factors that plague the rest of the country, but we do have the good fortune of not being tied as closely to the domestic economy. Conversely this can be a negative when the dollar is really strong, as our products then become more expensive domestically--this explains partially why Boeing orders go up when the dollar is weak, and Airbus orders pick up when the dollar is strong. At any rate, these factors lend validity to this idea that when the US at large is up, Washington might be down, or vice versa. But the important thing to note is that any time a trend like this exists, there will usually be reasons why it is, or is not so. It's an effect, not a cause.
The problem for us is when the global economy and the domestic economy go down the drain at the same time. Because then, there is no one to buy our stuff. And if no one buys our stuff, people tend to lose their jobs.
To return to this time delay theory, one of the theories that is floating around that I take the most exception to is this idea that Los Altos and the surrounding area real estate market is following in the footsteps of other inflated markets like San Diego. The theory seems to indicate that if San Diego has fallen 30%, then so too inevitably must Los Altos and the surrounding area --it is just taking us longer to get around to it. After all, the theory goes, San Diego what with its sun and fun, is a more desirable place to live than Los Altos and the surrounding area. How can our economy hold up when we don't even have a Sea World?
In my introspective moments, I've sometimes wondered this myself. There are days (rainy ones, usually) when I would rather be living in San Diego than here. But, there are a few factors that have always kept me here. Obviously, the first would be my family situation--being part of a Los Altos tends to limit the number of places that one might conceivably live. Another is the fact that I have actually visted San Diego, and did not like it. It is the proverbial place that is nice to visit, but not to live.
This is partly because of the sun and fun factor. Like most of California, San Diego has always had a boom and bust real estate market. Like it's bubble cohort Miami, part of what has always driven the market in San Diego is the 2nd home market. When times are good real estate in San Diego becomes very expensive because not only are companies that are located in San Diego expanding, you also get a lot of retired people (they call them Snow Birds) buying 2nd homes that they live in during the winter when the weather is bad in their home state. And because the 2nd home market tends to dry up whenever times are bad, that means that San Diego's real estate market is more volatile than our market here.

How Scary is the Economy in Sunnyvale California

Diane Schmitz Top Realtor Review

From the Desk of the Associated Press

By ALAN ZIBEL – 12 hours ago

WASHINGTON (AP) — Pending home sales rose 7.4 percent from July to August, an unexpected piece of positive news for the battered U.S. housing market.

The National Association of Realtors said Wednesday its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was the highest since June 2007.

Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed. Typically there is a one- to two-month lag before a sale is completed.

Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 84.9.

The index, which sunk to a record low of 83 in March, stood at 85.8 in August 2007.

Sales are picking up in places that have seen the most severe declines in housing prices — including California, Florida Nevada and Arizona, plus Rhode Island and the Washington, D.C. area, said Lawrence Yun, the trade group's chief economist. Still, Yun does not expect home prices to rebound until next year and only expects a modest gain of 2 to 3 percent in 2009.

A major unknown is how the worldwide financial crisis and economic slump will affect the housing market.

Despite numerous efforts by the Federal Reserve to encourage banks to lend more, lenders have kept tight reins on mortgage lending, and average rates on 30-year mortgages have remained over 6 percent for most of the year.

The latest effort by the central bank came Wednesday, when the Fed and six other major central banks around the world slashed interest rates Wednesday in an attempt to prevent a mushrooming financial crisis from becoming a global economic meltdown.

The Fed reduced a key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent. Also cutting rates were the central banks of China, Canada, Sweden, and Switzerland.

There's no guarantee, though, that mortgage rates will match the Fed's cut.

That's because long-term interest rates, which influence 30-year mortgages, don't always move in sync with the Fed's action, which lowered the interest rate banks charge each other on overnight loans.

However, the Fed action will reduce borrowing costs almost immediately for U.S. bank customers whose home equity and other floating-rate loans are tied to the prime interest rate. Bank of America, Wells Fargo and other banks cut their prime rate by half a point to 4.5 percent after the Fed announcement.

America's Fastest-Selling ZIP Codes from Forbes Magazine

No. 2 San Francisco, Calif., 94111
Year-Over-Year Change in Home Sales: 106.52%
2008 Median Sale Price: $755,000
San Francisco's financial district continued to see healthy home sales over the last year. Whether or not the recent financial crisis will affect this remains to be seen, but real estate agents will have a better idea in February or March, the post-bonus season window when financial-industry types tend to put down payments on homes. However, the area has seen steady appreciation since 2003, when the median price of a home was $600,000. Even a major spike in home prices in 2005, which caused the market to dip, hasn't pushed numbers too low.
As credit tightens, job losses and foreclosures mount and stocks see-saw, getting a mortgage is the last thing on many Americans' list of things to do this year.
That's not the case for home buyers in Cold Spring Harbor, N.Y. (population: 4,975). This quaint town on the North Shore of Long Island--with a Main Street that's only one-fifth of a mile long--is popular among buyers, and that's despite a $100,000 year-over-year median home sale price decrease to $1.2 million. Home sales there jumped 65.63% last year; there were 53 more from July 2007 to June 2008 than the same period a year prior. If you're looking to stay put, and have the money, it's a good buy; experts believe homes in this area will appreciate.
In Depth: 10 Spots Where Homes Are Selling Fast
Other neighborhoods are appreciating and selling well. That is, if you're willing to pay up. The median home sale price in most of these areas is more than $700,000, which puts them in the richest 1% of ZIP codes in the country. They include 10069, a part of New York's Upper West Side, 94111 in San Francisco, Cold Spring Harbor's 11724 and Fisher Island, Fla., ZIP 33109.
Wealth matters here. If buyers aren't paying cash for these homes upfront, they likely have enough net income to secure a mortgage, which is rare during this tight credit period.

"The areas that have been insulated from the [mortgage meltdown] tend to have high-income residents," says Walter Maloney, a spokesman for the National Association of Homebuilders (NAHB), a Washington, D.C.-based trade organization.
Behind the Numbers
To determine our list of the 10 best ZIP codes to buy a home, we looked at the percent increase in home sales from July 2007 to June 2008 in the top 500 richest ZIP codes in the country. This data was provided by First American CoreLogic, a Santa Ana, Calif.-based provider of real estate property and ownership information.
It's no surprise that Manhattan ZIP code 10069 tops our list. This patch of the city's Upper West Side--which falls between the Henry Hudson Parkway and West End Avenue and between 60th Street and 70th Street--has seen its home sales double in the last year to 233. That's mostly due to Riverside Boulevard's Trump Place, a 16-building, 5,700-unit apartment complex set to be completed in 2009.
But that's just one building, which means that once all the units are sold, the percent increase in homes sales in this ZIP code--108.04% from July 2007 to June 2008--is likely to slow down. The area remains desirable, however, for homeowners looking for a long-term investment. It's what economists call proximity value: A condo that's located near several other very expensive properties--like the Trump units, which cost upward of $1 million for a one bedroom--will hold its value better than one on the fringe of a metro area.
Fisher Island, a man-made resort island off the coast of Miami Beach that represents ZIP code 33109, is one of the only spots in the state of Florida that has stayed afloat during this real estate meltdown. While the median sale price of a home over the last year was $3.85 million, that number increased by half a million from 2007. Unlike some pricey spots that see an influx of buyers and then a severe dip in interest, the secluded Fisher Island has remained exclusive for an extended period because of its limited space. There are just 218 households on the private, 216-acre island. According to the U.S. Census Bureau, the area boasted the highest per capita income of any U.S. area in 2000.
What's happening to home sales in your neighborhood? Weigh in, Post your thoughts in the Reader Comment section below.

The US Economy: Where is it Headed?

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