Lee Morof's Real Estate Blog

The Federal Housing Finance Agency (FHFA) reported that home prices rose by a seasonally-adjusted rate of 0.30 percent in January, and were 5.10 percent higher as compared to home prices in January 2014.

FHFA oversees Fannie Mae and Freddie Mac and its home price report is based on sales of homes financed by mortgages owned or backed by Fannie Mae and Freddie Mac.

Month- to- Month FHFA Home Prices Mixed

Month to month home price data was mixed for January. Home prices ranged from -0.40 percent in the Middle and South Atlantic census divisions to +2.30 percent in the East South Central census division.

Month-to month readings are considered more volatile than year-over-year home price readings. Year-over-year readings for all nine U.S. census divisions were positive and ranged from a 1.70 percent increase in the Middle Atlantic division to an increase of 8.20 percent in the Pacific division. This suggests that overall, home prices are gaining, but slowly.

Commerce Department: New Home Sales Hit 7-Year Peak

In an unrelated report, the Commerce Department reported that February sales of new homes reached a seven-year peak with 539,000 sales of new homes expected on a seasonally-adjusted annual basis. This was significantly higher than the expected reading of 455,000 new home sales and was also higher than the revised reading of 500,000 new home sales in January.

Analysts said that this positive reading may indicate a robust sales for the peak spring and summer home buying season. The reading for new home sales in February was nearly 25 percent higher than for February 2014.

In spite of this good news, analysts cautioned that the new home sales numbers are often volatile, and future revisions could result in lower sales figures for new homes.

With jobs increasing and mortgage rates remaining relatively low, more homebuyers may enter the market and boost home sales. Tight mortgage lending standards remain an obstacle for would-be buyers with less than stellar credit scores.

A fire can rage through your home at a moment’s notice, and it can cause a significant amount of damage in a very short period of time. Damage from the flames, intense heat, smoke and soot can cause tens of thousands of dollars or more in some cases, and a severe fire event can result in a total loss for the homeowner. More than that, a fire can create a serious health and safety risk for you and your loved ones inside the home. If you are concerned about how safe your home is from a fire, consider a few important points.

Do You Have Fire Extinguishers On All Floors?

When a small fire breaks out, you may only have a few seconds to respond. You simply do not have time to rush around the house in search of a fire extinguisher. Instead, you should know immediately where it is at and how to use it. More than that, you should have one available on all floors of your home. While you may want to reach for a fire extinguisher to put out a small flame, you should still yell for others in the home to vacate while you use the fire extinguisher.

Do You Have Smoke Alarms in Ideal Locations?

Fires can break out during all hours of the day and night. When you are awake, you may easily be able to smell smoke from a nearby room. However, when you are asleep or when the smoke is in a removed area of the home, it can be more difficult to observe the signs of a fire until it is too late. Placing a loud smoke alarm in all bedrooms in your home is a wise idea. You will also need one in living areas of the home. If your home is larger in size, you may consider investing in additional smoke alarms.

When Was the Last Time You Replaced the Batteries in Your Smoke Detectors?

It is not enough to simply have the smoke detectors mounted to your walls or ceiling. Instead, you need to make sure that they are loud and that they work well. If you have a hearing impaired person in the home, you should invest in detectors with a visible strobe light to alert them to a danger. Batteries generally should be replaced every few months, and you may consider replacing the batteries each time you replace the filters for your HVAC system. Keep in mind that it is better to replace the batteries before they lose power than to be without the function of an alarm in your home when you need it.

Even a small fire can be a dangerous and costly event. By focusing on these factors in your home, you can most easily prepare for a fire, and you will be able to take immediate action in the event a fire develops in your home.

Last week’s events included the National Association of Home Builder’s Housing Market Index, which fell to its lowest reading since last summer. Other news included reports on housing starts and building permits, the FOMC meeting statement and Fed Chair Janet Yellen’s press conference.

Home Builder Confidence Falls, Building Permits Rise

The NAHB Wells Fargo Housing Market Index fell by two points for a reading of 53 in March. The expected reading was 57. Analysts said that this proves that lower mortgage rates and steady job growth aren’t fueling housing markets as expected. NAHB chief economist David Crowe also cited supply chain issues such as a shortage of available lots, labor shortages and tight mortgage underwriting standards. Home builders remain optimistic that as labor markets continue to improve and more home buyers enter the market during the traditional spring and summer buying season, that builder confidence will also grow.

The Department of Commerce reported that building permits for February rose from January’s reading of 1.06 million to 1.09 million. This represents a 3.00 percent increase and was the highest reading since October. Permits fell for single family homes fell by 6.20 percent in February, but were 2.80 percent higher year-over-year. Single family permits account for 75 percent of building permits issued.

Housing starts fell dramatically due to bad weather. The Northeast saw housing starts fall by 56 percent due to extreme snowfall; Housing starts in the Midwest fell by 37 percent and the West saw housing starts decline by 18.20 percent in February. The South reported a 2.50 percent decrease in housing starts, but since nearly 50 percent of housing starts are in the South, this decline is more significant than it appears.

Fed Rates Hold Steady, Mortgage Rates Fall

The Federal Reserve noted in its post FOMC meeting statement that the Fed is in no hurry to raise rates. Citing ongoing concerns about low inflation and a sluggish housing market recovery, the Fed’s policymakers indicated that they don’t plan to rush on raising the target federal funds rate. In her press conference held after the FOMC statement, Fed Chair Janet Yellen reiterated the Fed’s intention to raise rates only when domestic and global economic developments warrant.

Mortgage rates fell according to Freddie Mac with the average rate for a 30-year fixed rate mortgage eight basis points lower at 3.78 percent. The average rate for a 15-year mortgage was four basis points lower at 3.06 percent; the average rate for a 5/1 adjustable rate mortgage was also four basis points lower at an average rate of 2.97 percent. Discount points were unchanged at an average of 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

What’s Ahead

This week’s housing-related news includes new and existing home sales, the FHFA home price index and FHFA’s home price index. Freddie Mac mortgage rates and weekly jobless claims will also be released as usual on Thursday.

If you have children, no home is complete without a treehouse. Besides the fact that treehouses provide kids with hours of entertainment, they can also confer ancillary benefits that are hard to quantify. For starters, treehouses can improve property values by boosting curb appeal. When building any type of treehouse, keep the following tips in mind.

Location, Location, Location

Before you head off to Home Depot and get all the necessary supplies, you need to spend some serious time storyboarding the build process. Pick a tree with low, sprawling branches such as an oak or a maple. Furthermore, consider issues like wind, shade and privacy before you start to nail up supports.

Choose Your Materials Wisely

A treehouse built with subpar materials will fall short in the longevity department and disappoint the kids. Pick out stout oak 4×4 posts for the structural elements and top them off with pressure-treated pine for the floors and railings. Use quality plywood for the interior walls and seal it to avoid rot.

Make Multi-Use Your Mantra

Treehouses that are simply shacks suspended above ground will quickly bore youngsters no matter how well-built they may be. Incorporate elements such as swings, rope ladders and even zip-lines to get more from your treehouse. As long as you’re putting in the effort, you might as well add all of the bells and whistles.

Bake Safety Into the Recipe

You don’t want the kids to get hurt when they’re frolicking among the branches. Make sure to bolt handles and permanent rails into the truck so that adolescents are less likely to slip and fall. If you want to go all out, add a few safety nets around the edges.

Heed Aesthetics When Designing

An unadorned treehouse quickly turns into an eyesore over time as it’s battered by the elements. Shingle the roof and paint the exterior walls so that they match your home. Kids will naturally gravitate towards a treehouse that looks appealing and your neighbors won’t complain about a shoddy structure in your weeping willow.

It’s More Than a Treehouse

While many young kids will no doubt love a full-featured treehouse, it’s usually the improvement in home value that will appeal to adults. If you’re interested in learning more about homes in your area that would support your desire to build a treehouse, call a professional real estate agent today.

The post-meeting statement of the Federal Reserve’s Federal Open Market Committee indicated that while the Fed is considering raising its target rate as early as June, the agency is in no hurry to cast anything in cement. The statement cited stronger labor markets and low unemployment rates as encouraging, but noted that FOMC members remain concerned about economic growth due to low inflation failing to meet the FOMC goal of two percent.

15 of 17 FOMC members said that they expected interest rates to increase before year-end, but downwardly revised forecasts of how high rates might be raised. Committee members further expressed concerns about economic growth and inflation, which is likely to impact Fed decisions about raising interest rates or not.

Economic Growth, Inflation Slower than Expected

The FOMC statement noted that economic growth has “moderated somewhat”, which was less enthusiastic than in January, when the Fed noted solid economic growth. The Fed revised its projections for the national unemployment rate from December’s expected range of 5.20 to 5.50 percent to 5.00 percent to 5.20 percent.

The target federal funds rate remains at a range of 0.00 to 0.250 percent and is expected to increase to 0.625 percent by year-end, and forecasted to reach 0.875 percent by the end of 2016. The target rate is expected to rise to 1.25 percent at the end of 2017.
Raising the target federal funds rate would impact mortgage rates, rates on vehicle loans and corporate loans. As the cost of loans rises, and wages stay relatively flat, consumers will have less cash for discretionary spending and may put off buying homes and purchasing big-ticket items that require financing.

Fed Chair Says Fed Isn’t “Impatient” about Raising Rates

After the FOMC statement was issued, Fed Chair Janet Yellen gave a press conference. Asked about the FOMC removing the word “patient” from its description of the committee’s attitude about raising the target federal funds rate, Chair Yellen said that removing the word patient does not mean that FOMC members are impatient about deciding when to move on interest rates.

Chair Yellen reiterated what’s she has said many times in recent FOMC statements and press conferences, that although the committee may project when it will raise rates, the decision will be based on incoming economic data.

In her opening remarks, Chair Yellen said that when the Fed does raise its target interest rate, the FOMC will retain a “highly accommodative” stance in line with the FOMC’s dual mandate of achieving maximum employment and a target inflation rate of 2.00 percent.

All in all, this FOMC statement and Fed Chair Janet Yellen’s press conference revealed no great changes in the Fed’s stated policy over the last several months. While low unemployment rates are prompting the Fed to consider raising the federal funds rate, no date for doing so has been set; the agency will provide plenty of advance notice before it raises rates and in the meantime will closely monitor domestic and global financial and economic developments for guidance in deciding when to raise rates.

Spring is not far off, and your garage, basement and attic need your attention. From sweeping cobwebs to throwing out old, useless junk and organizing family photos, spring cleaning is essential to keeping a tidy house. Follow our handy guide to organizing your garage, basement and attic.

Make Room For Your Car

You’ll likely need to set aside a full weekend to organize your garage. As you won’t be able to complete this task by yourself, get your family or friends to help you out. It might be a good idea to bribe them with free pizza for lunch.

Go through every square inch of the garage from top to bottom, including tools, unpacked boxes from when you moved and anything else that gets in your way. Separate the items that you want to sell or donate into one area of your driveway, items that you want keep into another area and stuff that you want to throw away into a separate pile.

Organize the items you want to keep into small, well-marked boxes and place back in the garage. Use as much wall space as possible to store tools and boxes by installing shelves inside your garage. Organize the items you want to sell into separate piles on a tarp in your garage for temporary storage.

De-Clutter Your Basement

Similar to your garage, you’ll want to get rid of the clutter in your basement. Make sure you have enough room for multiple piles of items and be aware that you’ll need to add to your garage piles later on.

Organize your items into three piles: one pile for items you wish to keep, another one for items you wish to sell and the final pile for items you want to throw out. If you have a significant amount of clothing in your basement, you might want to consider purchasing mobile hanger units and place them against the wall.

Turn Your Attic Into An Inviting Room

Your attic doesn’t have to be a storage space if you can clean it up and organize it correctly. Place everything you want into marked boxes and dust the attic before you place them in their respective areas.

Selling and throwing away personal belongings can be a huge hassle, especially if you have an emotional attachment to them. Generally speaking, items that are broken, expired or out of date can be thrown away while items that you no longer use but don’t hold much sentimental value can be sold or donated.

Few people consider the tax implications of buying a home, but there are many. Here are a few ways buying a home can impact the amount of tax you pay.

Mortgage Interest

Most people put down the minimum amount of money needed to buy a home and finance the rest, usually over 30 years. This means that, especially in the early years of the loan, most of what they are paying are the finance charges. The good news is that all that interest is tax-deductible for people who itemize their deductions, which adds up to several thousands of dollars in deductions annually. You also can deduct interest on home equity loans, up to a certain amount.

Property Taxes

Another way that buying a home affects your taxes is property taxes. In most jurisdictions, property taxes are based to some extent on the price you pay for your home, meaning the more you pay, the higher your taxes will be. The positive is that, just as with mortgage interest, those property taxes you pay are deductible if you itemize deductions on your income tax return.

Points

Points are up-front fees you pay to lower the interest rate on your home mortgage. If you paid them when buying your home, you can deduct the entire amount on your tax return. If you paid points on a refinance or home equity loan, you have to deduct them a bit at a time over the entire term of the loan.

Tax-Free Appreciation

One of the reasons many people treat homes as an investment is the favorable tax treatment on profit from a sale. For example, in the United States as long as the home is your principal residence for at least two years out of the five years before you sell, you can exclude up to a $250,000 gain from capital gains taxes, or $500,000 if you are married.

Retirement Accounts

Buying a home for the first time is one of the few situations in which the government allows you take money from retirement accounts early without paying a tax penalty. For example, you can take up to $10,000 out of an individual retirement account without having to pay the early withdrawal penalty, although you still might face income taxes if your contributions were tax-deferred.

If you are considering buying a home, contact a real estate professional to discuss the potential tax and other benefits.

Last week’s economic reports included job openings, retail sales, retail sales except automotive, consumer sentiment for March and the usual reports on weekly jobless claims and mortgage rates.

Job Openings Highest in 14 Years

The Labor Department reported that job openings reached their highest level in 14 years in January, and rose by 2.50 percent over December 2014 job openings. On a seasonally adjusted basis, there were five million job openings in January. Job openings rose by 28 percent year-over-year.

Hiring rose by 3.50 percent to 5.24 million, but analysts said that employers continue to have difficulty in finding workers with skills needed to fill their job openings. Winter weather was also mentioned as contributing to lower hiring rates.

Stable full-time employment is a key requirement for qualifying for a home loan. Inconsistent, part-time and self-employment typically make it more difficult to qualify for mortgages in today’s conservative lending environment.

Retail Sales Lower

Retail sales fell by –0.60 percent in February against an expected reading of +0.30 percent and January’s reading of -0.80 percent. This was the third consecutive drop in retail sales volume and suggests that consumers are not confident about spending. Retail sales except automotive were also lower with a February reading of -0.10 percent against an expected reading of +0.40 percent and January’s reading of -1.10 percent.

Mortgage Rates Rise, Weekly Jobless Claims Fall

According to Freddie Mac average mortgage rates rose across the board with the rate for a 30-year fixed rate mortgage at 3.86 percent, an increase of 11 basis points. The average rate for a 15-year mortgage rose by seven basis points to 3.10 percent. The average rate for a 5/1 adjustable rate mortgage rose five basis points to 3.01 percent. Discount points were unchanged at 0.60 percent for fixed rate mortgages and 0.50 percent for a 5/1 adjustable rate mortgage.

Weekly jobless claims fell to 389,000 against expectations of 310,000 new jobless claims filed and the prior week’s reading of 325,000 new claims filed. This was good news after a spike in new jobless claims that was likely caused by bad weather. Although week to week data tends to be more volatile than month-to-month trends, there was good news in that new jobless claims fell below a benchmark of 300,000 new claims filed. Readings of 300,000 or fewer new jobless claims filed represent strong labor market conditions.

What’s Ahead

This week’s economic reports include the NAHB Wells Fargo Housing Market Index, federal reports on housing starts and building permits and the Federal Reserve’s FOMC meeting statement. Fed Chair Janet Yellen is scheduled to present a press conference, which analysts will watch closely for any indication of when the Fed will raise interest rates.

Taking an extended vacation can seem like a dream come true. You may have plans to spend your summer in Europe, your winter in the Caribbean or even a full year or longer exploring a different region. If you have the luxury of taking an extended vacation, you may have your sights set on adventure and relaxation.

However, you also need to consider the practicality of leaving behind your home and belongings for an extended period of time. A great idea is to take on a long-term tenant for your home, and there are a number of benefits that you can enjoy by doing this.

Generate Income From Your Home

When you lease your home to a long-term tenant, you will be able to generate a monthly income from the property. This can be used to pay for your mortgage, property insurance and other related expenses while you are gone. Essentially, it can make it more affordable for you to take your trip for an extended period of time.

Decrease Your Maintenance Expenses

When you are away from your home, you may still have maintenance and upkeep chores to do. When you are home, for example, you may easily be able to water your lawn and mow the grass on your own. You may deal with a leaky pipe before it becomes problematic and causes considerable damage to the home. When you are gone, you may need to pay for a lawn service, and you have nobody to watch over the interior of the home. However, when you lease your home to a tenant, the tenant may be responsible for caring for the yard. In addition, he or she can alert you to issues that develop inside the home.

Someone to Keep an Eye on Your Property

When a home appears to be vacant, it is more likely to be vandalized or burglarized. A tenant will give your home an occupied look and will decrease the risk of criminal activity. In addition, the tenant may change your air filters, replace batteries in the smoke detectors and take other steps to keep the home in great condition for you while you are gone. You can specify your requirements in the lease.

If you are planning an extended vacation and you are looking for a convenient way to ensure that your home is taken care of while you are gone, consider the benefits of taking on a long term tenant. You can speak with a real estate agent to learn more about the market rental rate for your home.

There are few things that can be more stressful than buying or selling a home. When you are buying and selling a home at the same time, your stress level may understandably skyrocket through the roof. There may be financial aspects of both transactions that may be cause you stress, and you may be dealing with logistical issues or simply feel stressed by the stacks of documents piling up for both transactions. While this will inevitably be a challenging time in your life, you can more easily navigate through the transactions with success by following a few tips.

Consider the Timing of Both Transactions

One of the best things you can do when buying and selling a home at the same time is to plan ahead and consider the timing of both transactions. You may get lucky enough to get an offer on your home from a buyer who wants to close just a few days before you close on your new home. However, it is more likely that these two transactions may be finalized weeks or longer apart from each other. You may need to plan on finding an interim home or paying double mortgages for a period of time. You may consider which of these two options is more preferable to you based on your work situation, your family’s needs and your budget.

Prepare a Budget Ahead of Time and Update It Periodically

Financial stress can mount during this period of time. You will need to make a good faith deposit and pay for third party reports and mortgage application fees for your new home purchase. You may also need to pay money to make repairs and to stage your current home before you list it. It is common to rent a storage unit and to pay for boxes and moving supplies as well.

In addition, a buyer for your current home may request that you make repairs to your home before closing. It is important that you prepare a budget so that you can pay for all of these expenses as they arise, and you should consider leaving yourself ample funds for unexpected expenses. If you run into a cash crunch, consider completing the sale of your current home entirely before going under contract with your new home purchase.

Use the Same Real Estate Agent for Both Transactions

The knowledge and support of a real estate agent can be beneficial to you for both transactions, and you may consider using the services of the same agent for both. Dealing with one person who is familiar with your goals and needs can be truly beneficial to you throughout the entire process, and he or she may offer insight about the best steps to take to make the transition from one home to the other smoother for your family.

While buying and selling real estate can be stressful, you do not have to make the process more difficult than it needs to be. You can set up a time to meet with a real estate agent today to begin discussing your plans and to take the initial step.