Mommified

I have trouble identifying myself as a mom.  Moms wear mom jeans (high-waist, tapered leg), they have sweatshirts with animals on them and they do crafts.  But now the reality is hitting me.  I am mother to one 8 month old human and three canines, a work-at-home business woman, and all around doer of stuff related to the home.  These blogs capture the lives of women just like me.  So, in honor of my life outside real estate…

24/7 – The author is a freelance writer and work-at-home mom.  Read her story about her pitbull Roxie’s feast of garbage.

Ruthless in the Suburbs – Suburban writer mom.  I like this post because she makes up a really great word that I’m going to start using – compuchat. 

IzzyMom – When is MY Day Off?  Need I say more.

Notes from the Trenches – Where the Insurgents Wear Diapers.  Check out the It’s Like Herding Cats post.

eMomsfromHome is a bit more serious and offers really helpful ideas for the Momtrepreneur.

Mom 101 - As a former eye-rolling, non-parental diner and now blessed with a child, I can relate to everyone in this story.  The author’s story about eating out in public can be told by every parent around. 

And last but not least, this article reminds me of why I left a steady, well-paying corporate job for a life of very un-steady income to pursue the things that make me who I am – my family, my pets and volunteering in my community.  At Your Funeral, No One Reads Your Resume.

The Murky Middle – Defining Middle Class in Connecticut

Inspired by an article in this morning’s Hartford Courant called Who is Middle Class?, I thought it would be fun to include varying perspectives (including my own) on the question of what defines class and just who among us is in the middle.  This is an issue that is likely to be addressed nationally but it will have ramifications for many in Connecticut who feel like middle class but may be treated as the “wealthy” when compared to those in other states.

More analytical commentators have differed for years on how to measure the middle class. Should net worth be the yardstick? If so, the Federal Reserve says, people in the middle would have a median family net worth – assets minus liabilities – of a healthy $93,100 in 2004, up from $70,800 in 1995. 

But if you look more closely at the numbers, the median net worth rose very little in the three years before 2004. 

See the full Fed report.

Also, The Big Picture did a summary article on the report.

Median Income

Or should the measurement be median household income? By that measure, the midpoint was $46,326 last year, according to the Census Bureau. But median income varies widely by region, age and racial groups.

 The national medial income in 2005 was $46,326. 

The median income in Connecticut was $56,409.   Compare that to Mississippi which has a median income of $32,397.

So What are Nutmeggers Doing With All That Extra Income?

While looking at median income, we also have to consider the cost of living.  The largest expense for most households is housing costs.   According to the Partnership for Strong Communities, housing costs in Connecticut have risen nearly 63% from 2000 to 2005 and wages have risen only 18.5% during the same period.    In 2005, the median home price in Hartford, Connecticut, was $253,300.   

Home Connecticut did a study about home affordability and found that 159 of the 167 towns in Connecticut are not affordable when comparing the median income to median sales price. 

To determine the affordability of a given town, HOMEConnecticut calculated the income necessary to qualify for a mortgage for a median sales priced home in that community based on a conservative formula: a 4.5% fixed rate, 30-year mortgage, 1% annual property tax rate and $60/month in property insurance. The formula assumes the buyer has 10% of the purchase price for a down payment and no other debt. We then compared the qualifying income with the town’s actual median household income. A town was considered unaffordable if its median household income was lower than the qualifying income.

Missisippi vs. Connecticut 

While I’ve never been to Jackson, Mississippi, and can’t say if it’s comparable to Hartford, Connecticut, both are state capitols and I thought it would make for an interesting comparison using the measurements discussed above. In Mississippi, the Median Income in 2005 was $32, 397 and the Median Housing Price in 2005 in Jackson was $133,880.

Compare that to Connecticut where we have a a median income almost double that of Mississippi but our housing costs are also almost double.  Median Income in 2005 was $56,409 and Median Housing Price in Hartford in 2005 was $253,300.

What Am I Getting At?

Defining middle class may be an exercise in futility because there are so many variables, even more than what I care to go into.  But it is clear that the value of a dollar in one part of the country is different that the same dollar elsewhere.  And certianly to make broad policy decisions affecting “the middle class” should take into account this variation.

To be middle class in Connecticut is very different than middle class in Mississippi simply because to live here, you have to make more income to be just able to live.  The additional income goes to pay for housing, owned or rented, and other expenses and taxes (can you say property tax burden). While someone earning $100,000 may be “wealthy” when compared to the national median, the $100,000 annual salary in Connecticut feels more middle class than it does elsewhere.  

                                        

Tales From the Real Side – Vol 1. – When Winning is Losing

Halloween may be over but this story is scary enough to tell anytime.  When I’m just about to put in an offer for a client, I remind myself of this experience so I remember just how important it is to remain professional and “friendly” throughout the process because I’m dealing with not only the future of my clients but that of the seller.

I was a new agent – my second transaction to be precise.  Clients of mine were looking in the low end of the market during a busy seller’s market – not the best place to be as buyers.  They couldn’t put any money down, they were FHA, they were looking in the summer and they needed to buy within 90 days.  Slim pickins’.

We came across a house that was in the area they wanted and was a price they could afford.  Looking at the house, I saw some structural as well as many cosmetic problems and pointed them out to my clients.  The home was also in a serious state of disrepair and filth – never a good sign.  Despite my concerns, my clients bid and their offer was eventually accepted and we went to inspection.

Real Estate and Mortgage Market Report for Connecticut – November 20, 2006

Local Market Trends:  According to monthly statistics released by the Greater Hartford Association of Realtors, October closings were down 11.5% from last year.  Houses were on the market for 55 days on average, up 17%. More homes were listed in October 2006 than last year – over 1700, a nearly 8% increase.  And year-to-date, there are more houses on the market than last year, more than 4% more.

While it seems that homes are taking longer to sell and there is more for buyers to choose from, prices have not begun to drop overall.  Comparing October 2006 to October 2005, home prices remained stable.  The average sales price was $284,780, just .3% more than the average price in October 2005.  The median price of homes was $250,000, about 2% higher than October 2005.  Connecticut is not yet seeing the declines in sales prices that other parts of the country are experiencing.

National Trends:  The national outlook for real estate shows prices dropping in most states.  According to the National Association of Realtors, “…the midpoint price for an existing home sold during the summer dipped 1.2 percent year over year to $224,900. Some 45 metropolitan areas saw home prices decline.”

Interest Rates:CHFA rates dropped to 5.25%.  For more on CHFA’s rates, programs and limits, visit www.chfa.org.   According to Kiplinger’s Forecasts, interest rates will remain steady – no increases or cut likely:

“The inflation rate is easing, but interest rates won’t follow anytime soon. Officials at the Federal Reserve are surely pleased with the October inflation report showing another big, energy-fueled decline in the Consumer Price Index (CPI) and a modest 0.1% rise in the closely tracked core CPI, which excludes food and energy costs.

However, Fed officials don’t think the economy is out of the inflation woods yet…. In their last policy meeting in late October, Fed officials noted that core inflation “remained undesirably high.” They also voiced concern about a possible upward drift in the future inflation expectations of businesses and consumers, which could further fan the flames of price growth, “if core inflation remained elevated for a protracted period.” This is Fedspeak for no rate cuts on the horizon.

A Diamond in the Rough? – Bridgeport, CT

Bridgeport, CT, was recently named one of the Top Ten Cities – Where to Buy Now, by CNN/Money.com – Number Three, to be precise.  I was surprised, although I shouldn’t be.  Looking at Bridgeport purely from a financial standpoint, the numbers make sense.

The editors project that in the next five years, home prices will rise by 63%.  By any measure, that’s a good investment.

Bridgeport is a bargain when compared to neighboring communities in Fairfield County.  The average sales price in Bridgeport this last quarter was $241,000.  The average sales price for the same period in all of Fairfield County was nearly $752,000. 

The last place you’d expect to find undervalued real estate is in tony Fairfield County, home to ultra-exclusive towns like Greenwich and Darien, where the Masters of the Universe retreat after a tough day on Wall Street.

But a mere 20 miles up the coast lies the hardscrabble city of Bridgeport, which has long suffered from sleazy politics and urban decay but is finally cleaning up its act.

But the wealth is starting to spread: As more businesses have left New York for Greenwich and Stamford, more middle-class workers – entry-level professionals, executive assistants, and so on–have come too, and they’re keen to take advantage of bargain prices.

The authors caution that the price increase is dependent upon New York’s continued growth.  That can be said for all of Fairfield County and even New Haven County.  But what I think makes Bridgeport most susceptible is its reputation -epecially for people with kids. Like many cities, Bridgeport has struggled with crime, drugs, corruption, and the flight of businesses and residents.  The City has worked very hard to change these quality of life issues and I think real progress is being made.

Other than concern for quality of life issues, Bridgeport makes a lot of sense for investment – location, location, location.  It’s an affordable city that is close to New York and other regional cities like New Haven & Stamford and it’s within one of the wealthiest counties in the country.  And because it’s affordable and positioned so well, it can’t help but attract people – people who work in the homes and businesses of all those wealthy Fairfield County residents but can’t afford to live in the same towns.

The Urban Land Institute conducted an analysis of Bridgeport which is equally optimistic, including a report of Real Estate Market Opportunities.

Home Buying 101 – Step Two: Know Thy Credit

This is the second of twelve weekly features for first-time homebuyers on buying a home.

If you answered yes to the question I posed in my first post of this series, Should You Buy? And When?, then the most important thing you can and should do for yourself is find out what lenders know about you.  And almost everything they care to know is in your credit reports (Note: you might also want to type your name in Google and find out what comes up because your lender can and may do the same thing).

Why is good credit important?  According to Freddie Mac,

Your credit report is a record of all your credit transactions whenever and wherever you’ve used credit to purchase goods and services. Your credit will have a big influence on whether or not you can get a mortgage, the terms of that loan, and the interest rate. If you have good credit, you may have a much wider range of mortgage offers with lower rates.

Your credit report will also affect the rates you pay for auto and home insurance.  Some employers are also running credit reports – think of it as your financial resume.

What is in your credit report?  Your credit report includes your current debts, paid debts, and payment histories for credit cards, loans, medical bills, leases, anything reported to a collection agency, liens, and a bankruptcy. 

It will also include the number of times someone pulled your credit report, called an inquiry.  According to MyFico.com,

There is only one type of credit inquiry that counts toward your FICO score. When you apply for a mortgage, auto loan or other credit, you authorize the lender to request a copy of your credit report. These types of inquiries, prompted by your own actions, appear on your credit report and are included in your FICO score.

Your credit history is reported to three credit bureaus, Experian, Transunion and Equifax.  Each credit bureau has a report on you and assigns a credit score, which allows you to quantify your credit in relation to other people.  The tricky thing is that each bureau can have different information on you and you can therefore have different score with each one – one higher than the other.  You should know what each credit bureau has in your report and what your score is with each one and your collective score.

How do you get your credit report? Under federal law, you are able to obtain a free credit report every 12 months from each of the three credit reporting bureaus.  Go to AnnualCreditReport.com and fill out the appropriate information and follow the instructions on getting your credit reports.  You must pay, however, for the credit scores. 

How bad/good is your credit?  Credit scores range from 500 – 850.  500 is bad; 850 is great.  The better your score, the better rate you are likely to get.  Even if your lender is very forgiving with your credit, it is in always in your best interest to get your credit back on track.  And the great thing is that your credit score is not set in stone – once you begin making payments on time, on a regular basis, stop applying for credit and correct any mistakes, your credit will begin to improve. 

Here are ways you can improve your credit score over time, according to Freddie Mac:

• Don’t spend money you don’t have.
  If you have a budget, stick to it.
• Make the minimum payments, on time.
  You can begin to improve your credit rating right away by making at least the minimum payment, on time.
• Pay off your accounts.
  If you have several accounts with small balances, try to pay them off.
• Understand the implications of declaring bankruptcy.
  Filing for bankruptcy can keep you from getting a loan for a long time, raise your interest rates, and stay on your credit record for 7-10 years.
• Get help from a credit counselor.

Give it some time.  If you have poor credit and can wait a year to purchase a house, then it’s better to wait.  Work on your credit, clear up any mistakes, work with the collections companies, and make sure any debts you have paid off actually show up as being paid on your credit report.  The wait will be worth it.

The Real Estate Love Affair Continues?

I always look for a silver lining.  Despite all the news about the real estate slump, housing bubble bursting, etc., I’m still optimistic about the housing market.  While we’re seeing an adjustment in Connecticut, one that’s long overdue, I think it’s a correction and nothing more.  The correction will shake the low hanging fruit from the tree – real estate speculators and people who over-extended themselves with 100% financing and who find themselves having to sell before the market is done adjusting.

So, when I saw this article in the Wall Street Journal, Generation X May Boost Sagging Real Estate Market, it brought a smile to my face. 

The housing market may be in a slump, but the industry’s long-term trends look promising as younger generations begin to buy and trade up. That was the consensus among a group of consultants, analysts and developers speaking at the recent annual meeting of the Urban Land Institute in Denver.

Real estate is a good investment, if you can hold onto it.  One of the participants issued caution, which I think is sound advice in any market. 

“You’re better off renting unless you’re going to be in a home for at least five years because of the costs of getting in and out,” (Ron Terwilliger, chief executive of Trammell Crow Residential) told attendees.

In reaction to the otherwise sour news about the real estate market, the National Association of Realtors has begun an ad campaign to try to convince consumers that “It’s a Great Time to Buy or Sell a Home.”  The Matrix has a good analysis of this ad and its goal.  The Real Estate Guide’s post, It’s a Market Stupid, also offers some good comments.

While I don’t think NAR is desperate, I think it’s clear who they serve -realtors.  They are not a consumer advocacy group.  They want you to buy a house and then sell it in a few years to keep all the agents and brokers busy and membership revenue coming in. 

With that said, the ad does make a few points that are valid, if self-serving.  Interest rates are low.  Housing inventories are high.  The outlook from economists is largely positive. 

I don’t agree that housing inventories are going to decrease any time soon – it will take time.  And if the Democrats raise taxes like they said they wouldn’t before the election and are now saying they’re going to (only for the wealthiest Americans, which includes anyone who can afford a house!), then that inventory may be around for a little longer because we’ll have less discretionary dollars.