Should You Buy Real Estate Now?

I happened to find this posting on the Motley Fool after a reader asked whether she should buy real estate now. 

In Is It Time to Buy a House?, John Rosevear answers the question as best as it can be answered. 

If you need a new home, and you can afford one, it’s time to buy — whether the market is up or down. I’ve called home ownership “The Best Investment Ever,” and when you look at the complete picture, it’s true — there are many tax and financial advantages to owning a home, and homes do tend to appreciate over the long term. And you’ve gotta live somewhere, right?

And,

If you’re both smart and lucky, you may see a sizable windfall if and when you sell your house and buy something smaller. But the idea of investment returns is — or should be — a minor consideration next to the major homebuying drivers — cost, location, condition, and the big one: Do you really like it?

Even if you’re buying a home strictly for investment purposes,

…fluctuations in market prices aren’t much of a factor in the purchase decision, except to the extent that a change in value has made a property significantly more or less profitable.

The key to buying a house in any market is to do it intelligently.  Do your research, hire experts, don’t over-extend yourself, put as much money down as possible and buy something you really like.  You can pay too much in any market.  There are also too many variables that affect housing prices – most of them out of your control and amny that can’t be anticipated. 

Calling All Landlords – Yeah, Wannabes too

The CT Real Estate Investors Association is having their Landlording Workshop again beginning on Sept. 19.  I took this seminar a few years ago and it was worth every penny.  I seem to recall that it’s not offered every year, although I could be wrong.   Anyway, if you can spare the time and are a landlord (or landlady like me) or even a wannabe, I highly recommend this seminar. 

For more information, visit http://www.ctreia.com/members/events.php?a=v&i=12.

It’s the Most Wonderful Time of the Year?

The end of summer signals several things for me, some good, some not so good:

Back to school.  While parents of school age children rejoice at the beginning of school, I cringe because it means more traffic as the teachers and parents not on vacation get in their cars and clog up the roads.

Goodbye flip flops.  Normally, I stash my flip flops in a corner of my closet around this time of year.  After breaking my foot in my flip flops recently, I think it’s time to retire them altogether.  After my fall, ABC did a report on just how dangerous flip flops are.  My father, also known as “Safety Dad” (I call him that because he gives me things like pepper spray and fire extinguishers for gifts) sent me a link today Flip flop Hazards from a recent ABC story.

Closings.  August is a busy month to be a real estate agent.  Everyone wants to close on their house by the end of the month and move in before school starts, even if they don’t have kids.  Conversely, everyone in real estate tries to squeeze in a little time off.  The upside is my wallet is a little heavier.

Fairs!  I love going to fairs.  Fried dough, farm animals and crafts – nothing is better on a late summer day.  I recently found this site listing all the fairs in CT, Association of CT Fairs.  If you love fair hopping like me, you can even get a pass for the entire season (click on season passes).

How’s the Real Estate Market? July 2007 Real Estate Market Statistics

The New London Day published a column written by Jeff Blodgett of the Connecticut Economic Research Center on the market in southeastern CT but this commentary relates to all of CT. 

Although regional housing prices are high by historic standards, I see no apparent indication of a bubble bursting in this region. Continued declines in number of sales could lead to some price reductions but, even if median prices were to decline by 10 percent to 15 percent, housing values would still be double what they were in 1998.

The ongoing housing slump, unlike that of the early 1990s, is not fueled by widespread speculative lending by banks or a tremendous overbuilding by builders that resulted in the large inventory overhang that precipitated the 1989-1992 real estate collapse. Uncertainties about further weakening in home prices are causing many buyers to remain on the sidelines.

The biggest wild card, in my opinion, is further bankruptcies among large sub prime lenders, a phenomenon that is now extending to near-prime lenders, as shown by the near bankruptcy of American Home Mortgage. The ripple effect of a few of these types of lenders would be widespread.

Here are the statistics released by the Greater Hartford Association of Realtors for single family home sales in Greater Hartford.  The trend over the last year has been that home prices are rising but that more houses are on the market and are spending more time on the market. 

Signs of a Weakening Real Estate Market

Using year-to-date figures for 2006 and 2007 and figures for the month of July 2006 and July 2007.

• The number of closed sales in the single family residential market is down
  • 10% fewer closed sales for the year compared to YTD 2006 and almost 7% fewer than just the month of July in 2006
• Average days on market is up
  • Homes are spending 5 more days on the market compared to last year, YTD
  • Homes are spending 2 more days on the market compared to July of 2006
• Inventory is up
  • 14% more homes are on the market in July 2007 than in July 2006

Signs of a Stable Real Estate Market

• Pending sales are higher, not enough to soak up the extra inventory but people are still buying homes
  • YTD, there are almost 2% more pending home sales than last year
  • When compared to the month of July 2006, there are almost 6% more pending sales
• Median sales prices are still notching upwards
  • YTD, the median sales price is $260,000, up from the same period in 2006
  • In July, the median home sales price was $273,900, up from $265,000 in July 2006

Do I Need Insurance for Condominium Unit?

When you purchase a condominum unit, you are purchasing the unit itself and partial ownership of the condominium complex including the common areas.  The condominum association, consisting of owners, sets the rules for the complex and collects a monthly charge (called HOA fees) to pay for regular expenses like lawn maintenance, snow removal, water, management fees and insurance.  The insurance, called the master policy, is included in the HOA fees and covers only the common areas and structural elements, not personal property within the unit. 

Many buyers think they’re off the hook for home owner’s insurance but are unpleasantly surprised when they have a problem within their unit.  Although your mortgage lender will probably not require you to have a separate insurance policy covering your personal property, it is a good idea to get a policy to cover the contents of your home. 

For example, if there is a leak in your 2nd floor bathroom into your kitchen and there is extensive water damage, your association’s master policy will most likely not cover the cost for repairing the leak, the sheetrock, kitchen cabinets or appliances.  Same thing if there is a fire in your unit.  The complex’s master policy also probably doesn’t cover personal liability or medical expenses to people who are guests in your home or who are renters. 

Review your association’s master policy and determine whether the policy provides you with ample coverage or if there are some holes in the policy that could leave you at risk for an unplanned major expense.

Reading Room – Friday, August 10

The Wall Street Journal has a story on how buyers will have trouble qualifying for mortgages in the sub-prime AND the Alt-A markets.  This effects everyone – fewer buyers, more foreclosures, lower prices, you get the idea.

Not to harp on the mortgage doom and gloom but the news is worsening with Countrywide and Washington Mutual announcing that their businesses could be adversely affected by “unprecendented disruptions” in the mortgage marketplace.

Fantasizing About Foreclosures – Novice Investors Beware.  If I had a nickel for every call I got about buying a foreclosure…

Just what Hartford needs – Alleged Slumlord Targets Hartford.

Out and About – Performing Arts Center at Simsbury Meadows

Last night I had the chance to attend a concert at the Performing Arts Center in Simbsury -Alison Krauss and Union Station.  It was my first time there so I thought I’d share my experience.

First, Alison Krauss and Union Station put on a good show.  I’m not usually a huge bluegrass or country music fan but Allison has the most beautiful voice I have ever heard.  If God could talk, he would sing like Alison.  And Union Station had some great songs so maybe I’m changing my mind…

Back to the venue – The outdoor theater has orchestra and lawn seats available.  We had lawn seats.  The great thing about the lawn is that you can bring anything – I brought chairs, a picnic with wine and food, bug spray, a blanket and utensils.  The only downside is that you have to haul everything pretty far into the venue and are responsible for cleaning up your trash afterwards. 

The sound was pretty good – we didn’t have any trouble hearing the music even from pretty far back.  The lawn felt nice and roomy – I’m tall so I hate going to concerts because I end up kicking or banging into the seats in front of me with my legs.  Here, there was plenty of space to spread out.

For $30/ticket and the cost of food for the picnic, it’s a relatively inexpensive night out to listen to good music and sit under the stars.  If you have a chance, this summer or next, check out the Performing Arts Center at Simsbury Meadows.