Northern Virginia Real Estate

The Ceiling Fan Tip That Will Reduce Your Energy Bill

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:38:01 -0500

Temperatures are rising as we head into May, but your energy bill doesn't have to. This classic video from The Weather Channel reminds us that ceiling fans can help to reduce energy bills all year long. The key is to use them properly.

When the heating system is on, fan blades should rotate clockwise
When the air conditioning is on, fan blades should rotate counter-clockwise

By changing the ceiling fan's blade rotation, homeowners can push heat back into circulation to warm a room, or create a downward draft to make a room feel cooler. With energy costs at record levels and more increases expected, use your home's ceiling fans to help keep energy bills low and household budgets in check.

New Home Sales : How The Newspaper Headlines Mislead You

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:36:56 -0500

Newspaper headlines rarely tell the full story and today's papers provide a terrific example. From the Baltimore Sun (and others):

New-home sales lowest since 1991 8.5% March decline exceeds forecasts; prices also tumble

As always, there's more to the story than the headline.

The Census Bureau reported a 8.5 percent decline in New Home Sales last month, but in the "fine print" of the report, the Census Bureau cites a margin of error of 16.1 percent.

By including a margin of error, the Census Bureau is acknowledging that the "headline number" is not precise and that the actual change in New Home Sales data lies somewhere between the values -24.6% and +7.6%.

Notice that the range of possible reading includes positive numbers.

This means that New Home Sales could have just as easily shown growth in March -- if only the Census Bureau had interviewed a different set of home builders.

The Census Bureau acknowledges this possibility, adding that it "does not have sufficient statistical evidence to conclude that the actual change is different from zero." The data, therefore, is worthless.

The housing market may be strong or the housing market may be weak. Most likely, it is both of these things. It all depends on your street in your neighborhood because all of real estate is local.

Either way, look deeper than the headlines. They're a good source of information, but the real analysis requires a deeper look.

Source New Residential Sales In March 2008 Census.gov April 24, 2008 https://www.census.gov/const/newressales.pdf

How To Determine When You'll Get Your Tax Rebate

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:36:19 -0500

More than 130 million Americans will receive tax rebates this year as part of Congress' $168 billion economic stimulus package. Payments begin in about two weeks and range from $600 for individuals to $1,200 for couples, plus an additional $300 per child. Not everyone is eligible for a full rebate, however. For single filers earning more than $75,000 and joint filers earning more than $150,000, the tax rebate is reduced by $50 for each $1,000 of income beyond the limits. An individual with no children, therefore, will not receive a tax rebate if income exceeds $87,000 annually. The IRS provides a tax rebate calculator that can help make sense of the math. For tax filers using direct deposit, the rebates will be paid based on the last two digits of the social security number:

SSN ending in 00-20 will arrive May 2
SSN ending in 21-75 will arrive May 9
SSN ending in 76-99 will arrive May 16

For tax filers using paper checks instead of direct deposit, payouts begin a little bit later on May 16 and extend through mid-July. The IRS makes the exact dates known on its Web site. For late income tax filers, the IRS send rebate checks about two weeks after the returns are processed, but not before the regularly scheduled date.

It Doesn't Matter That The Median Home Sale Price Rose In March 2008

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:35:40 -0500

The National Association of REALTORS released its Existing Home Sales report for March 2008. An "existing home" is one that is not considered new construction. A sub-headline in the report showed that the median sales price of all homes sold in March increased by 2.5 percent to $200,700. But don't assume that the housing market is improving because of a statistic like that because in the field of Statistics, median is just the "middle" in a group of numbers. With respect to the Existing Home Sales, the median sales price is the price point at which half of all homes sold went for more, and half went for less. If more homes sell in high-priced San Jose, CA than in low-priced Youngstown, OH, for example, the median will be skewed to the high-side. The reverse is true, too. Median sales price make for good headlines, but it does nothing to talk about the local market and that's where real estate is bought and sold. (Image courtesy: New York Times)

Considering Co-Signing For A Home Loan? Think About It First ...

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:34:58 -0500

As mortgage lenders limit how much money they will lend and to whom, co-signing home loans is growing in popularity. "Co-signing" a home loan is when a third-party -- usually a parent or relative -- promises to make repayments to the bank in the event that the borrower falls behind on his obligations. Money experts usually advise against co-signing notes because of the long-term financial risks, but people still do it for a number of reasons including "wanting to help". If you're thinking about co-signing a home loan for a friend or loved one, it's important to consider the implications of sharing credit with another person. The four questions below may help you with your decision:

Why can't the borrower get approved on his own? Is it because of poor credit ratings? Lack of income? History of foreclosure? Hopefully, if you're co-signing for a loved one you already know this, but it doesn't hurt to ask a few questions in order to get the whole story.
If the borrower stops paying the mortgage, can you afford to make the full payment due each month? Many people don't think of it this way - but that's really what you're signing up for. Your name is on the note and you are responsible for making the payments if the person you co-signed with can't ... or won't.
If the borrower defaults on the mortgage and doesn't notify you, how will a foreclosure on your credit rating impact your family finances? If you do decide to go through with it, it's a good idea to keep up with the mortgage company in order to make sure payments are being made. A foreclosure on your credit history can severely limit your credit rating for many years to come.
When the co-signed loan appears on your credit, will the debt load prevent you from getting approved for your own loans in the future?

Not only can a co-signed home loan create serious financial burdens, but it's a long-term commitment, too. Once the note is co-signed, the only way to separate the signers is terminate the note entirely. The two ways to accomplish that are to remortgage the home out of the co-signer's name, or to sell the home and retire the debt. Co-signing on a mortgage is not "bad" but bad things can happen should the primary signer face personal and/or financial difficulties. Before agreeing to share credit, consider the implications should something go wrong. I'm not trying to scare you, or talk you out of co-signing for a home loan with someone. However, given that this situation usually arises when a loved one needs help, it doesn't hurt to throw a little logic and analysis into mix. Many people make these types of decisions solely on an emotional basis ... and they may regret it later when the situation changes.

Radon - A Health Risk In 1 Out Of 15 Homes

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:32:44 -0500

Radon is the number one cause of lung cancer among non-smokers and 1 out of 15 homes has elevated levels of the radioactive gas seeping into it. Despite the risks, however, radon is a potential problem that many homeowners ignore. Radon can enter a home at many different points. A partial list includes:

Earth and rock beneath a home
Joints in construction materials
Gaps around pipes and wires
Cracks in flooring and walls

But, because radon is odorless, colorless, and scentless, it's impossible to detect without the use of tools. There are do-it-yourself, at-home radon testing kits which can be purchased at Lowe's for less than $20, or you can hire an EPA-approved professional to site-test for you. If the tests are positive for radon, fixing the problem in your home can cost anywhere from $800 to $2,500, depending on the home's architecture. According to the Environmental Protection Agency, nearly one million homeowners have taken radon-reducing steps in their homes over the years, saving 6,000 lives. Their Consumer's Guide to Radon Reduction provides more information about what radon is and how to mitigate the problem if you find high levels in your home. If you're buying or selling your home, you may also want to have a look at their Home Buyer's and Seller's Guide to Radon. Source My $1,200 Radon Job Gwendolyn Bounds The Wall Street Journal Online https://online.wsj.com/article/SB120855599410427459.html

Simple Real Estate Definitions: Absorption Rate

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:31:48 -0500

Absorption Rate is a real estate term for the length of time required to sell all of a given stock in a given area. We can use it to determine how quickly homes are selling in a neighborhood, city, or region. The formula to calculate Absorption Rate is simple. Add up the number of homes on the market, and then divide it by the number of homes taken off the market in the past 30 days because offers were accepted for the sale of those homes. For example, if 500 homes are on the market and 89 of these homes received offers in the past 30 days, the absorption rate is 500/89, or 5.6 months. In generally, the smaller the absorption rate, the more seller-friendly the region.

Simple Real Estate Definitions: Average Days On Market

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:31:10 -0500

In the world of real estate, Days On Market is the number of days between when a home lists for sale and when it goes under contract. It is often abbreviated as DOM. Average Days on Market is a similar statistic but instead of applying to one home in particular, it applies to all homes in a given neighborhood, ZIP code, or city. Average DOM is calculated by adding the number of days for which every listed home in an area was available for sale, and then dividing that number by the total number of listings. In a buyer's market, Average Days On Market is often elevated. This is because homes don't sell as fast as during a seller's market when the Average DOM can be quite low. For buyers and sellers of real estate, Average Days On Market can be a strong indicator of home prices. When Average DOM falls, home prices tend to increase.

Basic Credit Scoring Tips For A Better Mortgage Rate

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:30:23 -0500

Credit scoring is becoming more important to mortgage pricing so now would be a terrific time to brush up on your credit education. If you understand how the system works, after all, you can make it work to your advantage. One terrific place to start your research is at myFICO.com. Published by credit scoring powerhouse Equifax, myFICO.com give you information right from the source. There are tens of pages of tips and tricks from which everybody can learn. Gleaned from myFICO.com, here are some basic tips to get you started:

Use It Or Lose It: If you don't use credit, the credit agencies can't assign you a credit score. Spend $10 monthly on your credit cards and then pay it in full to "get on the grid" and get yourself a score. 30 Is The Magic Number: Holding your credit card balances below 30 percent of their respective limits shows an ability to manage credit responsibly. Before consolidating multiple credit cards onto one credit line, consider that card's credit limit. Overload it and the consolidation could hurt your credit score. The Trend Is Your Friend: A track record of paying accounts on-time means that you're likely to continue paying on-time. Credit bureaus like on-time payments. If you've been late, catch up immediately. At 35 percent, this is the largest component of your credit score. History Is The Best Teacher: Don't close unused credit cards. Having a credit "history" accounts for 10 percent of your score.

There are many more tips available at the Web site and with credit score adjustments expected to increase later this year, the best way to protect yourself is to be proactive. Identify potential issues in your credit profile and work to improve them. Credit scoring is not always intuitive so if you're not getting the personal information you need from general Web sites, ask your loan officer for an in-depth analysis. The mortgage rate you save may be your own.

If History Is An Indicator, Gas Prices Have Another 10 Percent To Rise

Mike Rosen (Frankly Real Estate) — Mon, 02 Jun 2008 20:29:22 -0500

Average gas prices reached an all-time U.S. high Tuesday, touching $3.40 per gallon. San Francisco and Tulsa are the nation's bookends at $3.94 per gallon and $3.11 per gallon, respectively. But before you wonder if relief is coming to your family budget, remember that "rising gas prices" is a conversation we have every April. Using data from gasbuddy.com and looking back to 2004, we can see that gas prices tend to rise during the Spring season. If the pattern holds, we'll should see another 10 percent increase at the pump before gas prices settle back down over the summer and fall months.

IRS Trivia To Amaze Your Friends

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 12:05:40 -0500

Today is Tax Day so here's some IRS-related trivia to share at the water cooler:

Did you know... President Lincoln and Congress enacted the first income tax in 1862 to pay Civil War expenses.

Did you know... The Civil War income tax was repealed in 1872, revived by Congress in 1894, and ruled unconstitutional by the Supreme Court in 1895.

Did you know... In 1913, Wyoming was the deciding vote in the 16th Amendment which gave Congress the authority collect income tax.

Did you know... The first income tax was 1 percent on net personal incomes above $3,000. There was a 6 percent surtax on incomes over $500,000.

Did you know... The first 1040 form was 4 pages long -- including instructions. Today, the instructions ALONE are 92 pages.

Did you know... During World War I, the highest rate of income tax was 77 percent. Taxes were used to help finance the war.

Did you know... In 1954, the tax filing date changed from March 15 to April 15.

Did you know... Electronic filings started in 1986. Today, e-filings have an error rate of 0.5 percent versus an error rate of 21 percent for paper filings.

And remember: If you don't file tax returns, the Treasury Department won't send your economic stimulus check. Happy April 15, everyone. Source A Brief History of the IRS IRS.gov https://www.irs.gov/irs/article/0,,id=149200,00.html

How "Once Bitten, Twice Shy" Is Making It Harder To Buy A Home

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 12:04:09 -0500

Getting approved for a conforming home loan just got tougher. Again. As home loan defaults mount, government-sponsored financier Fannie Mae has imposed new guidelines on what it will lend and to whom, highlighting the need for a strong credit profile and a downpayment. Some of the new restrictions on home buyers include:

580 minimum credit score requirement on all home loans (which 85% of Americans have)
No more than one instance of a 60-day late payment on a mortgage in the last 12 months
5-year moratorium on new mortgage credit with a prior foreclosure on record

In other words, Fannie Mae is outright declining mortgage applicants whose credit is weak and whose payment history shows signs of trouble. But, it's not just the "fringe" borrowers that are finding it harder to get a mortgage. Buyers with strong credit profiles are being hit by new changes, too. One such change says that owners of second homes must now have a 10 percent equity position in their homes; 15 percent if the property is in a "declining market". This is up from 5 and 10 percent, respectively, and represents a growing trend to make homeowners have a "stake" in their own homes. Downpayment requirements are higher for all mortgage products, in general. Fannie Mae's changes are the third set of restrictions imposed since December 2007 and more tightening is expected over the next few months. That makes now a compelling time to buy a home -- borrowing money will be more restrictive (and more costly) later. If you are actively shopping for homes and have not been pre-qualified in the last few weeks, reach out to your loan officer and get checked against the latest set of mortgage guidelines. It's better to know today than after you make an offer. (Image courtesy: myFico.com)

Are You Financially Smarter Than A 12th Grader?

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 12:02:43 -0500

Every two years, the Jump$tart Coalition issues a "personal finance" exam to high school seniors. The test highlights the importance of personal financial literacy among America's youth and comes at an especially important juncture. Many experts -- including Fed Chairman Ben Bernanke -- believe that basic financial knowledge is essential for (and lacking in) teenagers. Jump$tart's exam did little to disprove this. This year, 12th graders answered 48.3% correct on average and posted the lowest scores since Jump$tart first issued the test in 1996. A sample question from the 31-question test:

Which of the following types of investment would best protect the purchasing power of a family’s savings in the event of a sudden increase in inflation?

A twenty-five year corporate bond

A house financed with a fixed-rate mortgage

A 10-year bond issued by a corporation

A certificate of deposit at a bank

Find out the answer to the sample questions and 30 other questions by taking the complete Jump$tart Personal Financial Literacy test for yourself online.

The average adult scores 68%.

How The Fed Is Making Home Improvement Financing Less Expensive

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 12:01:43 -0500

In three weeks, the Federal Open Market Committee will meet again and markets anticipate another cut to the Fed Funds Rate. Based on data compiled by the Federal Reserve Bank of Cleveland at the close of business yesterday, traders put the probabilities of the Fed's next move at:

62 percent chance that the Fed Funds Rate falls to 2.000%
36 percent chance that the Fed Funds Rate falls to 1.750%

Currently, the Fed Funds Rate is 2.250%. Cuts to the Fed Funds Rate are meant to stimulate the economy by lowering borrowing costs for banks, businesses, and consumers. When less money is spent on interest payments, more money is available for goods and services and that tends propels the economy forward. And, because Prime Rate is tied to Fed Funds Rate, home equity lines of credit and credit cards grow "cheaper" when the FFR falls. That can makes financed home improvement projects a little less expensive. Cuts to the Fed Funds Rate, however, do not equal cuts to mortgage rates - this is a pretty common misconception. Mortgage rates are based on the price of mortgage bonds and -- although it exerts an influence -- the Federal Reserve does not set the prices for mortgage bonds any more than it sets the price for other investments such as stocks or mutual funds. Since September 2007, the Federal Reserve has lowered the Fed Funds Rate by 3 percent. Over the same period of time, conforming mortgage rates have been mostly unchanged.

A Simple Explanation Of The "Credit Crunch"

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 11:59:59 -0500

News sources like to use the term "credit crunch" in describing the U.S. economy, but they rarely define what a credit crunch is and what it means for Americans. A credit crunch is when the amount of available loans suddenly decreases over a very short period of time. Usually, it follows a period of lending which, in hindsight, becomes known for its "easy money". The start of a credit crunch often coincides with consumer loans starting to go bad and lenders losses starting to mount. The realization that more losses are ahead forces lending institutions to tightening their respective lending guidelines. Since the current credit crunch began in mid-2007, Americans looking for credit now face:

Higher credit score requirements on auto loan applications
Higher fees and interest rates on credit cards
Larger downpayment requirements on their home purchases

And now, the newest symptom of the credit crunch: the largest buyer of mortgage loans -- Fannie Mae -- has instituted a new, 580 minimum score requirement for all mortgage applicants. As consumer delinquencies mount and the economy continues to sputter, getting access to credit will likely get tougher for every American -- good credit and bad. And that's the defining characteristic of a credit crunch. Source Credit Crunch Wikipedia, April 8, 2008 https://en.wikipedia.org/wiki/Credit_crunch

Home Trends: Radiant Heating

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 11:58:55 -0500

For it's simplicity, comfort, and "green" status, radiant heating is a growing trend in home building.

Radiant heating is the process by which a room's temperature is controlled using warm (or cold) water flowing through plastic tubing. The tubes are typically installed under the room's flooring, but are also applied in walls and ceilings on occasion. Radiant heating works by heating the floors of a room which then heats the mass of the room. Unlike air duct systems, the heat stays lower in the room and temperature remains constant throughout. There are other reasons why homeowners and builders are moving towards radiant heat, too:

Dust- and mold-circulating air ducts can be eliminated making the home more allergen-free
Without ductwork, heating and cooling is much more quiet
Heating bills are lower by up to 20 percent because the water in the pipes doesn't need to be as hot as the water in a traditional radiator

That said, installing radiant heating can be expensive. Radiant heating is recommended for construction projects in which rooms are completely gutted, or for a new room additions to a home, or for new homes built from scratch. Homeowners wanting to retrofit a room (or rooms) for radiant heating should talk to an experienced contractor for opinions and cost comparisons. Source Perks of Radiant Heating Leslie Banker REALTOR.org https://www.realtor.org/RMOArch.nsf/pages/ArchCoach200802?OpenDocument (Image courtesy: Moser, Inc)

How Homes Got More Affordable Because Unemployment Rates Rose

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 11:57:55 -0500

For the third month in a row, the economy shed jobs, suggesting that the U.S. is in a recession. March's monthly loss of 80,000 jobs is the largest since March 2003 and follows January and February's losses of 76,000 each. The weak data is edging mortgage rates lower as we head into the weekend. The connection between poor jobs data and today's falling mortgage rates is a little bit strained, but worth discussing. It all comes down to expectations. Prior to today, there was an expectation that the Federal Reserve's recent rate cuts would over-ignite the economy sometime this Summer. The Fed has cut 3 percent from the benchmark rate since September 2007. Meanwhile, consumer spending makes up two-thirds of the economy and people can't spend if they don't earn. So, after today's report showing fewer workers (and falling confidence levels to boot), the largest component of the economy is expected to sag for a while. This lack of spending should offset the cumulative impact of the Fed's rate cuts and lowers the expectation for runaway inflation later this year. Now for the connection: If inflation causes mortgage rates to rise, it's the absence of inflation that causes them to fall. And that's precisely what we're seeing today.

Good Morning America: On TurboTax vs Accountants

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 11:56:37 -0500

To see which method gives tax filers the "biggest bang for the buck", ABC's Good Morning America recently compared three popular tax preparation services:

TurboTax
H & R Block
Personal accountant

In declaring TurboTax the "winner", the 4-minute video glossed over several important tax-related items. The first is that true tax planning cannot happen in a 3-hour stint in front of a computer. Tax planning a year-round activity. The second is that all personal financial decisions should be evaluated for their tax implications. That can't happen without a personal accountant that knows your tax history and understands your financial goals. The third is that filing income taxes is a personal event. The "winning" tax preparation method for the family on TV may not be what's best for your family. If you'd like a referral to a trusted accountant, please ask me. Filing your taxes for cheap today does not mean it will be the lowest cost to you long-term.

Simple Real Estate Definitions: Discount Points

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 11:55:27 -0500

More commonly called "points", discount points are up-front fees charged by mortgage lenders in exchange for lower mortgage rates. The cost of one point is one percent on the loan size and discount points appear on Line 802 of the HUD-1 Settlement Statement. As a general guideline, each point paid lowers a mortgage lender's offered interest rate by 0.250%. For example, a $200,000 home loan offered at 6.000% can be had for 5.750% if the borrower agrees to make an up-front payment of one point ($2,000). In addition to lowering your interest rate, discount points (as well as other closing costs) may be tax-deductible, too. Therefore, be sure to provide any settlement statements from the previous calendar year to your accountant during Tax Season.

FHA Home Loans Emerge As A Cheap Alternative For Low-Credit Score Homeowners

Mike Rosen (Frankly Real Estate) — Sat, 24 May 2008 11:53:37 -0500

FHA stands for Federal Housing Administration, a by-product of the National Housing Act of 1934 and now a sub-group within the U.S. Department of Housing and Urban Development (HUD). The FHA is not a lender nor does it build homes. The FHA exists to insure lenders against loss in the event that a homeowner defaults on a mortgage. Mortgages backed by FHA are often called "FHA loans" even though it's somewhat of a misnomer. A more appropriate name would be "FHA-insured" loans because that better describes the FHA's function. With the FHA's guarantee, mortgage lenders are enticed to make loans on which they would otherwise pass and the explicit backing from the government holds mortgage rates low for borrowers. FHA loans are often used by borrowers with less-than-20-percent downpayments and, therefore, tend to require mortgage insurance payments. For FHA loans above 80%, mortgage insurance rates are 0.50% annually (paid monthly) with an up-front payment of 1.5% against the loan size and due at closing. Homeowners with 15-year fixed FHA loans, however, are exempt from the annual insurance payments. For all homeowners, though, when the loan balance reaches 78 percent of the home's value, the annual MI is no longer required. Mortgage rates for FHA loans are typically higher than comparable conforming mortgages but because of new, risk-based pricing from Fannie Mae and Freddie Mac, homeowners with credit scores under 680 are finding FHA a viable alternative. And often with lower rates. Source FHA Loan Wikipedia, April 1, 2008 https://en.wikipedia.org/wiki/FHA_loan

Leesburg makes CNN Money's "Best Places to Live and Launch"

Mike Rosen (Frankly Real Estate) — Mon, 12 May 2008 15:51:45 -0500

As a twist on the typical "Best Places To Live" surveys, CNN Money released its 2008 "Best Places to Live and Launch".

The rankings rate the business friendliness of 296 Census-designated metro areas, and then identify that area's town that best combine business and pleasure for its residents. In 2008, the Top 10 Live and Launch cities are:

Bellevue, WA (pop. 111,608)
Georgetown, TX (pop. 37,963)
Buford, GA (pop. 13,576)
Marina del Rey, CA (pop. 8,891)
Bethesda, MD (pop. 59,475)
Portland, OR (pop. 535,421)
Denver, CO (pop. 555,932)
Charlotte, NC (pop. 596,123)
Fort Worth, TX (pop. 595,062)
Franklin, MA (pop. 29,642)

For the Northern Virginia area, Leesburg made the list at #31. Other cities and towns in Virginia include: Virginia Beach (#14), Charlottesville (#18 - Go Hoos!!), and Blacksburg (#43). View the complete, 100-city listing.

In 2008, Home Loans Are One Day Cheap And The Next Day Expensive

Mike Rosen (Frankly Real Estate) — Mon, 12 May 2008 15:49:33 -0500

When mortgage rates change rapidly, it's a fiscal challenge to shop for a home and/or home loan. Lately, mortgage rates have been especially volatile, mirroring the wild moves of the stock market. Here's how up-and-down stock markets have been in 2008: Through last week, the S&P 500 Index changed more than 1 percent per day on 28 separate days. This represents 52 percent of all trading days and is the most volatile measurement since 1938. Mortgage financing is impacted by stock market changes because when money flows into stocks, it tends to come from bond markets. And, when money leaves stocks, it tends to "gets parked" in bond markets. Because mortgage bonds set mortgage rates, you can understand how stock market volatility can make it difficult to predict what home loan payments might look like. Volatility is expected to continue for the next several quarters so if you see a mortgage rate you like today, consider locking it right away -- it probably won't last long. Source U.S. Stock Volatility Climbs to Highest in 70 Years, S&P Says Jeff Kearns Bloomberg, March 20, 2008 https://www.bloomberg.com/apps/news?pid=20601213&sid=av840GLwE4UA&refer=home

Why "Median Sales Price" Reports Aren't Helpful For Housing Markets

Mike Rosen (Frankly Real Estate) — Mon, 12 May 2008 15:48:21 -0500

Each month, the Commerce Department and the National Association of REALTORS release national housing data. The former's release is called the New Residential Sales report and the latter's is called the Existing Home Sales report. Both reports highlight the "median sales price", the point at which half of the homes in the U.S. sold for more, and half sold for less. Last month, the median sales prices were as follows:

Existing homes: Down 8.2 percent
New homes: Down 2.7 percent

The very definition of "median", however, makes this data point useless for national housing statistics. If a large amount of homes are sold in regions where home prices are traditionally high, the median sales price will trend higher. If a large amount of homes are sold in regions where home prices are traditionally low, the median sales price will trend lower. Again, all that the median sales price tells us is the price point at which half the homes in the country sold for more, and half sold for less. Real estate is a local phenomenon and so grouping the entire country's supply of homes together makes little sense. A home in San Francisco has little to do with a home in Omaha. To get a true gauge of your local market, talk to a real estate agent that knows the local market well. You'll not only get meaningful statistics about a neighborhood, but you'll get good insights, too.

The Small Statistic Within Consumer Confidence That Didn't Show Up On The News

Mike Rosen (Frankly Real Estate) — Mon, 12 May 2008 15:27:27 -0500

Consumer Confidence fell to its lowest point in three years and anybody who watches the evening news can understand why. Each day, news programs barrage Americans with tales of economic woe and American Opinion is largely shaped by the media. After enough time, the reporting becomes a self-fulfilling prophecy. But, in the Consumer Confidence report, there was a choice piece of data that isn't getting reported by the news programs and it's a rather important piece. Although fewer consumers expect to buy automobiles and appliances over the next six months, those with plans to buy homes is actually higher by 14 percent. In other words, despite weakening confidence in the economy, an increasing number of Americans are planning to buy homes this season and next. Consumers may be motivated to buy this year by a number of factors:

Lower home prices nationwide
Affordable mortgage rates
Fear that mortgage products will require larger downpayment

Regardless, the media is choosing to ignore this part of the story. Instead, the news programs are focusing on the negatives -- just look at the headlines. It's no wonder that confidence is down -- bad news is all the American Public tends to hear.

How Seasonal Factors Change Homeowner Vacancy Rates

Mike Rosen (Frankly Real Estate) — Mon, 12 May 2008 15:26:47 -0500

Each quarter, the Census Bureau releases the Homeowner Vacancy Rate, a housing statistic the measures the percentage of homes for sale that are vacant.

A home listed for sale may be vacant for several reasons including:

The home has been foreclosed and the owner has moved out
The home seller moved into a new home and not sold his former home
The home was a rental property and is being sold without a tenant

In Q4 2007, the Homeowner Vacancy Rate matched its all-time high of 2.8 percent. The statistic can be misleading, however, because Homeowner Vacancy Rates appear to be seasonal and the fourth quarter is more prone to high figures. As evidence: In 6 of the last 7 years, Q4 posted higher vacancy rates than for the preceding three quarters. Vacancy rates may increase in the fall because homesellers without a "need" to sell tend to take their properties off the market during the Holiday Season. That leaves an over-weighting of empty homes for sale -- precisely what the Homeowner Vacancy Rate measures. For an interactive version of the chart above, visit the Wall Street Journal Online. Source Housing Markets: A Vacant Look The Wall Street Journal Online March 21, 2008 https://online.wsj.com/public/resources/documents/retro-VACANCY08.html