Cheaper to Own Than Rent Regardless of Mortgage Rate

 

 

Trulia’s Winter 2013 Rent vs. Buy Report looked at homes for sale and for rent on Trulia between Dec. 1, 2012, and Feb. 28, 2013, and compared the costs, factoring in transaction costs, taxes and opportunity costs. For homeownership costs, study authors assumed a 30-year fixed-rate mortgage, 20 percent down, itemizing tax deductions at the 25% bracket and a stay of seven years in the home.

Overall, buying a home is 44 percent cheaper than renting nationwide – down just slightly from 46 percent in 2012. In each of the 100 largest metros, buying is more affordable than renting, though it ranges significantly – from 70 percent cheaper to buy than rent in Detroit to only 19 percent cheaper in San Francisco.

In the 10 Florida markets checked by Trulia, savings ranged from 40 percent to 60 percent. They include:

Miami: 43% cheaper to buy
Fort Lauderdale: 53% cheaper to buy
West Palm Beach: 56% cheaper to buy
Cape Coral-Fort Myers: 45% cheaper to buy
North Port-Bradenton-Sarasota: 51% cheaper to buy
Lakeland-Winter Haven: 55% cheaper to buy
Palm Bay-Melbourne-Titusville: 50% cheaper to buy
Orlando: 51% cheaper to buy
Tampa-St. Petersburg: 55% cheaper to buy
Jacksonville: 54% cheaper to buy

Individual own-versus-rent savings will vary depending on details, but Trulia posed an adjustable map on its website.

Visitors can change the map to suit their circumstance by choosing the mortgage rate they expect to pay (3.5%, 4.5% or 5.5%), their IRS tax bracket (none, 15%, 25%, 35%) and the length of time they expect to be in the house. The map then changes its buy-versus-rent estimates based on input.

For example, changing a Miami buy-versus-rent decision to a three-year stay, 15 percent tax bracket and 5.5 percent mortgage interest rate makes it wiser to rent for a 1 percent savings.

“People who didn’t buy a home last year may have missed the bottom of the market, but they haven’t completely missed the boat,” says Jed Kolko, Trulia’s chief economist. “Buying remains cheaper than renting in all 100 large metros. Even buyers who can’t get today’s lowest mortgage rates will still find that buying makes more financial sense than renting in nearly all local markets – so long as they can get a mortgage in the first place.”

March 10, 2013, Daylight Savings Spring Forward

Daylight saving begins, March 10, 2013. This is just a friendly reminder to turn your clock one hour forward at mid-night, March 10th. Enjoy the extra daylight to get all of your work done. Personally, I look forward to daylight savings because it allows me to show homes later in the evening. Quick note from your Tampa Realtor, Gloria Walters,www.gloriawalters.com.

Why Take the Key? It Won’t Help Your Buyer’s Chances.

 

I recently attempted to show a bank-owned property that was priced considerably below market-value. One of my eager buyers was hoping to view this property and ultimately submit his highest and best bid. The property had been on the market for two days and there was a mandatory seven day waiting period before any offers were considered. When we arrived at the property, I unlocked the lockbox, only to find that the keys were missing. Confused and a little annoyed, I informed my buyer and called the listing agent. The listing agent was aware of the situation and placed a call into the property manager to have the property re-keyed.

ATTENTION REAL ESTATE AGENTS!
Removing the key from the lockbox to reduce the likelihood of the property being shown to other potential buyers is not only very unethical but may prove to be a disadvantage to your buyer. The seven-day waiting period could be extended to rectify the inconvenience and allow interested buyers time to submit their highest and best offers. Also, your buyer could change their mind making your efforts futile and unnecessary.

As a Real Estate professional, you should inform your buyer of the competition associated with the property purchase. Review the comparables (Comps) with your buyer, as well as strategize and determine the best offer for the property. As a real estate agent it is important to be professional and ethical in all business endeavors.

ATTENTION BUYERS!
If your Real Estate Agent suggests removing the key from the lock-box, please ask them to reconsider. As a buyer, if you were viewing properties, you too may be a little annoyed to know that you cleared your schedule for this viewing only to find out, there is no key to access the property. Additionally, if you were successful in securing the property, the absence of the key could delay other areas of your home purchase process including the inspection, appraisal, etc.

I am always disappointed with agents who employ this unethical practice. As a Realtor, your success is not measured by how many keys you can remove from a lockbox or how you can block the other buyers and agents through unethical practices. As a Real Estate Professional, buyers seek your services in a real estate transaction to be informed, educated, and navigated through this process. Buyers look to their real estate agent to negotiate on their behalf, and more importantly to be honest and ethical in all they do. Sometimes I wonder if I’m the only agent who works by these practices.

Special Report: Real Estate Provisions in 'Fiscal Cliff' Bill

Published by:  Daily Briefing: Wednesday, January 2, 2013
A service for members of Florida Realtors

WASHINGTON - Jan. 2, 2013 – Tuesday, January 1, 2013, the House and Senate passed H.R. 8, legislation to avert the so-called "fiscal cliff." Following are real estate-related provisions of the bill, which President Obama plans to sign into law today:

• Mortgage Forgiveness Debt Relief Act extended to January 1, 2014. In place since 2007, the act provided a tax break for homeowners who struggled through financial hardship such as a foreclosure, and were granted mortgage debt forgiveness. In the past several months, National Association of Realtors (NAR) issued numerous calls to action urging its million-plus Realtor members to ask lawmakers to extend the tax break for another year. More than a quarter of all transactions involve distressed properties, the NAR said in its plea. "Homeowners shouldn't be forced to pay a tax on money they've already lost with cash they never received."

• Deduction for mortgage insurance premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012.

• The 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.

• The 10 percent tax credit (up to $500) for homeowners for energy efficiency improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

• "Pease limitations" that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high-income filers. "Pease" limitations will only apply to individuals earning more than $250,000 and joint filers earning more than $300,000. The thresholds are indexed for inflation so will rise over time. Under the formula, filers gradually lose the value of their total itemized deductions up to a total of a 20% reduction.
First enacted in 1990 and named for Ohio Congressman Don Pease, who proposed the idea, the limitations continued throughout the Clinton years. The limitations were gradually phased out starting in 2003 and eliminated in 2010. Reinstitution of these limits has far less impact on the mortgage interest deduction than a hard dollar deduction cap, percentage deduction cap or reduction of the amount of mortgage interest deduction that can be claimed.

• The capital gains rate remains at 15 percent for individuals earning less than $400,000 per year and couples earning less than $450,000.  Any gains above these amounts will be taxed at 20 percent. The $250,000/$500,000 exclusion for the sale of principle residence remains.

FHA Extends Flipping Waiver Through 2014

Typically, purchasing a Federal Housing Authority (FHA) property involves  a clause that prohibits the buyer to resell the property within the first 90 days of purchase. This preventative measure common among FHA insured mortgaged properties, but is sometimes included on cash contracts as well.

The FHA has waived that rule on some contracts and allowed flipping since January 2010. They hope this allowance will encourage investors to purchase and renovate blighted homes and offer turn-key home options for first time home buyers and others. Ultimately, this strategy will boost sales . Apparently, this strategy seems to be working. Since the FHA first extended the rule, it has been extended three additional times.

Bank of America Does It Again!

With short sales in abundance, it is very difficult to evade them. More and more of my real estate sales are short sales, with bank owned or reo properties taking a close second. There are a number of parties involved in a short sale: the lender, the negotiator, the investor, among others and each person’s role is vital to the success of the short sale.

Considering all of the short sale lenders I have worked with, Bank of America is by far, the best. From my experience, they always close within three months, unlike some of the other lenders. However, I had a recent case that threw me for a loop. In January, my client signed a contract for a two bedroom, two bath villa (short sale by Bank of America). I was confident that this would close within three months. However, three months and two negotiators later, I was drafting an extension, hoping that it will close soon. I was asked to resend a newly signed contract twice and five months into the waiting period, the contract was denied.

Stunned and confused I sent a direct twitter message to @BofA_Help, searching for an explanation. Why is this contract being denied? This doesn’t make any sense? The BofA representative responded the same day asking for further information. She researched the matter and advised me to resubmit all documents all over again and everything should be taken care of. Disheartened and a bit skeptical, I followed the instructions. This was in May. Three months later, we received an approval. My client was elated and so was I. After waiting eight months, my client now has a home.

Real estate agents have very little control on the outcome of a short sale. We always hope for the best, so all parties involved are content, especially our clients. I was happy that my client didn’t have to start the home search process all over again. Her heart was set on this property and mentally, she had already moved in. I am truly happy for the efforts that BofA made to make this sale a reality. There was a mishap in the beginning, however, we finished strong. Thank you Bank of America, you have done it again!

Cheaper to Buy Than Rent

 

 

Zillow recently released an article stating that “the average national homebuyer will save money over renting if he or she stays in a home for only three years. And in at least four Florida cities, a homeowner only needs to stay two years to make ownership the preferred option.”

Zillow examined the “breakeven horizon” for over 200 cities throughout the United States. Typical costs associated with buying or renting were considered in this analysis. These factors included down mortgage and monthly rental, closing costs, property taxes, utilities, maintenance, tax deductions, as annual inflation and changes in home values and rental prices.

I meet many renters that are on the fence, thinking of hanging up the renting towel or trading it in for home ownership. Home ownership is the largest purchase you may make in your life and it’s also the most rewarding one. I hope this bit of information will help you off the fence and into the field of home ownership.

Short Sales, Shorter Process

 

 

The short-sale process is expected to get shorter starting June 15. New guidelines issued under the Federal Housing Finance Agency will require Fannie Mae and Freddie Mac to give homebuyers of short sales notice of their final decision within 60 days. The new guidelines also will require the mortgage giants to respond to initial short-sale requests within 30 days of receiving an offer.

The speedier process is expected to be a boost to the housing market, Michael McHugh, president of the Empire State Mortgage Bankers Association, told the New York Times. Homebuyers and sellers often have to wait months before they receive a short sale decision from a lender. Some deals fall apart just from the wait alone.

Short sales have been increasing in recent months as many lenders find them more appealing than foreclosures, which can cost more and take longer to remove from their books.

Short sales now outpace foreclosure sales in many parts of the country. Short sales represent more than 14 percent of existing-home sales, according to CoreLogic housing data from March, the most recent month available.

McHugh says that a faster short-sale process may be particularly helpful in speeding the recovery in judicial states, where foreclosures must go through the courts before they are approved. Now short sales may be viewed by defaulting homeowners as more of an option if they want to avoid foreclosure.

“There should be a significant improvement in the turnaround,” McHugh said regarding housing markets with judicial foreclosure processes.

Source: “Speeding Up Short Sales,” The New York Times (May 24, 2012)

Tampa Bay Real Estate Investment Opportunities (October 2, 2011)

Investment opportunities are eminent in the Tampa Bay Real Estate market. As a Realtor specializing in selling investment properties, I’ve been keeping a close eye on the market’s activities. In the month of July, an investor contacted me to view and place a bid on a home in Villa Sonoma. At the time, this highly desirable community showed five condo units available for sale, ranging from one to three bedrooms. By early September, all five condos were under contract. There are currently no units available for sale in this community.

I noticed a similar trend at Parkcrest Harbor Island (one of my personal favorite condo communities in Tampa.) This highly desirable complex located on the water, boasts a great location, tons of amenities and impressive upgrades. There were nine units available in July. As of today, October 2nd, there are only two available for sale. Contact me to schedule a viewing today if you are interested in securing a home in this community.

Just recently I shared the investment opportunities with one of my real estate partners in California. He was shocked that homes were available for sale and priced under 20K. I thought this information would be great to share with other possible investors out there. This is a buyer’s market and many are taking advantage. If you ever considered purchasing a home to renovate and lease for some years, or for any other reasons you may have in mind, this is the time.

There are currently 35 homes available for sale and priced at 20K or less. Click here to view these homes. Please give me a call 772-359-7543 or email me at gwalters83@gmail.com to schedule a viewing and begin your journey in investing in Tampa’s Real Estate.

       

Short sales lose appeal among first-time buyers

A short sale occurs when a seller, sells his/her home for less than the amount owed. For example, seller A owes $100,000 for their single family home, but sells to buyer A for $50,000.  Since the home is sold for less than what the seller owed, this transaction is called a “Short Sale”. Short sale homes relieve the seller of a mortgage they could no longer afford and allow a buyer to purchase the home at a great price point. The short sale process could be cumbersome and takes a lot longer than traditional sales. The turnaround times can be anywhere from 90 days to nine months, sometimes even longer. According to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, short sale purchases for first time buyers have dropped to 39.7% of total transactions for the month of August. The survey further explains that buyers are frustrated with the approval response times, the extended time to close and the unexpected delays. Some buyers consider placing multiple offers on different homes and choses the home that wins the race to the closing table. When looking to purchase a short sale, hire a Realtor who can help you uncover all that you can about the home. 

Cash Is Still King

In May 2011, cash buyers accounted for 30 percent of existing home sales for the fifth-straight month, up from 25 percent in May 2010, according to the National Association of Realtors. Cash buyers often get better deals since sellers are more secure knowing that their offers won’t fall through due to lack of financing. So if you are thinking of owning a home or investment property and have the cash to do so, this is the time. Call or email me to discuss your home owning possibilities in Tampa Bay.