Investing, Real Estate

Home, Investment…or both

Purchasers are often concerned about home prices…is it the right time to buy….will the value go down, will it not gain as much as they had hoped…what about resale…etc.

Understandably, people do not want to throw money away or invest it unwisely, especially after what our economy has seen; however, a primary residence shouldn’t be considered only for it’s investment potential because often what you would consider a great “investment property” isn’t necessarily where you want to live or doesn’t necessarily meet all of your needs.  With those two interests competing, you will have a very difficult time selecting a home.

If you wanna buy a house strictly as an investment, your considerations are much different and much less emotional, it is about the bottom line.  If you want to purchase a home to live in, make memories in and it be in a place where you want to be, your considerations will naturally be different.

While it is often the largest purchase most individuals will ever make, and it is no doubt a great investment to purchase real estate; it is a LONG TERM investment…that if kept long enough has historically yielded a return much larger than any other type of investment.  If you are buying a home only because you expect a certain percentage increase over a short amount of time, you may be disappointed.  It is an average percentage over periods of time that we look at…which means that some years will be less and some years will be more…some years will be flat.  Overall though, real estate appreciates…there will always be demand for it, because the population grows and we have a finite amount of land.

The key to being comfortable with your investment is to consider the intangibles…growing your family there, making it a home, making lasting memories and friendships, pride of ownership as well as the tangibles, paying in to something that will help you build long term wealth through long term equity build up and appreciation, provide tax advantages, provide a consistent monthly payment (as opposed to rent which steadily increases yet provides no payoff).  What other investment can you actually enjoy while you are investing money in it?  You get something out of it while you are putting money in!  At the end of the day…if it isn’t an “investment property” you are purchasing, it is a home that also happens to be an investment in your future.

This is not to say that you should make frivolous decisions, pay way over market value or ignore serious defects, consistent declines in a particular area or problems that could affect selling in the future, I just mean that it is a home first and an investment second.

Just my two cents…

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Financing-home loans, Investing, Real Estate, The Market

Looks like the FHA loan limits will go back to $729,750

Logo of the Federal Housing Administration.
Image via Wikipedia

Looks like the FHA loan limits will go back to $729,750, not Fannie Mae or Freddie Mac limits though at this point.  It isn’t a done deal yet…the president still needs to sign it into law but this is a good sign!  See article below.

NOVEMBER 18, 2011
Congress Increases the Ceiling on Size of Mortgages
By ALAN ZIBEL
WASHINGTON—U.S. lawmakers moved Thursday to increase the maximum size of loans that can be guaranteed by the Federal Housing Administration.
Congress passed a broad spending bill that included a provision to restore to $729,750 the maximum size of mortgage that can be backed by the FHA, giving some borrowers the option of putting less money down to obtain a mortgage in expensive cities.  FHA-backed loans currently account for a third of new mortgages for home purchases and can be made with down payments of as little as 3.5%, compared with the 20% industry standard.  The bill goes next to President Barack Obama to be signed into law.
The loan limits fell to $625,500 on Oct. 1 in expensive markets like New York, San Francisco and Washington. They declined in around 250 counties for loans guaranteed by mortgage-finance companies Fannie Mae and Freddie Mac, and in around 600 counties for FHA-backed loans. In some cases, the FHA loan limits fell below those of Fannie Mae and Freddie Mac.
The housing lobby pushed for Congress to reinstate loan limits for Fannie, Freddie and FHA, citing concerns that any steps to raise borrowing costs might be too much for fragile housing markets to bear. Limits for Fannie and Freddie loans were not restored.  Sen. Robert Menendez (D., N.J.) said that restoring the loan limits will benefit the housing market at a time when it is weak. Doing so, he said, “won’t cost taxpayers a dime” and will benefit the housing market in many other parts of the country besides those cities.
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Tim McLaughlin
Senior Vice President, Secondary Marketing

Weichert Financial Services
225 Littleton Road, Morris Plains, NJ 07950

Homes for Sale, Investing, Real Estate, The Market

Internet Home Valuations…fact or fiction?

Margin of error-visual
Image via Wikipedia

I can’t tell you how often I hear people talk about what they want to offer on a home or what they want to sell their home for based on a website like zillow.com’s home value tool.  Unfortunately, these sites are notorious for giving inaccurate information regarding home values and have actually been reprimanded over it. They now have to disclose their margin of error on their site.  There is of course no “exact science” to pricing and appraising a home; however those sites are not able to take into account market trends, differences in homes such as upgrades, the difference between foreclosures/short sales vs. regular sales (and if they constitute the “norm” in a particular area), specific locality factors, etc that only a human would be able to do.  It can’t pick and choose the correct comps like a human would be able to do, it just pulls everything in a specific mile radius that has the same bedrooms and bathrooms which is wildly inaccurate especially in areas like ours (Northern VA and DC) where home values often vary between neighborhoods and even between streets within a very small vicinity.  Only a person who is familiar with an area can actually evaluate the comps on a more granular level and help you determine a range for an appropriate offering or listing price.  People are not perfect either but are at least able to analyze the data with a more keen understanding of the local market area and the variables that affect a particular home’s value.

A client of mine actually recently sent me a this article and (believe it or not) it supports my point :).  I found it pretty interesting…view it HERE

Happy house hunting or selling!

area info, Investing, Real Estate, The Market, Things to Do

BRAC-133 in Alexandria VA (Mark Center)-Infrastructure Impact

Location map Alexandria, Virginia
Image via Wikipedia

In an article written by: Dak Hardwick and Don Buch for the Cameron Station Compass

BRAC-133”, scheduled to be fully open and operational by September 15, 2011, will bring approximately 6,400 DOD personnel to the West End of Alexandria. As this building is owned by the federal government, it is not subject to local zoning rules and regulations. However, over the past two years, various citizens’ groups and the City of Alexandria have been working to help mitigate the impact of BRAC-133 as a consequence of its being located in a semi-residential area with a limited transportation infrastructure.

Short/Mid-Term Road Improvements — If you’ve been in the Seminary Road/Beauregard Street area recently, you’ve probably seen some ongoing road construction. The City of Alexandria is undertaking some minor road improvements, including a “triple left” from westbound Seminary onto southbound Beauregard in an effort to alleviate some of the BRAC-bound traffic. Construction of several additional improvements will begin in late winter 2011/early spring 2012 and are expected to take two to three years to complete.

BRAC Transportation Management Plan — DOD and the City of Alexandria have been working on an extensive Transportation Management Plan (TMP) that offers a variety of traffic mitigation efforts. There will be frequent peak period shuttles from five different Metro stations. That includes service between the King Street station and Mark Center every ten minutes on a service open to public ridership.

Long Term Transportation Improvements — In early February, the Virginia Secretary of Transportation announced plans to pursue a new HOV ramp from the northbound HOV lanes of I-395 to westbound Seminary Road (reversing at evening rush hours). The estimated cost of this project is approximately $80 million. Although some questions remain about the exact scope and scale of the project, the Alexandria City Council has endorsed the proposed ramp and is currently working with the Virginia Department of Transportation (VDOT) to move it forward as expeditiously as reasonably possible.

As many would expect, this project may also significantly affect Real Estate Values and requirements in the Alexandria Area, most pronouncedly on the West End of the city.  The demand both for homes to purchase and to rent near the new center will undoubtedly increase as this project moves forward.

area info, home for rent, Investing, Real Estate, The Market

Repealed Landlord Law! Yea NAR!

Congress passed legislation last week that repeals a provision in the small business legislation enacted last year that requires landlords to report any work done on investment properties totaling $600 or more, and to provide 1099 forms to vendors that provided the services.

Realtors® fought against this provision, arguing that the amount of paperwork generated would be onerous to landlords and any real estate practitioners employed by landlords. Lawmakers finally agreed that the provision was an example of overreach by Congress that was not intended to burden small property owners and managers.

Even President Obama agreed back in November of 2010, “It just involves too much paperwork, too much filing.”