Homeowner Finance

So Proud

Montclair has long been seen as a destination for families of all shapes and colors. Those of us who have raised children here know that our kids all have friends with two momgay marraiges or two dads - as far as they're concerned, it's just another family. How heartening it is to think that soon that may become the sentiment in suburbs all across America.

The Supreme Court's ruling on gay marriage last week has far reaching implications in so many sectors, and real estate is certainly one of them. Making same-sex marriage legal in all 50 states makes it easier for LGBT couples to get approved loans as a couple - and in towns like Montclair, where lenders often need to see two incomes to qualify buyers, it can be a game changer.

My colleagues and I are so happy to finally be able to leave behind those particular obstacles for so many of our clients. Finding the right house for your family should be fun and exciting, not a series of hoops to jump through.

Will it be sad to one day wake up and realize that Montclair's inclusive nature is no longer its unique selling proposition - that towns everywhere have finally started to regard LGBT couples as just another family? No. It will be awesome!

Is Montclair the New Beachfront Property?

300px-Upper_Montclair_Station_-_July_2010As a New Jersey Realtor, I am a member of the National Association of Realtors (NAR). Last week I read a news release on the NAR website that confirmed what I've been seeing over the past several years: homes near public transportation tend to command a higher price than others.

According to a study done by NAR and the American Public Transportation Association (APTA), homes located near public transportation with high frequency service performed 42% better during the last recession than those further away. The difference in value was so striking that APTA President and CEO Michael Melaniphy declared, "When homes are located near public transportation, it is the equivalent of creating housing as desirable as beach front property."

The study looked at housing prices in metropolitan Boston, San Francisco, Phoenix, Chicago, and the Twin Cities. Although New York was not included, I would certainly add it to the list.  Montclair homes located along the DeCamp bus route or near one of 6 New Jersey Transit train stations lost remarkably little of their value during the recent economic downturn demonstarting that while prime Montclair real estate may be pricey in the short term, it is a smart investment (not to mention a terrific place to live) in the long term.

Walkability: A Wise Investment

As a New Jersey Realtor, I read a lot of material relating to housing markets both state- and nationwide. Recently I read an especially interesting blog post on the National Resources Defense Council website. The NRDC is an environmental advocacy group, but in this post, staff member Kaid Benfield actually blogs about economics.

According to a study cited by Benfield, the recovery in housing prices nationally has begun, and this recovery is being led by "populous urban or semi-urban communities well served by local amenities." Homes in such communities will see price  increases of 3% by next year, and up to 5% per year between 2014 and 2017. Benfield advises, "If you're a real estate investor, put your money on smart growth and avoid sprawl."

Now, most of my clients view communities such as Montclair or Maplewood as  great places to live rather than as a real estate investment. But isn't it nice to know that homes here will maintain and likely increase in value--that buying in a walkable suburb also makes a lot of (dollars and) sense?

New Year's Resolution: Buy a House in NJ While the Rates are Still Low

With the start of  the new year, why not make a new New Year's resolution? Instead of vowing to exercise more or eat healthier (not that these aren't worthy goals), you might want to resolve to become a homeowner. If you've previously been a renter, buying a home may seem overwhelming. This really is the perfect time to buy a home, though: mortgage rates are currently lower than they've ever been.

According to a recent article in RIS Media, a real estate information website I follow, Freddie Mac just released the results of its Primary Mortgage Market Survey. Great news for home buyers: mortgage rates are down in every category. For instance, a 30-year fixed rate mortgage averaged 3.89 percent last week, down from 4.71 percent at this time last year. Similarly, last week's 15-year fixed rate mortgage averaged 3.23 percent, as opposed to last year's 4.08 percent. And the five-year Treasury-indexed hybrid adjustable rate mortgage averaged 2.82 percent last week, versus last year's 3.72 percent.

All  these numbers make for pretty dull reading, I know. They add up to exciting possibilities, though. So take the plunge and make 2012 the year of home ownership. As an experienced New Jersey Realtor, I'd be delighted to help make this happen for you. Happy New Year!

Why Buying a Condo in Montclair Now Makes (Dollars and) Sense

I've been reading a lot lately about our national housing crisis, and there are definitely some sobering statistics out there. According to a recent article in The Wall Street Journal, home ownership is falling at the fastest rate since the Great Depression. There is a silver lining, though: now is a really good time for renters to buy a home.

Jack Hough, the author of the WSJournal article, explains that because house prices have fallen so dramatically since 2005, the ratio of house prices to yearly rents is shifting in favor of buying. He compares a house's price/rent ratio to a stock's price/earnings ratio; in both cases a lower ratio means that more income can be generated for the price paid. And the price/rent ratio has been dropping steadily over the past several years.

Most first-time home buyers are primarily concerned with getting a  mortgage, and here too, the numbers are in their favor. The 30-year mortgage rate is currently just over 4%, almost a record low. Mortgages are not as easy to obtain as they were during  the housing bubble, but qualified applicants (those with a job, a good credit rating and enough cash for a down payment) will be rewarded with low monthly payments.

Here's a current example of a 2 bedroom "rent" option in Montclair vs. a 2 bedroom "buy" option.

  • RENT: 18 Baldwin Street. 2 bedrooms, 2 bathrooms. Rent: 2300/month
  • BUY: 50 Pine Street. 2 bedrooms 2.5 bathrooms.  Mortgage: $1050, property tax $695, HOA fee $225 = $1970/month
It's  $330 less per month to own than to rent a comparable property.  Not to mention the savings from the tax deductions you'll take on mortgage interest and property taxes.

The bottom line for renters: now is the time to take the plunge.

To Rent or To Buy...That is the Question.

Montclair rental - gone in 1 day

Real estate is always a "good news-bad news" business. The most obvious example of this is an overheated market: great news for home sellers, lousy news for home buyers.  An article I read recently in RISMedia,  an online trade publication, discusses another good news-bad news situation: the current rental market.

The article cited a study by the Harvard Joint Center for Housing Studies, which concluded that the fledgling national economic recovery will actually hurt renters. More Americans are finding new jobs, but these jobs often pay less than their former ones, so they are choosing to rent a home instead of buying one.  In addition, the continuing foreclosure crisis means that many former homeowners can now only afford to rent. With no real increase in multifamily rental units planned by developers, rental units will almost certainly become scarcer and thus more expensive.

Montclair is already showing signs of upward pressure on the rental market - There are only 35 rental units at the moment listed on the MLS as compared to 230 that are currently for sale.  As a New Jersey Realtor, I have firsthand experience with this trend: I listed a 1 BR condo renting for $1850/month in a loft-type building in Glen Ridge, walking distance to the NYC train, on Saturday; by Monday, it was gone.

The good news in this scenario: a poor rental market often means it is a good time to buy a home. Mortgage rates are at their lowest in years, and home prices have dropped significantly from several years ago. Are you looking for more space for your growing family? Have you been considering buying a multifamily property as an investment? If you answered "yes" to either of these questions, then take advantage of the good news (for buyers) and make your move before the tide turns again.

How Many Different Mortgage Lenders Should I Talk To?

Here's a scenario: New home buyer-client comes to me to find a house.  My first question to them is always "how important is it that you can walk to the train and to shopping?"  My second question is then "Have you been pre-qualified for a mortgage?".  If it's from a lender I'm familiar with we're all set to go look at houses.  If it's from a questionable company I may ask that they be "re-qualified" by a lender I've worked with before.

Most buyers are happy to have another company with which to compare rates, but some buyers balk at the prospect of having their credit pulled again because they fear it will damage a hard-earned high credit score.  This is a ploy that some mortgage guys use to stop the buyer from shopping around for a better rate.  Read this fantastic article by loan officer Dan Green (whom I've actually never worked with) to understand more about how much this will truly damage your credit score.

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      Short Sales

      A recent New York Times article discusses the rise in short sales in Manhattan due to the recession. One market analyst said "2010 might well be dubbed the Year of the Short Sale nationally. 'A short sale is going to be the only way for many people who bought at the peak and who are now underwater to move on with their lives if they have to relocate or downsize.'" Like Manhattan, Montclair, Glen Ridge Maplewood and the rest of Essex County have seen the number of short sales rise. When the alternative is foreclosure, selling a house through a short sale is a way for the owner to come out of the deal relatively unscathed. I discuss the issue of short sales further in Short Sales for Buyers and Short Sales for Sellers. If you have any questions about short sales, either because you're thinking of selling your house short or you're interested in buying a house that's  a short sale, please email me for more information.

      NJ's Tax Credit for Home Buyers? Not This Year.

      Despite both the state Assembly and Senate voting to approve a tax credit for NJ home buyers, Gov. Christie vetoed the program on July 23. The NJ Home Buyer Tax Credit Program would have allowed home buyers could claim a credit of either $15,000 or 5% of the home purchase price over the course of three years following the home purchase in 2010. $75 million of the $100 million total to be allocated for the credit would have been for the purchase of new homes, to increase the state's construction as well as provide new jobs for construction workers. The other $25m was to go to those buying resales (older homes). Like the Cash-for-Clunkers program, the $100m total was to be distributed on a first-come-first-served basis.

      Assemblymen and state Senators both pointed to the increase in jobs the credit would have brought, not just in the field of construction but also for home contractors, furniture makers, and all the industries involved in building and outfitting new houses. But Gov. Christie has long made it clear that he was against the credit, for the simple reason that the state does not have the money (yet he found $875m available for the embarrassing Xanadu shopping center in the Meadowlands...).

      Credit for Closers Now Extended Until Sept 30

      The US Senate and House of Representatives have both voted to extend the deadline for closing on houses bought by April 30 from June 30 to September 30 in the hopes of allowing around 180,000 home buyers to complete their transactions and still qualify for the tax credit. While this does not extend the period in which home buyers could qualify for the credit itself, it does mean that people who began the deal process to buy a home by the end of April will be able to receive the credit despite not completing the deal by the due date of June 30, which is what many home buyers are facing due to the delay in mortgage processing that has resulted from the popularity of the tax credit.

      The extended-deadline amendment to  HR 4213, the "American Jobs and Closing Tax Loopholes Act of 2010," was added onto an amendment that also extended unemployment benefits. It just barely passed before the June 30 deadline, and was written so that there will be no gap between June 30 and when it was signed by the President in early July. Home buyers will still have to show all the evidence that they entered a contract before April 30.

      So what does this mean? The newly-passed amendment eases the stress of thousands of NJ home buyers. The credit has proven to be extremely popular, which has been great for home sales, but has also led to backups in the normal time it takes to qualify for a mortgage. In addition, many first-time buyers are buying homes in foreclosure or short sale and the additional paperwork is adding to the logjam. Those of you waiting for your mortgage to clear, there is at least the bright side of amazing rates to look forward to, the best recorded by Freddie Mac since 1971, when it started following interest rates. The average annual rate for a 30-year fixed-rate mortgage (20% down) is now 4.69%. Just a year ago the rate was 5.42%. Though the low rates are a sign of the shaky economy, they are a positive for those looking to buy homes or refinance existing mortgages. No wonder mortgage brokers are swamped!