Entries in Home Buyer (13)


To Buy or to Rent? New Analysis Says Buy in Much of US

Stockbyte/Thinkstock(NEW YORK) -- Is it better to buy a home or rent?  An analysis released on Thursday by real estate information provider finds that in most of the U.S., buying becomes a better deal than renting after only three years of residence.

In many metro areas, the advantage comes much sooner. In Miami, Fort Lauderdale, and Tampa, for example, owning beats renting after 1.6 years, the study finds. 

Zillow determined the breakeven horizon -- the point at which owning becomes more financially advantageous than renting the same home -- for more than 200 metro areas and 7,500 cities around the U.S.

Unlike a simple purchase price-to-rent ratio, the breakeven horizon takes into account such other data as taxes, tax deductions, down payments, utilities, appreciation, maintenance, opportunity costs and fluctuations in the rental market.

"People traditionally have looked at the price-to-rent ratio," Zillow senior economist Svenja Gudell told ABC News.  "But that's not comparing apples and apples.  Our calculation takes into account all costs, plus tax deductions and inflation.  It would be very hard for the average consumer to crunch these numbers."

The shortest breakeven horizons occur in markets such as Florida's, where home values fell farthest during the recession.  The ownership advantage there kicks in after less than two years. In other markets, however, where values have held, the advantage comes far later.  In San Jose, Calif., for example, the time is a little over eight years. San Jose had the longest breakeven horizon of any of the 30 largest metro areas Zillow studied.

Within metros, the study found big variations between one city and the next.  In the San Francisco Bay Area, for example, a homeowner breaks even after 8.8 years; while in a similarly-priced home in Menlo Park, the time required is a bit over 14 years.

Metros with the longest horizons (besides San Jose) include Oak Harbor, Wash., and Santa Cruz, Calif.  Those with the shortest include Memphis, Tenn., and Fernley, Nev.

Gudell said it would be a mistake to conclude that buying always is the better option.  Everything depends, she said, on the metro area and the length of stay.  For lots of folks who occupy their home a year and a half, renting remains, she said, "a solid option."  In the right metro, it even can pay off for persons staying as long as five or six years.

Here are the 30 metro areas Zillow examined and their breakeven horizons (in years):

  • Miami-Fort-Lauderdale, Tampa -- 1.6
  • Detroit -- 1.7
  • Phoenix -- 1.7
  • Orlando, Fla. -- 1.7
  • Las Vegas -- 1.7
  • Riverside, Calif. -- 2.0
  • Dallas-Ft. Worth -- 2.1
  • Pittsburgh -- 2.1
  • Cincinnati -- 2.1
  • Cleveland -- 2.4
  • Columbus, Ohio -- 2.4
  • Atlanta -- 2.5
  • St. Louis -- 2.5
  • Denver -- 2.5
  • Minneapolis-St. Paul -- 2.7
  • Charlotte, N.C. -- 2.7
  • Chicago -- 2.8
  • Baltimore -- 2.8
  • Philadelphia -- 3.0
  • Sacramento, Calif. -- 3.1
  • Washington -- 3.5
  • Portland, Ore. -- 3.5
  • San Diego -- 3.6
  • Seattle -- 4.0
  • Los Angeles -- 4.3
  • Boston -- 4.3
  • New York -- 5.1
  • San Francisco -- 5.9
  • San Jose, Calif. -- 8.3

Copyright 2012 ABC News Radio


Bidding for Arizona Home Starts at a Penny

Courtesy Todd Talbot(GLENDALE, Ariz.) -- A 4-bedroom, 2-bath Arizona home with wood-burning fireplace, appraised at $125,000, is being auctioned for bids of a penny each, in what the promoter believes is the first auction of its kind on the Internet.

Penny auctions for electronic and other kinds of consumer goods are already common, but this appears to be the first such auction for real estate.

Bidding opened last week.  An open-house on Sunday sent offers skyrocketing from Friday's high of 5 cents to Monday's 15 cents.

Todd Talbot, creator and owner of the website, describes the 1,749-square foot property as a completely remodeled, "turn-key" home, just waiting for the winning bidder to move in.  He bought it at foreclosure in January for $81,000, then put in $20,000 of improvements.  The home has new carpet in the bedrooms and living room, new paint, new fixtures and, in the kitchen, new cabinets, granite counter tops and appliances.  It sits on a corner lot at 6214 West Acoma Drive in Glendale, Ariz.

Asked if he isn't a little disappointed that the high bid is 15 cents, Talbot says, "Well, it's early in the process."

Bidding closes Tuesday at 5 p.m., Arizona time.  Most of the action, he says, will come late.

"We have people signing up to bid from all over the country," Talbot says.

At 5 p.m. on Tuesday, he explains, "Open bidding will end, and 20-second extended bidding will begin.  At that point a 20-second timer clock will start a countdown.  If someone bids during that time, the clock automatically re-sets for another 20 seconds.  This will happen until no one bids during the 20-second period."

The auction is then over, and the last registered bidder will be the winner.

There's a reserve price of $2,750 on the home (meaning that's the minimum for which it can sell).  Talbot expects the winning bid could as little as $5,000.

Because of the reserve, he says, "I was a little afraid nobody would bid."  So, he initiated some incentives.  The person who places the highest number of bids during the reserve period automatically gets $15,000; the person with the second highest number gets $5,000.

Copyright 2012 ABC News Radio


Home Prices Edge Up, but Have They Hit Bottom?

Stockbyte/Thinkstock(NEW YORK) -- After almost five years of weakness in the housing market, have home prices reached bottom?

The widely-used measure of U.S. home prices, S&P/Case Shiller Home Price Indices, showed housing prices increased 0.9 percent in July from June, but areas are still below levels from one year ago.

The Case Shiller 10 and 20 city composite indices showed a fourth consecutive month of increases.

“With July’s data we are seeing not only anticipated monthly increases, but some fairly broad improvement in the annual rates of change in home prices,” David M. Blitzer, chairman of the Index Committee at S&P Indices, said in a statement.  “This is still a seasonal period of stronger demand for houses, so monthly price increases are expected and were seen in 17 of the 20 cities.”

Prices increased in cities including Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Miami, and Tampa.

Declines were recorded in Las Vegas and Phoenix, while Denver showed no change in the month.

Detroit’s housing market finally showed signs of growth. Detroit and Washington, D.C., were the two metro areas that showed price increases over the year, up 1.2 percent and 0.3 percent, respectively, from July 2010.

With historically low mortgage rates, is now the time to buy a home? Most buyers want to make sure the market hits rock bottom first.

Earlier this month, Freddie Mac announced fixed-rate mortgages fell near 60-year lows as investor concerns over the European debt market keep Treasury bond yields low.  The 30-year fixed rate mortgage averaged 4.09 percent, a new all-time low.  The 15-year fixed rate mortgage, a popular refinancing option, according to Freddie Mac, also reached a new record low, averaging 3.30 percent.

In a statement, Blitzer said despite seeing four consecutive months of increasing home prices, “we do know that we are still far from a sustained recovery.”

Eighteen of the 20 cities that the Case-Shiller report analyzed show home prices are still below where they were a year ago.  The 10-City composite is down 3.7 percent and the 20-city composite is down 4.1 percent compared to July 2010.

“Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery,” he said.

On Monday, the Commerce department reported that new home sales slid for the fourth consecutive month to a 295,000 unit annual rate for August, a 2 percent decline versus the prior month’s revised pace.  Many economists say at least double the number of houses must be sold for the housing market to be considered robust.

Copyright 2011 ABC News Radio


Housing Hunting? Five Tips to Cash In Smart in a Buyer’s Market

Steven Puetzer /Getty Images(NEW YORK) -- The Labor Day holiday weekend is generally a popular time to go house hunting, and in this buyer’s market, this weekend will be no different.  In fact, it promises to be a good time to get big bargains.

But you should do your homework to avoid common -- and costly -- mistakes.

Gerri Willis, host of The Willis Report on the Fox Business Network, appeared on ABC's Good Morning America on Friday to answer five common questions about bargain house hunting.

1. How Can I Get a Good Deal?

Consider foreclosed homes and short sales, Willis said.  Foreclosed homes cost 39 percent less than homes that are not in foreclosure, and homes that are being offered on short sale cost 20 percent less, she added.

2. Even if I pay a low price, how can I tell whether I’m buying in an area where my property values will go up?

People will be drawn to place where prices have gone down -- Las Vegas and Detroit, for example, Willis said.  But she also said that you don’t have to buy in those places.  Her advice?  Investigate the local economy.  That means you should check unemployment rates to see whether they’ve gone up or down.  And make sure local businesses comprise a diverse mix of industries.

3. People often underestimate how much money they’re going to have to put in to a fixer-upper.  How do I avoid that mistake?

This is the biggest mistake that people make when they buy a fixer-upper, Willis said.  Those who are purchasing a property as an investment must see it firsthand, and they should walk through the property with a contractor who can take a look at the work that needs to be done and provide you with an accurate estimate of just how much the renovations will cost, she added.

4. Can I roll the cost of renovations into my overall loans?

When banks are selling foreclosed homes cheaply, buyers who need financing are often caught in a bind because lenders often will not lend money until repairs are completed, she said.  But the Federal Housing Administration runs the 203K rehab loan program -- which only requires a 3.5 percent down payment, she added.  This program allows buyers to add renovations costs into the mortgage.

5. I don’t expect to see a bidding war in this market, but could it happen?

Smart people are going to put a really good price on their home if they want it to sell quickly, and that will attract many buyers.  If it’s a nice home, people will start to outbid each other, driving up the price.  Do not fall for this, Willis said.  There are too many well-priced homes on the market for you to ever get into a bidding war, she said, adding that you shouldn’t tell yourself one particular house is your “dream house,” because there will always be others.

Copyright 2011 ABC News Radio


Mortgage Rates Tumble to Near All-Time Low

Digital Vision/Thinkstock(MCLEAN, Va.) -- In addition to this being a buyer's market because of the continued plunging prices of homes, mortgage rates are near an all-time low.

Freddie Mac's weekly survey says that 30-year fixed-rate home loans are now being offered at 4.15 percent.  Prospective buyers would have to go all the way back to 1950 and 1951 to find a deal like that when long-term fixed-rate mortgages averaged 4.08 percent.

Shorter-term fixed-rate loans have also bottomed out with a 15-year fixed-rate loan now at an average rate of 3.36 percent.

It's possible these rates could sink lower, which might also sink spirits of people who want to buy a house but can't swing it right now because of economic hardships.

Copyright 2011 ABC News Radio


Homes Over $10 Million Prove to Be a Tough Sell in Connecticut

Stockbyte/Thinkstock(GREENWICH, Conn.) -- Any home grand enough to have a name, you have to figure, is going to be pricey -- and "Point of View" in Greenwich, Connecticut doesn't disappoint.  The six-bedroom, 20,000-square-foot mansion overlooking Long Island Sound has an atrium, a library, a gallery and an indoor pool that, with the touch of a button, converts into a ballroom.

The 175-foot suspension bridge connecting the estate to its boat dock was designed by John Roebling & Sons -- makers of the Brooklyn Bridge.  The $42.5 million manse seemingly has everything, except a buyer.

Like some 50 other homes priced above $10 million in this haven for Wall Street hedge fund managers, it sits forlornly awaiting a buyer.  How long might it have to languish?  In February, a 10,000-square-foot pile finally sold (at a discount of close to 30 percent) after having languished on the market 630 days.

In an improving real estate market, these homes stand out.  "The Greenwich market overall," says Mark Pruner, an agent with Prudential Connecticut Realty, "is doing well."

Ordinary shacks -- homes priced at $4 million to $5 million -- have practically been flying off the shelf by comparison.  Between Jan. 1 and the end of April, says Pruner, six sold, reducing the inventory of homes in this range to a little over 13 months -- the inventory of $10 million homes during the same period was over six years.

In May, things improved a bit.  A property listed at $10.75 million sold for $9.1 million after 294 days on the market.  Another went for $11 million in a private sale.  A third is under contract, with an offer price of $14.75 million.  The result: supply has dropped from six years to four.

So why aren't mansions moving? Agents blame several factors, starting with Wall Street's rewarding its star players with bonuses that contain a smaller percentage of cash. The $10 million-and-up market has traditionally been a cash market, Pruner says. Sellers of these homes tend to be people who can afford to wait.  Further, they poured money and personality into creating unique residences, from which they are reluctant to part.

Pruner thinks he's detected another reason. "There's been a lifestyle and attitude change," he says.  "The desire for 'big-living' is gone.  People are buying houses that fit the size of their family, that they're comfortable in. They're not buying to show off anymore; they're not buying houses as investments."

Copyright 2011 ABC News Radio


Foreclosures Made Up 28% of Home Sales in First Quarter

ABC News(IRVINE, Calif.) -- Almost a third of all the homes sold in the U.S. during the first three months of this year were in foreclosure, according to the latest figures released Thursday by RealtyTrac.

The listing firm said foreclosed properties accounted for 28 percent of sales, the highest percentage in a year.  During the same time period in 2010, 29 percent of home sales were in foreclosure.

According to RealtyTrac, the average price of a foreclosed home in the first quarter of 2011 was $168,321, down nearly two percent from the last three months of 2010.

With bank-owned properties being priced nearly 27 percent lower than homes not in foreclosure, potential homebuyers stand to land a good deal.  However, as RealtyTrac notes, bank-owned properties continue to be a drag on the housing recovery.

“While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties sold to third parties,” said RealtyTrac CEO James J. Saccacio.  “While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery."

"At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure,” Saccacio added.

Copyright 2011 ABC News Radio


Cheap Prices Help Spike Home Sales; Mortgage Rates to Rise

Comstock/Thinkstock(NEW YORK) -- After taking a beating, the housing market got a boost Wednesday when the latest report on existing home sales found that purchases for six out of the past eight months went up.

Relatively cheap prices are partially behind the upswing.

"Prices are at the highest affordability level that we've seen in the past decade," says Ken Shuman with, a homes sales wesbite.

Mortgage rates are also still very low but that soon may change, according to Shuman.

"As inflation begins to rise we'll see mortgage rates rise with that," he says.

"I think we'll see interest rates not only rise in the next two to three months but we'll see interest rates rise throughout the entire year actually," Shuman adds.

Despite the positive trend, home sales are still at depressed levels compared to a few years ago.

Copyright 2011 ABC News Radio


Existing Home Sales Rose 3.7 Percent in March

Stockbyte/Thinkstock(CHICAGO) -- Existing home sales rose 3.7 percent in March to an annual pace of 5.1 million, according to the latest figures released Wednesday by the National Association of Realtors.

NAR spokesman Walter Molony says the latest report is a good for the housing market.

"Buyers are responding now to very affordable home prices and low interest rates.  And home sales have risen now in six out of the past eight months so we're on a recovery path, even with tight mortgage credit," Molony says.

Molony adds that an improving economy and projected increases in rents are playing a role in moving buyers back into the housing market.

"We've been seeing them come back on their own without a tax stimulus," he says.  "And some renters now are looking to home-ownership as a hedge against inflation."

Despite the progress last month, Molony notes that existing home sales are "still 6.3 percent behind a year ago when we had a tax credit."

Copyright 2011 ABC News Radio


Buy Now: Jump Start Your Savings for a House Down Payment

Stockbyte/Thinkstock(NEW YORK) -- Despite the real estate meltdown, consumers are still being advised to buy a house as soon as possible.

Buying a house is still the only investment you can make with money you have to spend, anyway -- your monthly housing payment.  You can't buy stocks with your rent money, but you can buy a home.

It's especially a great way to save money if you plan to live in the house for at least five years; buy a house within your means and not stretch for a fancier one; and save up at least an old-fashioned 20 percent down payment.

To save up for a 20 percent down payment, you'll need to make some changes to save big.  Here are some ways to pile up savings:

-- Negotiate your rent.  Assuming you are renting now while you save up for your first home, approach your landlord and threaten to leave unless you get a reduced rate.  If you're a good tenant, they'll likely comply.

-- Never buy a new car.  Cars depreciate an average of 45 percent in the first three years.  So buy a three-year-old vehicle and you will save 45 percent.

-- Shop around for car insurance.  The same coverage at another company could be hundreds or thousands less.  While you're at it, consider raising your deductible and canceling collision and comprehensive coverage if you have an older car that is not worth repairing if you wreck it.

-- Become a creative couponer.  Fiendishly match up store sales with manufacturer coupons and you can save as much as 80 percent on groceries.  Also, if you currently shop once a week, cut out one out of every four trips to save 25 percent.

-- Set a spousal spending limit.  Resolve that you and your spouse will not spend more than X dollars without each other's permission.  This does wonders to prevent pricey impulse buys.

-- Cancel cable.  The average American household pays more than $700 a year for it!  Check out the website for ideas to see all your favorite shows without cable.

-- Right-size your cell phone plan.  Use the tremendous tools at to see if you are paying too much for cellular service.  You upload your bill and the website tells you if you should switch plans or even carriers.

-- Switch to a high-deductible health plan.  This is great advice if you are healthy.  You can save several hundreds each year, almost enough to cover the new, higher deductible itself should something go wrong.

-- Check out first-time homebuyer assistance programs.  They are offered in most every state and maybe you won't have to save up such a big down payment after all.  Some of these programs help with your down payment, others snag you a lower interest rate.  Here's a website to find your state plan: 

Copyright 2011 ABC News Radio

ABC News Radio