Interesting article by John E. Girouard, real estate contributor for Forbes. It is nice to hear a balanced view on homeownership in a world full of sensational news headlines.

Buy That Dream House Now Or Wait Until Prices Fall Further?

Is it time to buy that house we always wanted, or should we wait until prices fall further?

As a financial planner, I’m often asked that question and it frustrates me to hear otherwise rational people talking about home ownership the way a speculator might talk about the price of gold. Nobody needs gold, but everyone needs a place to live.

If you’ve found the house you love, you intend to make it your home for the long haul, and the financials add up, why would you wait?

Talk about the collapse of real estate prices destroying the American Dream makes good headlines but it simply isn’t true. Yes, it may feel bad to know that the house you bought in 2006 has lost a big chunk of its market value. But if you can afford the mortgage payments and upkeep, you bought it intending to live there for a decade or more, and you leverage that asset to its best advantage as part of your financial portfolio, the state of the real estate market is irrelevant.

Trying to time the housing bottom is as much folly as trying to time stocks or any other investment vehicle. In fact, it’s greater folly because if housing prices do fall further, it’s likely to be because mortgage rates are rising, which would mean that over the long term that slightly lower price you may have paid could end up costing more in carrying costs than you saved. Furthermore, how much lower could prices go? The economy can’t get much worse than it’s been in the past three years and the difficulty in getting a mortgage couldn’t be much greater.

My answer to those who ask whether now’s the time to buy a house is that the American Dream is and always was alive and well. It has nothing to do with the direction of housing prices but everything to do with your financial situation, income stability, ability to shoulder the costs, and if the home you have your eye on is your version of the American Dream—a home you love that you hope to live in for an extended period.

The financial benefits of home ownership haven’t changed and neither has the math.Here are a few basics to consider:

Waiting could be costly. A further decline in real estate prices might occur but may come with a price tag in the form of higher interest costs.

Renting may make more sense. Home prices rise on average over long periods of time by about the same rate as inflation—historically about 3% a year. Unless you plan to live in your home for a decade or so, you may be better off renting—it takes about a decade for the value of a home to rise enough to offset the fees, commissions, and other expenses incurred in the purchase and sale of a home.

Mortgage math favors 30 years. Opting for a 15-year mortgage to save on interest expense is mathematically unsound. Mortgage debt is good debt so long as the interest payments are tax deductible and you hold the home for at least ten years. My rule of thumb is to try to keep the net cash expense to carry the mortgage below the annual increase in the property’s value, assuming the historical growth rate of about 3%. If the value is rising more than the cost of servicing the mortgage, you’re building wealth.

Home equity earns you zero percent. The dollars of principal you pay back to the bank as part of your mortgage payment become locked up in your home and can’t be put to work earning money in another vehicle. Instead, extra dollars that might be spent on a shorter mortgage can be invested in conservative investments that offer compound interest, ideally with tax benefits.

Cash is all that counts. Most people describe the increase in their home’s value as if they had paid cash in full. My rule of thumb is that the increase should be based on how much cash you put down—what you actually have at risk. If the home for which you paid $500,000 has risen 3% and is now worth $515,000, but you only put down $100,000 cash and borrowed the rest, your return is 15% before interest and other expenses. Grasping the difference matters because it’s misperceptions like that which often drive our choices.

Forget about market tops and bottoms. Whether you buy a home at the top or bottom ultimately shouldn’t matter if you’re buying into the American Dream and plan to see it through. If you bought at the top, it’s foolish to assume your home’s value is destined to go back up there anytime soon. The house that cost twice as much in 2006 as it does now was never worth twice as much to begin with. Regardless of where the home market is headed, the house you love today that you can afford and plan to live in for the long term is the house you should buy. In time, the highs and lows end up smoothing each other out. Meanwhile, you’re putting money in the piggy bank every time you make a mortgage payment that includes principal.

 Moving into a new home brings with it a lot of emotions, particularly for families moving with children. Excitement and enthusiasm are coupled with anxiety and apprehension as to whether children will take to the new home and neighborhood. Carefully preparing children for the move, both practically and psychologically, will help ease the transition and make the process smoother and more enjoyable for the entire family.

We have been helping families move for years and offer the following advice on how to make sure children of all ages cope with the home buying process and the big move.

Finding a New Home

Communicate. Maintain an open dialogue with children about the decision to move to a new house. Engaging them at the beginning of the process will give them time to get used to the idea and ultimately accept the change. Explain the reasons behind the move, and answer questions truthfully. However, early discussion does not mean it is necessary to bring them to every single home being considered, especially very young children. Once the choices have been narrowed down to perhaps two or three, bring them to the homes so they can begin to feel familiar with new surroundings. 

Listen. Listening to what children are saying about the move is just as important as talking to them about it. By paying close attention to their statements and reactions, parents can alleviate any fears. This is especially important for school-age children and teenagers who may be reluctant to leave their friends and classmates. Avoid being dismissive of their social concerns; acknowledge them and remind them about the new opportunities that await them.  Focusing on the positives of the move may help settle down anxious children.

Explore. After deciding on a new home, a real estate sales associate can help a family discover their new neighborhood. He or she can point out the playgrounds, community centers, recreation areas and other areas important to the children and help make the environment seem more familiar. 

Moving In

Comfort. Pack up the children’s rooms last to minimize disruption. The longer they feel secure in their own rooms, the easier the transition will be. Then, set up their new bedrooms first so they feel like they’re back in familiar surroundings. And do not completely redecorate the children’s rooms in the new home; maintain continuity so the children feel secure. It is very important to return to normal routines as quickly as possible, so set up the kitchen second. Try to serve meals at the same times as before, so there is not too much change all at once.

Engage. Show the children all of the other rooms in the new home and let them participate to a degree in decorating decision-making. By accepting input on decoration, parents will make their children feel like they are part of the process.

Surprise. Arrange for special treats to be waiting for everyone at the new house. New games or new cuddly friends will keep the children busy during unpacking and make the first memory of the new house a pleasant one.

Image Credit: furniturehomedesign.com

Interest in the environment and green building has moved beyond installing energy efficient appliances and swapping out incandescent light bulbs for compact fluorescents. With luxury condos touting eco-friendly features like rain water recycling and construction companies incorporating energy saving features into new homes, it’s no wonder real estate professionals say more and more potential home buyers are asking about “green homes.”

With demand for environmentally friendly homes blossoming across the country, one way to make a home stand out in a stalled real estate market is to retro-fit it to green standards. Below are some helpful tips on how to make your home sustainable, energy- and cost-efficient now, to appeal to eco-conscious homebuyers later.

Replace hardwood floors with renewable materials. While hardwood has been the flooring of choice for the past several years, bamboo floors are much more eco-friendly because bamboo grows quickly and can be easily replaced. In the kitchen, linoleum floors, made from solidified linseed oil, wood flour or cork dust over a burlap or canvas backing, is very eco-friendly compared to modern floor coverings made from polyvinyl chloride.

Don’t flush away your money. Consider replacing existing commodes with low-flow toilets which use approximately 20 percent less water per flush, or dual-flush toilets with two buttons to give home owners the choice of flushing with a half- or full tank.

A ray of light. In many neighborhoods, owning a home on the north side of the street has always been more desirable than ones on the south side. South-facing windows provide more natural daylight, making a home more bright and cheery. More importantly, natural daylight helps keep indoor climate comfortable during the winter months, allowing a homeowner to lower the thermostat. Alternatively, drawing shades during key daylight hours during the summer can help cut down on air conditioning needs.

Green gardening. Sustainable landscaping is becoming all the rage to eco-conscious home owners. Planting native plants, vegetation and shade trees strategically around a home will keep it cool during the summer and block cold winds during the winter. Native vegetation thrives in its preferred environment and won’t require excess water. In addition, concrete driveways and patios can be replaced with permeable paving materials, allowing water to pass through to the ground, in turn reducing runoff that erodes soil and causes flooding of sewer systems.

Switch to green power. The use of renewable energy in a home, such as solar, wind, water or geothermal, greatly helps reduce pollution. However, installing solar panels or wind generators can be enormously expensive. Today, many utility companies in the U.S. are offering home owners an option to purchase a form of renewable energy that does not cost much more than conventional energy. The government also offers many financial incentives to home owners who install renewable-energy systems.

For more helpful suggestions, or information about how we can help you sell your property, please feel free to contact us!

For most couples, buying a home is the most significant purchase they will ever make together. While the prospect of owning a home is an exciting one, it can often seem overwhelming, especially for those who are new to the real estate process. From selecting a neighborhood to deciding how to use a spare room, navigating the world of homeownership together requires some extra work. However, couples will be thankful they put in the additional effort when the “sold” sign is posted on the home of both of their dreams.

Here are seven simple tips that will ensure a “harmonious house hunt” without rocking the relationship:

Get pre-approved for a loan

There are few things worse than finding the perfect home, only to find out that it costs more than one can afford. Before beginning the house hunt, I recommend getting pre-approved for a loan. A pre-approval will let couples know where they fall financially while informing the mortgage company that they are ready to buy. Additionally, being pre-approved for a loan can help speed up the closing process once an offer has been accepted.

Set a budget.

Beyond basic income and savings, there are a number of other financial elements to consider before setting a price range for the new home. Once a couple has decided on a location, they should consider its proximity to their family, jobs and a good school for children and gauge travel costs. The next step is to add up monthly bills, including the couple’s car payments, phone bills, insurance costs, groceries, and credit card payments. This total estimated cost of living should be factored into the couple’s overall budget.

Get on the same page.

Whether it is a quiet neighborhood or a two-car garage, everyone has their own “must haves” when it comes to the home of their dreams. For a couple looking for a home to share, it is important to discuss each of their essentials before beginning the search. Keep in mind that agreeing on all of the features of a future home will likely be impossible, so be prepared to compromise. Once the list of “must haves” is finalized, contact a real estate professional who can determine if the expectations are realistic given the homes currently on the market.

Allocate additional funds.

The down payment on a new home is just one of the significant financial aspects of a move. Even after both people’s belongings are combined there will likely still be a need to purchase furniture and other items like a washer and dryer which will require additional budget. The last thing a couple will want to do is start out their life together with nothing in the bank!

Be patient.

A Coldwell Banker survey found that women are likely to make up their minds faster than men. Almost 70 percent of women surveyed decided the day they walked into the house that it was right for them, while 32 percent of men needed two or more visits. It will likely take multiple trips to the home before both members of the couple decide it is “the one.” If a spouse needs more time, be patient and try not to pressure them.

Take inventory of everyone’s belongings.

Before moving into a new home together, each member of the couple should make a list of the furniture they plan to keep and compare it with their partner’s. There may not be a need (or a place) for three televisions and two kitchen tables in the new house. Consider selling unwanted pieces of furniture online, or holding a garage sale. The money made is sure to be put to good use on purchases for the new home.

Sign a contract.

For a couple who has yet to walk down the aisle, it is important to contact a real estate attorney before closing on a home. A contract should be drawn up outlining who is responsible for what expenses and how assets will be divided in the event of a split.

Upgrading your kitchen is not only a great way to instantly add sophistication and a fresh style your home, but is also one of the smartest investments you can make when considering the resale value of your home.  For example, just by investing in quality solid surface countertops you can have the piece of mind that they will keep their beauty for generations and will be a great selling feature down the road.  Below is our list of the 3 most popular solid surface options to help you start thinking about what is best option for you and your new designer kitchen!

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