This article courtesy of RISMEDIA
Mortgage Rates Hit All-Time Record-Breaking Low
RISMEDIA, April 4, 2009-Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.78% with an average 0.7 point for the week ending April 2, 2009, down from last week's average of 4.85%. Last year at this time, the 30-year FRM averaged 5.88%. The 30-year FRM has not been lower in the life of Freddie Mac's weekly survey, which dates back to 1971 for the 30-year FRM.
The 15-year FRM was also down this week, averaging 4.52% with an average 0.7 point, down from last week when it averaged 4.58%. A year ago at this time, the 15-year FRM averaged 5.42% and has never been lower in the life of Freddie Mac's weekly survey, which dates back to 1991 for the 15-year FRM.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.92% this week, with an average 0.7 point, down from last week when it averaged 4.96%. A year ago, the 5-year ARM averaged 5.59%. The 5-year ARM has never been lower in the life of Freddie Mac's weekly survey, which dates back to 2005 for the 5-year ARM.
One-year Treasury-indexed ARMs averaged 4.75% this week with an average 0.6 point, down from last week when it averaged 4.85%. At this time last year, the 1-year ARM averaged 5.19% and has not been lower since the week ending September 29, 2005, when it averaged 4.68%.
"Mortgage rates followed other interest rates lower this week amid reports of slower economic growth" said Frank Nothaft, Freddie Mac vice president and chief economist. "The final estimate of economic growth in the fourth quarter was revised lower and personal incomes fell 0.2% in February, below the market consensus.
"On a positive note, pending existing home sales rose 2.1% in February, marking the second increase in three months as potential homebuyers are taking advantage of historically low mortgage rates and falling home prices. Serving as a spur to sales, housing affordability reached an all-time high in February 2009 since the series' inception in 1971, according to the National Association of Realtors®. By region, sales surged by nearly a third in the Northeast and Midwest, but fell in the West."
For more information, visit http://www.freddiemac.com.
This article courtesy of RISMEDIA
5 Reasons to Buy Your Vacation Home Now
By Christine Karpinski
RISMEDIA, April 4, 2009-You'd love to buy a vacation home, but (let's be honest) the recession and the not-so-dim memory of the housing bubble have you a bit skittish. If only you could see what the future holds. But since a reliable crystal ball has yet to be invented, you must resort to less mystical indicators.
According to Christine Karpinski, the National Association of Realtors® (NAR) 2009 Investment and Vacation Home Buyers Survey suggests that the iron is sizzling hot-and if you're going to strike, the time is now.
"A few years ago when prices were escalating rapidly, people were kicking themselves for not having bought earlier when real estate was far more reasonable," notes Karpinski, director of Owner Community for HomeAway.com and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment. "Well, in 2012 or so, people will look back on 2009 as another missed opportunity."
While all home sales were down significantly in 2008 (as one would expect)-and vacation property sales were down some 30%-so were real estate prices. That, of course, makes for an extremely favorable buyer's market. It's not surprising at all, therefore, that the NAR report found that 80% of vacation property and investment property owners surveyed believe that now is a great time to purchase real estate.
These sentiments echo those of Walter Molony, spokesman for NAR, who said in a recent CNBC article that the second home market is "fundamentally healthy."
"The long-term underlying demand is favorable for vacation homes because of the large number of middle-age, middle income Americans [who are the primary buyers of such properties]," Molony was quoted as saying. "In recent years, this market has been driven by the Baby Boomers, but there are two even larger population groups coming up right behind them. Those younger segments will continue to fuel this market for the next 10 years."
Karpinski says the NAR 2009 survey results, in conjunction with a proprietary Special Report done for HomeAway, constitute clear evidence that now is an ideal time to buy a vacation home.
She offers the following insights:
- Home prices are way, way down. The National Association of Realtors survey showed that the median sales price of the typical vacation home was $150,000-down 23.1% from 2007's median price of $195,000. (To put this in perspective, consider that when NAR started conducting this survey, the median vacation home price in 2003 was $190,000 and reached a high in 2004 of $204,100.) When combined with the rock bottom interest rates, says Karpinski, all signs point to the likelihood that we're now at the picture perfect time to buy.
"Anecdotally, I can tell you that people who would never have purchased a detached single home on the coast are now seriously considering it," she notes. "Homes that would have once cost $3 million have now fallen to $1.5 million. And these buyers know that the price won't stay down long, and will never be this low again."
- It's never been more obvious that real estate is a sound long-term investment. The NAR survey results revealed that the share of speculator sales is down from 29% to 16%. Combined with the fact that 34% of buyers are purchasing properties within 100 miles or less of their primary residence-which suggests they intend to use it themselves-this trend indicates that more and more people are embracing a "buy and hold" strategy. Plus, Karpinski says she constantly sees evidence that people are beginning to see the long-term benefits of real estate investing earlier in life. (The median age of vacation property buyers in 2008 was a relatively young 47.)
- The vacation home rental market is booming. While 89% of vacation property owners surveyed cited "to use for vacations or as a family retreat" as a reason for purchasing their second place answer is telling, indeed. Twenty-seven percent of respondents said they were purchasing their home "to rent to others." While this number is up from the 25% cited in last year's survey, Karpinski predicts next year's survey will really tell the tale. As recession-crunched homeowners pursue new income streams-and as it becomes ever more evident that the vacation rental market is booming-2009 will prove to be a huge turning point in the renting out of second homes.
- People are more in touch with "rental realities" than they once were. In the past, says Karpinski, a first-time vacation homeowner might have expected to rent out their property an unrealistic number of weeks (say, 50 weeks out of the year). But NAR's Special Report for HomeAway shows that 44% of respondents said they plan to rent anywhere between 9-26 weeks.
- Renting by owner has become mainstream. The NAR Special Report for HomeAway reveals that 54% of respondents plan to market their homes themselves. This do-it-yourself attitude reflects not only a burgeoning confidence index among vacation property owners, but also the wealth of support resources available to those who want to rent out their homes themselves.
Everything has changed. The truth is it's gotten so easy and so affordable that there's no valid reason not to do it yourself." Need one more reason to take the plunge? Consider the fact that last month Fannie Mae rescinded its four-property limit for investors. If you're financially secure and can come up with the requisite 20% down, chances are good you're going to easily qualify for a mortgage.
"Of course there are always risks when buying any kind of real estate," Karpinski acknowledges. "But investors who are comfortable with risk have to realize that conditions are ripe right now for a ‘perfect storm' of success. Even if housing prices do go lower, interest rates surely will not. And once the turnaround comes, selection won't be nearly as good as it is right now.
"Naturally, you should be cautious and do your homework before you buy any property-but don't be so cautious that you miss this window of opportunity," Karpinski adds. "These windows do have a way of slamming shut, and you don't want to be stuck on the other side wistfully looking in a few years down the road."
Christine Karpinski is the author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment andProfit from Your Vacation Home Dream: The Complete Guide to a Savvy Financial and Emotional Investment.
ENERGY SAVERS
According to the Office of Energy Efficiency and Renewable Energy, Americans spend more than $160 billion a year on energy. This energy-used to heat, cool, light, and otherwise keep our homes running smoothly-represents about 21 percent of the nation's total energy use. However, our impact could be smaller. Take the time to implement even a few of the following energy-efficient improvements, and the results could cut your total energy consumption by up to 30 percent.
ON THE ROAD
Drive safely-and not just when baby's on board. Any aggressive driving (speeding, rapid acceleration or hard braking) wastes gasoline and lowers your highway gas mileage by 33% and city mileage by 5%
Keep up with car maintenance. A clean air filter-important because it keeps dirt and other foreign particles from entering the engine-can improve gas mileage by as much as 10%. Properly inflated and aligned tires will improve gas mileage by 3%.
IN THE HOME
As much as 85% of the energy used for washing clothes goes toward heating the water. Switching the setting from hot to warm (cold for your colors) will cut a load's energy use in half.
Quick fixes for your dryer: clean the lint filter after every load to improve air circulation. Dry towels and heavier cottons separately from your lighter-weigh clothes. Don't "over-dry"- and if your machine has a moisture sensor (it automatically shuts off once the clothes are dry), use it.
Regularly defrost your manual-defrost refrigerators and freezers. Don't allow more than one-quarter of an inch of frost to build up. Frost buildup decreases energy efficiency.
Cover liquids, and wrap foods stored in the refrigerator. Uncovered foods release moisture and make your fridge work harder.
When shopping for appliances, think of any new purchase as having two price tags. The first and more obvious cost is the purchase price. The second? The cost of operating the appliance during its lifetime-in other words, your monthly utility bill for that appliance (likely to last you for the next 10 to 20 years). On average, refrigerators last for 13 years, room air conditioners and dishwashers last for 11, and clothes washers last for about 9.
Conduct home energy audits. If you're handy or someone in your family is a contractor, you can perform your own home energy audit to pinpoint problem areas. Look for holes or cracks in your walls and ceilings and around windows, doors, electrical outlets, and lighting and plumbing fixtures, to make sure air isn't leaking into or out of your home, and caulk inside and out, where necessary. Make sure all appliances and your heating and cooling systems are still working properly. Old worn-out equipment that doesn't function properly can lead to higher bills. Also consider using light controls, like dimmers or timers, to reduce your family's lighting-energy use.
If you don't have the expertise for the job, you can also pay for a professional energy audit. An energy auditor should do a room-by-room examination of your home, as well as a thorough examination of past utility bills. To prepare for your appointment, make a list of any existing problems, such as condensation and uncomfortable or drafty rooms, and have a summary of your home's yearly energy bills available. Visit the Residential Energy Services Network to locate an auditor in your area.
Enter your zip code into the Rebate Finder on the Energy star website (www.energystar.gov) to find out about rebates and other offers in your area.
HEATING AND COOLING
Water heating is the third largest energy expense in your home, typically accounting for about 13% of your utility bill, so lower the thermostat on your water heater. A setting of 120 degrees provides comfortable hot water for most uses.
Install a programmable thermostat. Replacing the older, manual kind is an easy and inexpensive way to conserve energy, when used properly. Setting the thermostat to a lower temperature at night when everyone is snug in bed or during the day when kids are at school and parents at work can save your family $150 a year or more depending on its settings.
Take advantage of natural lighting to regulate the temperature in your home. Keep blinds closed during the summer, especially on those windows facing the sun, but open during the winter.
Forget about shortcuts. Setting your air conditioner to run colder than normal when you first turn it on won't cool your home any faster. If anything, the lower setting will lead to excessive cooling and, more chilling news, higher bills.
Buy an air conditioner that's the right size for the room. An air conditioner that's too big will perform less efficiently than a smaller, more appropriately sized unit. Room units work best running steadily over a longer time instead of constantly switching on and off, which is more likely to happen if the unit is too big for the space.
Keep lamps and TV's away from your air conditioner's thermostat. It will sense the heat from these appliances, which could cause the AC to run longer than needed.
Place your AC unit on the north side of your house and/or in the shade. A unit operating in the shade uses as much as 10% less electricity than one in the sun.
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