Homeownership has taken a justifiable beating lately. Housing prices have tumbled and sales are still declining. Markets are glutted with foreclosures from people who borrowed too much or lost a job and were unable to sell. And while your friendly Realtor will happily tell you about the opportunities this strife creates, buying a home for its appreciation possibilities is still an iffy venture, especially if you can’t or won’t give the market time to find its long-term footing.

But if you are looking for a place to live a while—and not a property to flip—buying remains the option that gives you both value and, yes, freedom.

Let’s strip away the big picture for a moment. It’s trendy to blame homeownership for the financial mess we’re in, but that’s like saying that eating leads to obesity. It’s not the act that causes the problem. It’s how poorly you do it—and banks and borrowers engaged in loans they shouldn’t have.

But for most of us, owning a home still makes financial sense. Lost in the pop of the housing bubble is some simple math: If you rent, you write a check and never see that money again. If you buy, and you’re prudent and patient about it, you probably will.

It’s called equity. If you’re paying $1,000 a month in mortgage on a standard 30-year fixed rate loan at, say, 5 percent interest—then $2,700 of those payments goes toward the principal of the loan in the first year. That means if you sell the home, you have to pay the bank $2,700 less than the amount you borrowed. The next year you’ll add $2,900 more to that total, and that annual number will go up each year. Plus, the interest you pay is often tax deductible.

If you rent, not only do you get less value by often paying more per square foot than homeowners, that hypothetical $1,000 each month is gone.

And for those renters who point to the supplementary expenses that come with homeownership, such as property taxes and insurance? If you believe your landlord isn’t passing those expenses on to you, then you probably think the car dealer really did throw in those floor mats for free.

Same thing for those household repair costs renters think they’re avoiding. Not only will you eventually pay in rent for the air conditioner that broke in your apartment, you’re also probably paying for part of the unit that died in one of your landlord’s other properties.

But beyond the repairs you have to do, the value of homeownership comes from the changes you want to make. If your carpet is worn or merely ugly, you don’t need permission to improve the place you live. You don’t have to split the cost for something that’ll raise the value of someone else’s property. You don’t have to worry that the landlord might subsequently cut corners with inferior workers or materials.

If you’re a tinkerer, you might be able to do some of these things yourself, which not only will improve your home’s value but make it a more personal investment. Owning a home, however, does not bring a lifetime sentence of fix-it-ups. If, like me, you’re not such a handyman, you can mow your lawn and call it a weekend. It’s your choice.

And choice is what homeownership brings. You can choose a neighborhood or street where you can put down roots without having to worry about a landlord selling your place or booting you out. You can choose a comfortable monthly payment without worrying that it’ll be bumped up in a year, and then maybe again the next year.

*taken from http://www.houselogic.com/news/articles/Homeownership-its-about-value-freedom-and-mowing/

Take housing data in context to get the full picture

The news headlines of the last 48 hours are enough to get any consumer rattled. Media outlets across the country are shouting far and wide about a “double dip housing recession” and housing sales that have “plunged 33 percent.”

I think it’s important to put these numbers in context, and help our customers understand that national media headlines are not always reflective of the entire picture of our real estate markets.

Let’s break down a couple of this week’s rather dramatic headlines.

New home sales plummet to record low (CNNMoney.com)

The U.S. Commerce Department reported Wednesday that new home sales declined almost 33 percent from April levels, to a seasonally adjusted rate of 300,000 sold units. Year-over-year, this number represents an 18.3 percent decline in sales.

Here’s what you need to know and communicate to your customers:

• This sales report is for new construction homes, not existing homes that have resold. The headline says “new home sales,” for sure, but the media does little to clarify that this report is for new construction sales only.
• Further, new construction sales made up only 5 percent of all home sales in May. The vast majority of the market was existing home sales.
• Due to the seasonality of home sales, month to month increases or declines are far less pertinent than year-over-year changes.  

Housing sales decrease in May, dashing hopes of quick recovery (The Washington Post)

The Washington Post may be located in Long & Foster’s territory, but it’s not necessarily a local publication. This article, and many like it, reported existing home sales figures released this week by the National Association of Realtors. These numbers are reported on a national level.

NAR reported that sales of existing single-family homes, townhouses and condos fell 2.2 percent from April to a seasonally adjusted rate of 5.66 million units in May. On the heels of big sales gains the previous two months, the media positions this number as representing a housing market that lost momentum toward the end of the tax incentive period.

Here’s what you need to know and communicate to your customers:

• Sales vary greatly by region—even by county. With the market recovering at different rates—even within the Long & Foster footprint—consumers will increasingly rely on their Long & Foster sales associate to communicate the dynamics of their local market. This is why we launched The Long & Foster Market Minute for more than 100 metro areas we serve. This data is not only local, it’s updated monthly. Share it with your customers to give them the real existing homes sales picture for their region.
• Looking at existing home sales in a broader context, year-to-date sales as of May climbed at least 10 percent (tracking right alongside Long & Foster’s sales, as I reported in my last WIN). Further, compared to May of last year, May’s sales were up 19.2 percent. There are definitely some bright spots in these numbers that don’t tend to make the headlines or initial paragraphs of most news reports.
• As we expected, the market did see a decline in written contracts in May following the wrap-up of the tax credit period. Much of May's decrease was due to the pull-forward phenomenon we experienced in April.  

Keep yourself informed of the real story behind housing data. If you’re informed, you’ll be better equipped to educate your buyers and sellers about what’s really happening in their markets.