Most of us have a basic understanding of what goes into buying a home. After saving enough for a down payment and getting pre-approved for a mortgage you can start your home search and make an offer once you're ready. But before you ever set foot in that new house of yours, there are going to be quite a few costs that come up, many that you may not be expecting.
In order to prepare yourself, you should be fully aware of all the costs that go into buying a home. That way, you won't be surprised at any point during the process.
Earnest Deposit: Although the earnest deposit is part of your down payment, it has to be made right away. This deposit is required in order to show that you the buyer are indeed serious about the property. It's generally in the amount of 1 percent of the value of the property's sale price or $1,000. It is just a deposit though, so you can get that money back up until the point when you remove your contingencies.
Home Inspection: Although the home inspection is generally considered part of closing costs, it's another fee that you have to pay upfront. Home inspections are essential to the buying process since they could uncover any potential structural flaws in the property. Home inspections generally range from $300 to $500. If you end up walking away from the property due to something you found in the home inspection you'll be out at least $300.
Renovation and Improvements: If your home isn't in the best of shape, you may want to consider renovating it before you move in. It's a lot easier to put new floors in or paint the walls before you have all your furniture moved in. Most homebuyers tend to forget about the initial renovation costs, so be sure to factor that into your calculations. A good rule of thumb is to assume that renovations and improvements will total about 1 percent of your purchase price. Of course, this can increase drastically depending on the condition of the house.
Move-In Costs: Any time you're moving into a new home there are lots of major expenses to consider. Everything from buying boxes to hiring an actual moving company will add up. And the further you move geographically, the higher your costs will be. Keep in mind that if you're moving into a community with a homeowners association, you will likely have to pay an initiation fee. Make sure that you get the details ahead of time since you don't want to be fined by your HOA in your first week at your new property.
New Appliances and Utilities: Some houses come with a refrigerator, washer and dryer, but if yours doesn't, be sure to factor that into your calculations. You will also have to contact utility companies and cable TV/Internet companies in order to get your new service hooked up -- there may be small fees for this as well.
Real-Estate Agents' Fees: This is probably one of the biggest hidden costs when it comes to buying a house because they won't ever show up on any piece of paper. Generally, the sellers pay real-estate agents' fees for both the buyer's and seller's agents (3 percent each) but those costs often will be reflected in a higher sale price.
Maybe it's about protecting an investment, or maybe it's about doing the right thing, or maybe it's a bit of both, but a millionaire landlord in Houston says that he's on a mission to make the crime-plagued neighborhood where he owns apartments a much safer place to live. And for starters, he's reportedly living on-site, spending millions on security, and instituting extraordinary rules for his tenants that include a curfew and dress code. He's also said to have evicted several residents.
"He's very bold," one of Steve Moore's tenants, Jenny Fouteaux, told KTRK-TV in Houston. "He do things I wouldn't do around here." That's included a 10 p.m. curfew and prohibitions against too much clothing (such as baggy, loose-fitting jeans) or too little (as in too revealing). And while tenants such as Fouteaux say that they have have welcomed the change, there's been strong resistance too. "I got a death threat," Moore (shown at left in the above photo) told the TV station," 'cause I figured out who was dealing drugs and gave them an eviction notice." [See its video profile of him below.]
Among the most recent to be evicted, says KTRK, is the family of a 16-year-old who was shot in a domestic disturbance at another apartment complex that Moore and his fellow investors own.
While Moore's decision to live on-site appears extraordinary, in Texas and some other states a landlord can be held liable for illegal activities on their properties even if they are unaware of it, and in some cases can have their properties closed. In most states landlords are expected to at least promote a secure and crime-free environment or run the risk of prosecution or a lawsuit, with Nolo.com pointing out that they're "especially likely to be held liable when a crime occurs on property where a similar assault or other crime occurred in the past."
NEW YORK -- A U.S. judge is considering an alternative that could result in Bank of America paying much less than the $863.6 million the government is seeking as a penalty for the sale of defective mortgages before the financial crisis.
At a hearing Thursday, U.S. District Judge Jed Rakoff in Manhattan asked the bank and the Justice Department to brief him on the alternative, which is based on the grains rather than the losses resulting from the sales.
The hearing followed a jury verdict on Oct. 23 in which a federal jury found Bank of America (BAC) liable for fraud for selling substandard mortgage to government sponsored mortgage finance companies Fannie Mae and Freddie Mac.
The verdict was a big win for the government in its efforts to hold Wall Street accountable for the financial crisis, and the Justice Department has requested a penalty based on the gross losses Fannie Mae and Freddie Mac incurred.
But at Thursday's hearing Rakoff said he wanted a "more full presentation" on how to calculate the penalty based instead on how much Countrywide gained through the fraud, calling it a simpler approach.
The judge said that his comments shouldn't signal how he will ultimately rule. Rakoff said he would issue a decision sometime in February.
A penalty based on gains rather than losses would likely be significantly smaller than prosecutors in U.S. Attorney Preet Bharara's office have requested. Evidence the government presented at trial indicated that Countrywide made $165.2 million selling the loans.
The case, launched in October 2012, focused on a mortgage lending process at Countrywide called the "High Speed Swim Lane," or alternatively "HSSL" or "Hustle," that the government said emphasized speed and quantity over quality.
The Department of Justice wants Bank of America to pay $863.6 million based on the gross loss incurred on the HSSL loans by Fannie and Freddie, which the government took into conservatorship in 2008. The Justice Department has also asked that Rakoff require that former Countrywide executive Rebecca Mairone, who was also found liable by the jury, pay $1.1 million.
"We're here to assess civil penalties, the purpose of which is to deter and punish," Jaimie Nawaday, a lawyer at the Justice Department, said in court Thursday. She urged the judge to award a penalty based on the losses through a "broad interpretation" of the Financial Institutions Reform, Recovery, and Enforcement Act, a law passed after the 1980s savings-and-loan scandals.
The law, which carries a lower burden of proof than criminal cases and a 10-year statute of limitations, has become central in a wave of Justice Department investigations focused on the financial crisis. But Rakoff prodded Nawaday on why assessing a penalty based on Countrywide's gain rather than loss isn't "a more natural way" to look at the case.
"The point of a fraud is to get money you're not entitled to," he said.
Kenneth Smurzynski, a lawyer for the bank at Williams & Connolly, urged the judge to find that the maximum penalty allowed under the statute was $1.1 million, and asked Rakoff to use his discretion to award nothing. He also criticized the government's calculation of Fannie and Freddie's loss, saying it ignored that they continued to receive value from the mortgages.
"What the government calls gross loss is simply preposterous," Smurzynski said.
But Rakoff questioned how Bank of America could be right that under the law the maximum penalty could just be $1.1 million, saying a finding like that would provide a "windfall" in a massive fraud case. "That wouldn't serve any deterrent value at all," Rakoff said.
Marc Mukasey, a lawyer for Mairone at Bracewell & Giuliani, urged the judge to be lenient with his client, saying she had been "punished enough already" through enduring publicity connected to the case. He urged that no penalty be awarded against Mairone, 46, saying he did not expect the bank to indemnify her for any award.
"Just because someone committed an act that in the eyes of the jury and maybe the court is a legal violation, it doesn't mean you're a bad person," he said.
The case is U.S. ex rel. O'Donnell v. Bank of America Corp., et al., U.S. District Court, Southern District of New York, No. 12-01422.
NEWARK, N.J. -- The American Civil Liberties Union has sued the Federal Housing Finance Agency, asking it to disclose efforts to stop municipalities from using eminent domain to bail out underwater homeowners and make its dealings with the financial industry more transparent.
The ACLU, Center for Popular Democracy and other nonprofits filed a freedom of information lawsuit against the FHFA on Thursday in federal court in San Francisco.
Richmond, Calif., was the first city to officially codify the divisive foreclosure fighting plan, which has drawn zealous opposition from Wall Street and Washington. Two lawsuits challenging the use of eminent domain have been thrown out, but will likely be refiled. The city has not yet used eminent domain to seize a mortgage. (Pictured above, a worker removes furniture from a foreclosed home in Richmond in July 2012.)
Irvington, N.J., is moving forward with the strategy, and the city council in Newark took its first steps toward moving forward with a plan Wednesday. Yonkers, N.Y., is considering it, but other places have scrapped the idea because of opposition from banks or legal hurdles.
The agency said in August it may initiate legal challenges against municipalities that want to use eminent domain to fight foreclosures and could direct regulated entities to stop doing business in those places. The nonprofits said most of the cities exploring the use of eminent domain have been besieged by foreclosures and have predominantly low-income, minority populations.
The nonprofits filed freedom of information requests with the agency in October, seeking communication between agency leadership and representatives of the banking, mortgage and financial industry, and records of meetings between the agency and financiers, among other requests.
The FHFA acknowledged, but did not complete, the requests, according to the lawsuit, so the groups sued. The nonprofits are asking for the documents to be procured on an expedited basis.
"The FHFA has taken an aggressive stance on this issue in a way that has harmed minority communities. The public deserves to know why," said Linda Lye, a staff attorney with the ACLU of Northern California, in a statement.
An FHFA spokeswoman said the agency is not commenting on the lawsuit.
By using eminent domain, municipalities can circumvent mortgage contracts, acquire loans from bondholders, write them down and give them back to the bondholders with reduced principals. According to Cornell University law professor Robert C. Hockett, who devised the plan, only government has the power to forcibly sidestep mortgage contracts.
The tactic only works with so-called private label security mortgages, or ones that are not backed by the federal government. The FHFA oversees government-backed loans owned by Fannie Mae or Freddie Mac. They cannot be seized by eminent domain.
The lawsuit said one of the agency's "statutory mandates is to help the housing market recover," and threatening to sue municipalities that try to use eminent domain conflicts with that obligation.
"By threatening legal action," the suit said, the agency "effectively blocks the communities hit hardest by the foreclosure crisis from pursuing one potentially effective solution on behalf of their residents." The suit also said the agency's threats to deny credit to communities raises Fair Housing Act and Equal Credit Opportunity Act concerns.
Members of the financial industry have said they fear using eminent domain could be a slippery slope, and penalizes people who save and invest in mortgage-backed securities. In Washington, Texas Republican Rep. Jeb Hensarling and California Republican Rep. John Campbell proposed legislation that would bar the federal government from backing mortgages in places that use eminent domain to seize mortgages. SIFMA, a group that represents security firms, banks and asset managers and 11 other groups sent a letter to Congress opposing the use of eminent domain.
Last month, 10 members of Congress sent a letter asking the head of the FHFA to rescind its threat to sue places that use eminent domain.
It's been said that spring and early summer are the best times to sell your house. Competition among buyers can be fierce during these warm months and for whatever reason, the data has consistently shown that homes sell for more in spring and early summer. Maybe there's something psychological to warm weather that entices buyers or maybe it has something to do with the fact that families want to settle in before the school year starts in the fall.
Either way, it's not always possible to choose when to put your home on the market. But while spring might be the busiest time of the year for real estate transactions, homes get bought and sold every season of the year. Here are some tips for selling your home in the off-season.
Staging for Snow: In many parts of the country it gets cold and snowy during the winter. If you live in a climate where snow is prevalent, make sure that you stage the outside of your home accordingly. Shovel the driveways and be sure to clear ice away from walkways and doors. Buyers want to feel safe and comfortable when they're looking around.
Just because your grass is brown or your house is covered in snow doesn't mean you can't stage it successfully. Try to highlight the house with tasteful winter-themed decorations like Christmas wreaths and aesthetically-pleasing lighting. Houses for sale in the winter tend to show especially well when they're decorated for the holidays.
Seeing decorations, lights and presents under a Christmas tree can create a warm feeling for buyers. And it might help your house seem even more attractive than it would be in the warmer months. Make sure that you choose tasteful decorations, though, that will appeal to a wide variety of buyers.
Leave the Lights On: Once daylight saving time ends, it can get dark pretty early. Consider putting your outdoor lights on a timer. That way, when prospective buyers show up, the house will look bright and cheery instead of dark and dreary.
You can apply the same idea to the inside of your house too. Make sure that the heat is on before buyers arrive and that the place is clean, smells fresh and is warm. First impressions are everything in real estate so you really want to "wow" buyers when they pull up to your house and walk inside.
Stand Out From the Competition: During the winter months, there may not be as many buyers but there also aren't as many sellers. Often times, off-season buyers need to move quickly, whether due to job relocation or major life changes, so be ready for them.
In order to make your property stand out, consider adding a video to your listing or creating a small website to showcase your home. When there's less competition out there, you can end up getting more for your property if you're willing to go that extra mile.
WASHINGTON -- Average U.S. rates for fixed mortgages rose sharply this week, making home-buying slightly less affordable.
Mortgage buyer Freddie Mac said Thursday the average rate on the 30-year loan jumped to 4.46 percent from 4.29 percent last week. The average on the 15-year fixed loan increased to 3.47 percent from 3.30 percent.
Rates have risen a full percentage point since May after the Federal Reserve signaled it might slow its bond purchases by year's end. Rates peaked at 4.6 percent in August.
Mortgage rates have stabilized since September, when the Fed surprised markets by taking no action. And rates remain low by historical standards. The Fed meets later this month and could slow the bond purchases if the economy shows further improvement.
The bond purchases are designed to keep long-term rates low.
The increase in mortgage rates has contributed to a slowdown in home sales over the past two months. But the government reported Wednesday that purchases of new homes ramped up in October after three months of soft sales, evidence that the housing market is improving fitfully.
Sales of new homes increased 25.4 percent to a seasonally adjusted annual rate of 444,000 in October, the largest monthly percentage increase since May 1980.
And in another sign of potential economic strength, the Commerce Department said Thursday the economy grew at a 3.6 percent annual rate from July through September, the fastest since early 2012. But nearly half the growth came from a buildup in business stockpiles, a trend that could reverse in the current quarter and hold back growth.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage fell to 0.5 point from 0.7 point. The fee for a 15-year loan dropped to 0.4 point from 0.7 point.
The average rate on a one-year adjustable-rate mortgage ticked down to 2.59 percent from 2.60 percent last week. The fee was unchanged at 0.4 point.
The average rate on a five-year adjustable mortgage jumped to 2.99 percent from 2.94 percent last week. The fee declined to 0.4 point from 0.5 point.
Criminal charges are being sought against a landlord in Oklahoma after three young girls were hospitalized with burns in a fire at one of his rental homes, which authorities say lacked a working smoke alarm. Agent Judah Sheppard with the Oklahoma Fire Marshal's office told an Oklahoma City TV station this week, "We believe based on statistics, the smoke detector would have given them an earlier warning and possibly gotten them all out without any injuries." It's the first time that Sheppard has sought such charges against a landlord in seven years on the job, reports KWTV News 9.
The girls were airlifted to Oklahoma City, then Dallas, for treatment of their injuries in the Nov. 20 fire in Purcell, Okla., according to police. Their mother, Jennifer Epperson, was also reported to have suffered burns in trying to help the girls escape. A neighbor told KWTV that Epperson credited their escape to a neighbor who noticed the flames as he passed by at about 2 a.m. and knocked on their door to alert them.
Although the fire was ruled accidental, Agent Sheppard says that the Eppersons' landlord, Neil McElderry, owns other properties which, tenants have told him, also lack working smoke alarms. McElderry is hardly the exception, Sheppard said. "This is a huge problem across the state of Oklahoma that landlords are not putting this in for people." If charged, Epperson would face a fine.
If the allegations are true in McElderry's case, you might expect him to know better. Though Sheppard said that the landlord owns at least 200 rentals in the Purcell area, that's not McElderry's only business. He's also, says KWTV, the owner of an insurance agency. [See the station's report in the video below.]
Although Oklahoma is far from alone in requiring landlords to keep smoke detectors working, fire safety experts advise renters to check to make sure detectors are present and operating when they move in and, if not, that they ask landlords install and maintain them. (Many local fire departments even offer programs to install them.) It's also recommended that renters themselves test the detectors monthly.
To some degree, every home is the owner's castle, but these homes take it a step further. With stone walls, turrets and even a guard shack, these residences would fit into medieval Europe, or perhaps a Harry Potter novel.
A gleaming addition to Miami's waterfront will greet the art world elite as they jet into town this week for the 12th edition of Art Basel Miami Beach: a $131 million art museum the city hopes will anchor its burgeoning cultural scene. "Our cultural infrastructure has evolved," said Thom Collins, director of the Perez Art Museum of Miami, also known as PAMM, which officially opened Wednesday. "We know people come here because they want the (tropical) environment. We needed to give them something that addresses our main competition, the beach."
From sprawling, shaded verandas dotted with greenery, the Herzog & de Meuron-designed waterfront museum offers stunning vistas of Biscayne Bay and downtown Miami's high rises. (Pictured above is a view of the museum and surrounding buildings at its ribbon-cutting.) Inside the yawning space, architects used rough wood flooring and ceiling-high hurricane-proof windows to allow the building to blend into the existing landscape. "The ingredients here are cement, water, vegetation and sun, and the building should respond to these things," said Jacques Herzog, whose firm famously converted a London power plant into the Tate Modern and designed San Francisco's de Young Museum in Golden Gate Park.
Outside a plaza is being built designed by landscape firm James Corner Field Operations, renowned for the New York's elevated High Line park in Manhattan. Since the first Art Basel Miami Beach, a spinoff of the fair held for decades in the Swiss city of the same name, Miami has undergone a cultural renaissance. Across from the convention center that hosts Art Basel is a Frank Gehry-designed symphony hall flanked by a large park where hundreds gather regularly to watch projections of the performances inside the building broadcast on its exterior.
"People now think there is a component of Miami that includes art and culture," said Carlos de la Cruz, a prominent Miami art collector who in 2009 opened a privately funded 30,000 square foot exhibition space filled with works from his family's private collection, including works by Felix Gonzalez-Torres, Gabriel Orozco and Rudolf Stingel. "They wouldn't have thought of that 20 years ago, and Art Basel is what put that idea there."
The Wynwood neighborhood, a once-blighted area just north of downtown Miami, is now home to graffiti murals by world famous artists and galleries that attract collectors from around the world.
In the Design District, award-winning restaurants buzz throughout the year and luxury retailers like Louis Vuitton and Cartier have taken up nearby storefronts.
Miami's image as a rising cultural center has also been a boon for its volatile real estate market.
"Most people can't believe the changes," said Jorge Perez, chief executive of the Related Group, known as the "Condo King" of Miami. "Art has been one of the great catalysts in producing this great reaction to Miami and it translates most clearly in the real estate market," he added, citing a new boom in luxury condo construction in the Miami area, with some buildings featuring high-priced art installations to attract buyers.
The hot real estate market has also attracted some high-profile firms, including Iraqi-born British architect Zaha Hadid, designer of a futuristic 62-story tower across the road from the new art museum, as well as Denmark's Bjarke Ingels Group and Britain's Lord Norman Foster. Yet the museum, partially funded by a $100 million public subsidy, came under fire in 2011, when Perez, a poster child for the city's real estate collapse, got his name attached to it thanks to a donation of cash and art valued at $40 million.
Perez, who came under fire when billions of dollars of Related Group projects went into foreclosure, fired back at his critics, saying his intent with the museum was not only to burnish his own legacy, but to inspire more philanthropy from other wealthy Hispanics in the city. "Many times we've gotten the rap that either because we're young migrants, or because we don't have a tradition of giving we haven't given our fair share to philanthropy," he said. "Hispanics will be part of the mainstream of philanthropy it won't just be Guggenheim, Getty and Whitney. You'll also have Gonzalez and other Hispanic names that are becoming more and more a part of the economic mainstream."
Miami remains a relatively young city, decades away from becoming a prominent art center outside of the week surrounding Art Basel and a host of satellite fairs. Many of the skyscrapers that now line the water were not there a decade ago and the region lacks major industries and major artistic educational institutions found in other cities. But art boosters say the new museum, like the Art Basel, will bolster Miami's credibility as a global art hub.
"I think it's going to be a Miami icon without trying to do anything other than being a really great museum," Terence Riley, former curator at New York's Museum of Modern Art, said during a public talk in November. "It's going to be considered one of the most important contemporary museums anywhere," added Riley who helped launch PAMM.
For many homeowners, the thought of refinancing can be less appealing because the clock resets each time you re-mortgage. Essentially, you could be turning back the clock to 30 years each time you refinance. In some circumstances, especially if you're a few years away from paying off the debt in full, a refinance might not make sense. You're in luck though. For the overwhelming majority of homeowners, there are ways to refinance without starting over a new loan term.
A Real-Life Example: Let's start with the most popular mortgage term, a traditional 30-year fixed-rate mortgage. Whether the purposes are strictly payment reduction, interest rate reduction or cash-out purposes, the loan-term will start over a new 360 months, no two ways about it.
With rates near a low 4 percent, opportunities to reduce payment by virtue of rate reduction are still plentiful. When starting over a new term, and the payment is reduced, the key is to make the same payment on the new mortgage made on the current loan sought to be paid off. Doing so will ensure you benefit from lower interest expenses, a faster payoff time and, of course, ability to make lower 30-year payments should your financial situation ever change.This scenario is best described in a real-life example:
The original loan amount taken out in January 2009 is for $300,000 on a 30-year fixed-rate mortgage, with a 5.5 percent current balance of $282,000 and a mortgage payment of $1,703.37. The new loan on a 30-year mortgage at 4.375 percent on same principal balance of $282,000 means a new mortgage payment of $1,407.98. That's a savings potential of $296 per month on a new 30-year mortgage.
A prudent consumer with stand to benefit by taking out the new 30-year mortgage over one full percentage point lower in interest in exchange for the savings just shy of $300 per month. By making the $1,703 monthly payment, rather than the payment of $1,407.98 that would actually be due each month, the loan would be paid off in 21.3 years instead of the current 26 years remaining with the higher interest rate. Moreover, this homeowner could always revert back to the lower monthly payment in case of financial hardship. As long as the same payment that was being made on the previous loan is made on the new loan that contains a lower monthly payment, the loan can be paid off much sooner.
Your Refinancing Options: 30-Year Term: A higher monthly payment would have to be made instead of the lower payment that's presently due to have the effect of a faster principal balance reduction. It's going to require consistent diligence to to adhere to making an overpayment each month beyond the payment that's actually due. It's easy to fall off the wagon, so perhaps a shorter-term fixed-rate payment would be more suitable. 25-Year Term: This is the next best option for homeowners looking to chip away at that principal over time. You can be mortgage-free five years sooner than the traditional 30-year term in exchange for a higher payment. Using our previous example of the loan amount of $282,000, payment is $1,154, an extra $141 per month to not have to worry about making an extra principal prepayment using our scenario. 20-Year Term: This loan is paid off at 240 months, which is 10 years shorter than taking the 30-year term and making the extra principal prepayment. Again, expect a higher monthly payment without the ability to revert back to a lower payment. 15-Year Term: This optionprovides the fastest payoff, in exchange for a payment that is nearly double the new 30-year mortgage for an additional 15 years of being mortgage-free.
It is important to be mindful of the fact that not all of the rates on each of these programs are the same. Oftentimes, the shorter the loan's term, the lower the interest rate. For example, the 15-year mortgage is priced at the lowest rates. Why is this? Fifteen-year mortgages are much more attractive to the secondary mortgage market because most mortgages are refinanced every five to seven years. A 15-year mortgage means the borrower is paying more interest in a shorter period of time, thus making the loan more attractive to an investor. Expect 15-year loans to run one full percentage point lower in rate than its 30-year counterparts.
4 Tips to Make Sure You're Not Resetting:
o. If you decide to take the 30-year option and make higher payments, make sure you can handle making extra principal prepayment.
o. Make sure the total new loan amount is lower than your original balance (this would include not cashing out your mortgage unless you switch to a shorter term such as a 20-year term or a 15-year term).
o. The interest rate should be the same or lower than the rate on the loan currently being paid off.
If mortgage insurance exists on the loan being paid off and the new loan contains a higher interest rate, the removal of the mortgage insurance greatly offsets even a slightly higher interest rate on the new refinance. PMI removal greatly aids in ability to make a monthly principal prepayment.
WASHINGTON -- Sales of new U.S. single-family homes recorded their biggest increase in nearly 33½ years in October, suggesting the housing market recovery remains intact despite higher mortgage rates.
The release of both the September and October reports was delayed because of a 16-day partial shutdown of the government last month.
Economists polled by Reuters had expected new home sales to set a 428,000-unit pace last month. Compared with October last year, new home sales were up 21.6 percent.
The strong rise in new home sales, which are measured when contracts are signed, suggested higher mortgage rate had not derailed the housing market recovery.
Higher mortgage rates have slowed the pace of home sales, but demand for accommodation as household formation continues to recover from multidecade lows is keeping demand supported.
Home resales fell in October for a second straight month and confidence among single-family home builders has ebbed somewhat since nearing an eight-year high in August.
Strong new home sales in October saw the stock of houses on the market falling 3.7 percent after touching their highest level in nearly three years in September. Despite the tight supply of properties, the median price of a new home slipped 0.6 percent from a year-ago.
At October's sales pace it would take 4.9 months to clear the houses on the market, down from 6.4 months in September. A supply of 6.0 months is normally considered as a healthy balance between supply and demand.
NEW YORK -- Applications for U.S. home loans tumbled in the latest week, led by a sharp slide in refinancing applications, data from an industry group showed Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, sank 12.8 percent in the week ended Nov. 29.
The week's results included an adjustment for the Thanksgiving holiday last Thursday, the group said.
The data marked the fifth straight weekly drop for the index, taking it to its lowest level since early September.
The fall in mortgage applications comes as investors try to gauge when the U.S. Federal Reserve might exit its bond-buying program.
The Fed has said it would begin to scale back its $85 billion a month in purchases of Treasuries and mortgage-backed securities when policy makers are convinced of a steady, self-sustaining recovery.
But data on the world's biggest economy have been mixed, leaving investors uncertain about the future path of U.S. monetary policy.
MBA data showed 30-year mortgage rates rose 3 basis points in the latest week to 4.51 percent.
The refinancing index sank 17.5 percent while the purchase index, a leading indicator of home sales, fell 4.1 percent.
The mortgage survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.
Like something out of a fairy tale -- a creepy, nightmare-inducing fairy tale about abandoned children and cannibalism -- but not so Grimm, a chef in Texas has constructed the largest gingerbread house in the world, and one so big that you could easily live inside it. The holiday-themed edible house -- purportedly the first of its kind built outdoors (at least since "Hansel and Gretel") -- has set a Guinness World Record by being more than 39,000 cubic feet.
And it wasn't easy, admits its baker and builder, Michael Menchaca (pictured at right) the executive chef at the Texas A&M Traditions Club in Bryan, Texas. As he says in the video above, the recipe had to be altered to suit the elements. That recipe, reports Austin TV station KVUE, included "1,800 pounds of butter, 7,200 eggs, 7,200 pounds of flour and 3,000 pounds of brown sugar." The calorie count of the home, which to qualify must have an entirely edible exterior, totals at 36 million.
But it wasn't built to be eaten -- at least not yet -- but to raise money for a charitable cause. About $15,000 so far has been donated by visitors toward a local hospital's trauma center, said KVUE.
Bryan TV station KBTX reports that tours of the home will continue through Dec. 14.
We might not quite be in the age of "The Jetsons" yet, but there are quite a few gadgets on the market than can make you feel a little more like you're living in the future. More than something to just keep you connected the web, your wireless network can now be used to keep you connected to your home or home office while you're out on town, ensuring that your home stays safe and even making sure you have what you need to make breakfast in the morning. Here are five of our favorite gadgets in the growing connected-home market that would even give the Jetsons' robot assistant Rosie a run for her money:
1. Lockitron: The Lockitron is a Wi-Fi-connected door lock that allows you to lock and unlock your door using your smartphone. The $179 lock is simple to install and works with any smartphone -- as well as older phones via SMS message -- to lock and unlock your door on command. As an admin, you can grant access to whomever you want, for any time period you want. So, you can give your neighbor a virtual key to go let your dog out when a meeting runs late, or pass out virtual keys to your whole family while they're visiting. An online log lets you see when your door is locked and unlocked and by whom. [See more about it in the video below.]
2. Dropcam Pro: This nifty gadget is a $199 Wi-Fi-connected camera that can be used as everything from a baby monitor to a home surveillance system. With Dropcam Pro, you can tune in to a live feed from the camera from your smartphone or computer no matter where you are in the world, and a built-in speaker and microphone allow you to communicate through the camera. Push-notifications alert you when there's movement in the camera's view -- for instance, your front door opening -- and an optional subscription service records and stores the video feed from your camera in the cloud. Since video is stored off-site in the cloud, you'll be able to access it even if your camera is stolen in a burglary, a feature that has already help nap a few criminals.
3. Belkin WeMo Switch: Belkin's $49.99 WeMo switch turns any outlet in your home into a "smart" outlet. The device plugs into your standard electrical outlet, allowing you to control it from anywhere on the planet through Belkin's free WeMo app. You can use the app to turn on a light when you're not at home, or even just turn on a fan that's located across the room. Outlets can also be programmed to turn on and off at any time you specify. [See more about it in the video below.]
4. Koubachi Wi-Fi Plant Sensor: This device gives anyone a green thumb. Koubachi's Wi-Fi plant sensor comes in both indoor and outdoor varieties and measures soil moisture, temperature and light intensity for your plants. The sensor alerts you if your plant needs some extra water or fertilizer, or would benefit from being relocated to a sunnier spot. Koubachi's indoor sensor is priced at $99, and its outdoor model costs $129. [See more about it in the video below.]
5. Egg Minder: This is a connected-home gadget for your refrigerator. The $69.99 Egg Minder smart egg tray keeps track of the number of eggs you have in your fridge and sends you push notifications when you're running low. More than just for keeping track of how many eggs you have, the tray can also let you know which of the eggs in your tray is the oldest and notify you when it thinks one of them is going bad.
Homeownership used to be considered the American Dream. Most baby boomers grew up with a goal of owning their own home. Now, many members of the younger generation question whether it is a good idea to buy real estate.
No wonder -- having watched the housing market collapse five years ago, combined with a difficult job market, buying a house or condo may not be a wise move anymore. Homeownership has been steadily falling from its high of 69.2 percent in 2004 to a current rate of 65 percent, according to the U.S. Department of Housing and Urban Development. So, is it a good idea to buy a house or condominium? To be clear, this is a question about purchasing real estate as a residence, not as an investment. When considering whether to buy, there are three major issues to consider: liquidity, return on investment and the personal use value.
Liquidity is the first issue to consider. Buying or selling real estate is timely and costly. It is generally not a good idea to make a purchase unless the property is expected to be owned for a long enough time period to recoup expenses and not result in a fire sale if circumstances require moving. For example, it may not be a good decision to buy a one-bedroom condominium if you expect to have a child in the next few years or to commit to a house if a pending job change may require you to relocate to another city. Obviously, if there is the possibility of buying a new house without selling the first, the illiquidity of real estate is not a problem. However, most people don't have enough liquid cash reserves to invest in multiple houses and wait out the market for an opportune time to sell.
A second issue is the return on real estate. Real estate has not seen the same capital growth as the stock market over the past quarter century. Nonetheless, real estate provides diversification to a portfolio and returns can be amplified by leveraging the purchase with a mortgage. For example, an individual buying a house for $100,000 with a $20,000 down payment will realize appreciation on the full $100,000 from the date of purchase. Although the rate of return on housing does not change, the gain on the investment is significantly higher.
Finally, it is important to consider the personal-use aspect of housing when making a purchase. This concept can actually work in two directions. When purchased as a residence, houses are providing personal use as well as an investment return. This means a homeowner can live in the house and avoid paying rent while also experiencing gain on the house through appreciation. Yet that appreciation is locked in because the homeowner cannot tap into it without selling the house and losing the place to live.
The personal use of a house is very important. An initial comparison between renting and buying might compare rent to combined costs of mortgage, maintenance, insurance and taxes. However, this does not take into consideration particular attributes of mortgage payments, which is that they are fixed and finite. The principal and interest portion of a fixed mortgage will remain the same over time (although taxes and insurance might rise) whereas rental costs will increase. In addition, the mortgage should eventually be paid off, providing the homeowner with a rent-free place to live. This can be a great planning technique for retirement -- if the mortgage is paid off at the time of retirement, there will be a reduction in expenses at the same time income falls.
Although the personal-use aspect of a house brings benefits to the homeowner, this also means the investment return is difficult to access for other uses. If a family downsizes its house as children leave home and less space is needed, then cash can be pulled out. Other ways cash can be taken out come from using a home equity loan or a reverse mortgage. However, many people are reluctant to use reverse mortgages to tap into the investment value of their house. Reasons for this hesitation include high closing costs, reduced inheritance left to family, continued responsibility for maintenance, tax and insurance and the need to pay off the loan if the house is sold.
The bottom line is that owning your residence can be a good decision financially, provided it does not cause liquidity problems and provided there are separate sources of retirement income. However, each individual or family is unique and will have to evaluate their options based on their specific circumstances.
One reason for the slowdown is that the figures aren't adjusted for seasonal patterns. Prices usually decline in the fall and winter, when sales slow.
Still, big gains in previous months, along with higher mortgage rates, may be pricing some buyers out of the market.
Home prices have risen 12.5 percent from a year ago. The increase could encourage more sellers to put their homes on the market, easing a shortage of homes for sale.
Only 1.88 million homes were for sale at the end of October, down 2.1 percent from the previous month and the fewest since March.
The shortage of inventory has slowed sales. Home re-sales fell in October for a second straight month to a seasonally adjusted annual pace of 5.12 million, the lowest since June, according to the National Association of Realtors. That pace is still 6 percent higher than it was a year earlier. But it's below the roughly 5.5 million sold each year in healthier markets.
Some sales were delayed in October due to the 16-day partial government shutdown, the Realtors' group said. The shutdown prevented the IRS from verifying incomes, a critical part of the mortgage-approval process. Those sales may have been pushed into November or December.
But a measure of signed contracts to buy homes fell for a fifth straight month in October. That points to weaker final sales in the coming months. Final sales typically occur one to two months after contracts are signed.
According to CoreLogic (CLGX), prices rose in October from the previous year in all states except New Mexico. The biggest gains were in Nevada (25.9 percent), California (22.4 percent), Georgia (14.2 percent), Michigan (14.1 percent) and Arizona (14 percent).
Ninety-six of the 100 largest metro areas reported price gains from the previous year. That's down from September, when all 100 cities reported gains.
The biggest increase was in Riverside, Calif., with 24.1 percent, followed by Los Angeles (22.1 percent), Atlanta (16.4 percent), Phoenix (15.9 percent) and Chicago (12.3 percent).
Home prices are still about 17 percent below the peak reached in April 2006, according to CoreLogic.