How Labor Day can Effect Housing Affordability!

As we get closer to Labor Day, volume on Wall Street is dwindling as market players get a head start on their long weekend.

Today could be a difficult day to shop for mortgage rates and that can impact home affordabilility. 

Expect volatility.

This is because mortgage rates are based on the price of mortgage bonds and, on Wall Street, bonds trade a lot like stocks.

There has to be a buyer and a seller at a specific price to make a deal.

With so many traders on vacation today, though, there are fewer opportunities to match buyers and sellers.  This can cause mortgage prices rise or fall faster than on a "normal" day, directly leading to mortgage rate volatility.

Each 0.125% mortgage rate increase is an extra $96 cost per $100,000 borrowed on a principal + interest home loan.

For a light-volume trading day, there is a lot of information for markets to digest:

• The weather reports on Tropical Storm/Hurricane Gustav
  
• Reports that inflation is rising
  
• Reports that Consumer Spending is slowing
  
• Ongoing political tension between the U.S. and Russia

By themselves, each of these points can move markets. Together, however -- and aided by Labor Day -- they can move markets a lot.

Mortgage bond pricing is fluid, changing every minute of every day.  Today, those changes will be exaggerated and, as an example, in the first 30 minutes of trading, mortgage rate pricing swung from rate improvement to rate deterioration in a flash.

Homeowners Benefit from Lower Housing Starts!

Housing Starts measure the number of new housing "units" on which construction has started and in July, Housing Starts fell to its lowest levels since March 1991.

For homeowners, this is a welcome bit of good news because as fewer homes are built, there is less inventory from which home buyers can choose, making their homes a more important part of the existing home inventory.

With fewer homes for sale, the supply-and-demand curve shifts in favor of home sellers and this adds a support floor for home prices. In addition, with less new construction , those homes built in the past few years become more attractive to potential home buyers who are looking for the newest home possible.

For home buyers, though -- and for the opposite reason -- the low number of Housing Starts may not be as welcome.

With fewer new homes on the market, owners of "used" homes may feel less pressure to lower their asking prices or to make other concessions to interested buyers. This means that home buyers may pay more for a home, or get fewer "throw-ins" on the contract.

For all of the hocus-pocus that surrounds real estate data, in the end, home prices are based on the supply of homes versus the demand for homes. When supply outpaces demand, home prices fall.

Homebuilders learned this lesson and July's Housing Starts data supports that.

(Image Courtesy: Wall Street Journal Online)

First Time Buyers to Receive Tax Credits up to $7,500

Photo Courtesy of Creativecommons.org

The President signed into law the Landmark housing legislation yesterday. The law is designed to help the housing industry and the credit industry recover from the mortgage melt-down of the past year, and provide stability in the financial markets. Those portions of the bill are important, but some sections of the law impact first time home buyers in a manner they will immediately feel.

One part of the bill does impact "the average buyer" immediately in an important manner. This portion provides a tax credit of up to $7,500 for first time home buyers, whose individual incomes are less then $75,000 or married couples who earn less than $150,000 jointly. The tax credit can be used for homes purchased between April 9, 2008 and July 1, 2009, and should stimulate home buying, reduce excess supply in housing markets and shore up home prices.

The Tax Credit is based the purchase price of the property, being 10% of the purchase price, up to $7,500 (meaning that for most first time home buyers , the credit will be $7,500).

A comprehensive lists of questions and answers about the tax credit program can be found at the National Association of Home Builder's web site www.federalhousingtaxcredit.com.

Selling Smelly Houses is Hard!

Neutralizing home odors is an important part of preparing a home for sale but it's not always so easy. Every home has a unique odor that's ground into carpets, walls, fabrics. Cooking at home plays a big role, too. And people being who we are, we become accustomed to those smells because we are exposed to them every day, but a potential buyer who walks into our home msy hsve s different tske on those odors!

Remember, just because a home is listed for sale doesn't mean that the kitchen is off-limits. You still need to live and using that kitchen may generate smells that are attractive to you , but to an outsider, not so much!

This 2-minute video from About.com offers a bunch of smell-related kitchen tips, including:

• Removing "the fish smell"
  
  
  
• Fighting the aroma from deep-fried foods
  
  
  
• Getting stubborn smells from hands

When your home for sale, the last thing you want buyers paying attention to is your dinner from the night before. Watch the video, read the transcript, and cook fear-free in your own home -- listed for sale or just planning on company.

What's the Job?

The job of the real estate salesperson is one of the most misunderstood jobs in America. Most sellers think that the job of the real estate agent is performed by placing a sign on a property and waiting for someone to come in to their office to buy the property.
In reality, the real estate agent and their firm perform a variety of jobs for the seller. These jobs are all aimed at helping to facilitate and coordinate the activities of the real estate marketplace.
This is more than just showing the property. It means the marketing efforts which are used to promote the property to other agents and their firms as well as the end user. Much of the agent's work involves these indirect marketing efforts. For example a salesperson will usually have to fill out the forms to submit the property to one or more Multiple Listing services. The agent will also usually have to design and complete a highlight sheet to be used by salespeople who are showing the property. They may design a flyer to be sent to other offices to promote the listing. The agent should schedule the property to be previewed by the agents of their firm. They will either place a sale sign, or arrange for one to be erected if the seller permits. The agent will arrange for property descriptions to be distributed to the agents in their firm, detailing the special instructions for appointments. If the property is to be marketed at an open house a more complex marketing tool is usually designed to be distributed to buyers, and additional signs and advertising is scheduled for the event.
When other agents wish to see the property, the agent will schedule the appointments at the seller's convenience, and then follow up the appointment to discern what if anything can be done to make the sale to that buyer, or to increase the marketability of the property for other prospective buyers.
If the property is not being shown, or offers are not forthcoming, the agent should recommend some adjustment in the marketing situation. Either a price adjustment or some cosmetic changes or some change in the advertising program.
When offers on the property do come to the seller, the agent will review the terms and conditions, and should advise the seller of any potential problems, or guide them through the counter offer process.Finally the agent will assist the seller during the period between acceptance of an offer and the time of final settlement, explaining all of the documentation, obtaining inspectors or contractors, and representing the seller at the settlement table.