It's Home Buying Season: New Home Sales Surge

Though there was lots of snow and wintery bluster in many parts of the country, that didn't stop consumers from making the decision to buy a home. Home builders signed contracts on more homes in February 2015 than any time since early 2008 according to the Census Bureau and HUD. February seasonally-adjusted annual new home sales topped out at 539,000, up 7.8% from a healthy 500,000 in January.

Sales increased a whopping 153% in the Northeast region but that was a make-up from an overabundance of snow in January that slowed the rate of sales to its lowest level in the 43 year history of the series. Sales were up 10.1% in the South to the highest level since early 2008. Sales were down 6% in the West but back to the level established in the fourth quarter of 2014. The Midwest saw a slight softening in sales (down 12.9% monthly and 3.6% annually) but still within the range of sales in the fourth quarter of 2014.

Inventories dropped slightly to 210,000, which with the increased sales rate, dropped the month’s supply to 4.7 months. Builders were able to sell an increased share of their homes from inventory in December and January. Along with the rise in sales suggests an improved starts picture in the future.

Prices rose 2.6% from February 2014 to a median of $275,500. The shift is due to more sales at the upper end of the price spectrum as fewer first time buyers continue to push the only new sales more to the repeat buyer market. The share of homes sold for more than $500,000 increased from 11% in February 2014 to 15% in February 2015.

Source: National Association of Home Builders

Your Responsibility as a Buyer

For most first-time buyers, if you want to make the move to owning your own home, you have to do some homework. As a homeowner, you will be far more independent than you would as a renter, but you will still have some very real responsibilities to make home ownership work. Here are the top three responsibilities you'll have as a homeowner.

Financial responsibilities
 You will be responsible for making timely payments to your lender. Paying on time helps you build your credit. With great credit, you can take on more projects such as remodeling, or you'll be able to buy furniture, cars or other things you want with lower interest on your payments.  Your debts should never be more than 40 percent of your income. If you get overextended, you'll have problems meeting the minimum payments. Instead, limit the amount of credit you actively use and pay off balances every month. Don't add new charges until you've paid off your balances.  You should also be in a position to save money, which you can do several ways. You can put money in your 401K, you can pay extra on your principal every month, or you can buy bonds or invest in the stock market, according to your tolerance for risk. You can put money in a safety deposit box or under the mattress as long as you are saving rather than overspending.  Common wisdom is to build six months of cash so you can continue to make your house payments if you lose your job or become ill. You need savings for emergencies, large expenses such as student debt, and retirement.  
Neighborhood responsibilities
 When you buy a home, your household becomes part of the neighborhood. You can influence whether or not the neighborhood prospers or declines simply by the way you treat your neighbors and your home. It's up to you to uphold or to set a higher standard for the neighborhood by keeping your lawn and trees trimmed, your home freshly painted, and toys and trash picked up from the entry.   This is the way you can protect your investment and those of your neighbors. It's one of the reasons many neighborhoods have homeowners associations -- to protect values by standardizing safety and maintenance for the community.  To get the benefits the HOA provides such as higher and consistent home values, you have to pay your dues and obey the covenants. You can volunteer to help or you'll have to abide by the decisions others make. Before you buy a home in a HOA-managed community, read the covenants so you'll know what you're getting into. If not being able to use certain exterior paint colors bothers you, then don't buy the home. Find something else.  
Household responsibilities
 Buying a new home is a great time to improve your lifestyle and dream for your future. Your home should help you be who you want to be. That's the purpose of shaping your environment. You have control over whether you entertain like Martha Stewart, enjoy your hobbies at home, or grow a lawn as sleek as a golf course fairway..  Choose a home that meets as many needs as you can within your means. Separate bedrooms for the kids may be doable, but you may have to compromise on a Jack and Jill shared bath. This is an excellent opportunity to teach your older children about prioritizing, delayed gratification, give and take and winning and losing gracefully.  Make sure the area you select offers amenities that your building doesn't have. If you don't have a yard for the kids and the dog, make sure there's a park and playground nearby.  Think about how far and how long it will take you to get to shopping, work, and other friends and family. Think about how a long commute will affect your family. Would you rather be sitting in traffic or attending your son's ball game?  You and your spouse may want the prestige of living in a certain area, but if your house-payment is too high, you'll introduce problems into the relationship you don't need. It's about making choices that make sense. Better to buy a smaller home in a great neighborhood and keep the arguing down.

Buy the best home you can that's within your means and it will see you through years of comfort.

Advantages and Disadvantages of Vintage Homes

There’s something about older homes that make them appealing to many buyers. Maybe it’s the ornate, decorative aesthetics and the fact that they aren’t the cookie-cutter homes of today, or maybe it’s the high standard of quality in the structure. Regardless of what it is that you’re drawn to, it’s important to be aware of the potential trials and tribulations you may be about to face.  Here are a few of the things to be aware of when purchasing an older home – or to keep in mind when selling yours.

Updating or Correcting 
One of the main concerns with older homes is that many of them predate current-day safety features. For example, homes built between the 1940’s and 1970’s often use dangerous asbestos as insulation for pipes, and homes built prior to 1978 may contain lead-based paint. You’ll also want to make sure you thoroughly inspect the wiring in any home built before the 1950’s as they may use a rubber compound that becomes brittle over time, which can pose a fire hazard.

Consider the Cracks
Signs of aging like cracks and leaks are inevitable in older homes regardless of the quality of the materials and workmanship. Seemingly superficial issues may lead to further trouble down the road, so it’s important to be aware of potential damage that may eventually result if they aren’t dealt with. One small leak today may be one large pool tomorrow.

Insulation
Houses that come from an era before the Cold War could easily leave you shivering. In many older homes, not only could the existing insulation contain dangerous asbestos, it could be letting tons of heat escape. The other culprit of a chilly home could be outdoor facing doors and windows allowing air leaks and drafts. A little caulk goes a long way – According to the U.S. Department of Energy, a homeowner may save anywhere from 5 – 30 percent per year on energy costs by plugging leaks.

Insurance
Like old vintage cars, old homes come with a slew of insurance problems. Insurers may demand that many of the issues mentioned above be fixed before they’re willing to insure you. They could require an outdated electrical system be upgraded or an oil tanker be removed if it’s more than 20 years old which means big expenses, and big headaches.

Buying an older home can be rewarding and give you that antique charm you’re so desperately craving, but each one poses its own unique challenges. It’s important to be aware of your home’s specific situation so that you may make the most informed decision possible and be happy with your purchase. Here’s a tip: a home warranty can help cover some of the expenses associated with major systems and appliances failing and is especially important in an older home. Learn more about what a home warranty is here.
Source: First American Home Buyer's Protection Corporation

Is Solar or Wind Energy Right for You?

Do your past winter and summer utility bills have you considering a utility switch? Some consumers have decided solar or wind power is the way to go. But is stepping away from electric or gas power right for you? 

Solar upfront costs - Installing solar panels and their equipment, including an inverter and metering equipment, comprises most of the costs associated with switching to solar at your home. The good news is that prices have been falling since 2009.
 
Wind upfront costs - Residential wind turbines can range from $10,000 to $70,000 depending on the size of the system you need to power your home.
 
Tax breaks - Solar and wind tax incentives are offered by municipal, state and federal government agencies and can help tremendously with the immediate costs of setting up your new system. However, like sales those incentives won't be around forever.
 
Solar payoff expectancy - The time it takes for your panels to "pay for themselves" can vary depending on cost, installation size and local utility prices. But a payback period under 10 years isn't unheard of these days (in some areas it's four to six years).

Wind payoff expectancy - The payback period for turbines also depends on several factors, including size, kilowatts and energy costs in your area. Experts estimate payoff could be as short as 15 years to as long as nearly 50 years.

Sustainability - Money isn't the only reason to consider these renewable energy sources. Many homeowners have made the switch due to their beliefs of the environmental benefits of moving away from the use of fossil fuels.

Info provided by Sharon Floyd at Residential Lending. (210) 317-8834

5 Money Tasks That Will Brighten Your Financial Picture

With tax time soon looming in your future, you might want to start planning new ways to improve your savings outlook for next year. Here are five ideas you can work on now  to improve money matters in your household for the future.

Pare Down Debt. Make your most expensive debt the priority. If it's a credit card, stop using it, ask for a rate reduction and make more than the minimum payment. Then, move to the next item on the list. (You'll likely save more paying off high-interest debt than investing.)

Save for Retirement. Some of the best retirement savings are your 401(k) contributions at work; you get immediate tax breaks on what you put in, and there's often an employer match. Outside of work, IRAs also have nice benefits. Work to save 10 to 15 percent of your income (20 percent if you're 40 or older).

Start an Emergency Fund. Six months of savings can help you through a job loss or another unexpected event. Set up a direct deposit to siphon a bit of each paycheck into savings. Then look for ways to uncover extra cash: Turn down thermostats, ask colleagues to carpool and make your own morning cup of Joe.

Save for College. First come kids, then come fears about college costs. Your best bet to start saving is a 529 plan; your investment grows tax-deferred, and withdrawals also escape taxes if the funds are used for tuition and related expenses. The best part: Grandma or Grandpa can even chip in.

Review Insurance. Ask your agent to identify gaps in your health, car and home or renters policies, and about ways to trim costs (discounts, premium reductions or savings for keeping more than one policy with the same company). Other insurance to consider: Long-term care (for nursing home and at-home care) and life insurance (to prevent hardships on loved ones).

Source: Residence Lending