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5 Signs You’re Ready To Stop Renting.

Buy or Rent?

via Nancy Mann Jackson

There’s a lot of conflicting advice about whether it’s smarter to rent or buy. Some say renting is like throwing money down the drain when you could be building equity in your own home. Others argue there are better ways to invest your cash, and you’re giving up valuable flexibility.

“We typically make big decisions like whether to rent or buy with emotion and defend them with logic, which is why it’s so easy to make a case for either,” explains Dana Bull, a Realtor at Sotheby’s Harborside in Boston.

But there are actually several considerations that can make the decision to rent or buy much easier. Here are five signs you’re ready to be a homeowner.

1. You actually want to own a home.

Enjoy gardening and fixing things up around your place? That’ll make homeownership easier. From coordinating maintenance and repairs to dedicating weekend time to yard work and other projects, owning a home requires a big time investment on top of the financial one. Be sure you’re ready for that responsibility.

“If you’d rather be able to call a landlord to handle issues when they arise, you may be better off renting for now,” says Certified Financial Planner John Piershale of Piershale Financial Group in Crystal Lake, Ill.

2. You’ve saved up for a down payment.

After deciding to take the leap, the next step is to save up a 20-percent down payment. This helps you avoid private mortgage insurance, which is typically equal to 1 percent of the purchase price (and paid annually). “If you can save more than 20 percent, even better,” Piershale says. “Taking out a smaller mortgage means you’ll pay less in interest over time.”

If homeownership is a near-term goal, you can take advantage of your flexibility as a renter by finding a roommate or downsizing to a cheaper place to accelerate your savings.

3. Your budget can handle all the extras.

A mortgage is just one home cost to budget for—there’s also taxes, insurance, maintenance and homeowners association fees. Generally, mortgage lenders want to see all these costs add up to no more than 28 percent of your income, Piershale says. (You can get estimates on sites like realestate.com.) It shows you can comfortably afford home costs and other living expenses, as well as repairs that may come up.

Don’t have that much wiggle room? Consider looking at homes with lower price tags or work on upping your income and savings while you’re still renting.

4. You’ve found a neighborhood you’d like to live in for years.

If you’ll only live in a particular area for a year or two, renting is likely your best bet. “Having the option to get up and leave with minimal strings attached is very appealing,” Bull says. Renting can also be a smart way to test the waters, learning what you like and dislike about different neighborhoods.

When you’re ready to put down roots, and plan to stay for at least five years, buying’s back on the table. Just make sure you thoroughly research the area first: If you have kids, are you happy with the school district? Is the neighborhood safe? Are the home prices increasing generally? You can find detailed information on crime rates and school rating on sites like City-Data.

5. You can’t rent a similar place for significantly less.

If you can rent in your desired area for much cheaper than a mortgage and other housing costs would set you back, you may benefit from renting a while longer and saving or investing the difference in monthly expenses. Not only can this build your net worth in the meantime, but it allows you to test-run your budget. When you do buy one day, you’ll already know you can comfortably handle the uptick in expenses.


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What’s Up With Housing This Week?

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1st Time HomebuyersA Few Tips for First Time Buyers This Spring Selling Season.
What first-time millennial buyers need to know about the spring housing market.

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Florida Association of RealtorsClosing costs? What are they really?
Here’s one common pitfall on the road to a smooth closing: During the course of a transaction, it’s fairly common for a seller to offer money toward the buyer’s closing costs — and many Realtors feel that adding a quick line about this change in the contract’s additional terms section is sufficient.
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Millennial HomebuyersSeems Millennials Are Unaware that They Can Enter the Housing Market.
Knowledge is essential in order to attract this generation.
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Are We Headed for Another Bursting Housing Bubble in 2017?
“There are three basic worry indicators and all three were very scary in 2005 and all three today suggest, if anything, that the housing market is still in the process of recovery instead of being near a new bubble.”

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What’s Behind the Housing Drought
The supply of homes for sale is now at the lowest level since the National Association of Realtors began tracking inventory 18 years ago.
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http://www.TitleSecurityFL.com


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Housing’s Call to Action for Millennials

Providing housing for millennials is a topic that has many implications. Dowell Myers, director of demographics at USC, approached the topic at HIVE with several esteemed colleagues.

Solving the Millenial Dilemma: Presented by Dowell Myers

http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1

Watch the follow up panel session.

http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1

But what happens now? What are some of the steps that the housing leaders and innovators can take to make a difference and provide future direction? Answers to HIVE attendees most pressing questions are below. And the conversation continues at HIVEforhousing.com.

Q: Is the multifamily boom partially buoyed by the over reach of Dodd Frank’s restriction on mortgage lending qualifications?
Sue Rossi: No – the multifamily boom was bound to happen based on the demographics. Multifamily housing is most appealing to those at the very beginning or the very end of their housing “lives.” Those would include young adults not yet ready for homeownership or seniors following homeownership. Since there is a disproportionate number of both of these groups, the increase for demand for multifamily housing was predictable.

Q: Will income inequality be more severe among millennials?
Dowell Myers: This will likely increase because economic opportunities are increasingly divided between the college grades and others, and the college graduate share of the millennials continues to grow but is not the majority.
Rossi: Not in my opinion. While salaries for entry level jobs may seem low, it’s all relative. Housing prices fell 40 percent and interest rates fell 50 percent. Those young adults who purchase a home at current prices and interest rates are still getting into homeownership with a much better future equity position than their parents, all of whom bought their first homes at double digit interest rates with incomes far lower than today’s graduates.

Q: What issues do you hope the next HUD chairman addresses over the next four years?
Rossi: My hope is that they rethink the “skin in the game” mentality and come to the realization that a minimum down FHA buyer is a much different buyer than an 80/20 buyer who borrowed 100 percent. While most of the buyers who lost their homes did have no down payment, the lack of down payment cannot be blamed to the exclusion of other sub-prime practices such as leaving the tax and insurance out of PITI and qualifying simply for principal and interest (P&I). When those buyers were qualified based solely on P&I (which was allowed) the surprise of the forthcoming tax bill caused them to refinance to pay the bill, on top of an increase in payment for future escrow, a double whammy that took them down. The lack of skin in the game mentality bled into the FHA culture, which successfully lends to buyers with minimum down payment and the result was the two buyer types became portrayed as one. Additional restrictions were imposed on FHA buyers that had nothing to do with the sub-prime practices. So my hope would be that the next chairman brings the down payment requirement back down to three percent; allows willing sellers to assist buyers to the previous levels and eases up-front MIP requirements. Last, but not least, I would like to see a new Student Loan Debt Consolidation Mortgage product added to FHA’s menu.

Q: When millennials are ready for home ownership what are they looking for? What’s most important to them?
Rossi: Millennials will buy homes for all of the same reasons as those who came before them. Before they have children, they all want a dog. That means they need a yard, and either their parents or their apartment won’t let them have a dog, so they buy a house. They want to play their music loud, which isn’t allowed at home or by their apartment. They want to entertain, or they get into a romantic relationship that requires privacy but doesn’t fit with their roommate setup. They will buy because they get married, have a child, or because their lease expires. Millennials will buy at the same rate as the Baby Boom, and for all the same reasons – they just are not there yet.

Q: How/if unaffordability of houses in good school district forces families with kids to rent?
Rossi: Families with kids have always rented in good school districts if they can’t afford to buy there. The public school system is inherently socioeconomically divisive wherever real estate taxes fund the schools. 1) Strong schools create demand for a community; 2) strong demand for the community drives up prices; 3) strong prices result in a strong tax base; 4) a strong tax base results in a strong public school budget; 5) a strong budget results in the best teachers, more programs, a wider variety of extracurricular and strong ratings; 6) strong school ratings create demand for the community and strong demand drives up prices and the cycle repeats. The only way to address this particular issue is to restructure public school funding at the local level.

Q: As we talk about innovation and disruption, why are we trying to find a way to make millennials follow the same trends as past generations as opposed to creating a new model for them?
Myers: The millennials will force new models by their own experimentation. No one is forcing them to follow past generations, but we should not “force them” to remain in their two-bedroom apartments where they rode out the great recession either. We assume they will want more housing space as they advance in their adult lives and as their careers progress. This will especially be true if they have kids, as 75 percent of them well. But, their exact neighborhood choices and preferred housing modifications are still experiments in progress!
Rossi: I don’t think we were encouraging millennials to follow the same trends. Rather, the suggestion of a Student Loan Debt Consolidation Mortgage would result in an innovative path for those who have no vision of how to fund a college education and follow it up with homeownership. This program would benefit not only first time buyers who are saddled with debt, but also existing homeowners who qualified for their starter home but deferred the debt –only to take on a mortgage payment and subsequently have the student loan debt re-enter their financial picture. Many existing homeowners are currently stuck in their starter homes and some wouldn’t qualify for the home they are currently living in despite the fact that they already own it now that their deferment has expired. This program could become a strategic plan for families as they plan for college as well as a tool for sharp high school counselors when working with students who don’t think college could be available to them.

Q: Why was the panel so for-sale focused?
Myers: The big question about millennials is not will they rent, which they already do, but will more of them transition to ownership. That has implications for their spatial location, their wealth accumulation through home appreciation, and their impact on the rest of the housing market. Moving more millennials into ownership also benefits renters because it will ease the extreme competition now felt among renters.
Rossi: You can’t discuss new construction, first time buyers and plan for what people will BUY to the exclusion of what they first have to sell. Buyers are not an independent group of people that operate autonomously. Buyers are first SELLERS, with the sole exception of first time buyers. Real estate is not looked at from a supply and demand perspective as intensely as it needs to be. Too much supply brings prices down as it does in any other industry. Lackluster demand also brings prices down. The only thing that brings prices up is when demand exceeds supply. Current demographic distribution threatens the balance of supply and demand due to the enormity of the Baby Boom, flanked by the enormity of the millennials, with an insufficient segment wedged between the two and causing a log-jam. A delicate balance has to be met in order for prices to rise without skyrocketing and to ensure that prices don’t collapse under the weight of the Baby Boom retirement liquidation. The barometer to measure that balance is the first time buyer share of market.

Q: How will the increase in rental rates impact the millennial home buying volume? Will higher rents increase home buying or reduce ability for a down payment? Is there a potential draw for millennials to cities with lower cost entry level home prices? Will these impact demographics as they age up into marriage?
Myers: High rents slow the savings of a down payment, but more importantly rising rents spur the desire to purchase a home and have something to show for your monthly payments. Relocation to markets with more affordable homeownership is definitely a spur to millennial migration. Those more affordable areas will capture more than their share of 30-somethings and also a greater share of families with children.
Rossi: Increasing rents won’t impact home buying as much as the experts would think it should. If rent rises, renters can add a roommate to offset expenses, double up and take action that’s not really practical as a homeowner. The bigger issue impacting home buyers is their ability to qualify under their debt level, and down payment requirements (and misperceptions). Rent levels inhibit their ability to save a down payment but don’t motivate them to buy as much as would be expected. Cities with lower cost entry level home prices would have lower cost of living across the board, so that becomes an equalizer as the income levels in those areas would reflect the cost of living which, in turn, is reflected in home prices.

Q: Can the millennial and Generation X dilemma of student debt be solved on the west coast where it’s ten times more expensive?
Rossi: Yes. Despite higher home values on the west coast, college tuition doesn’t change because of the location of the college. Further, where a student attends college is no indication of where they might purchase a home. So graduates with college debt are bringing the same amount of debt with them no matter where they relocate. Because home prices on the west coast are higher, the student loan portion of their total debt is not as disproportionate as it would be in a less expensive market. A $30,000 student loan balance would only be 10 percent of a $300,000 home out west, where it would be 20 percent of a $150,000 home in the suburbs of Chicago. Therefore, my proposal of a Student Loan Debt Consolidation mortgage that would allow a buyer to borrow up to 125 percent of purchase price in order to roll in their student loan balance would be successful in either market but even more successful in the more expensive markets.

Q: What incentives are needed to motivate millennials to purchase an entry-level home in C markets?
Rossi: Millennials, like all who came before them, will purchase a home in whatever market they are qualified to purchase. Depending on their income level, debt level, interest rates and real estate taxes, if a first time buyer is given an approvable price point they will find a home in whatever market that allows. While a “C” market may be an entry level market with the goal of moving in a few years or before a child becomes school age, buyers do buy in every market in the nation and there are no markets where absolutely no homes sell. Having said that, I believe there is a need for an incentive for first time buyers to buy from existing homeowners, which will ensure a sufficient number of trade-up buyers to maintain strong demand as Baby Boomers introduce an increasing level of inventory.

via Jennifer Castenson


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Interesting Housing News From The Past Week

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Tampa Bay Housing DemandTampa Bay leads the state in home sales as prices jump 13.6%
The greatest demand continued to be for houses under $300,000, eagerly sought by first-time homebuyers.

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Millennial HomebuyersFreddie Mac: Pay no attention to the homeownership rate
People who worry about the homeownership rate’s 50-year low forget demographics. Millennials may be late to the party, but that doesn’t mean they aren’t coming.
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FICO ScoresDon’t Disqualify Yourself… Over Half of All Loans Approved Have a FICO Score Under 750.
Potential home buyers, and even current homeowners, have an inflated view of what is really required to qualify for a mortgage in today’s market.

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Real Estate News SpinReal estate news often confuses homeowners.
Reading or watching real estate news can make a homeowner’s head spin. In one day, they might hear that mortgage rates rose, sales fell and prices stagnated.

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Home Buyer DemandHome Buyer Demand Remains Strong in September
Sales, as usual, retreat from August but hold up against the same month last year.
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Retirees Want Walkable, Urban Communities...Retirees Want Walkable, Urban Communities…
Interesting look at the shift of retirees from isolated gated sub-divisions or large home on golf courses to walkable urban communities.

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http://www.TitleSecurityFL.com

 


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Housing News of Interest

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Florida Association of Realtors4 out of 5 people think homeownership a good investment.
NAHB: “Most Americans believe owning a home remains an integral part of the American Dream” – policymakers need to encourage and protect homeownership.

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Trending Bathroom PhotosTop 10 Trending Bathroom Photos on Houzz
Whether you love sleek contemporary washrooms or rustic loos, Houzz has you covered. Here are great ideas featured in the most popular bathroom photos over the past three months.

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Janet YellenThe Case for a Rate Hike Has Strengthened…
The case for raising U.S. interest rates has strengthened in recent months because of improvements in the labor market and expectations for moderate economic growth, Federal Reserve Chair Janet Yellen said Friday.
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Urban Millennials

Millennial Preferences Are Reshaping U.S. Cities
’18-hour cities’ lure millennials with better career and lifestyle options and a mix of housing, retail, entertainment and green-space options.

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PRO LogoPinellas County Real Estate Statistics for July 2016
This summer the Pinellas County Housing Market has been nothing short of sizzling. For July we see some stats start to cool off, but every indication remains that our market continues to be strong.

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Construction DetailsSuccess is in the Details: Understanding Your Product at a Micro-Level
When it comes to selling homes, our knowledge of the building process can be the difference between making a successful sale and not.

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http://www.TitleSecurityFL.com

 


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Recent Housing News

Happy Mother's DayHappy Mothers Day…
I make it a point every May to listen to Jimmy Dean’s wonderful tribute to Moms. If you haven’t heard it, it’s more than worth a few minutes of your time.
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Luxury Home Move

A Luxury Move Has Luxury Costs…
Purchasing a luxury home can be expensive but so can moving the luxury items that you want to keep inside this new home.  Buyers pay top dollar for white-glove movers that offer meticulous wrapping, climate control and custom crates to move rare items and other valuables.

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Multi Family SectorHow a Reversal of the Millennial Rental Trend Would Affect the Multifamily Sector.
Could a homeownership program help reverse the Millennial rental trend—and eat into multifamily profits?

 

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Dodd-Frank FightAs Dodd-Frank Fight Continues, the Resistance Scores Some Victories
Court challenges threaten to eat away at the 2010 Wall Street reforms.
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No Housing Bubble“There’s No Housing Bubble” ~ Warren Buffet
Although home prices continued their upward trek all over the country, they are doing so at a much slower pace.

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RoamInstead of renting an apartment, sign a lease that lets you live around the world, for those with an, ahem, uber-active business travel schedule.
Roam provides short-term apartments with a communal feel, for today’s digital work-from-anywhere nomad.
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http://www.TitleSecurityFL.com 


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St Petersburg Development News

Lots of new and exciting developments happening in our wonderful City.

Skyway Marina DistrictNew look for key business corridor in south St. Petersburg.
Mayor Rick Kriseman has put a turnaround plan for the district high on his priority list, including closing a retail trade gap created when nearby residents leave the district to shop in other areas of St. Petersburg or outside the city.

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St Petersburg PierExplore the Pier.  Get to know the new Pier with their interactive map. Learn about the concept and all there is to do and enjoy at what will become the city’s newest waterfront park and attraction.

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880 ConwayThe 801 Conway project in downtown St. Petersburg designed to help millennials buy a home.  The project will house 35 two- and three-bedroom units that start in the high $200,000s.  Tremendous concept and marketing plan.

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Liv233New Townhome Project Liv233 is planned for 4th Ave N. Liv233’s three units have similar floorplans and will be priced just under $1 million each.
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Skyway Marina DistrictCeridian and the Skyway Marina District are a great fit for fast-growing, forward-thinking firms.
“I have no doubt that like-minded companies will move quickly to take advantage of the great opportunities available in this resurgent, business-friendly district.”
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http://www.TitleSecurityFL.com