Renters Spending 5% More Than Home Owners

Rising rents are forcing renters to outspend home owners on housing costs, according to a new study.

Since 2005, home owners’ housing expenses have climbed from 31.9 percent of their household budget to 33.2 percent. On the other hand, in that same time period, renters’ expenses have jumped from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.

In the last 26 years, home owners have increased the amount they spend on household expenses by 12 percent while renters have increased it by 22 percent, according to the study.

Earlier this month, Capital Economics economists noted that for the first time in 30 years the median monthly mortgage payment is about the same — or less — than the median rental payment.

Yet, with the bleak job market, home ownership rates continue to fall in many parts of the country, particularly among younger generations. CoreLogic found in its report that the home ownership rate for the 25-to-34 age group dropped from 51.6 percent in 1980 to 42 percent in 2010. For the 35-to-44 age group, home ownership rates fell from 71.2 percent to 62.3 percent over that period.

Source: “Renters Outspend Owners on Housing,” RISMedia (Oct. 25, 2011) and Capital Economics

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Tax Time Less Taxing for Home Owners

With a little more than one month before income taxes are due, many of the nation’s 75 million home owners may be appreciating the value of home ownership just a bit more as they take advantage of the tax benefits of owning a home.

“Owning a home offers myriad benefits throughout the year, but some of the financial advantages of home ownership are most apparent at tax time,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “As many of today’s hard-working American families are feeling a financial squeeze, the tax benefits that can come from owning a home can be a welcome relief.”

A number of tax deductions and credits are still available for home owners; these include deductions – with specific limits – for mortgage interest and capital gains on home sales, and credits for certain energy-efficient home improvements. Even with these benefits, home owners pay 80-90 percent of all U.S. federal income taxes.

“It’s been suggested that many of today’s tax incentives for home ownership primarily benefit wealthy individuals, but that’s simply not true,” said Phipps. “As today’s public debate continues about what home ownership means for families, communities, and the nation’s economy, there’s no question that for many, owning a home is still the best way to begin building wealth.”

Ninety-one percent of home owners who claim the mortgage interest deduction earn less than $200,000 a year, and the ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home in 2010 with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file this year.

“REALTORS® see the very real positive impact of home ownership every day with our clients,” said Phipps. “Recent proposals to reduce or eliminate the mortgage interest deduction and remove government support of the housing finance market could have disastrous consequences for the economy, not to mention making it harder or nearly impossible for millions of families to own their own homes. We believe America must continue to invest in home ownership, for the future of our families and our nation.”

For home owner tax season tips, visit HouseLogic is a free source of information from NAR that helps home owners maintain and enhance the value of their homes and engage in issues that affect their local communities.

Source: NAR

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Home Owners Switching to Natural Plants

Home owners seeking to save money are landscaping their properties with plants that are native to the area.

These gardening design schemes generally require less water. The practice started in the West, where this kind of design is called “xeriscaping” — based on the Greek word for “dry.” But lately, it is spreading all over the country.

Water savings can be significant. According to the Water Research Foundation of Denver, landscape watering accounts for 40 percent to 70 percent of residential water use. Converting to this kind of landscaping can reduce annual household water use by 30 percent.

Source: The Wall Street Journal, Anne Marie Chaker (08/18/2010)

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Survey: A Quarter of Renters Want to Remain So

More than 25 percent of today’s renters do not intend to ever become home owners, based on the results of a survey conducted on behalf of San Francisco-based Trulia.

Of those who do plan to buy, the real estate information search engine found, two-thirds expect to wait more than two years to do so — a trend that could choke recovery of the nation’s housing market.

“Renters converting into buyers are crucial to turning around the housing slump,” says Trulia CEO Pete Flint. Asked by Trulia to identify factors that could persuade them to purchase a home in the next year, poll respondents cited the ability to save for a down payment, finding a new job, and the availability of favorable borrowing costs.

The research was carried out by Harris Interactive, which queried 2,055 U.S. adults, including 1,345 home owners.

Source: South Florida Business Journal (08/18/10)

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Home Owners Becoming More Realistic

Home owner confidence about the value of their home has declined in the second quarter, compared to the previous three quarters of this year and last, reports in its second quarter real estate market report.

About 30 percent of home owners predict that values will increase in the next six months, down from 42 percent who believed that in the first quarter. More than 28 percent believe market values will fall in the next six months.

About 34 percent of homes actually increased in value in the second quarter, according to Zillow, but only 24 percent of home owners say their own homes’ values increased.

If they see signs of a recovering market, 5 percent of home owners say they are likely to put their homes up for sale.

“Home owners have become much more responsive to current market conditions than they were just two years ago, when a more typical reaction was denial,” said Stan Humphries, chief economist at

“Our forecast remains largely unchanged: We’re in for an L-shaped recovery that will likely keep annualized home value appreciation very low for the next three to five years.”

Source: Zillow

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5 Home Remodeling Trends for the New Year

Remodeling and decorating trends in 2010 are likely to reflect the fact that many home owners are settling in for the long haul.

Here are some ideas for updating homes and gardens from decorators and leading real estate practitioners:

* Environmentally sensitive furniture. Natural fibers, sustainable woods, and recycled products are key to attracting environmentally concerned buyers.
* Classic neutral colors. Deep gray browns and gray blues, muted beige, and chalky white will be particularly popular shades, Pittsburgh Paints predicts.
* Backyard gardens. First Lady Michelle Obama led the way in 2009 when she installed one at the White House.
* Backyard living. Wood-deck additions offer an 80.6 percent payback, according to the annual Cost vs. Value Report from Remodeling magazine and REALTOR® magazine. Simple fire pits and outdoor fireplaces also will be popular, trend-watchers say.
* Made in America. As more people feel compelled to support local employment, U.S. manufactured products and antiques will become more popular, says Patricia Shackelford, author of design blog, Mrs. Blandings.

Source: Orlando Sentinel, Jean Patteson (12/26/2009) and Kansas City Star, Stacy Downs (12/27/2009)

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4 out of 10 Recent Buyers Used FHA Loans

According to the most recent REALTORS® Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration-insured loan. REALTORS® who took part in the November survey also reported that the number of first-time home buyers continued to climb to 51 percent.

“FHA helps provide affordable mortgage financing to home owners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market,” said NAR President Vicki Cox Golder. “These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric.”

Distressed Sales, HVCC Concerns
The RCI results also indicated that distressed sales increased to 33 percent of all home sales last month, and that both investors and first-time home buyers are competing for these properties. The preponderance of distressed properties on the market has also influenced buyers’ perceptions of other homes for sale. REALTORS® report that many buyers have pricing expectations that treat every property as if it were in foreclosure.

In addition, REALTORS® expressed ongoing concerns with the impact of the Home Valuation Code of Conduct on recent appraisals. According to some survey respondents, inexperienced or out-of-area appraisers continue to rely heavily on sales prices of distressed properties, even when other comps are available.

“As the first, best source for real estate information, REALTORS® have their finger on the pulse of current housing trends, and their knowledge and experience offer valuable insights into today’s real estate market,” Golder said. “We know that an economic recovery is not possible without a housing recovery, and we will continue to work with policymakers at all levels to ensure that this happens.”


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Why Rent When Buying is Cheaper?

The foreclosure crisis has knocked down prices so much in some parts of the country that it’s cheaper or only slightly more expensive to own than it is to rent.

BusinessWeek, with help from research firm Reis, calculated ownership costs assuming a fixed-rate, 30-year mortgage for 100 percent of the purchase price with no down payment. The magazine said that had they factored in a 20 percent down payment – what most people must make these days – owning would have been cheaper than renting in most metros.

“It’s a great time to buy,” says Mollie Carmichael, senior vice-president of John Burns Real Estate Consulting in Irvine, Calif. “If you can own a home for less than the cost to rent, then it’s a logical financial proposition.”

Here are the top-10 cities where buying is a bargain and the own vs. rent cost ratio for each:

1. Detroit, 94 percent
2. Pittsburgh, 97 percent
3. Rochester, NY, 113 percent
4. Memphis, 114 percent
5. Tampa, 115 percent
6. Cleveland, Tenn., 119 percent
7. Dayton, Ohio, 119 percent
8. Columbia, S.C., 123 percent
9. Orlando, 124 percent
10. Dallas-Fort Worth, 124 percent

Source: Business Week, Prashant Gopal (08/20/2009)

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