Is it better to buy or rent a home?

Crunching the numbers on the perennial real-estate question

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By Eva Rosenberg, MarketWatch

Despite the fact that home mortgage interest rates are near record lows, only 65.4% of Americans own homes, according the U.S. Census Bureau’s 2012 report. (See Homeownership Rates by State: 1984 to 2012) In fact, home ownership in the U.S. is at its lowest level since 2004, when 69% of Americans owned homes.

Of course, home ownership can eat up not only your free time, but your money as well. Is the American dream worth the hassle? To find out, let’s look at it from three angles: taxes, costs, and quality of life.

Are there still tax benefits to home ownership these days?

Back in the days of 8% mortgage interest rates, you were sure to get a generous mortgage interest deduction on your tax return. Add that to the property taxes, and you’d get a nice tax reduction. But what about today, with average national interest rates at 3.46%, according to Zillow.com? See Current mortgage rates and home loans.

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The U.S. Census Bureau says that median housing costs for 2012 are $185,200. Assuming you put 10% down, your mortgage would be around $166,700. Your monthly payment, including principal and interest, would be under $750. Your interest expense would be around $5,000 a year. And if your property taxes were around 1% of the property value each year, you’d be paying about $1,850 per year. See Median property tax rates by state.

So, you’re looking at a total tax deduction of less than $7,000 a year. Oops! The standard deduction for a married couple filing jointly in 2013 is $12,200. So there’s no tax benefit here. A single person’s standard deduction is $6,100. So the net income reduction is $900. Even in a 25% tax bracket (plus 5% for state), that only saves you about $300.

These costs will enable some more folks to itemize, when taking into account their high state income taxes, charitable donations, and medical or business expenses. But remember, your real benefit is only the itemized deductions you get, in excess of your standard deduction. See Tax planning: Standard Deduction.

Suppose your increase in deductions is $3,000? Using the same tax bracket, that would be worth about $1,000 in tax savings.

Do the financial benefits outweigh renting?

Read More: http://www.marketwatch.com/story/is-it-better-to-buy-or-rent-a-home-2013-02-22?siteid=rss&rss=1&utm_source=dlvr.it&utm_medium=linkedin

Hottest cities for real estate

Here's a quick peek at housing by the lists: Biggest price increases, best sellers' markets and most underwater homes.

By Marilyn Lewis Tue 7:49 PM

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You might have thought you'd never see another top-10 list of hot rea estate markets after the housing boom's spectacular crash. Never say never.

Housing's coming back, mostly. It's creeping back in some places, leaping in others, but also still down in a few. 

Here's a quick peek at housing by the lists: one list of the country's hottest markets, another of the best markets for sellers, and one more of states with the most underwater homes. The last is a reminder that, while housing is healing, it's not off the sick list yet.

Hottest cities

Seven years after housing peaked and began its perilous descent, prices are again growing in many cities. FNC, a real estate analytics company, follows prices in 30 metros. On average, prices in those 30 cities rose 5% in 2012.

But the housing market's recovery is uneven. Phoenix and Denver are enjoying double-digit price growth over last year, yet homes in Chicago lost 0.05% of their value, according to FNC's index. Prices didn't move much last year in Baltimore, Chicago, Houston and San Antonio.

FNC says these 10 cities had the biggest home value increases in 2012. Here's the list, with the percentage of growth for each:

1. Phoenix, 22.8%. 
2. Denver, 10.8%. 
3. Miami, 8.7%. 
4. Sacramento, 8.6%. 
5. Detroit, 8.3%. 
6. San Francisco, 8%. 
7. Las Vegas, 7.9%. 
8. San Diego, 7%. 
9. Dallas, 6% . 
10. Riverside, Calif., 6%. 

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Mortgage delinquencies hit lowest level since 2008

Foreclosure rate is 3 times higher in judicial foreclosure states

BY INMAN NEWS, THURSDAY, FEBRUARY 21, 2013.

Inman News®

House and life preserver image via Shutterstock.

Unless you live in a state where courts handle foreclosure proceedings, don't expect a flood of distressed properties to relieve for-sale inventory shortages anytime soon.

Both the share of U.S. mortgage loans in delinquency and those in the foreclosure process hit their lowest levels since 2008 last quarter, according to the latest national survey from the Mortgage Bankers Association.

The share of loans on one- to four-unit residential properties that had missed at least one mortgage payment fell to a seasonally adjusted 7.09 percent in the fourth quarter, down from 7.4 percent in the third quarter and 7.58 percent in fourth-quarter 2011. That's the lowest delinquency rate since 2008, MBA said.

And though delinquency rates typically rise between the third and fourth quarter, even the non-seasonally adjusted rate fell to 7.51 percent in the fourth quarter, the trade group added.

The delinquency rate does not include loans in the foreclosure process. The percentage of loans that went into foreclosure for the first time last quarter was 0.7 percent, down from 0.9 percent in the third quarter and 0.99 percent in fourth-quarter 2011. That's the lowest rate of foreclosure starts since the second quarter of 2007, the MBA said.

Overall, 3.74 percent of mortgage loans were in the foreclosure process at the end of last quarter. That's down from 4.34 percent a year ago, and the lowest level since the fourth quarter of 2008.

Read more: http://www.inman.com/news/2013/02/21/mortgage-delinquencies-hit-lowest-level-2008

2012 home sales: Best in 5 years

By Chris Isidore @CNNMoney January 22, 2013: 10:39 AM ET

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NEW YORK (CNNMoney)

Steady December home sales capped the best year for the U.S. real estate market in five years, according to an industry trade group report Tuesday.

The National Association of Realtors said that December sales of previously-owned homes came in just slightly below November's sales pace, but up 12.8% from a year ago. That brought full-year sales to 4.65 million, up 9% from 2011 and the best year for home sales since 2007, when there were 5 million homes sold just before the start of the recession.

Sales are being helped by a combination of strong market fundamentals -- near record low mortgage rates, lower unemployment and a rebound in home prices, all of which are bringing in buyers into the market who had been waiting for it to hit bottom. The mortgage rates and years of depressed home prices have also combined to create the most affordable housing market on record, according to the Realtors group.

And the Realtors are predicting strong sales should continue into 2013 and beyond. It has a forecast for 5.1 million existing home sales this year, and 5.4 million next year.

Related: Big luxury home sales, big tax savings

The improved demand for homes in December led to the inventory of homes for sale to fall to 1.82 million homes on the market, the lowest supply since January 2001. One factor in 

Read More: http://money.cnn.com/2013/01/22/news/economy/home-sales/index.html?fb_action_ids=10200527124245951&fb_action_types=og.recommends&fb_source=other_multiline&action_object_map=%7B%2210200527124245951%22%3A146000135556866%7D&action_type_map=%7B%2210200527124245951%22%3A%22og.recommends%22%7D&action_ref_map=%5B%5D

HUD stepping up sales of seriously delinquent FHA loans

From AOL Real Estate

BY AOL REAL ESTATE, TUESDAY, DECEMBER 11, 2012.

Inman News®

Editor's note: This story is republished with permission of AOL Real Estate. See the original story, "HUD Mortgage Sale Could Help Thousands of FHA-Insured Borrowers but Unfairly Exclude Others."  

By TEKE WIGGIN

The U.S. Department of Housing and Urban Development has begun selling off thousands of seriously delinquent mortgages insured by the Federal Housing Administration, a move that could save many distressed borrowers from losing their homes. But it also leaves thousands more who are saddled with equally distressed FHA mortgages without any help, raising questions about its fairness.

HUD recently announced that it cut loose 9,400 loans in the first sale under its expanded Distressed Asset Stabilization Program, and the federal agency plans to sell at least 30,000 more over the next year. The mortgages are going at steep discounts to private investors and nonprofit organizations, which are expected to modify many of the loans. That could save a sizable pool of homeowners from foreclosure and help keep the FHA, which faces a shortfall next year, from seeking a bailout.

While this represents a step forward in combating the foreclosure crisis, HUD's DASP program touches only a fraction of the distressed homeowners with delinquent FHA-insured loans who are in dire need of assistance. The nearly 40,000 loans that HUD plans to have auctioned off by the end of next year is just a sliver of the 700,000 seriously delinquent mortgages on the FHA's books.

A seriously delinquent mortgage is classified as a loan that is 90 days or more past due. A large swath of the FHA loans -- more than the 40,000 being sold, experts say -- are at least six months past due and in foreclosure. That qualifies them for the DASP, assuming that the mortgages' servicers have exhausted all FHA loss-mitigation programs. So that means that thousands of borrowers with mortgages that are eligible for the DASP -- and, arguably, equally as deserving of it -- won't get it and will continue to drift toward eviction.

Read more:  http://www.inman.com/news/2012/12/11/hud-stepping-sales-seriously-delinquent-fha-loans

Mortgage rates fall to record lows again

By Les Christie @CNNMoney November 21, 2012: 11:02 AM ET

NEW YORK (CNNMoney) -- The nation's extremely favorable mortgage rates sank even lower this week, setting records for both the 30-year and 15-year fixed rate loans.

The 30-year fell to 3.31% from 3.34% last week, according to Freddie Mac(FMCC, Fortune 500), the government controlled mortgage backer. The 15-year rate averaged 2.63%, compared with 2.65% a week ago.

According to Keith Gumbinger, vice president of mortgage information company HSH Corp., the current conditions mean it may make sense for current mortgage borrowers and new homebuyers to look at shorter-term loans.

Related: Most affordable cities for buying homes

"If you're looking for Black Friday deals and door-busters, it's pretty hard to beat the savings," he said. "To really rack up savings, you might also consider a purchase or refinance using a loan with a term shorter than the traditional 30 years."

The numbers add up like this: Homeowners current paying off 30-year loans with rates of 4% spend about $1,098 a month in mortgage payments on a $200,000 balance, paying a total interest cost of $143,739.

Refinancing at 2.63% for 15 years would cost them about $250 a month more, but they would wind up paying just $42,250 in total interest and their payments would end years earlier.

Refinancing into another 30-year loan at 3.31% would cost homeowners only $877 a month, saving $221 from the existing loan. But the total interest paid would come to $115,725 over the life of the loan, a difference of more than $73,000 compared with the 15-year mortgage.

Related: 'I'm trapped in a high-rate mortgage

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Strong sales and tight inventory boost home prices

NAR: Median home price in October up 11.1 percent from a year ago

BY INMAN NEWS, MONDAY, NOVEMBER 19, 2012.

Inman News®

Housing trend image via Shutterstock.

A combination of rising sales and the lowest inventory in six years helped existing-home prices post annual gains for the eighth month in a row in October, the National Association of Realtors said today.

Sales of existing homes were up 2.1 percent from September to October and 10.9 percent from a year ago, to a seasonally adjusted annual rate of 4.79 million.

At $187,600, the national median price for all housing types including single-family homes, townhomes, condominiums and co-ops was up 11.1 percent from a year ago. The national median price last posted eight consecutive months of annual gains before the crash -- from October 2005 to May 2006.

Also released today, a survey by the National Association of Home Buildersshowed builder confidence rose in November for the seventh month in a row to its highest point since May, 2006.

Rising home prices are boosting home equity, and NAR Chief Economist Lawrence Yun thinks the improvement could be even greater next year.

"Rising home prices have already resulted in a $760 billion growth in home equity during the past year," Yun said in a statement. "Given that each percentage point of price appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year."

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NAR estimated there were 2.14 million existing homes listed for sale at the end of October, a 5.4-month supply at the current sales pace. That's the tightest inventory since February 2006, when the months' supply of homes stood at 5.2 months.

October's inventory is down from a 5.6-month supply in September, and represents a 21.9 percent decline from the 7.6-month supply that existed a year ago. Many analysts view a six-month supply of housing as an even balance between buyer and seller demand.

Homes were on the market for a median of 71 days in October, down 26 percent from a year ago when the time to sell an existing home took a median of 96 days.

First-time buyers accounted for 31 percent of purchasers in October, down from last October's 34 percent.

Distressed homes accounted for 24 percent of all existing-home sales in October -- down from 28 percent last October -- with an even split between foreclosures and short sales. Foreclosures and short sales sold for 20 percent and 14 percent, respectively, below market value.

All-cash deals accounted for 29 percent of October's sales -- the same as last year and a percentage point higher than September. Investors accounted for 20 percent of existing home sales in October.

Read More: http://www.inman.com/news/2012/11/19/strong-sales-and-tight-inventory-boost-home-prices