US home-buying season finally signaling a recovery

[Omaha Steve]

Source: AP-Excite

By DEREK KRAVITZ and ALEX VEIGA

WASHINGTON (AP) - Five years after the U.S. housing bust sent sales and prices plunging, the spring home-buying season is pointing to a long-awaited recovery.

Reduced prices, record-low mortgage rates, higher rents and an improving job market appear to be emboldening many would-be buyers. Open houses are drawing crowds. A wave of foreclosures is leading investors to grab bargain-priced homes.

And many people seem to have concluded that prices won't drop much further. In some areas, prices have begun to tick up.

Interviews with more than two dozen potential buyers, sellers, brokers, Realtors and economists suggest that confidence is up and that sales will move slowly but steadily higher.

Read more: http://apnews.excite.com/article/20120415/D9U5E6H80.html

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In this photo taken Friday, April 13, 2012, in Chicago, John and Megan Henshel pack belongings in the condo they were renting to move to a home they just purchased. (AP Photo/M. Spencer Green)

[femmocrat]

1. This is good news.

We have a family member who recently purchased his first home and his mortgage payment is less than his rent. We are also trying to sell a house we more-or-less inherited as part of an estate.

[magic59]

2. Prices at 30 year lows and will stay there for years

But, studies show that renting is always better then buying in the long run, frees up money for investments. Homes are poor investments but are great money pits.

[eggplant]

4. And if investing were the only reason to buy, you'd be right.

Of course, not having to deal with a landlord or the uncertainty that your home will disappear out from under you have their value as well. Personally, I love being a homeowner.

[marybourg]

5. And of the 5 homes I have owned

in the past 40 years, 3 have been excellent investments and have assured my comfortable retirement and 2 have been break even propositions. What the OP is expressing ia a familiar phenomenon called "recency bias". It's the same thing that caused people to extend themselves in and prior to the bubble. Then, it was the belief that house prices would always go up. Now, due to events of just the last few years it's the opposite . A slightly longer view of human history will always stand you in good stead .

[elleng]

7. 'Studies show that renting is always better then buying in the long run,'

don't think so. Such 'studies' must have been RECENT. Obviously everyone has to consider her/his situation and goals, the market they're considering, and many more matters.

[KurtNYC]

10. here is a pretty thorough calculator of rent versus buy

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

Although it does not evaluate renting an APARTMENT versus a free standing house so for those with that choice you would have to factor yard maintenance, rent with ehat included, etc. Many of the numbers they show for owning look low to me: annual maintenance for a $172K they say is $950 but a roof every 15-20 yrs would be most of that number if nowt more. Property taxes where I live are 3% of the home price and rising.

Also there is a major demographic shift which will put a lid on home prices for the foreseeable future. Boomers are retiring and the new workforce is paid less, has less stable income and jobs and generally will not be able to push prices higher.

For me the calculator says that renting is better than buying if I will be in the home less than 20 years and that is by fairly buy-biased modeling.

[dmallind]

13. 5.5% mortgage rates are BUY-biased?

Mine is 3.5 and even then I didn't quite catch the bottom.

You cannot come CLOSE to renting a house here for the same as a mortgage payment even including maintenance (and remember to subtract tax deductions too). NYC may well be different but in huge swathes of flyover country rentals of equivalent properties cost far more than buying them. Sure you can live more cheaply renting - if you want to live in an apartment.

[KurtNYC]

14. Mortgage + property taxes + insurance + maintenance

would be more, even counting the equity you build (assuming that prices stop declining).

A rent deal with heat included ensures that you have fixed costs and will not find yourself in an underwater mortgage on a house you can't sell 2 years from now.

I am upstate these days and property taxes (3%) could be nearly as high as payments on a 30 yr mortgage. We have gas heat but those with oil are hurting at $5 / gallon.

[dmallind]

15. No - I mean PITI payments far far lower

I lived in Broome cty for a while where 3% property taxes are a dream and even there mortgages were cheaper than rent. You don't think landlords base rent on their total costs including taxes? Renters pay every dime of those property taxes - they just don't get to deduct them on taxes.

Just because your rent doesn't itemize taxes and maintenance doesn't mean you're not paying them. Landlords are rarely known for being charitably generous.

[MADem]

8. Not for me--I am happier living in a home I own. I've rented all over the world, and there's

nothing like living in your OWN home.

[bluestateguy]

3. I'm actually looking to buy myself (maybe) this summer

I don't have to buy, but I will explore my options on the market.

The reasons for the housing market collapse are complicated and should not be bumperstickerized.

[klook]

6. Fantastic news

If this holds water, it's the surest sign the recovery is for real. Couldn't come at a better time to

1. start things moving in the right direction for many, many Americans, and


2. help ensure the defeat of RMoney -- which, come to think of it, would start things moving in the right direction for the whole damn country.

[magical thyme]

9. oh gawd I hope so....

There have been so many false "re-starts" to the housing market in the last 5 years, I'm afraid to buy into this one. This quote doesn't lend a lot of credence:

"two dozen potential buyers, sellers, brokers, Realtors and economists" is not a hell of a lot of input. 3 types of people who depend on the market improving, a couple prospects and an economist or two is not exactly overwhelming support. I'd like to see a dozen good economists looking at the numbers and another dozen prospects, and leave out the brokers, realtors and sellers.

On the other hand, the fact that I've pretty much given up after 3 years of trying off and on to sell is a good sign that the market is about to take off, lol.

The numbers they do cite bode well for me. My house falls into the $100-$250K category that's up 19%. Maybe I'll try one last time to sell before I resign myself to being trapped here until I'm bankrupted by student loans and thrown into the street.

[joeglow3]

11. We just sold our house in 4 days.

[just1voice]

12. LOL, income to price ratios any better on anything but foreclosures?

Job market is still horrible and people without jobs can't afford to buy houses. Also, the article on AP/repuke propaganda quotes a realtor who says "the fear factor is all but gone" as if fear was all that was keeping 1 in 7 homes in America empty.

Articles like this one NEVER look at incomes vs prices because it's not a real article that requires rational thinking, it's a fluff piece that's basically propaganda for real estate/banks.