Daily Archives: February 23, 2015

Here’s the budget of a 27-year-old who owns 2 houses | Mt Kisco Real Estate

After graduating college in 2009, Brian Maida lived with his parents for about two years in order to save the money to buy his first home.

He bought a second one in 2013.

Maida, 27, lives in New Jersey and works in business development and sales. He says it only took about $14,000 to buy that first place, which he now rents out for supplemental income.

“I was able to refinance that loan within a year and show them that I had 20% equity based on their appraisal, and that lowered my payment by almost 20%,” Maida explains. “You can get pretty good deals on real estate if you look hard and negotiate.”

He bought his second place, where he now lives, in  a short sale with  5% down, and he currently pays private mortgage insurance (PMI).

In fact, Maida devotes the bulk of his monthly budget to his properties, and plans to buy a third property in March of this year. “I liquidated my 401(K) and Roth IRA,” he explains. “I no longer believe in investing in the stock market — I follow it too much. I would rather buy real estate and leverage my money. Right now I own about $250,000 in real estate, and I put in maybe $40,000.”

Below, Maida shares his monthly budget based on his $5,656 monthly income ($4,306 from his salary, $1,350 rental income from his investment property). He budgets according to take-home pay from his base salary, plus paycheck withdrawals like medical insurance but excluding taxes. He chooses to list out the withdrawals in case he ever becomes a contractor in the future. “I don’t even put commission on here, because in my role, I could make $100,000 one year and $200,000 the next,” he adds. “All the commission is extra money I’d save.”

All numbers are rounded to the nearest dollar.

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maida budget

Brian Maida

To simplify the visual, we’ve abbreviated Maida’s primary home, where he lives, as “PH.” We’ve also condensed the costs of his investment property ($1,307) into one category that includes his separate payments for the mortgage, taxes, HOA fee, the landlord/tenant policy, and any other costs.

The “pets” category includes two categories that Maida lists separately for his two dogs and a cat: food/treats/toys/vet ($200) and walking/sitting ($60). His “accident insurance” category includes both his personal death and dismemberment coverage and his enrollment in his employer’s legal plan.

Vegaprocity” includes costs associated with the vegan website Maida runs on the side. In fact, he provides a downloadable budgeting template on his site.

His monthly costs, which he splits into fixed and variable categories, add up to $4,674 a month, leaving a difference of $982. “If stick to this budget, I save about $12,000 a year,” Maida explains. “My tax return is another approximately $3,000 — that’s $15,000 a year.  Next, I’d like to buy a house for $250,000 to $500,000.”

 

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http://finance.yahoo.com/news/heres-budget-27-old-owns-160000217.html

NAR Reports Existing Sales Disappoint | South Salem Real Estate

Existing home sales decreased 4.9% in January, and the share of sales for first-time buyers continued to disappoint. The National Association of Realtors (NAR) reported January 2015 total existing home sales at a seasonally adjusted rate of 4.82 million units combined for single-family homes, townhomes, condominiums and co-ops, down from a revised 5.07 million units in December. January existing sales were up 3.2% from the same period a year ago.

Existing Home Sales January 2015

Existing sales from the previous month were down in all four regions, ranging from 2.7% in the Midwest to 7.1% in the West. Year-over-year, existing sales were up in all four regions, ranging from 5.6% in the South to 0.9% in the Midwest.

The first-time buyer share decreased to 26% in January, down from 29% in December and 31% in November. This continuing downward trend follows 2014 during which the annual share of first-time buyers fell to its lowest level in nearly three decades. Reports of easing mortgage standards will help first-time buyers, and a full recovery awaits their return to their typical 40% share.

Total housing inventory increased 0.5% in January to 1.87 million existing homes. At the current sales rate, the January 2015 inventory increased to a 4.7-month supply, up from a 4.4-month supply in December. NAR also reported that in January the typical time on the market was 69 days, up from 66 days in December, and slightly up from 67 days during the previous January. NAR reported that 30% of homes sold in January were on the market less than a month, down from 31% in December and 32% in November.

The distressed sales share January sales remained unchanged from December at 11%, and was down from 15% during the same month a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts. January all cash sales increased to 27% of transactions, up from 26% in December and 25% in November, but were down from 33% during the same month a year ago. Individual investors purchased a 17% share in January, unchanged from December, but that share was down from the 20% share last January. Some 67% of January investors paid cash, up from 63% in December and 61% in November. The awaited withdrawal of cash investors will create more opportunity for first-time buyers.

The January median sales price of $199,600 was 6.2% above the previous January, and represented the 35th consecutive month of year-over-year price increases. The median condominium/co-op price dropped for the sixth consecutive month to $198,300 in January, but was up 5.3% from the same period a year ago.

The Pending Home Sales Index decreased 3.7% in December, so the decline in January existing sales was not a surprise. However, it is expected that existing sales will regain their upward momentum during 2015, hopefully supported by the much awaited recovery for first-time buyers.

 

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http://eyeonhousing.org/2015/02/existing-sales-disappoint/

Existing home sales collapse in January despite low mortgage rates | Waccabuc Real Estate

Existing home sales collapsed 4.9% in January to their lowest rate in nine months, falling well below analyst expectations, led by a massive drop in western region, according to the National Association of Realtors.

All major regions experienced declines in January, with the Northeast and West seeing the largest.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 4.9% to a seasonally adjusted annual rate of 4.82 million in January from an upwardly-revised 5.07 million in December.

“January’s drop in existing home sales is a bit concerning,” said Bill Banfield, vice president at Quicken Loans. “Economic indicators and stubbornly-low interest rates would lead most to expect improvement, yet recent housing reports have indicated the opposite. Inventory is a number I’ll be watching in the coming months as it has the power to help existing sales bounce back.”

Lawrence Yun, NAR chief economist, says the housing market got off to a somewhat disappointing start to begin the year with January closings down throughout the country.

“January housing data can be volatile because of seasonal influences, but low housing supply and the ongoing rise in home prices above the pace of inflation appeared to slow sales despite interest rates remaining near historic lows,” he said. “Realtors are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.”

Total housing inventory at the end of January increased 0.5% to 1.87 million existing homes available for sale, but is 0.5% lower than a year ago. Unsold inventory is at a 4.7-month supply at the current sales pace – up from 4.4 months in December.

The slowdown in mortgage purchase applications is alsoweighing on analysts. Mortgage purchase apps have faltered, and that limits upside risk for mortgage rates, according to the analyst team lead by Chris Flanagan atBank of America/Merrill Lynch.

 

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http://www.housingwire.com/articles/33021-existing-home-sales-collapse-in-january-despite-low-mortgage-rates

Existing-home sales slow to 9-month low in January | Cross River Real Estate

The housing market didn’t get off to a great start in 2015, as existing-home sales in January fell to the lowest level in nine months.

The National Association of Realtors reported that home sales fell 4.9% to a seasonally adjusted annual rate of 4.82 million. Economists polled by MarketWatch had forecast a 4.95 million rate.

December’s data saw a mild upward revision to 5.07 million from an initially reported 5.04 million.

Lawrence Yun, chief economist for the NAR, attributed the decline to a lack of housing supply and rising prices.

The median existing-home price was $199,600, which is 6.2% above January 2014 levels. Inventory edged up 0.5% to 1.87 million homes, or a 4.7 month supply at the current sales price.

Yun added that low mortgage rates are generating interest, but the lack of new and affordable listings is delaying decisions.

Other factoids from the January report:

• All-cash sales were 27% of all transactions, up from 26% in December but down from 33% in January 2014.

• Distressed sales were 11% of all sales, unchanged from December.

• Properties typically stayed on the market slightly longer in January (69 days) than December (66 days) and a year ago (67 days).

• The share of first-time buyers declined to 28% in January, the lowest since June.

“Today a somewhat softer-than-expected report is a further sign that housing is still struggling to gain altitude although we expect further signs of recovery in the next two to three years as the improving job market encourages more first-time buyers,” said Peter Buchanan, an economist at CIBC World Markets.

 

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http://www.marketwatch.com/story/existing-home-sales-slow-to-9-month-low-in-january-2015-02-23

Mortgages Rise in 2014, Should Increase Further in 2015 | Katonah Real Estate

According to the Federal Reserve Bank of New York’s latest Household Debt and Credit Report, total household debt outstanding rose by $306 billion, 2.7%, between the fourth quarter of 2013 and the fourth quarter of 2014.

At the end of 2014 there was $11.8 trillion in house debt outstanding. By virtue of its size, the increase in mortgage debt outstanding over the year, $121 billion, accounted for much of the increase in total household credit outstanding. Auto loans, $92 billion, student loans, $77 billion, credit cards, $17 billion, and other consumer debt, $18 billion, also contributed to increase in total household debt outstanding over the 2014. The outstanding amount of home equity lines of credit fell by $19 billion. However, in year-over-year percentage growth terms, auto loans, 10.7%, and student loans, 7.1%, led the way. Outstanding credit card debt rose by 2.5% and mortgage debt increased by 1.5%. The amount of home equity lines of credit outstanding fell by 3.6%.

Although the year-over-year growth in mortgage credit outstanding, 1.5%, was below the 2.7% growth in total household debt outstanding, it represents acceleration from the rate of growth recorded over the year of 2013. As Figure 1 below illustrates, following four successive years of declines, 2014 marks the second consecutive year of growth. The rate of growth in 2014 was 1.3 percentage points greater than the rate recorded in 2013 and is similar to the rate recorded in 2008, the last year that mortgage debt outstanding registered annual growth.

Presentation1

Despite the presence of some risks, mortgage debt outstanding should expand further in 2015. Part of the reason that mortgage debt outstanding should rise in 2015 is because the serious mortgage delinquency rate is returning to its pre-recession level. At the same time, mortgage originators expect their mortgage business to grow. According to Fannie Mae’s Mortgage Lender Sentiment Survey, and as illustrated in Figure 2 below, 88% of respondents expect to grow their mortgage origination volume going forward, while 12% expect to maintain their mortgage origination volume. No respondent expects to either downsize their mortgage origination volume or exit the mortgage origination industry.

 

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http://eyeonhousing.org/2015/02/mortgages-rise-in-2014-should-increase-further-in-2015/