Posted on December 19, 2008 by dhstevens

December 22, 2008 (Newsweek Magazine) - Sunday Open Houses are starting to look a lot more attractive, and it’s not just because the sellers baked brownies and slapped on another coat of paint. Since 2006, the peak of the housing boom, prices have dropped nationally by 18 percent and the rates on 30-year fixed mortgages have fallen from 6.8 percent to 5.5 percent. That means the average monthly mortgage payment has dropped from more than $1,000 to $894. The bottom line? Says Rich Arzaga, an independent financial adviser who teaches real estate investing at University of California, Berkeley, “Money is cheap, the homes are affordable, and sellers are really very desperate.”

That doesn’t mean you should run out and buy a house today; you can take your time to find the perfect home. The market is likely to bump along the bottom for a while, say analysts, and some markets may not hit their absolute rock-bottom prices for weeks or months-or even, in some vulnerable markets, years. But if you’re a first-time home buyer or a preretiree looking to line up your place in the sun (and you’re lucky enough to be able to afford one in this economy), start shopping now. Here’s why.

Good deals for snowbirds. Retirement hot spots like Florida, Nevada and Arizona have been particularly hard hit with falling prices. There are more than 21,000 homes for sale in Vegas; more than 5,000 in Boca Raton, almost 15,000 in Phoenix. That means lots of choice and room to bargain on price. If you’re intending to move to one of those areas, it makes sense to vacation there this winter and start checking out the market. In the three to five years it takes you to relocate, prices and rates are likely to solidify. There are already signs of slowing inventories and firming prices in some spots, like San Diego. But be careful: if you buy into a condo development that has many empty units, you can expect your monthly condo fees to rise significantly, to cover all those no-shows. And don’t count on rental income in those communities-in-crisis.

A bird in the hand. Don’t wait for the government-backed 4.5 percent rate that Treasury Department sources floated recently. It may never materialize, what with opposition from troubled banks and existing homeowners, and skepticism that it is the economic tool most needed now. Current rates are grazing their 45-year lows as it is, says Keith Gumbinger of HSH Associates, a mortgage-research firm. And they are as likely to head back up as they are to fall further.

Free money. First-time home buyers who ink their contracts before July 1, 2009, can claim a $7,500 tax credit to help them muster up a down payment. It’s really a zero-interest loan, repayable over 15 years with your annual income taxes. First-time home buyers can also withdraw money from their Individual Retirement Accounts penalty-free (but not tax-free) to make a down payment. They can also take some tax-free money out of their Roth IRAs to buy a home.

But some serious prep work is in order. As the sick housing market heads into typically slow winter, there’s time to amass a down payment (10 percent is good, 20 percent is much, much better) and get your low credit score up over 680, the new minimum level to qualify for a decent loan now. First-time and second-home buyers should take their time to explore what’s out there, and an extra moment to enjoy the one other advantage they have now. They can buy when they want, without worrying about selling a house in this market.

WASHINGTON, December 02, 2008

For the second year in a row, Realtors^® report that exterior remodeling projects return the most money as a percentage of cost, as detailed in the 2008 Remodeling Cost vs. Value Report.

On a national level, wood deck additions and all types of siding replacements – upscale fiber cement, midrange vinyl, and upscale foam-backed vinyl – returned more than 80 percent of project costs upon resale. Of these, the most profitable project was upscale fiber cement siding, which recouped 86.7 percent of costs, followed by wood decks at 81.8 percent, midrange vinyl siding at 80.7 percent, and upscale foam-backed vinyl siding at 80.4 percent.

“Because today’s buyers have much more to choose from in the way of inventory, any home for sale must make a positive first impression,” said National Association of Realtors^® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “As a trusted source for real estate information, Realtors^® understand what attracts and motivates their buyer clients, which is why the results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye.”

The 2008 Remodeling Cost vs. Value Report compares construction costs with resale values for 30 midrange and upscale remodeling projects comprising additions, remodels and replacements in 79 markets across the country, expanding from 60 markets last year. Data are grouped into nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 11th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR Magazine, as Realtors^® provided their insight into local markets and buyer home preferences within those markets.

In addition to wood decks and siding, window replacements and kitchen remodels also returned a relatively high percentage of remodeling costs on a national basis. All types of window replacements – upscale and midrange wood and upscale and midscale vinyl – returned more than 76 percent of costs. A major midrange kitchen remodel returned 76.0 percent of project costs, while a minor midrange kitchen remodel returned 79.5 percent of costs.

On a national level, bathroom remodels, while still a relatively good investment, do not return as high a percentage as in previous years. A midrange bathroom remodel was estimated to return 74.4 percent on resale, comparable to a midrange attic-to-bedroom conversion, at 73.6 percent of costs recouped, and a midrange basement remodel, at 72.7 percent of costs recouped.

As in last year’s report, the least profitable remodeling projects in terms of resale value were home office remodels, sunroom additions, and back-up power generators, returning only 54.4 percent, 56.6 percent, and 57.1 percent, respectively, of project costs.

Although most regions followed national trends, the regions that consistently were estimated to return a higher percentage of remodeling costs upon resale were the Pacific region of Alaska, California, Hawaii, Oregon and Washington; the West South Central region of Arkansas, Louisiana, Oklahoma, and Texas; the East South Central region of Alabama, Kentucky, Mississippi and Tennessee; and the South Atlantic region of the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia.

The regions that generally returned the lowest percentage of costs were New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin), West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota), and Middle Atlantic (New York and Pennsylvania).

McMillan explained that the resale value of any given remodeling project depends on a variety of factors. “A home’s overall condition, availability and condition of surrounding properties, location, and regional economic climate are all factors that will influence the value of any remodeling project,” he said. “That’s why it’s important to consult with professionals like Realtors^® in your area when you want to enhance the value of your home. Realtors^® see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area.”

Results of the report are summarized in the December 2008 issue of REALTOR^® Magazine. The issue also includes examples of actual remodeling projects that were less expensive than many of the report’s cost estimates. Full project descriptions, as well as national, regional and local project data for the 79 cities covered by the report will be posted at www.costvsvalue.com by December 5. “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

Hanley Wood, LLC, is the premier media company serving housing and construction. Through four operating divisions, the company produces award-winning magazines and Web sites, marquee trade shows and events, rich data, and custom marketing solutions. The company also is North America’s leading provider of home plans. Founded in 1976, Hanley Wood is a $240 million company owned by JPMorgan Partners, LLC, a private equity affiliate of JPMorgan Chase & Co.