INVESTMENT PROPERTY: Tips For First-Time Landlords

You can't or don't want to sell your existing home.

If those two statements ring true for you, becoming a landlord might not be a bad idea.You can move to another home for less than the income you could get for renting your home.

The housing recovery is underway, but it could still take years for many homeowners to surface from their underwater status. Selling now would beselling at a loss.

Other homeowners aren't underwater, but don't have enough equity to sell at a decent profit. Selling now could be only a break-even proposition.

Homeowners stuck with a mortgage larger than the value of their home, are cashing in on rising rents by renting out their existing home and moving to a home that costs less - if only temporarily.

The deal can even work if the home you move to costs the same as or even more than your current housing costs, provided your new housing costs are sufficiently offset by the rental income from your existing home.

Do the math

In the best of all worlds, the rent should cover not only your existing home's mortgage, but property taxes, insurance, upkeep and other costs of owning a home. If not, you'll have to make up the difference.

In today's skyrocketing rents market, you likely can swing the rental income you need.

However, you face a greater obstacle than making the deal pencil.

Hiring a property manager could cut into your rental income, but landlording, especially for first-timers, is not a piece of cake.

Take some cues from T.J. Rubin, broker owner of Fulton Grace Realty in Chicago.

He offers some tips to help you make the transition to a new job as a landlord.

MARKET TRENDS: Pending Home Sales Fall Due to Dwindling Supply

Signed contracts to buy existing homes fell 4.3 percent in December from the previous month, according to a monthly index from the National Association of Realtors. That missed analysts' expectations of a one percent gain. The index is 6.9 percent higher than December of 2011. Realtors say it is not lack of demand but supply at the end of 2012 that pushed the numbers down.

"Buyer interest remains solid, as evidenced by a separate Realtor survey which shows that buyer foot traffic is easily outpacing seller traffic," wrote Lawrence Yun, chief economist for the NAR in a release.

Much of last year's gains in existing home sales was driven by investor demand for foreclosures and other distressed properties. Millions of dollars, largely in cash, from private equity, flowed into the market, pushing supplies down dramatically and even causing bidding wars in some of the previously hardest hit markets. That pushed prices up in the double-digit range, but critics caution that this is not a real organic recovery in the overall market. These existing sales numbers as well as a disappointing read last week on sales of newly built homes are bolstering that warning.

The Realtors' monthly index fell 5.4 percent in the Northeast month-to-month, rose 0.9 percent in the Midwest, fell 4.5 percent in the South and fell 8.2 percent in the West. The West, and its severely distressed markets like Phoenix and Las Vegas, has been the center of most investor interest and is therefore seeing the lowest supply of properties for sale. The West is also the only region that saw a year-over-year decline in signed sales contracts in December.

Housing inventory usually drops in the winter months, only to rebound in the spring, but this winter has seen a larger than normal decline. Realtors are looking for more homes to come on the market in the spring, but there are still 10.7 million borrowers who owe more on their mortgages than their homes are worth, and an additional 2.3 million who have less than five percent equity in their homes, according to CoreLogic. Those homeowners cannot sell without having to pay into their mortgages, so they are largely stuck in place. First-time home buyers are purchasing at an unusually low rate due to tighter credit standards, and many potential sellers simply don't want to list until prices rise more substantially.

"We expect a seasonal rise of inventory in the spring to help, but a seller's market may be developing," notes Yun. "Much of the West is already a seller's market for homes priced under a million dollars, but conditions are much more balanced in the Northeast."

http://www.cnbc.com/id/100412357/Pending_Home_Sales_Fall_Due_to_Dwindling_Supply

THE ECONOMY: Housing to drive economic growth (finally!)

The bursting of the housing bubble plunged the economy into a recession from which it has yet to fully recover. But economists say this could finally be the year that housing lifts us out of the doldrums.

Just over half of economists surveyed by CNNMoney identified a housing recovery as the primary driver of economic growth this year. The rest were split fairly evenly between consumer spending, increased domestic energy production and stimulus from the Federal Reserve as major growth drivers.

"Homebuilding activity will likely remain the strongest growing component of the economy in 2013," said Keith Hembre, chief economist of Nuveen Asset Management. "After several years of excess supply, demand and supply conditions are now in much better balance."

Home sales rebounded to the strongest level in five years in 2012, as home building bounced back to levels not seen since early in the recession. Near record low mortgage rates, rising home prices and a drop in foreclosures have combined to bring buyers back to the market.
The economists surveyed also forecast that there will be just under 1 million housing starts this year -- roughly matching the 28% rise in home building in 2012. Moody's Analytics is forecasting much stronger growth -- a 50% rise both this year and next year, which it estimates will create more than 1 million new jobs.

"There's a lot of pent-up demand for housing, and very little supply," said Celia Chen, housing economist for Moody's Analytics. "As demand continues to improve, home builders have nothing to sell. They'll have to build." She said that growth in building will mean adding not just construction jobs, but also manufacturing jobs building the appliances and furniture needed in the new homes, which in turn drives overall consumption higher.

And economists say the tight supply and renewed demand for housing should lead to higher

THE ECONOMY: New-home sales post first annual gain in 7 years

Sales of new single-family homes rose 19.9 percent from 2011 to 2012, with 367,000 newly-built homes sold last year, the U.S. Census Bureau reported today.

It's been seven years since new-home sales posted an annual gain, but 2012 was still the third worst year in Census Bureau records dating to 1963, blogger Bill McBride noted onCalculated Risk. The two worst years for new-home sales were 2010 and 2011.

The Census Bureau also reported that after an upward revision of November's numbers, the annual rate of new-home sales dropped 7.3 percent from November to December, to a seasonally adjusted 369,000 per year.

That represents an 8.8 percent increase from a year ago.

The median sales price of new homes sold in December was $248,900, up 9.6 percent from a year ago and 1.3 percent from November.

The Census Bureau estimated that 151,000 new homes were on the market at the end of December, representing a 4.9-month supply.

Annual new-home sales

Year	Sales (thousands)	Percent change in sales
2005	1,283	6.7%
2006	1,051	-18.1%
2007	776	-26.2%
2008	485	-37.5%
2009	375	-22.7%
2010	323	-13.9%
2011	306	-5.3%
2012	367	19.9%

Source: Calculated Risk blog

McBride said he expects December sales will be upwardly revised, just as those for the three previous months have been. In the years to come, McBride and others expect sales of new single-family home sales will be much higher.

Source: Calculated Risk blog.

"My guess is sales will rise to around 800,000 per year in a few years, but others think the next

NEIGHBORHOOD NEWS: Panera opens nonprofit Hub cafe

Customers pay what they can afford here

Jonathan Diotalevi wasn’t sure what to expect when he walked into Panera Cares near Government Center on Wednesday, the restaurant’s first day of business. The recent UMass Dartmouth graduate said he doesn’t have a lot of cash and was just looking for a cheap lunch.

A smiling employee greeted Diotalevi at the door, he waited in line, ­ordered a tomato- mozzarella panini, and then asked the clerk, “So, can I, like, just give you two bucks?”

Yes, he could. And he did, dropping the money into a nearby donation bin.

The restaurant at 3 Center Plaza may have been as busy at lunch time as any of the chains’s other cafes nationwide — more than 1,600 of them — but there’s a reason cochief executive Ron Shaich calls this one “a test of human nature.”

The nonprofit outpost of Panera Bread Co. doesn’t have any cash registers, or set prices. Instead, it depends on donations from customers who pay whatever they can afford. The Government Center shop is the fifth of its kind for the St. Louis-based company — the first in this region.

“I think it’s awesome because it’s obviously beneficial for people who are a little less fortunate,” said customer Yanick Belzile of Lowell. “We can ­afford to, so we put in a little bit extra. If we can help someone else who can’t pay for a meal, why not?”

Belzile said he donated about $3 more than the suggested donation, or regular retail price,

SELLING YOUR HOME: What To Do When Your Home Isn't Selling

When sellers start the home-selling process, no one wants to think "What would happen if my home doesn't sell?" But before you panic, recognize that there are many things that you can do so you don't wind up in that position.

While all that may seem basic, you'd be surprised how many sellers rely on emotion to dream up a selling price for their home. Some have done little, if any, research on even their own neighborhood. Instead, their strong ties to their homes cause them to imagine that their home should sell for the price they want. Or they base the selling price on how much they owe which is, of course, of no significance to buyers.

Tip 1: Understanding the real estate market and the value of your home will help you avoid this dilemma. The first key point is to get educated about the market. Read your newspapers, online real estate sites, and consult with the best experts in real estate for your area to determine the sales price.

Tip 2: Fix up your home. Most buyers don't want to purchase a big list of must-do fixes in order to live in the home they just bought. Yet, some sellers think that it's a waste to spend money on a home that they're moving out of soon. That's quite a predicament. Both sides have valid points except one side–buyers–might be in a stronger position. The seller wants out and if the home is a mess, many buyers will simply move on to the next best house. Yet, if a buyer wants it badly enough, he/she might agree to purchase your home but it's guaranteed you'll take a

THE ECONOMY: Mass. single-family home prices rose 18% last year

In another sign that the housing market may be on the mend, the median sale price of single-family homes in Massachusetts rose more than 12 percent in December to $300,000, the first time since August that median home prices have broken the $300,000 mark, the Warren Group said Thursday.

Looking at the entire year, the Warren Group added that single-family home sales in Massachusetts rose 18 percent in 2012, marking 12 consecutive months of year-over-year sales gains and the best year on record since 2006.

“I would characterize 2012 as the year of robust recovery in the real estate market,” Warren Group chief executive Timothy M. Warren Jr. said in a statement. “It is clear we have turned the corner and are gaining ground rapidly. I contrast the 18 percent gain last year with the decline of 6 percent in 2011.”

As for condo sales in December, they rose 5.4 percent to 1,402 units. The median condo price in December rose 8 percent to $275,000, the Warren Group said.

For 2012, condo sales were up more than 25 percent to 19,061 units.

The Massachusetts Association of Realtors issued a separate monthly report Thursday on the local housing market. The association uses a slightly different method to track real estate activity than the Warren Group does.

According to the association’s press release, 3,737 detached single-family homes sold in December, a 13 percent increase from the previous December. December 2012 was the 18th straight month of year-over-year increases.

The median selling price for single-family home in December was $303,500, which was up

MARKET TRENDS: Call it a housing recovery, but not a boom

U.S. housing markets are in a recovery. But the rebound from the depth is modest, and how long the housing recovery will last is anybody's guess.

Evidence of an upswing is so plentiful that Rick Sharga, executive vice president of Carrington Mortgage Holdings, a real estate company in Aliso Viejo, Calif., says "virtually every metric" points to a housing recovery.

Specific numbers vary, as always, from one month and one locale to the next, yet it's clear that, on a national basis, sales of both brand-new and existing homes are up, prices are up, residential building permits are up, and sales of bank-owned foreclosure properties are down.

"A market that was at an incredibly low point has stabilized and is showing signs of getting better," Sharga says. "But it's all relative. We're not looking at a boom. We're looking at a slow and steady recovery."

That caution stems in part from a few "hidden aspects," to use Sharga's characterization, that lurk with the flurry of positive numbers.

One concern is all-cash, investment-oriented buyers purchasing homes to hold as rental properties continue to close a large proportion of home sales transactions. An investor-driven recovery isn't problematic in and of itself, but Sharga questions whether the current momentum can be sustained without a resurgence of traditional first-time and move-up homebuyers, who historically close the bulk of home purchases.

"Your average homebuyer really hasn't come back into the market in a meaningful way," Sharga says.

Another concern is that upticks in building and foreclosure activity on the supply side could create a significantly larger inventory of for-sale houses a year or so from now. That "could have an impact on pricing," Sharga suggests, if more traditional buyers don't return to the market to snap up those additional homes.

Two other cautionary notes are an unusually high number of pending sales that don't close due to appraisal or buyer financing problems and persistently high unemployment. Housing isn't likely to truly take off until the national jobless rate drops to less than 6.5 percent, Sharga suggests.

"Housing is trending in the right direction," he says. "But we have to recognize it will take several more years to work through the backlog of distressed inventory and for borrowers whose credit has been impaired to be able to come back as buyers."

Mix of sales

The massive California housing market has all those positive and negative characteristics. But the key factor this year has been a dramatic drop in sales of bank-owned foreclosure houses. These so-called real estate owned, or REO, properties made up more than half the state's sales in 2009, but comprised only about 10 percent to 15 percent of sales in recent months, according to Leslie Appleton-Young, chief economist of the California Association of Realtors in Los Angeles.

The interplay of REO sales, short sales and traditional equity sales "really tells the story of the recovery in the California housing market," Appleton-Young says.
Yet again, there is a constraint, which is that people who have cash and healthy credit are able to buy, but others are being kept out.

"People who are in a position to take advantage of the market today are doing so because properties are affordable and if they need a mortgage, the rates are very low," Appleton-Young says. "The lack of jobs is keeping people out of the market -- people who don't have a job, can't get a mortgage, don't have a down payment."

Better appraisals

The recovery is being felt in local markets, too.

Rob McAllister, a mortgage broker at West Seattle Mortgage, says homeowners who want to refinance are seeing higher valuations, and for-sale homes are attracting multiple offers.
"Homes are starting to appraise for more than (the owners') estimates, which is a good indication that the housing market -- at least here -- has improved," McAllister says.
He attributes the recovery to classic economics: Fewer new houses are being built to shelter an increasing number of people.

"When you have a complete stoppage or significant reduction in construction and you continue to have population growth, you have to house those people, so prices are going to go up," he says. "It's supply and demand."

Home loans

The recovery presents opportunities for buyers and sellers in the near term. But Appleton-Young also says the future of Fannie Mae and Freddie Mac bears watching by those whose plans are further out. Fannie and Freddie are federal government-controlled companies that buy bulk batches of home loans from lenders to create liquidity in the mortgage market.
"We don't know what the plan is toward the secondary mortgage market," Appleton-Young says. "We know Fannie and Freddie are shrinking. We know it's going to be different. But we don't know the plan or the trajectory."

Read more: http://www.bankrate.com/finance/real-estate/housing-recovery-not-boom.aspx#ixzz2IduwPfUe 

NEW CONSTRUCTION: Surge in home construction likely to continue

WASHINGTON (AP) — The aftermath of the housing bust forced many homebuilders to dramatically scale back construction on new homes to avoid the risk of ending up saddled with a trove of newly built, yet unsold properties.

But an improving housing market has homebuilders feeling more confident about sales, and that's likely to kick the pace of new construction into a higher gear this year.

The Commerce Department said Thursday that builders broke ground on houses and apartments last month at a seasonally adjusted annual rate of 954,000. That's 12.1% higher than November's annual rate. And it is nearly double the recession low reached in April 2009.

Construction increased last month for both single-family homes and apartments. And the pace in which builders requested permits to start more homes ticked up to a 4½ year high.

For the year, builders started work on 780,000 homes. That's still roughly half of the annual number of starts consistent with healthier markets. But it is an increase of 28.1% from 2011. And it is the most since 2008 — shortly after the housing market began to collapse in late 2006 and 2007.

Steady hiring, record-low mortgage rates and a tight supply of new and previously occupied homes available for sale have helped boost sales and prices in most markets. That has persuaded builders to start more homes, which adds to economic growth and hiring.

David Williams, a homebuilding analyst with Williams Financial Group, says builders are very closely tied to what's happening in the housing market and they're going to build homes to meet demand, but not go overboard.

"I don't think, at this point, that they're going to overbuild," Williams said, noting that homebuilders are still holding back on building too many spec homes, or properties built before they're sold.

Having some spec homes can help sales, especially when a buyer isn't willing to wait several months for their home to be built. Builders tend to put up more of those homes heading into the spring home-selling season that traditionally begins next month.

Larry Webb, CEO of homebuilder The New Home Co., in Aliso Viejo, Calif., says he is building

MARKET TRENDS: More young Americans leaving the parental nest, boosting housing recovery

WASHINGTON – Americans are feeling increasingly confident in the future and more and more are striking out to set up their own homes, a move that is helping propel the housing recovery.

The deep financial crisis and recession of 2007-2009 kept many Americans from leaving their parents’ nests and drove others back into them, putting a sharp brake on the pace at which new households formed.

Household growth averaged about 500,000 per year from 2008 through 2010 — less than half the rate seen at the height of the housing boom in the years just before that. The pace in 2010 was the weakest since 1947.

Instead of having too many houses, we are turning to a situation where there aren’t enough

But the rate at which individuals or families are getting their own homes picked up over the past two years, underpinned by a steady if tepid economic recovery and gradual labor market gains. In 2011, households increased 1.1 million and they grew closer to 1.2 million last year.

“The rise in household formation bodes well for the housing recovery. Instead of having too many houses, we are turning to a situation where there aren’t enough,” said Guy Berger a U.S. economist at RBS in Stamford, Connecticut.

Indeed, housing has turned from the economy’s sorest spot to its brightest, with new building activity at 4-1/2-year highs. Housing activity in turn spurs related areas like furniture.

That is because of people like Linna Chhean. After graduating from college in May 2007, she moved back in with her parents, helping out in a family-run business.

The 27-year-old finally moved into her own one-bedroom apartment four weeks ago after she was hired as a designer in the Dallas offices of a global public relations firm.

“I wanted to get a job in my field, which is art. I was working for them in a convenience store, which is not what I wanted to do at all,” said Chhean.

BRIGHTENING PROSPECTS

The worst recession since the Great Depression of the 1930s cost the economy 8.8 million jobs and drove the unemployment rate up to 10%.

Dim job prospects and growing financial stress undercut the pace of household formation — a

MARKET TRENDS: FNC: Property values grow for ninth consecutive month

The rebound of property values in the U.S. barreled through November, which was the ninth consecutive month of price gains due largely to a classic case of supply-and-demand, according to the latest FNC report.

Signs of market recovery are continuing to drive up demand as potential homebuyers jump on low prices.

Nationally, home prices were up 0.3% in November, based on recorded sales of non-distressed properties in the 100 largest metropolitan areas throughout the country. As prices moved higher for the ninth consecutive month, the total appreciation rate hit 5.3% year to date.

Foreclosures dropped by 4.8% since November 2011 and made up 20% of total home sales in November.

FNC reported that two-thirds of the component markets tracked by the index show continued price improvement in November.

Click on the tables below to see the full FNC Residential Price Index.

Las Vegas recorded the largest month-over-month increase, rising 3.4% since October. However, Chicago lagged behind other cities with home price declining 0.8% in the 12 months ending in November and a high level of distressed sales.




http://www.housingwire.com/fastnews/2013/01/14/fnc-property-values-grow-ninth-consecutive-month

MARKET TRENDS: Big Idea 2013: Home Prices Set to Skyrocket

Don’t be surprised if home prices begin to appreciate rapidly. Why? The ratio of homeownership costs to income is at an all-time low, and people are not going to continue renting homes at a monthly cost that exceeds a mortgage payment.

In fact, home prices need to rise 38%, or mortgage rates need to rise to 7.9%, for us to get back to the normal ratio of homeownership costs to income. It doesn’t matter how you define homeownership costs. As long as you use a consistent definition, homeownership is cheap!











Assuming our leaders in DC come to some sort of agreement that keeps the economy growing and interest rates low, which seems like the most reasonable assumption, here is what will happen:

• Investors: Investors and, yes, even flippers will continue to grow in numbers as they realize housing is the best risk-adjusted return on their money.
• Boomerang buyers: Foreclosed homeowners, who are currently renting homes, will come back in droves. In Phoenix, they are paying $1,300 in rent for a home whose mortgage payment would be $1,000. That situation is not sustainable. The Federal Housing Administration and Department of Veterans Affairs have low down payment programs with insurance premiums that push rates near 5.0%. Those payments are still very affordable.
• Entry-level buyers: First-time homeowners, who have been sitting on the sidelines waiting for a sign of the bottom, will hear about price increases in their desired neighborhood and rush to become homeowners.
• Move-down buyers: Empty nesters and retirees, who have plenty of equity in their existing home, will buy a home that is more suitable to their current lifestyle, which may or may not include adult children as well as their aging parents.
• Moveup buyers: The price appreciation that occurred in the last year has already lifted 1 million underwater homeowners above water, and future price appreciation wil

NEIGHBORHOODS: Press is on for more hotels in South Boston

1,000-room facility sought next year for Convention Center

State officials want to start construction on a pair of midpriced hotels across from the Boston Convention & Exhibition Center this year, and follow in 2014 with a larger 1,000-room hotel on one of two sites off Summer Street.

The timetable was laid out Monday night during a public hearing on the Massachusetts Convention Center Authority’s plans to expand the massive convention complex. The authority’s director of capital projects, Howard Davis, said the hotel rooms are badly needed to support the South Boston hall and that officials must take steps to get them developed.

“If we continue to wait for these hotels to happen on their own, they are probably not going to happen,” he said, noting that the facility has about 1,700 rooms within a half mile, compared to competing cities that average about 7,600 within that distance.

Private developers have not stepped up to build new hotels in recent years, so the authority is seeking to entice them by purchasing land for their development on D Street and committing to build a 1,350-space parking garage to serve their guests.

The authority paid about $33 million to buy the property last year, and two bidders recently submitted proposals to build 450 and 500 hotel rooms, respectively.

‘If we continue to wait for these hotels to happen on their own, they are probably not going to happen.’

Commonwealth Ventures, which is the developer of the nearby Channel Center complex, wants to build a 275-room Aloft Hotel and a 175-room Element Hotel, which would feature extended-stay rooms. Both would be operated by Starwood Hotels & Resorts Worldwide Inc.

Carpenter & Co. is proposing a 300-room Hyatt Place hotel and a Hyatt House with 200 extended-stay rooms. A winning bidder is expected to be selected by the end of February.

Development of the D Street hotels is the first step in a broader $2 billion expansion that would include a 1,000-room headquarters hotels, a doubling of the convention center’s exhibit space, and construction of public parks and retail stores. Davis said the goal is to start construction of hotels in the next two years, and follow with the new exhibit space in 2015.

During last night’s meeting, a couple of residents expressed concerns that the development of additional hotels would encroach on South Boston neighbors and worsen traffic problems.

But Davis said the hotels on D Street will help provide more business to the convention

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MARKET TRENDS: About 43% of Americans expect home prices to rise

The share of surveyed Americans who believe home prices will tick up in the next year reached the highest level to-date, at 43%, up 6 percentage points from November, according to Fannie Mae's December National Housing Survey results. 

The Fannie Mae National Housing Survey polled 1,002 Americans to assess their attitudes toward owning and renting a home, mortgage rates, homeownership distress, the economy, household finances and overall consumer confidence.

Consumer confidence in the housing industry continued its upswing as home prices, rental prices and mortgage rate expectations increased in November.

Thus, the growing confidence that housing indicators will continue well into 2013 is expected to boost home price activity during the year.

"Combined with consumers' growing mortgage rate and rental price increase expectations, the positive home price outlook could incentivize those waiting on the sidelines of the housing market to buy a home sooner rather than later and thus support continued housing acceleration," said Doug Duncan, senior vice president and chief economist of Fannie Mae.

The average 12-month home price change expectation rose to 2.6%, the highest level since the survey's inception in 2010.

The percentage of those surveyed that believe mortgage rates will rise continued to increase,

FIRST TIME BUYER: Buying A Fixer-Upper Home For Your First Home

For many people who have been sitting on the fence waiting and wondering if the housing market is rebounding, the signs are showing an improved chance to get into real estate while prices and loan rates are still low.

Why a fixer-upper? In some areas, the housing market is very low on inventory, especially new and/or homes in top shape. Foreclosures and short sales, though, can offer better prices if you can deal with the home's maintenance needs.However, many of the homes on the market need some work and some need a lot of care. How do you know what to look for in a fixer-upper? If you're a first-time home buyer, purchasing a fixer-upper can be a good option because the price will be lower. But fixer-upper homes come with flaws and some can be huge.

Many first-time home buyers don't take into consideration the extra expenses needed to maintain a home. They carefully calculate the mortgage, downpayment, homeowners' association dues, property taxes, and other hard costs but they neglect to factor in the everyday repairs and maintenance for the property. Things like a new water heater, stove, microwave, central heating/air conditioning systems, washer/dryer and dishwasher repairs and even plumbing and roof repairs. These items might be new or relatively new when you move in but, in the not-too-distant future, they'll need repairing or replacing. When they do, the added costs can put a strain on homeowners' monthly budget.

With this in mind, buying a fixer-upper for your first home can be a great way to get into the real estate market at a good price. However, it's essential that you completely understand the home's necessary repairs before you buy. Things to consider include how much you'll save by buying a fixer-upper versus what you'll need to spend to make it livable, how old the home is,

RENT VS BUY: Macro Rent-vs.-Buy Decision Fraught With Micro Decisions

The timeless rent-vs.-buy decision comes in a host of variations.

There are factors that go beyondaffordability.

There are cost differences bylocation.

For those who plan to move into a newly built home, there's abuying a new home-vs.-rentingscenario.

The rent-vs.-buy decision can get really quirky, including renting to cover a home with an underwater mortgage.However, to help level the playing field in any of a host of rent-vs.-buy scenarios, there are basics to consider.
While the information may appear to be self-serving, coming from ForRent.com, the online listings service for apartment communities offers an informative infographic to lay the groundwork for beginning to make a choice.
For starters, let's look at just some the pros and cons.
Renting pros
Rent an apartment and you've got the flexibility to move when you decide, and on fairly short notice.
That leaves your with more money available to invest, perhaps in some holding expected to do better than a 2 to 3 percent return that's expected on home values next year.
What's more, your time is also free from maintenance, landscaping chores and other upkeep, except those necessary for your own furnishings.
Renting cons
Of course, while you are socking your money away in stocks or bonds in a market that could crash any day, you won't have the benefit of new equity accumulation from today's recovering owner-occupied housing market.
And you may not be suited for close-in, higher-density apartment living, sharing parking, hallways and common area features.
Home ownership pros
With homeownership, provided you buy a single family home, you'll get more privacy, perhaps a quieter home.
More importantly, you are likely to enjoy increased equity in your home that will add to your personal wealth, help you build a nest egg and give you a source of liquid cash should the need arise.
There are also nearly a dozen tax shelter benefits that come with a shelter you own, from the mortgage interest, mortgage insurance and property tax deduction to the grand- daddy benefit of them all - a tax exclusion on certain capital gains.
Home ownership cons
Of course, you won't be able to call the super to take care of your property. That's your job.
Until you have some equity gain, you may actually have less access to cash. Not only will you have a mortgage payment, but also homeowner's insurance, property tax payments and the cost of upkeep.
You could face unexpected costs if you don't pay a premium for earthquake or flood insurance in certain areas if disaster strikes.
You get the idea. This isn't just a dollar and cents decision.
If you'll be moving soon, renting could be a better deal. If you'll be around longer, say five to seven years, buying wins.
It's tough to get into a mortgage for less than 20 percent down and even low down payment home loans force you to come up with some kind of down payment. That requires planning and saving.
ForRent.com has many more conditions you must begin to consider before the rent-vs.-buy decision is a done deal.
Check out the infographic below. Mouse over and click to get cozy with the kinds of decisions - within the rent-vs.-buy decision - that you'll have to make before settling on one or the other.

See more infographics.

NEIGHBORHOODS: Ariad to add HQ, jobs in Kendall Square

Drug maker consolidating after winning approval to market leukemia treatment

Ariad Pharmaceuticals Inc. will build a new corporate headquarters and laboratory complex in Kendall Square, adding to a biotech building boom that is rapidly filling that part of Cambridge with jobs and modern buildings.

The company, which recently won federal approval for its first major drug, will occupy most of two five-story buildings to be built on Binney Street by Alexandria Real Estate Equities Inc.

The new offices will allow Ariad to consolidate its operations and usher in an era of expansion following the launch of Iclusig, which won Food and Drug Administration approval last month as a treatment for chronic myeloid leukemia. The company is awaiting approval in Europe, too.

Ariad’s workforce has more than doubled to about 300 employees since the start of 2012, and the company expects to add at least 100 jobs in Cambridge over the next two years.


Ariad’s buildings will be part of a larger complex called Alexandria Center at Kendall Square , a 1.9-million-square-foot development that will eventually include four office and lab buildings, residences, stores, and restaurants.

Tom Andrews, an Alexandria Real Estate executive, said the project will bring new life to vacant lots along the eastern end of Binney Street and upgrade the area with bike paths, a public park, and fresher landscaping.

“These improvements will really transform that corner of Kendall Square,” Andrews said, adding that the Ariad buildings, to include at least one restaurant or retail shop, are scheduled to be completed in early 2015. The company has signed a 15-year lease to occupy about 60 percent of the 386,000-square-foot buildings at 75 and 125 Binney St.; much of the remainder will be available for lease by other technology or life sciences companies.

Several biotechnology companies are also moving forward with new office and laboratory complexes, including Novartis AG, Pfizer Inc., Millennium Pharmaceuticals Inc., and Biogen Idec, which will occupy another building under construction at Alexandria Center.

The rush of building activity is being fueled by the discovery of drugs to treat neurological

BOSTON NEIGHBORHOODS: New businesses, stores alter Financial District

Tech, communications, health care companies — and bars and cafes — are changing the vibe

Working in Boston’s Financial­ District used to mean something very specific. You wore a suit and carried a briefcase. You worked for a legal or financial services company. And when your work day ended, you went home — not out to eat at a nearby bar or restaurant.

But now those rules are changing.

A number of technology, communications, and health care companies are moving into the Financial District, shaking up the traditional mix of employees and business interests, while new restaurants, bars, and stores have opened, offering more reasons to linger after work.

“It’s setting a completely different tone,” said Bill Barrack, a managing director of Jones Lang LaSalle, a real estate services company with offices in the heart of the district. “We’re getting a lot of companies that wouldn’t even have considered the Financial District in the past.”


Financial companies still occupy large swaths of real estate in the area. But new or incoming tenants include the Internet payment giant PayPal, the engineering business Technip, and Brightcove Inc., a digital media company that moved into 80,000 square feet at the base of the Atlantic Wharf tower. In 2012, those and other companies made commitments to fill nearly 700,000 square feet in the Financial District, helping it to recover rapidly from the recession.

In the last year, the district’s vacancy rate has fallen to 11.9 percent, according to Jones Lang LaSalle. That marks a 4 percentage point decline during the year and the lowest vacancy level since early 2010.

Much of the activity is spilling over from hot markets such as the adjacent Innovation District and the Back Bay, where an influx of new companies has left little top-rated space available, causing those shopping for real estate to look harder at the Financial District.

The companies moving in are creating a more diverse business environment, with many more

Buying A Home: 5 things to know about a home before committing to buy

Your due diligence inspections should include more than hiring a home inspector to look at the home and reviewing a current termite inspection. And your due diligence should start as soon as you have serious interest in a listing.

Making an offer to purchase a home consumes a lot of time and emotional energy. Before your real estate agent or attorney puts pen to paper, find out as much about the property as you can. In particular, you want to know if there's any reason you shouldn't try to buy the house.

Seller disclosure requirements vary from state to state, as does real estate practice and protocol. Find out if there are any seller disclosure statements and presale inspection reports. If there are, ask to see copies before you write an offer.

In some areas, it is standard procedure for listing agents to provide a disclosure package that includes any existing reports and disclosures to interested buyers before they make an offer. In other areas, reports are made available only after the buyer and sellers have negotiated the purchase agreement. Get ahold of as much information as you can about the physical condition of the property as soon as possible.

After you review the seller's documents on the property, you may discover that the home you find so appealing requires a far bigger investment in repair work than you can handle or afford financially. In this case, move on to the next property with no remorse. You've saved yourself from hassle and heartbreak.

On the other hand, if the reports and disclosures fall within your expectations, move on to investigating the local neighborhood. On closer look, you may discover that there are several large apartment buildings that back up to the house you're interested in buying. This might create a noise factor. If you're sensitive to noise, you might not be happy living in the property you're considering.

Buyers sensitive to crime should check with the local police department to see if the neighborhood is being hit by waves of break-ins. Drive by the property several times during

BUYING A HOME: Don't lower your standards just because homes are scarce

In low-inventory markets that are now common in many areas of the country, buyers might be prone to jump at a listing they wouldn't even consider if there were a lot of homes for sale.

This desperate approach to homebuying could cause you problems down the line when you need to sell and you realize you paid too much, overlooked property problems or bought in the wrong location.

A listing that has been on the market for a long time could indicate a problem. Is the listing not selling because it's priced too high and the seller is stuck unreasonably at a high price?

Does the property have problems that can't be remedied for a reasonable price? Or is the deferred maintenance so widespread that buyers are turned off, particularly if the listing is priced too high for the market and the amount of work that's required?

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In some areas, it could be none of the above. The reason the listing hasn't sold could have to do with a slow market where it takes a long time for listings to sell, particularly if they are at the high end of the market.

HOUSE HUNTING TIPS: Before taking the leap and writing an offer on a listing that has been on the market awhile, find out why it hasn't been selling. Ask the listing agent if the seller has received offers and why they didn't end in a ratified contract.

The seller's agent may be reluctant to have this discussion. In that case, let your agent know what price you'd be willing to offer. Ask your agent to find out if the seller's agent thinks it's worthwhile to make an offer.

Listing agents usually want to take a low offer to the seller in writing. So you may have to go through this process to even find out if there's a chance of buying the listing for a reasonable price.

The seller could flatly turn the offer down. But if the listing doesn't sell for several more months, the seller might soften her stance.

A listing that is difficult to get in to see is another red flag. Does the seller really want to sell? If not, you could waste a lot of time trying to buy a home you'd love to own, but end up with nothing but frustration.

Another type of listing to be wary of is one that is on and off the market repeatedly. This is typical behavior of a seller who wants to sell only for a certain price that is too high for the market. It is also characteristic of homeowners who want to sell only if they have a place to move to and they can't afford to buy another home until they've sold their current home.

These are maybe sellers who can also waste a lot of your time and emotional energy. Some sellers try to sell contingent on finding a replacement home. If you go into contract to buy a home with this contingency, you should also have a contingency in the contract that lets you out of the contract if you find another home to buy before the sellers find a replacement home. You should also get a break on the price to compensate for the uncertainty.

A listing that has been back on the market (BOM) over and over could signify a problem. Find out the reason why the deals didn't stay together. Was the seller unrealistic about negotiating on defects discovered during inspections? Was there a problem with the buyer's financing? Did the appraisal come in low? Or was it just the seller's bad luck.

THE CLOSING: For peace of mind, investigate carefully before you buy.

http://www.inman.com/buyers-sellers/columnists/dianhymer/dont-lower-your-standards-just-because-homes-are-scarce

FINANCE: MORTGAGE INTEREST RATES START THE NEW YEAR AT NEAR RECORD LOWS

Mortgage interest rates continued to stay historically low at the start of the New Year based on Freddie Mac’s Primary Mortgage Market Survey (PMMS) for the week ending January 3rd, 2013. The average 30-year fixed rate mortgage interest rate started 2013 at 3.34%, slightly down from the end of 2012 when it was 3.35%, and even lower than the same time last year when it was 3.91%.

The 15-year fixed rate mortgage interest rate started 2013 at 2.64%, down from 2.65% at the end of 2012. In comparison to the same time last year, the 15-year fixed rate mortgage interest rate was 3.23%.

Freddie Mac’s Vice President and Chief Economist, Frank Nothaft, expressed optimism about the 2013 housing market in this week’s PMMS report:  “Mortgage rates started the year near record lows which should continue to aid the ongoing housing recovery. New home sales rose in November to a two-year high and were up 15.3 percent from the previous November. Similarly, pending sales on existing homes increased for the third month in November to the strongest pace since April 2010.”

FINANCE & MORTGAGE: To Givers of Down Payments

HOME buyers trying to scrape together enough money to cover the typical 20 percent down payment frequently look to relatives for help.

In a National Association of Realtorssurvey of people who bought homes from July 2011 to June 2012, about a quarter of first-time buyers relied in part on gifts from relatives. “Typically, that’s the Bank of Mom and Dad,” said Walter Molony, a spokesman for the association.

But mortgage lenders closely scrutinize cash gifts. That critical check from the parents may not count toward your home purchase if you can’t thoroughly document its source and intention.

“Basically, the banks want to make sure that you’re not getting a second loan,” said Ray Mignone of the New York financial planning firm Ray Mignone & Associates. “If all of a sudden $50,000 pops into your account, they want to make sure it’s not a loan against the property that they’re going to put a mortgage on.”

How to pass muster with the lender? First, it’s best if the gift comes from a close relative.

“It can’t be a friend or colleague, “ said Ace Watanasuparp, the president of DE Capital Mortgage, in New York. “And it can’t be your second cousin or something like that.”

Next, make sure that the gift comes in the form of a check or wire transfer — something traceable. Lenders are typically wary of gifts made in cash, Mr. Watanasuparp said.

The donor will also have to provide the lender with what is known as a gift letter.

Melissa L. Cohn, the chief executive of Manhattan Mortgage, said the gift letter should affirm that the money involved is indeed a gift from the donor and, more important, that repayment is not required. The donor should also specify the precise amount of the gift, and state his or her relationship to the borrower.

For good measure, Ms. Cohn added, donors should provide proof of their ability to give the gift — for instance, evidence of a stock sale, or a statement showing the withdrawal. Once the money is in the borrower’s account, the lender may also want to see proof of a deposit in the exact amount stated in the gift letter.

Just how heavily a borrower may rely on family largess to cover a down payment depends on the type of mortgage involved and the size of the gift. With a conventional loan, lenders require