The U.S. homeownership rate experienced its biggest drop in 2010 in 70 years, dropping to 65.1%, down from 66.2% in 2000, according to data from the Census Bureau.
The decline came even as the nation added 15.8 million housing units, increasing the total housing inventory by 13.6%, the Census Bureau said Thursday.
Eleven states suffered declines of ... [Read More]
The U.S. homeownership rate experienced its biggest drop in 2010 in 70 years, dropping to 65.1%, down from 66.2% in 2000, according to data from the Census Bureau.
The decline came even as the nation added 15.8 million housing units, increasing the total housing inventory by 13.6%, the Census Bureau said Thursday.
Eleven states suffered declines of at least two percentage points in their homeownership rates, led by South Carolina, with a decrease of 2.88 percentage points.
Nevada, the state that experienced the biggest housing boom in the nation over the past decade, saw its homeownership rate fall by 2.09 percentage points. The state’s housing units grew by 41.9% from 2000 to 2010. Housing growth outpaced population growth — which was already the fastest in the nation — by almost 7 percentage points.
Nevada, also registered the biggest growth in vacancy rates. The state’s vacancy rate, a measure of the share of unoccupied units on the Census survey, rose by 5.1 percentage points in 2010 from 10 years earlier. It stood at 14.3% at the end of 2010.
That increase “was almost completely driven by the increase in Clark County,” said Ellen Wilson, a statistician in the Census Bureau’s Economic and Housing Statistics Division, on a conference call Thursday. Clark County, home to Las Vegas, saw a 6.4 percentage point increase in vacant units.
Nevada’s vacancy rate was followed by Florida, (up 4.2 percentage points); Michigan (up 4 percentage points); and Georgia (up 3.9 percentage points).
The 10 states with the highest housing unit growth rates were in the West and South. After Nevada, Arizona clocked the second-largest gain, as its housing inventory rose by 29.9%, followed by Utah, with a 27.5% gain, and Idaho, with a 26.5% increase.
California had the most total housing units in 2010, as it did in 2000, with an inventory of 13.68 million units. Texas was next, with 9.98 million units, followed by Florida, which gained enough housing units to surpass New York.
Source: Liz Enochs
Consider these factors before you make a big move in 2011.
Downsizing is a big part of many baby boomers’ retirement plans, but the flat housing market and still-shaky economy have put many moving plans on hold.
2011 isn’t expected to bring higher home prices, so now may be a good buying opportunity, housing experts say. Still, ... [Read More]
Consider these factors before you make a big move in 2011.
Downsizing is a big part of many baby boomers’ retirement plans, but the flat housing market and still-shaky economy have put many moving plans on hold.
2011 isn’t expected to bring higher home prices, so now may be a good buying opportunity, housing experts say. Still, renting may be an attractive option if money is tight or if you’re not sure where you’d like to plant your retirement roots. A third of respondents in a recent Fannie Mae housing survey said they would be more likely to rent their next home if they moved.
Here are some factors to consider as you weigh whether renting or buying is best for you.
Four Reasons to Rent
An easy trial: Renting a home or apartment is an ideal way to test-drive a new community. You get the flavor of a new location without the financial commitment of home ownership — and you can always buy later. Vacationing where you may want to retire is another smart way to audition an area.
Flexibility: If something changes in your life, such as an unexpected job relocation or family needs, or if you just plain don’t like your new neighborhood, it’s a lot easier to walk away from a short-term lease than a home you own.
Less maintenance: Renting means you relinquish many of the responsibilities of home ownership. If something breaks, you can call your landlord instead of hiring a costly repairman.
More to invest: If you sell your current home and rent instead, you can invest the sale proceeds to boost your retirement nest egg.
Four Reasons to Buy
It’s a buyer’s market: While the sluggish housing market is painful for many sellers, lower prices in many areas make it a good time to buy. The NAR (National Association of Realtors) expects prices to stay flat in 2011.
Low mortgage rates: If you need to borrow to buy a home, mortgage rates are at historic lows.
Tax advantages: Under current law, most homeowners can deduct property taxes and mortgage interest, which lowers your overall tax bill.
Build equity: The housing market may not move much in 2011, but many properties can be snapped up for bargain prices. If you plan to stay put, you have time to build equity as the housing market rebounds. Historically, home prices rise over time, so a purchase at today’s lower prices can be a great investment if you plan to stay in the home for many years.
National Association of Realtors spokesman Walter Molony says a recent survey by his group found “a preponderance of baby boomers buying single-family homes.”
You also can borrow against the equity in your home using a home equity loan or line of credit, and the interest paid may be tax-deductible, too.
Other Considerations: Before moving to your next home, you may need to sell your current property. Depending on current prices in your area and when you first bought the home, you may have to sell at a loss.
“We’ve seen three years of declining prices, and it’s flat this year, so for some people who purchased, especially if they did so during the housing boom, it will take longer to get back where they started from,” Molony says.
For a ballpark estimate of your home’s value, try online services such as Zillow.com or Yahoo! Real Estate. For a more accurate assessment, contact a local real estate agent for an analysis of your home and the most recent sales in your neighborhood.
If you lost your job or had credit troubles during the recession, be prepared to face stricter lending retirements when you shop for a mortgage. Before you start looking, make sure you understand your credit standing. If it lacks gusto, make some improvements before you approach lenders for a mortgage.
Have you had a conversation with someone in the last 30 days about the consequences of walking away from your mortgage?
If the answer is yes, you are not alone.
With an estimated 11 million people underwater on their mortgage, (owing more on their mortgage than their home is worth), even the most credit-worthy consumers are considering ... [Read More]
Have you had a conversation with someone in the last 30 days about the consequences of walking away from your mortgage?
If the answer is yes, you are not alone.
With an estimated 11 million people underwater on their mortgage, (owing more on their mortgage than their home is worth), even the most credit-worthy consumers are considering walking away from their mortgage.
“Walking away from a mortgage,” or what’s known as a strategic default, usually results in either a short sale or foreclosure and many people in this position are asking one simple question:
What are the consequences of walking away from a mortgage?
Walking Away from a Mortgage: The Consequences
Generally speaking, if you are considering walking away from a mortgage the major consequences will include:
Impaired credit
Deficiency risks
Tax consequences
Moving costs
Professional implications
Impaired Credit
Most people are aware that walking away from a mortgage will mean their credit score will take a hit. What most people may not be aware of is between short selling and foreclosure, there is very little difference in how much your credit score is impacted. The main difference between a short sale and foreclosure is how soon you can qualify to buy a home again after the event, not how many points your credit score went down.
In addition to your credit score taking damage points, it is also common for credit card companies to cancel credit cards or lower your credit limit as a result of missing mortgage payments. It is also common that it will become more difficult to obtain financing for larger ticket items such as autos or furniture — or any other type of revolving account after walking away from a mortgage.
Deficiency Risks
Depending on which state you live in, there are varying deficiency risks associated with walking away from your mortgage. (See anti-deficiency laws by state)
Translation: Your lender may sue you for the difference between what you owe and what your short sale or foreclosure proceeds were.
Anti-deficiency protection is limited to a minority of states and for most states in the U.S., there is no protection for homeowners from a lender pursuing the difference between what they owe and what the home sells for in foreclosure.
Further, even if your state has anti-deficiency laws in place, don’t think you are free from deficiency risk. Whether you have deficiency risk or not, depends on factors such as: whether you have a second mortgage; did you refinance and take cash out; is your mortgage the one you got when you originally bought the house, and more.
Which is why when it comes to managing your deficiency risk, keep this saying in mind:
Nothing is more expensive than cheap legal advice.
If you are concerned that you may have deficiency risk, you should speak with a real estate lawyer who can provide legal advice for your particular situation. Only a real estate attorney can accurately provide you the specific advice for your situation. Don’t rely on your neighbor’s advice or your brother-in-law who just short-sold his house and recommends that you should be okay by just walking away.
Tax Consequences
If you are considering walking away from a mortgage on your primary residence, there is a chance that you may have some tax liability. If you are considering walking away from a mortgage on a second home or investment property, there can be a significant tax liability and you should consult your tax accountant.
Moving Costs
One of the commonly under-estimated consequences of walking away from a mortgage is the expense and process of moving. Some of the common concerns related to moving include:
Moving into a rental — perhaps after decades of being a homeowner.
Possibly explaining to the landlord any credit report concerns as a result of missed mortgage payments.
Paying for moving expenses. Utilities, deposits, moving trucks and other expenses can add up fast.
Moving family members school, work or community activities they have gotten used to.
Many of the people I have talked with who have went through the process of walking away from a mortgage cited “moving” as the one consequence they hadn’t fully considered before actually doing it.
Professional Implications
Depending on what you do for a living, you may have professional consequences as a result from walking away from a mortgage. The number of professions where your credit profile matters has grown over the last decade and if you are in a situation where your credit profile matters, you should know what the professional implications are before you walk. After all, you don’t want to lose your house and your job at the same time.
Walking Away from a Mortgage: The Single Biggest Mistake You Can Make
When making the decision to walk away from a mortgage, the consequences are certainly something to consider as part of the decision process. And in my our experience of handling many short sales for our Clients we discovered that there is one big mistake that you can make in the process:
Not being fully informed of what the consequences are of walking away from a mortgage.
Once you have educated yourself about the consequences and researched all of the possible options…
… the choice is still yours.
Source: Justin McHood of Academy Mortgage.
