A home inspection is a critical part of the home-buying process. But do you know how to choose the right inspector, what to expect when the inspector comes to evaluate a home, and what things the inspector will -- and won't -- look for?
Due to the importance of understanding what to expect with a home inspection, and because of recent changes to Massachusetts home inspection regulations, there are a number of things you should know before starting the process.
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Billionaire
Warren Buffett said the U.S. will recover from the residential real estate slump by 2011 as demand for houses catches up with the supply that accumulated during the bubble.
"Within a year or so, residential housing problems should largely be behind us," Buffett wrote Saturday in his annual letter to the shareholders of his Berkshire Hathaway. "Prices will remain far below 'bubble' levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits. Indeed, many families that couldn't afford to buy an appropriate home a few years ago now find it well within their means." Read More
Just how high rates will go, however, and when they’ll start to move, isn’t yet clear. Lawrence Yun, chief economist for the National Association of Realtors (NAR), says 30-year fixed rates are “rock bottom” and simply cannot stay at 5 percent. That much, economists, analysts, and the Fed all agree on. But just how high they’ll get is another question.
Fed Vice Chairman Donald Kohn
told a conference last month that any increase in rates is likely to be “modest” but added “that judgment is subject to considerable uncertainty.” Yun believes 30-year fixed rates will probably end up jumping to about 5.7 percent by year’s end. Freddie Mac, which issues many of the MBS being bought by the Fed, said in late December that
rates would hit 6 percent by the end of 2010, sending a shock through the market. But Amy Crews Cutts, Freddie’s deputy chief economist, now foresees a rate increase more in line with Yun’s prediction, saying that any upward pressure on rates will likely be offset by a dropoff in demand. Bill Gross, head of Pimco, one of the largest and earliest private investors in mortgage-backed securities, believes that due to a rising interest rate environment in general, mortgage rates could settle anywhere between 6 to 6.5 percent, but admits at this point he’s simply making an educated guess.
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The Worker, Homeownership, and Business Assistance Act of 2009 has established a tax credit of up to
$6,500 
for qualified
move-up/repeat home buyers (
existing home owners) purchasing a principal residence after November 6, 2009 and on or
before April 30, 2010 (or
purchased by June 30, 2010 with a binding sales contract
signed by April 30, 2010).
The following questions and answers provide
basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.
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The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to
$8,000 for qualified
first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after
January 1, 2009 and on or before
April 30, 2010. However, in cases where a binding sales contract is
signed by April 30, 2010, a home purchase
completed by June 30, 2010 will qualify.
For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.
View VideoThe income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.
The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.
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The bond market rallied this week, long-term rates falling, unfortunately in response to lousy economic news. Lowest-fee mortgages fell to 5.00%, and the 10-year T-note has approached its next key level, 3.60%.
Every item in this grim litany was forecast to improve, and none did. The Conference Board’s measure of consumer confidence in February collapsed to present-conditions 19.4, the worst since 1983. New claims for unemployment insurance jumped again, now almost back to a half-million weekly. New mortgage applications fell 8.5%, now to 1997 activity. January orders for durable goods fell 2.9%, excluding volatile transportation and military sectors. January sales of new homes suffered an 11.2% cave-in (the lowest rate of sale since 1963), and sales of existing ones dropped 7.2%.
Thursday morning’s business channels broadcast striking visuals: Perfesser Bernanke on split-screen left, asserting “nascent recovery”; Mr. Obama split-right, nouveau Nero obsessed with health-care fiddling; and from the screen-top data-stream the sad data listed above drifted down in little red embers.
As births go, this recovery is in ICU, but the Fed dares not say so. Just keep its rate at zero and visit the chaplain. The Health Care Summit collected the most unattractive group of politicians in modern times: John Boehner as the young Capone; Eric Cantor’s veneer of feckless ambition covering a core of feckless ambition; Nancy Pelosi the socialite annoyed to be called from dinner to quell a spat among the help; and Harry Reid as sour undertaker. Mr. Obama has law-school moot court competition confused with governing.
Good grief, people... the economy... the economy.
Now 18 months past Lehman, trillions in spending and tax-cut stimulus, support for financial markets and MBS purchases, the Fed easiest-ever... why no real recovery?
In a recession different from all prior, find explanation by hunting for the most uniquely different element in the overall pattern. One stands out: never before have households taken such a hit to net worth, and never at such a sensitive spot. Home.
We have had awful housing markets before, notably ’79-’82, when mortgage rates reached 18% and unemployment 11%. However, that was a time of very high inflation: a house worth $100,000 at the outset often still was at the end, the loss to the owner inflicted by inflation. That quirk of inflation meant that equity remained stable, nominal value versus mortgage, thus in those years there was no plague of underwater houses.
In the later 1980s, the total of American mortgages outstanding divided by the value of all homes led to an aggregate loan-to-value ratio in the 32%-38% range (All data here from the Fed’s Z-1 Flow of Funds). From 1990 to 2000, LTV crept to 42%. At the peak of the Bubble, in 2006, overall LTV was still only 45%: $22.9 trillion in value versus $10.4 trillion in mortgages of all kinds, 1st and 2nd. The nation’s homeowners held $12.5 trillion in home equity.
Then the catastrophe: by the 1st quarter 2009, mortgages outstanding were still about the same, but aggregate home values fell to $15.7 trillion. Seven trillion dollars in home equity wiped out, one-third of total value, but two-thirds of equity. In two brutal years, aggregate LTV shot up to 66%.
Now the bad part. Only 70% of US homes have mortgages. If the total value of homes is about $16 trillion, the 70% with loans is worth about $11.2 trillion. The loans total $10.8 trillion today. Of course, many homes, maybe 20 million, are underwater, and a great many mortgaged homes have a lot of equity, especially in the huge, Bubble-free heartland, Colorado to Texas to the Dakotas.
However, on average, 70% of American homes have no equity. Bye-bye consumer.
Instead of more toothpaste-back-in-tube mitigation, how about an effort to support modestly rising home prices? And to absorb the millions of mothballed foreclosures? Either restore adequate credit, or stay in this.