Great article below from WSJ.com posted in 10/15/11. Now is the time for sure to buy. Prices in the Richmond area are close to bottom and interest rates are below 4 percent. The moment we reach bottom and there is the slightest improvement,interest rates will jump quickly to 5 1/2 – 6 percent.  ~~Skye Bruce Properties

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it’s an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation’s ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter “throws money down the drain.” Whether buying is a better deal than renting isn’t a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

But the math is turning in buyers’ favor. Stock-oriented folks can think of a house’s price/rent ratio as akin to a stock’s price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody’s Analytics. The average from 1989 to 2003 was about 10, so valuations aren’t quite back to normal.

But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren’t hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or “points.”) The latest rate is still less than half the average since 1971.

As a result, house payments are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index’s historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today’s buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.

For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer’s monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.

Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. “If you have good credit, a job and a down payment, you can get a mortgage,” Mr. Humphries says. “There’s more paperwork and scrutiny than five years ago, but things are pretty much like they were in the ’80s and ’90s.”

Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.

For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent “yield.” The median market’s rent yield is 9.3% and Detroit’s is 17.9%.

Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor’s 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.

A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody’s Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. “If the economy slips back into recession, however, we could easily see a 10% drop,” Ms. Chen says.

And property “flipping” can be dangerous even when prices are rising. That is because, absent a real-estate boom, house price gains simply aren’t that exciting. Research by Yale economist Robert Shiller suggests houses more or less track the rate of inflation over long time periods.

Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

Click here to read article at WSJ.com

Summertime is buying time! Whether you’re a first-time home buyer, moving up or even downsizing, summer is a great time to buy. In fact, there are more home sales from April to July than any other time of the year, according to the National Association of Realtors®. Home sellers want to move before the new school year starts, so you’ll find a large inventory of homes on the market. And mortgage rates remain historically low, so you can afford more house for your money. Inventory is fantastic right now so contact the experts at Skye Bruce Properties to get started on your fun, summer home tour!

Check out these FEATURED HOMES on our Skye Bruce Properties Summer Home Tour!

Could you see past this wallpaper?

It sounds like a the perfect home when you see the listing online.  It’s in your price range, in a great Richmond neighborhood, with all the features you want in a home. You’re excited, but when you visit the home you find the yard a mess, tacky wallpaper inside, the kitchen cabinets are painted bright blue, there is gold carpeting in the family room, etc, etc.

Should you run? Maybe, maybe not. To fully determine whether you should take this house off your list of possibilities you’ll need more information, and possibly look past the blemishes to evaluate the home’s potential. How do you do that? Here are some suggestions from the experts at Skye Bruce Properties….

As Joe Friday would say “stick with with the facts!” Buying a home can be an emotional process. This could be a home you live in for the long term and one you experience great life moments in.  The fun part of buying a home can be picturing yourself in the home and what the future may hold. However, a home purchase can be the largest investment you’ll ever make, so it is critical to gather all of the facts necessary to make a sound, educated decision.

Look for good bones! Don’t get caught up in the aesthetics of how a home is decorated. The Richmond area neighborhood you are targeting for your home likely had just a handful of builders who built the majority of the homes. Get to know the reputation of Richmond area builders. Your Skye Bruce Properties’ REALTOR can find out who the builder was for the home. Be careful when looking at homes built by those high volume builders with less than stellar reputations.  When touring a home look past the furniture, paint colors and decorating style.  Look at the home room by room to evaluate if it fits your needs. Do you like the feel of the home and the layout?  Newly re-finished floors and fresh paint mean little if your grandmothers heirloom dining room furniture won’t fit.  At the same time a family room painted Redskin burgundy and gold can easily be changed with a coat of paint if it’s the perfect size for entertaining and your family.

When looking at room layout, corners are important! Rooms with doorways in the middle of walls flow better than rooms that open in a corner. Not something many home-buyers consider, but is important to consider.

Make sure the important and expensive things are in good shape. The roof, heating and cooling systems plus ideally the kitchen and bathrooms are in good shape as they are the most expensive rooms to renovate.

Does the home offer the option to add on? You might not be concerned with adding on to the home right away, but what about tomorrow? Is there room outside? What are the setbacks? Does the homes design lend itself to an addition?

Check the zoning and future development plans for the area. Don’t get surprised! Too often homeowners are horrified to learn that their tranquil Richmond area neighborhood is being invaded by multi-family housing, a big commercial project, or a 24-hour convenience store. The beautiful pine and hardwood forest down the street could disappear in a matter of a few days as developers employ scorched earth clearing to make way for a project. Before you make an offer on a house, check with Richmond, Henrico, Chesterfield, etc. for area zoning rules and impending projects.  Your Skye Bruce Properties’ REALTOR can help you with this process!

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Home buying in the winter can allow you to see things about a home you might not see in the summer months. Does the home have good insulation? If it seems warm without having the thermostat set to 85, that might signal the insulation is doing it’s job.

Try not to let things like over or under decoration bother you. While your emotional response to a home is important, don’t let those kinds of things cloud your judgment.

It can be hard walking into a stranger’s home in the best of times. During the holidays, it can make you feel like you are causing them even more of an inconvenience. Don’t let that deter you from seeing a home you really want to see. Remember, they want to sell the house as much as you want to buy a home. At the same time, if there are homes you are only so-so about seeing, you might wait on those until after the holidays are over.

The Richmond real estate market continues to be a buyers market so when you are riding around looking at Christmas lights and decorations keep your eye out for that special home!

Want to see what is on the market in the Richmond neighborhoods you like the best?  Visit SkyeBruceProperties.com!

Enough with the doom and gloom about home ownership. Brett Arends explains why owning a home is a good thing in this Wall Street Journal online article.

Enough with the doom and gloom about homeownership.

Sure, maybe there’s more pain to come in the housing market. But when Time magazine starts running covers that declare “Owning a home may no longer make economic sense,” it’s time to say: Enough is enough. This is what “capitulation” looks like. Everyone has given up.

After all, at the peak of the bubble five years ago, Time had a different take. “Home Sweet Home,” declared its cover then, as it celebrated the boom and asked: “Will your house make you rich?”

But it’s not enough just to be contrarian. So here are 10 reasons why it’s good to buy a home…

1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.

Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What’s not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.

3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.

4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. “You can tell the ones that have been bought,” said my local guide. “They’ve painted the front door. It’s the first thing people do when they buy.” It was a small sign that said something big.

5. You’ll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you’re better off buying.

6. It offers some inflation protection. No, it’s not perfect. But studies by Professor Karl “Chip” Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That’s valuable inflation insurance, especially if you’re young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.

7. It’s risk capital. No, your home isn’t the stock market and you shouldn’t view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.

8. It’s forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won’t. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn’t a cost. You’re just paying yourself by building equity. As a forced monthly saving, it’s a good discipline.

9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That’s below last year’s peak, but well above typical levels, and enough for about a year’s worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.

10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the “glut” simply won’t matter: It’s concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won’t have any long-term impact on housing supply in your town.

ARTICLE WRITTEN BY: BRETT ARENDS

Click here to view article at WSJ.com

Click here to visit SkyeBruce.com

Hire a Buyer’s Agent to represent you before you visit an information/sales center.  Sometimes once you visit a development without an agent builders will not let you have representation at a later date.  Your Buyer’s Agent will be paid by the builder a set commission so having representation will not cost you more, you will only save through having your interests represented.

Skye Bruce Properties has new construction experts on staff to help you through the new construction process for any home in the Central Virginia area. Your Skye Bruce Properties REALTOR will represent you, be your fiduciary and will highlight the positives as well as the negatives about the transaction.  Builder’s agents don’t discuss drawbacks. Thinking of buying a new home from a builder?  Contact Skye Bruce Properties first!

One of the most important facts you should consider when determining whether now is the right time to buy a new house relates not to the market but your own situation. Consider how long you plan to live in the home. While you might not be able to look into a crystal ball and see the future, consider what you know at the moment. If you know for a fact that you plan to upgrade or even move out of the area within the next five years, then now might not be the best time commit to the purchase of a home. On the other hand, if you feel fairly confident with the fact that you will be living in the home for at least five years, then now could be a really good time to purchase a home.

You also must consider how comfortable you are with taking risk as well. If you feel comfortable with a possible drop in a home price if you need to re-sell within the next few years then now might be a fine time to make a purchase. The reality of the current market is that the fluctuations have not yet stopped. Things are improving in some areas of Richmond, yet some areas are still struggling.

In addition you should be aware that lending restrictions remain tight throughout much of the country as well. Loans are available for the purchase of a home, but restrictions are much tighter than they were in the past. Make sure you know exactly what is on your credit and how much you will be able to offer for a down payment before you consider purchasing a home in the current market. At the current time, lenders simply are not comfortable with taking a high degree of risk when it comes to mortgage loans and as a result, they tend to be more conservative when offering approval.

While now could very well be an excellent time for you to buy a new home, it is important to consider your own situation as well as how comfortable you are with taking possible risks over such a large purchase in the next few years. The current market certainly is offering good deals in many markets, but before you rush out to grab one, make sure that you are fully informed.

Interested in getting some help in determining whether now is the right time for you?  Skye Bruce Properties has a team of home buying experts to provide you with the information you need to make the right decision.  Contact Skye Bruce Properties!

Looking for more great tips when buying a Richmond area home?  Our Buyer’s Agents at Skye Bruce Properties are Accredited Buyers Agents and are experts at helping people through the home purchase process. They know Richmond and give critical advice and support to get you in a great home at a great price. Contact Skye Bruce Properties!

Follow These 3 Simple Tips!

So you are shopping for a new home around Richmond.  Guess what?  It likely won’t be the last home you buy. That’s why it pays to go home shopping with the people you will eventually sell the home to in mind. Sound crazy? Maybe, but its smart to shop for a home this way. Make sure you buy a home with these simple but critical features which will make it easier for you to sell in the future!

Storage While curb appeal and designer decor can attract potential buyers, what they can’t see is just as important. Buyers are serious about storage space. Fifty-seven percent say a garage with two or more bays is key, and 53 percent want a walk-in closet in the master bedroom.

Modern Systems Your next house can be any hue, as long as it’s green on the inside. The eco-friendly trend gets high marks from 46 percent of buyers, so try to find a property with energy-efficient features like newer windows, Energy Star appliances and a well-maintained HVAC system. And a growing number of buyers want to stay wired at home — nearly half say cable and satellite connections are important, while 40 percent want access to high-speed Internet.

Exterior Features and Location When you’re shopping for a Richmond area home, what’s on the outside definitely counts. Half of all buyers say a backyard is important, and 36 percent would like a fence. And you know the real estate cliche about location, location, location? Make it your house-hunting mantra. Location, you can’t change. Everything else, you can. Research the Richmond area school district before you invest, even if you don’t have kids, the next owner might. Steer clear of high-power lines, highways, homes on busy streets and yes even water towers in your backyard like the photo above, which will raise red flags for potential buyers.

Shopping for a Richmond area home and need some help?  Contact Skye Bruce Properties. At Skye Bruce Properties our Buyer’s Agents work with you as a home buying consultant to make sure the home you buy is a smart purchase and a good investment!