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January, 2010 Newsletter

+++++++++++ January 1, 2010 +++++++++++++++++++

Introduction: Resales Up Sharply, New Sales Down Sharply
Mortgage Rate Update: Rates on Rise
This Month's Tip: SHOULD You Buy?

Introduction: Resales Up Sharply, New Sales Down Sharply

Here is wishing one and all a very Happy 2010!

Existing-home sales rose again in November as first-time buyers
rushed to close sales before the original November 30 deadline
for the recently extended and expanded tax credit, according to
the National Association of Realtors®.

Existing-home sales – including single-family, townhomes,
condominiums and co-ops – rose 7.4 percent to a seasonally
adjusted annual rate1 of 6.54 million units in November from 6.09
million in October, and are 44.1 percent higher than the 4.54
million-unit pace in November 2008. Current sales remain at the
highest level since February 2007 when they hit 6.55 million.

Lawrence Yun, NAR chief economist, said the rise was expected.
“This clearly is a rush of first-time buyers not wanting to miss
out on the tax credit, but there are many more potential buyers
who can enter the market in the months ahead,” he said. “We expect
a temporary sales drop while buying activity ramps up for another
surge in the spring when buyers take advantage of the expanded tax
credit, which hopefully will take us into a self-sustaining market
in the second half of 2010. In all, 4.4 million households are expected
to claim the tax credit before it expires and balance should be restored
to the housing sector with inventories continuing to decline.”

On the new home side, sales of new one-family houses in November 2009
were at a seasonally adjusted annual rate of 355,000, according to
estimates released jointly on December 23rd by the U.S. Census Bureau
and the Department of Housing and Urban Development.
This is 11.3 percent (±11.0%) below the revised October rate of 400,000
and is 9.0 percent (±15.3%) below the November 2008 estimate of 390,000.

The median sales price of new houses sold in November 2009 was $217,400;
the average sales price was $280,300. The seasonally adjusted estimate of
new houses for sale at the end of November was 235,000. This represents a
supply of 7.9 months at the current sales rate.

It is this kind of mixed result that puts the damper on any talk of the
issues facing housing being over. Yes, we may have turned the corner
when you take the results of late 2009 into account, but it does not
mean that there will not continue to be bumps in the road.


Mortgage Rate Update: Rates on Rise
For current average mortgage rates, see the
rates page.

For more information on mortgages, visit the
Mortgage Section

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This Month's Tip: SHOULD You Buy?

When considering the purchase of a home, frequently the most elementary
and important question often goes unasked: SHOULD we buy a home? Somehow
in the last decade or so, it became a general assumption in North America
that virtually everyone should buy a home. Much effort, from government
to real estate and constuction interest to banking and lending, was geared
to getting as many people into their own homes as possible. In reality,
though, there is a certain percentage of the population that should NOT
purchase a home, for a variety of reasons. The trick is determining
which camp you fit into--the "shoulds" or the should-nots."

How should you determine whether or not it is in your best interest to
buy or not buy? The process is relatively simple--essentially a series
of questions to ask yourself that will give you a fairly clear picture
of the most advantageous direction for your particular situation.

+ How long will you be in the house?
+ Is there a chance of a sudden change in your employment or family
+ Is your financial situation likely to change during the time you would
own the house?
+ Are you comfortable with home maintenance?

How long will you be in the house?

This is a crucial determining factor in our decison. When house values
were rising dramatically on an annual basis is recent years, this was
much less of a concern. With values stagnant at best and still dropping
in other areas, it needs to be prime consideration. If you know you will
only be in the house for a limited time (say a couple of years) and prices
do not rise during that period, it is fairly likely that you will lose
money on the transaction when it comes time to sell. The cost of sale
(sale commissions, closing costs, repairs and other potential expenses)
will quickly put you on the negative side, often far in excess of what
it would have cost to rent during the same time period.

Is there a chance of a sudden change in your employment or family

Might your job situation change in the near future? Is there the
possibility of a transfer? Could your family size change making the
home you bought too small? These factors need to be taken into
consideration to determine whether or not you pursue a home purchase
or a rental.

Is your financial situation likely to change during the time you would
own the house?

This is a big question but one that is often ignored. What would happen
should your financial situation change drastically in the near future.
Do you need two incomes to live? What would happen if one were eliminated
or severely cut back? Would you be able to make other arrangements or
would such a change force you to sell (or worse, give up) your home?

Are you comfortable with home maintenance?

Although this may seem like a minor concern, it actually can have a
pretty major impact on your home ownership experience. There are those
who have no problem dealing with maintenance and repair issues with a
home (including those who find enjoyment here). There are also those,
however, who have little or no desire to confront home maintenance and
repair. If you find yourself thinking that way, you will need to be
prepared to spend a considerable amount of money paying to have these
items dealt with. Or, it may be better to consider renting, where
such concerns are handled--without cost or aggravation--by the landlord.

Summing up

Although the home ownership experience is truly wonderful for most, it
is a mistake to summarily assume that it will be right for you. Invest
the little time necessary to be sure BEFORE you commit to a purchase.

Next Month's Tip: Prequalification

The Home Buying Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer's Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched.
You can find the checklist

As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer's
Information Center to successfully purchase a home),
drop us a quick line

A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.

Have a great month and good luck in all your endeavors!

The Team at the Home Buyer's Information Center

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