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Wednesday, April 27, 2011

The correlation between mortgage rates and home sales

Low mortgage rates are thought to lead to higher sales numbers due to the economic theory of supply and demand. However, this relationship between mortgage rates and home sales numbers is not always as strong as some economists might think. This is made evident in a study by Christopher Mayer and R. Glenn Hubbard of the Columbia Business School whose findings indicate a more diverse set of influences on home sales.

Higher demand is typical of a low interest rate environment
Low mortgage rates encourage home sales due to declining finance costs

In light of the above findings, the correlation between mortgage rates and home sales numbers involves understanding additional variables that can influence home sales. Examples of these factors include Federal Reserve Bank 'quantitative easing' policy, the business cycle of the mortgage industry, economic conditions and federal regulations. Despite all the additional variables that influence mortgage rates and home selling, the connection between mortgage rates and home sales is relatively strong when averaged out historically.

How to find low-income apartments for rent

Low-income housing
Low-income housing is sponsored by government programs
Finding low income apartments for rent is a challenge faced by many Americans who face living expenses that consume much of their income. Not including private arrangement, lower rent neighborhoods due to low property values and alternative living, there are a number of programs and ways to help find low income apartments for rent. 

Some of these ways include federal, state, municipal or non-profit programs that provide assistance locating affordable housing, and/or in subsidizing the cost of rent. Qualification for these programs varies on criteria such as income, living status, health, and household information. Below is information on, and possible sources of information and assistance for locating low income apartments for rent.

HUD: Section 8

Low income earners who qualify for Section 8 housing assistance may receive assistance for rent in excess of 3/10ths of income; this is illustrated with more elaboration on the Section 8 website. To illustrate Section 8 qualification further, if an individual is determined by the local Section 8 administrator to be below a certain income mark, and that individual's income is $20,000 per year and their rent costs $8000/year, Section 8 may pay for $2000.00 worth of the housing expense. It is important to note that not all residences participate in the Section 8 program and not all persons who qualify for Section 8 are guaranteed to receive assistance.

USDA: Housing Community Facilities Program (HCFP) 

The HCFP program is administered by the US Department of Agriculture and not the Department of Housing and Urban Development. This program includes what its website calls Section 514 and 515 depending on the type of housing. Income qualification for this program is similar to that of the HUD administered Section 8 program with a key difference being the location and type of housing i.e. farm and rural housing. For more information on the Section 514 and 515 programs the following HCFP website is illustrative of the aforementioned information, and explains the program in further detail.

FEMA: Federal/State Disaster assistance

If home or living circumstances have been affected by an area officially designated as a disaster are the Federal Emergency Management Agency may be able to provide temporary rental assistance. For more information on FEMA run and sponsored programs please visit the FEMA website or contact them directly through the information available therein. FEMA is specifically for emergency and disaster situations and does not typically provide apartment rental assistance for low income situations other than these.

State run housing administration programs

Each state may have a program of its own that may provide alternative assistance to low income earners who are either waitlisted or have not been accepted into the Section 8, 514 or 515 programs above. Examples of state low income housing programs include Michigan's Section 236 program and South Carolina's Housing Choice Voucher Program (HCVP). To find out if a State has a rental assistance program visiting the State Housing Authority may be of assistance.

Municipal, corporate or non-profit low income rental assistance

In addition to Federal and State programs, there may also be additional alternatives to look into. Examples of these include the Kansas Housing Resources Corporation (KHRC) which is made possible through a federal grant program as mentioned on its website called the HOME Tenant-Based Rental Assistance Program. Qualification for the Section 8 program does not necessarily qualify one for this and other TBRA low income rental assistance.

Other programs may include County facilitated programs that may help low income earners find rental apartments. An example of this type of program is the Arlington, Virginia Rental Subsidy Program, however the low income earners in this particular program are also required to meet age , disability and/or household criteria. Other programs that may help low income find apartments to rent include the Minority Rental Assistance Program and The New America Foundation Rental Assistance Accounts program.

Finding low income apartments for rent is possible, however some of the programs administered and or paid for by Government agencies such as HUD and/or grants distributed by the Government may have waiting lists or limiting criteria. For persons who fall between the regulatory cracks of these programs additional assistance or resources may be required. Further help finding low income apartments for rent may be obtained by searching and contacting housing assistance centers and organizations such as those mentioned above or additional resources such as the National Low Income Housing Coalition (NLIHC) and organizations not listed in this article.

Image license: Baycrest, CC BY-SA 2.5

Guide to home valuation

Real estate valuation
Home prices tend to rise in bull markets
A home may be given numerous valuations depending on the purpose of the real estate valuation and  the methods and techniques used by the appraiser. Home values may be determined for purposes of refinancing, or obtaining 2nd mortgages or in the pricing of a home for sale. When deciding how to value a home for sale or purchase, several forms of valuation come into play in addition to other factors such as market conditions, location, proximity to schools, utilities etc.

In terms of different forms of valuation there are tax assessments, banking appraisals, fair market appraisals, insurance appraisals, market valuations and of course individual estimation of value. This article will discuss the different forms of valuation and other conditions that can influence the price of a home outside of appraised valuation.

Types of property valuation

Tax assessment 

Tax assessed value is typically lower than market value but varies from locale to locale. Tax assessed value may be as low as 30% below market value and thus is not always ideally considered as the selling price of a home. The tax assessed value is determined by local Government and can be a useful metric in determining the minimum value of a property.

Fair market appraisal 

A fair market appraisal may include one or more independent property valuation estimates from bank appraisers or bank affiliated appraisers and/or independent appraisers. According to Mortgage News Daily, market appraisal may also include a "Broker's price opinion" or a "Comparative market analysis" which are estimates arrived at through the judgment and expertise of real estate agents and brokers. 

Insurance appraisal

Insurance appraisals are performed by insurance companies in determining the cost of replacing a home in the event of a catastrophic event such as a tornado. Insurance appraisals are typically closer to market value and may take into account inflationary pressures on the cost of replacing property.

Individual appraisal

When a person or family lives in a home, repairs it, pays taxes on it, pays the mortgage, may be familiar with similar home prices in the neighborhood etc. Consequently, they may develop an intuitive sense of a home's value simply through involvement with the home. This can lead to an individual assessment of value which may or may not conform with appraisers estimates of home value. To ensure the accuracy of such an individual appraisal, taking into account variables might be of assistance. A few such factors are the following:

• Percentage annual inflation
• Operating costs
• Investments into the home
• Annual appreciation of the home's value
• Taxes paid on the home

The video below further illustrates property valuation techniques used by real estate industry professionals.

Influences on home prices

Despite all the above forms of estimate, a market may not value a home the same way. This is due to other factors external to the intrinsic physical value of a home and the independent judgment of various appraisals. While in theory property appraisals should take into account a broad range of price influences, those influences can change quite frequently causing the market price of a home i.e. the selling price to fluctuate with changing conditions such as the following:

• Macro Economic conditions
• Market forces such as volume of buyers, demographic trends etc.
• Interest rates
• Neighborhood conditions
• Local Supply and Demand

Valuation resources and tools

When determine the value of a home there are several useful methods available to help arrive at a reasonable value. While no single mechanism of home valuation is a de facto determinant of value they can be helpful in recouping investment costs, inflation, maintenance and in some cases capital gain. A few of the pricing mechanisms are provided below:

Essential financial formulas

Since not all homes yield an income through rental, the inclusion of costs into the selling price of home is simply a matter of adding up all renovation, repair, maintenance costs etc and included those costs into the selling price. Maintenance costs that are tax deductible may then be removed from the selling price due to the affect of tax benefits on cost.

In the case of homes that incur rental income, different financial formulas can be used to assess yield, return before expenses and operating costs as a percentage of income. A few of these formulas can be obtained by linking to the references in this article. If a home owner has a set yield and/or capital gain on the sale of the home in mind, these formulas can assist in determining how close to that financial goal the property valuation is.

Real estate websites

Real estate websites sometimes have toolbars and links that can help a home owner assess the value of a home in addition to market conditions. One such website is www.realtor.com and another useful website is the U.S. Census Bureau, census of housing which provides longer term pricing information. Websites such as these and others can help home buyers and sellers determine sale prices of nearby properties that are similar, and influential conditions such as interest rates.

Qualified appraisals

As mentioned above several types of home appraisal exist. One way to deal with any ranges of such appraisals could be to average them out to come up with an average appraised value if several appraisals are gathered. This average can then be compared to the costs of the home to see if the price incorporates those costs and any potential capital gain. If not, the property may be sold at a loss or the price may be reconsidered. Real estate appraisers can be obtained from several sources including 1) Realtor or agent recommendation 2) mortgage broker recommendation 3) appraiser directories and 4) word of mouth.

Finding the value of one's house can be as simple as coming up with a price that seems right and making that the selling price or it can be more exacting. In the latter sense, the property owner may take into account a number of factors including costs, taxes, appraised valuation and market conditions before coming up with a value and/or price dependent on whether or not a real estate transaction is involved. Home valuation may also be used in determining 2nd mortgages, and/or home equity lines of credit in which case a bank determined appraisal. Home valuation is somewhat subjective and ideally should consider as many financial factors as possible to ensure accuracy. However, despite this, home valuation estimates can and still do vary making the process a somewhat unscientific valuation.


1. http://www.mortgagenewsdaily.com/3162005_Home_Appraisal.asp
2. http://en.wikipedia.org/wiki/Real_estate_appraisal
3. http://appraiserusa.com/
4. http://www.realtor.com
5. http://www.helium.com/tm/895496/calculating-return-estate-investments
6. http://www.census.gov/hhes/www/housing/census/historic/values.html

Image license: Openclipart /Luc, US-PD

Home selling tips for Missouri residents

Missouri home selling tips
Seasonal factors influence home sales
The Missouri housing marketing includes cities such St. Louis, Kansas City, Columbia and Jefferson City. There is also a housing market for vacation, rural and smaller cities and towns in places like Lake of the Ozarks, Branson, Springfield, Blue Springs etc. The housing market is different in many of these areas due to Missouri demographics and economics, but similar to other States in terms of the national or regional economy and housing market.

Naturally, selling the home at a time when the most money can be easily acquired for the home is ideal. However, in both tough and smooth markets, and for Missouri housing markets, it can be helpful to  know your market, place your home in the market properly and make your home worth buying. This article will discuss these 3 points in the following sections.

Potential market for Missouri home buyers

Knowing each individual market within Missouri can be helpful in assessing who the appropriate target market for the home may be and whether or not real estate investing is a good idea in that market. To illustrate further, the State of Missouri has several unique characteristics that can be indicative of its potential home buying markets. Some attributes of the State of Missouri that assist in defining the market for people with homes for sale in Missouri are described in the next paragraph.

Missouri is a State that borders 8 other States so it also sees a lot of interstate traffic. The State is also home to several Universities including the University of Missouri system which includes Columbia, Kansas City and Rolla. Jefferson City is the Capital of the State and the State currently has a Republican led Government. The State is home to several National sports teams including the St. Louis Cardinals, Kansas City Chiefs, and Kansas City Royals and has a significantly large agricultural community and economy.

Due to Missouri's diversity, economy, location, social demographics and location in the United States, several distinct population groups may be more likely to seek out homes to buy in various parts of Missouri. These groups are potential target markets for people with homes for sale in Missouri, as mentioned in point 1 in the 1st paragraph above. A few of these potential markets are listed below in no particular order.

• Interstate truckers
• Agricultural workers, administrators, farm owners etc.
• Out of State professional relocating to Missouri
• Newly wed couples and new families
• Recent Doctoral and/or Fellowship enrollees
• House flippers, investors and up-graders

Placing a Missouri home in the property market

After a target market is identified, pursing that market is just as important as identifying it. Placing your home for sale in the market properly is an essential step for people with homes for sale in Missouri. This involves making buyers and potential buyers aware of the property, facilitating the process of learning about the real estate and encouraging interest in the home. Several general methods can be used to promote this process, however additional techniques unique to each market and micro-market may also be beneficial.

To place a property on the market the home can be listed independently, or via a Real Estate Agent or Realtor. If put on the market independently, being very clear on the home buying and selling process is important as there will be no agent to assist if one is not used. Secondly, if an agent or Realtor is utilized, get a feel for their marketing style, efficiency and know how. An effective and helpful Agent or Realtor can have a considerable impact in properly placing a Missouri home for sale in the housing market.

• Make sure the home is listed in the MLS or FSBO system
• Talk to neighbors, family or friends about the home
• Advertise locally and in addition to the Agent or Realtor's efforts
• Be aware and make use of up to date and helpful marketing tools
• Actively seek out buyers most likely to be interested
• Provide seller financing if possible
• Have a good and legitimate reason for selling

Making a Missouri  home worth buying 

Once the home for sale in Missouri is placed on the market, making the home attractive to buyers is also important. Different people have different concerns, look for certain things in a new home and naturally want to get the most for their dollar. Appealing to these interests is beneficial in promoting the home for sale in Missouri in addition to helping make the property worth buying.

To help make a Missouri home that is for sale worth buying several general and specific methods and techniques can be used. General techniques include selling ideas that assist in attracting Missouri and out of State home buyers/target market on a broad level. Specific methods for making a Missouri home for sale worth buying include more focused, localized and micro-market specific. For example, many people like homes to have aspects such as functional wiring, plumbing, doors, cleanliness etc. Some general things one might consider in making a Missouri home for sale more interesting are listed below.

• Price the home at or slightly below neighborhood homes with similar features
• Only upgrade the home for those things that add more value than the lowest cost
• Remove clutter from home and tidy lawn
• Repair cosmetic flaws of the home
• Offer a reasonable asking price

In the case of more specific markets may be interested in things like proximity to good schools, neighborhood characteristics, location near work or in certain areas close to parks, churches, commercial venues etc. It's difficult if not impossible to appeal to everyone within your target market so becoming aware of the more probably home attributes that are more likely to appeal to a larger market can be a good way to approach the step of making a home worth buying for people with homes for sale in Missouri. Some specific ways that may make the home worth buying for home-buyers in Missouri include the ideas listed hereafter.

• Similarity of home with neighborhood traits, ex-proportional square footage
• Features that suit the surrounding environment, ex-shed for large lawns
• Suitable space for vehicle(s), ex-double driveway or parking garage
• Cost saving features, ex-energy efficient windows
• Interior design, ex-bathroom with a fan

For people with homes for sale in Missouri, selling can be easy or difficult depending on overall market conditions. However, making use of methods and techniques that can help sell a Missouri home within less time can be worthwhile in some cases. The steps in this article address improving prospects for selling a home in Missouri, but don't guarantee that such methods or techniques will be successful. Those techniques include identifying a suitable market, promoting to those Missouri and other home-buyers within that market and appealing to those home buyers' interests, wishes and/or expectations for a home.

Image license: Mark Moz, CC BY 2.0