US Home Sales Drop 1.9 Percent
US existing home sales fell last month for the sixth month running, owing to caution among buyers with prices still in decline, realtors have said.
The National Association of Realtors (NAR) said September sales slowed by 1.9 percent to a seasonally adjusted 6.18 million units. Most economists had anticipated sales to drop by less, to 6.25 million units.
Sales fell from the 6.30 million unit pace recorded in August and were also down 14.2 percent from September 2005.
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10 BIGGEST Home Buying Mistakes
Based on 25 years of home-building experience for 30,000 people, here are the 10 biggest mistakes in home buying:
1. Not doing your homework. Knowledge is power. Tremendous information is available on the Internet. There is no excuse for entering the market unprepared.
2. Trying to make a shrewd investment. People need to buy based on what fits their family. Don't try to guess what will happen to the market.
3. Choosing a poor location. Even within a neighborhood, location matters. Is it on the busiest street? Is there a shopping center out the back window?
Read about other home buying mistakes…
Investing Borrowed Money Can Be Risky
You're getting into risky territory when you start investing borrowed money. At first glance, your plan may seem like an easy way to use the bank's money to easily rack up investment gains for yourself.
After all, you can probably get a home equity line of credit at or below the prime rate, which is now 8.25 percent. Assuming the interest on the loan is tax-deductible (which you can ascertain by checking out IRS Publication 936), you're actually paying 6.2 percent in interest after taxes, assuming a 25 percent tax rate.
So all you've got to do to come out ahead is earn more than 6.2 percent after-tax on the borrowed money you invest.
Some may think that sounds like a sure thing. But actually, several things could go wrong.
Cheaper Housing Lower Costs?
Moving to an area with lower housing costs often doesn't pay off for low-income Americans, according to a study to be released today by the Center for Housing Policy, a nonprofit research group based in Washington.
The study, which looks at families with low to moderate incomes in 28 metropolitan areas, found that transportation costs in places with cheaper housing are often so high that they wipe out the savings from lower rent or mortgage payments. Such places tend to be farther from employers or short on public transportation, which makes commuting costlier.
The study found that housing and transportation costs combined eat up an average of 57% of annual income for "working" families, which the study defines as those with incomes of $20,000 to $50,000 a year. The combined costs ranged from 54% of income in Pittsburgh to 63% in San Francisco; in 25 of the 28 metro areas, the combined total was within three percentage points of the 57% average.
The findings contradict the common notion that many people would be better off financially if they moved from areas with high housing costs.
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Dream House Of A Baby Boomer
Every eight seconds, another baby boomer turns 60. And as the trendsetters of the generation head for retirement, they're yearning for their dream homes.
But their idea of housing utopia doesn't necessarily hinge on spending quality time with the grandkids, according to a study commissioned by publisher Hanley Wood and released this week at the company's American Housing Conference in Chicago.
More than a third said their adult children and their own parents are not a consideration in creating their dream homes. Sixty-three percent said enjoying their home after age 60 is a priority above or equal to spending time with the grandchildren, and just 35% said they'd relocate to be closer to family and loved ones.
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