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Friday, February 18, 2011
February 2011 Newsletter
Understanding Landlord Insurance
Turning your home into a rental or buying an investment property? Expect to pay up to 20% more for the right insurance policy to protect your property.
If you think a homeowners insurance policy will cover you when you turn your current home into a rental property or buy an investment property, think again.
Rental properties require their own type of coverage--landlord insurance, which is different than the homeowners policy you buy when you live in a house yourself. Landlord insurance protects you against losses from fire, lighting, falling trees, wind and hail, water damage, and injury to your tenants and their guests.
But it doesn't cover the renters' household goods. So encourage tenants to buy a renters policy to cover their stuff. You can even include a clause in your lease saying they have to buy renters insurance, so everyone is clear about what's insured and what's not.
Landlord insurance is expensive
You'll pay 15% to 20% more for a landlord insurance policy than you will for a homeowners policy on the same house--and even more if you offer short-term rentals. Start your policy shopping by calling the company that sold you your homeowners insurance, then check with an independent insurance agent selling commercial and business policies.
Ask how you can get discounts if you have fire prevention devices, burglar alarms, or multiple properties.
What a landlord insurance policy probably will cover:
- Lightning, windstorm, hail, explosion, riot and civil commotion, smoke, falling objects, snow, ice, sleet, vandalism, sonic boom, sprinkler leakage, frozen pipes, water damage, burglary, volcanoes, and sinkholes.
- Things that belong to you that stay at the property, like appliances, furniture, or lawn care equipment. Keep an inventory (http://www.houselogic.com/articles/compile-home-inventory-right-tools/) of what's on site.
- Outbuildings, like sheds or garages, although this coverage will have its own limit (probably 10% of the overall insurance policy amount).
- Costs to defend yourself against lawsuits filed by tenants or guests, as well as the costs awarded if you lose the case. Some policies cover medical bills for injuries; some don't.
- Lost rental income if the property is damaged and you can't rent it.
What a landlord insurance policy probably won't cover:
- The tenants' belongings.
- Your rental property if it's vacant for more than 30 days. Seek an exemption in advance from your landlord insurance company as soon as you know the property is going to be vacant.
- War and nuclear, biological, chemical, or radiological attacks.
Optional coverage you might want to buy:
- Flood
- Earthquake
- Vandalism (if the policy you buy excludes it)
- Pool and tennis court insurance
- Liability for personal injury, wrongful eviction, wrongful entry, libel, and slander
Don't forget liability coverage
To cover yourself in case you lose a big court case filed by an injured tenant, buy an umbrella insurance policy (http://www.houselogic.com/articles/cost-umbrella-insurance-homeowners/) that gives you liability protection for $1 million to $5 million or more if you have a lot of assets to protect.
Don't file a claim unless you absolutely have to
There's a limit to how many claims (http://www.houselogic.com/articles/homeowners-insurance-to-claim-or-not-to-claim/) you can file before insurance companies start charging you more or canceling your policies. Claims can quickly add up as you buy more rental properties.
One time you always want to file a claim is when someone says they've been injured on your property. One claim you'll want to avoid filing: water damage for less than $10,000 because worries about mold growing in water-damaged properties will lead some insurers to immediately cancel your insurance policy.
More from HouseLogic
How to Correct Your Clue Insurance Report
Other web resources
Renters Insurance Brochure to Share with Your Tenants
Article From BuyAndSell.HouseLogic.com,
by: Dona DeZube, HouseLogic's News Editor, has been writing about real estate for over two decades. She lives in a suburban Baltimore 1970s rancher on a 3-acre lot shared with possums, raccoons, foxes, a herd of deer, and her blue-tick hound.
For More InformationPlease contact me if you'd like more information about our community or real estate market:
Walter Stauss, Lifestyles Real Estate500 Seabright Avenue, Santa Cruz, California 95062Cell: 831.246.4663, Email: walter@831.com, Web: http://www.831.com DRE #01105052
Wednesday, February 16, 2011
Real estate sales rise in 49 states in Q4
Home sales rebounded in 49 states during the fourth quarter of 2010 with 78 markets—just over half of the available metropolitan areas—experiencing price gains from a year ago, while most of the rest saw price weakness, according to the latest survey by the National Association of REALTORS®.
Total state existing-home sales, including single-family and condo, jumped 15.4% to a seasonally adjusted annual rate of 4.80 million in the fourth quarter from 4.16 million in the third quarter, but were 19.5% below a surge to an unsustainable cyclical peak of 5.97 million in the fourth quarter of 2009, which was driven by the initial deadline for the first-time buyer tax credit.
In the fourth quarter, the median existing single-family home price rose in 78 out of 152 metropolitan statistical areas (MSAs) from the fourth quarter of 2009, including 10 with double-digit increases; three were unchanged and 71 areas had price declines. In the fourth quarter of 2009, a total of 67 MSAs experienced annual price gains.
The national median existing single-family price was $170,600 in the fourth quarter, up 0.2% from $170,300 in the fourth quarter of 2009. The median is where half sold for more and half sold for less. Distressed homes, typically sold at discount of 10-15%, accounted for 34% of fourth quarter sales, little changed from 32% a year earlier.
Lawrence Yun, NAR chief economist, is encouraged by the trend. “Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down,” he said. “A recovery to normalcy requires steady trimming of the inventories.”
Yun added, “An improving housing market and job growth will go hand in hand.
The housing recovery will mean faster job growth.” He projects about 150,000 to 200,000 jobs will be added to the economy this year from an anticipated 300,000 additional home sales in 2011.
Yun further noted, “Better than expected sales and/or strengthening in home values can have an even bigger job impact as consumer spending would naturally rise from a housing wealth recovery affecting a vast number of American families.”
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a very favorable affordability environment is a huge factor in the recovery. “Although job growth has been relatively modest and credit is tight, you can’t underestimate the impact of historically high housing affordability conditions,” he said.
“Mortgage interest rates recently hit record lows, median family income has edged up and prices in most areas have been stable following the correction from the housing boom. For people with good credit and long term plans, it’s hard to imagine a better opportunity than what we see today,” Phipps said. “Unfortunately, the flow of credit is unnecessarily tight and is constraining the pace of the housing and job growth recoveries.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.41% in the fourth quarter, down from 4.45% in the third quarter; it was 4.92% in the third quarter of 2009.
“The healthier local housing markets are also experiencing favorable local employment conditions,” Yun said. Job growth is a major factor in price appreciation in metro areas such as the Washington, D.C., region, where the median existing single-family home price of $331,100 in the fourth quarter is 8.1% higher than a year ago; the Boston-Cambridge-Quincy area, at $346,300, up 4.2%; and Austin-Round Rock, Texas, at $190,300, up 4.1%.
Smaller metro areas sometimes see larger swings in price measurement depending on the types of properties that are sold in a given period. In such markets, full year price data can provide additional context.
In the condo sector, metro area condominium and cooperative prices—covering changes in 57 metro areas—showed the national median existing-condo price was $164,200 in the fourth quarter, which is 6.4% below the fourth quarter of 2009. Twenty-two metros showed increases in the median condo price from a year ago and 35 areas had declines; only 11 metros saw annual price gains in fourth quarter of 2009.
“Consumers in the hard hit regions of Nevada, Arizona and Florida were able to scoop up condos at absolute bargain basement prices,” Yun said. Median condo/co-op prices in affected metro areas include Las Vegas-Paradise at $60,700, Phoenix-Mesa-Scottsdale with a fourth quarter median of $68,900, and Miami-Fort Lauderdale-Miami Beach at $81,900.
Regionally, the median existing single-family home price in the Northeast increased 2.3% to $240,400 in the fourth quarter from a year earlier.
Existing-home sales in the Northeast rose 15.0% in the fourth quarter to a level of 797,000 but are 22.8% below the surge in the fourth quarter of 2009.
In the Midwest, the median existing single-family home price rose 0.5% to $139,200 in the fourth quarter from the same period in 2009. Existing-home sales in the Midwest jumped 18.3% in the fourth quarter to a pace of 1.02 million but are 25.4% below the cyclical peak one year ago.
In the South, the median existing single-family home price edged up 0.3% to $152,400 in the fourth quarter from the fourth quarter of 2009. Existing-home sales in the region rose 11.4% in the fourth quarter to an annual rate of 1.82 million but remain 17.8% below the surge in the fourth quarter of last year.
The median existing single-family home price in the West declined 2.9% to $214,400 in the fourth quarter from a year ago. Existing-home sales in the West jumped 19.9% in the fourth quarter to a level of 1.17 million but are 14.2% below the cyclical peak in the fourth quarter of 2009.
“A good portion of the sales activity in the West has been driven by investors taking advantage of discounted foreclosures, with high levels of all-cash transactions,” Yun explained.
For More InformationPlease contact me if you'd like more information about our community or real estate market:
Walter Stauss, Lifestyles Real Estate500 Seabright Avenue, Santa Cruz, California 95062Cell: 831.246.4663, Email: walter@831.com, Web: http://www.831.com DRE #01105052
Understanding Your Home Loan’s Good-faith Estimate
When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you'll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.
1. Know which fees can increase and by how much
In the past, lenders provided an estimate of the costs involved in getting your home loan, and if those costs rose by the time you closed on your home, tough luck. The good-faith estimate shows some fees the lender can't change, like the loan origination fee that you pay to get a certain interest rate (commonly called points) and transfer costs.
The form also lists the charges that can increase by up to 10%, like some title company fees and local government recording fees. The lender must cover any increase over that amount.
Finally, the good-faith estimate lists the fees that can change without any limit, such as daily interest charges.
2. Look for answers to basic loan questions
In the summary section, lenders explain your loan's terms in simple language. Can your interest rate rise? If so, a lender must spell out how much the rate can jump and what your new payment would be if it does. Can the amount you owe the lender increase, even if you make your payments on time? If it can, a lender must show you the potential increase.
3. Evaluate the "tradeoffs" on a loan
In the new "tradeoff table," you can ask lenders to provide details on the tradeoffs you can make in choosing among home loans. If you'd like the same loan with lower settlement charges, how will the interest rate change? If you'd like a lower interest rate, how much will your settlement charges increase?
4. Compare apples to apples with the shopping chart
Included on the good-faith estimate is space for you to list all the terms and fees for four different loans, so you can make side-by-side comparisons.
5. Know what's missing from the good-faith estimate
The form doesn't include key information, such as how much you'll reimburse the sellers for property taxes they've already paid on the home. It also doesn't tell you the amount of money you'll have to bring to the closing table.
For More InformationPlease contact me if you'd like more information about our community or real estate market:
Walter Stauss, Lifestyles Real Estate500 Seabright Avenue, Santa Cruz, California 95062Cell: 831.246.4663, Email: walter@831.com, Web: http://www.831.com DRE #01105052
The Economy
Initial claims for unemployment benefits fell by 36,000 to 383,000 for the week ending February 5, the lowest level since early July 2008. Continuing claims for the week ending January 29 fell by 47,000 to 3.88 million.
Retail sales rose 2.2% for the week ending February 5, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 2.5%.
Wholesalers increased their inventories 1% in December, following a 0.2% drop in November. Sales at the wholesale level rose 0.4% in December after a 1.9% increase in November.
The trade deficit increased 5.9% to $40.58 billion in December from $38.32 billion in November. Economists had expected a trade deficit of $40.5 billion. Exports rose 1.8% to $162.96 billion. Imports increased 2.6% to $203.55 billion.
The Reuters/University of Michigan consumer sentiment index for February's preliminary reading rose to 75.1 from 74.2 in January. It was the highest level since June 2010. The index hit a 30-year low of 55.3 in November 2008.
The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending February 4 fell 5.5%. Refinancing applications decreased 7.7%. Purchase volume fell 1.4%.
According to the Federal Reserve, consumer credit debt rose in December by $6.1 billion, or 3%, for a total credit level of $2.41 trillion. Revolving debt, which includes credit cards, increased by $2.3 billion, or 3.5%. Non-revolving debt, including loans for cars, rose by $3.8 billion, or 2.8%.
Upcoming on the economic calendar are reports on the housing market index on February 15, housing starts on February 16 and the index of leading economic indicators on February 17.
For More InformationPlease contact me if you'd like more information about our community or real estate market:
Walter Stauss, Lifestyles Real Estate500 Seabright Avenue, Santa Cruz, California 95062Cell: 831.246.4663, Email: walter@831.com, Web: http://www.831.com DRE #01105052