3 tips for smart vacation-home buying

ATLANTA – April 14, 2011 – Shoppers can find lots of good deals in vacation homes at the moment. In many second-home hot spots, prices remain close to five-year lows. For example, single-home prices in second-home hotspot Napa, Calif., are down 47 percent from their peak in 2006, according to Fiserv. A buyer looking to cash in on vacation- or second-home values should consider the following: 1. Is it rentable? Even if a buyer isn’t planning to rent, he or she may still want to consider the rental aspects of the property, particularly since a home’s rental potential can affect its resale value, says Catherine Jeffrey, a real estate professional in Fredericksburg, Texas. Buyers should check with the homeowners association or township to ensure that short-term rentals are allowed. 2. How do you plan to use the home? The loan rate depends, in part, on how the property will be used. For example, if buyers intend to use the property primarily as a second home, they’ll pay about the same mortgage rate as a primary residence, says HSH Associates vice president Keith Gumbinger. However, if they plan to get rental income from the property, the property will be treated as an investment, which means they may need to pay as much as 25 percent of the buying price for the downpayment and up to one percentage point more in interest. 3. Are you eligible for the tax benefits? If owners rent the house for two weeks or less per year, they won’t have to report income to the IRS, and they’ll be able to deduct property taxes and mortgage interest. If the owners stay in the home for less than two weeks or have 10 percent rental days, whichever is greater, they’ll be able to deduct operating costs, such as cleaning and maintenance fees, as well as the interest and property tax, says Rick Shapiro, a CPA in West Hartford, Conn. He suggests homeowners talk with a tax expert to find out what tax benefits apply. Source: “5 Things to Know About Buying a Vacation Home,” CNNMoney.com (April 5, 2011) © Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

Buyers ready to snatch bargains this spring

WASHINGTON – March 23, 2011 – Bargain prices on housing combined with low interest rates below 5 percent may bring the real estate market its busiest spring season in years, economists say.
Distressed sales continue to put downward pressure on home prices, which may lure more buyers off the fence and ready to snag a deal during the typical prime-time buying season.
Some builders are ramping up discounts on new homes as well as boosting commissions to brokers to try to spark more transactions.
Sellers of existing-homes also are getting more competitive in pricing their homes.
“After three years of the housing downturn, people are becoming much more realistic in terms of valuing their homes,” says Lawrence Yun, chief economist at the National Association of Realtors®.
An improved job market with better income potential may also motivate more people to buy, says David Berson of the PMI Group.
“Household formations are also very important,” Berson says. “Kids may have moved back in with their parents, or two people may have moved in together because of job concerns. Now they can move into their own place.”
While interest rates are sitting comfortably below 5 percent for now (30-year fixed rates averaged 4.76 percent last week), economists warn the attractive low rates won’t last long.
“Few think mortgage rates are going lower,” says Mark Zandi, Moody’s Analytics chief economist. “It’s more likely they will be 6 percent than 4 percent next spring. This lights a fire under buyers.”
Source: “Discounts expected in spring housing market,” The Wall Street Journal (March 22, 2011)© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
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