Friday, December 3, 2010

Have a Great Holiday Party!

Here's some great ideas for having the best Holiday Party ever!

1. Have a great guest list. Make sure you have compatible personalities. You also need both extroverts to keep things lively and introverts to laugh at the others.

2. Make it Easy. If people have to bring gifts, food or costumes expect a lower attendance. No one want one more thing to worry about this season. The exception is if it is part of the theme.

3. Choose a Theme. Make it fun and carry the theme out throughout the party. Examples: White Christmas - everything is white with white twinkle lights, Ugly Christmas Sweater - everyone wears the worst Christmas sweater they own. It's very funny if your worst is someone else's favorite.

4. Talk it Up - No one is going to know how great your party will be, so you have to tell them. Enlist some help from other attendees to generate enthusiasm

5. Have the party on a Thursday. It is toward the end of the week but not on the weekend when everyone is already over booked.

6. Use evite to not only send out great invitations but to get good party ideas. I love it for the easy RSVP.

7. Have a surprise during the party. It can be a small gift for guests, a rare delicacy, a special guest or a fun activity. Something the guests will be talking about.

8. Keep the entertainment unstructured. If you have a Karaoke, don't make everyone participate. Stay loose and let the party take on its own personality.

9. Relax and Enjoy. When you are relaxed and having fun, your guests will too.

10. Don't forget to post pictures on Facebook, and be sure to tweet.

11. Always kill a party, don't let it die a slow death! End at a time when everyone is having fun and wishing for more.

Wednesday, November 24, 2010

October Existing Home Sales : Buyers And Sellers In Balance

Existing Home Supply (Oct 2009-2010)After two months of surging sales, home resales fell by 100,000 units last month to 4.4 million homes nationwide.

October's Existing Home Sales tally is slightly below the report's 6-month rolling average, according to the National Association of REALTORS® -- a time span which includes this year's $8,000 federal home buyer tax credit's tail end.

Housing statistics have been wildly inconsistent during that period.

For the future of housing markets, though, it's encouraging that first-time and investment property buyers were both outnumbered by "move-up" buyers; buyers that have sold their respective homes in favor of larger ones. It's the move-up buyers that power housing.

In October, buyer profiles broke down as follows:

  • First-time buyers : 32 percent of all buyers, unchanged from September
  • Repeat home buyers : 49 percent of all buyers, down one tick from September
  • Investors : 19 percent of all buyers, up one tick from September

As a point of comparison, first-timers represented 50 percent of all purchases in October 2009.

For home buyers, October's Existing Home Sales report is neither weak nor strong. It signals that, with mortgage rates low and home affordability high, housing may be reaching some form of balance. Because -- although home sales are down -- home supplies are down, too.

We can infer that buyers outnumber sellers, but probably not by much. In most areas, negotiation leverage is still up for grabs.

At the current pace of sales, the complete housing stock would be depleted in 10.6 months.

Tuesday, November 23, 2010

Applying For A Mortgage Soon? Don't Open New Credit Cards On Black Friday.

FICO recipeBlack Friday is 3 days away. It's the official start of the 2010 Holiday Shopping Season.

Sales are expected to top $111 billion this year and, already, businesses are vying for shoppers and their dollars. Newspaper circulars are getting larger, and in-store discounting is more prevalent.

But one discount that shoppers should think twice about is the popular "Open A Charge Card, Save 20%" promotion. The short-term savings may be tempting, but the long-term costs may be huge.

It's because of how credit scores work.

According to, "new credit" accounts for 85 out of 850 possible credit scoring points, with new credit defined by such traits as:

  • Number of recently opened accounts
  • Number of recent credit inquiries
  • Time since recent credit inquiries
  • Proportion of new accounts to all accounts

These traits are negatives against a FICO score so with each new, in-store credit card application, a person's credit score will fall. The fall will be especially pronounced for persons lacking credit "depth", or who have made a disproportionately large number of new credit applications recently.

For soon-to-be homeowners, or would-be refinancers , credit scores are worth keeping high. This is because credit scores change the mortgage rates and/or loan fees for which an applicant is eligible.

As an illustration, assuming 20% equity on a $200,000 conforming loan:

  • 740 FICO : No added loan costs
  • 720 FICO : 0.250% increase in loan costs, or $500
  • 700 FICO : 0.750% increase in loan costs, or $1,500
  • 680 FICO : 1.500% increase in loan costs, or $3,000
  • 660 FICO : 2.500% increase in loan costs, or $5,000


It's expensive to have a low credit score -- more expensive than the money saved by opening a card at the mall, anyway.

That said, if you know you won't need your credit for a mortgage within the next 6 months, the risk of applying for in-store credit cards is likely small. But if you'll need your FICO soon, consider paying for your gifts full price.

Monday, November 22, 2010

Home Safety Tip : How To Install And Test A Smoke Detector

Test your smoke alarmAccording to the United States Fire Administration, in 2008, there were an estimated 378,200 in-home fires. Combined, these fires caused $8 billion in property damage and killed 2,600 people.

Unfortunately, many of affected homes did have smoke detectors installed, but the devices were faulty either because of dead batteries, or because the smoke detector had reached the end of its useful life.

This is why it's so important to test your home's smoke detectors at least once annually.

Here's how to test a smoke detector:

  1. Ask a family member or friend to walk to the farthest point of the home from the detector.
  2. Push and hold the testing button to activate the alarm. Usually, this takes 5 seconds.
  3. Confirm with the family member or friend that the alarm was audible from his/her location.

And there's an additional step worth taking.

Just because the smoke detector's alarm works doesn't mean that the actual smoke detector works. For less than $15, therefore, you may want to buy a "smoke test" from Amazon to confirm whether your detector is faulty. The smoke test simulates a real fire so, if the detector fails to sound when it's tested, it's time to replace the entire smoke detector unit.

2,000 residential fires occur on Thanksgiving Day each year -- most of them related to cooking. Before Thursday, make sure your smoke detectors are working. You don't want your home to be Fire #2001.

Friday, November 19, 2010

Mortgage Rates Still Rising. Is This The End Of The Refi Boom?

Freddie Mac mortgage rates (January - November 2010)

Rock-bottom mortgage rates may be gone for good.  This week's Freddie Mac Primary Mortgage Market Survey shows in numbers what rate shoppers have learned the hard way -- mortgage rates are spiking.

During the 7-day period ending November 18, the average 30-year, conforming fixed rate mortgage jumped to 4.39 percent, an increase of 0.22% from the week prior.

And it's not just rates that are soaring. The average number of points charged to consumers increased to 0.9 percent last week. For most of the year, that cost had been 0.7 percent.

One "point" is equal to 1 percent of your loan size.

With the sudden rise in mortgage rates, we have to question whether the Refi Boom is ending. Between April and early-November, conforming mortgage rates dropped more than a full percentage point and, during that time, a lot of homeowners capitalized on the market. Refinance activity was strong; rates cut new lows each week.

Today, however, Wall Street sentiment is different. There's a growing concern for the future of the U.S. dollar, and that's making mortgage bonds less attractive to investors. As demand drops, so does the underlying bond's price which, in turn, causes mortgage rates to rise.

Buy-sell patterns like this are common. The speed at which they're changing is not.  Mortgage lenders can barely keep up with the volatility, issuing up to 4 separate rate sheets in a day.

Therefore, if you're shopping for mortgage rates, or wondering whether it's finally time to join the Refi Boom, the time to lock is now. Mortgage rates should remain volatile through the New Year, at least. At what level they'll be then, though, is anyone's guess.

Thursday, November 18, 2010

Housing Starts Data Much Better Than The Headlines Would Have You Believe

Housing Starts (Nov 2008-Oct 2010)Newspaper stories can be misleading sometimes -- especially with respect to real estate. We saw a terrific example of this Wednesday.

A "Housing Start" is a privately-owned home on which construction has started and, according to the Commerce Department's October 2010 data, Housing Starts data dropped by nearly 12 percent as compared to September.

The media jumped on the story, and its negative implications for the housing market overall.

A sampling of the headlines included:

  • Housing Starts Plunge: Market's 'Pulse is Faint' (WSJ)
  • Housing Starts Tumble (Reuters)
  • Housing Starts Sink 11.7 Percent In October (NPR)

Although factually correct, the headlines are misleading. Yes, Housing Starts fell sharply in October, but if we strip out the volatile "5 or more units" portion of the data -- a grouping that includes apartment buildings and condominiums -- Housing Starts only fell 1 percent.

That's a big difference. Especially because most new construction buyers around the country don't purchase entire condo buildings. They buy single-family residences.

As an illustration, 84% of October's Housing Starts were single-family homes. The remaining starts were multi-units.

This is why the headlines don't tell the whole story. The market that matters most to buyers -- the single-family market -- gets completely glossed over. The Housing Starts reading wasn't nearly as awful as the papers would have you believe.  Furthermore, it's never mentioned that single-family Housing Permits climbed 1 percent last month, either.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Therefore, we can expect December's starts to be higher, too.

Wednesday, November 17, 2010

Homebuilders Expect A Surge In New Home Sales

NAHB Housing Market Index November 2008-2010Homebuilder confidence is higher for the third straight month this month.

According to the National Association of Home Builders/Wells Fargo Housing Market Index, a combination of shrinking new home inventory plus higher-quality foot traffic is boosting builder optimism.

November's confidence reading of 16 is the highest since June 2010. The Housing Market Index is now above its 3-year trendline, too.

The purpose of the Housing Market Index is to measure "the pulse of the single-family housing market". The survey is sent to home builders around the country, asking them to report on their business.

The survey is 3 questions:

  1. How are market conditions today?
  2. How do market conditions look 6 months from now?
  3. How is the prospective traffic of new buyers for new homes?

Responses are then collected, and seasonally-weighted.

Of course, it's no surprise that builder confidence is rising. The sales of new homes spiked in September, and the jobs market is moving in the right direction. Additionally, low mortgage rates help to attract new buyers, too. Altogether, the outlook in the New Home market is as rosy as it's been in months.

The downside for new home buyers , though, is that, because of their optimism, builders may be unwilling to offer free upgrades or other discounts. Certainly not with sales are expected to return to "federal tax credit" levels, anyway.

Therefore, if you're in the market for a new home, or expect to be "buying new" in early-2011, you may want to move up your time-frame. Not only are low mortgage rates not likely to last, but neither are low home prices.