Cyberhomes Blog

Prices up in California

Fri, 20 Nov 2009 11:00:00 GMT

The median home price for new and resale homes in California was up in October from the previous month according to MDA DataQuick, which monitors real estate activity nationwide.

The median sales price for October was $257,000, a 2.4 percent increase over the $251,000 in September. The number of sales rose 2.6 percent from September to October. The numbers were generally consistent throughout the state.

In Southern California, sales were up 2.8 percent and the median price grew 1.8 percent from $275,000 in September to October’s $280,000. The news was even better in Northern California, where the median price was up 6.5 percent from September and had a year-over-year gain of 1.5 percent. It was the first time since November 2007 that the region experienced year-over-year price growth.

“The regional price statistics mainly reflect the fading of the foreclosures and the uptick in high-end activity in recent months,” said John Walsh, MDA DataQuick president, regarding the Northern California market.

In Southern California, two counties — Orange and San Diego — had year-over-year price increases. Orange County had a 1.9 percent increase in the median price of resale homes and San Diego County was 2.9 percent higher than the previous year for resale homes.

Although the other SoCal counties did not have year-over-year gains, it was still good news in that it could foretell future increases. Orange County traditionally is the real estate market that is last to decline and the first to return because of its popularity with home buyers. San Diego County was the first to be hit by the declining market, nearly a year before the rest of SoCal, so it’s logical it would lead a turnaround.

Unlike NorCal, a drop in foreclosures and buyers in the move-up market were not behind the increase in median price for SoCal. Sales of properties above $500,000 fell to 18.5 percent of sales after accounting for 20.2 percent in September.

This means the likely influence on prices is the continued high demand for entry-level homes. Properties in this market are often getting multiple bids, especially if they are priced below the area median, which is pushing sales prices above asking in many areas.

Mortgage rates, loan applications drop

Fri, 20 Nov 2009 06:00:00 GMT

For the second week in a row, mortgages to purchase properties fell despite interest rates falling. According to a survey by the Mortgage Bankers Association, mortgage interest rates fell from 4.90 percent to 4.83 percent for a 30-year fixed-rate purchase loan with a 20 percent down payment.

Even with more economists and mortgage watchers calling for rates to begin increasing soon, purchase applications fell a seasonally adjusted 7.9 percent last week from the previous week. Last week’s drop was modest compared to the 11.7 percent fall the week before. The 15-year fixed-rate (4.32 percent) and one-year adjustable rate mortgages (6.82 percent) remained relatively the same from the prior week.

Tax credit uncertainty

The lag could be attributed to the uncertainty of the home buyers tax credit, which was extended and expanded two weeks ago. If the extended credit begins to contribute to home purchases, an uptick in mortgage applications should soon begin to show.

Overall, mortgage applications fell 2.5 percent, buoyed by refinance applications. Refinances took a 72.9 percent share of all loan apps last week. But rates have been so low for so long, one has to wonder if the market is beginning to run out of qualified homeowners who want to refinance. With near unanimous opinion that rates will begin rising and likely continue going up all of next year, it’s likely even fewer homeowners will look to refinance.

“I don’t think the market will stay this low for many more months,” Denis Salamone, COO of Hudson City Bancorp, the nation’s largest thrift, told Reuters News Agency. Salamone says he thinks rates will rise once the Federal Reserve begins its scheduled cutback this spring on the purchase of mortgage-backed securities.

The biggest problem is the bottleneck above entry-level home purchases. First-time buyers are flocking to the market because of pent-up demand, mortgage rates at historic lows and the buyers tax credit. But the move-up markets are basically dormant.

Most economists agree that the double-digit national unemployment rate is keeping move-up buyers home. That, and they may not be able to psychologically handle selling their home so far below its previous high.

This time bad news is good

Thu, 19 Nov 2009 10:00:00 GMT

The stock market took a tumble yesterday because of investor reaction to what is being called a surprising drop in housing starts. The Commerce Department said October new home construction fell 10.6 percent from the previous month, dropping to a six-month low.

With apologies to those in the construction business, this drop is good news for the trying-to-recover real estate market. The fact is, inventory of homes for sale and rents are too high and the last thing we need is for new construction to pile on more vacancies.

Some economy watchers were likely getting too caught up in recent “good” real estate news — falling inventories of properties for sale, the extension of the home buyer tax credit and a slight uptick in building permits, among others.

Housing starts overall have fallen 30.7 percent from October 2008. But single-family starts have fallen 6.8 percent, while multi-family units (34.6 percent) and apartments with five or more units (33.3 percent) accounted for more than two-thirds of the fall.

Fewer renters

Most landlords will say those numbers make sense because it’s become more difficult to find tenants. On the surface, it would seem that there should be more people renting because of foreclosures and short sales. The theory is that if people aren’t owners, they’re renters.

Not in this economy. In California, where I live, unemployment has hit 12 percent. This doesn’t include the many more who are employed but making significantly less.

What we’re seeing is people moving in with family members or friends to cut housing costs. Even people who were renting and can’t afford what they were paying are sharing housing.

In my town, I’ve seen the number of rental houses sitting on the market increase dramatically since the summer and prices have dropped 10 to 15 percent for single-family rentals.

The fall in housing starts really just tells us what most already know. Real estate isn’t ready for more inventory and may not be for quite a few more months.

Bad press for tax credit

Thu, 19 Nov 2009 08:00:00 GMT

Although the real estate industry did not get everything it hoped for when the home buyers tax credit was recently extended and expanded, they were more than happy the program was continued.

But for some, there’s a lot not to love about the home buyer tax credit.

A survey of naysayers:

• “Congress threw good money after bad this week when it voted to extend and expand a wasteful home buyer’s tax credit set to expire at the end of the month,” the New York Times stated in its lead to an opinion piece on Nov. 6. The Times went on to say that “… housing analysts were finding that the tax credit did little for home sales. Between 80 percent and 90 percent of the people who have bought homes using the credit would have purchased those homes without it. To put it another way, the tax credit has been wasteful spending, not stimulus spending.”

• Simon Johnson, a professor at MIT Sloan, and James Kwak , a Yale law student and software entrepreneur, wrote in the Washington Post: “This is a bad idea. The main argument for the tax credit is that it stimulates the economy and stabilizes the housing market. Seen purely as a stimulus, the tax credit is highly inefficient. Putting cash in pockets does have a stimulative effect because some of that cash will turn into consumption. But as far as stimulus measures go, it has a low multiplier (the ratio of new economic activity to stimulus spending). By contrast, we could take the same cash and hire more teachers, police officers or soldiers to fight in Afghanistan. We would get more economic activity, and the government would get something for its money.”

• Ted Gayer, the co-director of economic studies at the Brookings Institute , offers this summation of the program: “If the goal of extending and expanding the home buyer tax credit is to spur housing sales, an optimistic assessment is that we will spend $121,000 in tax revenue per additional housing sale. Again, this is a very poorly targeted subsidy. Putting aside the high cost, the goal of increasing housing sales is misguided. The core problem with our housing market is that the bubble led to too many homes being built, and the recession led to a decline in household formation. Even if the tax credit spurs house sales, many of these transactions will just shift renters into buyers, which does not address our excess inventory of houses. Indeed, one unintended consequence of the first-time home buyer tax credit could be the worsening of conditions in the rental market.”

These are many more opinions on the home buyers tax credit out there, but these come from the most reputable sources — two of the top newspapers in the country and the prestigious Brookings Institute.

Let’s face it, the Cash for Clunkers program was a handout to the auto industry and the home buyers tax credit is the same for the real estate and banking industries. Yes, some people benefited with some extra cash in their pockets, but these are the same people who had sufficient income to purchase a car or a house — two of the more expensive goods in our society.

So, this begs the bigger question. Do these handouts help and even if they do, are they helping those that need it the most?

Reluctant landlord -- new tenants

Wed, 18 Nov 2009 12:00:00 GMT

In my last post, I told you how we ended up “reluctant” -- and long-distance -- landlords. For the past year, we hoped the people living in our Memphis-area house would buy it. But they defaulted on their lease-purchase contract and left us with a major clean-up.

They also left us with our first lesson. Don’t expect that tenants will treat your house with any respect at all, especially if they don’t have a deposit hanging in the balance.

I guess part of the problem is that we were always good renters. We paid our rent on time, we cleaned a house thoroughly when we were moving out, and we tried to stay on good terms with our landlords. So when we signed that lease-purchase contract, I thought that if the “buyers” defaulted, we’d be able to use that $7,500 deposit to cover the mortgage until we got the house sold or rented again.

Unfortunately, when our renters moved out, we were left with a lot of fixing to do. And while my husband and I spent one long weekend in the house trying to make it presentable, our elbow grease wasn’t close to being enough. I will spare you the more disgusting details, but suffice it to say the back bedroom, which had been my dream office, now smelled like a toilet. It was so bad we had to open the windows to even go back there. We pulled up the carpet and the stains were soaked through the pad.

We had to get the entire bottom floor repainted. We hired a pest control guy to come in and treat for the fleas -- he had to come back three times. That’s really extreme when you consider nearly all of the ground floor is hardwood or carpet.

We had to throw out all the curtains because of flea infestation and because their dogs had shredded the window treatments, so we replaced them with faux wood blinds. And then there was the cleaning. We had the house cleaned several times, including a steamed carpet cleaning throughout once the bug guy said the fleas were gone.

Then of course there was the yard maintenance while the house was vacant, as well as the mortgage, which had just gone up because we’d lost our homestead exemption since we no longer use the home as our primary residence.

Starting anew

All in all, we ran through that $7,500 pretty quickly. When we were comfortable letting people see the house, we listed it for rent or sale, with our Realtor managing both processes. We had showings, but there were four other houses on our street for sale, in addition to new construction still being completed in the neighborhood. Add that to the seriously depressed Memphis market, and it made for a good dose of homeowner pessimism.

We had a lot of rental interest, but we also had several people asking us to lower our rent by several hundred dollars. (We weren’t priced too high for the house -- we just had lots of people who wanted in at a lower price.) But we learned with the last people that if you lower your standards, you’ll be bitten. And not just by fleas.

Finally, we got a true rental application. I was excited until I saw the applicants’ credit scores -- they were abysmal. But they’d also written a letter that was attached to the application. They explained they were both had gone through divorces in the past year that were now resolved, but had hit their credit hard. They gave me references and asked me to call them before I dismissed their application. The letter was heartfelt, well-written and thorough. So I decided to give these renters a chance.

Next time, I’ll talk about my process checking references and making a decision on who to rent our house to.

Rude awakening

Wed, 18 Nov 2009 06:00:00 GMT

There’s nothing like waking up to a noise so loud that your house actually shakes. That happened to me this morning, and it has happened, on and off, for the past three months.

My neighbors across the street, you see, are renovating their house. Scratch that: They aren’t just renovating, they’re tearing it down to the studs and starting over.

The good news is that I've suddenly become a morning person -- even on weekends and holidays -- because I’m so conditioned by the noise to wake at around 7 a.m.

After all, who needs an alarm clock when you’ve got a cement truck in front of your house? That is, at 6:30 a.m., an hour before you usually get up?

Not me, apparently. And I won’t need an alarm clock for the next 10 months.

See, the very nice guys who live across the street from me are adding a third story to their little San Francisco house. I’d known about it for months beforehand, of course. I’d seen the public notice posted on the outside of their house. I’m kicking myself now for not paying attention earlier.

Wake-up call

But then the construction started. And the generator moved in. And the jackhammers started taking out the driveway under the house (a very common set up for houses in San Francisco, where land costs and density require close quarters). And the crews dumped giant, heavy loads of wood on the ground first thing in the morning, making a noise like a gun going off. And then the cement truck started beep-beep-beeping down my street at an ungodly (to me) hour, and I asked my landlady, “What the heck is going on? How long is this going to last?”

To my utter horror, the answer came, “A year, is my understanding.”

Lord have mercy.

Catch 22

There are laws about this, of course. The San Francisco municipal code prohibits construction crews from starting work to “erect, construct, demolish, excavate for, alter or repair any building or structure if the noise level created thereby is in excess of the ambient noise level by 5 dBA at the nearest property” before 7 a.m.

But there’s a catch. Of course there is. They can start earlier or make more noise if the homeowners get a special permit. I have no idea if my neighbors have done this.

And then, I’d have to complain. And at 6:30 in the morning, I can barely speak. But that’s just me.

So I did what any sane person would do: I started complaining about it—to anyone and everyone who would listen, aside from the construction crew, of course. That helped. When I griped on Facebook, wondering how early construction workers were allowed to start hammering and drilling and jack hammering, a friend responded, “It’s the same law as other cities: an hour earlier than anyone in the neighborhood wants to get up.”

That seems about right.

I know I’m not the first one to go through this. I know that all over the country, there are homeowners covering their ears and cursing the heavens when the construction starts and stays loud early in the day. And because I work at home, I also know there are others who have to seek refuge at a friend’s house or a coffee shop while the worst of it gets underway.

But as the construction continues, I’ll be sharing my tips and tools for coping with it, and would love to share yours as well.

Readers: Do you have foolproof ways to cope with neighborhood construction? Have you actually called the cops or talked to the construction crews working on a neighbor’s house? Did it cause a noise war? (That’s my biggest fear.) What brand of earplugs work best? And, if you use them, can you still hear your alarm and wake up on time?

Share your stories and I’ll share them in future posts.

A reluctant landlord

Tue, 17 Nov 2009 02:00:00 GMT

Call me the reluctant landlord.

Our story starts simply enough: My husband got a new job in the Memphis area. It was a big pay bump from his current position, and we’d be closer to our families. So we jumped at the chance. We bought a great house, thinking we’d be there for years. We imagined our kids growing up there, big family dinners and a bright future.

But then the economy took a nosedive, his company laid people off, and one of the first to go was the new guy -- him. We had been in the house six months.

Don’t get me wrong: We were very fortunate. He got a fantastic new job within a few weeks. But it wasn’t in Memphis -- it was in Huntsville, Ala. We were going to be moving, and we had a house back home in a neighborhood that was still being built. And Memphis was taking the economic downturn especially hard. It’s a huge shipping hub, and when things weren’t being bought and sold as much, people were losing jobs and getting their hours cut left and right.

Becoming landlords

My husband’s new company paid for temporary housing for our family while we tried to sell our house in Memphis. But we were getting nervous. This was October 2008. Lehman Brothers had just been allowed to fail. Banks were in a tailspin. People were talking about the possibility of a second “Great Depression.” So when we got an offer in from a buyer who wanted to do a lease-purchase contract, we jumped at it.

The lease-purchase contract has become more and more common since the mortgage crisis started. People who need to get their credit scores up or who need to save more for a down payment will basically rent the house for a set period of time, after which they have to buy it or lose their deposit. We asked for a pretty big deposit -- $7,500 -- and crossed our fingers that these buyers would close.

No sale, bad house

Well, they didn’t. They paid on time for a year, but then discovered they still couldn’t get the mortgage loan they wanted because their income had fallen. Knowing they weren’t getting back their deposit, they just left the house.

They left our home a complete disaster. When we made it back there to investigate, we discovered our beautiful 2,600-square-foot former model home had been badly mistreated. Despite the no pets clause in the lease agreement, the people had clearly had at least two indoor dogs. The dogs shredded our lovely window treatments, peed all over the floors, and left us with a brutally flea-ridden house.

This was our initiation into the world of being a landlord. We had to get the house cleaned up before we could show it, but we only had a couple of days in town before we had to head back to Huntsville.

So what did we do? I’ll cover that in my next post. Stay tuned!

Party like it's 2010?

Tue, 17 Nov 2009 06:00:00 GMT

Home prices may rise 4 percent next year, Lawrence Yun, the chief economist for the National Association of Realtors, told real estate professionals at NAR’s annual convention, held earlier this month in San Diego.

Of course, that statement was met with much applause, as 2009 has been a tough year for real estate, with home prices down in 123 out of 153 U.S. metro areas, according to NAR’s own data. Some of NAR’s hopeful stance stems from the fact that the home-buyer credit, which has been extended into 2010 and now includes move-up buyers, has been fueling an increase in first-time home buyers, who now make up at least half of all buyers, says CNNMoney.com.

NAR (a trade organization that represents Realtors across the U.S) often tends to have a rosier outlook on the housing market than others -- which makes sense, since it’s an organization for professionals whose bread and butter is real estate. I’m not an economist myself, so all I can say is that I hope that NAR is right -- there are many strapped homeowners out there who could use a break.

But I am a little skeptical, what with the tremendous number of foreclosures and short sales that are flooding the market. There just seems to be a lot of inventory out there, inventory that’s relatively cheaply priced. Cyberhomes blogger Rick Hazeltine also has his doubts whether 2010 will usher in some good real estate news.

Meanwhile, SignOnSanDiego.org notes that some economists don't agree with NAR's forecast. For instance, Patrick Nugent, an economist at IHS Global Insight in Massachusetts, thinks home prices may fall 3 percent to 5 percent in the U.S. next year, the website says.

Readers: Do you agree with the National Association of Realtors' upbeat real estate forecast for next year?

Home prices up in 30 cities

Mon, 16 Nov 2009 11:30:00 GMT

Not everything is headed down in today’s real estate market. Despite that median home prices fell in 123 out of 153 U.S. metro areas, according to recent data from the National Association of Realtors, median home prices are up in 30 cities from where they were a year ago. And some of these cities have seen substantial increases. Could these cities be harbingers of more positive real estate news? I hope so.

Maryland and West Virginia’s Cumberland metropolitan area saw its median price increase 19.2 percent from a year ago to $122,100. In the Davenport-Moline-Rock Island metro area in Iowa and Illinois, the median home price increased 14.3 percent to $115,600 from a year ago.

Of course, none of the 30 cities hail from states like Florida and California, which saw prices soar during the housing boom and crash equally hard when it ended. (Nor are they in New Jersey, where I live. Guess I’ll be staying put for a while.)

The Christian Science Monitor has a very helpful list of the 30 cities that have seen year-over-year gains in median price, while NAR’s website offers extensive existing-home sale data for the third quarter, if you’d like to take a look.

Readers: How is the real estate market looking in your area? Is there any indication that the market may start to improve?

Nicolas Cage homes sold at auction

Mon, 16 Nov 2009 06:00:00 GMT

I guess that it’s fitting that actor Nicolas Cage’s upcoming film, Bad Lieutenant: Port of Call New Orleans, which comes out this month, is based in the Big Easy. It’s in New Orleans that Cage lost two homes to foreclosure last week.

Cage, who owns multiple properties, has the IRS after him for a reported $6 million in back taxes. He owed $5.5 in mortgage payments for two homes he owned in New Orleans, as well as $151,730 in real estate taxes to the City of New Orleans, according to a recent CNNMoney.com story.

Cage’s New Orleans homes that went on the auction block last week were the supposedly haunted LaLaurie Mansion at 1140 Royal Street in the French Quarter and a home at 2523 Prytania Street in the Garden District. The French Quarter home, appraised at $3.5 million, sold at $2.3 million, while the Garden District property, appraised at $3.3 million, sold for $2.2 million. Movers reportedly removed Cage’s belongings from the homes on Friday, People.com says.

The properties were purchased by Cage’s lender, the Birmingham, Ala.-based Regions Bank. There were no other bids made on the homes, according to CNNMoney.com.

Cage, who has sued his former business manager, Samuel Levin, for leading him to financial ruin, has more trouble on the way: His homes in California and Las Vegas are to hit the auction block this month, CNNMoney.com says.

Mortgage rates and buyers on decline

Fri, 13 Nov 2009 12:00:00 GMT

Although interest rates have dropped to a five-week low, there has been a potentially unsettling surprise in the numbers.

The Mortgage Bankers Association weekly survey said the average interest rate for a 30-year, fixed-rate loan with a 20 percent down payment was 4.90 percent for the week ending Nov. 6.

The twist on the news is that loans for real estate purchases fell nearly 12 percent from the previous week. The loan purchase index is at its lowest level since December 2000.

So despite near record low mortgage rates, buyers are not jumping into the market. Whether this is a trend or an aberration in the statistics will be followed in future weeks.

Tax credit may spur buyers

Purchase loans may be lower because of a lull caused by debate over the home buyers tax credit in the Senate and House. First-time buyers need at least 30 days to close a real estate transaction, and when the credit was set to expire after Nov. 30, most would have had to be in escrow before last week’s survey.

Now that the credit has been extended and even opened to those who have owned their home for at least five years, those shopping for a home loan could increase soon. Of course, if the market is running low on qualified first-time buyers, there could be a continued slide in home purchase loans.

With rates falling and predicted to rise by most experts beginning in January 2010, those who have the equity and can afford to refinance are taking advantage of the low rates. The refinance share of the loan market climbed 11.3 percent to 71.5 percent of the market last week.

The 30-year fixed rate has fallen from the previous week’s 4.97 percent and is the lowest since May 15, when it hit 4.69. The average 15-year rate was unchanged at 4.33 percent. The rate for a 1-year Adjustable Rate Mortgage was 6.85, up from 6.83.

Waiting it out

Fri, 13 Nov 2009 06:00:00 GMT

Anyone who has been looking to buy an entry-level house can likely share stories of losing the battle in a war of multiple bids. Outside of a few hardest hit areas, the entry-level market is nothing if not robust.

A big reason is the pent-up demand that was created by quickly appreciating home prices. Although homeowners cheered when the price of their home increased, there were many others who groaned, knowing that home ownership was that much farther from their grasp.

Few move-up buyers

So although the entry-level market has seen great demand from investors and first-time buyers, the move-up market is stagnant. In a normal market, entry-level buyers would allow those sellers to move up to a more expensive house.

But not this time, because the entry-level market consists of too many foreclosures and short sales. The previous owners of foreclosures are now renting. The same goes for those who negotiate a short sale.

The National Association of Realtors is set to release its annual consumer study, which it says will show that 45 percent of home sales during the past year were to first-time buyers. If you include investors, the numbers would show not too many people looking to move up.

“We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth,” NAR economist Lawrence Yun said.

The key to this statement is “a steady supply of qualified buyers.” Right now, the stream is running out of water before it can get to the move-up buyer.

The big problem is that most people are not willing to sell their home at a loss or small profit if they don’t have to. Many Americans have most of their wealth tied up in their home and don’t have the cash for a down payment on a move-up house unless they can pull it out in equity. This is how it works in a normal market.

In the mid-1990s my company was moving our division 120 miles. I told my boss this would be a hardship because the value of our house had fallen about $100,000 since we purchased it. His enlightened comment was: “Yeah, but all the other houses have fallen in value, too.”

Of course, he wasn’t considering that I would need to have a down payment for another house and in the current market, I would walk away with zero — if I was lucky.

That’s the conundrum for many owners today. You don’t think they are eyeing that sweet house on a bit more land and in a little nicer area? But, really, there’s no way for them to get there. Until there is, the real estate market is going to remain robust at the entry-level and dead in the water anywhere above that.

Releasing demand

So what needs to happen to release the pent-up demand of the move-up class? Time and some luck.

Although first-time buyers are in many cases taking residence in an empty house, they will, in five-to-six years by historical standards, become move-up buyers. Many of those displaced by a foreclosure or short sale will someday return to homeownership.

This demand will lead to increased prices at the entry-level, allowing more of those sellers to move up.

One good sign is the dropping inventory. NAR statistics show that the national housing inventory fell to a 7.8-month supply of homes in September, down from a 9.3-month supply in August. This is the lowest level in two-and-a-half years according to the NAR. Generally, a six-month supply is considered a balanced market.

When the inventory falls to six months or fewer, competition will start to push prices up. This time, hopefully, at a sustainable pace. Eventually, the upward pressure on prices will allow sellers in the non-entry-level category to become move-up buyers because they’ll be able to pull out enough equity for a down payment.

Until then, these would-be buyers will be sitting at the dock waiting for the tide to rise.

Time to go digital?

Thu, 12 Nov 2009 10:30:00 GMT

An elite prep school in Ashburnham, Mass., has upset bibliophiles everywhere by exchanging its 20,000-volume book collection for a digital database of books that holds millions of titles, says NPR.org.

Now, instead of perusing a hushed atmosphere of stacks of books, students at Cushing Academy openly chat in the library and can read their “books” on 68 Amazon Kindles provided by the campus or on laptops given to each student by the school.

Now the school’s action to scrap of all its books to go digital may be extreme, but perhaps it’s a good example for homeowners to follow -- or at least in part. Getting rid of printed material for digital versions would be a good step for homeowners (like me) to take -- whose homes are swamped with so many bills, documents, magazines and books that there’s precious little living space.

Is your home being overrun by paper? Here are a few steps that you can to do lighten up the paper and perhaps save some trees:

-- Check with your bank, credit card company and other services from which you receive bills to see whether you can receive online statements instead and pay those bills online.

-- Cut down on the unwanted catalogs you receive by going to http://www.catalogchoice.org and removing yourself from certain catalog lists for free.

- Decrease junk mail by using the free service offered by the Direct Marketing Association.

-- Donate already read books to the local library or to local charities that will take books, such as the Vietnam Veterans of America. Instead of buying new books and magazines, think about reading ones from the library instead. Or, if you really want your own copy of a book, you could purchase a reader like the Amazon Kindle.

-- Get a scanner and create digital documents of any paper documents that you have or receive. (The Moneyblog on MSN.com offers tips on scanners and other ways to go digital.)

-- If you’re like me and clip out articles from magazines and newspapers, think about finding the digital versions of those publications online and saving the digital versions of what you want instead. Many magazine websites (such as GoodHouseKeeping.com) and recipe websites (like Food Network.com) offer services that let you save and store your articles and recipes on their site.

So, if you can bear to do it, weed out all those bills, magazines and books and go digital -- you might uncover a lot more living space.

Readers: Have you found a way to clear out the paper clutter from your home that you'd like to share? (And we don't mean just tossing things in the trash!)

Real estate headed for a perfect storm?

Thu, 12 Nov 2009 09:00:00 GMT

Although there are some glimmers of hope that a real estate turnabout is just around the corner, it seems just as likely that the coming spring could bring a storm of epic proportions.

That is why the next few months may be the best time to buy a house or investment property if you plan to finance the purchase. If you are one of the few who have gobs of cash on hand, it’s probably better to wait until the summer because rising interest rates and the home buyers tax credit won’t affect your purchases.

But for the rest, the time is now.

Time to buy

You hear a lot of economists saying the real estate market will likely get worse before it gets better. The spring of 2010 just may be the “worse” econs are talking about. And here’s why:

• Buyers battle it out. The home buyers tax credit has been extended to purchases under contract by April 30, 2010. The tax credit almost exclusively appeals to entry-level buyers, which means the prices of these homes will continue to be inflated above what they would be in a normal market. This is because the tax credit is forcing competition for houses.

• Disappearing demand? Although the tax credit has spurred buying, whether it is enticing enough people to purchase a home who otherwise would not have, is highly debatable — at least in the numbers to sustain a recovery. The fact is the tax credit results in the real estate market borrowing heavily against future buyers. When the credit disappears, those who were originally waiting to buy won’t be there. Just talk with your local car dealer about the impact of Cash for Clunkers.

• Rising rates. By the spring, interest rates will be on the upswing. Nobody believes rates will be where they are now, fluctuating just south of 5 percent. The consensus is that rates will be around 5.5 percent by March and could go as high as 6 percent by the end of 2010. Those are still pretty darn good rates from a historical perspective. But I’m not so sure they won’t be higher. Just as the tax credit manipulates housing prices, the mortgage interest rates have been heavily influenced by the Federal Reserve keeping the rate it charges on loans to banks at 0 to .25 percent. That will not be able to happen, especially if unemployment starts to fall as expected. This is because with falling unemployment and an economy on the rise, inflation will have to be addressed. The U.S. dollar is also at a 15-year low and the Obama Administration is going to have to turn that around soon. When the value of the dollar rises, so does inflation. And interest rates.

• Little lending? Another factor in the spring is how much money there will be to lend. The government is in the midst of a program to buy more than a trillion dollars in mortgages through Fannie Mae and Freddie Mac. This program is set to end in March, 2010. In essence, the government created a false bottom to the residential mortgage backed securities market. If the private sector is not willing to pick up that market at the same place when the government pulls back, there could be a tremendous shortage of money to loan and what is available will cost much more. The rate investors demand is determined by how much risk they believe exists. So, they will either demand a higher rate of return, which will cause interest rates to rise, or they will invest their money in something else, which will create a capital shortage and also higher interest rates.

If all of these elements collide in the spring, housing prices will likely drop, but that would be offset by higher interest rates, which may not matter because it will be extremely tough to get the few dollars that will be available.

We could very well see a perfect storm of falling demand, inflated prices in the entry-level market, rising interest rates and disappearing capital.

The best place to ride out that kind of storm is in your own home. So if you plan to buy one, now just may be the best time.

Tiny house crashers

Wed, 11 Nov 2009 04:00:00 GMT

With their vibrant red wings and black spots, ladybugs aren’t often thought of as pests in the traditional sense of the word. Children and others who’d usually run screaming from any type of beetle or bug are apt to like them, and farmers and gardeners welcome ladybugs because they are known to goggle up lots of crop-destroying pests.

But this year, there are reports across the U.S. of Asian lady beetles swarming by the hundreds upon houses and even in homes, creating quite a mess. As the weather gets colder, the beetles can get into a home through any unsealed area, and once inside, can leave behind stains and stinky smells if squashed.

I noticed a modest infestation of ladybugs in my home just a few years ago. Now, I am not the best at keeping my home tidy, so when spring came and it was time to start opening the windows, I found a few dead ladybugs here and there on our windowsills. I was surprised to find the ladybugs because I had never before seen more than one ladybug at any one time. Coincidentally, I found a deceased ladybug just inside my front door just today. Could it be a harbinger of more to come?

In a recent story on the beetles, the Associated Press reported that one pest-control specialist based in St. Louis, Mo., found thousands of the brightly colored beetles both inside and outside his home in the past few weeks. In the winter, the story notes, the beetles seek out either sunny exposures on light-colored buildings to warm up, or find their way inside nicely heated homes. To get rid of the critters, simply vacuum them up and dump them outside. (You wouldn’t want to dump them in the trash inside, since they give off a smelly defensive chemical.)

Like any other bug, it seems, ladybugs are attracted to light, so you are likely to see them hovering around your light fixtures. The ladybugs have been known occassionally to bite, and some people report allergic reactions to the bites, says the PoconoRecord.com. The best defense against these unwelcome guests is to seal cracks around windows and doors with caulk or tape so they can't get in, the website says.