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Pending Home Sales Index Crosses The 100 Barrier

After a series of worse-than-expected data last month, the housing market appears to be back on track.

The Pending Home Sales Index posted 101.4 in March, a four percent gain from the month prior and the index’s highest reading since April 2010 — the last month of that year’s federal home buyer tax credit.

A “pending home” is a home under contract to sell, but not yet closed. The Pending Home Sales Index is tracked and published by the National Association of REALTORS® monthly.

The March report marks the index’s first 100-plus reading in nearly two years.

To home buyers and sellers throughout CA , this is statistically significant because the Pending Home Sales Index is normalized to 100, a value corresponding to the average home contract activity in 2001, the index’s first year of existence. 2001 was an historically-strong year for the housing market.

The March 2012 Pending Home Sales Index, therefore, puts current market activity on par with market activity from 2001.

You wouldn’t know it from reading this week’s papers, though. There have been stories about how the Case-Shiller Index put home values at new loans; and how the Existing Home Sales figures unexpectedly dropped off; and how the New Home Sales report was a laggard.

But this is why the Pending Home Sales Index can be so important.

What makes the Pending Home Sales Index different from those other data points is that the Pending Home Sales Index is a “forward-looking” housing market indicator.

Unlike most data which aims to tell us how the housing market performed at some point in the past, the Pending Home Sales Index attempts to tell us how the housing market will perform at some point in the future. 

80% of homes under contract close within 2 months. Many more close within months 3-4. Therefore, on the strength of the March Pending Home Sales Index, we should expect a strong April and May nationwide

If you’re shopping for homes right now, consider taking advantage while the market remains somewhat soft. Mortgage rates are low and home prices are, too. It can make for a good home-buying conditions.

America’s 20 Best Small Towns

America is stuffed with world-class “big cities”; New York, San Francisco and Chicago make for three great examples. But beyond the biggest cities, there are some wonderful small towns, too.

Smithsonian.com highlights 20 of them on its website.

Focusing on cities with 25,000 residents or fewer, the publication ranked areas high in “culture”; towns with high concentrations of museums, public gardens, art galleries and other cultural assets including resident orchestras. 

The author states “big cities and grand institutions per se don’t produce creative works; individuals do. And being reminded of that is fun”.

The Top 10 Small Towns in America, as judged by Smithsonian.com :

1. Great Barrington, Massachusetts
2. Taos, New Mexico
3. Red Bank, New Jersey
4. Mill Valley, California
5. Gig Harbor, Washington
6. Durango, Colorado
7. Butler, Pennsylvania
8. Marfa, Texas
9. Naples, Florida
10. Staunton, Virginia

Other notable cities on the list include Princeton, New Jersey; Beckley City, West Virginia; and Siloam Springs, Arkansas.

The Smithsonian.com website provides an in-depth review of each of its twenty listed cities, including historical notes and quotes from key community members. It makes for good reading by local residents and visitors, alike.

Review the complete rankings online.

How To Use Newspapers To Kill Garden Weeds

April 22 is Earth Day, a day to raise awareness about, and to celebrate, the Earth’s natural environment. It’s also a day for people of Palm Springs to do something good for the planet.

There are lots of ways to help the environment, including by reducing your net electricity usage, by conserving fresh water supplies, and by planting trees. You can also reduce the use of chemicals and pesticides in your home’s garden or yard.

One such trick is replace chemical-heavy pesticides used for weed killing with your local newspaper instead. Newspapers can be effective in killing weeds, and preventing new ones from growing, while also protecting the Earth from contaminants.

The method is basic — use a wet newspaper “carpet” blocks both sunlight and oxygen from reaching the soil, starving weeds that have already grown, and those that have yet to break soil.

Here’s how to do it :

1. Confirm that your newspaper uses soy-based ink — most local dailies do.
2. Stack a dozen pieces of newsprint and thoroughly wet it
3. Place the wet pages on the area affected by weeds
4. Cover the wet pages with a thin layer of mulch

That’s it. Over several weeks, the covered weeds will decompose into the soil, providing nourishment to other plants and vegetation. If you find that the initial newsprint stack “failed”, repeat the above steps, doubling up on the number of news pages and mulch.

Make sure that your newsprint is the “standard” newsprint, too. Avoid glossy circulars and coupon pages which use different paper and often use less Earth-friendly ink.

Tax Tips : What To Do With Your Tax Refund

The typical U.S. taxpayer will receive roughly $3,000 in federal income tax refunds this year — an average of $250 per month. So, what would you do with an extra $250 monthly? This segment from NBC’s The Today Show offers some advice. 

Whether you’ve already filed your annual taxes for 2011, filed an extension, or will squeak by on the deadline, you could probably be doing more with your taxes. The above video shares some tips. It’s four minutes of solid insight on tax refunds, tax withholdings, and reducing your household’s overall “bad debt”. There’s something for everyone.

Among the points covered in the tax refund piece :

• Consider changing your personal payroll exemptions so your 2012 refund is $0
• Remember that refunds are not “free money” — it’s your money. Spend wisely.
• Use your tax refund to fund retirement accounts

Advice is also shared about how to use your tax refund to fund a reserve account, or emergency fund. As a homeowner or home buyer in Palm Desert , applying tax refunds to a savings accounts in this manner can go a long way. When you’re a homeowner, maintenance costs can be sudden and unexpected. A furnace can explode, for example; or, a roof could spring a leak. Having money set aside for crisis is essential.

Having a savings account will also improve your household’s long-term financial stability. 

As a reminder, in most years, federal income tax is due April 15. However, with Tax Day falling on a Sunday and with the federal government closed for a holiday the following Monday, U.S. taxpayers in CA and nationwide get a reprieve until Tuesday, April 17, 2012.

Homebuilder Confidence Slips 3 Points In April

For the first time in 3 months, homebuilder confidence has slipped. 

As measured by the National Association of Homebuilders, the Housing Market Index dropped three notches in April to a reading of 25. The report measures homebuilder confidence in the newly-built, single-family housing market. 

When the Housing Market Index reads 50 or better, it reflects favorable market conditions. Readings below 50 reflect unfavorable conditions.

According to the scale, not since April 2006 have housing market conditions have been deemed “favorable” but, recently, homebuilder confidence has picked up. Between September 2011 and March 2012, confidence doubled.

April’s reading remains that second-highest since 2007.

So what does “builder confidence” mean? The formula is a little bit tricky.

The Housing Market Index is actually a composite figure. It’s the combined result of three separate surveys sent to homebuilders monthly. The surveys ask about current single-family sales volume; projected single-family sales volume over the next 6 months; and current home buyer “foot traffic”.

The NAHB compiles the results into the Housing Market Index.

In April, builder responses worsened on all 3 questions :

• Current Single-Family Sales : 26 (-3 from March 2012)
• Projected Single-Family Sales : 32 (-3 from March 2012)
• Buyer Foot Traffic : 18 (-4 from March 2012)

At first glance, the data reveals a weakening market for newly-built homes and this may be true; we won’t know for another few months whether April’s confidence setback is an historical blip or the start of a trend. The change in builder psyche, though, is a change that today’s new home buyers in Palm Desert can exploit.

Two months ago, builders expected 2012 to be a banner year for home sales. Today, they’re not so sure.

Buyers of new construction, therefore, may find it easier to negotiate with builders for price reductions, “free upgrades”, and/or other concessions. Plus, with mortgage rates still resting near historical lows, financing a newly-built home is cheaper than at any time in recorded history.

The Spring Buying Season is underway. For buyers of new construction, there are deals to be found.

Build Your Own Rain Barrel To Save Money, Environment

According to the EPA, during summer months, lawn and garden watering account for roughly 40% of a typical home’s water use.

It’s a statistic that reminds us how “green lawns” can be wasteful to both the environment and household budgets  – especially with drought conditions expected and water costs rising in many U.S. municipalities.

As a homeowner in Palm Springs , to help Mother Nature and your wallet, consider added a rain barrel to your home.

A rain barrel is a rain-capturing system that collects and stores water runoff from your roof. Often attached to a home’s gutter system, a standard rain barrel collects and holds 55 gallons of water which can then be reused to water plants, wash cars, and clean driveways among other uses. Because the water is natural (i.e. not treated with chlorine or lime), it’s also ideal for window washing.    

Rain barrels can be purchases at most hardware or garden stores, or online via Amazon.com, for example. Or, they can be hand-built.

To install your rain barrel, first find a location for it, either under a downspout or near one. Make sure to select a stable location because water weighs roughly 8 pounds per gallon. A full rain barrel will weigh over 400 pounds, therefore, so be sure the ground beneath the it is solid and flat.

Next, if your rain barrel is hand-built, use PVC piping to reroute falling water into the mouth of the barrel itself, making sure to create a water-tight seal between the piping and the downspout. Or, if you’re using a store-bought rain barrel, follow the manufacturers instructions to “connect” the rain barrel to the downspout.

And, as the last step, be sure that the mouth of the rain barrel is protected from outside debris such as leaves, flowers and bugs. A formal lid or a covering made of wire mesh makes for a suitable protective cover. Most store-bought rain barrels will be sold with a covering.

That’s it. Just remember that basic maintenance will be needed. Water caught by a rain barrel should be used regularly to prevent “standing water” and protective screens should be cleaned regularly.

For a step-by-step guide to building your own rain barrel at home, click here.

The Top 10 Cities In Which To Raise A Family

Titled “The Best Cities For Raising A Family”, Forbes has compiled and analyzed data from America’s 100 largest metropolitan areas, accounting for seven lifestyle factors including cost of living, commuting ease, school quality, crime density, and home affordability.

Given these selection criteria, it’s no surprise that Grand Rapids, Michigan took top honors. The area’s low median income is offset by an extremely low cost of living and a school system that’s among the best in the nation. Nearly 90% of the homes in Grand Rapids are affordable families earning the median income — the seventh-highest affordability ranking in the country — and commutes are quick.

Since the housing peak, home prices are down just 12% in Grand Rapids — a figure below the national average.

The complete Top 10 list for the Forbes “The Best Cities For Raising A Family” piece were:

1. Grand Rapids, Michigan
2. Boise, Idaho
3. Provo, Utah
4. Youngstown, Ohio
5. Raleigh, North Carolina
6. Poughkeepsie, New York
7. Omaha, Nebraska
8. Ogden, Utah
9. Cincinnati, Ohio
10. Worcester, Massachusetts

Now, before you make a home-buying decision based on the Forbes report, remember that real estate is a local market and even city-wide statistics can be too broad to be helpful to everyday home buyers in Palm Desert. Even within Grand Rapids, there are some neighborhoods that outperform in terms of home valuations and school quality, for example; and some areas from which a daily work commute may be more cumbersome. 

For accurate, real-time housing data for any of the above markets , be sure to ask a Palm Springs real estate professional.

Fed Minutes Causes Mortgage Rates To Rise Suddenly

The Federal Reserve has released the minutes from its last FOMC meeting, a 1-day affair held March 13, 2012. Mortgage rates in CA are rising on the news.

For the un-indoctrinated, 3 weeks after it meets, the Federal Open Market Committee, the sub-group within the Federal Reserve that votes on U.S. monetary policy, publishes its meeting minutes.

Similar to the minutes from a corporate event, or condominium association meeting, the Fed Minutes recounts the conversations and debates that transpired throughout the meeting.

The Fed Minutes is a lengthy publication, often filling 10 pages or more. By contrast, the more well-known publication from the FOMC — its post-meeting press release — tends to span 6 paragraphs or less.

The extra detail contained within the Fed Minutes is Wall Street fodder, especially given the current economic uncertainty. Investors look to the Federal Reserve for clues about what’s next for the U.S. economy.

Lately, the minutes has made an out-sized impact on mortgage rates. The Fed’s words continue to swing the mortgage-backed bond market.

Today is no different.

March’s Fed Minutes is a dense one and markets are reacting. The text shows a central bank softly divided on future U.S. economic policy, and in debate about whether existing market stimulus should be removed.

The Fed has said that it’s expecting high levels of unemployment and low levels of inflation in the coming months, an outlook that leaves little reason to introduce a third round of stimulus. This is the primary reason why mortgage rates in Palm Desert have been climbing since the Fed Minutes’ release.

Since mid-March, mortgage rates dropped on speculation that the Federal Reserve would introduce a mortgage bond purchase program this quarter. Today, those expectations have reversed.

According to the minutes, the Federal Reserve believes that additional market stimulus would only be necessary “if the economy lost momentum”, or if inflation remained too far below 2 percent per year. Currently, Core PCE — the Fed’s preferred gauge of inflation — is running slightly below 2 percent.

The Federal Reserve’s next scheduled meeting is April 24-25, 2012 — its third of 8 scheduled meetings this year.

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FHA Mortgage Insurance Premiums Increasing April 9, 2012

Planning to use an FHA-backed mortgage for your next home loan? You might want to get your application in gear today.

Beginning next week, the Federal Housing Administration (FHA) is changing the way it charges mortgage insurance to U.S. homeowners. For the fourth time since 2010, FHA mortgage insurance premiums are rising for all FHA-backed homeowners.

For FHA Case Numbers assigned on, or after, Monday, April 9, 2012, there are two planned changes.

First, FHA Upfront Mortgage Insurance Premiums (UFMIP) will increase by 75 basis points to 1.75%, or $1,750 per $100,000 borrowed. Upfront Mortgage Insurance Premium is paid at closing, and typically added to an FHA borrower’s loan size.

The current UFMIP rate is 1.000 percent.

Second, annual FHA mortgage insurance premiums are rising. All new FHA-backed loans will be subject to a 10 basis point increase in annual mortgage insurance premiums, costing homeowners an extra $100 per $100,000 borrowed per year.

The new FHA annual mortgage insurance premium schedule follows :

• 15-year loan term, loan-to-value > 90% : 0.60% MIP per year
• 15-year loan term, loan-to-value <= 90% : 0.35% MIP per year
• 15-year loan term, loan-to-value <= 78% : 0.00% MIP per year
• 30-year loan term, loan-to-value > 95% : 1.25% MIP per year
• 30-year loan term, loan-to-value <= 95% : 1.20% MIP per year

In addition, for loans above $625,500, beginning with FHA Case Numbers assigned on, or after, June 11, 2012, there will be an additional 25 basis point increase in annual MIP.

To calculate your monthly MIP obligation as a FHA homeowners, multiply your starting loan size by your insurance rate from the list above, then divide by 12.

Note that the FHA mortgage insurance changes apply to new FHA Case Numbers only. If you have an FHA mortgage approval in-process, or an existing FHA home loan, you are not subject to the new MIP schedule. To avoid paying the FHA’s new MIP schedule, therefore, begin your FHA mortgage application today.

Once your FHA Case Number is assigned, you’re locked in to today’s lower premiums.

Spring Cleaning Shortcuts

It’s April in Palm Desert and warmer weather is coming. It’s Spring Cleaning season. Do you have a checklist?

In some households, spring cleaning is an annual ritual, taking anywhere from a full day to an entire week to complete. Room-by-room, foot-by-foot, dust, dirt and grime are replaced with cleanliness and shine.

No matter in which way to you choose to tackle your chores, though, the people at Real Simple have you covered. The magazine’s website provides a thorough, detailed walk-through of the most common spring cleaning tasks. It also offers a “shortcut” series.

For example, the section of cleaning area rugs and rooms with wall-to-wall carpeting is a chore Real Simple lists as lasting “a morning”. The shortcut version, however, is noted to take just 10 minutes.

Some of the other areas covered in the Real Simple spring cleaning guide include :

• Windows (4-6 hours long version; 15 minutes each “shortcut” version)
• Curtains (30 minutes per panel long version; 10 minutes per panel “shortcut” version)
• Upholstery (25 minutes per piece of furniture long version; 5 minutes per piece of furniture “shortcut” version)

You’ll need tools for your spring cleaning tasks including special cleansers, sponges, rags and vacuums. In some cases, you may want to rent equipment from a local hardware store. For example, deep-cleaning an area rug with a steam cleaner may be more time-effective than scrubbing it clean by hand.

Then, after completing the above chores, remember to flip your mattresses, change your air filters, and test your smoke alarm batteries.

Keep track of what you’ve done, and what’s left to do, with this classic, 3-page Spring Cleaning Checklist from Martha Stewart.

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