Want To Buy That $40,000 Home? No. You Don't.

You've all heard the stories -- finding that gem of a foreclosure way below market price that only needs a new furnace and some cosmetic updates, bought by a savvy investor or lucky owner-occupant. Have you been hoping to find the $40,000 property in a $100,000 neighborhood that only needs a new roof, not a new foundation? I'm here to tell you that the likelihood of that happening anymore is very, very small. Infinitesimal. The homes I've been showing in Hamilton, Clermont and Brown counties that are in this price range are not worth fixing up -- you will never ever get your money back. Sounds harsh even to me, but there you have it. That's the bad news.

The good news is this: if you have an income that has been nice and steady for the past two years, average credit, and the will to commit to home ownership, qualifying for a mortgage is probably MUCH easier than you think. Plus, there are plenty of low down payment mortgage options for you to choose from: FHA with 3.5% down and recently lowered mortgage insurance premiums, USDA in many rural areas with 0% down payment, VA loans for veterans of the military with no mortgage insurance premium, the new Freddie Mac Home Possible Advantage with 3% down -- many lenders are even offering 5% down conventional loans.

Will you end up paying more for a house if you make a smaller down payment? Yes, probably. Unless you make extra payments and pay down the principal balance over time. But it still beats renting, and as long as you take good care of your home chances are you will see a return on your investment.

Improved Market Activity In February

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One of several infographics from the February 2015 survey report

The latest REALTORS(c) Confidence Index survey has been released to those who responded to the survey -- like me -- and it has some good news for those looking to buy or sell this year. For those of you unfamiliar with the survey, it is sent by the National Association of REALTORS each month to 50,000 randomly chosen members, as well as to respondents in the previous three surveys who provided an email address.

So, what's the news? February showed increased market activity across the nation, supported by easier mortgage access and the recent decrease in FHA mortgage insurance premiums. Also, REALTORS in every state were very positive about the outlook for single family homes in the next six months. Buyer traffic did continue to outpace seller traffic in February, so it's not just me wondering where all the homes are for my buyers (great time to list, everyone!). Showings were down overall in February, but since this has been the trend for the past two years and it was a snowy winter month for many of us I'm not terribly surprised. REALTORS expect that prices will increase modestly over the next year -- not another bubble, just a gradual increase partly due to high buyer demand and lower inventory. Homes are taking about a week less to sell than reported in January but about the same amount of time as February 2014; over a third of homes sold within 30 days.

There's plenty more information in this report, but those are the highlights. You'll be able to see it for yourself at the NAR website later this week.

Home Office Space Could Make The Sale

A consumer research firm recently learned that over 75% of people would use extra bedroom space as an office in their next home, beating out guest rooms and multipurpose rooms. This shouldn't be that surprising, especially with the increase in telecommuting and self-employment opportunities, and the recent increase of stay-at-home moms. Plus, parents see a centralized work space where they can keep an eye on homework progress as an increasingly important feature.

Remember, if you do work from home you may be able to deduct the cost of your home office on your taxes as well -- the only room in the home that can pay you back before you sell!

How Much Do You Need For A Down Payment?

According to a survey from RealtyTrac, buyers in 2014 put down an average of 14%, and more in higher-priced markets. Surprisingly, younger buyers appear to have made higher down payments at an average of 17%. It's important to note that while RealtyTrac surveyed over 350 counties, most of these appear to be on the coasts.

3.5% down payment FHA loans, and 5% down conventional loans are increasingly popular -- and publicized -- in the Midwest, including greater Cincinnati, where lower sale prices (as compared to coastal states) mean that first-time home buyers and others who may not have large amounts of cash available for a down payment are competing against people in similar situations rather than those able to fork over 24% which is the average in some luxury markets.

What does this mean for you? Talk to a few lenders to get a good idea of what types of loans you qualify for, and talk to a Realtor about what you need to be competitive in your local market.