Housing Construction Hits Pre-Recession Pace

The U.S. housing sector was in full bloom in April, as construction during the month revved up to its fastest pace since before the Great Recession.

New privately owned housing starts – a category that includes single-family and multi unit housing – rose to a seasonally adjusted rate of 1.14 million, according to data from the U.S. Census Bureau and Department of Housing and Urban Development. Up 20.2 percent month over month, it was the sector’s largest monthly gain since November 2007 and represented a 9.2 percent jump year over year.

Housing construction was sluggish during a particularly rough winter, especially in the Northeast and Midwest. And the numbers didn’t rebound markedly in March, making some analysts anxious for April’s numbers.

The uptick is good news for a housing sector that has largely lagged behind the rest of the economy. It’s also a good sign for domestic construction, which shed nearly 30 percent of its employees between April 2006 and January 2011 but has since gained steadily, according to the Labor Department.

Single-family housing starts in April were up 16.7 percent month over month, while construction of buildings with at least five units jumped nearly 32 percent. More here.

Workers continue construction on a housing plan in Zelienople, Pa., on March 28, 2014.

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Mortgage rates hit 2015 high

Aspate of positive economic reports helped push average fixed mortgage rates this week to their highest level of the year.

Still, the cost of borrowing money to buy or refinance a home remains lower than it was a year ago.

The average interest rate on a 30-year fixed-rate loan this week was 3.87 percent, compared with 3.84 percent last week and 4.12 percent in the same week a year ago, according to Freddie Mac’s weekly survey.

Pending U.S. home sales jump to strongest level in 9 years
Pending U.S. home sales jump to strongest level in 9 years
On a 15-year fixed-rate mortgage, the average rate rose to 3.11 percent this week, from 3.05 percent last week. A year ago, that rate stood at 3.21 percent. More here.

9 Questions To Ask Before Buying Your First Home

While the dream of home ownership may have taken a beating during the recent recession, a majority of Americans still say that buying a house is in their life plan.

And with good reason: home ownership is a key part of many individuals’ long-term financial strategies, plays an important role in improving the health of the economy, and can provide much-needed space for growing families.

But if the recent collapse of the housing market made one thing clear, it’s that home ownership is not for everyone. It’s a significant, long-term commitment that requires strong financial standing and the right timing.

We spoke with Merrill Edge Financial Solutions Advisor Wesley Gunter and Trulia real estate expert Michael Corbett to get a sense of what first-time home buyers should consider before taking on a mortgage. They recommend that prospective buyers ask themselves the following questions:

1. Why do you want to purchase a home?

Both Gunter and Corbett say that figuring out why you want a home is absolutely critical before you begin looking at options. “What’s the purpose of the home?” asks Gunter. “What do you want to do with it? Are you going to live in it? Are you going to rent it? Know where you are in that life cycle.” Answering those questions will determine what kind of loan structure you’ll need and what size house makes the most sense given your short- and long-term family plans.

2. What can you reasonably afford?

Before you even think about whether you want a two- or three-bedroom, you need to figure out what you can actually afford. That means taking an inventory of your income, expenses, assets, savings, and debts. Once you know where you stand, Gunter suggests sitting down with a financial advisor and saying: “Here’s an example of our cash flow on a monthly and quarterly basis. Is it reasonable for us to buy a $500,000 home or a $200,000 home?”

The last thing you want is get your sights set on one kind of home only to discover later that it’s way outside your price range.

3. Have you factored in all the hidden costs?

The mortgage and down payment aren’t the only numbers you need to consider. “You hear people say all the time: ‘Well, my rent right now is $2,500 and the mortgage would be $2,300. I should buy a house,'” Corbett says. “Well, the problem is, you’re not taking into consideration all the ongoing costs of home ownership.”

Costs like property taxes, home owner’s insurance, realtor fees, closing fees, utilities, and maintenance can really add up. If you’re buying in areas like California, Corbett continues, you’ll also have to pay hazard insurance against natural disasters like earthquakes. “So that $2,300 is not $2,300,” he says. “It may end up being $3,500 or $3,700 when all is said and done.”

4. What kinds of loans do you qualify for?

Just like applying for a credit card, whether you qualify for a particular home loan depends on your financial history. Lenders will look at your pay stubs, employment forms, and tax returns going back two years, as well as your credit score to determine eligibility. First-time homebuyers can apply for Federal Housing Administration (FHA) loans, which require just a 3.5% down payment.

But if you can’t put down 20%, says Corbett, you should seriously think through whether you can afford a house. In the latest housing crisis, he says, “the majority of the collapsed mortgages and a majority of the defaults were homes that were purchased with very little money down.” Gunter agrees, saying: “Every mortgage is set up differently, but the more you can afford to put down the better, because it will reduce your payments as you get going.” More here.

buying home

House flippers seeing record returns

House flipping may not be as popular as it was just a year ago, but for those willing to risk it, there are now record rewards. Four percent of home sales in the first quarter of this year were flips, according to RealtyTrac, which defines a flip as a home that is bought and sold again within a 12-month period. That comes to just 17,309 flips, which is the lowest share since the middle of 2011.

The average gross profit on a flip, however, soared to $72,450, up from $61,684 in the first quarter of 2014. That is the highest profit since this survey started in the beginning of 2011, and is attributable to tight supply in the housing market, which is pushing prices higher faster. More here

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10 Garden Hacks for Under $20

Ready to grow a green thumb this spring? Gardening, when it’s done right, can be a great way to save money. Just imagine if you could grow all your own tomatoes for the summer without spending a fortune. With these 10 tips, you just might!

1. Choose the right plants.

An unsuccessful garden often stems from choosing the wrong plants. If you don’t want to dump loads of money into your garden, choose the right fruits and veggies for your area. Hardy varieties suited to your soil and climate will make the rest of the process a breeze.

Cost: Free! You’re going to buy plants anyway, so you might as well buy the right ones to start.

2. Start veggies from seed.

Starting seeds indoors is difficult. However, plenty of veggies and fruits are easy to direct sow. Just prepare your soil, put the seeds in at the right time and watch them go. Some easy options to direct sow include corn, carrots, zucchini, turnips, beets, radishes and leafy greens.

Cost: 50 cents to $1 per seed packet

3. Try containers.

If you’re new to gardening or don’t have a lot of space or time to invest, consider a container garden. You can use old containers, or pick them up for a couple bucks at your local dollar store. Add in a 1:1:1 blend of compost, vermiculite and peat moss for a rich DIY potting soil, and go to town.

Cost: Less than $5 for a container. Small bags of vermiculite, compost and peat moss can be found for under $10 each and should fill a few containers.

4. Make your own compost bin.

Compost is one of the best ways to boost your garden’s fertility. It’s a great fertilizer for any garden, it’s easy to make and you don’t even need a fancy compost bin.

If you have a large backyard, you can make a compost pile for free. Just pile up roughly equal volumes of acceptable food scraps (read: no meats, bones or dairy) with yard waste (leaves, weeds, lawn clippings). Turn it over once in a while, and it will become compost.

In a smaller space, you can make a simple trash can compost bin.

Cost: Free to $20

5. Use cattle fencing for vining produce.

You can buy a 2-foot by 6-foot piece of cattle fencing – a raw steel wire grid – for about $20. You can turn it into an arch, or clip the piece in half and zip-tie the top to create a narrow V. Either option is great for trying tomatoes, beans, melons and other vining produce. The fence is sturdier than traditional tomato cages, and it lets you use your garden space more efficiently.

Cost: $20 or less

More here.

Overhead shot of woman weeding a raised bed in a vegetable garden.

6 must-do’s before buying a home

You may think you’re ready to be a homebuyer, but have you done your homework? Do you know about credit score requirements? Are you familiar with the different mortgage options that could be available to you?

Have a checklist

Whether you are a first-time buyer or an experienced owner, buying a house requires a “preflight check,” in the words of Barry Zigas, director of housing policy for the Consumer Federation of America.

Read on for Bankrate’s six-item checklist, including tips on the types of savings you need, plus advice about what matters beyond purchasing a home at its resale value.

“It’s a brave, new world with respect to credit requirements for mortgages,” says John Ulzheimer, credit expert and contributor at CreditSesame.

One old rule still applies: The higher your credit score, the lower your monthly payments.

“Below 660 or 680, you’re either going to have to pay sizable fees or a higher down payment,” Zigas says. And that’s pretty much the cutoff score for getting a mortgage, he says.

Higher scores wanted

Vicki Bott, a former official at the U.S. Department of Housing and Urban Development, says that her office noticed much the same thing. “While there are many qualified borrowers in the 580 range, the market today is probably (looking for) 640 to 660, at a minimum,” Bott says.

On the other end, a score of 700 to 720 will get you a good deal, and 750 and above will garner the best rates on the market.

Improve your chances by: pulling your credit reports and ensuring you’re not being unfairly penalized for old, paid or settled debts, Zigas says.

Stop applying for new credit a year before you apply for financing. And keep the moratorium in place until after you close on your home, Ulzheimer says. More here.

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