Home Prices Still Surging

NEW YORK (CNNMoney)

Home prices are still surging, but the pace of the gains has steadied as interest rates continue to rise.

Prices for homes in the nation's 20 largest cities in June rose 12.1% over the last year, according to a report Tuesday from S&P/Case-Shiller home price index.

While that gain is still robust, it didn't quite match the gain of 12.2% reported for May. Rising mortgage rates may be to blame.

"With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened," David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a press release.

Home prices have been on a tear for the last twelve months. June marks the first time in over a year that the overall increase has been smaller than the month before. While prices rose in all 20 cities measured by the index, only six cities in June saw price increases larger than the month before, down from 10 cities in May.

Prices in Dallas and Denver hit all-time highs, while San Francisco housing prices notched the biggest rebound, rising 47% from their low in March 2009.

U.S. home prices are now at early 2004 levels -- still 23% below their peak in mid-2006.

And while mortgage rates have been steadily rising for the last few months, they're still at historically low levels.

Record-low rates, a lack of new homes on the market and years of pent up demand have been the driving forces behind the recent home price spike, according to Erik Johnson, senior U.S. economist at IHS Global Insight.

"The shortages are likely to get larger before getting smaller," Johnson wrote in a note Tuesday. "We still expect housing to remain a key driver of growth for at least the next couple of years."

Related: How the Fed can taper without killing housing

The recovering housing market has been a big part of the nation's economic recovery since the Great Recession. But many fear that rising mortgage rates could put a damper on that growth.

Rates have risen more than a full percentage point since May, when Federal Reserve Chairman Ben Bernanke indicated the Fed may soon ease its bond buying program that's helped keep interest rates at record lows.

While some cheer the Fed stepping back from its unusual bond purchases amid fears the buying will spark inflation, others worry that it may be too soon.

First Published: August 27, 2013: 9:19 AM ET

Five More Advantages of Rent to Own

A week ago I wrote about five great advantages of the Rent to Own method of buying real estate.

Here are five more good reasons to consider this option when searching for a new home:

6. Time to Check out the House: When you Rent to Own, you have time to live in the home before making the full purchase commitment. This give's you time to find out all the pros and cons of the home before you buy. If you find things wrong with the home that you didn't see before moving in, you have the opportunity to resolve those issues, possibly by getting the owner to correct them, or by renegotiating a lower purchase price. If you find the home just isn't all you wanted it to be, you can simply stay in the home as a renter and/or find another home, without the full commitment of a purchase.

7. Time to Check out the Neighborhood: Just as above, when you Rent to Own a home, you'll have ample time to get to know the neighborhood, and the neighbors. The homes we offer for Rent to Own are typically in very nice neighborhoods, with good schools and friendly neighbors. By doing a Rent to Own on one of these homes, you'll have the opportunity to verify that for yourself before making the full purchase commitment.

8. Control: When you Rent to Own a home you control the property in the sense that, while you are renting, the home cannot be sold, except to you -- if you choose to buy. You are in control of the destiny of that home during the period of your Rent to Own contract!

9. Time to Obtain the Best Financing: While you are renting in a Rent to Own home, you have time to shop around for the best mortgage rates, the best terms, the best interest rate. We work with many different mortgage brokers, and while you are not obligated to work with any of them, we're happy to give you a list of professional mortgage brokers who can work with you to get the best deal.

10. Leverage: When you Rent to Own a home, you are typically putting down much less to purchase the home than in a conventional mortgage or purchase. The less money you put down toward a home, the more "leverage" you have. In other words, the more profit through appreciation you stand to make with the least amount of up-front cash at risk. In any investment situation, making more off less is preferable to making some off a lot of up-front cash.

We always have Rent to Own opportunities available. Visit our website to learn more: MyHappyHomeSolutions.com

Five Great Advantages of Rent to Own

There are many advantages to buying a home through the Rent to Own process. Whether you call it Rent to Own, Lease Purchase, Lease with an Option to buy, or by any other name, there are many good reasons to move toward home ownership this way.

Here are five good reasons to start with:

1. Low Down Payment: A conventional purchase of a home requires a substantial down payment, sometimes as much as 20 to 30 percent of the purchase price. If you don't have a spare $40,000 or more burning a hole in your pocket, Rent to Own is your ticket to home ownership.

2. Rent Money Is Working For You: Rich people know that putting their money to work is essential to financial stability. When you enter into a Rent to Own contract, you are putting your rent money to work for you and your financial future. In most Rent to Own situations, a portion of your monthy rent -- sometimes even 100 percent -- is credited toward the purchase price of your new home.

3. Option Consideration is Credited: The money you put down toward a Rent to Own home is called "option consideration." This money goes toward the purchase price of the home, and the amount you put down is then increased with monthly rent credit as well.

4. Purchase Price is Locked In: In most Rent to Own agreements, the purchase price of the home is locked in for a specified period of time. This is typically one year, though it may be more. In some cases the price may increase after one or more years, but you'll still have the benefit of locking in a reasonable price.

5. Appreciation: After several lean years, the housing market and home prices are now back to what they have done for the majority of the past 200 years in America -- appreciate in value! Yes, home values are rising nationwide and have been doing so since early 2012 or even 2011 in some markets. If the home you Rent to Own appreciates while you are renting, you will have earned valuable equity even before you've completed the purchase!

We always have a variety of Rent to Own homes available, with more coming in week by week. Visit our website to see what's available now, and be sure to join our mailing list so you won't miss any good opportunities!

Stop by our site today: MyHappyHomeSolutions.com

Rent to Own From the Buyer's Viewpoint

Who is a candidate for Rent to Own?

Generally this is a person who can't purchase a home through conventional means (or is just too smart to want to). This buyer does not have a large enough down payment, poor credit, high loan to debt ratio, or 20 other reaons that make the traditional purchase of a home impractical.

The buyer is aware of the advantages of home ownership (tax shelter, appreciation, security, etc.) and is eager for a chance to get involved in a home of his or her own. This property is their potential new home and their rent money is working toward the down payment or off the sales price.

Everyone is happy because all parties are getting what they want from the transaction -- the buyer is able to take an ownership interest in a home while still renting, and the seller is able to find a quality tenant who is eager to purchase the home.

The lack of third parties such as banks, mortgage brokers, lawyers, and complicated escrows enable the seller to be flexible with the price and the terms, and the buyer to avoid the usual road blocks of home ownership.

We always have Rent to Own homes available, from condos and townhouses, to single family homes in a variety of price ranges. And we get more on a weekly basis.

To find out more, watch our video "How Rent to Own Works" in the top right corner of our website: MyHappyHomeSolutions.com

Thanks to Claude Diamond for some of the above!

Should You Rent-to-Own a Home?

Rent to Own has been around for decades. The housing and credit market crunch of the past several years made it a more popular method of getting into home ownership. Here is what Fox Chicago recently had to say on the matter:


Should you rent-to-own a home?

By Andrew Housser

It's a buyer's market right now in real estate. This is good news if you're in the market for a new home, but bad news if your credit rating prevents you from qualifying for a loan. Yet even if you've had some setbacks, it may still be possible for you to realize your dream of home ownership. The option to rent-to-own or lease a home has risen in popularity over the last several years, in part because it benefits both buyers and sellers. Renting (or leasing) can be a good stepping stone toward home ownership, but before you sign on the dotted line, find out the answers to these all-important questions.

How does rent-to-own work?

As the prospective buyer, you sign a contract agreeing to pay an option fee (generally around $5,000 for a low- to mid-priced home), as well as rent and rent premiums to the home seller. The homeowner will put your rent money toward his mortgage expenses. The extra rent or rent premium, if any, goes toward your future purchase of the home. The option fee will become part of your down payment when you buy the house, but the seller can keep this money if you back out of the purchase.

Who should I consult before signing?

Because there's no standard rent-to-own contract and every state has its own regulations, you should talk to an attorney or a real estate agent to ensure you fully understand the financial implications of the contract. This process will also ensure there aren't any problems with the home's title and that it's not in foreclosure. Get a home inspection and appraisal -- just as you would if you were buying the home right now. And talk to a mortgage lender to determine what you need to do to qualify for a loan when your rental option is up.

Is this a good option for me?

Rent-to-own or lease options give you an opportunity to save up a down payment while working to up your credit score. If you were to pay a $400 monthly rent premium on top of a $1,000 monthly rental payment, you'd have $4,800 saved for a home purchase after one year. Add that to your option fee, and you'll have close to $10,000 already saved for your new home. Renting also enables you to try out a home and surrounding neighborhood before buying.

What are some of the cons?

Before entering into a rent-to-own agreement, you and the seller must decide on the purchase price of the home. Leasing options usually last for one to two years, but can last for three to five years, and the housing market can change significantly during that time period. As a renter, this can work to your advantage if the market improves and the home's value increases above the agreed-upon contract amount (clearly, that's a negative if you're the seller). Of course, the home could be worth less than the agreed-upon price by the time your contract is up. At this point, you can either try to renegotiate with the seller, go through with the purchase as is, or move out and lose your investments.

What are my rights as a future home buyer?

Until you purchase, you are still a renter and subject to all rules that apply to renters. You can be evicted for failing to make rent payments on time. If that happens, you can also lose your upfront fees and rent premiums. If you still don't qualify for a loan at the end of the rental agreement, you may have to forfeit the extra cash you've invested.

What should I know if I'm the homeowner?

Renting to potential home buyers can be a good decision if your house has been on the market for a while, the housing market in your area is stagnant, or you must relocate quickly for employment or other reasons. The rent income can help cover your mortgage, freeing you to move to your new location. Another upside: Potential buyers are more likely to take good care of your home, since they hope to call it their own someday. But if your renters can't make their payments, you could be liable for two mortgages, a situation that could lead to financial difficulty, and in some cases, foreclosures.

Buying a home may well be the biggest purchasing decision you'll ever make, so it's important to carefully weigh the pros and cons of renting to own. Talk to a real estate expert who can help you determine whether renting-to-own is right for you.


We always have Rent to Own homes available, with more coming in weekly. To see what we have available right now, or to join our mailing list so you'll be alerted to new Rent to Own opportunities, visit our website: MyHappyHomeSolutions.com