Help with the Down Payment
Your child may have excellent credit and a reliable income, but if they do not have cash for a down payment, they will have a hard time getting a home loan. Most banks will not extend a hundred percent credit on the cost of the house today. Requirements for the down payment vary from 3 ½ percent to 20 percent, depending on whether you get a traditional loan or an FHA loan. If you can afford to pay the down payment for your kid, they will be able to get a home loan with good credit.

Pay the Closing Costs
Another cost that requires actual cash in most situations are the closing costs. They are lower than the down payment, but can be more than your child has available. If you cannot afford to assist with the down payment, paying a portion or all of the closing costs can be a tremendous help.

Get the Loan Yourself
One option to help your child is to buy the home for them and let them make payments to you. You will probably get a better rate than your child and lower payments, which will make it easier for them to pay back the loan. One consideration to keep in mind is your ability to continue to make the payments if your child cannot pay you back. It will be your credit that will be affected by missed payments.

Become a Co-Signer
If your child can qualify for a home loan with a co-signer, you can help them without spending any money. Your child will still be responsible for the payments and it will help their credit as they make payments on time. The danger is that if they default on the loan, it will damage your credit unless you take over the payments.

Give Advice
While they may not always appreciate unsolicited advice, giving them information about buying a house will put them ahead of other buyers. Volunteer to go with them to look at houses and point out things they should consider. This includes things like the cost of inspection, checking the foundation, finding out the age of the roof, and other parts of buying a home that they may not think of.
Offer to go with them to a real estate agent or mortgage broker. Having an older adult present will help keep them from being taken advantage of, and you can explain things to them that they may not think to ask.

Your child can become a homeowner even in today’s housing market with a little help from you. Your knowledge and experience can be the most valuable gifts you can give to your adult child.

Looking in the Rearview Mirror: 2011

Here’s what we know, 2011 has been wrought with uncertainty and unexpected shocks that has hobbled output in the US and around the globe and caused a huge crisis of confidence for consumers, investors, and businesses alike. The list of wildcards is long: the DC midterm elections, the change of power in the House, the Japanese earthquake and tsunami, the Arab uprising, the oil price shocks, the European debt crisis, the battle over debt ceiling, the downgrading of the US long-term debt, and the fallout with the volatility in the stock market. All of which have left output through the first half of the year below the growth rates that accompany a recovery. The probability of a double-dip recession has gone up and has caused economists far and wide to downgrade their outlook for this year and next.

What Does Next Year Have in Store For Housing?

Here is what C.A.R. is forecasting for 2012:

• While the probability for a double dip recession is higher, the most likely scenario is for a continuation of the slow-moderate growth we have seen for the last few years. The outlook is for modest but positive growth with GDP coming in at 1.7% in 2011, 2.0% in 2012.
• We are moving forward, albeit bouncing along the bottom for most of 2011 and we can expect the same for next year, with a flat sales forecast for 2011/2012 (-0.1% year-to-year loss in 2011 and 1.0% gain in 2012).
• Prices are expected to come in 4% below 2010 levels and should show a modest gain in 2012 (+1.7% year-over-year).

Overall, we’ve seen uncertainty and a lack of urgency put a damper on the housing market in 2011.

Hopefully, 2012 will prove less uncertain and could even show signs of urgency as current prices and mortgage rates are phenomenal and will not stay this low forever.

Homes Are Very Affordable Now
C.A.R.’s Housing Affordability Index (HAI) has been around since the 1980s, and was intended to be a predictive measure of housing, showing households’ ability to purchase a home at the prevailing market prices, rates, and incomes. The HAI assumes a 20 percent down payment, the median price for a geographic area (e.g. $292,120 for California’s 3rd quarter of this year), and the corresponding monthly payment for principal, interest, taxes and insurance should account for no more than 30 percent of a household’s income.

The latest index reading was 52 for the 3rd quarter, meaning that 52 percent of California households have sufficiently high incomes to afford the median priced home. The HAI is up from all of 2011 when it hovered just above 50, just shy of the historic high of 55 hit in 2009. The current HAI translates into 52 percent of households are able to purchase the median priced home given the underlying assumptions of price, rates, and income.

Provided You Can Get The Loan
Although this metric shows that affordability may be near record highs, it does not account for underwriting standards implemented by lenders and banks. Today, there are extremely tough standards being placed on mortgage applicants by lending institutions. According to research from the National Association of REALTORS®, credit scores for approved loans in the last few years have been about 40 points higher than normal. This is hindering the ability for many households, especially first-time buyers, to take advantage of the great affordability of housing at this time. In similar regard, the HAI did not account for the extremely lax lending standards that were the norm for most of 2000s decade, which consequently led to record low affordability at a time when home sales were through the roof. The recent lending environment is overriding the predictive value of the HAI, making it a less dependable indicator as it once was. Although it may be less reflective of current market conditions, the HAI does give a historical perspective and shows how California real estate is relatively cheap investment right now.

For those who can qualify, there is a rare opportunity to capitalize on the discounted price levels and historically low mortgage rates over the next few months.

Not everyone may want to live in a house that is made totally of glass though. For those who love the idea of walls (or just can’t find the sledgehammer to knock them down), here is how you can get the same look in your own home. These ideas combine the simplistic idea of glass, one that can be recreated in any home.

-Consider adding a larger window or a window seat. This will give you the feeling of a large area to look out of, but will cost significantly lesser than a whole house made of glass. Using energy efficient window panes will also help keep the elements out. Just removing the section between two smaller windows and adding in a larger window will provide a unique look and a great view.

-Add a small greenhouse (or glasshouse as they are called across the ocean) to your backyard so you get the feel of a glass house, without having to move. Some greenhouses can even be bought pre-built. This can be a great place to grow a garden, or if you want to create a hideaway, you can just add furniture.

-If you are up for a larger project, add a sunroom to your home. One room made entirely of glass will feel luxurious.

-Open up your windows by decorating them with curtains that can be pulled back or easily taken out (like on a rod). Curtains that make use of only a small amount of space in the window (like shades that snap up) are also great. For rooms that don’t require privacy, forgo the curtains and shades. When you take away the curtains, you may find the entire wall section feel bigger and taller, and the window itself will look bigger.

-Use the delicate nature of glass when you decorate. Glass houses look simplistic and delicate (but are very strong). They also use sharp edges and clean lines. Use these elements as you decorate. Instead of furnishing your house with an ornate floral couch or a heavy looking leather sofa, opt for a couch that is simplistic in design and square in shape. Take out wooden cabinet doors and instead use glass ones. Add glass, but add it in unique ways.

Certain areas are doing better than others. Ten off the twenty metro areas that were covered by the Case-Shiller index saw a rise in home prices. Home prices rose 1.6% in Washington, D.C., and 1.4% in Detroit and Chicago. However, other areas saw a fall in home prices; 2.4% in Atlanta, 0.4% in Los Angeles, 0.3% in Las Vegas, 0.2% in San Diego, and 0.1% in San Francisco and Phoenix. As long as the overall economy stays weak, home prices will continue to hover around their current levels. When the economy is weak, there are more foreclosures. Lending standards are also strict right now, and unless they ease up, there may not be a big change in the price of homes. The changes that were made to the Home Affordable Refinance Program (HARP) by the Obama administration are unlikely to have an effect on home prices. The main focus of the changes that were made to HARP was to help people stay in their present homes instead of buying new ones. These changes allow borrowers to refinance at a lower rate, which has the potential to lower monthly house payments. While this may provide a boost to the economy, it is unlikely to help those people who are looking to buy a new home. It may help prevent defaults and foreclosures, which means there are fewer distressed homes on the market pulling down the value of those and other homes in the area.

The best thing that could happen to the housing market would be a boost to the economy and job market. Once people are able to find jobs, and the unemployment rate decreases, people will start to feel more financially secure and confident. As money is spent, the economy will also receive a fillip. People will also feel that they have enough money to qualify for and purchase a home. Analysts are anticipating home prices to continue to drop though. The main reason is that more distressed houses will come onto the market and sell, which tends to bring down the price of homes overall. If that happens, home prices could reach a new post-bubble low since 2006.

Seasonal Change in the Mix of Sales

The statewide median price is typically softer at the end of the year and in the early months of the year, falling 1.5 percent from the third to the fourth quarter and 1.1 percent from the fourth to the first quarters respectively. By contrast, the median price increased by an average of 6.2 percent and 1 percent in the second and the third quarters. The seasonal softening of home prices is due partly to the change in the mix of sales throughout the year. Homes in the lower price tier (below $500,000) typically make up a bigger portion of the total annual sales in the first and the fourth quarters of a year than they do in the second and the third quarters. At the same time, shares in the higher price tiers (above $500,000) are generally higher in the second and the third quarters than they are in the first and the fourth quarters.

The market appears to be following a similar trend for the first three quarters of the year. Whether the mix of sales will shift in favor of lower-price tier in the fourth quarter remains to be seen.

Downward Movement in the Sales-to-List Price Ratio

The sales-price-to-list price ratio (SL ratio) also shows a seasonal trend that may shed some light on the direction of home prices for the upcoming quarter. The ratio typically begins the year at a relatively low level, climbs up through the busy season to a peak around June or July, and trends downward for the rest of the year. The SL ratio in
2011 appears to be tracking the historical trend so far this year, and it has been declining in the last couple months since it peaked in July. This downward trend could be an indication that the statewide median price will taper off at the end of the year, and a quarter-to-quarter decline in median price is likely for the fourth quarter in 2011.

Given the typical seasonal softening of home prices and the near-record low levels of mortgage rates, the off-peak months are an opportune time for potential buyers to find extra value in the market.

Looking in the Rearview Mirror: 2011

Here’s what we know, 2011 has been wrought with uncertainty and unexpected shocks that has hobbled output in the US and around the globe and caused a huge crisis of confidence for consumers, investors, and businesses alike. The list of wildcards is long: the DC midterm elections, the change of power in the House, the Japanese earthquake and tsunami, the Arab uprising, the oil price shocks, the European debt crisis, the battle over debt ceiling, the downgrading of the US long-term debt, and the fallout with the volatility in the stock market. All of which have left output through the first half of the year below the growth rates that accompany a recovery. The probability of a double-dip recession has gone up and has caused economists far and wide to downgrade their outlook for this year and next.

What Does Next Year Have in Store For Housing?

Here is what C.A.R. is forecasting for 2012:

• While the probability for a double dip recession is higher, the most likely scenario is for a continuation of the slow-moderate growth we have seen for the last few years. The outlook is for modest but positive growth with GDP coming in at 1.7% in 2011, 2.0% in 2012.
• We are moving forward, albeit bouncing along the bottom for most of 2011 and we can expect the same for next year, with a flat sales forecast for 2011/2012 (-0.1% year-to-year loss in 2011 and 1.0% gain in 2012).
• Prices are expected to come in 4% below 2010 levels and should show a modest gain in 2012 (+1.7% year-over-year). Overall, we’ve seen uncertainty and a lack of urgency put a damper on the housing market in 2011.

Hopefully, 2012 will prove less uncertain and could even show signs of urgency as current prices and mortgage rates are phenomenal and will not stay this low forever.