Open House by Jim Woodard

Home sales are on an upward swing in most areas of the country, but the growth is slow.

A key reason for the continued sluggishness of the home-buying market is the mindset of many prospective buyers that prices have not yet reached bottom. They are waiting for clear signs of a positive turnaround in home values. In the meantime, they are renting a residence.

Most of those renters want to experience the great American dream of homeownership as much as current homeowners, but they feel it's prudent to wait a while before becoming an owner. A few renters are convinced that permanently renting is best for them.

About 98 percent of all prospective shoppers prefer ownership rather than renting for their next home, as was revealed in a recent survey conducted by real estate consultant John Burns. Only 2 percent of these prospective shoppers prefer to rent today, despite the fact that 20 percent of those who took the survey are currently renting.

Even among the 2 percent that shared they wanted to rent for their next move, 68 percent want to buy a home in the future.

Let's take a brief look at the pros and cons of renting a residence.

When you rent a home you keep the cash that would go for a down payment and closing cost in your bank account. It's available for other investments. You also avoid the financial burden of paying for ongoing maintenance costs.

Additionally, you are also in a more flexible situation with housing needs. No need to sell one house before moving to another.

On the negative side, when renting you have no equity-buildup potential. That benefit has been minimal in recent years but is now reviving. Owning a home has long been the best form of long-term investment for most families.

Renters miss out on substantial tax breaks — the deduction of mortgage interest payments and property taxes on income tax returns. And of course there is the emotional satisfaction of owning and caring for your own home.

Also, the Internal Revenue Service is very kind to owners who sell their home at a financial gain. Married couples can earn up to $500,000 tax-free when selling a home at a gain. Singles get $250,000.

In coming months, we will probably see a growing flow of current renters who purchase and move into homes of their own.

Q: How many homeowners have modified their mortgage via the government's Home Affordable Modification Program?

A: Nearly a million (930,000) homeowners have received a permanent modification through HAMP, saving an estimated $10.5 billion in monthly mortgage payments, according to the Department of Treasury.

Although this tally — nearly three years after the program's launch — falls well short of Obama's promise to help 3 to 4 million homeowners restructure their loans, federal officials continue to tout that HAMP improves standards and processes within the industry.

Q: How has the housing crisis affected life for real estate professionals?

A: It's been a tough period. Eighty-eight percent of real estate professionals in a recent survey said they have lost money since 2008 or are living off significantly less income.

Many of those professionals are dipping into savings to make ends meet. The survey of more than 800 real estate agents and brokers across the nation was contacted in January. The results show that both personally and professionally they have had to make significant sacrifices to adapt to the new situation.

Q: Do most homeowners who refinance their mortgage take additional cash with the refinance?

A: No. During the fourth quarter of last year, 85 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principle balance by paying-in additional money at the closing table, according to a report from Freddie Mac.

Of those borrowers, 37 percent maintained about the same loan amount, and 49 percent of refinancing homeowners reduced their principle balance; this latter percentage reflected "cash-in" borrowers and was the highest in the 26-year history of the analysis.

Q: Are appraisers still using distressed homes in their area for comparables?

A: The Appraisal Institute recently released guidelines to instruct its members on how to deal with distressed sales and foreclosures when seeking comparables.

According to the organization, some homeowners claim appraisers have undervalued their homes by relying on nearby foreclosed and distressed homes to assess a property's value.

The Appraisal Institute stresses that qualified appraisers know what adjustments to make when using distressed sales as comparables, but because the issue is "particularly crucial" in the current market, it's offering additional guidance.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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