Sales In These Categories Rise, Indicating Recovery Is For Real

A retail analyst at NPD Group says they should have known the economy was in trouble in 2009. Sales of underwear were down, signaling a major economic downturn.

* Underwear makers have good news for you. Yearly sales for 2011 jumped 6.6 percent. According to the Underwear Index (championed by Alan Greenspan), the uptick in staples, like boxer shorts, is a sign that consumers are upbeat and not pinching pennies.

* Golf courses had an increase of 21.4 percent in rounds played during 2011. The rise included both public and private courses, meaning that all kinds of golfers were willing to pay. They had a more positive outlook.

* Sit-down restaurant sales rose by 8.7 percent in January 2012 over January 2011. Because more diners chose full-service places, as opposed to fast food, it’s a sign that the economy is back on track.

* Pay-TV sales were up a little in 2011. In spite of options like Netflix and Hulu Plus ($7.99 a month), Americans are still spending $50, $100 or more per month for pay-TV packages.

* Beauty salon sales grew by 5.4 percent over the last two years. In downturns, many customers skimp on hair gels, creams and haircuts. The turnaround is proved by 34 percent of salons saying they have hired more stylists in the past two years.

* Mobile home makers shipped 3,800 units in December 2011, up 30 percent from the month before. A strategist at ConvergEx says strong trailer-park sales may signal stronger overall housing numbers before long.

Interviewed in Time, authorities say the only loser in their survey was the tooth fairy. Per-tooth payouts dropped in 2011, but the non-profit Delta Dental says the tooth fairy is hopeful for improvements this year.

Understanding Your Credit Score

Your credit score is one of the biggest determining factors in your ability to get a quality loan, and it is far more complex than just a three-digit number.

Yahoo! Personal Finance recently wrote an in-depth piece about understanding the intricacies of your credit score and what it means.

According to the article, “consumer research conducted by the Consumer Federation of America and VantageScore Solutions shows that many Americans don’t really understand their credit scores.”

The lower your credit score, the higher interest you will pay on loans and any line of credit. Understanding the basics of credit scores can help you achieve your goals, including home ownership.

Click here to view the article and learn more about credit scores.

Home Remodeling Brings Return on Investment

Everyone wonders, “Is it worth the money to remodel my home?” Overall, the answer is, “Probably.” But you should not expect to fully recover the amount of your investment.

In 2010, the National Association of Realtors said you can expect between 65 percent and 75 percent back on the investment dollar. During the real estate boom, you could get 80 percent to 90 percent back when selling. As property values grow, percentages will rise.

1. Home maintenance and repair projects: Do these first. If needed, replace or upgrade roofing, exterior paint, some windows, the furnace, and electrical amperage capacity (200 amp is best). An independent home inspector will be looking objectively at your home’s condition if you decide to sell.

2. Curb appeal projects: They are typically lower cost and create emotional appeal and a high ROI. The positive impact of a freshly edged, lush green lawn is significant. A pop of colorful annuals and ground-cover around trees draws attention from the road. A freshly painted front door is inviting, and shiny clean windows are a must.

3. Neighborhood norm projects: It’s remodeling that brings your home up to the level of others in the area with features buyers expect your home to have. If your neighborhood is mostly three bedroom homes with a full bath and three-quarter bath with a shower, and you have a three bedroom with a half bath, finding a way to add a shower will more than pay for itself.

4. Kitchen counter upgrades can be had for less by installing attractive counters that have man-made materials rather than granite. Some are made by blending acrylic polymers and stone-derived materials.

Consumer Confidence is Rising

Consumer confidence at the end of March reached the second-highest level in four years.

Lower interest rates on mortgages and credit cards were one reason for the more positive view.

According to a USA Today analysis, American households paid an average of $8,731 for mortgage interest in 2007. For 2011, the average interest was $5,633.

Low interest rates mean more cash in your pocket.

Three-fourths of the interest savings were from falling interest rates, the rest were from debt reduction.

For the three-week period ending on March 25, The Bloomberg Consumer Comfort Index showed more than 30 percent of households said they had a favorable view of the buying climate. It was the longest stretch since early 2008.

The economic gain for borrowers is greater than other stimulus efforts or even high gas prices. A cut in the Social Security payroll tax, for example, saves households an average of about $70 a month.

Job and income growth are providing consumers with the means to withstand higher fuel costs and are the basis for sales of cars and other expensive items. Economists at the National Automobile Association say even if people aren’t paying attention to their falling interest rates, the money builds up in their checking accounts and especially benefits big-ticket items like cars.

The favorable reduction in household debt shows that many responsible Americans are using the extra cash to pay down credit card balances, which is always a wise move.

Consumer spending is a big factor in U.S. economic growth, so if you need a car or a fridge and can afford it, you’ll perk the economy if you go ahead and buy it.

Start Building Wealth Through Real Estate

If you’ve been thinking about buying a home or rental property, experts at bankrate.com say low prices combined with low interest rates make this a good time to do it.

As one real-estate specialist puts it, “When money is cheap to borrow and houses are cheap to buy, it’s absolutely the best time to invest.”

While the timing is right, these tips can help investors take advantage of what might be the opportunity of a lifetime, say Bankrate advisors.

• Find a rental property in your area. Your real estate agent can help identify good properties, will work with you and share investment knowledge. Or, if you have the time and inclination, you can search foreclosure listings, read the newspaper ads, walk or drive through neighborhoods, and seek recommendations from friends.
• Look for the right location. Properties in highly populated areas can draw from a larger pool of potential renters. Renters are generally looking for properties with multiple bedrooms and bathrooms that are located in low crime areas. They want to feel safe and send their kids to good schools.
• At MSN Money, they ask, “Why buy a rental?” Their answer: “To get richer.” In today’s market, you may be able to buy a property for less than its actual value. Over time, you will realize most or all of that value.
• In the meantime, you can generate a reliable cash flow from the property.
• Because of depreciation and other deductions, you won’t pay federal or state tax on the income.
• Some prospective investors worry about the work involved in owning a rental house or duplex. You won’t have to worry about it if you hire a property manager to do the job for you. You’ll still have income.

Public Records Errors and Real Estate Transactions

A recent Inman News article explains how mistakes in public records can hurt sellers without due diligence. While paperwork isn’t the most glamorous part of selling a home, the article is clear about the dangers of not knowing the legal usable square footage of your home as defined by the public record.

Buyers want to know the actual square footage, not just what is reported by the seller. If the numbers don’t match up, it could cause a problem.

For example, the article hypothesizes that “if the sellers say their house has 3,000 square feet of living space, but the public record reports only 2,300 square feet, the buyers expect an explanation for the discrepancy.”

Many appraisers are now only taking legal public record square footage into account when making their evaluations of a home’s worth.

It would be wise to check that the record on your home is correct, and make adjustments to it if not to prevent any transactions from falling apart over this detail. As the article points out, it can take months for changes to show up in the public record, so it is best to start fixing any mistakes early on.

Read the Inman News article here. Do you know what the public record says about your home?

Four Ways to Avoid Getting Outbid

Competition can be stiff when multiple offers are placed on a house or condo.

There are ways to get ahead in the bidding war that will help your offer be selected.

1. Be first

If you are not working with a buyer’s agent, you should be. Make sure that the agent knows that you want to jump on any appropriate properties as soon as it becomes available. Also, put a tight deadline on your offer so the listing agent can’t use it to solicit other offers from interested buyers.

2. Be pre-approved

Although you likely can’t pay all cash, if you have an approval from a lender saying you’ll qualify for the necessary loan, you’ll be in a stronger position. Because lending standards have toughened, be prepared to make at least a 20% down payment. To prove you’re serious about buying, offer the seller a substantial earnest-money deposit as well – up to 3% of the purchase price.

3. Be highest

Obviously, sellers want to the the highest price possible for their property, so a generous offer will trump an all-cash one. But ask your agent to do a comparative market analysis first so you don’t pay more than the market price. If you do, your deal could fall through – or you’ll be asked to put up more cash – once the lender has the property appraised.

4. Be Easygoing

A recent survey done by the California Association of Realtors found that three-quarters of all sellers are putting their property on the market because of financial difficulties. While it isn’t suggesting that you waive an inspection contingency, don’t demand any monetary concessions, like a decorator’s allowance, or help with closing costs.

Similarly, ask your agent to find out if some accommodations on time would suit the seller’s needs – perhaps a quick closing date for a seller who is having trouble paying the mortgage, or conversely, a long rent-back after closing for sellers who need time to find another place to stay.