The Psychological Tactics That Supermarkets Use On Customers

February 28, 2011 by · Leave a Comment
Filed under: Budgeting 

More than 50% of supermarket purchases are “impulse buys”. You may not have known that, but the supermarkets do. And they’ve built their stores accordingly. A fool and his grocery cart are soon filled to the brim.

In this 6-minute video from NBC’s The Today Show, you’ll learn how supermarkets use everything from packaging to placement so that customers spend more of their money with each store visit.

Among the supermarkets’ tricks:

  • Placing flowers and bakery at the front of the store to “make you salivate”
  • Specific “deal wording” (e.g. Buy 5 for $5.00) meant to entice larger purchases
  • Placing staples on top and bottom shelves, leaving middle shelves for impulse products

The piece also recommends shopping a supermarket in a clockwise-fashion. It helps you spend less time in the store.

We’re all mindful of our household budgets. Watch this video to save more money on your next trip for groceries.

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New Home Sales Crater In January, Opening The Door For Deals With Builders

February 25, 2011 by · Leave a Comment
Filed under: New Home Sales 

New Home Sales (Jan 2010 - Jan 2011)

Not all housing reports are sunny, it seems.

In its monthly New Home Sales release, the U.S. Department of Commerce showed a 13 percent drop-off in annualized new construction sales between the months of December and January.

It’s the biggest one-month drop in New Home Sales since May 2010.

In addition, the supply of new homes for sale spiked higher to 7.9 months last month.  “Home supply” is defined as the amount of time it would take to sell the complete “for sale” inventory at the current pace of sales.

In December, the supply measured just 7.0 months,

Don’t fret the news, however. For buyers of new construction in Mason , falling New Home Sales figures can be terrific. Weaker markets put pressure on the nation’s home builders to sell their respective homes more quickly. To reach that goal, builders often discount prices and/or offer free upgrades to buyers. 

Some of that action may already be in effect.

Despite falling volume, the New Home Sales report showed that new homes are selling faster than in recent months. The median time required to sell a newly-built home dropped to 7.8 months in January — a figure well below January 2010’s reading of 13.9 months.

It suggests that builders are getting better at locating buyers, and moving property.

Therefore, if you’re shopping for a new construction and see one worth buying, get to it. Not only will the home likely sell soon if it’s priced right, but an increase in mortgage rates will make the home more expensive to finance.

Every 0.250% increase to rates adds $15 monthly per $100,000 borrowed.

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Existing Home Supply Down 40% In Last 6 Months

February 24, 2011 by · Leave a Comment
Filed under: Existing Home Sales 

Existing Home Supply (Jan 2010 - Jan 2011)Home resales rose another 2.7 percent last month, according to the National Association of REALTORS® monthly Existing Home Sales report.

An “existing home” is a home that’s been previously occupied and is not considered new construction.

The number of existing homes sold on a rolling 12-month basis is now at its highest point since May 2010, the month before the federal homebuyer tax credit ended. It’s also up some 40% since July 2010, the month after the tax credit ended.

But that’s not the biggest story in the Existing Home Sales report. The precipitous decline in home inventory deserves more attention.

At the current pace of sales, the complete, national home resale inventory will be sold in 7.6 months. This is close to 5 months faster as compared to last year’s peak, and well below the 2-year home supply average of 9.0 months. There more buyers in the market, it seems, and fewer homes from which they can choose.

Total home resale inventory is down to just 3.38 million homes nationwide — the fewest in 12 months.

There were other interesting statistics in the official Existing Home Sales report, including a break-down of purchases by buyer-type.

  • First-time buyers accounted for 29% of purchases, down from 33% in January
  • Repeat homebuyers accounted for 48% of purchases, up from 47% in January
  • Investors accounted for 23% of of purchases, up from 20% in January

In addition, distressed sales — foreclosures and short sales — made up 37 percent of the market.

Over the next few days, more housing data will hit the wires and it’s expected to show similar strength to January’s Existing Home Sales report. With falling supplies and a growing base of move-up buyers, home prices in Cincinnati and around the country are expected to rise in the coming months ahead.

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Cost of Living Reaches An All-Time High, Pressures Mortgage Rates Higher

February 23, 2011 by · Leave a Comment
Filed under: Mortgage Rates 

Consumer Price Index Feb 2009 - Jan 2011Mortgage rates are up 0.875% since mid-November, causing home buyer purchasing power across Cincinnati to fall more than 10 percent since.

Persistent concerns over inflation are a major reason why and this week’s Consumer Price Index did little to quell fears. CPI rose for the third straight month last month.

Wall Street was not surprised.

As the economy has picked up steam since late-2010, the Federal Reserve has held the Fed Funds Rate near zero percent, and kept its $600 billion bond plan moving forward. The Fed believes this is necessary to support the economy in the near-term. 

Over the long-term, however, Wall Street worries that these programs may cause the economy may expand too far, too fast, and into runaway inflation.

Inflation pressures mortgage rates to rise.

Inflation is an economic concept; defined as when a currency loses its value.  Something that used to cost $1.00 now costs $1.05, for example. It’s not that the goods themselves are more expensive, per se. It’s that the money used to buy the goods is worth less.

Because of inflation, it takes more money to buy the same amount of product.

This is a big deal in the mortgage markets because mortgage rates come from the price of mortgage bonds, and mortgage bonds are denominated, bought, and sold in U.S. dollars. When inflation in present, the dollar loses its value and, therefore, so do mortgage bonds.

When mortgage bonds lose value, mortgage rates go up.

Inflation fears are harming Kentucky home buyers. The Cost of Living has reached a record level, surpassing the former peak set in July 2008. Mortgage rates would be rising more right now if not for the Middle East unrest.

So long as inflation concerns persist, mortgage rates should trend higher over the next few quarters. If you’re wondering whether to lock or float your mortgage rate, consider locking today’s sure thing.

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Going On Vacation? Don’t Tell The Burglars!

February 22, 2011 by · Leave a Comment
Filed under: Home Safety 

Want to help keep your home safe from burglars while on vacation? One smart way is to refrain from announcing your plans on various social networks such as Facebook. 

There’s other common-sense tips, too, as shared in this 4-minute video from NBC’s The Today Show.

Drawing from a series of interview with former convicts, you’ll learn that there’s more to keeping your home safe than just locking the doors and windows, and setting the alarm system for “away”. You’ll also want to make sure your home looks “lived in”.

And some of these tricks you may have never thought of. 

For example, while on vacation:

  • Make sure a neighbor is picking up your mail and newspapers daily
  • If it snows, have a friend drive tracks in your driveway, or shovel it clean
  • Set inside lights to a timer, giving the appearance someone being home

In addition, if you don’t have a safe for valuables, consider moving them to a child’s room. It’s among the last places a burglar looks.

You can’t make your home 100% safe from intruders but you can make your home a tougher target. Just use some common sense and follow the tips in the video.

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Single-Family Housing Starts Fell In January, Despite What The Headlines May Have Told You

February 17, 2011 by · Leave a Comment
Filed under: Homebuilders 

Housing starts September 2008 - August 2010Annualized Single-Family Housing Starts dropped 1 percent in January to 413,000 units nationwide, it’s lowest reading almost 2 years.

A “Housing Start” is defined as a home on which construction has started. 

Now, if you had only seen the Housing Starts story in the headlines today, you wouldn’t have known that single-family starts fell at all. It’s because of how the story is being reported.

Most commonly, newspaper headlines are reading something similar to “Housing Starts Jump 14.6%” with the lead paragraph making mention that “housing starts are at their highest levels in 4 years”.

It’s a true statement, but it’s misleading, too.

This is because, despite the Census Bureau reporting Housing Starts by property type — single-family, multi-family, and apartments — the media often lumps them into a single data set.

It’s a categorization that helps investors in homebuilder stocks, but it does little for everyday Cincinnati home buyers. The huge majority of buyers aren’t buying multi-units or whole apartment buildings — they’re buying 1-unit homes.

Here’s how January’s Housing Starts broke down by type:

  • Single-Family Homes : Down 4,000 units, or -1%
  • 2-4 Unit Homes : Negligible change
  • Apartment Buildings : Up 46,000 units, or +80%

Clearly, the surge in Housing Starts can be attributed to the rapid rise in the 5-unit-or-more sector. Single-Family Starts were weak, by comparison.

Even with all of this noted, however, we can’t even be certain that the January Housing Starts data is accurate anyway. A footnote in the government’s report shows that, although single-family starts are said to have decreased 1 percent, the data’s margin of error is ±8.6%.

This means that the true Single-Family Housing Starts reading may be anywhere from -9.6% to +7.6%. The data is throw-away. Housing Starts may have actually increased in January, but we won’t know until revisions are offered later this year.

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Home Builders Report Higher Sales Levels In January

February 16, 2011 by · Leave a Comment
Filed under: Homebuilders 

NAHB HMI Index 2000-2011

Homebuilder confidence in the market for newly-built, single family homes appears stable as the spring buying season gets underway in Mason.

The confidence reading is recorded and reported monthly by the National Association of Homebuilders. For the 4th straight month, the group’s Housing Market Index reads 16.

As a market indicator, Housing Market Index has been tracked for more than twenty years and reports on a 1-100 scale. A value of 50 or better indicates “favorable conditions” for home builders.

HMI hasn’t read higher than 50 since April 2006.

Broken down, the Housing Market Index is actually a weighted composite of 3 separate surveys measuring current single-family sales; projected single-family sales; and foot traffic of prospective buyers.

February’s surveys showed slight improvement as compared to January, overall.

  • Single-Family Sales : 17 (+2 from from January)
  • Projected Single-Family Sales : 25 (+1 from January)
  • Buyer Foot Traffic : 12 (unchanged from January)

It’s notable that the current sales levels were higher in February, and that projected sales levels for the next 6 months are higher, too.

For home buyers Ohio across , this month’s Housing Market Index reading may foreshadow tougher negotiations in the months ahead with builders. The likelihood of getting discounts and free upgrades may be diminished as builders see their respective sales levels grow, and as the economy expands.

Coupled with rising mortgage rates, home buyer purchasing power may never be as high as it is today. 

Therefore, if your plans call for buying a newly-built home this year, think about moving up your time frame. Builder confidence appears to have bottomed. As it rises, so should home prices.

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Retail Sales Rise For 7th Straight Month; Mortgage Rates Worsen

February 15, 2011 by · Leave a Comment
Filed under: Retail Sales 

Retail Sales (Feb 2009 - Jan 2011)

If consumer spending is a keystone element in the U.S. economic recovery, a full-on rebound is likely underway.

Tuesday, the Census Bureau released its national January Retail Sales figures and, for the seventh straight month, the data surpassed expectations. Last month’s retail figures climbed 0.3 percent as total sales receipts reached an all-time high.

It’s good news for the economy which is scratching back after a prolonged recession, but decidedly bad news for people in want of a mortgage across the state of Kentucky. This includes home buyers and would-be refinancers alike.

Because consumer spending accounts for the majority of the U.S. economy, Retail Sales growth means more economic growth and that draws Wall Street’s dollars toward riskier investments, including equities, at the expense of safer investments such as mortgage-backed bonds.

On the heels of the Retail Sales report’s release, bond prices are falling this morning. As a consequence, mortgage rates are rising. It’s the same pattern we’ve seen since mid-November — “good news” about the economy sparks a stock market frenzy, casuing mortgage bonds to rise.

A sampling of other recent good-for-the-economy stories include:

  • Corporate earnings are rising quickly (Marketwatch)
  • Existing Home Sales up 12% month-over-month (CNN Money)
  • The Fed says the economy looks “brighter” (Bloomberg)

The days of 4 percent, 30-year fixed rate mortgages are over. 5 percent is the new market benchmark. Unless the economy keeps showing strength. Then, that number may rise to six percent.

If you’re thinking of buying or refinancing a home, consider how rising rates will hit your budget. You may want to take that next step sooner than you had planned — if only to protect your monthly payments.

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How To Replace And Install A New Kitchen Faucet

February 14, 2011 by · Leave a Comment
Filed under: Home How-To 

Want to replace your kitchen faucet? It’s a job for which you could hire a plumber, or, with just a little bit of craftsman skill, it’s a project you could finish yourself.

Watch this video from the Lowe’s YouTube channel. You’ll get step-by-step instruction on how to take out an old faucet and how to install a new one. The supplies you’ll need are minimal, too.

In 3 minutes, the video covers:

  • How to shut the kitchen water supply off and drain residual water from the pipes
  • How to detach and remove the old kitchen faucet
  • How to align the new faucet and reconnect to the water lines

There’s some good tips along the way, too, including how to make sure you don’t accidentally connect the hot water supply to the cold-water faucet.

If you’re uncomfortable working with your home’s plumbing and would like a referral to a plumber near Mt Lookout , please just ask. I’m happy to help how I can.

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Mortgage Rates Return To April 2010 Levels

February 11, 2011 by · Leave a Comment
Filed under: Mortgage Rates 

Mortgage rates (Feb 2010 - Feb 2011)

Mortgage rates are surging.

Over the last 7 days, conventional, 30-year fixed rate mortgage rates have jumped 24 basis points, or 0.24%, according to Freddie Mac’s weekly Primary Mortgage Market Survey.

It’s the largest 1-week spike in mortgage rates in recent history.

The 30-year fixed rate mortgage now averages 5.05% nationally. This is much, much higher than what we saw last November when mortgage rates were 4.17% and looked headed to the 3s.

That’s not the case today. In fact, it’s the opposite. 

Mortgage rates have risen quickly and fiercely this year. As of this morning, mortgage rates are higher over 9 consecutive days, marking the longest mortgage rate losing streak in the last 6 years, at least.

Note, however, that when you call your loan officer or bank, you may not be quoted the same 5.05% rate as shown by Freddie Mac. This is because Freddie Mac-reported rates are national averagesAny given mortgage rate may be higher or lower depending on its region. 

As an illustration, look how this week’s rates breaks down by area:

  • Northeast : 5.07 with 0.7 points
  • Southeast : 4.99 with 0.9 points
  • North Central : 5.09 with 0.6 points
  • Southeast : 5.06 with 0.6 points
  • West : 5.02 with 0.8 points

In other words, the rate-and-fee combination you’d be offered in your home town of Madeira is different from what you’d be offered if you lived somewhere else. In the Southeast, rates tend to be low and fees tend to be high; in the North Central U.S., it’s the opposite.

The good news is that, as a mortgage applicant, you can have your pricing whichever way you prefer. If getting the absolute lowest mortgage rate is what’s most important to you, have your loan officer structure your loan as in the “Southeast Style”. Or, if you prefer to have as few closing costs as possible and don’t mind slightly higher rates, ask for that type of set-up instead.

Either way, consider locking your rate as soon as possible. If rates keep rising, it won’t be long before they touch 6 percent.

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