I, for one, am looking forward to Bernanke succeeding Greenspan as Federal Reserve Chairman in January. Why? Well, real estate junkies may recall a lull in the market during the ’04 presidential election. People tend to sit tight and hold their breath when a political shift occurs. I feel that happening right now. Add that to the end of the year holiday season and the overall market exhaustion… and we have ourselves a real estate respite. I love it! We needed a break!
So… why do I look so devotedly at Bernanke? Well, I don’t think much is going to change in the long run. Rates will probably tick up another 3 or 4 times throughout the first few quarters in ‘06. I will certainly not go belly up from the $75 monthly increase on my adjustable rate mortgage when those rates go up. Most homeowners won’t. Come on, I sprained my ankle a few months ago and was out $700. S— happens and you have to blow some extra bucks, right? Now, rates can’t go up too much because if consumer spending slips then we’re right back where we started when the Fed started to drop rates in the first place. Also, lenders are always coming up with new loan programs and borrowing power is still strong. If inventory does not pick up, then I predict a balanced Bernanke for ’06.

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Anyone reading the latest on the proposed changes for our tax deductions on equity loans and second home loans (story here) ? I am keeping my fingers crossed that this will not affect my purchase money second. The problem is that homeowners have tapped into their home’s equity for car purchases, vacations, paying off other debts, etc… and not for the purpose of home improvements. The interest portion of the mortgage payment on, for example, a home equity loan has traditionally been a tax deduction for up to a $100,000 loan. On a purchase money first, the limit is at 1 million. Now the powers-that-be are talking about lowering these loan limits for tax deduction purposes and possibly even eliminating them on some lines of credit and second home mortgages. Stay tuned…

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Our house is on a raised foundation. It is not bolted to the ground, nor are the cripple walls reinforced. Most foundation and seismic retrofitting experts would tell us to shell out the $4,000.00 plus dollars to get the work done.

The Post–Katrina me says, “Yes, yes, yes. My home is my biggest investment- take care of it, protect it, love it like a child.”

Then the Ignorance-Is-Bliss me says, “I’d really rather have new floor tiles, a pedestal sink and a claw foot tub in my bathroom.”

Well, I just got a second opinion today that I can sleep with. (For now.) This seismic retrofitter informed us that if we bolt the foundation, then we should reinforce the cripple walls, too. The city will require both (he says) when we pull the permits. However, because we have had moisture gather at our foundation walls (as many homes do) the added plywood will trap in that moisture and lead to worse problems like the “M” word down the road (MOLD!!!)

So what we’re going to do is put in French Drains to divert any future moisture away from our foundation, and purchase earthquake insurance. That raises our insurance premium from $300 a year to $1,100 a year.

… I guess I won’t be getting that pedestal sink anytime soon.

Sources that helped me:

Installing French Drains

Alpha Structural, contact Mark Schlaich at: (323) 258-5482 or (323) 841-3749

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by Suzanne Bridgham

Just read an article about the anticipated “Real Estate Bubble.” Some experts say one thing- some say another. Jeez- can’t anyone make up their mind? Even Greenspan is on the fence.

I have so many conflicting thoughts regarding my own real estate investment- my newly purchased house: Should I have put more money down on my loan? Should I really dump all of my savings into remodeling our home? Was this the wrong time to buy? Heck- I am a Realtor- I have seen this market pumps itself up for 5 years. I considered all the options:

- If we rent, we have to rent a house. We have too much stuff and hate shared walls.

- If we rent a house, it would probably cost about $2500- 3000/mo for something comparable to what we bought.

- Our mortgage, property taxes and insurance total about $4800/mo. With our tax write off, out of pocket we are about $3450/mo. I am sharing this expense, so at the end of the day my ultimate question was “Do I want to own for and extra $225 a month?” Well… duh… yeah…

- On the plus side of the ownership picture: our home may appreciate in value over time, we get to make our own renovations, we are not subject to a landlord booting us out w/ notice (as most single family homes are exempt from rent control).

- On the minus side: the market may crash, the interest rate on our adjustable rate mortgage on our second loan may go up, we pay for our own maintenance and… the Big One may hit!

Hmmm, well, if the market tanks… big deal- it always redeems itself over time and we are happy staying put. We both love where we live, enjoy our jobs and friends. We don’t anticipate job relocation, loss, or major health problems any time soon. We both do anticipate earning more money in future years. That would help buffer the shock of higher interest rates. And maintenance- well, luckily I have a handy boyfriend!

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