Numbers Count: Weekly mortgage data highlights

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Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.

The numbers: Home sales slump

View of the Port of San Francisco at sunset.Existing home sales in January were at their slowest pace in nine months as tight inventories and rising prices put a crimp in some transactions, according to the National Association of Realtors. Total sales of existing single-family homes, townhomes, condominiums, and co-ops fell 4.9% in January, NAR’s Jan. 23 report said.

What counts: Tight inventories can be a real drag. One strategy that could help home shoppers when inventories are low is to have a clear list of what’s really important in a home. Most of us have a general sense of what we would like, but having your priorities written down may help you evaluate trade-offs in a tight housing market: How important is a new home versus an existing one? What’s an acceptable commute time? How many bedrooms do you really need? Here’s a useful checklist from HUD to help you map out what’s important and what?s a nice-to-have in your next home.

The numbers: Home prices climb 4.6% in 2014

Home prices rose at twice the rate of inflation in 2014, according to the S&P/Case-Shiller Home Price Indices released Feb. 24. The S&P/Case-Shiller U.S. National Home Price Index recorded a 4.6% annual gain in December 2014. The 10-City Composite Index gained 4.3% year-over-year, and the 20-City Composite gained 4.5%.

Among the 20 major cities in the composite index, the fastest year-over-year gain was in San Francisco, where prices rose 9.3%. Chicago had the lowest annual returns with a 1.3% rise in prices.

What counts: People ask me all the time: Is a home a good investment? Coming out of the recession, home prices rose at double-digit rates, and a lot of investors managed to buy cheap. That trend has cooled in many markets — institutional investor activity and the percentage of cash investors are both at four-year-lows. So if you’re looking to make a killing in real estate, a lot of those opportunities may be behind you.

I tell people: Buy a home first because you want to live in it. Or buy that second home because you want a vacation or weekend getaway, first and foremost. The benefits of owning a home are clear — a place to live and raise a family, the satisfaction of having your home, and building equity in the property with may strengthen your financial situation.

But as an investment, don’t overlook the less tangible costs of ownership beyond the monthly mortgage payment: homeowners insurance, maintenance and repairs, property taxes, and utilities are just some of the added costs you should take into consideration whether you’re buying a home as a primary residence or an investment.

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