Tuesday, November 28, 2006

Home Prices Decline 3.5% - It's a big deal

The median price of a home in the US fell by 3.5% over last year's number, to $221,000: the biggest decline on record. If 3.5% doesn't sound like a lot to you, remember that most people buy homes on leverage, i.e. mortgages.

Suppose a year ago you bought a median priced home for $229,000. You put 10% down, so you invested $22,900 of your own cash money. Now suppose the price declined by about 3.5% to $221,000. You've just lost $8,000 of your $22,900, or 35% of your investment! If you turn around and sell it tomorrow because you're afraid the market will continue to decline you'll probably incur transaction fees ranging around 6% (real estate agents, escrow fees, etc), which would wipe out your investment completely. But if you don't turn around and sell it tomorrow, and we have another bad year or two, you could soon owe the bank more money than your house is worth, even though you put down 10% of the money yourself.

And with prime at over 8%, let's hope you didn't buy on a variable rate mortgage, because your payments could soon jack up without giving you the benefit of any additional equity.

Rising interest rates mean some people won't be able to make their payments. Declining prices will mean some people won't be able to solve their payment problem by selling. Hang tight, there's going to be a shakeout.

Wednesday, November 15, 2006

Social ROI

I posted recently about Charity ROI: How do you get the most bang for your charity buck? Tough to find, but I recently stumbled across a blog called Social ROI. It's a charitable entrepreneurship blog. It isn't exactly what I was talking about, but it's definitely got a business bent, and that's what it takes to get the best bang for your charitable buck.

Microsoft StickyKeys

Not sure what the difference is between Microsoft StickyKeys and Microsoft FilterKeys, but I know when I hold down the shift key for too long, it gets stuck on and there's no way to prevent it. This blog posting has advice for how to turn off Microsoft StickyKeys.