I was tired of fighting with mortgage lenders about self-employment income, high-interest rates, and dealing with scarce inventory that fit our family’s needs. We decided to rent a bigger home. I was beyond done. It wasn’t meant to be. The awards for entrepreneurship did not extend to quickly buying a home.
My wife found a home with motivated owners due to a divorce. They had only lived there nine months and needed to make a move. The best way to say it is that the price point didn’t accommodate the rising interest rate environment, and they were open to many options.
I discussed rent-to-own options, and finally, she said the magic words: “They would even make an assumption – they don’t need to make money on the deal.”
My father had been diagnosed with stage four liver failure at that time, and we were aggressively looking for a home so he could move in with my family. He had been working full-time, despite the immense pain and turmoil he experienced daily.
To overcome the disparity in my income, my father agreed to be our co-borrower on the mortgage assumption application. This was ideal because he was also moving in with us.
I quickly applied with our names, and our combined income was approved. We agreed on a final sale price and were off to the races.
I have been in the mortgage industry for nine years, with my loan officer in the industry for 19 years and my Realtor for over 10 years. While all parties knew this option existed, none of us had ever participated in a real mortgage assumption transaction. I had written a dozen or so mortgage assumption content pieces for various mortgage lenders and realtors, but have never seen a single deal shake out.
Everyone was in for a new experience, and here are the things we learned almost immediately.
Assuming a VA loan
I have nothing but the utmost respect for everyone serving in the military. I have several family members on active duty; this is a sacrifice, and veterans deserve every benefit possible.
Veterans Affairs (VA) mortgage loans can be an excellent product for veterans. VA loans can be assumed by anyone, and the new borrower assumes those benefits. You do not have to be a veteran to assume a VA loan.
I am not a veteran, but I did assume a VA mortgage.
Minimum timeline of 12 months
The sellers had only lived in the home for nine months. To make a mortgage assumption, you must live in the home for 12 months. To move my father in, we opted to rent the house for the remainder of the three months. Ideally, these types of loans can close in 30-45 days from application.
Assume everything
You assume everything about the loan. The focus, of course, will be the mortgage rate, which is almost half what the current market mortgage rates are today. In addition, I received the existing escrow account as well.
However, for some reason, you must pay property insurance up front for a year. Still, these small concessions and fees pale compared to what we’d have to pay if we bought a home traditionally in this high-rate environment.
The price difference
Homeowners at certain price points may need help to sell their homes in this high-rate environment. In our case, we agreed to pay the list price and the difference between the remaining loan and the list price. They had only been there nine months, and the price they bought was the same as the price they listed. So, we didn’t have much to cover.
We paid nothing down and very few fees. Hypothetically, if a homeowner lives in a home for several years, this would be an incredible option for a borrower to cover the difference and receive a mortgage rate that is potentially almost half of the current market rate.
My father grew extremely ill in the weeks leading up to moving in and passed away seven days before we took occupancy. I had to reconfigure my taxes to show income qualifying for the mortgage payment we would soon take over. If my father hadn’t stepped up, we wouldn’t have had a chance to secure the deal of a lifetime.
Three months later, at the closing table, clasping a picture of my father, I went through a traditional mortgage loan closing. The 20+ mortgage title professional had never closed a mortgage assumption in his entire career.
Were we lucky? Maybe a little bit. It was a culmination of luck, mortgage knowledge, and timing.
When going through my father’s stuff after he passed, we found a New Year’s letter from one of those television evangelists he had subscribed to. The letter spewed about affirmations and claiming victories in your life. On that piece of paper, my father wrote down our new address. So maybe it was that.
We live in a weird market. The demand to buy a home has remained strong. As mortgage and real estate professionals, we must continuously educate and inform our clients about every opportunity that may exist.
Mortgage assumptions seem to be the Bigfoot of our industry, but they exist and are a viable option for thousands of home sellers and borrowers. I would recommend checking the option out.
This column does not necessarily reflect the opinion of HousingWire and its owners.
To contact the author of this story: Steven Cooley at ArtVsMath.com To contact the editor responsible for this story: Sarah Wheeler at [email protected]
Well, folks, this spring marks a major milestone in the housing market: Annual home list prices have gone negative for the first time in years. In other words, they are actually dropping nationally.
Looking at the country as a whole, sellers have priced their homes this May below where homes were priced just one year ago. That hasn’t happened in recent memory, especially after the past few years of unprecedented price hikes. But as mortgage interest rates shot up, buyers have been unable to afford the higher monthly housing payments.
Something had to give. And while today’s price dips are slight, there are no indications that overall prices will begin rising anytime soon.
So where are home prices falling the most? The data team at Realtor.com® found out. These are mostly places where prices shot up the most during the COVID-19 pandemic in the Western and Southern swaths of the country. In most of these places, there has been a lot of new construction helping to ease the housing shortage and taking the pressure off of prices to remain quite so high.
“Those markets that got the most juiced during the pandemic—where the prices really took off—are the markets where they’re now suffering the biggest declines because affordability has been the hardest there,” says Mark Zandi, Moody’s Analytics chief economist.
“The market is trying to adjust to the surge in mortgage rates and the collapse in affordability,” says Zandi. With mortgage rates hovering around 7%, he believes the price declines will continue in the near future.
“I’d be surprised if we don’t have this same conversation a year from now and prices aren’t another 3% or 4% lower than where they are today,” he adds.
For example, look at Boise, ID, No. 1 on our list, or Austin, TX, which came in at No. 2. Both were practically synonymous with the housing market’s pandemic price pump.
People who previously had to spend their nine-to-five in a big-city office building were turned into remote workers with more flexibility in where they could live. That led many people to leave more expensive cities like San Francisco and Seattle for smaller cities where they could get more space for their money.
The big caveat here is that there are still real estate markets around the country where prices are rising steadily. These are typically more affordable Midwestern markets that didn’t see the large upswings that other markets experienced during the pandemic.
To figure out where prices are falling the most, we looked at the median price per square foot in the 100 largest metropolitan areas. Then we compared median prices in May 2023 with May 2022.
We used price per square foot as the most reliable metric to track home price movement. This means in a few instances, overall home prices in a metro might be rising while the price per square foot is falling. Price per square foot is generally considered a better indicator of prices because it accounts for changes in the mix of homes for sale. For example, right now many larger, more expensive homes are sitting on the market without attracting buyers. Since those homes aren’t moving, it’s bringing up the overall price for these metros. But the price per square foot compares apples to apples and shows that in some of these markets, it’s actually cheaper to purchase a home now than a year earlier.
We looked at only one metro per state to ensure geographical diversity. Metros include the main city and surrounding towns, suburbs, and smaller urban areas.
Here’s where home prices are down the most.
Median listing price: $609,875 Median listing price per square foot: $282 Change in year-over-year price per square foot: -7.8%
Boise has been one of the poster children for the run-up in home prices during the pandemic. The area saw a massive influx of residents and soaring demand over the past few years, especially from Californians. And it’s not hard to see why.
The city checks many of the standard quality-of-life boxes that people are seeking: Homes are larger than the national average, and there’s plenty of natural beauty and outdoor recreation.
Homes in the city, surrounded by mountains, used to be a bargain. Then the pandemic hit, and from March 2020 to May 2022, prices rose 63%. Now prices are coming back down to earth.
“It’s the entry-level homes where we’re losing value,” says Boise real estate agent Rob Inman, with Boise’s Best Real Estate Keller Williams, “those homes that people got into for $400,000 to $500,000.”
That reality is rough for buyers who bought at the peak, Inman says, especially first-time buyers. The one consolation, he says, is the low interest rate they probably have on the mortgage.
But for buyers still looking for a home on the more affordable end of the spectrum in Boise, there’s a lot more to choose from now.
“Now, you can actually find stuff between $350,000 and $425,000, right in that entry-level price point,” he says. “There’s even new construction.”
Median listing price: $583,751 Median listing price per square foot: $276 Change in year-over-year price per square foot: -7.7%
When it comes to pandemic hot spots, you can’t mention Boise without bringing up Austin, too. This cultural hub and capital of the Lone Star State has attracted hordes of tech companies and homebuyers leading to a surge in prices.
During the pandemic, the price per square foot for a home in the Austin metro rose around 75% from February 2020 to May 2022. The median home list price, not standardized for size, went from about $364,000 to almost $630,000. Pandemic price growth in Austin outpaced all others on the list.
Higher mortgage rates have cooled off buyers’ ability to purchase at the same price point. Right now, a relatively new, one-bedroom condo in East Austin is being listed for $420,000, with a recent $5,000 price reduction.
Median listing price: $366,075 Median listing price per square foot: $225 Change in year-over-year price per square foot: -7.3%
Myrtle Beach, nestled in the center of South Carolina’s “Grand Strand” shoreline, is a popular and affordable summer destination. The city, named after the abundant wax myrtle tree in the area, was recently named one of the nation’s most affordable golf towns by Realtor.com.
With its beaches, boardwalk and amusement parks, and plenty of golf courses, it’s another spot where prices rose over the past few years and are now coming down.
Some of that is due to the abundance of new construction in the area. With so many homes to choose from, buyers aren’t under as much pressure to bid them up.
Homes in Myrtle Beach are relatively small, so if buyers aren’t looking for a colossal home, the actual median price on homes there is 15% to 20% less than the national median. This remodeled three-bedroom, two-bathroom house is on the market for $284,900 after a $15,000 price cut.
Median listing price: $529,450 Median listing price per square foot: $274 Change in year-over-year price per square foot: -5.6%
During the COVID-19 pandemic, home prices in Phoenix got as hot as a sweltering Sonoran summer, and just as the monsoons mark the end of the season, raised interest rates have come like a cold downpour on the market. After more than 50% pandemic-era appreciation here, the median price per square foot is down more than 5%.
But the housing boom in Phoenix—as well as the subsequent correction—is nothing new for the Valley of the Sun. Phoenix was one of the markets with the biggest swing up and down during the late 2000s housing bubble and crash.
Part of the reason why is that Phoenix has the capacity for so much growth. Without a real winter to speak of, home construction can go on year-round. And the only thing surrounding Phoenix is more land, so developers can continue to build outward.
“Developers can keep sprawling,” says local real estate agent Angela MacDonald. “Without the new homes, we wouldn’t be able to keep up with the demand for people moving here.”
Even with the price decline, sellers still have a bit of an edge in the market. There are still many buyers and not as many homes to go around.
Median listing price: $549,900 Median listing price per square foot: $305 Change in year-over-year price per square foot: -4.7%
Florida was another red-hot real estate market during the pandemic. As more folks could work remotely, many migrated to the Sunshine State with its low taxes, reasonable cost of living, and year-round warm temperatures.
Part of the reason Sarasota, about an hour south of Tampa on the southwestern coast of Florida, made our list is because it’s also one of the places in the U.S. where the number of homes for sale has risen the most.
Sarasota homes are also spending longer on the market, with the median listing on the market for nearly eight weeks. Homes were selling in about half of that time a year ago.
This midcentury three-bedroom home near downtown Sarasota has undergone a price reduction bringing it down to $499,000.
Median listing price: $635,000 Median listing price per square foot: $247 Change in year-over-year price per square foot: -4.0%
Salt Lake City is another area that’s grown in popularity over the past few years and attracted more tech companies and workers. That led prices to rise—until recently.
“Buyers are holding back a little when it comes to waiving contingencies or inspections,” says Lory Hendry, a real estate agent at Windermere Real Estate in Salt Lake City, ”
That’s in contrast to the frenzy of the pandemic, when fast sales were often sealed without those protections.
Salt Lake City has the biggest homes of any metro on our list. So buyers looking for more home for their money might want to give the city a hard look. Surprisingly, it’s the higher end of the market, the larger, more luxurious homes, where high demand is still leading to quick sales and competition among buyers.
“Anything in that $1 million to $2 million price point is going pretty quickly,” says Hendry.
For people looking for a bit more of a bargain, the Ogden metro, just north of Salt Lake City, is a little less expensive and was recently featured on our list of places where the number of homes for sale is growing the most right now. The number of listings in the Ogden area has roughly tripled over the past year.
Median listing price: $238,250 Median listing price per square foot: $152 Change in year-over-year price per square foot: -3.9%
Venturing outside of the West and South, the “Steel City” is the only Northeastern spot on our list.
Pittsburgh stands out on our list as a place with some of the smaller homes, with a median home size around 1,600 square feet. Combined with a price per square foot that’s about one-third less expensive than the national median, this means the price of a Pittsburgh home is quite a bit lower than in most other places.
This anchor of the Steel Belt didn’t see the same kind of pandemic-era price appreciation as others on the list. However, the overall housing slowdown seems to have pulled down prices anyway.
Buyers looking in the area can find a three-bedroom home in the South Side Flats neighborhood for $285,000. It recently underwent a $10,000 price reduction.
Median listing price: $345,899 Median listing price per square foot: $148 Change in year-over-year price per square foot: -3.6%
For the previous few metros on our list, there’s a quirk to how home price data is affected by the mix of homes for sale. The anomaly is the most pronounced in the Winston-Salem metro. While the median list price per square foot has dropped, overall prices in the metro are rising.
This is due to shifting buyer preference. As mortgage rates rose and buyer budgets shrunk, many buyers shied away from larger, more expensive homes. That left these properties on the market as the cheaper, smaller homes were more quickly scooped up. The bigger homes have been pulling up overall prices for the metro even though local real estate costs less than it did a year ago.
If you were to compare the median home list price in Winston-Salem with Pittsburgh, you’d see that the Winston-Salem price is about $100,000 more. But the median home listing in Winston-Salem is more than 500 square feet larger. So buyers get more space for their money.
A nearly 100-year-old, three-bedroom home about 10 minutes south of downtown Winston-Salem is listed now for $220,000, after a $9,000 price reduction.
Median listing price: $662,875 Median listing price per square foot: $340 Change in year-over-year price per square foot: -3.4%
Sacramento, California’s capital city, may be the most expensive of any on our list, with homes priced around 50% higher than the national average. But for California, Sacramento is cheap! The state’s median list price per square foot is more than 30% higher.
The city became a popular alternative to the pricier San Francisco Bay Area during the pandemic as buyers sought out more space for less money. But as companies have been calling workers back to their offices, the area isn’t as hot as it was during the pandemic. There has also been plenty of new construction in the area.
A two-bedroom townhome near downtown Sacramento can be picked up for a little under $500,000 right now.
Median listing price: $376,000 Median listing price per square foot: $205 Change in year-over-year price per square foot: -1.1%
The real estate market in the “Windy City” is really a tale of two cities, says Compass real estate agent Amy Duong Kim.
Chicago’s dense downtown should be thought of as one market, she says. The suburbs on the periphery, where about two-thirds of the metro residents live, should be thought of as another.
“In River North and Gold Coast and the other downtown neighborhoods, they were hit the hardest during COVID,” Duong Kim says. “Unfortunately, they haven’t bounced back yet.”
The listing data backs up her point about the two different markets of Chicago. Where the larger metro area is showing a 1.1% decline in price per square foot, the city of Chicago at the center of the metro is showing the list price per square foot is down just a little more than 4%.
This two-bedroom, one-bathroom condo in downtown Chicago is on the market for $299,000.
The 2020 Home Buyers and Sellers Generational Trends Report highlighted similarities and differences across generations of home buyers and sellers. This report takes a look at trends among generational groups within the following 7 categories:
Characteristics of Home Buyers
Characteristics of Homes Purchased
The Home Search Process
Home Buying and Real Estate Professionals
Financing the Home Purchase
Home Sellers and Their Selling Experience
Home Selling and Real Estate Professionals
Overall, Millennials made up the largest share of home buyers at 38 percent.86% percent of Younger Millennials, and 52 percent of Older Millennials were first-time home buyerswhile buyers from ages 40 – 54 (Gen X) consisted of 23% of recent home buyers.
On average, Gen X homebuyers bought the largest homes in size at a median of 2,000 square feet and also moved the shortest distance. The biggest motivations for people above age 55 who purchased a new home were: the desire to own a home of their own, being closer to friends and family, and living in a better area.
Sellers 65 to 73 years (Older Boomers) made up the largest shares of sellers at 23%. Those who were 55 years and older often purchased a similarly-sized, but less expensive home than they sold while moving further away.
Chapter 1: Characteristics of Home Buyers
Characteristics of Home Buyers covered trends among married couples, unmarried couples, single buyers, and buyers with children under the age of 18. Sixty one percent of buyers between ages 30 to 39 had at least one child under the age of 18 residing in their home. 👶
Do you have children? If the answer is yes, or if you are planning to in the near future, you should consider the following 5 key items when searching for a home:
1. School districts
2. Access to local services and amenities
3. Privacy
4. Safety
5. Storage
Chapter 2: Characteristics of Homes Purchased
Home Inspection:
39% of recent buyers who purchased new homes were looking to avoid renovations and problems with plumbing or electricity.🔌🔨🔧💡
Before buying a home, it is always important to check the exterior for any damages. According to the National Association of Realtors Report for 2020, windows, doors, and siding were very important factors that mattered to home buyers between ages 65 – 73. It’s always a smart idea to hire a professional to inspect the interior and exterior of a home before making an offer. Here is a list of 9 Important Exterior Items to Check When Buying a Home:
Foundation
Grade of Property
Settling
Downspouts
Roof
Chimney
Windows
Siding
Concrete Stoops, Patios, and Walks
** It is worthwhile to note that the damages on this list don’t necessarily mean you should cancel a potential purchase, but you should get information on whether or not these things will be fixed and how they might be accounted for in the price. If you have any questions or are looking for home inspector referrals, reach out to be connected to a Total Mortgage loan officer and we can make sure you get the quality in a home that you deserve!
COMMUTING:
Commuting costs were very important at 45% for buyers 22 to 29 years.
Deciding where to buy a home starts with finding a neighborhood that fits your lifestyle and has a cost of commuting that you’re willing to accept. Most people are still working from home, however not everyone is so lucky.
Did you know that the average one-way commute time for most Americans is 26.1 minutes? 🚗 For people who work 5 days a week, that adds up to an average 4.35 hours weekly! This may not seem like a lot but reality kicks in when you start to consider gas money, mileage, funds for public transportation and more. So, if you are looking to buy a new home, make sure you choose a location that makes the trip to work worth it! 😊
Chapter 3: The Home Search Process
According to the National Association of Realtors Report for 2020, the most important website feature were photos for nearly nine in 10 buyers under the age of 55.If you are looking to sell your home, it’s important to have professional pictures and sufficient property information listed online. 📸 Detailed information about properties for sale were also very important to all age groups.
Now, you might be wondering; how long does it typically take to find a new home? According to the National Association of Realtors Report for 2020, buyers typically searched for 10 weeks and looked at a median of nine homes.
Chapter 4: Home Buying and Real Estate Professionals
Why you need a Real Estate Agent:
Are you a pro at negotiating? 🤝 Do you like doing loads of paperwork? 📄 Most likely the answer is “no” because ain’t nobody got time for that! In 2020, it was reported that the majority of home buyers between the ages of 22 – 29 and 74+ wanted an agent to help with paperwork. Agents not only specialize in negotiating and understanding contracts, but they also are power players when it comes to getting the paperwork taken care of.
Home Buying Process:
Do you know how the home buying process works? 🤝🏡💵If not, that’s okay! Actually, most people don’t fully understand how the home buying process works from start to finish. According to the National Association of Realtors Report for 2020, help understanding the purchase process was most beneficial to buyers 29 years and younger at 85 percent and for buyers 30 to 39 years at 69 percent.
Regardless of age, the majority of people really benefit from having assistance with the home buying process. To gain a better understanding, check out the graphic below. Now is the time to start making moves towards finding your dream home!
Chapter 5: Financing the Home Purchase
Saving for a Down Payment:
If you are a prospective first-time home buyer struggling to save money for a down payment, you aren’t alone. According to the National Association of Realtors Report for 2020, 13% of all buyers cited that saving for a down payment was the most difficult step in the home buying process. If you’re looking to buy a home but need help saving, check out these tips on How toSave for a Down Payment on a First Home: https://www.thebalance.com/how-to-save-for-a-down-payment-on-a-house-1289847
Student Debt:
Debt hindered prospective home buyer’s ability to save for a down payment by a median of four years and came primarily from student loan debt.
Most people don’t know this but you can still get a mortgage if you have student debt! A lot of first-time home buyers worry about qualifying for a mortgage while still owing student loans. In 2020, 24% of all buyers reported having student loan debt with a median amount of $30,000.
If you are someone who has student loan debt but want to purchase a home, check out this article on How to Buy a House Despite Student Debt: https://www.cnbc.com/2020/01/31/have-student-debt-you-can-still-get-a-mortgage.html
Build Your Savings:
Even without debt, saving money for a down payment can feel like a struggle. Are you wondering how you can alter your spending habits to increase your savings? According to the National Association of Realtors Report for 2020, it was most common for buyers to cut spending on luxury/non-essential items, and on entertainment to save for their home purchase.
Saving efficiently starts with small habits that stay consistent over time. Here are 10 tips to help build your savings:
1. Transfer a fixed amount into a special savings account every month.
2. Skip vacations for a year.
3. Lower your expenses.
4. Reduce your high interest rate debt.
5. Borrow from a relative.
6. Borrow from your retirement plan.
7. Sell some of your investments.
8. Get a second job.
9. Make a deal with the seller.
10. Look into down payment assistance.
Chapter 6: Home Sellers and Their Selling Experience
Equity:
CHA-CHING! 💸Want to know how to get the most equity out of selling your home? Recently sold homes were typically on the market for a median of three weeks and sellers made a median of $60,000 in equity from their sale. If you want the most value, check out these important tips: https://www.opendoor.com/w/blog/how-to-sell-your-house-for-the-most-money
Understand your local market
Choose the right time to sell
Set the right price
Understand how much it really costs to sell a home
Determine how you’re going to sell
Consider minor renovations that add value at minimal cost
Negotiate the best offer – not just the highest offer
Incentives:
Offering different incentives can help attract buyers and potentially increase the value you can get from selling your home! 🏡 According to the National Association of Realtors Report for 2020,34%of all sellers offered incentives to attract buyers. This varied across age groups where it was less likely for sellers 74 years and over to offer incentives and more likely for sellers 55 to 64 years.
Buy down their interest rate
Include furniture or window coverings
Credit for non-recurring closing costs
Offer buyers’ brokers higher commission
Credit for “Close By” date
Chapter 7: Home Selling and Real Estate Professionals
According to the National Association of Realtors Report for 2020, All generations of buyers continued to utilize a real estate agent or broker as their top resource to help them buy and sell their home. While the internet is increasingly incorporated as an important tool in the process, buyers needed the help of a real estate professional to help them find the right home, negotiate terms of sale, and help with price negotiations.
If you are someone who is looking to buy or sell a home, here are 5 reasons why it is wise to utilize a real estate professional: https://www.forbes.com/2010/05/25/why-you-need-real-estate-agent-personal-finance-commission.html?sh=6d0aede94496
Better Access/More Convenience
Negotiating is tricky business
Contracts Can Be Hard to Handle
Real Estate Agents Can’t Lie
Not Everyone Can Save Money
Please feel free to reach out to us at Total Mortgage with any questions!
Policymakers also want to evaluate the impact of their actions on the economy so far. The Fed imposed its fastest series of rate increases since the 1980s, but it wants to avoid over-tightening and causing a significant recession.
May’s inflation data aided the Fed in making today’s decision. The Consumer Price Index in May rose just 4% year over year, before seasonal adjustment, compared to a 4.9% increase in April. Real wages also continue to fall, suggesting that the Fed has cooled, if not broken, the labor market.
“Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” the Fed said in its post-meeting statement. “In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
But it’s a delicate balance.
A series of bank failures — including Silicon Valley Bank, Signature Bank and First Republic Bank — have spurred concerns that banks are reducing their appetite for new loans, hurtling the economy towards a recession. Fears of a commercial real estate collapse have also emerged.
Fed Chairman Jerome Powell told reporters on Wednesday that it makes sense to moderate rate hikes as the policymakers get closer to the destination. The benefits of that, according to Powell, is that the Fed officials can access more information to make better decisions.
“The main issue that we’re focused on now is determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time,” Powell said. “So, the pace of the increases and the ultimate level of increases are separate variables. Given how far we have come, it may make sense for rates to move higher, but at a more moderate pace.”
Regarding the banking crisis, Powell said that “we don’t know the full extent of the consequences of the banking turmoil that we’ve seen.” However, with today’s decision, the Fed will “have some more time to see that unfolding.”
What’s next?
Investors are waiting for indications of what will happen next, as the macroeconomic policy crafters have yet to break the labor market and inflation levels are still double the 2% target.
The CME FedWatch Tool showed a 98% chance the Fed would hold rates at the current range on Wednesday morning, according to interest rate traders. However, 60% of these investors bet officials will impose a rate hike at the July 26 meeting.
In favor of another rate hike is the fact that employment continues to rise and consumer spending has been resilient. According to the latest labor market report, total nonfarm payroll employment rose by 339,000 jobs in May, compared to April.
The FOMC published new projections for the U.S. economy that expect the GDP to change by 1% in 2023 compared to 0.4% estimated in its March meeting. The unemployment rate is expected to be at 4.1% (compared to 4.5% in March) and the PCE inflation is projected to be at 3.2% (compared to 3.3% in March).
Policymakers also expect the federal funds rate at 5.6% at the end of 2023, which opens the door to the possibility of two rate hikes at the end of this year. March’s projection was at 5.1%.
“Looking ahead, nearly all Committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down to 2%,” Powell said. “We have been seeing the effects of our policy tightening on demand in the most interest rate sensitive sectors of the economy, especially housing and investment. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.”
Today’s Fed decision will have an impact on the housing market. Industry experts believe mortgage rates will remain high compared to last year.
Ahead of the Fed meeting, mortgage applications picked up last week as rates dropped slightly – another factor that impacted rates was the debt ceiling agreement.
On Wednesday afternoon, mortgage rates for 30-year fixed-rate mortgages were at 6.70%, according toHousingWire‘s Mortgage Rates Center. However, at Mortgage News Daily, mortgage rates were higher, at 6.98%.
“For real estate markets, today’s decision by the Fed will ensure that mortgage rates are likely to keep moving sideways for the next couple of months,” George Ratiu, chief economist at Keeping Current Matters, said in a statement. “The 30-year fixed mortgage rate has moved in the 6% – 7% range since mid-November 2022, cresting the upper limit several times over the past few weeks.”
The Fed’s pause means borrowers can see, for June, a stabilization of rates across a range of industries, particularly mortgage and credit cards, according to Michele Raneri, vice president and head of U.S. research and consulting at TransUnion.
Raneri said in the mortgage market, “It remains to be seen if, in the short term, this will spur many who have been holding off to finally engage in a new purchase or refinance, or if they will continue waiting until rates begin dropping.”
Rolling over a 401(k) is something you might consider if you’re planning to retire or just changing jobs and don’t want to leave your savings behind. When deciding where to move retirement assets, a certificate of deposit is one you might consider but it’s important to consider the tax implications. Can you transfer a 401(k) to a CD without penalty? Yes, but there are a few rules to know to make sure you don’t get hit with a surprise tax bill. A financial advisor can help you choose the best option for rolling over your 401(k) money.
Understanding 401(k) Rollovers
When you roll over a 401(k), you’re simply moving it from one place to another. A rollover is not the same as a withdrawal since you’re not taking any assets out of your account. In terms of where you can roll a 401(k) to, the options can include:
Another 401(k) or qualified retirement plan if you’re changing jobs
A traditional or Roth IRA
IRA CDs or money market accounts
Why would you want to roll over a 401(k)? There are different reasons for doing so and it often depends on your financial situation and needs. If you’re changing jobs, for instance, you might want to roll the money over from your old plan to your new one so that all of your 401(k) assets are together. On the other hand, if you’re retiring you may feel more comfortable having your 401(k) funds in an Individual Retirement Account or IRA CD.
Of course, you could always leave your plan where it is if you’re happy with your current investments. Just keep in mind that if your account balance is below a certain threshold, your former employer can cash it out and cut you a check.
Can You Transfer a 401(k) to a CD Without Penalty?
It’s possible to roll 401(k) money into a CD without paying tax penalties but there are some guidelines for doing so. First, you’ll need to make sure you’re using the right type of CD. Specifically, that means an IRA CD.
An IRA CD is a CD account that’s funded through an IRA and enjoys its tax benefits. Banks and credit unions can offer traditional and Roth IRA CDs. Each one follows the same rules as a traditional or Roth IRA. Here are a few things to know.
Both traditional and Roth IRA CDs are subject to IRA annual contribution limits (except when rolling over 401(k) funds).
Traditional IRA CDs are funded with pre-tax dollars and withdrawals are taxed as ordinary income.
Roth IRA CDs are funded with after-tax dollars and allow for tax-free withdrawals in retirement.
Early withdrawals from either type of CD before age 59 ½ could trigger tax penalties.
None of that applies to traditional bank CDs. You can generally put as much money as you like into a standard CD and withdraw the money at maturity without a penalty. Any interest earned is taxed as ordinary income.
Next, you’ll need to make sure you’re handling the transfer the right way. With a 401(k) plan, you can use a direct or indirect rollover to move money from one account to another. A direct rollover allows you to move money from your 401(k) to an IRA CD without ever receiving any of the money yourself. Indirect rollovers send the money to you and you then have to deposit it into a new account.
If you want to transfer money from a 401(k) to a CD without penalty, then a direct rollover is the best option. An indirect rollover puts the burden of redepositing the money into an IRA CD on you. If you fail to do so within 60 days, the IRS can treat the entire rollover as a taxable withdrawal.
Also, note that rollovers need to be like-kind to avoid any tax consequences. If you have a traditional 401(k) and you want to roll it into a Roth IRA CD, for instance, the IRS requires you to pay taxes on the amount that you’re converting. Talking to a financial advisor can help you figure out whether that type of 401(k) transfer makes sense.
How to Transfer Money From a 401(k) to a CD Without Penalty
Rolling over a 401(k) isn’t a difficult process but there are some important steps you’ll need to follow. The first is to decide where you want to open an IRA CD to receive your retirement funds. You can start with your bank first to see what options you might have, then compare them to IRA CDs offered by other banks or brokerages.
Once you choose an IRA CD option, the next step is filling out the paperwork to initiate the rollover. You can contact the company that currently holds your 401(k) to find out what forms you’ll need. It’s possible that you might be able to fill them out and submit them electronically.
You’ll need to tell your 401(k) administrator where to send the money and how much to transfer if you’re only doing a partial rollover. Once you’ve done that the plan administrator and the company that holds your newly opened IRA CD does the rest.
In terms of how long it takes to roll a 401(k) into an IRA CD, it largely depends on the plan administrator and the company that’s receiving the funds. Two weeks is usually a good amount of time to allow for a rollover to complete, though it can take longer in some cases. Following up with your bank or brokerage can help you get a better idea of when your 401(k) funds should hit your CD account.
Is a 401(k) to CD Rollover a Good Idea?
Can you transfer a 401(k) to a CD without penalty? Sure, but the better question is, should you? An IRA CD can be a safe place to park your retirement funds and having your retirement money at your bank might be more convenient than keeping it at a brokerage if you need to withdraw funds. On the other hand, you could be missing out on a chance to grow your retirement savings.
IRA CDs can pay interest like other CDs, but the rates may not be the best. Even if you’re able to find a high-yield IRA CD option, you may still be able to get a better return by rolling over your 401(k) to a regular IRA instead. Traditional and Roth IRAs can offer access to index funds, exchange-traded funds and other investments, all of which could outperform CD rates.
You might consider an IRA CD if you’re looking for safety and virtually guaranteed rates but it’s important to consider the bigger picture where your portfolio is concerned. Depending on what your goals are, you might run the risk of shortchanging your retirement savings if you’re leaning heavily on CDs to save.
The Bottom Line
Transferring money from a 401(k) to an IRA doesn’t automatically trigger a tax penalty if you’re following the proper steps to complete the rollover. Before starting the process, it helps to flesh out what your goals and reasons are for doing so. You’ll also want to shop around to compare IRA CD rates to see which banks have the best options.
Retirement Planning Tips
One of the most challenging parts of retirement planning is deciding when and how to draw down your assets. A financial advisor can help you develop a strategy for withdrawing your savings as efficiently as possible. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
IRA CDs can come in a variety of terms, ranging from as little as three months up to 10 years. When your CD matures, it may renew automatically so it’s important to keep the timing in mind when deciding which ones to choose. If you need to withdraw money from an IRA CD before maturity, your bank could impose an early withdrawal penalty equivalent to some or all of the interest earned. The IRS can also assess a tax penalty if you make early withdrawals before age 59 ½.
Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
You cannot name a legal minor as a beneficiary. This applies to almost all legal documents, most notably wills and life insurance policies. The significant exception to this rule is trusts. You can name a legal minor as the beneficiary of a trust. That’s particularly important because, if you want to leave assets to a minor, a trust is how you’ll do it. Here’s what you need to know. However, you may want to consult with a financial advisor or lawyer before moving forward.
Every State Has Its Own Laws
As a threshold matter, it’s important to understand that property and estate laws are highly state specific. Every jurisdiction will have its own laws that apply to issues such as property rights, insurance and estate laws. Even the age at which someone is a legal minor changes from state to state.
Most states will use a version of these laws, but each will have its own specific rules. In some cases, a state’s laws may be entirely different from another state’s laws. Make sure to consult with a local attorney before you make any decisions regarding your own money and estate planning.
What Is a Beneficiary?
Several different legal documents can name someone as the beneficiary of any underlying assets. A beneficiary is the third party who receives some benefit from the document, typically in the form of financial or other property assets. While many documents can name a beneficiary, they’re most common in estate law. This is chiefly because beneficiaries are third-party recipients named in some documents and estate law is entirely concerned with making distributions from the deceased to third parties.
There are four main types of documents that can name a beneficiary when it comes to estate planning:
Wills: In a last will and testament, a beneficiary is someone who the will names to receive assets from your estate.
Life Insurance: In a life insurance policy, a beneficiary is someone who receives a payment from the life insurance policy after the death of the policyholder.
Retirement Accounts: In a retirement account, a beneficiary is someone who receives the assets in the account after the death of the account holder.
Trusts: In a trust, a beneficiary is someone who receives assets from the account based on the terms of the trust and the trustee’s management.
Can a Minor Be a Beneficiary?
Under most circumstances, a minor cannot receive assets as a beneficiary. The major exception to this, as discussed below, is trusts.
Legal minors are defined as children who have not yet reached their state’s age of majority. Most states set the age of majority at 18, although in a handful of states, this age can reach as high as 19 or 21. Legal minors cannot take legally binding actions. Among other things, this means that they cannot sign enforceable contracts and they cannot participate in financial transactions.
Because minors cannot participate in financial transactions or handle their own legal matters, they cannot receive assets through contracts and legal documents. This means that they cannot directly inherit through a will, nor can they receive assets through a contract such as a life insurance policy or a retirement account.
However, minors can be named as beneficiaries of a trust. This is because the beneficiaries of a trust do not participate in contractual or financial transactions. A trustee manages the assets in the trust and then distributes them on the beneficiary’s behalf as directed in the terms of the trust. This can range from making payments, for example paying the mortgage on a home or a college tuition, to sending assets to the beneficiary in a simple property transfer.
What Happens If a Minor Is a Beneficiary?
You can name a legal minor as a beneficiary to any document. Many people do this when they name their children on documents like their will or life insurance policy, counting on the idea that those children will age into adulthood before receiving any assets. As long as the named party is a legal adult when they actually receive the assets, they can do so with no problem.
However, even if they are properly named in the document, legal minors cannot receive assets as a beneficiary under a will, a life insurance policy or a retirement account if they are a minor at the time of the transfer. If this happens, the assets are instead distributed to an entity that can legally receive the property and hold it on the minor’s behalf until they reach the age of majority. Typically this involves three possible situations:
Legal Guardian: In this case, the minor’s legal guardian receives the assets and holds them on the minor’s behalf until they reach the age of majority. This is common for children who have a parent or legal guardian. In almost all cases, a probate court will approve the handoff of assets to the guardian.
Custodial Account: In this case, the assets are placed into an account and a legal adult is appointed to manage the assets until the minor reaches the age of majority. The details of this process vary widely based on the nature of the assets and the custodian. For example, if the legal child has a parent or guardian that guardian will typically act as custodian. If they do not, a court will typically name a custodian to manage the assets. In almost all cases, a probate court oversees the creation of a custodial account.
Trust: In this case, the assets are placed in trust on behalf of the legal minor. A legal adult is named as the trustee to manage the trust with the legal minor named as the beneficiary to the fund. In almost all cases a probate court oversees the creation of this trust fund and it will distribute all of the assets once the child reaches legal majority.
IRA/Retirement Accounts
Some retirement accounts, specifically IRA accounts, work slightly differently. Under the SECURE Act, a minor beneficiary cannot take out assets from an IRA after the accountholder’s death. They must leave the money in place until they turn 18.
Once the minor beneficiary reaches age 18 they take all of the assets out of the account within 10 years. They can transfer these assets to another portfolio or they can sell the portfolio for cash.
Naming Minor Beneficiaries With Trusts
The court process can take time, sometimes a lot of time. And court-appointed custodians and trustees are often very expensive. But what if your children are still under the age of 18 and you would still like to name them as beneficiaries of your will or life insurance policy? Generally, the best thing to do is to establish a trust.
You can establish a trust in the terms of your will or you can do so during your life, essentially creating the fund and setting it aside unless needed. When you create the trust you will name the trustee who will manage the fund, either a trusted adult who will work for free or a professional entity who will charge for their services. You then set the terms of the trust. These terms define how the trustee will manage its assets and how it will distribute those assets to and on behalf of the beneficiary.
Finally, you will name the trust as the beneficiary on documents like your will and life insurance policy. As a legal entity, the trust can receive these assets.
If you die, the trust will directly take the assets to which it is a beneficiary. The trustee will manage the assets and distribute them as necessary for the child’s welfare, per your instructions. Then, once the child is old enough, the trust can wind up and pass along its principal to the beneficiary, again if you have set it up to do so.
When your heirs and beneficiaries reach the age of majority, you can change your estate planning to name them directly, removing the trust once it’s no longer necessary. This allows you to care for minors despite the fact that you cannot leave them their money directly.
The Bottom Line
Minors cannot receive assets as a beneficiary under documents like a will or a life insurance policy. Instead, the best option is to leave this money in a trust until they reach adulthood. It’s important to consult with a financial advisor for full estate planning in order to make sure your individual needs are met.
Trust Planning Tips
Here’s the even better news, you don’t have to figure this out on your own. A professional financial advisor can help you analyze your situation and make the right moves for your estate. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
The best way to prepare a trust in advance is with a living trust. Let’s review how you can set up a living trust and why you might want to do so.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
Wondering when the best time to buy a home is? And the worst time? Well, thanks to data science, we no longer have to guess whether it’s fall and winter, or spring and summer.
I’ll save you the suspense: the very best time to buy your dream home is late summer, namely August and September, this according to a new study from real estate listing website Zillow.
Apparently prospective home buyers will find the most home inventory and a greater number of price cuts during these temperature-hot months, giving them better odds of finding that perfect home.
This means it might be easier to negotiate prices and perhaps even snag a lower price if the property stays on the market for a prolonged period of time.
Inventory Remains a Problem
An inventory glut in late summer
Could be the perfect time to buy a home
Because home sellers will be getting desperate
And there might be fewer competing buyers at that time
As you probably know (if you’ve been house hunting), inventory is scarce. It’s slim pickings out there and hasn’t gotten any better, despite predictions telling us otherwise. They were wrong about mortgage rates going up too…
Overall, inventory is off 5.3% from a year ago, meaning you’ll have to buckle your seatbelt and prepare for another tough year if you’re in the market to buy a home, or getting ready to be. Real estate investing is also getting a lot less attractive, and not so easy.
Conversely, if you’re a seller, you don’t even have to clean your house, make the bed, or mow your lawn – it’s already sold!
Okay, maybe you should do those things to fetch a higher price, but the seemingly endless seller’s market persists.
However, there are some house hacks (pardon the awful, awful buzzword) to increase your chances of landing your dream home.
Zillow found out that in most major metros, the month of August featured more for-sale listings than any other month during the year.
For example, last year in Los Angeles there were about 8,000 more homes for sale in August than in April. The total number of homes for sale increased from 26,000 to 34,000, a major 31% increase.
The same trend was found in many other metros, from Detroit to San Francisco, though not all of them.
However, it wasn’t just inventory that improved. Competition also went down in late summer, so even if fewer homes were on the market, there were fewer buyers chasing them.
Conventional logic tells us that many would-be buyers want to get situated well before summer ends to ensure they can get their kids enrolled in the new school. They may also be taking family vacations during late summer.
It’s also just plain hot in some parts of the country, which might affect buyer traffic and seller motivation, regardless of market conditions.
Price Reductions Most Common in Late Summer
As time goes on and desperation grows
Home price reductions might become more prevalent
Which leads to opportunity
And the potential to negotiate even lower!
With more homes and fewer prospective buyers comes price reductions. After all, the business law of supply and demand will dictate a homes price, and if fewer people are chasing more homes, the sales price must down come.
Zillow discovered that 15.1% of active real estate listings had a price cut in August, significantly higher than the 12.8% of homes in April.
That increases your chances of finding a home on sale, assuming the starting points (listing price) were relatively similar. September was also a good month to find a deal, with 14.3% of homes on sale, so to speak.
Of course, this wasn’t the case everywhere, with cities like Ft. Lauderdale seeing pride reductions drop in the six months from March to September.
By the way, if you’re wondering when it’s the best time to sell a home, it’s supposedly early May, per Zillow, though Redfin argued winter was the best back in 2013. Of course, for a lot of buyers and sellers, the sale and purchase have to happen concurrently.
The Best Time to Buy a Home Is a Moving Target
Just remember that the perfect time to buy isn’t set in stone
Nor will it be the same in every market nationwide
It can change depending on what’s happening in the economy
And the local housing market in question
Like anything else, the best time to buy (or sell) is really dependent on a number of factors that can’t be summed up by one datapoint.
The old adage says real estate is local. Today, you can add hyper to the front of local. Real estate markets are different, plain and simple. One neighborhood might be cold with days on market creeping higher and higher while a nearby pocket or street is on fire, with bidding wars the norm.
That’s why things like median sales, census bureau data, nationwide home inventory, and what the Federal Reserve is doing might not matter all that much, if at all. Who cares what the median sales price is in Orange County if you live in LA?
There’s also the practicality of timing a buy, or even a home sale. Buying and selling isn’t only dictated by price. It’s usually driven by life events, which tend not to happen at the ideal time.
For home buyers, the process is a long one that isn’t just decided on one night. You can’t say, “Honey, we should buy a home this August.”
Or, “I will sell my house in April.” That might mean you need to buy a home in April too, which could be the worst time because everyone else is out house hunting too.
Nope, it takes lots of time and research, touring, open houses, ups and downs, close calls, and more to finally snag that right property, even if it happens to take place in the worst month.
Zillow even says the average buyer spends more than four months shopping for a home, and makes at least two offers along the way.
I feel like it’s pretty rare to make one offer on one home and have that be the end of the story. Sure, it may depend on the housing market (and the buyer), but nowadays it seems you have to strike out once or twice before getting a hit.
Sometimes that could be walking away during the home inspection period, while other times you might get outbid or be unwilling to offer more than someone else looking to buy.
Whatever the case, odds are good that the home buying process will take many, many months, if not years. So if you happen to buy in August or September, great! You may have found a property with a price cut. The same might be true even if it drags into the winter months.
But telling your significant other that it’s prudent to wait until later this year probably won’t fly. You’ll at least want to get the ball rolling as soon as possible.
On top of all this, there’s a good chance Zillow will tell us that the best time to buy is a different month after more data is analyzed next year. So it’s probably best to chalk this one up to interesting, but not words to live by.
Be Proactive to Get a Lower Price
Stay on top of your own finances
While tracking the real estate market
To ensure you get approved for a home loan
At the best possible price
A smarter move might be focusing on your finances to land a better mortgage rate, which can lower your homeowner costs at any price point.
For example, instead of worrying what month it is, or avoiding the worst months to buy, worry about your three credit scores. Make sure they’re all in tip-top shape to avoid unnecessary pricing adjustments on your home loan.
Also take the time to shop mortgage rates with different lenders instead of going to one bank, broker, or credit union. And compare loan programs.
These two steps alone can make a huge difference in what you pay each month to own your home, no matter the sales price at closing.
While you’re at it, choosing the right real estate agent is also key. Find one who knows the art of negotiating to ensure you get a good deal no matter what the month.
Some real estate agents are afraid to make lowball offers, while others are willing to take chances when they see opportunities. This is another factor to consider.
Along those same lines, it’s important to get pre-approved beforehand and show the sellers you’re a serious candidate.
It’s not unheard of to show them you’ve got assets available for a large down payment to get your offer accepted, even if there’s a slightly higher offer already submitted.
Lastly, make sure it’s a good time for you personally. Are you ready to become a homeowner? Is now the right time mentally and financially? Did you do your research, set aside funds for a down payment and closing costs, learn about mortgages, etc.?
Using these common-sense tips, you can get a good deal on a home during any month of the year, even in a red-hot market, and even when it’s supposedly the worst time to buy.
I’ve been stewing over something for the past few days, and I’m finally ready to write about it.
I’m not a fan of judging others and their actions. Like Atticus Finch, I believe you never really know a person until you stand in their shoes and walk around in them. But I’m human. Like everyone, there are times I can’t help passing judgment. And although I know that judging others isn’t productive, sometimes I’m at a loss to do anything else.
Rock Bottom
I had dinner with my buddy Michael last week. Michael’s moving back to Portland after several years away, and his financial life is a mess. He’s had a rough couple of years:
He lost his home to foreclosure.
He lost his job.
His wife is out of work, too.
And, last month, Michael filed for bankruptcy.
Not all of Michael’s problems are due to the economy. He’s brought plenty of woe upon himself due to a typical consumer lifestyle. He knows that.
Over a meal of southern-style fried chicken — my treat — we talked a lot about his financial situation. We’ve chatted some in the past, but I never feel like what I say makes much of an impact. I don’t want to be too pushy, for one thing, but I also get the impression that Michael isn’t ready to hear the message. Now, however, that may be changing. He has a haunting, hunted look about him.
Michael told me about the mistakes he’s made and the lessons he’s learned. He also confessed that he borrowed money from a family member, but had never repaid the loan. “It tears me up inside,” he said. “I feel so guilty.” Once he gets everything worked out, his goal is to pay that money back as soon as possible.
Michael explained how he’s hoping to set up a budget; he wants to set money aside for things before buying them. “Plus, I want to pay myself first,” he told me. “I’ve been reading about saving. I want to open a savings account and set aside $400 per month. My wife thinks we should use the money for other stuff, but I really think we should save.”
Old Habits
Because Michael is a good friend, I want to help him and his family. (Michael and his wife have two kids.) I’ve been watching for cheap rentals in the Portland area, and even found a house where he could stay for $500 a month (which is incredibly cheap). There are some drawbacks to the place, and I wouldn’t suggest that he and his family stay there long term, but it’d be an awesome temporary home be while they get back on their feet.
“Thanks for finding that place,” Michael told me as he took a bite of mashed potatoes and gravy. “But we’ve decided to rent someplace else. We found a place in Rock Creek for $1300 a month.”
“Wow,” I said. “That seems like a lot.”
“Not really,” he said. “That’s pretty good for similar places in Portland. Plus, it gives us space for our two dogs.”
I sighed inside. Sure, that may be a good price compared to similar houses, but I know there are tons of places to live in Portland for less than $1300 a month — if Michael and his wife are willing to make some sacrifices. I wanted to pursue this line of questioning — What about getting rid of the dogs? Why not look at the $500/month place I found? — but I let it go. You can only argue with your friends so much, right? We moved on to other topics.
Michael mentioned that although his wife is still looking for work, he’s managed to find a job. (He was vague about what the work entailed and how much it paid.) He even has transportation. “I’m borrowing an old beater until I have a chance to buy a new car,” he told me. Michael’s last vehicle belonged to his employer, so he came to town not only homeless and jobless, but carless as well.
“You might want to wait to buy a new car until you’re more sure of your situation,” I said. “There’s nothing wrong with driving an old beater. Heck, where you’ll be living, you could ride the light rail into work.”
“I hadn’t thought of that,” Michael said. And from the way he said it, I could tell he still wasn’t thinking of it. In his mind, he needs a car — and a new one, too.
Further to Fall
Before we parted ways, Michael gave me his new cell phone number. “What happened to your old phone?” I asked.
“It was the company’s. I had to give it back,” he said.
“That makes sense,” I said. “What did you get instead? Did you go with a prepaid phone? That’s a great way to save money.”
Michael evaded the question, but when we stood up to leave, I noticed the phone hanging from his belt clip: a brand-new iPhone. Later I learned from a mutual friend that Michael didn’t just buy a new iPhone for himself, but he bought one for his wife and for his 11-year-old son as well. (And he bought his 9-year-old son an iPod Touch so he wouldn’t feel left out.)
This is the part of the story where you now have to imagine a little black squiggle hanging over my head, like in the comic strips. This is the point at which I go from being sympathetic for my friend to judging him — and not favorably.
The Mote in My Eye
But as I began to silently judge Michael’s choices, I thought of my recent trip to Alaska. I spent ten days on the boat with my neighbor, the “real millionaire next door“, and in those ten days I often felt like I was being judged.
Before the trip, I bought a $120 backpack at REI. My goal is to use this for much of my travel during the coming years. It fits in an overhead compartment, and is a great way to limit what I carry. John frowned when he saw the new pack and asked, “What’s wrong with a duffel bag from Goodwill?”
On the first day, Mac and I tore a paper towel in half, and we each used our half as a napkin for several days. Eventually my napkin became grimy and gross, so I went to tear off another half a paper towel. When John saw me, he scolded me and told me I ought to use a cloth towel instead.
Near the end of the trip, I threw a molding orange overboard. “I wish you hadn’t done that,” John said. “I could have cut out the bad part and eaten the rest.”
On the last day, I went to the bookstore in Sitka and bought a copy of Bruce Chatwin’s In Patagonia, which I’ve been wanting to read for a long time. (After our trip to France and Italy this year, Kris and I hope to save for a trip to Argentina and Chile in 2012 or 2013.) When John saw I’d bought a new book, he shook his head. “I’ve got a lot of perfectly good books here on board,” he said, indicating his library of old paperbacks.
Throughout the trip, I felt like I was under pressure to, well, be more frugal, to make the same choices John would make. And you know what? That pressure sucked. It felt awful. I didn’t like the feeling of being judged, especially by somebody I look up to.
To Judge, or Not to Judge?
So, I’m torn. As much as I hate to judge others, sometimes I can’t help it — and now I’m judging Michael. He says he wants to change, he says he’s learned his lesson from his bankruptcy, but his actions say otherwise.
He has no savings, no car, no home. His wife is out of work, and he’s only just started a new job himself. Yet he’s decided to rent a $1300 house, is looking to buy a new car, and has signed up for at least $180/month in cell phones. (I’m ignoring the start-up costs of the phones.) These are just the things I know about. Michael is talking the talk, but he’s not walking the walk. (I’m reminded of a previous conversation with another friend.)
I know how tough it can be to change your behavior. I’ve been there before. I used to talk about changing, too, without making any actual change. I’m sure my friends just shook their heads at me. (In fact, I know that some of my friends used to wonder at my foolish choices — they’ve told me so.)
I hope Michael turns things around, but I can’t help but judge his actions right now. And I don’t know how to help him.
Footnote: During dinner, Michael told me that he’s been reading personal-finance books. “Like which ones?” I asked. “Rich Dad, Poor Dad,” he said. That should have been a big clue that things weren’t right yet. Rich Dad, Poor Dad has some interesting entrepreneurship lessons in it, but it’s a terrible, terrible book to base your financial philosophy around. If I could remove only one book from the hands of people just learning to manage money, that would be the one.
Footnote #2: Okay, folks. No need to leave any more “I can’t believe you said that about the dogs” comments. You’ve made your point. In fact, I’m now whipping up an article for Friday where we can spend all day talking about the relationship between dollars and dogs. (And cats.) So, please: Save your pet-related discussion until Friday.
Everything’s exciting in Nashville, even the apartment gyms.
Known as the cradle of country music and birthplace of bluegrass, Nashville is home to a diverse population of talented performers, producers and people from all walks of life. With such an assorted population comes a wide variety of workout preferences.
These are the best apartment gyms in Nashville to sling steel, sweat it out and start the process of meeting those fitness goals.
Source: Rent. / 505 Nashville
The fitness center at 505 Nashville is above and beyond. From soaring ceilings to treadmills with a view to the Italian-made Technogym equipment, the attention to detail is apparent from just one look at this luxury gym. Located in the heart of Nashville’s thriving Arts District, just blocks from the Country Music Hall of Fame, 505 Nashville offers residents the best of what the city has to offer inside and outside the complex.
The options for recreation don’t end in the fitness center either. The 505 Nashville complex also boasts tennis and pickleball courts in addition to an area for bocce and a rectangular pool ideal for swimming laps.
Source: Rent. / Brownstone SoBro Apartments
The fitness center at Broadstone SoBro Apartments is all about versatility. It provides equipment for all types of workout regimens. With everything from cardio machines and free weights to more specified equipment like a punching bag, Jacobs ladder and CrossFit rig, no matter what your workout style is, there’s something just for you at Broadstone SoBro Apartments.
It’s located in Nashville’s hip SoBro neighborhood, so if you’re lucky enough to call Broadstone SoBro home, there’s no shortage of options to get moving right at your fingertips. Whether you’re getting your steps outside or enjoying the view from an elliptical in the gym, you can’t go wrong at Brownstone SoBro.
Source: Rent. / Aertson Midtown
Aertson Midtown has a state-of-the-art fitness center. From the modern, light-filled design to the virtual WellBeats fitness system that provides workout, fitness and nutrition guides for people of all ages and body types, this gym is somewhere that everyone can feel at home.
Offering plenty of cardio machines with outside views, a Smith machine that makes benching and squatting without a spotter safe and free weights for days, this Midtown apartment fitness center empowers you to conquer even your loftiest fitness goals.
Source: Rent. / Abberly Foundry
Amidst the exposed brick, pool views and plenty of space to stretch, residents love to sweat and reach their fitness goals at the gym at Abberly Foundry. This complex provides residents with an elevated fitness center experience. Along with all of the traditional equipment you’d expect, the gym also features TRX bands, a punching bag and a dedicated yoga/dance area complete with a mirror wall and barre.
Located in the food and drink paradise of Watkins Park, Abberly Foundry is a great place to call home for active people that still enjoy a little outburst of indulgence on occasion.
Source: Rent. / 805 Lea
Smack dab in Nashville’s desirable SoBro neighborhood you’ll find the luxurious 805 Lea apartment complex. And inside that complex, you’ll find a fitness center with scenic views, Peloton brand stationary bikes and top-of-the-line weight-lifting machines that make working out less of a chore than ever before.
The fitness center at 805 Lea also features a mirrored wall to aid in monitoring form and a walkout terrace, perfect for when you need a breath of fresh air in between sets or want to do a round of walking lunges while you work on your tan.
Source: Rent. / Camden Music Row
Located in The Gulch neighborhood, Camden Music Row benefits from a great location and supplements that with plenty of lifestyle luxuries and recreational amenities within the complex. The fitness center at Camden Music Row leaves nothing to be desired by providing residents with everything they could possibly need to get their heart rates up and stay in shape.
Boasting a rooftop pool, dedicated yoga studio, stationary bike station and commercial-grade equipment, the fitness amenities at this high-end complex are designed to comfortably accommodate the residents of all 430 units and then some.
Source: Rent. / Bells Bluff
Located about as close as you can possibly be to the Cumberland River, Bells Bluff is a great place for nature lovers to call home. The recreational amenities at this riverfront apartment complex include scenic hiking trails with plyometric stations peppered throughout.
But you can’t always make it into the great outdoors to get your steps in and that’s where the exemplary fitness center comes into play. The fitness center at this Hillwood complex features stationary bikes with pool views, versatile machines with trampoline-style rebounders and a TRX station for those body-weight warriors. Beyond that, Bells Bluff boasts two pools with one specifically designed for swimming laps.
Source: Rent. / Olympus Midtown
Olympus Midtown features a state-of-the-art fitness center and cardio studio that rivals what you would get from an expensive monthly gym membership. As the name suggests, this complex is located in the middle of Midtown and provides easy access to many of the unique attractions that make Nashville such a desirable city to call home.
The cardio machines have outside views, the machines have enough space between them to promote a stress-free experience and the free weights are plentiful so you rarely have to wait your turn to complete your workout. To put it simply, the fitness center at Olympus Midtown is among the best you’ll find in Music City.
Source: Rent. / Atlas at Germantown
Located amid the Victorian buildings and chic restaurants of Germantown, the Atlas at Germantown apartment complex is one of the more desirable places for renters to call home in Nashville. It’s easy to see why with just one look at this 24/7, state-of-the-art fitness center.
With carpeting that dulls the loud thuds of any aggressively dropped free weights, high ceilings and plenty of windows providing natural light, the fitness center at Atlas at Germantown is a great place to work up a sweat with a smile on your face. With everything from resistance cables to medicine balls to flatscreen TVs on the walls, the team behind the creation of this gym thought of everything and will have you canceling your gym membership as soon as you sign your lease.
Source: Rent. / Aspire Gulch Apartments
The tagline for the Aspire Gulch Apartments is “Fresh. Stylish. Sophisticated.” and if the fitness center is any indication of how they have lived up to those lofty descriptors, they’re doing a great job. Located in Pie Town, this 360-unit complex excellently caters to its active resident population.
Boasting racks on racks of free weights, mirrors for monitoring form and machines that can support a full workout circuit in and of themselves, there’s no excuse to not hit the gym when the space is as welcoming and appealing as this.
Never miss a workout in Nashville
No matter how you like to get your steps in or how much weight you’re throwing up at the bench press, there’s an apartment fitness center in Nashville that is up to the task of being your home base while you build the body you want. Find your favorite on the list above and fill out your application today.
Featured image source: Rent. / Brownstone SoBro Apartments
I realize it’s been a hot second since we provided an update on the remodel of our San Francisco Victorian. That’s because there really hasn’t been much to show or tell for quite a few months now – unless you’re fascinated by plumbing, electrical work or the art of insultation. It’s riveting stuff, let me tell you. If you’ve ever gone through an extensive remodel, I’m sure you can relate. There’s an extended amount of time where it really looks like nothing has happened. But, I’m pleased to report we finally have real progress! There are walls. Rooms are starting to look like actual rooms. Flooring is about to go in. These are major milestones for us. Here are a few sneak peeks!
this taken from our living room looking into what will be our kitchen! We removed two walls to create an open concept space.
I love the curviture of our staircase. Now I just have to design a banister…
We’re keeping all the original molding and those killer archways throughout the house.
Looking from the dining room into living room/kitchen. I’m just dreaming of those oak floors being laid.
Now that all the ugly stuff is done, we’re moving onto the fun – finish work! Think light fixutres, counter tops, cabinet design. I’ve been obsessing about our master bathroom lately. It’s a bit of a holy grail of homeownership after all. We actually took an extra bedroom to create the master suite of my dreams. Here’s what it is going to look like!
All the dream bath ingredients are here. His & Hers vanities. A little room for the toilet to call home. We’ll enjoy the modern revelation called a linen closet. No more shoving towels and sheets where ever the heck I can find space. We’re also creating a dual-headed shower, with a rain showerhead – what I hope will be my tiny oasis from the rest of the world! My goal is to create a spa-like atmosphere. These are a few of the inspiration images I pulled onto my moodboard.
As with most other things in my day-to-day, I’m drawn to a neautral color palette. Natural materials like stones and wood will have a soothing feel. One of the bathroom’s biggest features is going to be the shower. It will be the first thing you see as you walk from the bedroom into the space. At 12″ tall, it’s got to be eye catching!
To create something modern, but also timeless I headed to Fireclay Tile – an amazing San Francisco-based tile maker. Working with their in-house design team, we decided to do a play on the classic subway tile look. To take a modern approach, the shower will feature an oversized version their Edge tile line. The tile is crisp and clean with sharp edges. I love the color Feldspar – it’s just a touch warmer than white and looks gorgeous in a matte finish. You can see the sketch of the final tile design below.
I am so excited to see that oversized subway pattern stretching 12″ tall! We’re also tucking in a teak bench and a hidden products storage cubbie behind the wall. I know California is in a drought but it’s going to be really hard to not spend hours in that shower!
When it comes to accessories this is where I want to warm up the space with super cozy towels, woven baskets and a natural stump stool. Modern towel racks in black will add a touch of trendiness.
There’s still quite a bit I’m debating. I haven’t nailed down a paint color. I’m also hunting for great bathroom mirrors (any hot tips?!) and have yet to fall in love with a wall sconce. But all in all, it’s coming together! I can actually envision getting ready in this room everyday.