Time for a Housing Turnaround?

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Speaker: Sales for existing homes went up for the second straight month in May, but prices still fell sharply. Are these signs the market is slowly beginning to rebound? Here with some advice is Moneywatch.com Editor-At-Large, Jill Schlesinger. Good morning.

>> Jill Schlesinger: Good morning.

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Speaker: So the National Association of Realtors announced that in May, existing home sales rose second month in a row. What is driving this?

>> Jill Schlesinger: There are basically three issues. One, mortgage rates are pretty low, historically low. Two, the government has offered a first-time homebuyer's credit --

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Speaker: Um-hum.

>> Jill Schlesinger: -- And three, we actually have motivated sellers because there's a lot of foreclosed properties on the market. Those three things together have created a lot of activity.

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Speaker: All right. Now, what would you -- what advice would you give for people who are trying to sell their home right now?

>> Jill Schlesinger: All right, first of all, no offer is too low. Do not snub an offer. You are no longer in a place where you can do this.

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Speaker: Right.

>> Jill Schlesinger: The other thing is keep your house in good shape, but when you have someone who comes, I would say have your comps of other places in your neighborhood. And you say, "Look, my house is so much better, and this just sold for X."

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Speaker: Right.

>> Jill Schlesinger: Finally, this is a really key one. Market to first-time homebuyers. That's where the action is --

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Speaker: Right.

>> Jill Schlesinger: -- Because of that homebuyer credit. So you want to really say, "If you've never bought a home before --" If I were writing an ad, I'd write to the first-time homebuyer or their parents.

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Speaker: Really look at those comparables though, too, because if you can say mines better because X, Y, or Z, then you have that much better of a chance.

>> Jill Schlesinger: Indeed.

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Speaker: What advice would you give somebody looking to buy a home right now?

>> Jill Schlesinger: First of all, you got to make sure you can afford it, and that does not go away. And there is a rule of thumb. If you look at your income, your household income, 28 percent of your gross income is what you can afford to pay. No more. You -- all that whole -- the old idea of stretching to buy?

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Speaker: Um-hum.

>> Jill Schlesinger: Get rid of it.

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Speaker: If it's -- if you're going into the 30s, you're starting to lie to yourself.

>> Jill Schlesinger: Exactly. Just -- don't even do it. So you want to get pre-qualified, and you want to make sure that owning makes sense for you because for some people, renting is still a good deal. And you don't have to reach to buy. Buying is not the American dream.

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Speaker: And this is -- and it isn't gonna -- this market is not gonna change overnight. Finally, very quickly, what advice would you give somebody looking to refi right now because it's kind of messy?

>> Jill Schlesinger: It is messy. Get all of your ducks in a row. Get lots of offers and don't be surprised if the appraisal for your current property is really low because they're erring on the low side.

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Speaker: Jill --

>> Jill Schlesinger: But still a good time to get going.

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Speaker: Jill, as always, thanks so much.

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