Ceiling Fan Provides Relief in 2 Ways

One of the basic things we all understand about heat is that it rises. As air molecules warm up, they expand and become lighter, and that causes them to head up toward the ceiling of a room, which isn't necessarily where you want them.

This natural rising can create layers within a room, with cooler air down near the floor, and warmer air trapped up near the ceiling. That's especially true if you have ceiling-mounted heat registers, where your heat is entering the room at a higher level to start with. And of course, the higher the ceilings, the more that heat can rise, and the warmer the temperatures will get up near the peak.

The same is going to be the case with cooler air. When summer finally gets here and we switch back to air conditioning, cooler air is going to want to fall and settle near the floor of a room, to the detriment of those spaces on the upper levels. And here again, if you have air conditioning ducts in the floor, the effect is going to be that much more pronounced.

Stirring things up

One possibility for getting that hot air down from the ceiling and back into the room when it can do some good is to install a ceiling fan. Ceiling fans utilize large, angled, rotating blades to push air down or pull air up, which creates currents that can stir things up and move stagnant air off the ceiling. They also help draw cool air up off the floor during the summer, as well as creating cooling breezes.

Sizing things up

When considering a ceiling fan, the first order of business is deciding on the size. Fans are sized by the overall diameter of the blades, such as 36-inch, and will have anywhere from three to five blades. For the most part, the more blades and the larger the diameter, the more air movement you'll have, although some large-diameter, industrial-style fans move quite a bit of air with only three blades.

As a general rule of thumb, a fan with a diameter of 36 to 44 inches will handle a room up to about 225 square feet, and a fan with a 52 or 54 inch diameter will handle about 400 square feet. For rooms that have more square feet than that, simply use more fans.

Ideally, the fans should be installed with the blades about 7 to 10 inches from the ceiling. Any closer than that and you won't get a good air movement to stir up the stagnant air along the ceiling. Also, the blades should be at least 18 inches away from the wall.

Most ceiling fans have the option of multiple speeds, so this is also a consideration when choosing a size. Larger blades have the capability of moving more air at a slower speed, so if you have relatively low ceilings, that can be a real advantage when you don't want the fan to be blowing loose papers around!

So which way is up?

If you look at the fan blades from the end, you'll see that they're angled in relation to the floor, rather than being exactly parallel. It's that angle that allows them to move air as they turn, like a horizontal airplane propeller. Most fans have a reversing switch, which allows the motor to run either clockwise or counterclockwise. In one direction, the angle of the blades will pull air up from the floor toward the ceiling; in the other direction, the blades will push the air down from the ceiling toward the floor.

If you have a very high ceiling, such as a room with a two story vault, you'd like to get the warm air that's trapped up there pushed down, so the lower floors can take advantage of it. Typically, that means that the fan rotation should be such that the blades are pushing the air down. However, in homes with lower ceilings, that downward push of air, even though it's pushing the heat down, may also create an unpleasant breeze that actually makes you feel cold.

In that case, reverse the motor so the blades are pulling the air up. That will create a convection current of air against the ceiling, and push the warm air that's up there outward and down the exterior walls, which again stirs things up.

The bottom line is that getting things where you want it from a heat distribution standpoint may take a bit of trial and error, with a combination of both blade rotation and blade speed.

For cooling, things are usually a bit more straightforward. Most people prefer to have the fan rotation set so the blades are pushing the air down, which stirs up the air and creates a nice cooling breeze. Set the speed at whatever level you're comfortable with, and you should find that you can save money by cutting back on how often you run your air conditioning

Market at a Glance January 2013

Market @ A Glance
California	Reporting Period	Current Period	Last Period	Year Ago	Change from Last Period	Change from Year Ago
Existing Home Sales (SAAR)  *	January-13	491,720	523,090	511,760	-6.0%	-3.9%
Median Home Price  *	January-13	$337,040	$366,930	$271,490	-8.1%	24.1%
Unsold Inventory Index (months)  *	January-13	3.5	2.6	5.8	34.6%	-39.7%
Median Time on Market (days)  *	January-13	36.6	38.1	59.6	-3.9%	-38.6%
Traditional Housing Affordability Index (HAI)  *	2012 Q3	49%	51%	51%	-2.0%	-2.0%
30-year fixed-rate mortgage (FRM)  **	January-13	3.41%	3.35%	3.92%	0.06%	-0.51%
SOURCES * CALIFORNIA ASSOCIATION OF REALTORS®, ** Federal Home Loan Mortgage Corp.

Is There a Window of Opportunity for Sellers Right Now?

One of the most interesting revelations of the latest National Association of Realtors (NAR) Existing Home Sales Report is the shortage of housing inventory being reported throughout much of the country. At the same time, buyer demand is dramatically up over last year.  Here are some key points:

• Total housing inventory at the end of January fell 4.9 percent to 1.74 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace.
• This represents the lowest housing supply since April 2005 when it was also 4.2 months.
• Listed inventory is 25.3 percent below a year ago when there was a 6.2-month supply.
• Raw unsold inventory is at the lowest level since December 1999 when there were 1.71 million homes on the market.

What Does This Mean if You Are Selling a Home?

The price of anything is determined by supply and demand. According to NAR’s report, inventory is at its lowest level since the real estate boom eight years ago. At the same time, demand is up. Lawrence Yun, NAR chief economist, reveals:

“Buyer traffic is continuing to pick up, while seller traffic is holding steady. In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We’ve transitioned into a seller’s market in much of the country.”

Does that mean you should sell your house now? Or should you wait to see if prices increase? Nobody knows for sure. However, some feel that there may be a pent-up inventory about to come to the market because, as prices increase, it will free up some sellers who have been locked in a negative equity situation (where the house is worth less than the remaining mortgage).

The Zillow Negative Equity Forecast predicts: 

“The negative equity rate among all homeowners with a mortgage will fall to at least 25.5 percent by the fourth quarter of 2013, freeing more than 999,000 additional homeowners nationwide.”

If these homes come to market, the supply/demand ratio will begin to balance out and lessen the opportunity a seller now has.

Calculated Risk, a well respected blog which analyzes the economy:

“With the low level of inventory, both in absolute numbers and as a month-of-supply, and the recent price increases in some areas, it would seem likely more inventory would come on the market.”

Lawrence Yun agrees:

“We expect a seasonal rise of inventory this spring.”

Yet, Yun is quick to add:

“It may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth.”

Probably the most interesting comment on this comes from Calculated Risk:

“I need to think about this…This will be an interesting issue all year.”

FHA: More Expensive Than Expected

The 3.5% down payment on FHA loans could be more expensive for buyers than expected. Beginning April 1, 2013, the mortgage insurance premium will go up by .1% to 1.35% which may not even be noticeable to most would-be homeowners.

The staggering increase will occur on 6/3/2013 when FHA’s policy on the duration of the required mortgage insurance will be increased for the life of the mortgage. It basically doubles the amount of total MIP if the loan is paid to term.

Below is an example with a purchase price of $175,000 with 3.5% down payment at 4% mortgage rate on 30 year term.



(Regarding the current MIP duration: When the unpaid balance reaches 78% LTV of original purchase, the MIP can be released. In any event though, the minimum time must be five years.)

Currently, the MIP is required for approximately 9 years 9 months with normal amortization. The new program would require the MIP for the life of the loan. In this example, the initial monthly MIP is $196.88 which decreases based on amortization.

There are buyers that qualify on income and credit who may not have the necessary additional down payment required for 80% and 90% conventional loans. The 3.5% FHA program has provided a great vehicle to get into a home with a minimum amount of cash.

For homeowners that expect to stay in their home for ten years or less, the new changes might not have much financial impact. Homeowners who expect to be in their home long term can refinance with a conventional loan without mortgage insurance once the equity has increased due to amortization and appreciation.

For buyers to avoid these increases, they will need to act now to get the FHA commitment issued prior to these change dates.

Tips on Buying and Renting a Home for Extra Income

Tips on buying and renting a home for extra income, being a landlord
Although the housing market is showing signs of recovery, demand for rental housing is expected to remain strong. Follow these tips from rental experts on becoming a landlord or investor in rental property.

Making sense of the story
Understand what it means to be a landlord. If tenants are paying the rent, rentals can be a strong source of income; however, if they’re not, landlords must be prepared to cover costs.
Buy in an area with a history of strong rental demand: Neighborhoods near universities are a good option. For homes in residential areas, proximity to schools can be a good draw for families.
Consider using a management firm: Landlords should determine whether they want to select the tenant and handle property issues or hire a company to do it. Property management firms can charge a percentage of the rent, sometimes 10 percent or more.
Do the math: Although prevailing rental prices will go a long way toward determining what can be charged, getting the best return on an investment starts with making sure the rent is enough, ideally, to cover expenses and costs.
Screen tenants thoroughly: Once the rental starts drawing inquiries, it pays off to screen prospective tenants by asking for previous landlord references and running a credit and criminal records check.
Get familiar with landlord laws: Two good resources for rental rules are the U.S. Dept. of Housing and Urban Development’s website (www.hud.gov), and The Landlord Protection Agency (www.thelpa.com), which includes state-specific rental guidelines and standardized forms for rental agreements.

Don't Wait Too Long To Buy