The widely respected Case-Shiller index reported a price fall of 2.5% in Q4 2009, as compared with the same period for 2008. Moreover, prices fell only 1.1% from the third to the fourth quarters last year. While still a decline, the number was a marked improvement from previous quarters. The Case-Shiller index tracks housing prices in 20 cities and nine census divisions across the United States.

Housing analysts say that the recent numbers could indicate that housing prices will continue small declines or will be flat for the next one to five years. However, several unknowns make it especially difficult to forecast house price movements. Primary among the unknowns is the Federal Reserve’s plan to stop buying mortgage-backed securities on March 31.

In addition, mortgage rates could rise as the Fed tightens the money supply in response to economic growth and possible inflation. To top off the uncertainties, the federal home-buyers tax credit is scheduled to expire on April 30th.

How all these factors will impact the housing market over both the short and long term remains to be seen. While some analysts fear a return to rapidly falling home prices, others say an improving economy and job situation could bolster the market as federal support is pulled away.

The research looked at homeowner’s income and expenses, their credit record, as well as the loan-to-value ratio of the mortgage. Using a complex formula, the NRDC study found that mortgage foreclosures increased with the number of cars owned by a household. In others words, the neighborhood where more households owned cars were also the same locations that had the highest default rates.

One theory about why these two items correlate is that transportation costs, which include gas, are about 17 percent of the average household’s income in the U.S. That comes out to about $8,750 per year. The farther you have to travel for work, the higher your transportation costs are likely to be, which cuts into a consumer’s free cash to pay the mortgage. A spike in gas prices can put an especially strong pressure on homeowner’s ability to pay the monthly note, leading to an increase in foreclosures.

The NRDC is urging banks to factor in travel time and transportation costs when evaluating borrowers for a home loan. Mortgage lenders agree that transportation costs can have a big impact on household’s disposable income, but argue that other factors like unemployment have a much more direct impact.

So the next time you apply for a mortgage will the loan officer ask how far you travel for work and how many cars you own? While that’s an unlikely possibility in the short term, if the NRDC report catches on it could be a future reality.

The reason that banks and mortgage lenders will require all homeowners to purchase homeowners insurance before they disburse the funds for the home loan is that the bank wants to make sure that their loan collateral (your house) is protected.

Home insurance protects against things like fire, explosions, when your neighbor drives through the side of your house, and many of the other things that can cause damage to your house.

Before you purchase home insurance then be sure to shop around and compare homeowners insurance quotes from many different insurance companies to find the best deal.

Not all homeowners insurance policies are created equal so be sure to do your research before you commit to choosing a policy.

There are also many different discounts that can be taken advantage of when moving into a new home. Some of the most popular discounts include discounts for having a functioning security/alarm system installed, having your auto insurance and your home insurance on the same policy, and many more.

Be sure to lock up all of your jewelry and other valuables before the open house. Also, make sure your realtor is actually present throughout the entire open house. Nowadays many realtors are bouncing around between multiple open houses and even a few minutes away from your home could be disastrous. Even better ask your realtor to have a team on hand during your open house – one real estate agent for an entire house, particularly a bigger one, is often not enough.

In addition to open home thefts, burglaries of the many unoccupied homes on the market is becoming more common as well. Particularly vulnerable are homes that have been staged with nice furniture, linens and draperies. With the home sitting empty, these items become a magnet for thieves.

Police say that many thieves case a home during an open house, taking note of the ones that are particularly well staged. Criminals can easily use cutting tools to remove lockboxes on the doors or even remove door handles to get the housekey out of the lockbox. If your house is unoccupied and has a big “for sale” sign out front, it is particularly vulnerable, as this essentially announces the house is vacant.

Make sure you let neighbors know that no on is authorized to take things out of your house and ask them to keep an eye on things. Also consider an alarm system to keep the thieves away. Finally, consider making your home available by appointment only. Free-for-all open houses are often an invitation for thieves to pocket items during the showing and to come back later to clean the house out.

The main damage from hurricanes is caused by high winds which can pry roofs off and create structural damage to homes. In the past, homeowner’s insurance usually covered wind damage. However, with the high cost of recent hurricanes in Louisiana and Florida, many insurers have started to drop this coverage.

As hurricanes occur more frequently than floods or earthquakes, it is usually easier to determine how susceptible your house is to hurricane damage. If you talk to neighbors who have lived in the area for awhile you can often get a sense of how badly hurricanes hit your locale. In general, houses near coastlines or in low lying areas face a greater risk of damage from hurricanes.

Check with your insurance company to see if wind damage is covered by your policy. If not, and you know you are at risk for hurricanes, you should consider purchasing coverage for both wind and flood damage.

Renters generally have it easier when it comes to wind damage coverage. There is a lower risk of damage to personal property in the event of high winds, so wind damage is usually covered by renters policies. However, if there is any doubt it’s best to review your policy or call your carrier to make sure.

Like earthquakes, your typical homeowner’s and renter’s insurance does not cover damage from flooding. If you live in an area that is prone to flooding, chances are your mortgage lender already requires you to maintain flood insurance. However, where your house is located has a huge impact on how much flood damage you are likely to sustain.

The federal government maintains a helpful website called FloodSmart.gov that can be useful for determining your home’s flood risk. If you live on a hill you are likely to sustain much less damage than if you live near a river. If you find that your home is particularly susceptible to flooding you should consider increasing your flood insurance coverage above the minimum that your lender has set.

Once you have determined your flood risk, you can contact the National Flood Insurance Program run by FEMA or private insurance companies to see how much additional flood insurance will cost. As with the cost of earthquake insurance, the decision about whether to obtain flood insurance is a balancing act between the ongoing cost of he policy and how much it would cost to repair your home in the event of a flood.

We next cover hurricane insurance, which is particularly timely since we are just entering hurricane season.

Today we will cover earthquake insurance and in future posts we will talk about insurance to protect you against hurricanes and flooding.

Earthquake coverage is probably of most concern to California residents. The California Earthquake Authority works with companies to provide insurance against quakes but the policies are expensive and often have deductibles as high as 10 to 15 percent. You first need to determine what type of damage your house is likely to sustain in an earthquake and how much the repairs might cost.

A website called ShakeOut.org is a useful resource for figuring how how susceptible your home will be in a large earthquake. Factors that can determine how much damage your structure is likely to sustain include what kind of foundation you have, how close to a fault line you live, and whether your house rests on bedrock or fill. You can also talk to local contractors to get a general sense of how much structural repairs to a house like yours are likely to cost.

The next step is to get some quotes on earthquake insurance from the California Earthquake Authority and compare the cost of a policy against how much repairing your house will be. Many California consumers have determined that getting earthquake insurance is not financially smart.

If getting earthquake insurance doesn’t make financial sense, consider applying what you would have paid in premiums to reinforcing your home. In some cases, retrofitting your house for an earthquake can pay off more than buying insurance.

As with last month, the Minneapolis and San Francisco metro areas paced the increase, rising 3.2% and 2.8% respectively. Chicago, Los Angeles, Phoenix, and Washington D.C. all posted price gains of over 1% for August.

Despite the seeming strength coming back to the housing market, many analysts caution that the rise in prices may be temporary. Unemployment remains high, another wave of foreclosures may be in the offing, and an $8,000 first-time home buyer tax credit is scheduled to expire soon.

Some housing experts expect home prices to recover incrementally, following the pattern of the last few months. Getting back to the mid-2006 in home prices may still be a long way away.

The Case-Shiller index is widely considered one of the most accurate gauges of home prices because it compares recent home sales with previous prices for the same home. Last month the Index rose 1.6%.

Option ARMs are typically 30-year adjustable rate mortgages that initially offer the borrower four monthly payment options: a specified minimum payment, an interest-only payment, a 15-year fully amortizing payment, and a 30-year fully amortizing payment. Option ARMs are also known as “pick-a-payment” or “pay-option” ARMs. Option ARMs are often offered with a very low teaser rate (often as low as 1%) which translates into very low minimum payments for the first year of the ARM.

The Fed has been trying to prevent a crisis in Option ARMs by keeping key interest rates at historic lows, thereby lessening the impact on borrowers when the interest rate on the Option ARM recasts. The most common rate that Option ARMs are pegged to is the Monthly Treasury Average (MTA) which takes the Monthly Yield on 1 Year Treasury Notes and averages them out over a year.

Under the terms of the typical Option ARM, the interest rate does not recast for a maximum of 5 years after the loan was originated if the MTA does not vary much. So by keeping the MTA low, the Fed’s actions only served to postpone the Option ARM crisis. The bulk of existing Option ARM loans were originated in 2005 and 2006 which means a huge number of loans will be recast over the next couple of years.

The result is an increasing amount of foreclosure activity on Option ARM loans that are being recast. How bad will it get? That depends a lot on the willingness of lenders to modify the loans, but it could get very bad.

Facing steep cuts in state aid, public colleges around the country have been forced to slash costs and raise tuition and fees. In some systems, like the University of California, colleges are accepting a higher proportion of out-of-state students who pay full tuition.

At most state schools, in-state residents pay a fraction of what out-of-state students pay. In the University of California network, the tuition paid by out-of-state students covers their educational costs whereas the reduced tuition paid by California residents must be coupled with state aid to make ends meet.

Prices at private colleges also increased rapidly, rising 4.4 percent last year, according to the College Board’s report. This is despite a significant decline in the Consumer Price Index of 2.1 percent from July 2008 to July 2009.