Billionaire Warren Buffett was quoted in a recent article in  Business Week  focusing on the housing market. He had indicated that the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.

Warren wrote in his annual letter to shareholders of his Berkshire Hathaway Inc,  “Within a year or so, residential housing problems should largely be behind us,”  “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”

The current real estate market has left one in five U.S. mortgage holders owing more than their houses are worth. In addition, record foreclosures last year flooded a real estate market already stocked with unsold property, causing new construction to fall to the lowest in at least 50 years.

“People thought it was good news a few years back when housing starts — the supply side of the picture — were running about two million annually,” said Buffett, the chairman and chief executive officer of Omaha, Nebraska-based Berkshire. “But household formations — the demand side — only amounted to about 1.2 million.”

Berkshire, which owns a real-estate brokerage, a business that constructs pre-fabricated houses and units that make products used in homebuilding, has suffered amid the slump. Profit at Clayton Homes, the pre-fab housing business, fell about 9 percent to $187 million before taxes, while earnings at carpet manufacturer Shaw Industries fell 30 percent. “High-value houses and those in certain localities where overbuilding was particularly egregious” will take longer to recover, he wrote.

Buffett joked that curbing home construction was the best of three ways to reduce supply. The other two, he said, would be to explode homes in a “tactic similar to the destruction of autos that occurred with the ‘cash-for-clunkers’ program” or “speed up householder formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers.”

Some homeowners find themselves in a situation at one time or another in need of extra funds for home repairs, medical bills or other unexpeceted expenses. A home equity line of credit, or HELOC, can be a good way to obtain the necessary money needed. However, it is important to keep in mind that you will be able to repay this loan or you could loose your home if you default.

A line of credit is similar to a home equity loan in that both types of credit let you borrow against your home equity. The difference is that a home equity loan provides the borrower a specified amount whereas a HELOC provides an ongoing, revolving credit account. With a line of credit, typically you have a certain amount of time where you can borrow money at any time.  However, there may be specific terms such as a minimum amount per draw.

If you decide to apply for a home equity line of credit, be sure to do your research. Read the credit agreement carefully, and examine the terms and conditions , including the annual percentage rate (APR). Remember, though, that the APR for a home equity line is based on the interest rate alone and will not reflect closing costs and other fees and charges, so you’ll need to compare these costs, as well as the APRs, among lenders. Many of the costs of setting up a home equity line of credit are similar to those you pay when you buy a home. For example:

•  A fee for a property appraisal to estimate the value of your home 
•  An application fee, which may not be refunded if you are turned down for credit; 
•  Up-front charges, such as one or more “points” (one point equals 1 percent of the credit limit) 
•  Closing costs, including fees for attorneys, title search, mortgage preparation and filing, property and title insurance, and taxes

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When it comes time to sell your home, you will have different options that  are available for your listing agreements, each with their advantages and disadvantages.   Some agreements may be confusing, so  consult with your real estate professional with any questions you may have and what agreement is best for your situation.

Open Listing : An open listing is very similar to a “for sale by owner” listing.  It is a non-exclusive agreement, which allows the owner to execute open listings with more than one real estate broker and pay only the broker who brings an able buyer whose offer the owner accepts. However, no commission is owed if the seller finds a buyer on his own, without any agent’s help. The open listing creates competition between the seller and agent(s) to find an willing buyer.

Exclusive Agency Listing : An exclusive agency listing contracts one agent to sell the home. If that agent, or any other licensed cooperating agent finds an acceptable buyer, the seller must pay a sales commission. The owner still reserves the right to sell the property by themselves and thus avoid paying a commission. The broker is free to cooperate with another brokerage, meaning the second brokerage could bring an able buyer whose offer the owner accepts. Typically, the broker is paid a listing commission that is shared with the selling broker, so the owner pays both fees.

Exclusive Right-to-Sell Listing:  An exclusive right-to-sell listing is the most common, typically most real estate listings are this type. The listing agent has complete control of the transaction and so even if the seller, the listing agent or a cooperating selling agent finds an acceptable buyer, the listing agent will still earn the sales commission. However, when the listing expires the seller does have the option of finding another agent if they are not satisfied with their performance.

 Multiple Listing:  An important marketing tool for listing agents is the multiple listing service (MLS). This allows all the listing information as well as photos of the property to be shared on the computer others who are working with potential buyers. In addition, these listings are also available online to potential home buyers who are doing their own research. A MLS number is assigned to each listing, it is a unique number given to homes listed in the Multiple Listing Service (MLS) used by Real Estate professionals.

Whichever agreement you decide to go with, it is important to understand that a real estate listing contract is a legally binding agreement that sets out the rights and duties of the seller and the agent. It is important to consider your options when making your decision. Keep in mind that all listing contracts have expiration dates and you can change your listing choice when the contract expires.

When shopping for a new home, the process of  researching and applying for a mortgage can be a stressful and confusing process, especially for first time homebuyers.  However, getting a home loan doesn’t have to be an ordeal if you do your homework first.  A qualified real estate agent can help by providing a list of recommended lenders and help to answer any questions to  make the process easier.

It is a good idea to do the following before you even start looking at homes, to help make the process quicker and go more smoothly. 

 •Start by obtaining your credit reports from these credit reporting agencies. Under Federal law, you’re entitled to one free report from Experian, Equifax and TransUnion each year. Visit http://www.annualcreditreport.com to learn more. Keep in mind that all lenders will review these reports, and you need to know what they contain–and where you stand. If you see any errors, take action beforehand to correct or explain the negatives.

•Get pre-qualification from one or more lenders on a possible loan amount. That way you’ll have a good “guesstimate” of the loan amount you would qualify for–and how much house you can afford. Once you’ve chosen a lender, you can even get pre-approved for a loan. Knowing your mortgage limit up front will be a tremendous help in your search for the right home. So how do you find out about mortgage loan basics and the best way to work with lenders? One resource I like is Looking for the Best Mortgage, a free, easy-to-understand booklet you can download from the U.S. Department of Housing and Urban Development. You’ll get a “shop, compare, negotiate” strategy:

•  How to get loan information from more than one lender
•  How to get rate and fee information that you can compare
•  How to get your “best deal”

 The best advice I can give is to do your homework. Learn what you need to know about your home mortgage options up front–and get approved quickly for your new home when you’re ready to buy.

Tax time is here, but homeowners have an advantage with many tax breaks. Make sure you’re not missing out on important home-related tax deductions. Everyone has a different situation and you may actually qualify for other deductions you were not aware of, so always check with your tax advisor to find out which deductions apply to you. Below are some of the common deductions.

Deducting Real Estate Taxes. Real estate taxes are deductible in the year paid. They are generally reported on Form 1098, Mortgage Interest Statement, the annual statement from the financial institution holding your mortgage, or on your county real estate tax assessment statement. You should also deduct any prorated taxes collected from you at closing. These amounts are not always included on Form 1098, but may be itemized on your real estate closing statement.

Deducting Loan Points Paid on a Purchase or Refinance
The points you pay on a loan for a home purchase are tax-deductible for the year you made the purchase. You can deduct the points you paid as well as those a seller paid on your behalf if you meet the following criteria:

• The loan is secured by your primary residence
• The loan was used to buy, improve or build the home
• Paying points is a common practice in your geographic area
• The points are calculated as a percentage of the loan principal

First-time home buyer credit. A $7,500 tax credit is available to eligible taxpayers must have bought, buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return. and before July 1, 2009.  You are considered a first-time home buyer as long as you did not own a home during the three years leading up to the purchase of your new home.

Residential Energy Efficient Property Credit. For 2009 and 2010, homeowners can take a tax credit up to $1,500 for energy efficient home improvements. If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. Click here for more information

Health-Related Improvements – Any home improvements for medical purposes can be deducted entirely from your taxes as long as the improvements do not add to the overall value of the home and have been made for a chronically ill or disabled person.

Moving expenses. If a move is connected with taking a new job that is at least 50 miles farther from your old home than your old job was, you can deduct travel and lodging expenses for you and your family and the cost of moving your household goods.

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Jay Mallin/Bloomberg News

The Federal Housing Administration, which is supporting the housing market by insuring thousands of new mortgages every day, is expected to announce on Wednesday that it is tightening standards.

Times Topics: Federal Housing Administration

Borrowers who get an F.H.A.-insured loan will soon have to pay a higher initial insurance premium. The new premium will be 2.25 percent of the value of the loan, up from 1.75 percent.

Starting this summer, sellers will not be able to offer as much help to buyers to pay their closing costs. The maximum amount of assistance will drop to 3 percent of the value of the property, from the current 6 percent.

Other changes will try to hold lenders who participate in the F.H.A. program more accountable by publicly reporting their performance rankings.

The new measures are aimed at shoring up the agency’s finances while also screening out unprepared borrowers.

For years, the F.H.A. operated largely out of the public view. But it has become a subject of controversy recently even as it has ballooned in size. Some of the agency’s critics want it to tamp down risk by insuring fewer loans; others think it should help the market by insuring even more.

As of December, the F.H.A. was insuring 5.8 million single-family residences that had a total loan balance of $750 billion. More than half a million of the loans were seriously delinquent and heading toward foreclosure.

Many of these troubled loans were made in 2007 and 2008 as the market was plunging. Last fall, the agency said its cash reserves had tumbled to 0.5 percent of its loans outstanding, far below the 2 percent mandated by Congress.

Left largely untouched by the changes is the most controversial aspect of the agency’s program: a provision allowing buyers to make a down payment as low as 3.5 percent. Private lenders these days require at least 15 percent.

Borrowers who want to put the minimum down will now be required to have credit scores of at least 580, a relatively poor figure. Previously, there was no minimum score. But this rule might have little effect. The agency says that in practice, new borrowers already have much higher scores.

F.H.A. critics argue that the agency is allowing people to become homeowners while requiring relatively little of them, which they see as a replay of the poor lending standards that created the housing boom and subsequent decline.

Agency officials have responded by saying that they have adequate safeguards in place to make sure that borrowers are creditworthy, and that these loans are saving the housing market from collapse.

Lou Barnes, a loan officer with Premier Mortgage Group in Colorado who is among those who think the government is not doing enough to support the housing market, said the changes were not unduly restrictive. He noted that the insurance premium was merely returning to its level of a decade ago.

“The F.H.A. has done its best to protect the taxpayer, and the least harm to the credit supply,” Mr. Barnes said.

An industry consultant, Howard Glaser, said that with “the F.H.A. hovering around 40 percent of new loan originations, even small rule changes echo.”

Mr. Glaser, a former official with the Department of Housing and Urban Development, which includes the F.H.A., said that “obtaining credit will be a little more expensive or it may be a little more difficult to qualify” but that the changes were “not enough to have a systemic impact on slowing home buying.”

By Les Christie, staff writerDecember 29, 2009: 9:45 AM ET

NEW YORK (CNNMoney.com) — Home price gains of the past few months flattened out in October, according to a closely watched market report issued Tuesday.

The S&P/Case Shiller Home Price index covering 20 of the largest metropolitan areas in the nation, was unchanged in October, after four consecutive months of gains. The index is down 7.3% from 12 months earlier.

The result trailed industry expectations. A panel of experts put together by Briefing.com had forecast a month-over-month gain of 0.5% and a year-over-year loss of 7.1%.

“The turnaround in home prices seen in the spring and summer has faded, with only seven of the 20 cities seeing month-to-month gains, although all 20 continue to show improvements on a year-over-year basis,” said David Blitzer, chairman of the Index Committee at Standard & Poor’s, in a statement.

“All in all, this report should be described as flat,” he added. “Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip.”