Money Management

Home prices keep rising. Read on to see how to navigate that situation as a buyer. 

If you’re a prospective home buyer who’s been struggling with today’s real estate market, rest assured that you’re not alone. Housing market conditions today can easily be described as impossible. There’s very little inventory, mortgages are expensive to sign, and home prices keep on rising — despite a massive decline in sales.

In August, the median existing home sold for $407,100, according to the National Association of Realtors. That’s a 3.9% increase from a year prior. But it’s also surprising seeing as how existing home sales are down 15.3% year over year.

If you’re at the point where you’re ready to resign yourself to renting indefinitely, try to breathe and work through your options. Housing market conditions today are far from optimal, but that doesn’t mean you have to call it quits. Here are some avenues you can pursue at a time when home prices are so darn expensive and mortgage lenders aren’t backing down on rates.

1. Look at up-and-coming neighborhoods

You might have your heart set on a given neighborhood because it offers tons of amenities, like access to great schools, parks, and restaurants. The problem is that at a time when home prices are up, moving to a desirable neighborhood is apt to be a very expensive prospect. But if you’re willing to take a chance on a neighborhood that’s currently under development, you might manage to buy a home for less.

Of course, you’ll need to consider your household situation when making this choice. As neighborhoods get built up, more money tends to get pumped into local resources, like schools. But if a given neighborhood isn’t there yet and you have a first-grader, that’s not necessarily the best choice. However, if you have a newborn, you have more leeway to move to an up-and-coming neighborhood and see what changes transpire through the years.

2. Try to find a starter home

Starter homes aren’t so easy to find these days. Many of them are getting scooped up quickly either by investors or budget-conscious buyers who are willing to sacrifice square footage if it means a more affordable mortgage.

But if you’re willing to settle for a home that’s a bit smaller or less updated in nature, it could allow you to get into the housing market at a time when it’s so expensive. From there, you can work on building equity in your starter home so you’re positioned to upsize down the line.

Of course, you may be willing to buy a starter home, but finding one may not be so easy. But if you work with a good real estate agent, they can keep close tabs on the market so you’re able to jump on opportunities as they arise.

3. Look at a fixer-upper

Some people don’t have the patience to deal with home repairs. But if you’re willing to endure some upheaval, then a fixer-upper could be your ticket to buying a home today. A home that needs work is apt to be priced more affordably than a home that’s move-in ready.

That said, before you buy a fixer-upper, it’s a must to enlist the services of a contractor who can inspect that property and tell you how much money you’re looking at sinking in for repairs. You don’t want to land in a situation where you get a discount on your home’s purchase price, but you end up busting your budget to get it into decent shape.

And if you’re planning to buy a fixer-upper and renovate it yourself, think that idea through carefully. You might be extremely handy and have the best of intentions. But if you also have a full-time job, it may not be feasible to do the work yourself. So make sure you can afford to hire a professional before making an offer.

The fact that home prices are up is apt to be frustrating for buyers. But that doesn’t mean all is lost. There are still options out there for buying a home today if you’re tired of renting and are eager to call yourself a homeowner sooner rather than later.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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Costco’s executive membership gives you 2% back on the items you buy. But read on for a list of exceptions. 

If you’re looking to join Costco, you could get away with spending as little as $60 a year on a basic membership. But if you plan to shop there fairly often, it could pay to upgrade to an executive membership.

An executive membership at Costco costs $120 a year. But in exchange, you get 2% cash back on Costco purchases, including orders you place online.

It takes $3,000 in annual Costco spending to break even on the executive membership — meaning, to make back the $60 extra you’re paying for it. So that’s a number you should keep in mind if you’re not sure which membership to get.

That said, there are certain Costco purchases that do not qualify for cash back with an executive membership. Here are some you should know about.

1. Cigarette and tobacco purchases

You may be able to purchase cigarette and tobacco products at your local Costco. But those items won’t be eligible for cash back if you have an executive membership. If you’re counting on your weekly cigarette purchase to get you beyond that $3,000 break-even point, you may want to reconsider the upgraded membership.

2. Gas

Members commonly like to fill up their cars at Costco because the warehouse club giant is known to offer competitive prices on gas. But your fill-up won’t result in cash back on your executive membership. That said, the credit card you use might give you cash back, so your personal finances won’t totally lose out..

3. Costco Shop Cards

Costco’s Shop Card is the equivalent of a store gift card. The nice thing about Shop Cards is that if you gift one to someone who isn’t a Costco member, they’ll be allowed in to shop by virtue of having that card, even if they don’t have a membership card to flash at the door. But you should also know that buying Costco Shop Cards won’t result in earning cash back on your executive membership.

4. Stamps

It could pay to load up on stamps the next time you visit Costco. But unfortunately, you won’t get cash back with your executive membership on that purchase. You might also end up with a really large quantity of stamps if you buy yours at Costco, so you’ll need to be careful. Over time, the adhesive on stamps can become less sticky, so if you do most of your bill-paying online, you may be better off buying a smaller quantity of stamps at your local supermarket or post office instead.

5. Food court purchases

There’s nothing like a stop at the Costco food court to fill an empty stomach on the cheap. But you should know that your budget meal of frozen yogurt or pizza won’t give you cash back toward your executive membership. However, considering that you might spend a mere $1.50 for a hot dog and soda combo, not getting your 2% back means missing out on a whopping $0.03.

6. Vehicle purchases

The maximum cash back you can rack up per year with an executive membership is $1,000. To hit that max, you’d need to spend $50,000 at Costco over the course of 12 months. But that may be doable if you’re buying a car through Costco’s auto program. However, here’s some bad news: Car purchases don’t qualify for cash back with an executive membership. So if you’re hoping to snag that $1,000, you might really need to buy a lot of cereal and toilet paper.

An executive membership at Costco can be very worthwhile despite not earning cash back on the items above. And remember, if you’re not sure whether the upgrade is right for you, you may want to just take the chance. Costco will allow you to downgrade your membership after a year if you find that it’s not worth it, and you’ll also be refunded whatever portion of your upgrade fee you don’t make back in cash back form.

So if your executive membership only gives you $40 back after a year, you can downgrade to a basic membership and get reimbursed $20. Given that lack of risk, it may be worth giving an executive membership a shot.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Human health insurers cannot discriminate against applicants with pre-existing conditions. Read on to see if the same rules apply to pet insurance. 

One of the first things we did when we adopted our dog, Champ, three years ago was take him to our vet for a checkup. His health records were a bit jumbled (to this day, we’re not totally sure what his birthday is because we received conflicting documents) so we wanted to make sure there weren’t any glaring issues we needed to know about.

After that initial visit, Champ marched out with a clean bill of health. But a few months later, we found ourselves at a specialty clinic having Champ undergo testing after an extended limp that wouldn’t subside.

We found out that he had arthritis — a common condition for dogs his size, even young ones. And that was a relief given that at one point, there was concern about malformed joints and surgery to correct that.

But while the news on Champ was ultimately good — arthritis is a pretty easily treatable condition for most dogs — one thing we realized is that we were a little out of luck on the pet insurance front. See, we’d been so focused on helping Champ settle into a routine that we’d put off shopping for health insurance following his initial vet exam. We knew that having arthritis would pose a challenge from a pet insurance standpoint, since pre-existing conditions and pet insurance don’t tend to mix well.

But rest assured that we were able to secure insurance for Champ. And if your pet has a pre-existing condition, there’s a good chance you’ll manage to get pet insurance, too.

Insurance isn’t off the table, but it may not be as helpful

It used to be difficult for people with pre-existing conditions to qualify for health insurance. Thankfully, the laws have changed there, and now, insurers cannot deny coverage on the basis of that alone. Not only that, but insurers have to cover the cost of treatment related to pre-existing conditions.

Pet insurance works differently. You may not be denied insurance for your pet if they have a known condition. But pet insurance companies aren’t required to cover pre-existing conditions and their related treatment.

So while we do have a policy for Champ, the medications he takes to treat his arthritis aren’t covered. And should he need further treatment for that issue, we’ll have to cover the cost ourselves.

Now, you may be wondering why we bought pet insurance if it won’t cover a known issue with our dog. The reason is that if Champ were to get hurt or suffer from another ailment not related to his arthritis, that treatment would likely be covered by our plan. So basically, our policy is our safety net against massive bills.

Let’s say Champ ends up needing surgery for a reason having nothing to do with arthritis. If that procedure costs $5,000, it’ll be a huge blow to our savings account. If our insurance policy picks up the bulk of that tab, the hit won’t be as bad.

Will you pay more for pet insurance with a pre-existing condition?

Not necessarily. This might depend on the issue at hand, but in many cases, you can still qualify for affordable rates with a known condition.

In our case, the fact that Champ has arthritis doesn’t put him at an increased risk for health complications like heart problems or diabetes. So we’re not being upcharged simply because of his condition. You might have a different experience, though, depending on the issue your pet has, so it’s a good idea to shop around with different insurers and see what they say.

There are several different factors that go into calculating pet insurance rates, like your dog’s breed, age, and size. Progressive says that the average annual cost of pet insurance for a large dog like ours is about $300 to $870. Clearly, that’s a wide range, which explains why we got quotes from several insurers before landing on ours. And it definitely pays for you to do the same, whether your animal has a pre-existing condition or not.

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Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

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